Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I meant blind reliance from our point of view, as we have don't have much 'sight' of what's going on, rather than implying fanatical 'blind hope' based on nothing. Poor phrasing.
Using 'hope' in contrast to certainty... hoping the prospective deals come good, in contrast to, contracts signed and money obligated*
*which you'd think would be a sure thing....DHSC.
If we're going to presume rationality (and I wouldn't necessarily); surely the only rational answer is that DHSC money was already priced in, and/or, money in ABDX's pocket isn't perceived as leading to growth - it's just going to pay the bills of loss-maker a bit longer?
While we're relived that some money is forthcoming, let's remember that it's only the settling of an old invoice at a discount of approximately 25%. There's not much 'win' in this; paid less than owed, questionable exploitable value of components in lieu of cash, interest forgone... It could've been worse, but objectively, it's a loss.
There's also a view; does this money make much different to the operating outlook? Does it actually change anything?
Yes, it provides runway and delays the threat of another raise (and seriously who would partake in that - what price for a second raise?), but this late under-paid windfall isn't on-going business, and it doesn't clearly lead to expansion/growth - indeed ADBX already has excess un-utilised capacity (for understandable reasons) seemingly unproductive and depreciating -- and it's that cash burn that we're seeing represented here. The DHSC money has only delayed the bleed out ... we need new income streams.
Lastly; some nonsense accounting on here: assets + cash with assets priced at purchase price. Unproductive assets are liabilities, and their value out of administration is 10-20% purchase, if lucky. With obligations and liabilities, perfectly possible for a company to be worth less than the cash it has in the bank.
What the market is saying is that £6.8m is worthless in a fully expanded company and is only going to be burnt keeping the lights on longer. The blind reliance on hope on new business is unchanged, we just have a bit longer to find it.
To add to my comment; yesterday was an astonishing day as, in my view, the market reacted rationally!!! Value added roughly equal to the cash was added.
Today.... ???
I guess that some of that cash value was already being priced into the SP.
Roughly speaking; based on the share price change following the news of the DHSC payment; £1 of hard confirmed cash is valued at 40p!
News of £6.8m hard cash incoming results in a share price gain of approx £2.75m at time of writing -- about 40% of value.
Even at £4.8m (cash without risk of clawback) that's only about 60% of value.
What's going on? Rather than seeing opportunity in cash in hand, the market thinks ABDX is so toxic that £1 in its hands is worth 50p ish? FML.
It means that for the debt of X amount, they have agreed to accept Y. It doesn't mean that the items listed under Y are worth X, just that they will accept Y and call the debt cleared/fully settled. Could be a fiver and kick in the nuts.
Happily, they've negotiated better than that, although I wonder what the actual realisable value of those components will be today (considering spoilage, actual utility in making another product that can be sold at profit, and the market value of test components in 'Post Covid' June 2022 vs 'Covid Panic' 2020/2021)?
***The negative:
Of an outstanding debt of £8.9m (excluding interest):
i) Cash payment of £6.3m, £1.5m of which reclaimable (held under charge), so £4.8m actually secured.
The deal, at £6.3m is £2.6m (approx 30%) less than that total outstanding debt of £8.9m.
ii) ABDX gets the old materials from 2020/1. Still usable? Still useful/convertible to profit? Really compensation for cash?
Reductions in actual gains:
From RNS Number : 3637G, £0.8m VAT has been deferred against the DHSC payment being a bad debt, a portion of that will now need to be paid (estimate £0.5m).
Arguably; legal costs - an (ordinarily unnecessary) expense discountable against the invoice (possibly already fully priced in before this RNS).
121,711,614 Ordinary Shares in issue, given recent pre-RNS price approx mean at 10p, £4.8 - £6.8m payment puts the price at between 14-15p. Appreciate there was a sense that the DHSC payment was suppressing other good news... but it'll take fresh good news to hit 20p etc.
***The positive:
Some money is incoming soon, knowing is better than not knowing, fund raise risk deferred etc. One point I've not seen made - if DHSC are co-owners of a test IP, doesn't that greatly increase the likelihood of it being the test of choice for future DHSC purchases?* Speculatively, isn't DHSC reducing royalties also indicative of this; an asymmetrical bargaining chip?
iii) joint-ownership, alongside DHSC, of the intellectual property of the AbC-19™ COVID-19 antibody test; and
iv) a lower royalty payable to DHSC on sales of the AbC-19™ COVID-19 antibody test, with this royalty time limited to one year from the date of the settlement agreement.
*Anybody know if DHSC has such IP agreements with other tests?
This. Kudos for it being on schedule.
Tue, 29th Mar 2022 07:11
RNS Number : 3637G
Interim Results > BUSINESS REVIEW > Strategy
2) E-commerce and distribution
The Company is in the process of developing and launching an enhanced B2C e-commerce website, due for completion in Q2 2022. The Directors believe that the direct-to-consumer lateral ?ow test market will grow signi?cantly and in its recent report, Future Market Insights forecasts the global market for self-testing kits will be worth US $11bn by 2030.
The Company expects its e-commerce site to become a 'one-stop shop' for consumers to purchase lateral ?ow tests across a range of indications, with Abingdon selling its own tests as well as complementary third-party tests directly to consumer via the site. These third-party tests will be independently validated by the Company to provide the customer with the assurance that the tests have been checked by lateral flow experts and are "fit for purpose" and user-friendly.
As part of this process of improving our digital offering we relaunched in March 2022 our B2B Pocket Diagnostics e-commerce site. This will initially focus on plant, food and environmental testing products and we will look to augment our existing Pocket Diagnostic product range with third party products going forward.
We are also actively building our own distribution network. Our expertise is in the development and manufacture of lateral flow tests and we are not looking to own the route to market. Therefore, we will work with partners to distribute our lateral flow tests in certain channels and internationally. We recently appointed a new distribution channel manager tasked with building this distribution channel to provide routes to market for both our own products and third-party products which we have validated.
Zoom, I have the same question; Pumpky, why’s that?
I’ve speculated that it will take longer than people expect, because the of the different way the test works, but I don’t doubt it will pass in the end (as a startup with one product, Vatic will be highly motivated to get it through) - the only concern is when, and the covid market at that point.
...a little bit of reality, please. Anybody who bought in on this pre Jan 2022 was buying into a Covid stock. If they weren't, then they over paid as that was what is was initially priced on. The no-Covid/delayed Avacta Jan cliff and subsequent
floor plateau evidence that... and even that plateau is being propped up by the possibility of Covid sales (Vatic), and the one-off windfall payment for the failed contract which set the initial price optimism. Looking at the movements based on news like todays, IMHO the 10-20p band is the new reality for a long time.
On a positive note; the BoD keep it exciting with some surprises and are clearly active. Any price depression based on lack of faith in them seems increasingly unjustified - good for them. GLA, hope to be wrong. Post what you wish on the boards, but be honest with yourself. LTH based on not wanting to realise a loss isn't the same thing as LTH based on faith. There's a lot of trapped money in this stock - I'd hesitate to call that an 'investment'.
If I'm reading this right... Abingdon are selling their own already developed test ... not just manufacturing for another... so higher profit margin per unit, presumably? 10m with option on a further 20m.
And if Taiwan aren't buying Chinese and the search has taken them as far as Yorkshire... EUA seems likely.
VAT has already been written down, so deduct that from the upside.
What's the source for:
* The Company was told by DHSC in January 2021, both verbally and in writing, that payment for the 1 million tests had been cleared for payment.
What am I missing, why would a PI buy in at this stage?
Well now I'm hallucinating that the gas explosion which destroyed your rafter-filled house in actual fact saved you from a grammar induced suicide. What a beautiful Easter-tide story of resurrection...
As is now painfully obvious, I have real work to do which I don't want to do. Off to do that now. Happy Easter all.