Crowdcube success Wrap it Up look to raise another £500k on falling sales and closed restaurants

Wrap it Up have raised £760k on Crowdcube. Now they are looking for more cash as their business struggles to get even close to the projections used to sell that equity. Another typical day at Crowdcube, you might say. 

We have written about these guys before here

January to June 2018 sales fell back from the same period in 2017 - annualised, the revenue for 2018 looks likely to be around £5m. Projected revenues for the company back in 2015, showed £6m for 2017 and at a growth rate of 50% pa would have brought £9m for 2018. So someway off reality. 

We wait to see what valuation they come up with for this new raise but it has to be lower than 2015 - unless of course they use Crowdcube. 

Without the money, it looks like a bumpy ride for the company and its investors. Debt is at over £500k. As they cant really provide much in the way of hope for 2019 and beyond, why would anyone put more into this outfit unless the valuation is sensible? The company made a £230k loss in 2017 and with turnover down in 2018, the best bet is for a similar loss or a greater loss for 2018. 

Time to take away the takeaway - Wrap it Up file more losses

Wrap it Up took £760k off 560 Crowdcube investors in 2015. Now two years on how have they performed against their Crowdcube offer?

Well you guessed it.Yet another hopeless failure. 

The Crowdcube version had profits for the year just filed (Dec 17) of £670k. The company actually made losses of £230k and since funding, has never made a bean despite claiming to be profit making on the pitch.

The pitch emphasises the new central kitchen which can service up to 100 outlets. Hell that is fantastic if you are using it but with only 17 outlets on their website some might say this a total waste of capex.

We shall have to wait and see what the outcome is - the company is complicated see here and there are new non related Wrap it Ups popping up  - so the brand is hardly valuable. Units that do exist and are run by this Wrap it Up, get very average reviews - not what investors might want in a growth company. 

The whole picture is very confusing. It does beggar belief that 560 investors could give away £760k for this at a dreamy £6.5m and not invest in a current pitch by Appetise, which offers value for money and a real chance of success. You have to wonder at the sophistication of this crowd. 

Is it a Wrap?

Wrap it Up raised £760k on Crowdcube only 7 months ago. The company was valued at over £6m.

Accounts to YE Dec 2015 are now filed - very early which is always helpful.

They are quite tricky these ones. We wrote about this company when they were pitching

  - http://fantasyequitycrowdfunding.blogspot.co.uk/search?q=wrap+it+up+

As far as we can tell they made a small loss for the year. The Crowdcube projections had them making a profit of £235k.

What is more worrying, for them at any rate, is the cash position. The Crowdcube projections show cash at the year end of £136k. Its a cash business so there are no debtors as such.

In the real world the cash position filed stands at £600  - yes six hundred pounds. So out by a factor of 226 times.

The real position is quite hard to fathom as there are odd debtor entries in current assets, for monies not due for 12 months and an accrued income with no explanation. Best guess is that the real situation is they have current liabilities of around £70k and have less than £1k to pay to cover them.

Of course in the projections they had current asset/liability cover at this time of 3 times. Given that this projection was based on them raising only £400k, you have to wonder what's happened.

Due to the crazy accounting rules we have here, we may never know.

Something not right with Wrap it Up

There is something odd about a current pitch on Crowdcube - Wrap it Up. They are  looking for £400,000 for 6.25%  - so valuing the company at a mouthwatering PV of £6.4m.

Wrap it Up Ltd has been closed and Wrap it Up Holdings is owed £1.1m by this closed company. They both have addresses related to the current pitch. How this sum is allowed to appear in current debtors on the balance sheet when it is noted as a long term debt is questionable - but then the accounts are not audited.

According to the WiU website, the company is run and owned by World Gourmet Restaurants Ltd - set up in 2009. According to the current pitch on Crowdcube , this operation turned over £2m in 2013. The accounts do not reflect this although it is impossible to be sure. There are a whole group of sole traders listed as Wrap it Up whose addresses correspond with the units listed by World Gourmet Restaurants. World Gourmet Restaurants Ltd last filed accounts showed a current debtor for £76,000 as 'cash deposits' for securing leases. Again as with Wrap it Up Holdings, this should not be in the current assets.  The accounts are unaudited. In these accounts there is no company structure to suggest a legal connection between the sole traders and the World Gourmet Restaurants.

The Founder of WiUP and World Gourmet Restauarants, has a good list of closed companies. Not quite a cricket score but certainly getting there.

Wrap it Up are listed on Trip Advisor at 3.5 with only 23 reviews - a small number for a company that has been trading for 8 years. As 6 of these are 'poor' and 'terrible' they clearly have some work to do. The accounts show 4 years of trading with losses for all 4, accumulating to just over (£200,000). Where does that leave a current valuation of £6.4m??

The company has had £125k pledged to date but £100k of that is from one investor. As usual on Crowdcube, this we are sure would have been an prearranged deal so 'nout to do wit crowd'.

We think that companies pitching for public money on ECF sites, whilst also benefiting from EIS and SEIS tax rebates, should be required to produce at least one year of fully audited accounts. Crowdcube's due diligence has been shown time and time again to be mere window dressing; so something needs to be done.