attn arthur - has lum got revenue-how much???? Hi Arthur, To the...

attn arthur - has lum got revenue-how much???? Hi Arthur,

To the best of my knowledge only the one report has been disseminated on LUM - Ballieu,somewhat dated but never the less enclosed below.

As stated you have perused a number of the Lumacom posts - many of which, unfortunately, warrant little scrutiny BUT there are the occasional posts of substance which offer food for thought and with acknowledgement to the author ' Rhyno' I also enclose his short summary dated Dec/12/03.

Events have of course moved on since then - in my view .. positively. but I would disclose that I hold the stock and accept that despite endeavouring to maintain a disciplined trading approach - my opinion may be somewhat coloured.

Anyway - in the interest of opinion/discussion from an informed perspective(in as much as we are able .........)




E.L. & C. Baillieu Stockbroking Ltd
Lumacom Ltd
Light me up!
Rob Ward LUM $0.52 SPECULATIVE BUY
(03) 9602 9222 Monthly Turnover (m) $2.9 Market Cap (m) $47.9
[email protected] Shares Issued (m) 98.9 12 Month High/Low $0.55-$0.05
September 2003
Company Outline
Lumacom Ltd (LUM) owns the global technology
rights for a LED-based signage system called
LumaSigns which has a number of applications, most
notably large-scale video advertising. The developers
of this technology are part of the management of
LUM. The company’s overall objective is to
commercialise this technology worldwide.
Recent developments
Recent activity in Europe and the US looks
promising. LUM, in a 50:50 joint venture with Mega
Profile, unveiled a large video screen in Barcelona in
May- a deal which should bring it an $800,000 cut of
advertising revenue for at least the next four years.
Management believe that this success will lead to
take-up of further screens in Europe- opportunities for
which have been identified in conjunction with Mega
Profile management. We expect announcements in
relation to these screens to be made soon.
LUM also appears close to obtaining advertising
contracts for signs to be placed on the roof of No 4
Times Square, New York- eventually having four
signs (one for each side) on the building. The
company is reliant on its US joint venture partner,
Totius Media securing advertising agreements for this
location before any details are announced. It is worth
noting that at this stage, No 4 Times Square is the
only skyline site approved for such advertisin g in
New York. However, with support from Durst
Organisation (property investor and owner of No 4
Times Square), we believe that other opportunities for
advertising using LUM signs will be forthcoming.
Totius have proved a valuable partner to LUM so far-
having already secured a major US order for the
venture providing advertising revenue to LUM.
A recent exercise of options was successful for LUM,
raising $5.5m in cash- taking total cash held to around
$6.5m. This should enable management to continue to
pursue international opportunities whilst obtaining
recurring revenue from announced advertising
contracts.
Outlook
Management of LUM themselves note that
commercialisation of the proprietary technology to
date has been slower than expected. However, there
appears to be ample amount of interest at present and
we predict an exciting 12 months for the company.
Successful demonstration of screens in Barcelona and
New York could see an increase in demand for
LUM’s technology. Joint venture partners Mega
Profile (Europe) and Totius (US) appear to be highly
active in seeking advertising contracts- providing
positive indications for the future. Each additional
major contract gained will prove highly lucrative for
LUM and will provide important recurring income
streams in the form of a cut of advertising revenue.
We believe that the European market in particular will
provide LUM’s best opportunities for winning new
contracts in the coming 12-24 months.
Recommendation
On the basis of the quality of its technology and its
close relationships with capable international partners,
we believe that LUM is well placed to win a number
of contracts in the near future. However, we note that
with no earnings history and no existing market for
LUM’s specific technology per se, that there are a
number of risks involved in this investment.
Accordingly, we rate the company a Speculative Buy.
Share Price Performance
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12/04/00 12/10/00 12/04/01 12/10/01 12/04/02 12/10/02 12/04/03
E.L. & C. Baillieu Stockbroking Ltd Page 2
Technology
Each of LUM’s products utilises LED technology
which provides a clearer picture with a longer life
than alternative displays such as Neon, and cost
benefits over conventional LED Displays.
LUM’s technology is developed through the science
of psychophysics. Specifically, this technology
focuses on the process in which the human visual
system perceives complete images whilst only
receiving partial images. For example, an advertising
display using LUM technology can use as little as
only 10% of the pixels of a full display- yet appear to
the eye to be ‘complete.’ This provides a considerable
cost advantage to users of the technology and allows
for advertising on a larger physical scale which would
otherwise be uneconomical.
LUM have three main products available - the
LumaVideo, LumaPanel and the LumaPole.
LumaVideo: (for viewing within 300m)
Used indoors and outdoors, this technology utilises
LED technology. Whilst this is a useful demonstration
of LUM’s LED technology, we do not expect that this
will be the major source of revenue for the company
in coming years.
LumaPanel: (for viewing over 100m)
This technology is primarily designed for
advertising/corporate branding on top of buildings.
During the day-time, the advertising area has a fixed
advertisement on it (like a normal billboard). It is at
night-time that the technology can be used. The LED
technology can be used for scrolling advertisements
or for full video display on the billboard area. Along
with the LumaPole, it is this technology which will be
most ‘visible’ and which will have the most
pronounced effect on the company’s public profile
and awareness of its technology.
LumaPole: (for viewing over 1km)
This technology is primarily designed for advertising
and corporate branding on the side of buildings and is
used for very large displays. An installation has no
effect on the outward view of the building.
Strategy for commercialisation
LUM management intend the technology to be used
in outdoor advertising- specifically in high traffic
areas where the requirements for minimum viewing
distances can be met. Accordingly, there are limited
opportunities for major contracts in Australia and
LUM have sought to win contracts overseas. It has
been seeking joint venture opportunities- intending to
contribute its technology to these ventures. Current
relationships are with Totius Media and Mega Profile.
US: Totius Media (Joint Venture)
In a joint venture with Totius Media, LUM have
secured the right to place four signs on the top of No 4
Times Square. These signs will be 55 ft x 55 ft and
will be visible to approximately 10 million people
daily from Manhattan and other parts of New York.
Totius Media have announced that the signs will be
launched in the October – December quarter of this
year to coincide with the launch of the 360 ft
broadcast antenna replacing that which was on top of
the WTC. Being the only advertising property on top
of a New York City skyscraper- we see this as an
invaluable opportunity for LUM to gain widespread
recognition of its technology.
Totius Media have already placed an order with LUM
for the US valued at $1.4m. We believe that this is a
significant step for the company despite the fact that it
has been overshadowed by the high profile No 4
Times Square project.
Europe: Mega Profile (Joint Venture)
Mega Profile has been a highly active joint venture
partner- being responsible for the first commercial
demonstration of LUM’s technology in Barcelona
which has been the catalyst for growth opportunities
both in Europe and the US. We expect efforts by
Mega Profile to win new orders for the venture to see
success in Europe in the next 12 months.
Asia
We see the Asian markets as being an opportunity for
LUM which they have not yet had the chance
capitalise on. Should LUM secure a high-profile joint
venture partner as active as Totius Media or Mega
Profile in the region, we could foresee Asian revenue
making a sizeable contribution to LUM’s success.
History of technology and company
LUM was registered in 1999 and listed in 2000 and
was utilised to acquire the business and intellectual
property rights of the LumaSign technology developed
by Display Systems Advertising Pty Ltd (DSA). DSA
was established by Monte Sala and his sons, Rodd
(Managing Director and Board Member of LUM),
Oscar (Executive Manager of LUM) and Mickey Sala
(Executive Manager of LUM) for the development of
data encryption technology.
Monte Sala, the driving force behind the LumaSign
technology, had a number of decades experience in
the technology industries- having worked with NASA
in the 1960s and at the University of Western
Australia in the 1970s. The latter involved research on
the psychophysics process would become the basis of
the Lumasign technology.
So while LUM is a relatively new company in its own
right, the development of the technology and creation
of relationships by the Sala family has been ongoing
for a number of years.
The Sala family have a successful history
commercialising technology. Monte Sala was
responsible for one of the world’s leading data
encryption systems which is used by major banking
and financial institutions worldwide. This system was
commercialised by another public company, of which
Monte Sala was the Chairman. Rodd, Oscar and
Mickey were all involved in this process.
As a result, this gives us confidence in the Sala’s
ability to successfully commercialise the LumaSigns
technology in Australia and internationally.

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Subject lumacom
Posted 12/12/03 22:57 - 93 reads
Posted by Rhyno
Post #198168 - start of thread

I have been reading with great mirth the naitivity of alot of people on this forum.

There have been a few inaccuracies that have been doing the rounds for the last few weeks (and longer). People who purport to research stock never cease to amaze me with their ignorance.

One example has been the report that Lumacom only earn't $13k last quarter. That figure was taken from their quarterly CASH FLOW STATEMENT, not consolidated accounts. Those that know the difference would know that if you are operating joint ventures, as in the case of LUMACOM, you can't report the cash received by it until year end which gives you a detail of the whole year. Joint ventures distribute net cash (after expenses).

This company has reported some 9-11 signs that they will make on average net revenue of $800k per annum ie. after expenses of the JV. I think most missed that they actually announced 5 new signs at the AGM that are sufficeintly advanced, ie the companies have put in a purchase order (in the MD's address to shareholders)

They have also said that they are very close to the Time Square deal which was reportedly around $47m over 7 years (as reported in the West Australian newspaper) If you look at this as a 5 year deal and discount it by half you would expect that the company could earn around $3-4mil per year (again recurring revenue)

At the AGM the MD was asked what revenue could be expected next year. He responded by saying "conservatively" they expect net revenue (NET) of $6m per year. They have already announced 9 odd signs that will be up in the next few months. He was only stating the revenue expected from the already announced signs.

In terms of issuing shares to option holders, this is common practise, whether we like it or not.

As to the bidding by someone at 30c, that is waht makes a market, bids and offers. You will also notice that people are bidding at rediculous prices in just about every stock on the bourse. They are also offering at silly prices too!

Another thing that no one seems to acknowledge is that the deals are recurring revenue, they don't have to sell the same amount of signs next year to equal current year sales. Any new sales next year increases their net revenue.

What value do you put on a company with reported revenue ?

For simplicity, 10 signs at $800k = $8m Recurring every year. IF they only announce another 5 signs next calender year (half of what they have achieved this last 6 months) it could amount to $12m.

Less a few for expenses etc, you could have a profit (which will reoccur and grow) of $8-10m.

At 100mil shares on issue, that is 8-10c per share. pe of say 10 (even though 15 is the average) without accounting for growth you get a share price of 80c - $1. Add New York to that and you have another 30c on that.

Totius Media have been joined by a Sony executive that was in charge of their outdoor Jumbotron division. Again in the MD's address. Do you think he has joined them for the fun of it? If anyone knows this sort of technology it would be him, not some guy sitting on HC every day telling the world what a guru he is.

Lumacom has always stated that it will only announce deals "when the $ is in the bank" not before. The ASX and ASIC take a dim view on directors who mislead the market.

If you are looking to trade this stock, good luck. But deals of the magnitude they are talking about and to the advertisers they are talking to (read the MD's address) don't happen overnight. As seems to be the expectation by the majority on this forum.

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