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thanks KS great summary. Good to see cash improve so much from H1 to H2 - i suspect much of this is down to the £10m cash down payment we got from UK gov is Oct/Nov.
DIM is still the biggie for me - this could be worth a significant amount if well managed. Data is such a valuable commodity and health data is the gold standard
Thanks KingSuarez - much appreciated. Good to get an accountants view on the report.
King thanks for your analysis ... IAM not an accountant but I see incredible value at today's price and I will certainly be accumulating more once my fund come through. Cheers Mafuta
Looking at the accounts, and from the results presentation, a few things can be noted:
1) Of the £32m admin and project costs, around half (£15m) are in staff wages (relatively fixed cost) and over £2m were exceptional costs related to the RTO of HVIVO (so one off). That leaves around £15m presumably related to project work i.e the clinical trial studies and associated consultancy/agency/volunteer/premises costs etc. There is also a good chunk of IT and lease equipment costs in there too, so really it is about getting the clinics fully utilised consistantly that will drive profitability. Presumably, with most of the significant contracts coming later in 2020 this was not always the case?
Point being, if ORPH can increase revenue to £50m, as stated as the 2021 target in tonight's presentation, then with relatively fixed wages/salaries for existing staff there is strong scope to move to significant profitability.
2) In terms of cash flows, cash in bank increased £18.4m, however £18.0m of that was from the share placing proceeds. That said, there were around £5m of costs that will not be repeated going forward, relating to the RTO, placing fees, loan note repayment + interest etc.
In fact, operating cash flow in H1 2020 was negative at (£3.6m) and positive for the year overall at £4.2m, which means H2 2020 operating cash flow must have been £7.8m - very healthy. Extrapolate that out over a full year 2021, with potentially doubled or more revenues = quite significant cash generation potential?
3) The fact cash in bank has gone down since year end is somewhat meaningless imo without knowing the timing of cash receipts from initial contract upfront deposits and/or the change in trade receivables/payables - i.e timing.
I was initially worried at the quite large trade payables figure on the balance sheet, but on checking the notes I see most of this is simply the value of 'contract work' outstanding - i.e the booking of work ORPH need to complete.
So yes, overall the company made a 2020 loss, but look at the trajectory and consider that most of the big contract wins have come in H2 2020 - should be much improved in 2021 and I would say v good value at the moment, especially considering the monetisation to come of the 'non-core' assets - I would quite like to buy shares directly in the DIM business once listed, provided it is not too highly valued as I think that could be a real growth area.