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@Dartron, Millenium do appear to have played a blinder... the relegation of NCYT from the French MSCI was announced on 11th May (below link), but presumably those 'in the know' would have realised it was going to happen as soon as the 9th April RNS cut the share price by 40%....

https://app2.msci.com/eqb/gimi/smallcap/MSCI_May21_SCPublicList.pdf

Remember that we sat around the £5 for a week at the end of April before declining? I reckon this was almost certainly driven by shorters lining up for the MSCI relegation, there could have been a lot of other entities holding positions below the 0.5% threshold.

Cracking way to end the week - enjoy the bank holiday weekend all :)

So it looks very much as if the shorts were playing the MSCI index relegation - they must have known they could buy their shares back in the uncrossing auction that happened on the close last night - certainly Millenium Partners going from 0.56% to 0% is evidence of just that. There was no other opportunity for them to buy 400k shares on the open market, so they were on the other side of the large sell trade.

Now that event is out of the way, hopefully we can start the re-rate back to something a bit more sensible!

The problem is they have such a big holding in what is a very illiquid share, such that it's almost impossible to sell in volume on 99% of trading days. So when liquidity arrives, they have to take the chance to sell. Think this will see a real bump when Schroders are done...

Totally agree Bluelight. The nice thing about any approach is that the share price would jump straight to the offer level. So if that was £8 then there wouldn't be any chance for the doubters to jump back in. I'd still put the chance of it occurring at less than 10%, but given the number of PE deals announced in recent weeks + the sheer discount to fundamental value, the chance (risk) has got to be a lot higher than last year...

It's such a fallacy that the company aren't doing anything. You would think that they hadn't released one RNS since 9th April.

Was the 23rd April RNS a bad RNS? Didn't is create a near 50% rally in 3 days? Yet now we find ourselves well below that point. Same as Wednesday's RNS, was that bad? No of course not. Or the NHS framework for SNPsig?

So many are simply led by the price, just because the price is declining doesn't make NCYT a bad company. It doesn't mean the directors are deliberately letting it slide. It means that at present there is more supply than demand. Shorters are providers the supply on Euronext and panicking or frustrated PI's are aiding their games.

50k shares bought on Euronext is a start, let's see if Millenium are happy to increase their short to try and block the momentum again...

"Short termism is rife" is the nail on the head. Modern platforms have revolutionised share dealing, opening it up to the masses. One of the biggest drawbacks is that it's so easy to get drawn in to checking your shares every 5 minutes, this then builds pressure if a share is falling, and can cause you to press the sell button. We've all been there, that moment after you sell a share at a loss is a mixture of relief and anguish, you don't need to worry about losing more, but what if it goes back up? That's what is happening here, and rather than accept it's a tough period, some are taking their frustration out of the management and likely selling shares.

As soon as we start the recovery back up, huge FOMO will kick in. That was evident after the 23rd April RNS when it rallied back to £5.85. Just getting back to that level is 72% upside from here...

Institutions are a good thing but only if they are the right ones that buy in for a few years. If Amati or Unicorn bought a tranche here then it would be a great sign, other II's not so much. This has been evidenced over at SNG, where there has been a roll call of II's coming and going over the last 15 months, all is does is suppress the price for long periods as they exit.

The issue II's have is the fact we don't currently need to raise cash, so they would have to accumulate on the open market. They may have to bite the bullet later this year though, as cash generation vs market cap is obscene at these prices!

SP Angel had the following € EPS figures for 2022 - 2025 in their October initiation coverage;

2022 : 91.3
2023 : 64.4
2024 : 72.2
2025 : 79.3

This is based on us reaching a low revenue point in 2023 of €101m before starting to climb back up at 20-30% per annum.

Remember that diagnostics companies usually trade on at least 20 x earnings (Diasorin trades on 31 x 2023 earnings), so even the lowest of these figures would give an £ EPS of 0.55 (2023) , which would equate to £11.13 a share. Plus the fact we would have cash in the bank and no debt which should mean a higher rating...

Of course it's still pretty much finger in the air type forecasting and we could significantly miss or exceed this, but I'd recommend having a re-read of the SP Angel research note which is available on Research Tree (not sure on anywhere else).

I'd be way more concerned about the shorts if we hadn't seen exactly the same behaviour on Euronext last summer... Last year it was Voleon & Airain that held back the price during August + first half of September.

Worth highlighting that Voleon were short 0.97% of shares on 28/09/20 the day before the DHSC contract landed, showing just how clueless some of these quant funds can be. All of the historic data from last summer is on the below link;

https://whalewisdom.com/short_position/issuer/ncyt

Could be different this time of course, but it feels like deja vu to me...

Oh sure, it wouldn’t look suspect at all if you sold 2m right before bad news would it!

Far more likely related to the below;

“Vatel has agreed to a lock-in period for a certain number of the Ordinary Shares, whereby 1,107,255 Ordinary Shares will not be sold or transferred before 31 December 2021, and a further 1,033,438 Ordinary Shares will not be sold or transferred before 31 March 2021. The remaining 811,988 shares have no such restrictions.”

I see that we've just had a 0 trade go through for the second day in a row - I've never seen that before on any share!

oh and for anyone wanting to get an idea of what can be achieved over a decent time frame (5-10 years) have a look back through the growth of Dechra Pharmaceuticals (DPH) - they have built a global animal diagnostics / vaccine business over the last 10 years via M&A and organic growth. They've funded it via operating cash flow, hundreds of millions of debt + several equity placings at increasing prices (£3 in 2012, £11 in 2016, £20 in 2018, £27 in 2020) currently trading at £41. They've gone from a market cap of £400m in 2012 to £4.4m today. Oh and in 2012 they had net debt of £87m...

So yes £54 (£3.7b cap) is unlikely here in the near term, but later this decade? Absolutely possible if they pick the right acquisitions + bolt ons and manage to stay independent. It's all about the execution...

@Oriens1, clearly calling a WUM a WUM was a bad idea... ;)

I wasn't invested on 9th April but have followed the story here since 31st Jan 2020 and from memory I posted to that tune when I bought back on 23rd April. Following the drop I reviewed everything available and realised just how good the fundamentals were, then the R&D RNS on 23rd April made it a no brainer in my opinion. So yes, I have changed my tune since that initial reaction to the news - but clearly the uncertainty that exists has proved to be a problem? The no more future DHSC business was conjecture as we don't know this.

I've tried to bring logical analysis to the table, so lost patience when you started saying £36m of Q1 revenues were 'awful' etc. My opinion is no more relevant than the next persons, it is what it is. I'll do what I should have done yesterday and put you on filter - whinge away to your hearts content!

Oriens1, you are simply a WUM. "I can't see the sp moving up until its all resolved!" Is absolute rubbish, the share price should bounce strongly when the market sees the financials & can quantify the dispute. As Porky says this is very likely to be no later than 29th June.

Right now the market doesn't have a clue that the DHSC have made payments of £173m including VAT since last October. Not a clue. We have worked this out for ourselves by accessing DHSC transparency data. No financial publication is going to publish anything like this, even if they knew about it. It's one of the huge benefits of being able to collaborate on research efforts.

My take on the share price is;

- At £12 in mid Jan, the market was pricing in a good chance of getting the second stage of the DHSC contract

- At £7 in March the market had assumed no second stage; £350m had been removed from the market cap due to lack of 2021 guidance, which had been taken as a sign of uncertainty around the extension

- At £3.50 now, the market is pricing us £1.20 BELOW the level we traded at before the DHSC contract was announced on 29th September 2020. This is due to the dispute on Q4/Q1. How else can this make sense?

The market is pricing in loss of the entire £150m + £36m in Q1, it has priced in the worst case scenario.

Meanwhile, other than the dispute the business goes from strength to strength. I strongly suspect we'll be back in the £6-8 range by July. However, IMO the real gains will come over the next 3-5 years...

IMO Poidster was simply speculating with what looked like a bit of 'knowledge from the field', the main part was on whether we had supplied the Q1 PROmate tests in the assumption they would be billable when the DHSC may have decided to claim otherwise. For context, Poidster also speculated on 22nd March that he thought the second phase DHSC contract was going ahead as they were so happy with PROmate... My guess is that Poidster knows individuals in the NHS who work with NCYT, and has been using scraps of info to try and put 2 + 2 together.

Bottom line is, the market has already priced in such an eventuality and then some. We also know that the DHSC paid us £33m gross in October, £92m gross in November + £48m gross in Feb, so £144m net of VAT has been received. More could have been paid in March or April, we don't know yet.

We also know that PROmate is the future, so if the NHS are very happy with it, it should be interpreted as being a very positive sign for all of our other customer relationships both present and future - particularly after yesterday's news :)

The below link from the £406m tender publication is worth a read;

file:///C:/Users/44756/Downloads/Justification_for_Use_of_Article_32__Primer%20Design%20id%20125.pdf

What stands out re. Poidster's comments is;

"Due to the urgency of the situation there is no time to run an accelerated procurement under the open, restricted or competitive procedures with negotiation that would allow the NHS to secure delivery of a suitable, compliant
product at required volumes as quickly as is needed. The supplier is required to start delivery of goods and services immediately"

This reads to me as; they needed a solution ASAP. Therefore corners were cut from their side. They know this, so have paid the majority of the minimum contract, but now with the benefit of hindsight they are trying to haggle over the remaining outstanding invoices, around £30m for the first part + the £36m PROmate for Q1.

Share volume is hardly ever highest when a share is at the year low, the only exception would be just after the event that caused the fall has happened (i.e. 9th April) or if there is a big seller clearing (i.e. the Woodford overhangs from a few years ago). People like buying a rising share price, they like buying the top even more...

Consider the fact that on the day we hit our all time high of £12.60 (26/10), volume was 3.2m shares, or £40m. Go back just a few months earlier to August 2020 & value traded for the entire month was only £30m and an average price of £3.04 a share. Why? Because most PI's are attracted to shares that are rising.

I take such petty manipulation as a positive sign John... The uncrossing trade is definitely one of the most abused elements of the UK small cap market, how can a trade for 20 shares (last nights UT) move the price by 5.2%? It's ludicrous. Surely there should be a minimum purchase limit put on UT's. I'd go with £10k in value. Anything less than that should be purchased during trading hours.

Great stuff B2H2SL, thanks a lot for posting that. 1500 instruments a month is significant, and reinforces the value case even further. Love the different coloured instruments in the background of the picture too, a snip at £10.1m +£1.9m deferred consideration. What would they be worth if they wanted to IPO today?

Also re-read the SP Angel initiation doc from October which states gross margins are estimated at 58%, and "With higher volumes anticipated, Novacyt expects to reduce COGS, improving gross margin on instrument sales"

Auction Technology Group is an interesting comparative... the market loves it's results today, up 16% at the moment... It's market cap is £1.16b with net cash of £6m. Half year results today have revenue at £34m and an operating loss of £12m , growth nowhere near AWE levels at around 5% a year...

AWE now at a cap of £1.95b, cash of £360m, so an EV £1.59b. 2021 revenues will be around £52m if they double 2020...EBITDA margin over 50%, so a profit of £25m, a PE of 78 and EV - Sales will be 30.57

I'm not saying AWE is cheap for a second, but it looks more attractive than ATG?! I'd also argue that barriers to entry are higher in the the IP connectivity industry than auction software...

The market is never a boring place :)

Sometimes they are, although IPO performance has been excellent on LSE over the last 6 months - Deliveroo was the first one that flopped... Darktrace cutting their IPO price by almost 50% probably didn't help AWE, as it would have detracted shorters from going for that. Bottom line, if AWE listed on NASDAQ, the market wouldn't have blinked at the valuation - it is so rare for a genuine tech company to be profitable after 4 years.

I can see it getting back to £2.50 if the current short attack continues, I suspect that the PR regarding the short has probably attracted some similar minded sharks who have joining in the selling frenzy... I guess it was inevitable with them having the temerity to list at such a heady valuation (even if they are a profitable company!).

"I would say 95+% of our income is from Uk govt/NHS/DHSC"

I mean, maybe this is exactly why GM broke down the split of sales in Q1? So that trolls such as yourself couldn't claim the whole amount was from DHSC?

"Approximately 50% of Q1 revenue was driven by sales to the DHSC, predominately PROmate™. The remaining c.50% of Q1 revenue was driven by continued growth of international sales and expansion of the Company's private sector testing operations."

Private sector testing will be significantly higher now than it was in Q1, international travel is picking up and workplaces are reopening - so to achieve £36m in this period was excellent as far as I'm concerned. It's certainly a hell of a lot higher than any of our esteemed competitors on AIM...

That'll do for me today, I'd urge you all to look at the LumiraDX presentation - we are literally at the start of the journey here IMO.