Member Info for ChrisToffer

It could also buy you a company that generates £40m a year in non-covid revenue, effectively replacing the projected drop-off in covid revs.

Thanks for that B2! Really helpful. Reads a LOT better than when I watched it. Maybe he should have went to print.

Drb, 'Chris, I get an overwhelming feeling that the market is valuing NCYT based on face values.'

Completely agree. Its not even a feeling, its demonstrated in the EV of less than £20m. A company with this kind of cash would usually have negative cash flows or huge cash burn to justify such a low EV. NCYT have neither, so its undervalued. We just need either a resolution to the dispute or a sign of what the cash will be used for.

Monty888, its not entirely who knows though is it?

The RNSs clearly state that £73m is involved in the dispute which is for a revenue of £129m related to a specific product.

The company will not have to pay back £129m because theyre owed that £73m(£48m inc Vat of which is for promate that was actually used). So the worst case payback will be in the region of £56m. Its still extremely unlikely that they'll have to pay all of that and as DRB points out, a lot of it may be offset by Tax/VAT overpayment, or the £19.9m provision in the 2020 accounts.

Thats a very good question Wilson.

As CS points out there is a provisions for 19.8m in the 2020 full year accounts so it may be that any cost of dispute resolution is offset by that OR the situation had developed by half year 2021 accounts and the exceptional costs incurred there.

I wonder would investor relations answer that?

I find its very difficult to account for tax in our estimations.

We know that there was £17.7m in tax receivables (i.e credit) with HMRC at 30 June 2021 however some of that may be included in the end of year cash position. Without the full audited accounts we just dont know.

Hi AK/DRB/Hydram, i dont interpret that as £178m In disputed revs (£129+£49). 'The dispute is in relation to £129m disputed revs'.

I believe the DHSC have withheld payment of £73m as part of that £129m. I think their first argument would be " we want a refund so we're not paying these invoices and you need to refund us the remainder (£129m - £73m = £56m).

Big Yellow Pig filtered. Only so much toxicness one can take.

UPs, the 2021 revenue was adjusted by 40.8m but there was also £24m in trade receivables tied into the dispute from Q4 2020. That's £64.8m outstanding.

Additionally, the company had to write down c.£30m of stock that was built in preparation of further DHSC demand. Some of that stock may have been intended for the extended 10 weeks of the contract. If the DHSC didnt want to extend the extra 10 weeks then they needed to give 2 weeks notice in writing. If this didn't happen then NCYT would have further claim.

Brilliant Sir Digby! My thoughts exactly

Captainswag. If they have to replace the stock at a cost of £19.8m then I think they would be entitled to the £65m outstanding revs.

P.s the £73m number is that £65 plus the c.£8m VAT on the outstanding £40.8m from Q1 2021. Im not sure if we would count that now as they were taking about rebates of 10-20m in the last half year report.

HarChris, I do see it that way and I think we could see compensation on top of the outstanding revs.

Thats my own take on it though, and a reason I still hold. There could be up to an 80m swing on the cash position from a resolution.

21ATS, there's is £24m sitting in trade receivables from Q4 2020 that is tied up in the dispute, along with the £40.8m written off from Q1 2021.

So yea, we could confidently remove nearly £65m from the 129. But the company haven't stated that.

HarChris, from the 2020 full year trading update.

'The dispute primarily relates to Q4 2020 revenue totalling £129.1m in respect of a specific product supplied to the NHS'

I completely agree with everyone that its extremely unlikely to be all of it and it would never be in one go but until that risk is officially removed this company will not be valued alongside its peers.

I also think that the risk is somewhat removed if they decide to go ahead and spend it on an acquisition.

Captainswag, the dispute relates to around £125m. Util the company states that these revs are not at risk then the value of the company will be suppressed.

Youre right, they don't need to spend the cash but the market doesn't like companies sitting on large cash piles without stating what they're gonna do with it.

Having said that, the SP is so suppressed a positive resolution to either situation would result in a very fast bounce.

Ventura, I believe captainsswag is referring to the enterprise value of the company. Thats market cap +/- debt/cash - currently £20.38m

Captain swag, couple of things;

If the company officially responds to the PE article then they legitimise it so I think its best they ignore it.

An aggressive takeover in a company that has so few shares in issue would result in a huge spike in SP.

Youre correct that the company is being valued at the profit it will make this year. 2 reasons for that in my mind;
1) Outstanding risk to the cash position- all goes back to the dispute and the possible, but not probable risk to the cash.
2) The company have given no indication how they Intend to use the cash.

Couldn't agree more B2. He needs to act and we shouldn't be made to wait until April.

He may only be in the role for 6 months by then but we've been supporting the company a through this nightmare for a lot longer

Hi Neil,

The fall in EBIDTA is much less then revenue, however the cash position will continue to rise, reducing the EV. If the SP remains the same then the EV/EBITDA ratios decreases.

Hi John, Current EV Multiple is 0.7. A multiple below 10 in any sector is undervalued. Should arguably be 15-25.

The companys projected revs (assuming 50% less covid no growth of non-covid) actually reduce that multiple further.

It cant stay this way forever.