The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please 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. 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.
It was £1.50 a test with it costing us £0.75 p to make = 50% margin (or 100% if you work the other way :) )
The margin is slightly better because we have brought costs down with the cassetting machine as CK mentioned hence me changing it to 65%.
Minimum 25% is correct, double it if you like either way the point I was making is that it's small fry and wont be transformational on its own
The sentiment may change because we have a UK GOV stamp of approval but the GOV are not gonna give us wild triple bagger profit hence just a small rise today.
Private sales and what they look like will be what drives the increase.
"Someone mentioned the RTC will profit share once these costs have been distributed but not sure if this has been confirmed"
If there is an additional profit share aspect to the consortiums deal, then that might well end up contributing more to ODX that the £1 a test.
The key figure in your figures is the sell price per test, from which the number of tests can be determined (given a £75M contract).
I've seen figures on this forum of anything between £5 and £17 per test. Which means a range of 4.5-15M tests. ODX will make a profit of around £1 per test.
But given we don't know ABI's sell price to UK gov, it makes the other extrapolated figures unreliable to say the least.
My understanding is that ODX are being paid a set amount per unit they manufacture which I think was £1.50 per test until yesterday when it changed to a slight increase which cannot be confirmed due to confidentiality agreement....
Someone mentioned the RTC will profit share once these costs have been distributed but not sure if this has been confirmed - will be a question for next week in the trading update. But to my knowledge the agreement is still that ODX get paid a set amount per units they manufacture. I am guessing at the cost of each test but say its £5 a test then the government order is for 15 million and ODX will manufacture 3.75million of these as a minimum.....
Can someone confirm if my assumptions are correct?
Js1990 your calculations dont add up. Nevermind the random figures of £7.5 or 10million tests!
Note that we dont get 25 percent of £75million. We get a minimum of 25 percent of the orders to manufacture. So say the price is £7.50 per test the £75mill order covers 10 million test of which we will make 2.5million as a minumum which we will get paid £1.50 (likely to now be more like £2 from the RNS yesterday) to manufacture. So the deal is worth around £5 million to ODX. Seems strange and I may be wrong??
That's why we are saving the remaining manufacturing capacity for the Mologic tests where there is more profit.
The govt order is great for sentiment as other countries will see this and want some of the gold standard tests.
Win win...
£75 million
We apparently get 25% = £18.75 million
Profit margin as stated has increased from 50% so lets say 65% = £12.2 million profit
The government orders of any size really don't get us that much and imo shouldn't move the share price too much.
They do however give us better leverage when selling outside of the UK GOV. When we have a grasp of what that looks like in terms of profit and volume I think the share price will move significantly. Until then GOV orders alone wont make this fly and I really don't want them to take up too much of our capacity anyway please.
Not saying it wasn't good news this morning it was but multiple GOV orders wont bring this to full potential (on the COVID side)