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The material impact is to q1 dhsc. Only dhsc. That was half of total revs.

It’s def a change. But...arguable the sp crash before had priced that in?

The company did not need to report that q1 dhsc number on the rns. They should put bky have dont it if it was bullet proof and not open to be contested. They are guilty of incompetence there and maybe now there is a competence issue with the management team?

But.....

Strip out dhsc totally. The market did this as the last rns said dhsc likely have all the kits they require for rest of year. So everyone assumed after q1 there would be no dhsc sales anyway. Looking backward. Take an ace to these dhsc revs. What ever you want? 50 percent? That still gives dhsc revs of 18m and total revs of 54m for the quarter. On a flat q on q basis that would give fy revs of 160m and prob in excess of 90m ebitda. A company making 90m ebitda and free cash flow positive should not trade at 1.2x ev ebitda.

Come on chaps. Pls one of the naysayers but some numbers around the situation and help me understand the valuation downside from here. Pls no arguing let’s try to actually put the pieces of the jigsaw together with some actually numbers and assumption and not just typical aim market nonsense.

The rns statement revenues. If they mean financials and that would include cash then this management team should be locked up not just chastised. The statements they are making are very specific to “revenues” and no mention of the flash cash number they previously reported. If it is they are guilty of providing misleading statements. I am hoping this would a the kitchen sink. If not they are idiots as they can’t afford to erode trust any more.

I put this on another threat but it’s worth some discussion on its own.

Long view here....

- assuming a 30 percent hit to dhsc revs for q1. So dhsc revenues revised down to 25m from 36m. This gives total q1 revs of 62m. For the rest of the year I will conservatively keep non dhsc revenues flat. As such I am assuming no upside from snpsig sales, no growth in private sales from airlines and pre flight pcr and most importantly or LFT sales. I have taken The ebitda margin to 58 percent from 68 last year and cash conversion to 50 percent. This gives...

Fy 21 sales 170m
Fy 21 ebitda 99m
Fy 21 ending cash 141m

At SP 370p this gives enterprise value of 120m or an EV EBITDA of 1.2x for 2021.

Assume covid suddenly ends globally for 2022 and we are left as a pure diagnostics biz making sales of tests into the installed q machine base and some other bits and bobs. Say we make a paltry 40m of sales FOR THE WHOLE YEAR at 50 percent ebitda margin so ebitda of 20m and assume neutral free cashflow.

With cash of 141m still this gives fy22 ev ebitda of 5.5x.

Sector trades at 15-20x usually.

The short view....

Help. I’m genuinely interested. The current valuation assumes no dhsc anyway and it also assumes we do nothing with the cash (no m&a, no non covid investment in new products) and it assumes private testing disappears at the end of this year. As such, is this dhsc news priced in? Show me? The SP and valuation seems to be pricing in in this and much much much much downside already IMO. Interested to get the alternative valuation. Not just high level “it’s over” they’re “****ed” but some actual numbers from a shorter. Thanks

That’s my thinking. Even the ****test or AIM companies that don’t make any revenues or sales are worth more than that.

Mac dude that is right. Cash is cash. You can only report what is in the bank.

The only way that can change is if they have to repay any monies received. I think the rns would not state revenues if that was the case. The would just say “will have a material impact on reported financial statements” and not explicitly revenues. I hope!!!

I have just rerun my model assuming a 30 percent hit to dhsc revs for q1.

Gives q1 revs of 62m. I keep private flat for rest of year so no upside from snpsig or LFT. No growth in private sales. Taken ebitda margin to 58 percent from 68 last year and cash conversion at 50 percent. Gives...

Fy 21 sales 170m
Fy 21 ebitda 99m
Fy 21 ending cash 141m

At SP 370p this gives enterprise value of 120m or an EV EBITDA of 1.2x.

Assume next year we make 40m of sales FOR THE WHOLE YEAR at 50 percent ebitda margin so ebitda of 20m.

That gives fy22 ev ebitda of 5.5x.

Sector trades at 15-20x usually.

Tell me this news isn’t priced in? Show me? The SP was pricing in in this and much much much much downside already.

Why oh why oh why did those idiots give out a dhsc number for q1 unless they were 1000000000% sure it was bullet proof?

The ceo and the cfo have big questions to answer.

The q1 revs were 72.6m of which half were dhsc.

Material definition and impact
10 percent = 3.6m = total revs 69m
20 percent = 7.2m = total revs 65m
30 percent = 11m = total revs 62m
50 percent = 18m = total revs 55m
100 percent = 36m = total revs 36m

Given that only half the biz was dhsc and then the market had assume zero dhsc going forward the actual impact going forward is nil. And for Q1 it is actually not huge either given the cushion we now have from non dhsc sales.

I genuinely livid. I think we do actually need to do something about management here. Is there an organised group outside of LSE anywhere I could get involved with.

This is a man made problem created by an incompetent CEO and management team. Action is needed.

Let’s try to quantify this. Let’s assume no dhsc revs for q1 so nuts pvt and international. No snipsig or LFT sales for rest of year and flat private sales for rest of year.

Gives sales of 145m. Ebitda margin at say 60 per cent is 87m. Conversion let’s say 50 per cent.

Assuming no impact on cash from year end then you have cash at year end 21 of approx 130m. Current mkt cap is 296 before today inevitable dive. So we are saying the enterprise value is approx 170m.

So the q is. Is novacyt worth 170m to someone? Anyone? I say yes. I say it’s IP, it’s technology, it’s innovation and its platform is worth multiple times more.

The CEO has created this issue today. It’s entirely man made. They should not have stated the q1 dhsc revs or any revs in the last update. They did not need to. And now they are back tracking.

Great company. Absolute tin pot management.

When is the age? We should absolutely hold GM to account for this.

Either ncyt should define and explain what the issue is so the market can asses the impact on valuation or they should shut the f up. This rns does nothing but generate more uncertainty. They undo all the good with something that clearly did not need saying. If they were not certain about Q1 dhsc revenues WHY put it in the last rns??!!! Why GM you absolute moron!!!! I have lost my patience with your leadership.

The SP is suffering because management can’t even be bothered to give the market forward guidance for the year. It’s nearly June!!! If you can’t make a best guesstimate for the next 6 months GM step aside and let someone who can take the job.

You are creating problems for the company and for the shareholders. You are a shambles.

Rant over.

What is bad is the lack of detail. I gets it’s commercially sensitive but they should at least give shareholders and the market some details on what the dispute concerns. Otherwise it’s just a black hole.

Tbh I think most people have written dhsc to zero anyway. Material? Ok call it 20 percent. That 7m top line adjustment. Irrelevant.

Last time I checked you can’t make petrochemicals, plastics, fertilise mr etc from windmills. What’s the west gonna do? Tell developing countries they can’t drill to improve their economies and provide jobs and wealth to its citizens cos we are chasing a green dream. It’s total nonsense.

That. Is. Huge.

....currently being handed their arses.

Crabtree that is the most sensible thing I have seen you put on here. It’s hard to believe that both corporate and private equity won’t be looking given (as you point out) the interest and near term growth of this whole industry. We are a niche player but with a footprint, knowledge base and reputation that can’t be recreated easily. And certainly not for the price this company is valued at by the market.

I do t think they will be audited and signed off without a dhsc resolution. Unless they take a provision maybe and the auditors are happy it covers any poss liability.