Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
All I can say is that if there’s a global Sweetbiotix deal announced with product royalties, if a NASDAQ listing is announced soon and if a TU in February shows growing revenues of £3m minimum for FY20, then I reckon the sp should go up :-) GLA
Maybe it’s a coincidence but since the new broker was appointed there seems to have been an increase in the number of trades.
May awareness is increasing.
Agreed. You need the people to develop the business. It won’t develop without them! I also like the bit about strong sales and reduced costs in 2020. Moving in the right direction I hope.
Like everyone here, I’m really hoping for a positive trading update soon too.
One other point which causes me to be a little optimistic is the recent appointment of Chris Brinsmead as a non-exec director.
Don’t you think it would be really embarrassing for the team to appoint someone of such standing only for the next results issued following his appointment to be poor? That wouldn’t make any sense. And why would he want to join a company not going anywhere? I’m sure after his career he doesn’t need the money.
That’s my line of thinking anyway.
Yes, I would say for a company like Opti free cash flow is probably the single most important financial metric at this stage of its development.
This is primarily due to markets tending to dislike the possibility of future fund raises leading to share dilutions etc.
I know SOH has said no immediate cash calls are required for financing current plans but positive fcf would prove this to the market and would show Opti has turned a very important corner. I suspect it would also help the share price.
My understanding is that Opti’s sales comprise both product sales and royalty sales, with royalty sales primarily arising in H2.
Whereas product sales need to be financed i.e. stock needs to be purchased first, and probably has a gross margin of around 35-40%, royalty sales by comparison have a GM of 100% and go straight down to operating profit.
I’m really hoping the H2 royalty sales are strong not least because this would really drive strong cash generation which Opti can use to finance product sales and other costs.
If Opti can demonstrate to the market it has strong cash generation, which markets tend to love, we could do very well indeed.
Here’s hoping for a good trading update, probably in February. Good luck all.
An excellent post. To my mind Opti’s most recent recruits, both the non executive director and the operations/quality manager are precisely what Opti needs and I’m hopeful for 2021.
I come back to FY20 revenues. I’m so keen to see them at least at the £3m level.
If they are it will begin to prove to the market that Opti can translate its IP into solid revenues and with a high growth rate to boot.
Can’t wait for the trading update with everything crossed.
Just for a bit of fun, I thought I’d try to estimate what level of turnover Opti might need to achieve for FY20 to break even which is what we’re all hoping for.
Opti’s accounts are pretty uncomplicated. Looking at previous full and half year reports I’ve come to a figure of £3.2m.
This is based on an estimated gross margin of 52% and estimated full year admin and finance costs of £1.65m.
As H1 turnover was £745k, this means H2 would need to be £2.455m, which would be 3.3x H1.
All this comes with a huge potential error rate and of course I have no idea how well Opti has performed during the last six months but £3.2m is what I think Opti need to achieve to get close to breaking even.
Let’s hope Opti achieve this and even surpass it. Good luck everyone.
I have been a holder of Opti for several years now and my shareholding represents my largest in any company by a country mile. I’ve only recently started posting probably due to the lockdowns.
I cannot think of any other company I’ve come across at such an early stage in its development where the management has done so much to mitigate geographic risk.
I can completely understand why some people focus on H&B and the UK economy because presumably most of us live here but in my view that’s not the way to look at Opti.
Eventually I’m sure Opti will start reporting revenue not only by division but by geography too. This may take a couple of years but it’ll be really interesting when we see it. Just my personal views.
Just to explain why I asked my original question on this thread relating to quarterly reporting.
On 18 May 2020 Opti issued an RNS called ‘Trading and Commercial Update’ in which they reported segmental turnover results for the first quarter of the 2020 financial year i.e. the three months to end March. They reported £407k for these first three months split by division.
Therefore, given they have reported quarterly turnover figures previously I wondered if anyone thought they would report quarterly figures again.
Maybe I was the only one whose expectations were raised.
Again, I reiterate, I am a big fan of Opti.
I wouldn’t get too concerned about the additional staff costs. I see this latest recruitment as a strong and smart move by Opti.
With Opti’s operating model they rely on a combination of third party manufacturers, assemblers/packagers and distributors to get to market. Unfortunately, even working with really good companies you cannot rely on them to always deliver the right quantity, with the right quality and at the right time consistently without having an operational or supply chain type manager to oversee the whole end to end supply chain and effectively keep them on their toes.
If deliveries are constantly incorrect and late Opti’s reputation will suffer, distributors will get fed up and ultimately sales will suffer too.
If both LPLDL and Slimbiome really can achieve the level of sales SOH has suggested long term then the additional salary should be taken care of many times over. I think it’s a great investment.
That’s it for me. Weekend now.
Thanks woolworth. I’m a long term holder in Opti and a huge fan. Fortunately I’ve also got the patience of the proverbial saint. I think I’m going to need it!
I was under the impression that Opti is now reporting quarterly.
If I’m correct we should soon see a trading statement for Q3 to end September.
Does anyone know if this is correct?