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Thank you try2buy.
Reading between the lines. Could 13.2 be the reason that DHSC have enough product for 2021 because they took enormous amounts before the year end and are now refusing to pay the last 3 invoices.
That would ultimately change the end of year profit as stated in the RNS.
It seems to make sense to me anyway .
try2 - I've asked this a while ago and got no replies - what are the chances of ncyt supplying cheaper kits in Q1, when the old contract has ended, but we were still supplying the gov out of the old contract? This way as far as my [extremely limited] legal understanding goes, the gov might have claimed that ncyt has implicitly agreed to the old contract extension and breached the favourable customer clause.
It’s a calculation but they would argue most likely that different product or sold in different market. So would refute the claim.
The wording on the last rns I find strange. Not sure if anyone has a view but it’s says may have a material impact of revenues. Not sure why they would just say revenues and not reported financials.
Soder, good to read an attempt, not sure what the fall from grace was over & it would help to know in the absence we have of information & adjustment to market expectation of revenue mentioned in the RNS
Most favoured customer clauses - could it be this? how would they fall out so badly, its a calculation of monetary amount which they'd settle wouldn't they?
13 Favoured Customer Provision: (only applicable to the Contract if this box is
checked)
13.1 The Supplier agrees that if at any time during the Term it sells any product, licence, good
or service which is the same as those comprised in the Goods (in whole or in part) to a
Comparable Customer for less than the cost of such product, licence, good or service
included in the Charges, it shall:
13.1.1 reduce the Charges to match the lower price for so long as the lower price is
available; and
13.1.2 in accordance with Clause 13.2 below, refund the Authority the difference between
the Charges and the lower price in respect of its purchases of the Goods with
effect from the date the Supplier began charging the lower price to the
Comparable Customer.
13.2 If a refund is due to the Authority pursuant to Clause 13.1.2 above then (unless agreed
otherwise by the Authority in writing) the Supplier shall, in equal proportions, set off the
total value of the refund due against the next three (3) invoices raised by the Supplier.
13.4 A “Comparable Customer” is any customer based in the United Kingdom or Europe and
who purchase products from the Supplier of the type which fall within the meaning of
Goods under this Contract.
PS and in the meantime, we have f.cking doggiecoin with mcap higher than barclays.
Based on the public information we know, if you're not buying ncyt at the moment, you're an idiot.
There is, however, always a risk of catching the falling knife, particularly when IIs get insider info before PI Joe, and sell into the misinformed PI base. Then bad news become public and PIs are screwed. It won't be AIM if that sort of sh.t wasn't happening every week.
So never overexpose yasel to a single stock.
You have spacs in the US trading way above their cash optionality value that are just shells. No sales, cashflow, not even a product yet. Just m&a optionality on the spac and it’s cash pile.
We have a global diagnostics biz making sales all over the shop with world leading r&d and innovation and a huge cash pile. It’s a shame we are in AIM as it’s full of dumbasses which is a curse as much as it is a gift.
Soder good effort, management put it in the bin and burn it brought a smile, some of the derampers will quote that :))
Soder - great number crunching, much appreciated.
Just to add my comments, i feel the cash position is actually better than you suggest.
Rev in H2 was £213m and the EBITDA was c£149m for H2 alone. Now the cash position increased by 'only' £74m to £92m at 31/12/20. So not all the invoices were paid by year end and c£70m is still to come in (standard business practice).
It is likely any dispute will only impact unpaid invoices.
Lets assume worst case 50% of this £70m doesn't come in that's still £35m that should be added to the coffers.
Using your £52m cash generated in 2021 i've got a cash position at 31/12/21 of £92m + £35m + £52m = £179m.
This is a massive war chest and shows how undervalued we are IMHO.
I don’t think it’s that they have too many. If the government have too much they can put on an aircraft and send to India. Will help post Brexit trade deals. That issue would be easily solved.
https://www.google.co.uk/amp/s/www.thenewsminute.com/article/wait-rt-pcr-test-has-increased-labs-get-twice-samples-147262%3famp
Maybe we are putting out hundred million into bitcoin, Tesla style
We supply smarties? I have not put that in my base case :0
Is that all Soder :) I thought somebody had discovered we supplied smarties instead of Winterplex.
The defence rests, your honour.
I will say with some confidence... if you are buying this here, you will make money. If you see yourself underwater heavily dont worry you will make it back and you will still make money.
This gives an enterprise value of 125m for a company doing EBITDA of 105m. Ridiolous. B-b-b-but what about 2022? What will ebitda be then as the business will fold post covid I hear you say? Lets assume that they have some products that will last longer than 2021 and are able to make 40m of full year sales at an ebitda margin of 50% going forwards. That would give us an ebitda of 20m every year and on an EV EBITDA multiple basis that is 6x. Still ridiculous as even small diagnostics biz with no cash trades 10-20x ev ebitda never mind one with 130m of cash optionality.
To think that this business is worth its current market cap you have to believe the following:
Way way more than 20% of H2 cashflow from DHSC is paid back to them
No sales are made from versalab, snp-sig, the LFT antibody…ever
EBITDA margins fall 10% and were lower in Q1 21
Cash conversion is lower than 50% and not 80% guided
There is no additional private sales growth from Q1 21 despite all the fit top fly guys currently lining up and airlines announcing huge holidays booking for H2 (look at jet 2, tui easyjet etc)
Management take their cash pile and put it in a bin and burn it so there is no option value atrtached to it via new product development or M&A
There is no biz after 2021 so no need for disgnostics in infectious disease and pathflow products produce no sales
Ok, its getting a bit pant wetty in here so try to piece this together rationally… all figures in ££
The fy update reported that ncyt finished fy20 with 277m sales, a gross margin of 80% (gives gross profit of 221m) and Ebitda of 187 (68% ebitda margin). Cash was reported at 92. We can piece together from that update that cashflow for the full year was 90m of which 16m was in H1 and 74m was in H2. Cash conversion after M&A was ~50% and guided as 80% going forward but lets ignore that as we are going to take an axe to the cash position.
My worst case hypothesis for the DHSC issue is than they breached a most favoured nation clause and were selling tests to other parties at a lower rate than was agreed with dhsc. As such DHSC are claiming a refund is due on the difference. I cant analyse how this will impact sales and ebitda but lets assume they have to pay back some of the cash earned in H2 to DHSC. As a downside lets assume 20%. Fair? So the dhsc contract was in h2 where cashflow which was 74m. Lets assume all this H2 cashflow was from DHSC contract to be conservative and pay them back 20% which is 15m and would give us a year end cash position of 77 (instead of 92) as a starting point for a downside valuation.
Now for 2021, we know sales were 72.6m in Q1 of which 50% is DHSC and 50% private. This is all largely promate, so NO SNPSIG, NO VERSALAB, NO PATHWAY, NO FUTURE PRODUCTS LIKE ANTOBODY LFTs etc. We know they said they beleived DHSC may now be done with what they need. So lets assume they make no further sales for rest of the year to DHSC. Lets then assume that private and international sales are flat Q on Q for 2Q so you get H1 21 sales of 109m. For H2 my base case would be that as we start to travel the private and international sales will meaningfully increase as the world opens up. We will also start making versalab sales along with Snpsig variant tests and an antibody LFT tie up with a vaccine maker. But ignore my base case and lets look at a downside. Assume private sales are flat from Q1 and they make no, nill, zilch, nada sales of versalab, snpsig or any future products they have and are developing. That will give FY 21 sales of 181m.
Now, EBITDA margins were 68% last year, lets take an axe to that and say they will be 58% this year, That gives EBITDA of 105m for FY 21. What about cash conversion. Lets ignore what they said re 80% cash conversion from ebitda as that may be impacted by the dhsc contract issue. But lets say its 50%. That would imply that in a tough downside case they are able to generate 52m of cash this year.
Lets add that 52m to the revised (post payback to DHSC) cash position of 77m. That gives us a year end 21 cash position of 130m.
Enterprise value = mark cap + net debt. Net debt is gross debt minus cash. Debt is zero so net debt is -130m in this scenario. The market cap is the share price x the number of shares which is 3.654 x 70.6m = 255m