Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Chris Toffer is right.
The replacement price mentioned of £19.8m represents a sales value of £80-£100m at a GP of 75-80% - so a substantial majority of the sales value of the contract per YE except for the £24m (gross of Vat = £20m net sale) unpaid of YE revenue (in the £73m exposed debt (including VAT £12m that would be recovered if written off) along with Q121 Promate sale £40net or £49m gross). It must be an issue with or over the product.
They go on to say "It is possible, but not probable, that the DHSC's claim for a refund under the limited assurance warranty will be successful"... would significantly impact the financial statements in terms of revenue & provision for product warranty could be significant. Lets guess to the market holding zero shares, i.e. those with a vested interest in ruling worst cases in, that might be pencilled in as adjustment down £120m revenue less whatever has been provided against uncollected debt (£20m?)
IMO this shows in the SP action today, it is back to where it was without information and all worst cases being factored in.
EXCEPT SHs are better off because we now know more and can judge the size of uplift the uninvested cynic would write in if the dispute is resolved as management feel is probable (by replacement) rather than the possibility of repayment. £100m or 140p per share + whatever may be recovered of debts net of VAT + something for lifting the cloud over the business.
Should be more than one catalyst up the sleeve - dispute progress, LFT "both professional and home use", rationalising market listing, regular reporting against a plan with pipeline news could be one (perhaps on the agenda for this lot), lowering the materiality concept for RNS announcement of new contracts, acquisition, strengthening BoD & esp Chairman & NEDs who have overseen this vacuum in market information.
Cash looks good
Start with YE 92m + the DHSC payment 24 Feb from FOI request £48m + FCF on non DHSC at roughly 40% of 49m = 20 so about £160m at 31 May - is that right?
Interesting reading on dispute.
It seems to me the cost of replacement figure of £19.8 represents sales value that would have GP of c 75% - 80% - or sales value net of VAT £100-£80m so covering virtually all of assay sales under contract excluding the £24m unpaid. Wow!
The dispute seems far from easy or amicable to resolve. The contract was written to secure supplies with urgency which was what happened. Replacing them now surge is over is hardly a substitute for the DHSC. On the other hand NCYT gave up the opportunity to sell them to other customers and develop other markets so refunding sales value seems even more unbalanced than replacement. I wonder what the issue was behind not using the products , was it "curdled milkshakes" as someone said at the time, or the process too fiddly for DHSC testers teams to do on top of their other workload.
There are matters that will have an immediate effect in this case IMO.
The market has not had independent confirmation of the cash balance at YE. It is significantly different from previous years so sections of the market that have no particular interest in dramas of particular companies rely more on previously audited figures in lists, updating those lists with significantly improved figures will have an impact.
Secondly, financial reporting requires significantly more concerning events existing at YE whose subsequent resolution may have a material effect on the YE position or post balance sheet events that have a bearing on the view shown in the statements than has been released in RNSs to date. The nature, circumstances, implications, risks and managerial view of for example a legal dispute would need to detail. The good thing is that that disclosure needs to be audited. The auditors will have discussed information that management propose to disclose . Their job is to form an opinion on whether it is true and fair and qualify that opinion to the extent that they feel necessary for a reader of the financial statements to obtain a true and fair view.
The additional information accompanied by an independent view can not fail to put a lid on what might be read into the absence of information available to date. This BB has had the most optimistic & one-sided views of how "easy & amicable" a solution might be "expounded" to the exclusion of debate (sometimes justified by their sizeable exposure). Shorters in the real world have taken advantage of the prudence disinterested investors in the market must apply ruling in all worst case arguments in absence of contrary evidence. IMO a lid will be put more appropriately on the issue next week for good or bad but with the balance away from over prudence in favour of positive for LTHs.
Bringing announcement forward a week is also positive IMO as at least the auditors can agree little is likely to change in the dispute with the DHSC to outweigh benefit of a news vacuum in the investment market. We will still need a guide on expectations however for benefit of product announcements to assess their commercial value however.
quality signing! sod the dressing room, splash her some millions & get a deal done
The Preliminary report from the Joint PHE Porton Down & University of Oxford SARS-CoV-2 test development and validation cell: Rapid evaluation of Lateral Flow Viral Antigen detection devices (LFDs) for mass community testing
https://www.ox.ac.uk/sites/files/oxford/media_wysiwyg/UK%20evaluation_PHE%20Porton%20Down%20%20University%20of%20Oxford_final.pdf
explains some background to their role as distinct from the usual approval route
"DHSC Ministers therefore commissioned PHE Porton Down to establish a time-limited SARS-CoV-2 LFD test
development and validation cell in collaboration with the University of Oxford. In this document, we report on the
systematic and rapid evaluation of LFDs over the past three months, which have been used by HM Government
to inform decisions on increasing rapid COVID-19 testing capability in the United Kingdom."
https://www.capita.com/sites/g/files/nginej291/files/acquiadam/2021-03/capita-annual-report-2020.pdf
For a Profit before tax 65.2m and a rosy view read pages 1 to 110 prepared unaudited by management.
For the other results read the financial statements between pages 110 to 204 that start with a report to shareholders (like you) by independent suitably qualified auditors as required by law (in case management report results skewed in some way). Page 125 the Consolidated P&L account shows the result for the group on the line - Loss before tax £(49.4)m
Ripe for lift off & arriving at 100p by some date with >200m profit in 2021 or hard slow slog ahead with little progress to report & stuck until some unforeseen hope arrives.
The pick is yours!
GL
Perfect pick!
Does this mean they are looking for Chinese backers?
The UK assessed LFTs for themselves through PHE, Porton Down & Oxford. Innova was the clear leader out of 130 picked and the top 40 tested when they first reported back in Nov. It would be interesting to check what accuracy stats Innova provided in support of their application if the assertion the the FDA make is para 6 is correct
"Separate and apart from the foregoing issues, FDA further notes that the clinical study data you submitted in your EUA request for the SARS-CoV-2 Antigen Rapid Qualitative Test was identical to data previously provided by other manufacturers in their separate EUA requests."
Did they cut & paste the same numbers into what they sent the UK govt?
It would also be interesting to know what role price, scalability of production played in that choice, my point being that we may think of test accuracy as the criteria but the government may have had greater weighting on surety of supply & price than we would think. It looks as though they took LFTs based on existing production & price.
Is the source genuine?
If we have been hoaxed, that is one thing, but if true, how could the government procure such amounts without solid due diligence. I don't get it. How have they made approval of RTC & others so hard to obtain and their biggest choice exposed to claims in this warning from the FDA?
Its hard to believe the government could procure so much from a company without solid evidence to rule out allegations such as these made by the FDA. The DHSC paid Innova over £750,000,000 in... er... one month alone (March ?), I recall the total is £1.2bn to date but may have that wrong. How can that happen without a modicum of due diligence, where £1m in professional advice would be 1/12 of 1 %.
Great find, v well done.
Its hard to believe the government could procure so much from a company without solid evidence to rule out allegations such as these made by the FDA.
Shearclasslessness's numbers stack up against mine & I share his reluctance to post here.
I must admit disappointment not to have this BB's version of dominic cummings not commenting here for a few weeks if he's gone now. I was hoping to hear whether he'd doubled up his holding at 330 as he promised now that he's disclosed that he was clever enough to have sold out.
We need a financial plan & audit opinion on YE20. Product advances just can not be valued without it, as we have seen this week again. Every effort on this BB to big up the company with positive and censure discussion can not make the difference that normal, basic, financial information would.
Part of the reason for not considering lab escape at the time was "resistance" to Trump ( or perhaps hatred would be a better word) when it should be about origin (& implications for the likely evolution) of the virus.
Agree, is that the next wait after EU approval? (& what ODX's RNS referred to)
hey ho, good news all the same, Julie will be pleased.
Promate isn't on the list of what has been paid as its in dispute.
Abbott was paid 67m in March, 3m April
AZN 9m & 2m
Optigene 43m & 23m
PerkinElmer 59m & 22m
Randox 22m & 11m
Innova needs deciphering from a closer look at trading names.
You'd think an agency specialising in regulatory consulting ought to have a review documents before submission to avoid contributing a spanner in the works of its clients like this & I expect an in house regulatory team to ask to be copied into a submission at AVCT and at Mologic.
It looks like a shambles from having too many parties involved, none of them effective AND we are told this was not the only failure to have happened through Mologic's submissions team last week.
Sticky, you mixer you, sayin I dun it coz I never dun nuffin nor nuffin, mixer, wus that **** down at the independent regulatory that dun it, twitter minger, minging mixer so shut up.
The benefit of a known plan, measured goals and predictability is in appeal to good quality II commitment.
I took shearclass's advice & had another look at the SP Angle model in Oct (that recommended a target price of 1,463p).
I was surprised how little impact adjusting their assumptions for YE21 down had on their target price.
The target value counts most on how business will fare in the long term which they measure by a "terminal value" assumption applied at the end of 2025. They assumed the YE 2025 business will continue to grow at 4% which added 817p into the 1,463p target. The years 2022-25 added in 244p's worth and assumed building business away from the DHSC. YE20 & YE21 estimates made up the rest. Heavy adjustment to SP Angel's YE21 assumption would only bring their target price down to about 1,300p provided their assumptions on replacement business are achieved.