Member Info for DRB83

It will and soon I hope.

Huey, your probably just confusing matters by referring to it as rebranding. Novacyt have said what is happening so maybe it's best just to stay on the same page as everyone else.

Not sure if they are keeping the labs. Could be? Don't know how many staff they will keep. They are losing all there sales which the loss of gross margin will be off set by the cost savings so that's about £2m in cost savings. That's going to be a fair few heads and possibly some lab rent and sale of lab equipment. Who knows.

Happy for either of you to provide a cash flow forecast that shows how Deepverge will run out of cash and it's loan facility as GG says. How else can we believe it if it's not supported by hard facts.

GG, run out of cash? I'm assuming you've not done your own cash forecast before spouting nonsense. Poor form. Hopefully you have and you'll be able to support your comment with it.

Many stocks were dramatically inflated during the beginning of Covid and have since plummeted. It was the markets expectations that ran away with itself.

A proper P&L and cash flow will be included in the half year unauditored accounts, probably September. You've not missed them.

Agreed, an official update on CR and the BT would be great but I'm guessing as we haven't had one then there's nothing to report. If that is the case then they are not in the £18m forecast anyway so let GB focus on what he can control, which is STC and MW. The rest will happen at some point.

Huey,

Therefore, Novacyt is proposing to discontinue both businesses, which will be treated as discontinued under IFRS 5 for 2022 accounting. The estimated sales impact of this decision is circa £2.9m in 2022, with a gross margin reduction of £1.45m, which is expected to be fully offset by cost savings. A cash restructuring charge of circa £0.5m is expected, however, this should be fully financed from in-year savings and the release of working capital to make the closure of the businesses cash neutral in 2022.

So Lab21 sold £3.3m in 2021 so I'm thinking the £2.9m is pretty much all of 2022 forecast revenue. If it was just a rebranding Huey why would sales be impacted by £2.9m?

It's clear to me that Lab21 is being discontinued. What does it mean when a product is discontinued? Novacyt will keep the bits that it deems worth keeping the rest will be disposed of. Some employees will be made redundant and some will transfer over to Novacyt. The £0.5m restructuring costs will be predominantly redundancy costs.

Microgen will cease to exist and the LFT's that we keep will be rebranded as probably Novacyt.

Huey, how are you interpreting what Novacyt are telling us in the rns's?

I think it's important to keep expectations real here as we approach the end of Q3.

Weekly US downloads have dropped significantly this quarter from 21m to 14m so I'm expecting this to result in monthly downloads dropping to 105m.

I think we'll struggle to keep the earnings per 1000 downloads above $50 so let's say revenue will be $5m per month so $15m for the quarter.

Gross margin will be 20% so $3m

Ignoring share based payments and FX adjustments let's say admin costs are $1m per month so $3m.

EBITDA before exceptionals of $0.

Assuming working capital management is sustained then we should end the quarter with roughly the $5.8m we started with.

Given the significant drop in downloads if we can navigate these stormy waters in Q3 and come out unscathed then q4 should hopefully be a much better period.

No such thing as Microgen anymore. It's Novacyt. Novacyt do LFT's

The only semi positive I can spin on these results is that the decline appears to be across the industry with exception to Wondery who appear to be firing on all cylinders.

We've recently signed up some promising shows which will need time to build their audience.

Boom appear to be a feeder platform at the moment. Bring in rising stars, train them up and then unfortunately they get too big for us and get snapped up by the likes of Wondery. Reminds me of Southampton with the likes of Bale, Shaw, Chamberlain, Walcott.

We have loads of inventory but it's just not quite the best stock out there. Top show is now no. 42. It will be difficult to keep the revenue per 1000 downloads above $50 in Q3.

We need a good news story.

Which 4 are you referring to? I know Morbid was a huge loss. I can't see any of our newly signed shows in the top 100.

No way has someone with only 22 posts contributed enough to this BB to validate slating Max.

Retireby, the large step up in both revenue and admin costs was due to the inclusion of a full year of Modern Water. GB is forecasting £18m+ of revenue this year which all the growth will be organic (no acquisition). Organic growth will largely be achieved with small increases in admin costs.

I'd hope for admin charges being no more than £11m. Finance charges of £0.6m. Tax credit say £0.6m

Revenue £18m (conservative)
GP margin 57% (usually grows with growing revenues)
Gross Margin £10.26m
Admin charges £11m
Finance charges off set with R&D credit.

In terms of profit it will be close but cash is the main point. A big part of the £11m admin expenses is Depreciation/Amortisation (£3m ish) which are non cash expenses so from a cash flow perspective we should be generating cash in FY22. That is key. I forecast a £5.7m cash balance at 31 Dec 2022. Let's see.

We've had the H1 heads up already but the unauditored H1 accounts should be out back end of September. Next results out after that will probably be the January trading update.

The logic that the market will wait until we are in profit before the SP moves is a bit bizarre to me. The market prices in the potential not just the actual. There are several key moments to come that could significantly shift this SP. Patience is key.

Poker, all fair points well made. The contracts will certainly prove their worth over the next 12 months. The business is approaching it's strongest period of the year and it must be profitable to restore confidence in the market.

Profit is one thing but as the saying goes, 'cash is king'. Can they drum up enough cash to repay the £100m covid loan in Jul23 or will they be forced to beg for an extension, if possible. Will they have enough cash left to satisfy the loan covenants or will they need to extend again? The current macro economics must be playing on the minds of the lenders. It feels high risk to me at the moment. The next set of accounts will give us more of an insight into the strength of the balance sheet. 7 weeks to wait.

Mike, based on what exactly. What are the pros in investing here when the balance sheet is massively over leveraged on debt, liquidity is a huge risk and people are getting less and less disposable income. Please share why people should invest here.

Maybe not exciting but renewals are important, simply because expiry would be disastrous. Therefore this is good news.

Short, we will have to wait and see but the potentially £5.7m in the bank come the end of the year should provide enough of a buffer to prevent any further shares being issued. Once we are profitable then there is a good chance we will be able to arrange more suitable financing to fuel our further growth. A lot is hinging on how we navigate the stormy recession seas. Dvrg appear diverse enough both product wise and geographically to hopefully come out on top. We'll see.

Short,

We started the year with £1.8m and took £4m from the mezzanine loan. So £5.8m to play with.

I believe the business will be self funding in the FY22 accounts.

Assuming the £19m generates £11m gross deduct about £9m for admin expenses (exc D&A as non cash) and £0.6m in finance charges then we have £1.4m net cash generated within the year.

So that's £7.2m but we paid for Glanaco £0.5m. We'll also have to pay back £1m of the £4m this year so we end the year on £5.7m. We will need to pay back the other £3m of the loan by March 23 so that leaves us with £2.7m and hopefully we'll be self funding on a monthly basis by H1 2023.

This is obviously all dependant on how we can manage the working capital. Trade receivables increased massively in FY21 from £1m to £4.7m. You'd expect that as revenue grows but it's important the credit control team don't let that number become too big as a % of revenue. FY20 was 22% to FY21 52%. So with the right working capital management Dvrg may not need to dip into the mezzanine again and therefore save about £600k in finance charges.

It's looking good. Let's see what H2 has to offer.

Good to see the bid stepping up despite those sells. A big buyer in the background?

Volume picking up again.