RE: Buy or no buy13 Aug 2021 09:30
Sorry, accountant by background, so my tuppence worth....
Revenue absolutely fundamental to profitability with Orph, due to the fixed overheads...fix that and the rest follows:
Historical problems down to under utilisation primarily (and heady office overheads).
My take on profitability for FY21 below:
1. Revenue will be c £45m-£55m, but let's take lower end of that, £45m.(I think it's more realistic)
2. 'Direct Project and Admin costs' were £32mn in FY20. The 2019 figures aren't comparable.
3. Of the £32mn, approx half (£15mn) is Staff costs, with ave headcount for year, 179. I have asked IR for current headcount to draw a comparison for FY20. Fy20 ave salary when removing employer contributions for pension etc... of £69k, seems high despite London weighting and salaries for roles seen advertised. Will also likely have some overhang from previous ownership. Once I have an updated figure should be able to work this out better, but for caution let's assume staff now £20mn, so £5mn increase.
4. Volunteer costs likely to increase with revenue, plus minor add on for Covid characterisation, agency costs the same, so for FY21 assuming an increase from £2.5m to say £4m.
5. Professional fees slight increase, don't know what's included £1.3m to £1.5m.
6. Premises costs, was £1.3m, assume £2.5mn - don't know if Whitechapel fully in FY20 so might be understated, but equally Poolbeg sharing office space in H2 FY21 so some economy there.
7. IT, broadly flat at £1m.
8. Inventories consumed - was £0.7m, assume grows with revenue so £1.5m.
9. Deprecation and Amortisation of £2mn, assume same for FY21.
10. Exceptional items of £2mn.
11. The two above sit below EBITDA line, doubt CF would have much info on these - figures are ones for company accountants / auditors.
12. This leaves us with one line of £6mn for other expenses. No idea what is in there as no detail in the notes, again, have asked IR. Typically, this would include oddities so often not repeatable e.g. Office disposals - absolutely fundamental to the FY21 performance.
Taking the above, leaving the 'Other expenses' line in, we have
Revenue = £45mn,
If including the 'Other expenses' of £6mn, it gives us EBITDA of £8.5mn and EBIT of £4.5mn.
While I would expect 'other expenses,' to be different in FY21, with Spin out costs plus Malaria/Pneumococcas CHIM agents etc..., broadly a like for like cost (where it appears on the income statement might differ though).
Company Annual Report talks of EBITDA margins of 15-20% this FY, which would be consistent with the figures above.
Anyway, just personal view, but may be of interest.
Sign In
Follow the stocks
