Member Info for TheTrotsky

Ace, I think you miss the point. Nobody really knows where oil and gas prices are going. Historically it's always been a fickle market. High prices have historically resulted in supply surges (new exploration, swing producers etc) and eventually price falls as supply starts to outstrip demand. I think one of the primary problems at the moment is a lack infrastructure and transport (the US has the capability to produce a lot more LNG but lacks the refineries and shipping to meet the current shortfall in Europe). Those potential c$2bn of profits may never crystallise and there are many factors that could result in oil and gas price collapse. It seems unlikely at the moment, at least in the short/medium term, but plenty of traders have been caught out by unexpected swings in the past. Rusty is not in the casino business. Hedging secures DEC's future. Playing the lottery doesn't.

The derivative financial instrument liabilities are not "real" liabilities. DEC has entered into hedging contracts to sell its oil and gas at given prices in the future and the derivative financial instrument liabilities represent the difference between the negotiated hedging prices and the current market prices for oil and gas. It's the potential opportunity foregone (c$2bn) should the current market prices remain constant (essentially the additional profit that could have been booked if DEC hadn't hedged). It sounds bad but, from the perspective of a company like DEC, certain, guaranteed cash flows avoid the potential for boom and bust and if the current market prices start to fall then it's feasible that the current liabilities could actually become assets (if the market prices for oil and gas fall below the hedged prices). Hedging removes risk from the business and leaves price speculation to the speculators (the speculators are in the money now but if there is a sharp fall in current oil and gas prices they could just as easily be out of the money).

Rusty's problem is that as the derivative financial instrument liability rises there will be increased pressure from certain quarters for DEC to significantly reduce the level of its future hedging (to bag more of that potential profit for DEC) but, as an experienced oilman, he knows that path would not be prudent and therefore it's not a topic that he cares to broach in public debate (it's not a debate he's going to win with people who are only focussed on the near term); instead, it's time for him to grit his teeth, ignore the naysayers and keep a steady ship.

"Tax liability that could not wait few weeks..."

It's standard practise. There are also some tax nuances, such as the matching rules and wanting to peg the the value of the shares awarded to the price received on sale (to avoid any ptential shortfalls), which means that it's best to sell the same day that the new shares are awarded. If Rose was really concerned she'd have sold the whole lot.

The date of the award is consisent with last year; so I don't think anything can be read into that.

Muggins, But is also means that DVRG would need to notify the market everytime they take a further drawdown (because they would need to issue further warrants). The fact that they haven't done so since the original announcement would suggest they haven't taken any subsequent drawdowns. Plus they need authourity to issue further warrants.

People also appear to have completely overlooked the fact that a reduction in forecast sales for the current year will actually put less pressure on DVRG's cash requirements. Beyond the initial drawdown, the loan facility is predominantly intended to help fund the gap between when sales are made and when payements are received (those government debtors often paying six months plus). Lower sales should actually help DVRG to better manage their cash flow. Hopefully in the future they will be able to negotiate part payments on despatch/installation (it's not uncommon to see payments for equipment purchases being made as and when certain milestones are reached; so much on order, despatch, installation etc. followed by a balancing payment at an agreed later date)

smeeno, I suggest that you re-read the loan facility. Warrants are issued with every tranche drawn down; giving the lenders the right to subscribe for shares at a given price. c11.3m warrants were issued with the first tranche, exercisable at 20p. I'm not sure from the RNS whether there is a time expiry on the warrants. IN ADDITION, if DVRG is unable to repay the loan then the lenders have conversion rights to convert their outstanding loan(s) into shares.

Barking. Profits halved (despite an extra million customers), EPS reduced, ordinary dividends reduced, return on equity ratio reduced, solvency ration reduced and still the share price rises! The only saving grace are the dividends and those are don't look sustainable at current profit levels. I'm sure that it's not a long term decline but it does seem odd that the market heavily punished DLG for getting its short term pricing wrong but gives ADM a free pass. Sour grapes ;-)

Yup ;-)

I've been ahead of the market before and the market never ever did catch up. I'm cautiously optimistic but need GB to now step up and act like a CEO rather than a kiddie in a sweet shop, get off Twitter and start improving the quality (information) and timeleousness of the company's official announcements. The last RNS was better but still fell short of what the market needs; I don't think that updates on EBITDA, cash/debt and loan drawdowns are covered by NDAs. PIs may not like to hear all of the facts but at least we can better gauge progress and feel confident that no bad news is being hidden (it's inevitable that fast growing companies will face a cash squeeze but as long as it's being properly managed it shouldn't automatically be read as bad news; it goes with the territory)

The market was spooked by Sabre and DLG and when AV, unlike LGEN, chose not to issue a (panicked) trading update the market assumed AV's results would also be impacted (and the share price fell accordingly). I think Blanc has made a strong statement; if she has something to say she will say it but, otherwise, she will not pander to the market's foibles and issue RNS's every time the market has a panic attack (you do it once and the market starts to expect you to issue an RNS each and every time it has a wobble)

trillsg, The market doesn't agree with you (yet). We have a lot further to go before the market is convinced and less Twitter and more financially informative updates would help. The credit facility spooked a lot of PIs and GB has not yet addressed the matter in any of the recent RNS (the market needs to see that growth and cash are being managed). There's simply too much speculation and we've been here before (the China deal that dragged on for over a year before GB saw fit to update the market again). GB has a habit of dangling carrots but failing to meet timelines. There may well be valid reasons (these certainly aren't normal times; China in particular hasn't returned to pre-Covid business as usual) but GB has repeatedly failed to address expectations when timelines have slipped; he prefers to go silent which does not help. I think Labskin and STC have great potential and I think it's right that DVRG should be exploring potential ties ups but I don't think we should be rushing for a quick payday.

£100m or £1bn is totally irrelevant. If GB runs a tight ship and can demonstrably show the market that rapid expansion can be managed without breaking the bank then the share price will inevitably start to move north.

casapinos, I suggest that you actaully dig a bit deeper. The unit linked assets don't belong to the shareholders (they are matched by insurance and investment liabilities). L&G only held c£3.5m of equities attributable shareholders at 30 June (see note 4.03). It seems to be a very common misconception that insurers hold significant shareholder funds in equities.

Rorkes, Not sure that STC income is low margin. In the RNS issued on 4 July DVRG talk about "affiliate fee income" which would suggest that they are earning commission rather than retailing the products. In the latest RNS, they have reiterated STC income of over £1m (presumably this also includes plan income - either a one time fee of £99 or £75 quarterly); any commission, barring some administration costs, would be virtually 100% margin. I doubt that plan income is covering the initial start-up costs but there would appear to be considerable scope to ramp up income if they can continue to ramp up member numbers. Interestingly, not sure whether people subscribing for a single test actually constitute members and, if not, whether there remains scope to convert people who have taken the single test to quarterly subscribers. More detail needed.

A more timely update but still short on critical detail i.e. cash! Fear of a high cash burn rate has hampered the share price for months and this RNS does nothing to allay those qualms (higher sales are all well and good but they are just adding to the cash consumption, assuming long debtor days). It would also be helpful to have some segmental income analysis between the two primary divisions (still a bit a dubious about STC revenues but glad to be proven wrong). Also, what about EBITDA? Still scope for significant improvement in their financial reporting.

PS. Is a 6% conversion rate good? They are clearly getting a lot of hits on the STC website but appear to only be converting a relatively low percentage. Given all the hooplah and recent good press coverage one would hope that they can significantly improve the conversion rate (because at some point they will fall out of the spotlight). Would like to see in excess of 100k members by year end (would need to see c17% compound monthly growth of the 7,000 members added in June).

PPS. £18m sales looks more manageable but it would appear that MW now has the capacity to manufacture and deliver more than c£9m orders in H2 if additional orders can be bagged with enough time to deliver in H2. It will be interesting to see whether they can bag a few more of those £1m+ orders before the end of Q3 (early October at the latest I would hazard) to drive potential FY sales even higher. We will also want to start building a big pipeline of orders for next year.

I'm in DVRG for the £s (perhaps even tens of £s) in the future not the pennies that a potential IPO now would offer

8411, Get your head out of the clouds. STC is most definitely not worth £100m, at present. DVRG is currently valued at £31m; even the PIs don't believe that valuation at the moment (if they did they'd be driving the share price north)! I for one would vote down an IPO; if this is a unicorn, I don't want to sell it on the cheap. Also, tech stocks on the NASDAQ have tumbled of late and valuations are a lot more conservative (relatively speaking) than they were (say) 9 months ago. If VCs had missed the boat DVRG wouldn't be talking to them (amongst others). VCs offer cash to fund rapid growth.

PS. Do you really think its good business to sell (say) 70% of a business that you think might be worth £1bn for a measily £70m? Personally, I'm in this for the long haul benefits; not to sell on the cheap today. That's the big picture!

PPS. Labskin's future value lies in it's skin biome database. If DVRG offloaded 70% of Labskin it would also lose control of that database. If DVRG kept the database and licenced it to Labskin then any potential current valuation of Labskin would come tumbling down. Labskin is not just about STC. The database offers opportunities to generate multiple future income streams and generate significant value. GB likes to say that they've only just started to scratch the surface. Retaining over 50% (ideally 75%) control is vital if the majority of that future benefit is to flow to DVRG's current shareholders

People are really at risk of cooking the golden goose here. An IPO does not make sense (venture capitalists like to enter on the ground floor and ride the elevator up before an IPO - they like to get a foot in the door before the PIs). A private placing with a mix of venture capitalists and/or existing customers seems more likely. Also, I wouldn't expect DVRG to want to cede control over Labskin (it would be Labskin not STC); technically DVRG would only need to retain more than 50% of the voting rights but they'd lose some of the decision making powers and I'd therefore be surpirsed if DVRG ceded more than 25%.

It's also likely to be a mix of debt and equity. If Labskin is a potential unicorn then venture capitalists would probably be quite pleased if they could take a 20%-25% stake now for (say) £10m or less (a discount would generally be apply for a non-controlling interest); any additional funds would probably be provided in the form of loan notes that would likely carry a coupon of c10% per annum (they like to earn money whilst the value of their capital investment is growing and loan notes also rank ahead of ordinary shareholders in the event of any winding up, thus de-risking their investment).

RB40, In my experience markets are as clueless as the rest of us. When the market gets it right everybody clammers that the market knew all alomg and when the market gets it wrong there's generally a deafening silence ;-) At the moment I think the market is being very cautious and until DVRG improves the speed, detail and frequency of its financial reporting, I think the market will remain so. DVRG is forecast to more than double its revenues this year and a lot of its major MW customers are governments; a combination of high growth and slow payers! Even successful companies can go bust if they don't manage their cash flow.

I'm not too concerned about what the loan facility might or might not imply at the moment; the fact is that DVRG is asset light (so can't raise cheaper secured loans) and would have struggled to raise an additional £25m from the markets (even when the share price was at 30pps). The loan facility offers flexibility, they only draw down what they need as and when they need it, and the fees/interest they are paying are not demonstrably different from what you might pay for an invoice discounting facility (the warrants are unusual but necessitate the lender subscribing at a 40% premium to the share price when the advance is made; so it's not all bad). In my recollection, businesses aren't normally offered invoice discounting for government invoices (because governments quite often pay 180 days plus and lenders either don't want the risk and/or don't want to tie up their cash for such long periods) so the loan facility couldn't have been conventional one, even if DVRG wanted one.

I think the share price will improve if DVRG can show that they are managing their growth/cash issues and, to do that, DVRG must now improve their (very lack lustre) financial reporting. We need quarterly updates on revenues, cash etc. to be issued within one month of the quarter end. Many smaller listed companies with fewer employees manage it and GB has got to pull his finger out; he needs to spend less time on Twitter (it does not help the share price one iota) and more time sorting out the reporting.

Since Peel raised the bid price to 22.50p at 9.21am this morning there have been over 450k of shares sold at or around the bid price and yet Peel still holds the bid price! A buyer?

RB40,

I'm not sure where you get 90k tests per month from (the last RNS that referenced testing capacity that I can find suggested 60k - 20k in the UK, Ireland and US respectively with more capacity being created in the UK and US) but, even so, we can't necessarily conclude from the RNS that the available capacity is not being utilised (STC will be testing people who don't become members and also doing repeat tests). More information is needed before any firm conclusions can be reached.

As regards the loan facility, people seem to have ignored some pertinent facts. Firstly, this is a 3-year drawdown facility and DVRG only gets charged interest and fees when funds are actually advanced. Secondly, as part of the agreement, it would appear that DVRG issues warrants in conjunction with each advance and, as far as I am aware, DVRG would need to issue an RNS each and every time it issues new warrants. Therefore it would appear that the only advance DVRG has taken to date is the initial £4m.

Calm down people. £24m is a very steep target. Don't forget that we ONLY made £2.4m sales in Q1. Realistically we will need to at least double Q1 sales in Q2 if we are to have any prospect of reaching £24m (£7m-£8m iof H1 sales would still leave us to find £16m-£17m of H2 sales; that's a very big ask). Also, don't lose sight of the fact that equipment orders do not equate to equipment sales and that the orders announced to date (c£8m by my reckoning), even if all delivered in the current year (which we won't because some of them are leasing deals), would still leave us to find an additional c£16m of income.

To suggest that DVRG might announce an increase in the current year target is, in my view, complete pie in the sky at the moment and it's probably unrealistic to think that STC might provide a big fill up in the current year because we appear to be capacity constained on the laboratory side (we can't keep up with current demand and that will inevitably put a damper on membership growth - we are increasing capacity but it's unclear when we will actually be able to handle c40,000 of tests per month already in the pipeline) and DVRG's share of income from product sales still needs to be clarified.