Our latest Investing Matters Podcast episode with QuotedData's Edward Marten has just been released. Listen here.
China tested 1,437 cases in two provinces between 17 Jan & 19 Feb 2020 and followed up until 15 March 2020.
Imagine western timescales.
An RNS 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.
V interesting post, thanks. It does look like the DHSC changed tack. I wonder why they disputed the contract rather than just paying Ecolog legal costs.
Details of contractual terms with Primer Design can be found thru link below - extract on dates copied from page 13 for ease
"2.1 This Contract shall commence on the Commencement Date and the Term of this Contract
shall expire on 28 January 2021, (“the Expiry Date”). The Term may be extended in
accordance with Clause 15.2 (Extension) of Schedule 2 provided that the duration of this
Contract shall be no longer than six (6) months in total.
Primerdesign contract Commencement was 28 Sep, expiry 28 Jan, maximum possible extension (for Phase 1) would have been to 28 March. (Thats is what the RNS referred to as 14wks + 10 wks for Phase 1). No payments made by DHSC to Primerdesign were shown in FoI request data between 29 Nov & £44m paid 24 Feb. Seems like dispute started end Nov & went legal mid Feb. Timing of RNSs also interesting - contract announced 29 Sep, absence of extension mentioned in Full year trading update 29 Jan (which might have been interpreted as extension of Phase 1 to Phase 2 but referred to not extending Phase 1 through to the next two months), R&D update 24 Feb & announcement of dispute in Trading update (Q1) 9 April.
https://atamis-1928.cloudforce.com/sfc/p/#0O000000rwim/a/4J000000kEFW/0a.XEpAnsXhWLPDFwBk_JAjjG7TOqEVnG58sfxOiFmw
https://bidstats.uk/tenders/2020/W47/739312011
commercial break? what you mean David Cameron is involved? is he lobbying Julie for a delay in the update so a good bloke he knows can tuck a few away somewhere perhaps?
A...None as you cannot write about unexpected events. Let's not beat around the bush. The only thing that will get this damp squid off the ground is A) big contract wins or B) clarification regarding DSHC contract; the very thing that made the SP drop in the first place.
I agree loss of the DHSC contract undermined expectations of future earnings.
What they might do is release a cogent plan showing current business organisation, revenue streams with projections & net return expectations to YE & the forthcoming two years.
THAT would scatter shorters & bring proper fund interest.
Current business Commercial DHSC Others YE21 YE22 YE23
UK PCR - standard test x x x x x x
UK VoC tests x x x x x x
US market x - x x x x
World x - x x x x
X X X X X X
Ambition for growth
UK PCR - standard test x x x x x x
UK VoC tests x x x x x x
US market x - x x x x
World x - x x x x
x - x x x x
Total X X X X X X
They don't have to give sensitive detail away, just enough to show they have a plan & a list of dependencies/risks & milestones with some narrati
It is frustrating.
It is probably a good idea to watch for new orders placed.
Incidentally, how did Innova get approval if the UK is this fastidious on home grown tests? Perhaps Innova gave evidence that their test, had been pre tested to western standards but just without more than 9,000 covid cases in the whole of china in the last 12 mths, (like all the other chinese products including the vaccines) or perhaps there was a box at the top of the application form that said "Price". How does it stack up!
hope for news, er ...not sure when
SP reflects hopes for risk adjusted present value of future profits. It is rational for the uninvested market to hold back estimating future profit in the absence of guidance, in terms of size and duration, & wait for better information.
It is rare for a business to be able to release an RNS as rich in development as the one today. It is a developer's list of development whereas shorters needed to be fought off with raw commerciality. Even we can't estimate out what the framework will be worth. The DHSC contract announcement added undeniable commerciality which fell away nearly as fast when extension was ruled out.
IMO it isn't about blockbusters it more about lack of surprises & predictable delivery. We need a plan that scopes potential market for products and territories to show the business's view of its future profit stream before this SP will find a stable & suitable market value. Lets hope we don't fall back too far too quickly in the meantime.
Saw these
PerkinElmer
https://finance.yahoo.com/news/perkinelmer-launches-comprehensive-solutions-detecting-130000248.html
DHSC spending with Perkin Elmer
PERKINELMER LAS (UK) LIMITED
Sep 4,499,788
Oct 173,171
Nov 32,867,904
Dec 0
Jan 38,464,353
Feb 29,735,942
Total 105,741,157
Lab Facilities £12.5m rent pm from 29 Nov, + set up then testing £15m pm jan & feb
The DHSC signed a contract with PE for PCR testing on 30 Sep with similar format to Primerdesign's contract - except for a 6 month duration (rather than 4) with 6 x 1 month extensions possible thereafter (not 2 x 1 month). Bidstats shows a related award announcement published 4 Dec for £268m. I can't find comments on the DHSC at the Q&A session for YE results presented in Feb - they were vague from rusty memory though they are obviously active in this market.
this is in context of payments to NCYT
PRIMERDESIGN LTD
Jul 9,943,730
Aug 6,535,267
Sep 1,286,239
Oct 33,322,822
Nov 92,374,175
Dec 0
Jan 0
Feb 47,926,630
Total 191,388,863
RNS 29 Jan said negotiations still ongoing for Phase 3.
how would we find what other companies are on the framework?
NCYT listed its capabilities & basis for approval.
It would be useful to list capabilities for the others on the framework & their bases of approval. Perhaps it would show a "go to" choice for certain variants & the relative speed in each designing & having new tests approved.
Thanks for raising the topic naesmith & everyone else for allowing a discussion of it particularly HarChris.
It is hard to make comments on this board at times when fanatics only want the most positive angle limiting there information available. Other businesses would announce plans, appointment of foreign agents and estimates of addressable markets. We had to wait until a trading update early April for mention of the legal dispute with DHSC which must have started in November with a final bill being raised early Feb. Lets hope they won't hold off announcement of its resolution until the next trading update!! Similarly, a plan must have been made for the charitable donation to have been fit into a production demands, so what benefit is there in holding back disclosure of plans, are they being written by fountain pen?
What bugs me about NCYT is the processes for dealing with the stock market haven't been mature enough. They have dealt with financiers and private equity in the past & not had to give enough information for a choice in an open market like a mature company might. I hope it changes soon & in the meantime, investors can discuss issues with more civility for each other. GLA
Y, more informative than the company itself is
its a possibility worth considering
I wonder why the company doesn't give the market a map of what their sales strategy is.
It is like they want to appeal to investors keen enough investigate for themselves what might be going on, offering specialist investment for amateur detectives just for fun (their fun/our instinct for risk) . Zmar's post shows a strategy is already be in place in some shape or form waiting for a formal announcement of it in teh days & week to come invites SP pressure for everyone less willing to hunt down clues of what this business may be up to like Sherlock Holmes in The Mystery of Covid Testing.
I wonder what the harm would be in announcing that a company was involved if they were.
We accept that NCYT could be involved but they probably can't say because they are probably bounded by a NDA, like we accepted the lack of news on a DHSC renewal was probably for the same reason. Why do we have to make these allowances?
I've read comparisons between Mcap now and last August, written with incredulity at the inequity of the valuation, with £150m in the bank & all the positives. In a real world, the uninvested market, or an auditor in Deloitte, has obvious questions about revenue, business plan & legal exposure that they need answering to improve their opinions. The business needs to step up on its basic homework for the market to see where it stands IMO & end all this mystery.
Agree, No timescale given to my knowledge. It seems to have started 1 Dec when billing was suspended with backlog billed in Feb & a payment on 24 Feb for £44m that might not be all NCYT billed (don't know). The delay in announcement until April was only to link with Q1 trading update was not the only choice in when it could have been announced when you think about it.
VanV - perhaps.
The topic is doesnt compute. I hope you get my point about conviction.
"exciting long term plans for long term growth" sounds credible to me, great! Like "easy & amicable resolution of legal dispute" did last month. I am counted in but this SP will drag down to unnecessarily low levels through shorting and the absence of evidence available to sway neutrals away from counting in their harshest interpretations first. If plans exist, what is the benefit in delay in releasing them? It faffing about that'll undermine their homework when they get round to handing it in - hence why this does compute unfortunately IMO.
I think it does compute unfortunately.
Whatever we believe about the MCap or EV needs scaling back without corroboration or other sources of evidence, particularly from independents like an auditor. Contributors here put forward views of how easily and amicably the legal dispute with the DHSC could possibly be resolved that we all would love to be relevant. Uninvested money, on the other hand, has to be objective about possible outcomes, and rule in the most onerous first for prudence. We can say "lets hope it has been resolved soon" and they say "how bad could it be?" as you can see in the SP.
It is the same for our list of positives about the business and gaps in what might ordinarily be expected from a business don't help, like revenue expectation or plan. Waiting conspires against SP.
"Targeting mid cap" means addressing "small cap" weaknesses in processes that allow market uncertainty such effect. IMO these shortcomings actually add to the investment opportunity when you are confident in the underlying business & it is far better be in this imperfect position that are resolvable than paying a premium for an opportunity that has not yet started trading.
Lets hope for news.
I don't understand why they don't say why they have also spent £1.2 billion on LFTs made by Innova. Can they have been approved to the same standard applied to UK tests with only 9,000 cases reported in China in the last year or 1 in 144,444 of the population. Has there been a compromise of quality against price that hangs over mass usage and has unfairly penalised home developed tests?
The scenario Poidster mused about crossed my mind but timing and 100% shelf life issues were against it.
The DHSC contract was signed 28 Sep, a list of transactions over £23k with Primer Deign was obtained by Freedom of Information request from the DHSC showing 47 transactions between after 28/9 to the latest items listed on 29/11 totalling £125m. We do not know why there are no transactions after 29/11, could be the FOI request was run to end Nov, could be no further transactions dated in Dec. The RNS said Phase 1 was worth in the region of £150m with 300 machines that someone here estimates retail at £10k each (i.e. £3m machines, £147m test kits in theory). Speed of delivery was of the essence in the contract & a process was set for calling off orders and delivery such that an invoice was raised in 2 weeks of delivery with payment following on a timetable. We also have word from the trading update that the scale of these figures fits in broadly results.
Primer Design must have achieved a massive productive capacity by Nov to be paid £125m. The capacity would continue from that date on & presents a dilemma in an ongoing negotiation with a large customer. Would it be better for the business to reduce price & utilise its capacity with the existing customer (who would be all too aware of this choice), or maintain price and lose volume & or the customer while looking for other markets to maintain its production power?
I concluded the UNICEF donation is using under utilised productive capacity for a benevolent purpose and recognition without any link to DHSC or contract resolution. If done well, it might enhance reputation, protect sales price and keep wheels turning.
TB being a weak holder presumably