Poor judgment or deliberately misled? Part 127 Oct 2020 15:45
I have been reviewing yesterday’s trading update and it is clear to me that investors have not been properly informed about the performance of the core business.
The revenue declines in the key NIPT and International segments have never been trailed and the results are truly shocking as a result.
These results may be understandable in the context of a global pandemic, but they have never been mentioned so have come as a surprise. When I opened the RNS yesterday morning I thought I may be disappointed by the COVID numbers, but not the core business and overall growth.
Growth of 5% is also total growth, not like for like, which the Board has conveniently overlooked (in spite of mentioning it in all other trading updates). I suspect that if you take into account the impact of the Elucigene and AGX acquisitions (ignoring the minor impact of the EX5 and Coastal Genomics acquisitions) as well as the £0.4m of sales that rolled into 2020/21 that organic growth was probably down 5-10%, a figure that would have been even worse without the contribution of the COVID-19 testing.
Some posters bleat about the disappointment of investors with the COVID-19 progress and others opine that dissatisfied investors should sell, but the former overlook the importance of the core business, which is the main element that should matter to investors as emphasised by Lyn Rees, and the latter are ignorant, selfish fools.
It is my view that the Board and Lyn Rees have either made at best a serious error of judgment here in not telling us about the performance of the core business or at worst have deliberately misled us. This is a large black mark on their reputations for me.
I have outlined below all the comments about the core business from the RNSs and presentations since late March 2020. Firstly, you will note in yesterday’s RNS that the main damage to the NIPT segment occurred in Q1 2020/21:
26 October 2020
“Non-invasive prenatal testing (NIPT) was affected by the diversion of laboratory testing capacity towards COVID-19 testing in many of the Company's core markets, especially in the first quarter. The second quarter saw a return to more normal trading patterns with strong momentum entering the second half.”
However, the scale of the damage was not obvious at the end of March:
25 March 2020
"Business demand for our core products and services is proving to be very resilient to current market conditions, albeit with isolated areas of friction for travel or customs restrictions.”
The damage that was being done to our international business was still not clear at the end of April:
20 April 2020
“Our core South East Asian markets have so far been very successful in containing the virus and avoiding restrictive practices which might have otherwise inhibited our business there.”
“The Group remains well funded to achieve its objectives and we are confident that our business remains robust going into the new financial year.”
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