The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
If push comes to shove and you can't find another broker to transfer your shares to, you could always convert your nominee held shares to a paper crrtificate. That would buy you time to work out what to do in the longer term.
Most brokers would charge you about £25 to do that, but I suspect it'd be dearer with IG because that's the way their business model operates ?
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Skid
The ST and LTIPs are a joke really, especially those at zero cost
Not hitting the targets ? Best move them then.
In the middle of a pandemic ? No worries, grant some anyway.
Sadly, that's just a fact of life.
On the other side, a market cap of 41 million, underpinned by roughly 10 million in the bank should hopefully mean that any cash raises needed are purely for expansion, rather than covering losses, so it's looking much more derisked than it has been for many a year.
Obviously it could still all go pear shaped, but I'd be hoping to see a decent return on my cash over the next 12 to 18 months.
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Are two words I like to hear, so, after a long absence, I've dipped my toe in here again.
There's likely some way to go before pre-tax profits really start to flow enough to support a high market cap, but generating cash is a decent starting point.
BB
Well, that was an interesting day, and, first of all, it has to be said the news in the RNS was good news, and fair play to Ford for negogiating the contract.
It's a bit odd that, on the face of it, this may put us into competition with By-Health in China, but I'm sure they'll have been aware of what we intended to do, and I'm also sure they must be comfortable with it. It's also slightly odd that the distributor wasn't named. Given the RNS tells us the distrubution agreement is "with immediate effect", who they are will be public knowledge soon enough
Whether the news was good enough to justify a temporary rise in the market cap of quite a few million above where we ended up is debatable though. So, mainly to annoy Alf, I'm going to look into the entrails of what we know.
We know a manufacturing run of FF+ has been carried out at a cost of 90k to ourselves. We can probably suppose that a good portion of that is bound for China, lets say 60k for the sake of argument. We know the distributor will want to turn a profit, so we can guess what level of profit we might make on the 60k estimate. I'm going to guess we'll sell that 60k worth of stock for no more than 120k and turn a profit of no more than 60k on it.
What we don't know and can't even really guess at, is how much FF+ the distributor is going to shift. If they end up shifting enough stuff to mean we keep on turning the handle on ( say ) 60 to 90k FF+ orders every few months, we should do very well out of it. But if it's a once a year order, then, though good, it wouldn't be as good.
More generally, the cynic in me wonders if we've seen some forward selling from the placing today ? If we have, then it's not the end of the world because it would make the placing easier to get away.
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Alf
Fair point, well made, wholesale was the wrong word to use.
But, if you look back at life before H&B when we were the only ones selling FF+, so the numbers were easier to pick apart, the reality was as follows :-
Revenue from FF+ : 73k
Cost of goods : 23k
Selling and distribution costs : 24k
So, our costs to sell FF+ were 47k on a revenue of 73k
Packets were being sold at between 15 and 20 quid, call it £17.50 on average, so, for every £17.50 of revenue, we had costs
of just over £11.
Of that, roughly half was cost of goods, so about £5.50 a packet
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Kev
You're missing the point a bit. If Fruitflow's £350 / kilo ( and it might not be, that's a guess based on info that Gixer got years ago when it was £500 / kilo ), then that works out as about £1.50 for a packet of 30 tablets.
But any tablets will contain more than just FF, so total ingredient costs will be more than £1.50. Add in manufacturing costs, distribution costs, marketing costs and general overheads and the cost of getting a packet on the shelves soon adds up. Chances are the total wholesale cost of a packet of FF+ is in the order of a tenner ?
Then take into account that we're not taking a share of DSM's revenues of Fruitflow sales, but a share of their profits, and that theoretical ( aka guess ) cost of about 5p cost to the client per tablet for the Fruitflow in the tablet will translate into a much smaller amount of profit per tablet to be shared between DSM and ourselves.
But, as Wellsite says, if DSM shift enough stock, then it's all a bit academic.
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Wellsite
Yep, well, kind of.
50k GBP for 700 kilos works out at nigh on exactly 1p per 150mg, but, personally anyway, I think the numbers I used are on the generous side ( from our perspective ).
Mind you, on "standard" margins, I'd be surprised if it was less than 0.5p per dose, with presumably a fair bit less that that per dose for large orders from the likes of By-Health. However, even if Seriburn "only" came to 25k a year, then you wouldn't need huge amounts of similar sized orders to start making decent inroads into our losses.
At some point you'd hope that PXS will eventually become a cash cow of some description. How long that'll take and how much of a cash cow it might become, should eventually allow us to be valued on reality rather than speculation.
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Gixer
Total guesswork, but, say it was something in the order of £350/kilo now and say it was 700 kilos a year => Revenue to DSM of 245k ?
Operating margin of maybe 20% and gross margin of maybe 60%. Not sure how the definition of profit in the AA might sit in that, but call it 40% => 98k to share ?
A 50/50 split may be generous, but that'd be ~50k ?
Must admit, I'm not convinced each of those sachets has 150mg of FF in them though.
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I peered at zoomed in images of the box earlier today, and, rather annoyingly, although you can see each sachet ( ? ) contains 115mg of Vmix, there's no indication, in English anyway, of how much Fruitflow a sachet contains.
As Doc Horrible says, it'll likely be apparent how much of a big deal it is when the Interims come out next month. Quite fun* to guess though ( though it plainly won't take us into profit ).
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*plainly, even in normal times, I need to get out more
Then again, it's also available in boxes of 28 ?
https://shopee.sg/-SERYBOX-SERYBURN-Healthy-Diet-Relieve-Swelling-Of-The-Body-Constipation-Supplement-1Box-28EA-1Month-i.119124584.3439321415
Gixer
If it's the same as https://shopee.com.my/-Serybox-Seriburn-Medusa-12-packs-i.282125612.4556282867 then it looks like packs come in 12's, but, if my maths is correct, that's still the equivalent of something like 140,000 people a day taking it ?
Which is quite a bit more than the number taking FF+ !
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Google suggests that, in China, a low dose aspirin is quite often 100mg rather than 75mg, which presumably explains the difference
It'd be a big shock to see any trials on the Chinese giving massively different results to the previous European trials, but it's still good to see it in black and white.
Ah, oh well, there goes my dream :(
Fair point.
First thing I'm going to do is buy Alfa Romeo and charge Alf extra for his next motor !
Gixer
Oh, absolutely, and that'll likely have been happening over the last few years and contributing to some of the growth we've seen from the AA.
Sadly, that's pretty slow progress, and until our income and therefore our profit ( or at least sensible forecasts underpinned by info from Ford ) justifies a market cap of 10 million plus, then the sp relies on peoples thoughts on the financial potential* or otherwise of Fruitflow
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*obviously there are plenty of people who are content with just saying "this'll be huge" without any idea of what huge is and how, long term , that'll be reflected in the market cap, because large parts of AIM is for dreamers, and for feeding off dreamers views.
Gixer
Yea, that's a good point, so would give us more cash from existing customers as part of the profit share.
I also noticed in the last accounts that it appeared ( so not 100% definite ) that the cost of goods for FF+ had come down giving us a higher gross margin. That might be down to DSM continually working on production costs and passing savings on, but it might just have been down to us putting a bigger order in and consequently getting a better price, don't really know.
Time will tell on the difference that ByHealth actually getting going will make to our cashflow. It'll certainly be good, the debate really is how good ? You're also right when you say ByHealth might be a catalyst for other countries / companies sitting up and taking notice, but that'll likely take some time, so is very much more jam tomorrow.
If, some time next year ( or even this year, but that seems unlikely ), we get an RNS saying ByHealth has got regulatory approval for Fruitflow , and firm orders have been placed, then it'll be interesting to see if any financial guidance on it's effect to PXS is given at the same time.
For example, a statement of "... and we expect this to mean the company will be profitable this FY " , or H2 at least, " or "... and we expect this to mean the company will be profitable in FY 2022/23" would be helpful. Will we get such a statement ? Well, if only to control speculation, both overly negative and overly positive, we should do, but I wouldn't be surprised to see something unsuitably vague !
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Relatively slowly isn't small Alf.
As for DSM making a contribution to launch costs, we don't know how common, and to what extent they've been doing that. All we know is what they did for us.
For smaller companies, it's likely they'll help out, but, as larger companies come on board, I think that will likely change and they'll mainly, be not totally, be after a good discount on the ingredient price commensurate with the large volumes they're ordering and they'll be less interested in short term ( effective ) discounts.
The info we've been fed in the RNS's which talk about By-Health certainly support that. "That" being they'll want it cheaper than others are paying. DSM's job is to use economies of scale or other methods to make the price attractive to By-Health while still making a decent margin. Again, recent RNS's suggest we're confident they can do that, but not to the point where they can maintain present margins, which is fair enough, it's what you'd expect as you deal with bigger companies, and to be fair to Ford, that info is there in black and white for any shareholders to read.
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CB
On timescale, as Sphinx says, ByHealth will have to buy Fruitflow from DSM, so, and there's a bit of guesswork here, it should be recognised in our accounts within a few months. How they roll out any new products, and the price they pay for FF is probably more important than the timing.
I guess you have to work out what potential significant multiples by volume and multiple by value might mean in terms of cash received by Provexis ? The wording suggests that, not unreasonably, that the volumes of Fruitflow that ByHealth intend to buy mean they'll be getting it cheaper than most, if not all, of DSM's customers.
So, if for example, "Potential sales volumes remain at a significant multiple of existing Fruitflow sales." meant sales volumes were 5 or 6 times existing volumes, then maybe "potentially at a multiple of Fruitflow's existing annual sales." means the value of those sales is 2 or 3 times existing sales ?
I think those are reasonable assumptions, though others will likely disagree and put forward a coherent argument for a higher cash value of sales than 2 or 3 times. Anyway, if you assume our share of the profit remains constant, then, once By-Health are fully up and running, we could well be looking at receiving 3 or 4 times ( what we currently get, plus the extra generated from By-Health sales ) what we currently do via the AA. So that might be 700 to 930k , which, assuming our costs are fixed, would give us a profit of something in the order of 400 to 600k.
Would we get that level of cash immediately ? Probably not, I'd guess By-Health would start relatively slowly, but I'd be surprised if the initial 12 month uplift to our share of the AA wasn't well in six figures and, assuming retail sales went well, would rise pretty quickly to the 700 to 930k which is my guess.
Another way of looking at the numbers is to make a stab at retail sales and work backwards. If By-Health fairly quickly get to retail sales value of 50 to 100 million pounds then cost of goods might be about a third of that, so 16 to 33 million ? Maybe half of that cost of goods is the cost of Fruitflow, so that's 8 to 16 million to DSM. Guessing an operating margin of 20% on FF for DSM would give a profit to share of 1.6 to 3.2 million ? What's our % share ? No-one knows, but if it's 50%, then that'd be 800 to 1600k to us, which is in the same sort of ballbark to the figure I'm guessing at from the info Ford's put in the Annual Report.
All of that could, of course, be complete and utter testicles, and it wouldn't be the first time I've typed *******s about PXS
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If you havn't tried previously, why don't you contact Ford and tell him you're interested in supporting the company in the anticipated forthcoming placing ?
There'll likely be a minimum amount needed before it's worthwhile from the company's POV, but I'd guess something in the order of 5k would swing it ? It's plainly far more use to the company to get new money in than it is to recycle existing shares, so, assuming you're thinking about throwing in more than just another grand or so, it seems like a no-brainer all round
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