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Butchers, I think you make a good point and it's why I'm sure we are right at the bottom of our retrace. The 'cycle of market emotions' sums up our predicament very well...
https://www.forbes.com/sites/greatspeculations/2012/10/18/understand-the-cycle-of-market-emotions-to-make-better-investing-decisions/?sh=4be62ebf7f48
Are we going through what will happen to lft test producers at a later stage. A fall of in demand due to vaccinations making testing unnecessary unless in a clinical background. Novacyts shareprice now seems to be discounting the worst case scenarios... due to vaccines and lft tests.... but not pricing in the global market and distribution chain that is now in place. We need to see the figures as a certain degree of research is just research.
I would like to see a bolt on aquisition with a statement that takes away the grey areas that are present.
On another link that VanV posted here, I could see the payments over £25,000 made by the Department of Health for the whole of 2020. At first I couldn't find any payment to Nova because I was looking for Novacyt as the payee. Once I saw the tenders, I realised that I should be looking for Prime Design.
The total of the payments made to Prime Design in 2020 were: £355,660.80
Thanks
Jungla I am not with my numbers ,so I will respond tomorrow. K
Kaeren,
if you think the number is neither crazy nor misleading, then please explain this (I sure would like to know the answer):
My earlier post:
... the U.K. contract that AZN has for running the Cambridge Lighthouse (dated April 27, 2020; duration 12 months) amounts to "only" 152m£. Considering phase 1 of the Nova September contract already amounted to 150m£ for only 14 weeks, I find it hard to understand how the Lighthouse contract can be sufficient to cover all testing expenses for a whole year. What am I missing here?"
***************************************************************
ShaunP's answer:
You are right to question & compare the values of both contracts
We know Cambridge Lighthouse processed 2 million tests up to 31st Dec 2020
that equals around €16m to Novacyt
Add say another 4 months = €28m (as per research finances) = total €44m Euros = £40m UKP
Therefore the total contract of £152m to AZ looks reasonable
I think you are right that it is hard to see how £150m could be spent within a 14 week period on "low volume" testing, in fact I think it is impossible.
It is the £406m contract which raises the questions, the AZ contract looks okay.
@harchris
In the very short term covid testing has obviously boosted novacyt much higher and quicker than would normally be expected, this has enabled them to grow quickly. Covid will be here permanently now, tracking and tracing of new variants will be key in the fight against it. I believe, I have no proof, that primerdesign/novacyt are at the forefront of this work, not just for the UK but globally, this in itself will realise significant revenues over the next year or 3.
They are also changing the delivery of diagnostic services, not just clinical either.
They have the technology to move diagnostics away from a formal lab setting. If you look at their repertoire of investigations, they are wide and deep.
Most of this can be delivered in the field without the need to send samples off to a lab.
Higher sensitivity and specificity at POCT within an hour.
They have also developed now a high throughput instrument for covid, specifically for lab use, again this is just a platform not covid specific.
Remember this isn't just applicable to UK markets or just covid. They have tests for ebola or lassa fever as extreme examples that could be used in the field on a device that could fit in your pocket.
They are changing the whole diagnostic world.
Their agility to respond and change to new requirements in time frames of weeks from development to production is astounding.
Imo, novacyt should be looking to aquire other companies to build, rather than being taken over
I'm underwater atm, was looking for a quick buck from money I had languishing in a cash isa, I've now doubled down and quite happy to ride out these month to month swings.
They will either get bought out soon or go on to be a major diagnostic force. All my opinion but the science and agility behind what they do is revolutionary.
It is neither crazy nor misleading , it will have been worked out with a very small margin of error. It was not plucked from midair , forensic examination is causing excessive speculation.
I am bullish about the share but not a bull and will not be led by the nose by man nor beast.
Thanks Shaun. Puzzling, isn't it, that 406m£ contract. Who on earth came up with that crazy and misleading number?
Poidster, what do you see as the main revenue driver going forward then? I know you're bullish and think this could become a midcap company worth something in the billions, what makes you believe that most? Confident in the bolt on acquisition strategy? Think we'll continue to sell millions of covid tests a year for the foreseeable?
@ Try2buylow, Porky, Shaunp, Poidster,
It is still a mystery to me how the Nova HT tests for the Cambridge Lighthouse are being invoiced. If I remember correctly, according to Shaun, they were being invoiced to AZN directly. However the U.K. contract that AZN has for running the Cambridge Lighthouse (dated April 27, 2020; duration 12 months) amounts to "only" 152m£. Considering phase 1 of the Nova September contract already amounted to 150m£ for only 14 weeks, I find it hard to understand how the Lighthouse contract can be sufficient to cover all testing expenses for a whole year. What am I missing here?
@ Try2buylow, Porky, Shaunp, Poidster,
Excellent posts.
In reply to Shaun's question, for what it's worth, according to Novacyt Insider the Q16 maximum throughput is 14 tests per hour, the Q32's is 30 tests per hour. So assuming a 50/50 mix, maximum throughput for 200 machines per month would roughly be 1, 2 or 3 million tests per month for 1, 2 or 3 eight hour shifts respectively. A lot will depend on the mix of Q's installed and the question whether the hospital labs indeed run 1 (not likely), 2 or 3 shifts per day. Because of these unknowns, it is impossible to make a precise estimate, but depending on the price per test, I would estimate between 15 and 25 million £ of revenue per month is currently being invoiced under the September NHS contract (or 30 to 50m£ so far this year from this contract alone).
If we add all the other sales (Cambridge Lighthouse, ROW, private, WHO, etc.) it is very likely we passed the second half of last year's 2 month average already (70m£). Six more months like this to go and we reach SP Angel's revenue target for the year. All imo.
I wouldn't be banking on SNPsig to be a big earner tbh, its most useful for surge testing, in the average hospital lab it's not really that important to know what strain of covid it is, just the fact that its covid positive is enough the care pathway thereafter is the same.
Does anyone know if the original DHSC contract was a call off contract or not?
Not if they are all small value.... a £1 million order doesn’t change anything but 140 £1million orders do... we didn’t get one for a £10 million contract with UNICEF
This thread goes to the heart of my misgivings over what has been and what hasn't been accounted for in the Full year 2020 trading update - 29.01.2021.
I posted this on the 3rd Feb:
"The more I read about the amount of the September 28th DHSC contract that can be placed in 2020, and consequently how much product we sold overseas, the more I think the Broker forecasts being fairly accurate was just a fluke."
It would be helpful to read the redacted version of the contract made available by a footnote of the Bidstat tender notice
https://atamis-1928.cloudforce.com/sfc/p/#0O000000rwim/a/4J000000kEFW/0a.XEpAnsXhWLPDFwBk_JAjjG7TOqEVnG58sfxOiFmw
The RNS 29 Sep uses understanding & meaning of what was discussed but the redacted contract has legal definitions. there is not a big difference or any misinformation but the legal dates fit the RNS pattern.
Commencement date was 28 Sept, RNS released 29 Sept
Contract term was set for 4 months with two one month options available to DHSC and a need for 8 weeks written notice for termination so the "expiry Date" is defined legally as 28 Jan, RNS released 29 Jan commented.
We all want to know about "Phase 2" given the guide of 700 instruments at stake according to the RNS 29 Sep. Phase 2 is mentioned in the legal contract but only in passing. the RNS also implies that there could be an extension of 10 weeks whereas the contract makes 2 x 1 month extensions available to a final date 28 March (presumably).
IMO, often wrong, the RNS was vague about negotiations underway because the "shape" of future procurement was not set in terms of a procurement order, more machines could be obtained under the contract in place & its extension along with reagents needed to keep testing going. i.e. they did not need to say anything until 28 March when a new contract will need to run from.
I basically agree with Porky's timing except for a couple of days and bet an announcement will be made on Monday 29 March & not before. The radio silence before will be important for DHSC approval protocol & because from the DHSC view more than one supplier may be affected what it needs for the next NCYT contract to be approved.
A contributor called Poidster made the point earlier today that hospital resource managers call NCYT kit off a central procurement rather than placing an order by their hospital budget holder to the supplier (via the NHS procurement portal) which supports a need for a central procurement contract. He said, a local manager "just calls off" what they need for NCYT PCR tests but they have to order LFTs from their local spending.
Porky is right on how the tender generated revenue - its sale of kit, support & reagent delivered up to a maximum limit not just 406m whacked out on a bill.
@ShaunP
Its also worth noting that the Indy article was probably right that 200 units not 300 were deployed to the year end, maybe £100m not £150m?
After ProMate launch in the new year this resolved all implementation issues and its possible 100 more units to fill the order came out later, in this FY's accounts?
I don't think we will see any clarity until April / May when the Full year accounts are fully specified. At that point we will know exactly what UK sales came to but based on what they did declare and just using existing percentages from H1 for sales elsewhere my gut feeling is that WW sales are stronger than we think and revenue from DHSC was a lot less in the last year than we expected.
Only other caveat to this is IF the bid stats notice is updated and confirms the position but i suspect we need the full years accounts position declared to be sure?
HYDRA : it is these facts that quell our fear of pending doom and help us to remain steadfast. However, where there is no NDA we should be getting updates to international sales and it is this that makes me nervous - this quietude cannot remain for too much longer - IMO.
I suspect that to be the case. Remember we are supplying 140 countries. Even if each country only spent £2 million each that would be 250,000 tests per country. A paltry amount.... and that would get you to £280 million a year total revenue. The DHSC contract did not start till late in the year so it’s pretty obvious that a lot of that revenue will not have been in last years figures.
Cheers Shaun. Interesting thoughts on under utilisation of nhs contract. If that is the case, and yet we still exceeded broker forecasts, that suggests we have much higher foreign sales than we think, as it has offset any nhs shortfall. Impossible to know without seeing the full accounts of course
ChasPB
I wouldn't expect the whole value of the tender to be in the accounts - some of it will be in 2021. If anything supplied in 2020 is unpaid it will show as a trade debtor.
ChasPB.
Like any other business, you provide the product and then the invoice and trading terms define when you are paid.
So when DID we or DO we get paid for this Tender? as I don't believe it was accounted for (in FULL) in Y/End 2020's figures (RNS Jan 2021)
ShaunP - any Account/Accounting thoughts?
Our Bank Balance could now be a lot higher now
Delivery
28 Sep 2020 to 28 Jan 2021
Duration
4 month
Value
£406M
https://bidstats.uk/tenders/2020/W47/739312011