Rainbow Rare Earths are raising £6.4M in a placing to fund future development at Phalaborwa and Gokara, and George Bennett RBW CEO presents live from Johannesburg next Tuesday evening. Register here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East and have access to Premium Chat. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Perhaps it hinges on a winterplex release formulated for Promate. Other upper respiratory infections are already doing the rounds along with covid and we're barely heading into autumn. There isn't an LFT solution to descriminate between the big 3, I suppose you could do 3 individual LFTs, hardly a cost effective solution.
DRB appears to be mixing everything up...Intentionally? DeRamping Badger 83?
The stock write-down makes no sense to me. Is it going out of date (then why is the board looking for opportunities to use it in future?) If they are able to sell it to somebody, then why write it down? Are DHSC correct in their assessment of "not fit for purpose" then?
My wishful thinking feeling is that ncyt agreed to write-off the entire disputed amount in exchange for a large promate contract that is about to be announced (remember that 180m tender?). But wtfdik.
Saint cant find you so follow me and I will follow back ( sorry other posters)
Correct. Thanks Neil. At a rate of £10m revenue per month I would expect at least £9m cash from that at a 32% conversion rate. That's £86m and counting. That puts my forecast for YE cash north of £130m (with resolution).
Our cash balance Today is not £77 million, the cash balance stated within this week's RNS was for cash at 30/06/2021.
Today's cash balance, nearly 3 months on, is likely to be well North of £80 million.
Sorry Chris just seen your last post. Yes so it was PROmate, Thank you for the reminder. Still baffled then as to what the issue with PROmate is. Could it be the machines that were the issue as I believe both Exsig and PROmate run on the machines.
Also baffled as to how we have been ordered a new contract for PROmate worth £4.7m when there is a dispute surrounding that product.
Can't wait to get this resolved just so it all becomes clear. Clear as mud at the minute.
My view is H1 as the absolutely worse case built in and some so that number will only get better imo. I am hopeful that we get this dispute resolved by YE and the accounts come March will show significant upside on what the H1 will look like.
FY20 is different. It is not absolutely worse case. Worse case is a full refund of the £103m which would reduce sales by £103m (assuming £129m Inc Vat) and cash by £83m (they haven't paid us £24m Inc Vat). The £20m provision would also be released back into the P&L reducing COS.
Net impact to bottom line = £103 - £20 = £83m
Leaving us with £50m EBITDA in the restated 2020 accounts.
In my view, this will not be the outcome but is worse case.
I believe we will negotiate a favourable resolution for both parties which is to give the DHSC replacement products. Let them pick what they want. We have a large offering and the DHSC demand is about to go through the roof.
The £20m provision in 2020 and £7m in 2021 will cover the manufacturing cost to replace the orders in dispute. Leaving the DHSC to pay the remaining £20m from Q4 and £41m from Q1. Ncyt don't need to pay anything back. As for the £30m stock write off. Not sure about this. Don't know enough about it.
Following this the accounts stay as they are for 2020. A nice £132m EBITDA. 2021 H1 goes to £95m sales, with EBITDA of approx £38m (40%) less the £7m replacement cost less whatever happens with the stock write off. Worse case £0 EBITDA for H1 but again, I am sure we will get something for the stock.
Our cash balance today of £77m grows by £61m less the £27m to pay for the production of the replacement stock. Gives cash of £111m
Add to this a solid H2 and I would be expecting a cash balance north of £125m going into 2022. Then M&a comes into play.
All just my opinion of course.
DRB, 9th April RNS explains that,
On 29 September 2020, Novacyt announced a second supply contract with the DHSC for exsig® COVID-19 Direct kits and other products. In the full year trading update announced on 29 January 2021, Novacyt explained it was in active discussions with the DHSC regarding an extension of the supply contract. Unfortunately, an extension has not been agreed, although the Company supplied PROmate™ in Q1 2021 in accordance with DHSC demand.
Q1 trading update and 2021 outlook
Novacyt delivered revenue for Q1 2021 of €83.0 million (£72.6 million). Approximately 50% of Q1 revenue was driven by sales to the DHSC, predominately PROmate™.
We know from the redacted contract on bidstats that winterplex was also supplied IAW the contract but was unlikely to be used due to the absence of flu.
Chris, had a very quick look back through the relevant RNS's but can't see any reference to the £41m being promate. Can you specify where it quotes this please? There is also no confirmation of what the Q4 product is as far as I can see. We are assuming Exsig and Winterplex because it makes most sense.
Db, the RNS' clearly state that 40.8m Q1 2021 revs are for deliveries of PROmate.
Separately, the 19.8m(cost)/129m (sales) replacement product is for the initial contract in 2020, for Exsig/Winterplex. This may not even have to be replaced.
It all got roped in together because of the unlikely possibility of a full refund that would result in money going from NCYT to DHSC. Its for this reason that I'm confident the Q1 40.8m will get added to the Y/E EBITDA.
Incidentally, that should give the company Y/E EBITDA of somewhere between 40-50m (including the exceptional costs!). Sector EV/EBITDA ratios are between 10-20.
It will Saint and thank you. Good to be here
Chris, wrong choice of words apologies. I do realise that we have not received the £41m but my point is still valid. If they haven't paid for them in the first place why are we replacing them? If they end up with a replacement order they would have to pay the £41m in the end. It's one or the other but not both.
Agree that a full refund is highly unlikely. Happy with 50% and move on
I don't think the Q1 is promate. It is all roped into this case together so must all relate. Q4 and Q1 are the same products imo. Which seems likely to be Exsig and Winterplex given the timeline.
P.s the exsig inventory is obsolete in the eyes of DHSC because they only want PROmate now.
Winterplex was rendered unusable because of the absence of flu. The unfortunate part is that other suppliers have now been able to catch up with their own multiplex panels. Unless of course someone comes up with an simplified workflow version.....
The company does not have to refund the 40.8m Q1 revs. They haven't been paid that yet, therefore in the worst case that the dispute results in a refund of the 129m exsig/winterplex from 2020, then the 40.8 will come off that. They won't receive that invoice and will have to pay back the remaining 79.1m.
This is incredibly unlikely in my view and this very thread should demonstrate that. If it were that clear cut this thing would have been resolved months ago.
The 40.8m Q1 revs are for PROmate which isn't even mentioned in the contract.
Time will tell DR b.
Welcome to the board .
We all have to start at 1 Saint. I did wonder how long it would take for someone to mention it.
Just a genuine holder here. You'll see eventually.
I do worry about you one post posters .
You worry about your short and all the long term investors and researched will know your game .
It won’t work.
I do wonder about the £30m stock. Have we really allowed this to become obsolete. What if GM has been sat on it awaiting the outcome of the Case not wanting to sell it in case it was decided that the DHSC would have to have it. The case has massively over run and now it is out of date. If so, the recovery of the £30m should be included in the case if we win. All this seems illogical but you never know.
I assume the £20m provision at YE related to the £129m of goods in dispute. The £7m additional provision in H1 I assume relates to the £41m in Q1. The stock write down is to reflect worse case that the stock is now worthless.
Our H1 accounts will now show the absolute worse case scenario. Which is
We receive zero of the £41m from Q1
We actually have to replace the order free of charge at a cost to us £7m
Our stock of £30m is now obsolete and we will get zilch for it. Unlikely imv.
A few questions from me
1. Why would we have to give the full refund of £41m as well as a free replacement. I must be missing something
2. If we have factored in zero sales for the DHSC in H1 in line with IFRS15. What does that mean for 2020 Q4 revenue. Does this need restating? If so, why no mention of it. Confused
Kaeren, I think that depends on the outcome. The 6.8m cost could come off the 19.8m for replacement of goods but theyre different products. Equally, the 40.8m of PROmate sales could be used as credit in the event of a full refund of the 129m exsig/winterplex (i suspect this is the DHSC grounds for withholding the Q1 payment).
If I were NCYT though, I'd want paid for the PROmate and then deal with the Exsig/winterplex separately. Even with the minimal info we have, its a complicated situation.
DRB, they have physically paid for them though. Its a Q1 PROmate order that has been delivered and used + 2020 stockpile of winterplex/exsig that has been superseded (and not used). Thats material stock therefore the costs are not just a paper booking.
In the absence of a paying customer, that liability has to come cash (or debt).
Will message later , food shopping beckons :(
Chris agree again , but one further thing I can't fathom. So 20 million set aside for replacement goods. The 40 million ordered this year outside of contract and not paid for is not a gift from Novacyt to the DHSC. This has to come off the figure in dispute , which is therefore dramatically reduced . So why has the 20mm figure for replacement goods not dropped to reflect this and why have they booked the 6mm for producing this , to me that is a duplication. You no longer need to earmark 20 million for relpacement goods as this is now is considerably less ??
Chris, cash is cash. You can't just book something to cash unless you are physically paying it. Ncyt are not physically paying those adjustments that they mention they are just being prudent and will be putting them on the balance sheet as a liability until settled. The debit side will impact the p&l hence the EBITDA loss. No cash is moving.
Agree with your prediction of North of £100 by year end though.
Sales of £40m Sept to Dec @ 32% cash conversion giving £13m
Finally settle this DHSC and receive 50% of what they currently owe us which is £65m from memory = £32m
Year end cash £122m
The settlement is obviously just my opinion. I would settle for 50% given what we have been through. Also, hopeful that sales will exceed the BODs conservative £100m by year end
Thanks Kaeren, it is very hard to call. There has definitely been some sort of agreement to move from Exsig to PROmate. I guess it depends on how much is documented.
Having gone round the bhoy again, I'm really confident that a full refund is highly unlikely. That reassures me that therell be a cash position north of 80m at Y/E. It could be well north of 100m
ShellDonald/DRB, ill try to put it another way. The RH table of Thursdays RNS shows that the company are gonna book an EBITDA loss of c.12m.
The only place that can come from is the Y/E cash pile of c.91m.
The benefit of them doing that now, is that the costs are booked. So if they receive the Q1 invoice it will not be subjected to those costs. 80% or more of it will go straight onto the 77.2m cash pile.
So we started with £92m cash
We were told we have a cash conversion of revenue of 32%
We sold £95m in H1 giving a cash pile of approx £122m
We know we haven't received the £41m from DHSC so this will show as a Trade Debtor not cash
This brings cash at bank to £81m. Give or take a few million it's pretty close to the £77m quoted.