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Naive question perhaps but if the DHSC has accepted & can use PROmate, why won't they need supplies of reagent test kits going forward as their stockpile is used up?
Another observation - what poidster says usually makes sense for me but I can be wrong, so I am interested in how other react. The fact that the tread was removed this morning suggests puts his suggestion out as the front runner in the explanation stakes.
if what he has said is true it is utterly scandalous & ought to be the end of Han**** & Johnson
"all we had to is download travel policies from Taiwan"
Dominic Cummings is on now live commenting about the mess up by DHSC in developing testing in the UK.
& can anyone guess what the future sales potential from this announcement will be?
a) yes = lasting impact on SP & reduction of volatility
b) no = an enthusiastic but understated rise that quickly fades away
By announcing in an open ended style without commercial quantification of news items or business projection NCYT allows overly negative reaction to bad news, provides no lasting basis for recognising good news and a time practiced opportunity for its loyal following of shorters to do what they do.
NHS Frimley Park (rather than DHSC) paid a batch of payments on the first contract before July 2020. I'll try & find the reference on here.
Frimley Park is only 4km from Novacyt's head office off M3 is at junction 3(?).
gkb47 - thanks, I'm please that they went through the same testing, I wondered.
UK was in EU when this was issued
https://ec.europa.eu/taxation_customs/covid-19-taxud-response/covid-19-waiving-vat-and-customs-duties-vital-medical-equipment_en
VAT relief for COVID-19 vaccines and COVID-19 testing kits
On 7 December, EU Member States agreed important new measures enabling them to relieve EU hospitals, medical practitioners and individuals from Value-Added Tax (VAT) when acquiring coronavirus vaccines and testing kits. Based on a Commission proposal, the measure is designed to give better and cheaper access to the tools needed to prevent and detect coronivarus.
The rules will allow EU countries to put in place a temporary VAT exemption for COVID-19 vaccines and COVID-19 testing kits being sold to hospitals, doctors and individuals, as well as closely related services. Previously, Member States could apply reduced VAT rates on sales of vaccines but not a zero rate, while testing kits could not benefit from reduced rates. Under the amended Directive, Member States are able to apply either reduced or zero rates to both vaccines and testing kits if they so choose.
The rules will remain in place until the end of 2022, or until an agreement is reached on the Commission's pending proposal for new rules on VAT rates, if the latter occurs earlier
Does anyone know how Innova LFTs tested for approval? Was it in the UK through Porton Down like US LFTs or by virtue of excellent test results somewhere else (presumably California as presumably too few officially acknowledged cases in China after Feb 2020).
That has been the real barrier to entry UK LFTs face to the UK LFT market hasn't it? Not just price.
Poidster, the trading update referred to revenue from PROmate so your view that they were swapping out (NOT extra to) exsig & genesig is v helpful for me. It is an obvious difference. Thanks & KR
Chris Toffer - I agree with ShearClass
Q for anyone: the contract sets out steps to resolve disputes that have failed. They have to go arbitration under the contract & perhaps a court judgement after that - or 6 or 9 months. Is that right? What restrictions are Primer Design under in the meantime in their sales pricing?
I hope the formatting is legible for summary of DHSC "spend">£25 below from 1 Oct to end Feb analysed by the descriptions on invoices:
Sep Oct Nov Feb Total
Lab Facilities 1,237,740 1,576,908 - - 2,814,648
Maint & support - - 110,620 3,682 114,301
Test Kits - post 29 Sep 48,499 31,745,914 92,263,555 47,922,948 171,980,916
1,286,239 33,322,822 92,374,175 47,926,630 174,909,866
Dec & Jan are nil for all types & obviously any invoices Primer Design presented but the DHSC did not pay won't be in a list of payments. Are "Lab facilities" 300 instruments at roughly £10k each = £3m?
The DHSC list is on a different basis from trading updates.
Comments above identify that DHSC "Spend" refers to payment. i.e. cash paid from DHSC to supplier
Trading updates are based on accounting records that tie in with Financial Statements that must be prepared in line with generally accepted accounting principles. So accounting records recognise a sale when it has been made (i.e. delivered). If it were made on the last day of an accounting period before an invoice could be raised the sales revenue would be accrued income, otherwise the sales are recorded at the date of invoice. H
At the YE the "balance sheet" (what the company has or owes) will have in terms of sales
*Cash accumulated in the bank for sales made & collected in year
* Trade debts (sales made but not yet collected) less provisions for doubtful debts (if any)
* Accrued income (sales made not yet delivered).
DHSC spend shows payments made Sep, Oct & Nov. Dec & Jan is blank & a single invoice with 5 items on it (4 called Test kits & the other service & maint) paid 24 Feb for £48m.
Best assumption is test kits are exempt of VAT under special exemption granted, training & equipment MAY be standard rated (20%) - not sure but VAT treatment IS mentioned in contract.
IMO it could be that a hold was put on billing in Dec for some reason (dispute or otherwise) & the whole catch up covering Dec & any in Jan billed when the dispute went legal - best estimated at 2 weeks before payment say 10 Feb. What is NOT shown in the DHSC list of payments is any other contested invoices (i.e. they said - no we're not paying that for some reason). PROmate invoices in Q1 could have been absent from the list of payments because they were raised 2nd half Feb & weren't in any payment run however the announcement 21 May bringing them into legal dispute could be timed 90 days after the invoice was submitted 21 Feb. Someone else may have better knowledge of the process of including later invoices in a claim than me. I have wondered whether the announcement of a legal dispute took such time to be made because of time taken for invoices to reach that stage - announced in April & delayed for Q1 update figures so perhaps invoices submitted in December.
I have prepared month by month summary of DHSC payments to suppliers for 12 months to latest available data Feb 21. I'd copy it in here is the format didn't mess up. It shows only Innova, Abbott, Systems Biology & Tanner were paid in Dec & only them & OPtigen, PerkinElmer (who have a monthly rent due BTW), Qnostics & Randox in Jan. Nov & Oct had 3 or 4 other suppliers receiving nil in Dec.
Perhaps the DHSC system "melted down", perhaps payments were just stopped from the top (indirect by the Treasury?)? Perhaps they broke certain payments to pay for LFTs from Innova & co and perhaps the moratorium has phases - pay nothing/followed by pay for test kits BUT contest everything else (like kit) until forced to pay by court as the ADBX cas
Thanks Urraca.
Perhaps melting under pressure is it, they seem to have stopped payment in some cases that have gone against them. Perhaps the political fall out of figures reported as cost has led to desperate measures. There is a world of difference in terms of culpability between goods that fall short of their contractual description and buying goods delivered as they were described that were unsuited for the purpose (because they didn't know what they wanted or changed their minds after the event).
Mark888 , thanks for contributing now & not when there isn't much to say. IMO, often wrong, you & shear are commenting from different angles on the same thing. You know the opportunity uncertainty creates for traders to thrive but shear is "speaking to", as no doubt he would say, the function of capital markets more generally in a reasonable term & goals in the financial markets of effective companies.
We are dealing with a company that seems to open the door to uncertainty in announcements others use to close it off creating opportunity for traders & shorting rather than working towards the outcome after the bumpy ride.
Poor invest - "losing" the court case depends on what it is about & makes maximum scope of possible outcomes rather extensive - recovery of payments made & payment over of damages might come to the mind of the market. On the other hand losing might only mean non recovery of invoices rendered & reduction in income.
It would have been helpful to have discussed what the reason for the claim may have been on this board and what NCYT might do to limit speculation without being attacked with advocation that "amicable & easy settlement" was only worth considering.
I'll copy a quote from an RNS issued by ABDX on their dispute with the DHSC as illustration of how much simpler this shambles of uncertainty might be made. I don't know what is behind NCYT dispute but how is this for clarity from ABDX RNS on 27 Apr :
"As previously noted, the Company's supply contract with the DHSC expired on 14 February 2021. The Company has still not been able to establish from the DHSC when the outstanding debts in relation to this contract will be paid, as well as other monies owed in relation to the procurement of components on the DHSC's behalf by Abingdon. As at 27 April 2021, Abingdon has outstanding invoices with the DHSC totalling £6.7m (including VAT) with monies being overdue by between 79 and 135 days. This includes £5.15m (including VAT) for the 1 million AbC-19™ rapid tests which were delivered by early January 2021 and are currently being used by the DHSC within the UK Biobank study. So far as the Board is aware there is no contractual basis for the DHSC to withhold payment on products they have accepted and are using. As such, the Board continues to seek resolution to this matter. If the outstanding and overdue sums are not paid in the short-term, then Abingdon may need to reduce its cost base. As at 26 April 2021 the Company's cash balance was £7.7m."
Perhaps the DHSC was put under pressure to contest all contracts they could, or that didn't work, or some other parameter & that is what happened back in Dec. NCYT haven't known how to deal with the muddle as they are developers used to dealing with finance houses, private equity & private investors IMO.
We should look around to other disputes for a pattern. Why wouldn't both parties just settle & move on unless govt policy was to procure from many & then dump on the l
Does anyone have a link to the contract wording or award notice for the contract that relates to the goods in dispute please?
What is happening here? Is the government reneging on payment as a way of avoiding cost they have incurred or has there been an indication of a reason relating to the goods itself. I can imagine this is emotive but at least ABDX have outlined their objection clearly. NCYT have only said a legal dispute is underway which lets speculation run wild about scope and degree of fault when they may just not have been paid as ABDX indicate is their case.
Many thanks for some help GLA
gkb47
Legal document supporting the Procurement of SARS-CoV-2 Antigen Rapid Qualitative Tests (Self-Tests) (award notice 20 May 21) you referenced is in form of an order initiated 13 March due to expire 28 Apr for a redacted quantity of tests. So answer to new or update question is that it is an increment of the existing £1.2bn award in place being notified after the event.
DHSC_Contract_for_Goods_Order_Form_12_March_2021_VF_sig_Redacted
https://atamis-1928.cloudforce.com/sfc/p/0O000000rwim/a/4J000000kgEM/R1ci9dpbcsQ...
what is not right is the you and others are doing the projection.
A disinterested party won't give it credence.
Richard Leonard of Trium actually met GM & Novacyt recognised the opportunity but used hybrid valuation.
The company needs third party evidence of its performance, like report of an auditor. The announcement of a legal dispute leaves open ended uncertainty. The fact the business has not expressed its expectation is a huge factor in my mind. The disinterested third party is on notice the company itself does not have "visibility" of its own income.
The SP can only run from one trading update to the next. Even charitable donations will be read as the absence of demand and major technical milestones receive the meanest & fleeting quantification in value.
So, I was in line with your last set of figures but I'm not updating mine now until they will be more relevant.
That is right. It was more hope than open balanced discussion.
Macmdude - the news seems to be that Q1 may be affected (to me at least). We were told Q1 was PROmate, I presume without wanting to be attacked here, that means PROmate is dragged into the complaint too somehow.
Harchris - lets hope so. I didn't think it would go below 300p last year but it did. If there isn't a plan for the market to take numbers from, they'll value this on cash less provision for settlement to DHSC + downbeat economic value so I expect 330p to be on the cards now. It's going to be more pain & frustration as you say.
It feels like something got worse to warrant an RNS.
They said on 9 Apr
"On 29 September 2020, Novacyt announced a second supply contract with the DHSC for exsig® COVID-19 Direct kits and other products. In the full year trading update announced on 29 January 2021, Novacyt explained it was in active discussions with the DHSC regarding an extension of the supply contract. Unfortunately, an extension has not been agreed, although the Company supplied PROmate™ in Q1 2021 in accordance with DHSC demand. Regrettably, the parties are now in dispute regarding the contract, which may have a material impact on Q4 2020 revenues. However, the Company has taken legal advice and believes it has strong grounds to assert its contractual rights.
Q1 trading update and 2021 outlook
Novacyt delivered revenue for Q1 2021 of €83.0 million (£72.6 million). Approximately 50% of Q1 revenue was driven by sales to the DHSC, predominately PROmate™. "
Presumably DHSC has a problem with PROmate as well now as test kits or q16/q32 machines or whatever it was.
Spreading a blanket of speculation is commercially sensitive in itself.
Without a plan, how do they expect the market to react next?
Beware of Friday RNSs
HarChris - thanks for posting this reference to EKF. I thought of referencing it here as what NCYT could do with in its announcements. Measured commerciality with risk identification. IMO its is an example of an RNS written to pre-empt shorting - the reason to invest is open & clear so the scope for pulling prices down through uncertainty is nipped in the bud in stark contrast RNSs released where shorting plagues the SP