The London South East, Investing Matters Podcast - Episode 5 featuring Annabel Brodie-Smith, the Communications Director at The AIC is now LIVE. Listen 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.
I will go further, if it transpires that the Chairman’s statement is correct and the agreement was not extended but lapsed in April at the end of phase 1 then the company have just opened themselves up to the types of claims that Calderkate and Flashy have been suggested as the BoD had a duty of care to report that to the market as soon as they became or should reasonably have become or made themselves aware of it which would certainly have been sooner than 7 months ago and any positive statements even tweets that they made subsequent to this surrounding the government contract could certainly land them in hot water if the FCA actually had any teeth.
TWatcher I take your point, the Chairman’s statement said:-
‘Unfortunately, DHSC did not provide the Company with a licence to manufacture an approved test and as such Phase 2 of the contract, covering manufacturing, has not been activated and therefore no orders have been placed. We now have confirmation that the contract expired at the end of Phase 1, although both parties remain in dialogue and DHSC are still providing us with access to their Government-funded equipment to provide the infrastructure to grow our businesses.’
The presentation elaborated on that point and identified that they were unable to obtain confirmation from the DHSC that the contract remained live and as no extension had been received the legal advice was that it had lapsed - you will agree that this is different from receiving confirmation from from the DHSC that the contract was over. I really don’t know how much I care about a contract that was on the back burner having lapsed and could make a reasonable case for being positive as to the opportunities that having the increased capacity for commercial production is an advantage. But CK’s presentation and his subsequent statement to the Scottish Herald stating that they had ‘deemed’ it as having lapsed which is very different and makes me question where we are. Would ODX need to make a further statement if they physically received formal notification from the DHSC that the contract had lapsed - after the chairman’s statement probably not but what if the reply they received from the DHSC was no, we did not mean for the contract to lapse and whilst we may not be ready to place an order we would like to keep the facility in place as we may want it in the future? Would you want them to report that or not?
Sorry I missed something, if at some future point ODX did receive confirmation from the DHSC that the contract was not only lapsed but they had no intention of utilising it in the future then of course they would have to report that but of course.
I disagree, they've told the market in an RNS it is dead.
"We now have confirmation that the contract expired at the end of Phase 1"
The extra colour around how it happened was provided via walbrook and the video presentation, not in the RNS. But they have told the market in no uncertain terms that the contract is expired. I don't want them under any circumstances to tell the market again, as it would just be repeating the same news again.
clearly if they get orders from HMG that's something different from the status quo.
I've review the presentation from Oct, which include a bar chart of capacity increase. Between the chart and the narative it states:
500K by Dec.
600K by Jan. This is not by more machinery, but by using the existing kit more efficiently. He says ( and this is being said in Oct) that they were initially trying to target 1M tests per week. Feb shows 900K a week, March around 1.2 and April around 2M.
This was 5 months before any antigen lft announcement, when ODX was just talking about antibody testing. To be fair the March and April steps on the chart are marked as "exploring options to acheive these levels of production".
But there was a clear assumption by Shareholders that in-house was around 1M, driven by that circa 900K figure for Feb.
660k commericial capacity does sound like less than what was promised. And in the several interims since then, there was no indication that the capacity was less in-house than what was previously advised was the plan.
ODX have chosen to retain the £2.5m (I think) in the balance sheet. If I remember correctly this money was only repayable by offset against future government orders that is HMG handed the money over in advance and expected us to offset it against their future invoices as orders landed - perfectly normal and entirely good. Again my recollection is that ODX having expended the money during set up would not be required to repay the money if orders did not land. Once they were advised by their legal team that the contract had lapsed they could have chosen to put that money into the p/l account as income and presented a better trading figure although they have not done so yet they will probably do this at year end.
"No doubt that I was certainly amongst those that believed no business would simply pay for staff to sit around but it would certainly appear that we did. As a positive the contract allowed us to build capacity and HMG paid for us to do it - should we have managed it better, certainly but overall increasing capacity on someone else’s dime is a major positive."
It's definitely a positive.
Let's not forget that £2m from govt is sat on balance sheet. It would be interesting to see what is happening with that.
I presume it would have been transferred to p+l as and when orders were received.( Didn't they have to offset pre payment against intitial orders?)
So what accounting treatment are omega using or proposing to use for that item now that the contract has expired? another question for walbroolk?
Not saying that anything was missing just trying to confirm figures if increased capacity .I'm sure I can remember a figure of 65,000 pre covid could someone correct me if wrong please?
No I can’t remember but as HMG paid for us to increase capacity to 100m per annum I don’t see how it matters and until we receive approvals and orders whatever capacity we have remains unused. What am I missing?
Bigbangs- Do you know what capacity has been increased from?
No doubt that I was certainly amongst those that believed no business would simply pay for staff to sit around but it would certainly appear that we did. As a positive the contract allowed us to build capacity and HMG paid for us to do it - should we have managed it better, certainly but overall increasing capacity on someone else’s dime is a major positive.
no worries kate
"his main aim was to build the company capacity up"
i am guessing that with no contracts and approvals he was reluctant to build up capacity on a regular basis -cost/storage/use by date factors.
i listened to all those saying odx were churning out masses every week - "they cant be sitting round doing nothing" etc and never believed it. they would have run out of storage space by now. besides the car park never seemed to have more than 40/50 cars unlikely if they had 250 staff.
Okehurst, we do not yet know that the day 2 LFT has or will be scrapped, I have posted on another thread why I do not believe this will happen. Although technically correct on legal advise it would appear that the government contract has been allowed to lapse, whatever it is actually worth it could easily be reinstated, renewed or revised and as I am in bed this weekend and have far to much time on my hands I was actively posting yesterday my views on the contract and that despite the fact we have received no orders having it was an almost entirely good thing. What we have to fully accept is that the keystone to any progress is only through achieving approvals. We know we have the capacity to produce tests which is important but until we actually have approvals nothing else matters. We believe we are close, NCYT have just been given one so hopefully our first one (I am grateful that we are CE marked and although absolutely necessary it is not the key) will arrive shortly allowing us to maximise the Dam contract but it is HUA that is the game changer as we have learnt everything else is just froth.
@Oke."Without UK HUA we have no market."
Surely with CTDA clearance DAM can start selling Visitect as pro-use in-clinic.They're doing 200,000 tests per month..no way these can all be solely for day 2 LFT. LFTs still a necessity and hopefully our test can pick up Omricon.If not then,hopefully,we can alter it innminimal time.I'm sure many suppliers will be in the same boat either way.
Captain - Thanks for your opinion , I understand that all posts on here are just opinions .
"but Omega must have a black Cat hanging out in their empty industrial units, they just can’t get a break."
Amen to that!
Now that overnight the Test to travel day 2 LFT a market has disappeared I am not too sure what we can actually sell in the U.K.
even with CTDA ? Without U.K. HUA we have no market ?:
USA side looks a non starter ?
DHSC - enough said
EU HUA and fingers crossed Lansdown get them a European deal
That’s 2 big hurdles to jump after last nights U.K. Government announcement
Know we make our own luck in life but Omega must have a black Cat hanging out in their empty industrial units, they just can’t get a break.
kate - my posts are only ever my opinions , suppositions and guesses - so not to be taken with any more weight than that. i agree we have been misled but on purpose? i don't know and would be impossible to prove.
i know you had gone through my history with HUR - and that defo was manipulation and strategy against shareholders in my opinion - as supported by the judge siding with PI in the court cases
Captain - I don't agree with you ,if you see in previous RNSs Colin did say that he would help government if he could ,his main aim was to build the company capacity up . Thats what has now changed as far as I can remember the 2m capacity week was implied to be 50/50 split between gov tests and ODX tests we now find out it is in fact 33% hence 660,000 a week not 1m a week, obviously shareholders have been misled here ,your views would be appreciated
"Maybe he has had his wings cut, hence the presentation around covid was so muted vs previous presentations?"
unfortunately the presentation panned out pretty much as expected - other than the shocking news of the gov contract expiry. he has always seemed to start with non covid stuff - which from his point of view has always been core of the business. the trouble is that no one was interested in odx for that and still isn't. unfortunately more than half the time goes on repeating stuff that doesn't change much.
as for muted. firstly i think the SP crash was always going to burst every bubble. colin could also make fillet steak sound like a macdonalds patty - as seen by his RNS and previous communications.
The contract is expired, it can not be unexpired. Any potential new contract with HMG will be via a completely new contract. The £50-£374M contract is historic.
And if ODX saying its expired isn't enough to tell you their expectations, then surely them saying in the RNS:-
"Given the outlook on COVID manufacture for the UK Government is uncertain, it is prudent for us to re-size this aspect of our LFT manufacturing capacity to meet current and future demand. "
Decoded means that the what they see ahead ('outlook') tells them they have too much capacity. They do not have any visibility that gets them to 2M LFTs a week, and are confident enough of the accuracy of their visibility that they are reducing capacity.
Meanwhile, Regulator, that great hindsight poster, told us after the RNS, that he wasn't surprised by the it.
"These results are roughly in line with what I expected. "
No this has been orchestrated for the benefit of a few at the expense of many
Surescreen were to manufacture their test (they have been)
GAD & ODX manufacture Mologic test
Hit a brick wall when our test failed at Porton Down.
Either the commercials or something didn’t work out, who knows but it boils down to Mologic test not being approved in the UK for HUA.
Commercials then needed to be agreed between ODX and the other companies but since those companies have decent caapacity, would you let ODX manufacture your test for less profit for the same customer than doing it yourself (ie ODX would want a cut of the profit)
Thats my take on it anyway………
As we keep saying, it all boils down to approvals again and again and for whatever reason, that is taking time.
Positive I do take is that we still have govt machines and DHSC hasn’t confirmed expired.
Also, despite Colin downplaying covid element of the business significantly, the approvals for CTDA and HUA sounded like close to completion
No I do not agree ,this is total wrong on all fronts
The BOD didn't set out to make losses in connection to the whole DHSC contract/equipment.From the onset of the agreement they were expecting a sovereign test to be chosen ny the govt. and then foro them to make alot of revenue from producing it.The govt. have chosen to keep using Chinese tests instead,not within ODX's control/foresight. In the past now..we all need to look ahead,positively.With approvals will swiftly come more orders and here is still plenty of scope for a huge upside from here.
I noticed that - I presume that until the DHSC situation is concluded - ODX seem to be playing more to the book - I wonder if that is Colin following getting burnt from earlier in the year or new BOD faces getting Colin onto the straight and narrow? Maybe he has had his wings cut, hence the presentation around covid was so muted vs previous presentations?
As shareholders, this more factual approach is better, but a tough pill to swallow with an SP that was arguably raised based on a lot of the promises / hints that to date have no delivered?