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In terms of the local content, that is unfortunately something of a red herring in this particular tender and may well stay as much, if the tender documents repeat themselves across the packages, which I don't see why not.

Its important to have a good read of the Eskom "Standard Procurement Document."

Section 2. "South Africa’s Socio-Economic transformation objectives" deals with the local content item and states the following ;

"Based on the high-level market sounding exercise Eskom conducted, Eskom has estimated that at least 40% of BESS components are locally manufactured and / or services that can be locally provided in South Africa"

These include ;
"1 Civil , Building and Steel work
2 Survey and Geo-technical studies
3 AC Equipment and installation
4 Shipping / Transportation Services
5 Construction/Project Management Services
6 Security Services
7 O&M Sub-contracting/Joint Venture"

The documentation is clear that much of this local content can be achieved by employing Eskom contractors, who have already demonstrated to Eskom that they can meet the programme and quantities (be it that the proof is in the pudding).

Also ;
"The Bidders can achieve compliance to this mandatory and compulsory local procurement spend requirements through the SDL&I and BBBEE programs that already exists as means of facilitating Social and Economic sustainability."

Finally ;
"Job creation proposal by bidders does not form part of the evaluation criterion. It is however, part of Eskom’s contribution towards the Government’s job-creation initiatives and therefore bidders are required to support the socio-economic imperative that seeks to empower local communities surrounding the areas where construction activities are conducted. These include the utilisation of local labourers from the area within which the project is taking place."

So any emphasis placed on a bid towards future job creation, has no bearing on the bid outcome.

Despite all of that, I still hold great hope for a BMN consortium bid because they may just win it on what truly matters and that is price.

Some thoughts on that next.

Morning all,

If I may, I would like to add to some thoughts to the ongoing debate around the Eskom BESS Tender, seeing as I managed to make the title

First and foremost, its important to appreciate that this first tender is not the only tender and the timing of those 2 follow on tenders, could well impact things here.

However, I do not expect the tender criteria to adjust but it might, depending on what Eskom learn from this first tender round.

What is also clear, is that Eskom are putting in places criteria, that do not fully mirror, the intentions laid out by the World Bank in previous presentations on this project.

There is a clear requirement for each bidder (consortium) to have 60MW of cumulative capacity with "each contract of not less than 20MW," completed in the last 7 years. That is very stringent for a project that the WB stated this about ;

"Because of the pioneering role of this battery storage project, its assessment should not be limited to the amount of
clean energy enabled and CO2 offset but the impact that the demonstration would have on maturing the technology,
lowering costs and enabling scale-up. Concessional funding is needed at this stage to support maturity of the
technology."

Bidders ave attempted to get this altered but Eskom have denied this request, driven by discussions with the Eskom "technical team."

Assuming bidders will not make it past first base without this, the final list of bidders might not actually be all that long and yet BMN have stated that they are still involved.

Packages 2 is of a size close to package 1 (combined 83MW). Package 3 is a tad smaller at a combined 34.5MW.

Will that reduce the requirements for experience? Possibly but unlikely.

I would argue that any company that has already delivered 60MW and rolling 20MW projects, is already well on its way to scaling up but then the entire energy storage industry, is still deemed immature and is even more relevant to 2018, when those comments were made.

What all of that logically points towards, is a BMN consortium with one from a very limited list of VRFB players.

Rongke is of course favourite, given they are installing a battery at Eskom, to replace the one delivered by their sister company UET. Everything happens for a reason after all. I'll leave others to pull the other potential partners together.

To follow, some thoughts on the tender particulars.

@Observer842 Thank you for engaging on this.

You are absolutely correct, I made a clear error on the ownership levels for stage 1.

So actual retained ownership for BCN is 48.2% for at least the first 19 years of mine life, which is excellent.

Question still remains how KDNC cover their $15m bill. I suspect it will be deducted from profits with additional fees for BCN upfront cost outlay.

BCN looks really good after today's update.

Morning all.

Firstly really great news for BCN and their shareholders.

I have been running some numbers on my feed but have not taken into account the KDNC ownership factor.

https://twitter.com/BigBiteNow/status/1327197554749169664?s=20

The following statement is given as part of today's RNS.

It would imply that KDNC are 12% owners of stage 1, which means that on paper they are responsible for 12% of the build costs. Does anyone have a link to how the JV is structured? If true it has a significant affect on the final finance deal.

I assume the RK Finance deal is at project level as i can see no reference to Sonora Lithium Ltd (See Below). However, it is BCN paying the interest on the loan. Any direction anyone can give would be greatly appreciated.

https://www.bnamericas.com/en/news/bacanora-lithium-secures-us150mn-funding-for-sonora

"Sonora Lithium Ltd ("SLL") is the operational holding company for the Sonora Lithium Project and owns 100% of the La Ventana concession. The La Ventana concession accounts for 88% of the mined ore feed in the Sonora Feasibility Study which covers the initial 19 years of the project mine life. On completion of this option exercise, SLL will be owned 50% by Bacanora and 50% by Ganfeng Lithium Co., Ltd. SLL also owns 70% of the El Sauz and Fleur concessions."

Error. They are sitting at just 0.29% of that market, which only goes to support my point further.

I also look forward to witnessing the indicated uplift to c. 17,000 meters by YE, which itself is another clear tell for me, given it increases total meters by 23% in just c. 4.5 months.

@ontheupupup Thank you for coming back to me. I appreciate where you are coming from and you have certainly given me food for thought and I will look to spend some time on this angle now.

I will say this though, these churn rates have been in play right throughout the company reset and yet they have managed to increase revenues from £80m in FY18 to £112m in FY19.

As far as I can see, FY20 was never about driving substantial additional growth but building up business systems, strengthening the sales arm and driving through the remainder of the low margin contracts.

Now this is complete, I can see a solid FY20 outcome (Covid aside) and much cleaner and progressive 2021 backed by a sales team expansion, that has never been fully unleashed until essentially now.

As the interims state, "the first two months of Q3 bookings have been the strongest to date," which given in H2 2018 they managed to average £8.6m, says there is real strength there.

I remain convinced by the foundations YU now finds itself stood upon and for me the green shoots are abundantly clear, despite this churn question and I see no evidence that YU cannot counter any losses from this churn.

After all they have a £35BN sized market to go at and profitability (my first goal here), would come at a tiny fraction of that, given they are sitting at just c. 2.9% of that market to date.

However, the icing on the cake here for me is acquisitions and that could well push things on a lot more quickly.

Lets see what January brings, in the meantime, as things stand, i will add on any weakness.

@ontheupupup. Thank you for engaging on this, its appreciated.

You make a good point about customer churn rates but I do feel this is countered somewhat by YU's whole ethos of customer service, the 4.5 trust pilot score and such things as their 3 ring pick up commitment. YU's whole approach is to be better at customer service than their competition.

Also, its surely difficult to define customer retention, when their goal is to shift a high proportion of low margin contracts off the books. A move that would likely drive higher customer churn and present a warped picture. That does not excuse not providing guidance.

Whilst none of the above is easily measurable, it is for me nevertheless, factors that alleviate many of concerns on this matter.

In terms of making big assumptions, based on previous years, my assumptions are calculated ones and employed against a year, when there was a deliberate managed deceleration in bookings, as the business expanded its sales team and focused on fewer higher margin bookings, whilst eliminating future low margin contracts.

Jump forward a year and now the effects from that are behind them and a bigger sales team is making its mark. So for me the figs. I have used are as I said, conservative but you are entitled to differ in your opinion.

It should also be noted that I was concentrating on your point that revenues ;

"Will reduce further in 2021 (contracted revenue for 2021 stands at £71M - unlikely this gets back to 2019 levels in 2021. (given Bristol Energy represents around £16M of annualised revenue for 2021 my earlier analysis showing that revenue was reducing fast proved to correct - contracted revenue would have been around £56M for 2021)."

For a start, Bristol Energy revenues are expected to be £10m over a 16 month period to Dec 2021, so £7.5m in 2021, not £16M as you have stated. So contracted revenue would have been £65m (actual fig. is . £71.7m).

Secondly, the business is the sum of all its parts and the acquisition is part of that, so contracted revenue is what it says it is and will clearly be added to by further M&A. A big positive because it shows intent and financial stability to do so. YU is the hunter and not the hunted, for now.

Your point about Covid is in line with my own thoughts but my investment is designed to reap the rewards prior to the event, as opposed to reacting to it. There may be risks to overcome but the important thing is YU is stable and will add to its portfolio of meters and that means an even stronger base, post Covid.

@Ammu123

I couldn't cover everything without it becoming too much detail but I did indicate towards this when i said "there are some costs to be re-added to the system," be it a tad wooly.

As the below link details, on 24th Sept the UK Gov now allows businesses to make "smaller payments up to the end of March 2022, interest free."

What this essentially means is that payments can be split over 11 equal payments, starting April 2021.

So YU have the option to extend payments over a c. 18 month period, giving them time to further expand business revenues throughout 2021/22 and thus lower any impact.

https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19

Apologies 2 clear confusing errors in my posts.

1. "If 2021 can beat 2021, which Covid influences aside, I believe it comfortably will, then the knowledge that low margin legacy contracts fall from c. £35m in FY20 to c. £5m in FY21."

Should read "can beat 2019"

2. We are talking H1 c. 9,800 meters at 35% revenue with "a sharp shock during the lockdown period, via a c35% instant drop in customer demand" vs start of FY21 at c. 17,000 meters and stronger margin contracts.

Should read "We are talking H1 c. 9,800 meters, which included "a sharp shock. . .

(2 of 2)
As for the overhead, that has indeed remained "broadly aligned to FY 2019 despite the reduction in revenues" but as YU says, it was achieved against just £46m in revenues, so £92m at FY, compared to 2019, which achieved £112m.

So £20m less in revenues plus further investment in "sales and marketing to drive growth" but overhead remained steady. That's clear progress in my view and will be further helped by revenues increasing and the removal of those legacy contracts, as most costs are now fixed.

The same goes for gross margins, which will naturally gain a lift from the removal of legacy contracts, the addition of "mid-single digit percentage" margins from the £7.5m of revenues to be booked from Bristol Energy in FY21 (£10m across the 16 months ended 31 December 2021) and ever increasing revenues.

Its simply not fair to judge the 2.2% margin on H1 2020 because it was an extraordinary event with revenues well below those that can be expected in 2021.

We are talking H1 c. 9,800 meters at 35% revenue with "a sharp shock during the lockdown period, via a c35% instant drop in customer demand" vs start of FY21 at c. 17,000 meters and stronger margin contracts.

However, I do expect that there are some costs to be re-added to the system, which were deferred but the expanding revenues, already stated as being well within grasp, should more than cover that.

It is absolutely correct that the BOD are forecasting break even at EBITDA for FY2021 but that is without any further acquisitions and it is clearly designed to be cautious because new restrictions are in play in the UK and so forecasts must naturally remain subdued but it Covid restrictions remain manageable, which I believe they have every chance of, given how another full lockdown would affect many businesses, then I think FY2021 will be far more successful than is currently indicated.

In addition, it should be forgotten that UK Gov is supporting a great many UK businesses through interest loans with lengthy no payment periods. These measures have recently been extended and I expect that to continue, so long as small businesses remain under strain. This supports a healthy level of payments being maintained across YU's customer base.

Finally, given YU's approach to customer service, demonstrated though the introduction of their Assist and Agile plan, I actually believe YU can prosper through these uncertain times, as more customers shop around and look to manage their cost base better. It wouldn't take a great deal of drive through to FY2021, for YU to completely remove the adverse affects of Covid on the business.

However, even without that added bonus, it looks to me that YU is now on a much stronger footing and the growth promises reflected in the valuation throughout late 2017/18, can now start to be realised, whatever this Winter throws at us all.

(1 of 2)
Morning all,

@ontheupupup For the purpose of healthy debate, I would if I may challenge a number of your figs and conclusions.

1. Firstly, 2019 revenues were £112m, not £120m as you have stated.
2. Contracted revenues for FY21, as of 31st August 2020, stand at £71.7m.

If we look back at the same stage in 2019, we see that contracted revenues for FY20, stood at £65m on 31st Aug 2019. By 28th Jan 2020, these had increased to £79.5m (22% increase). However, this was against average H2 2019 monthly bookings of just £5.1m, where as H1 2020 monthly bookings are already at £6.2m and the CEO has reported (30th Sept RNS) that "the Board anticipates H2 2020 average monthly bookings to be significantly above the £6.2m achieved in H1 2020."

Therefore, this should translate into a greater uplift in FY21. However, even if they only match the same 22% increase, we are talking FY21 contracted revenue of c. £87.5m by end of Jan 2021.

Note - This is of course prior to any affects of Covid restrictions, which won't be known about until 2021 starts to unfold.

To place that all in context of what can/should be achieved in 2021, we need only look at what was booked by end of Jan 2019.

There we see that as of 30th Jan 2019, YU had "in excess of £85 million of revenue contracted for FY 2019" and went on to deliver £112m in FY revenues that year, whilst averaging £4.2m in monthly bookings throughout 2019. So c. 32% further uplift over the course of the year.

The same result in 2021, would deliver FY revenues of £115.5m and would beat the 2019 result.

However, that's without adhering to the message that H2 2020 monthly bookings are significantly above H1 2020, which themselves are 50% higher than those achieved in 2019.

The message in yesterday's update was clear, "Strong monthly bookings in July and August with significant acceleration anticipated during H2 2020."

If 2021 can beat 2021, which Covid influences aside, I believe it comfortably will, then the knowledge that low margin legacy contracts fall from c. £35m in FY20 to c. £5m in FY21.

Even with £35m of low margin contracts on the books this year, H1 20 would have delivered an almost break even EBITDA, if it weren't for the £1.6m in lost EBITDA due to Covid and it would have been achieved on c. £54m (H1 £45.9m + "£8.0m impact on H1 2020 revenue has occurred due to the reduction in customer demand for energy due to the COVID-19 lockdown" See financial review 30th Sept RNS).

So in simplistic terms c. £110m in 2020, gets us around about break even at EBITDA level, against the above conservative £115m for FY2021, which should be (Covid aside) beaten, will have next to no legacy contracts and will highly likely include at least one acquisition.

I would be delighted to see an RNS for the IND filing for AVA6000 pop up shortly, so the clock to phase 1 trials could start ticking.

Its due.

From my post yesterday ;

"AVCT's approach to its shareholders up to now has been one of inclusion and information sharing. I don't see any reason to believe that would change, whatever the results.

So I inclined to believe that they are building up to something on the manufacturing side of things, as opposed to avoiding anything.

The LFT is going to reach market and its going to sell. We are now merely in the when, who and how many phase and certainly not a broken promises one."

Today's update has helped answer a good many of those outstanding questions, be it we are clearly in the first phase of bringing this product to market, with a clear early emphasis on the UK market.

Logic says there is much more to come.

I feel RADx is now a question of when the announcement will come. If CONDOR is the way into the UK and Europe, then why would AVCT give up the same opportunity in the States. They say don't look a gift horse in the mouth, I'm sure they won't.

It is clear that a long term strategy has been in play from pretty much the start. A re-run of the 6th May presentation resonates very well with what we are now witnessing.

Investors have allowed themselves to become bogged down with exact timings, when for some time it was clear, that that fixation, is not what will create true value for them.

Two things ring true.
1. The delivery of a product of high enough quality to capture a sufficient amount of the available market.
2. That sufficient demand exists when that product reaches its markets.

What today's announcement effectively says is that AVCT will highly likely deliver the first ever truly rapid antigen test for Covid to market, which is also suitable for home use. Demand for that type of test is a given.

Entry into CONDOR says the test is already good enough to sell extremely well. The only question left is just how good can it go on to be.

In that very same 6th May presentation, slide 23, AVCT said this ;

"Performance is key - the best performing test will become the most successful. Avacta has the advantage of Affimer reagents that are highly specific to the SARS-COV-2 spike protein."

The best thing about following this story, is the trail of tells that AVCT have given those investors willing to dig deep into what the information they have provided.

The above statement is a very big one, along with such things as "aiming for a high performing test" with the LFT (dated 23rd June).

We aren't quite at the point we can say, 'and now you're going to believe us', but we are damn close. . .

@JoeyDiamond

Thank you for posting, it led to some thoughts that I generated here but I failed to give you credit for highlighting. So I would like to say as much here and now.

https://twitter.com/BigBiteNow/status/1291303433430093833?s=20

Apologies that should read "I cannot see how the AVCT LFT isn't sitting at "primary validation" stage.

@Spike66 I have just put together a logic in a series of twitter posts but in essence I cannot see how the AVCT isn't sitting at "primary validation" stage.

That would explain why there were no words about evaluation and clinical validation by CONDOR because it is a self validation stage with blind sera sets fed into it by the NIBSC.

The BAMS test is at secondary validation already, which i suspect is direct from NTAG Triage because they likely would have been an announcement if it was primary and because we know that the next stage as of 9th June for the BAMS test was

"evaluate and optimise the BAMS assay using patient samples at laboratory sites in the UK and US which will be done imminently"

Primary validation could also have been the same thing but I suspect AVCT would have made some noise about CONDOR the moment it was confirmed they were on board.

Whatever the case, if that flow chart is indeed correct, then the only way to gain access to patient samples from CONDOR is to be at primary validation stage, which as you strongly indicate invoves "advanced procurement talks for promising candidates."

There is always the chance that something outside the box is happening or the flow chart has been altered but the chances are for me minimal. Why would CONDOR go out of its way for 1 test and not make it do what everyone else is trying to achieve.

So i very much like that as an answer to the wording of yesterday's RNS.

Like I say, a great great find. This BB is at times very poor but your post is certainly a diamond in the rough of it all.

@Spike66 Thank you that is a really great find.

One other important point to perhaps appreciate.

SONA conducted their in-house lab studies prior to contracting MRI Global for the clinical validation studies. When SONA announced those MRI Global clinical validation study results, they also then announced their own earlier gamma irradiated studies.

SONA 22nd May
"The project work will take place in MRIGlobal’s Kansas City laboratories and will assess Sona’s test using live SARS-CoV-2 virus following its past, successful internal evaluation using gamma irradiated virus."

SONA 2nd July ;
"Validation studies were also conducted in-house to assess potential clinical performance of the test using 30 nasopharyngeal samples from healthy individuals who were presumed negative for COVID-19. Results from the study generated a specificity of 96% (29/30) and a sensitivity of 96% (28/29)."

Most importantly ;
2nd July again
"To generate the sensitivity data, the remnants of each negative sample were spiked with gamma irradiated COVID-19 virus"

SONA had already completed in-house lab studies that told them they could achieve 96%/96%, prior to going into an independent clinical validation study.

They did not publish these results because they are following the same rules that AVCT are now working against.

As I have discussed elsewhere, the general belief is that because AVCT have talked about transferring the prototypes when they are ready, to manufacturers they are in discussion with and that said manufacturers are due to be announced, that optimisation is ongoing.

What AVCT actually said was "as soon as we reach agreement with the manufacturing partners, we'll be able to provide more detail on the precise timeline for having product available."

The assumption is that is triggered by tech transfer and the completion of optimisation but its an assumption only.

Sona never stated optimisation was complete. What they did was announce an independent lab study on 12th May (so 1 month after optimisation started), which led to adjustments to the test design.

10 days later they announced MRI Global and the clinical validation study, which also triggered tech transfer.

SONA 22nd May ;
"The Company has begun technology transfer activities with secured manufacturers"

Some investors assume that optimisation is being drawn out and that means there must be problems but are they really sure that is what is truly going on.

AVCT is doing deals for patient samples with CONDOR for the very same LFT that is supposedly being fine tuned because its not good enough.

Are we really sure about that? SONA prepared for clinical validation because their own in-house, at the time unannounced results, told them they were going to get a very good result.

Why is AVCT any different?

@CautiousOptimist You don't have any need to apologise to me, we all have our opinion and should try to help each other with what we know. That is of course assuming we are all pulling in the same direction (not aimed at your good self).

In the time periods between updates, it is in my opinion important to stick to the facts and not allow ourselves to fall too far down the rabbit hole.

Yesterday's RNS ;
"Avacta Group plc (AIM: AVCT), the developer of Affimer® biotherapeutics and reagents, is pleased to announce that it has begun work with the UK government's CONDOR programme to evaluate and clinically validate the high throughput COVID-19 bead-assisted mass spectrometry ("BAMSTM") laboratory assay developed with Adeptrix (Beverly, MA, USA)."

The CONDOR programme will clinically validate the BAMS test, which means in accordance with MHRA guidance, and those results will then be published by CONDOR, which means AVCT will need to publish as well.

If you refer to the enclosed excellent tweet, then you will see what the BAMS test is at "Offers Evaluated" stage.

In BAMS case, this means a Technical Evaluation (TE) and a Clinical Evaluation (CE), not to be confused with the CE Mark.

https://twitter.com/buy_buy_bye/status/1285828035384672258?s=20

Further reading around the CONDOR programme allows us to understand that in-field studies will be conducted as well. Again CONDOR will publish these through MHRA and so AVCT would need to publish as well.

It may well be that all results come out in 1 report but the reality is, it is the results as whole that will allow these tests to sink or swim and not games played around timing of release. That short term trading related, which is not my bag.

For the LFT, all we know thus far is that CONDOR are prepared to allow AVCT access to live patient samples to allow the clinical validation to be completed "quickly." It does not say that CONDOR will be doing it.

However, what AVCT also say is that ;
"This, combined with other collaborations that we are putting in place, will provide us with access to a sufficient number of COVID-19 patient samples to allow us to quickly clinically validate the saliva rapid test."

So perhaps what we should all be asking ourselves is what possible collaborations exist that would involve parties that have access to live patient samples and where are they based?

Then my post wasn't for your benefit.

Some contributors both here and on Twitter, believe SONA have only released laboratory results and this justifies criticising AVCT for not doing the same, because these perceived SONA actions support such a move.

The reality is that SONA did not release such data until they had a a test that was clinically validated.

What they then did was reference their own earlier in-house work, which matched the 96%/96% results but that they could not share until the MRI Global results were available.

There is a rule book in play and AVCT are following it, whilst giving as many hints as they are allowed, through portals that are not so tightly controlled.