That sink­ing feel­ing

Poor Pool­cop sales put project in deep wa­ter

Finweek English Edition - - Companies & Markets -

BE­LATED FI­NAN­CIAL state­ments for the year to endOc­to­ber 2007 show that un­listed ven­ture cap­i­tal con­tender APMI Hold­ings – the de­vel­oper of the much-hyped Pool­cop swim­ming pool main­te­nance sys­tem – is sink­ing. APMI was one of the new bri­gade of un­listed ven­ture cap­i­tal com­pa­nies – in­clud­ing Vin­guard and Laze­ron, as well as re­vamped projects such as Agave Dis­tillers and Su­per­tow In­ter­na­tional – that plied the pub­lic for fund­ing be­tween 2005 and 2006 (see box).

Like its coun­ter­parts, APMI promised big re­turns to in­vestors who par­tic­i­pated in a pub­lic place­ment of shares, which raised R16m for APMI in early 2006. At that point Fin­week and Fin24 pointed out that the in­ferred value of APMI was R100m – which looked far too gen­er­ous for a start-up ven­ture mar­ket­ing a highly niched prod­uct.

For its past two fi­nan­cial years, APMI’s turnover col­lec­tively topped R6m – a truly in­sipid per­for­mance con­sid­er­ing that amounts to less than half the cap­i­tal raised from share­hold­ers in 2006. Turnover of R3,4m for the year to end-Oc­to­ber 2007 trans­lated into a loss of R4,4m. That’s a far cry from the prospec­tus fore­casts that sales for the pe­riod were ex­pected to top R24m and yield taxed prof­its of R4,7m.

The lack of sales is omi­nous, es­pe­cially if share­hold­ers re­call the up­beat state­ments from APMI CEO Gus­tav Lotz to­wards end-2006. In the com­pany’s third quar­ter news­let­ter of 2006 there were ex­citable ref­er­ences to “hec­tic” off­shore ac­tiv­ity and “reap­ing the fruits of con­tin­u­ous mar­ket­ing and brand­ing” in SA.

While year-end 2006 is a long time ago, we must re­mem­ber Lotz was talk­ing about APMI’s per­for­mance re­flected in its most re­cently fi­nalised fi­nan­cial state­ments. In that news­let­ter Lotz pre­dicted a ma­jor sales boost, re­fer­ring to a pend­ing trans­ac­tion with Pen­tair Europe and a con­tract with a hard­ware group in SA. That, claimed Lotz, would in­crease sales in SA to the value of R5m and R10m in­ter­na­tion­ally for the year to end-2007 – an in­crease of 600%.

Scan­ning its piti­ful in­come state­ment for the year to endOc­to­ber 2007 you might not be sur­prised if share­hold­ers ac­cused Lotz of a reck­less rant.

Ques­tions were emailed to Lotz last week to es­tab­lish why ex­actly APMI had fallen so far be­hind its pro­jec­tions. At the time of writ­ing no re­sponse had been forth­com­ing.

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