Tuesday, 13 December 2016

Hop Stuff inflate their figures on latest Crowdcube pitch

Hop Stuff is a Crowdcube success story - no it really is a Crowdcube success story

It is one of the only companies that has raised money on the platform that has achieved or exceeded its revenue projections. So why in its latest Crowdcube pitch for £500k, has it felt the need to play around with the truth?

This is what they say on the pitch - 

We have a demonstrable track record of beating our own forecasts. In 2013 we forecast Hop Stuff would be turning over around £480,000 by this year, we’re currently on track to double that.

This is highly misleading.

In fact the 2013 projections showed a turnover to August 2016 of £417k against an actual turnover to April 2016 (their filing date) of £524k. The claim to be on track to double the £480k is made up based on firstly an estimated figure of £480k for 2016 (Jan to Dec) - which is not a figure they ever published and the use of a large chunk of 2017 - which has not happened yet. What they dont highlight is the crucial fact that in the 2013 projections they had a 2016 forecast EBITDA profit of £166k whereas in reality they made a loss on EBITDA of £84k. 

Would you think that this loss is the more significant figure - or rather how it came about bearing in the extra revenues? Maybe a look at that 2013 projected GPM of 83% might help. This 2016 figure was actually rising over the 3 year projection.

Then just when you think you have clearer picture of what has actually happened, you find this footnote on the pitch - 

The actual figures (12 months to Apr-16 and 5 months to Sep-16) have been prepared by the Company and represent consolidated figures of Hop Stuff Brewery Limited (08471474) and Yeomans Pubs & Bars Limited (09539108) which at the time was not a Hop Stuff wholly-owned subsidiary.

So we are really comparing Apples with Elephants. Totally transparent. 

It is still a success, certainly in terms of  Crowdcube, but they really dont need to make things up. They have most certainly exceeded their 2015/16 projected revenue figure. Part of the confusion has been caused by Crowdcube allowing companies to use different projection dates to their filing dates. Something easy for the FCA to stop? 

As usual, the valuation is stupendous at £5.5m - for a company yet to make a penny of profit but then that's why they have to make these claims. Oh and you might want to ask about that debt. 

A word of caution

We notice that the forum for this pitch is crammed full of hyperbole - from the founder. He claims that the company has done very well for its first round funders, that growth will be such and such etc etc. This is all fantasy - at the moment. Shareholders in round one are no better off than they were the day after they invested. The value of the company is entirely make believe - there is no market for the shares and the company makes losses not profits. Sure the future looks interesting but please take a good look at the hype here before jumping in. 

And on top of this, the founder has now admitted that a deal with an overseas importer which is given a big push in the pitch is NOT confirmed. He goes on to say that due to this, they have only put 50% of this deal's revenues into the projections - apparently that is prudent!!!! Come on please.

And a final update - 

It seems someone reads this blog as the Hop Stuff pitch text has been changed  - in line with our comments above. That's much better guys now we might believe you :))

1 comment:

  1. That's good to hear they've taken your thoughts on board. That seems to be the exception rather than the rule...