Ann: Covata Part of Successful Tender by Multi-National Company, page-20

@Agent-86 keep up your excellent research.

Have read a few of your posts earlier and some of your concerns that you highlighted which are legitimate and aids a balanced view which I think is very important.

However, having been invested in the company since it's listing in 2014 and observing it's progress very closely a few things have become apparent and would like to share a few thoughts without going into too much detail.

First of all CVT is a high risk potentially high return investment proposition. Although the company has secured a number of impressive contract wins over the last six months, there is significant uncertainty and have heard concerns from posters regarding end user take up rates and perhaps the degree to which its channel partners will actively market the product.

But I think what is important to understand is that the company has to an extent transitioned out from the early stages of its commercialisation strategy which has helped de-risk it. Recent deals have helped validate the product and further contract wins will clearly exert a positive re-rating influence. Whole of last year CVT was busy laying a strong foundation to its go-to-market strategy. This provides validation, credibility and augurs well for further contract wins. Significant contract wins, including Cisco, Deutsche Telekom (T-Systems) and more recently Barmer show the company can secure contracts with industry heavy weights.

They are now saying there are over 50 live prospects in the pipeline which they trying their best to qualify in. The eventual strike rate is anyone’s guess but with a predominantly fixed cost business model, incremental net sales will largely hit the operating profit line. What this also means is that the cash issue will become a thing of the past once this happens and I think the company is acutely aware of this.

As an investor I’m confident that the company will deliver.