Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
Joker - thanks for your good humour, you have to laugh sometimes though I am embarrassed to confess that to not reading everything on here before I go off on one, sorry Shaun, no disrespect intended, appreciate your help, I had a bee in my bonnet, There is a mine of info in that transaction list if there isn't an RNS at 7.00 on Monday like there should be.
There are many many ways of "throwing revenue over the wall" between accounting periods but in this case central government procurement controls apply. IMO funny business would be a no no. I'd guess an invoice would only be raised on delivery. You can see from the transaction lists that there are several locations being stocked including some central deposits. The DHSC might accelerate or decelerate requirements for stock (based on expected usage) but NCYT wouldn't be able to deliver in advance of orders nor have much scope for delay of delivery.
I'll put points about transaction references again. There are a couple of patterns of 95 payments between July & nov. There is a string of 47 transactions divisible by 49,509.60 (being 257 lots of 49,509.60) between July & 22 Sep and then another string of at least 22 transactions from 29 Sep to 29 Nov divisible by 48,499.20 (representing 398 x 48,499.20). My life hasn't yet sad enough to figure out whether any of the remaining 26 fit the profile of those two batches. I've assumed £48k bought a pallet or box worth of test kits, again if enough sadness wells up on Monday, I might try to work out more on how the patterns work.
There are some interesting transactions, a batch of 200 £48ks was paid on 5 Oct that makes me think there is a central distribution place.
Another sad thought is that the earliest payment on 6 July is of "transaction number" (I'd guess aka NCYT sales invoice number) 306930 and the latest on 29 Nov is of 309502. There are 95 transactions listed but some cover two payment amounts so there are only 80 NCYT sales invoice references. Sales invoices for Primer design probably use sequential references as an internal control so there were 2559 sales invoices raised for either less than £25k (parameter of teh download) or to other customers as the sequence has 2639 in all. You can see as someone has pointed out above if teh DHSC is £143 in payments (closely aligned to revenue) & H2 total revenue announced 29 Jan RNS was €239.2 million (£213.7 million) it only leaves £70m for DHSC December and all other sales. Have a look at the website & see if you can get an invoice number for a small order to test if it uses the same transaction sequence - bet it does, there are probably 2000 sales of small values £5m, 25 invoices to the DHSC in Dec coming to what? 30m and lets say £35m sales to all other customers in the 150 countries.
We should not underestimate the power & potential in those sales. Unique access to monitoring infection where most needed (like Zimbabwe & China) and under developed growth potential due to focus for UK surge.
My concern is NCYT approaches its financials like teenagers cleans their bedrooms. Plan are not something to put off till Q2, nor is furnishing the market with adequate info to drive the company agenda & they shouldn't undersell their unique contribution to a global effort - a big pharma wouldn't! I bet it is underbilled.
Agree with bluemoon.
The finance function lets the investment down with the business almost run like a owner managed business.
Confidentiality may prevent specific mention of terms with the DHSC but that wouldn't prevent disclosure of production capacity information. "Last year we delivered x and expect to increase throughput in a range of x or y depending on z", a breakdown of sales streams and their growth objectives & an idea of result expected for YE21 or factors it depends on.
Saying that a plan will be available in Q2 is a bit like a teenager putting off a chore they don't believe in like cleaning their room. A competent approach would have regular process, that does require knowledge and involvement, but does not distract from business by doing a little bit often towards a format designed to manage the market sufficiently for its ends including stability in its backing. Otherwise it ends up in this scenario with us second guessing a situation like nervous wrecks.
It struck me in the day of reflection yesterday how sad it has been to have had indication of a treatment with 79% efficacy since July that is unlikely now to be tested & available before the urgent need has passed. It is bordering on scandalous, as it would be if vaccines still had months before testing completed.
The tender seems to be for a software framework for a schools information management system (SIMS) and identifies the supplier as Capita ESS. I think it must be won by the business that was announced as sold before financial year end as there is no mention of it on the CPI website yet.
We know H2 revenue was €239.2 million (£213.7 million) delivered in H2 2020 from 29 Jan RNS of which the DHSC download of items >£25k was £143m from Jul to Nov. Transactions for Dec are not yet available from the DHSC so we can expect to find out how much of 213-143=70m was DHSC >£25k. I've noticed the first Primerdesign invoice number in the DHSC download was 306930 on 6 Jul & the latest was 309569 on 29 Nov, of the 2639 numbers in that sequence the download total £143m used only 80 invoice numbers. Business outside the hefty DHSC must be relatively low value. It just shows the focus that must have gone into rendering those sales.
It might be huge but by a different route than before via dividend
dividends are paid out of realised profits, it is unlikely that profits will have been realised (made) to pay a dividend equal to the SP in the near future however profitable future development of test will be unless there had been a sale or part sale of the IP which is probably not desirable. I'd guess it would be more likely that money for development and commercialisation would be needed unless it is shared in JV/collaboration
The problem is that the management focus on "an adjusted" basis & the audit report is on a standard accounting basis.
We have operating profit on an adjusted basis 111m (being software 43, People 52, CCM 107, Govt 11, Tech 35 = 248 less (133) not mentioned so presumably management's central overhead = 111m). They show an adjusted profit before tax of 65m which is adjusted operating profit 111m less adjusted impairment & restructuring(?)(who outside mangement's bubble cares?) (46m) = management's adjusted profit before tax 65m
In the auditor's view, management adjusted operating profit 111m needs (143)m taken off for unadjusted (goodwill & impairment (34) & unadjusted costs of restructuring (110) = accounting standard operating profit/(loss) ( 32)m [YE19 : 0m). Add unadjusted profit on business disposal* 31m less finance costs (49) = Loss before tax (49)m [YE19 :(63)m]
Auditors report to SHs reduce the scope for figures to be adjusted towards a particular view.
* what I have underestimated is how the profit on disposal of businesses is so low. ESS was sold for £400m, it was amalgamated into CBS so it wasn't easy to see the associated cost, but since it was acquired >20 years ago my (incorrect) guess was there wasn't much associated goodwill - so I estimated profit circa £200-300m. They must have had to get rid of some book value to sell it if all those disposals are only 31m +ve total.
NFR - I have been telling myself the same thing & expecting news taking effect after the limit of the last contact from 29 March
they have to be profitable to pay a dividend & it is not measured on the adjusted profit for management. So for example the profit at H1 of 30.1m was a loss before tax (28.5) on an unadjusted basis & coming in in the range for results set last year at profit of 275m translated to an audited loss before tax (63)m - 338 is a big difference to carry outside management's focus . They'll have a profit this year from ESS exceeding the underlying loss but take it out of the result to judge future expectations, divisional results are weakening & more so without ESS and costs/write offs still out of kilter.
It looks like there is less FOMO than the other way today.
I agree on Q1 will be strong
Hartlebury - i've just tried to find the oddo report from last week on their web site without success, presumably they had access that we all need but what they have found out is hidden away, buried for restricted access while everyone else is holding out of intuition & near blind faith. What a crap way to to run the relationship with Pis
harchris - spot on!
Imagine that only a year ago, this company could not obtain cash having had to dilute its capital base by 50% during 2019 via Negma convertible loans & still had unsecured deals at 14% (from memory) such as the one closing out with Vatel & they had been at this for long time before that funding an accumulated loss of £44m on mainly on research. Really good finance leadership would move the business on.
Does anyone have the link to the oddo note please?
I've just worked my model through from scratch again. The revenue from my YE20 model came out only 4% different from the update (luck) so I rejigged its components.
Ist draft YE21 revenue is £251k based on Q1 flying high. hard to think Q1 be less than full tilt when they hit YE figs.
Does anyone have a profile of the number of tests that might be expected in the UK through 2021 or guesses on income abroad? How could we rationalise the number of test they sell per week? Shame not to have more to go on.
KR
That is right, the low PE implies a time limit to profit flow. They usually increase on expectation of growth but need a stable base to start from which they question until it shows what it is, where it comes from so explicit medium term plans & progressing steps would help.
Thanks for your feedback Jungla. I've put my latest meander on the previous thread incase anyone is interested.
There must be some other figure missing if my theoretical value of a sale is so wrong, which it obviously is. It does help work at this to hammer out how it stacks up so know the "shape" of business revenue to expect in YE21. If we could do that, we might find a way to judge business progress rather than just relying on mega announcements.
IMO, it would help to quantify the level of day to day business, perhaps linked with testing volume stats which should build a base of less volatile revenue into YE21 & help us identify the new business targeted in YE21 forecasts.
If anyone has a better breakdown of the initial DHSC stage RNS to make an estimate for the other business with other significant customers and the "150 countries" in YE20 results to help flesh out expectations for YE21 - great!
Just listened to Justin Waite's latest cynicism concerning testing. He fought hard against Paul Hill's defence and heard about as much of it as he did Vadim's the other week. Battle commences at about 35.00. I admire the way these guys inform themselves of statistics.
https://www.youtube.com/watch?v=MvUbwLEsHQw
Temuchin - not sure about the rest of this BB, sometimes it is heartfelt & personal.
I try to look at the numbers to retain sanity as we don't have a long history to go on for this business & what they can say is restricted by confidentiality. In any case their RNS in Sep had some mega numbers that were borne out in the trading announcement on 29 Jan.
Wilson is quite right about sales value of a machine at £10k but putting that figure into the guide we received last Sep leads to another conundrum. It might not be t everyone's taste but its worth thinking through for sake of current forecasting.
We have £100m as a guide for DHSC "10 weeks" that would be (£10m per week for 300 machines or £33,333 each pw it it is all run cost. If the sales value of a machine is only £10k the £150m guide for the initial phase would only include £3m for equipment sales. You can see to usage would have to run at the full rate £10m pw for 14 weeks to get to close to £150. Deployment has to have been phased which implies another sizeable piece or revenue is missing. (If roll out was even over 14 weeks rate would be 300/14 = 21 instruments pw & only half the amount of usage would be generated is all deployed machines ran at full capacity when deployed - in that case the revenue needing explanation is about £75m)
Ok, thanks, couldn't imagine £500k was right in real world, so if we had 210 spare machines produced after 28 Jan to 28 Mar at £10k = only 2.1m. But if any of those been deployed, even more reagent.
Chas -
Y are right about the £100m with a couple of assumptions.
Lets take the Sep RNS alongside the redacted version of the underlying contract available by link on the award notice on bidstat. There are a couple of differences in what is expressed because the two serve different purposes so look at the redacted contract if you get the chance.
Phase 1 was for supply of the 300 instruments in a 4 month period ended 28 Jan (or about 14 weeks) with 2 x 1 mth extensions available to the DHSC (the 10 weeks) and a defined limit on contract of 6 mths (28 March).
The initial 14week/4mths of Phase 1 was for SALE of machines with calibration, training & support to get them going plus supply of reagent (run costs). 10week/ or 2 x 1mth extension could include sales. I guess it is there to obtain reagent rather than new sales (as they expected 300 machines to be in place/sold by 28 Jan). So each fully operational machine (not splitting between types as we don't have numbers) would generate £100m/300machine/10wks = £3,333 pw which is exactly as your figures are.
Surge usage may be higher or lower, some machines may not have been deployed or got to original use assumptions but, at the very least, we can reasonably guess the DHSC will need a contract from 29 March to keep the machines that are in use operational.
My guess is that contract ends March & Sep fit in with procurement periods running to public sector financial YE on 31 March. Contributors here report that NCYT machines are procured centrally by the DHSC rather than on local NHS accounts through the supply chain.
We can't tell what the speed of rollout would have been in the first 14 weeks so the split between their sale/deployment revenue and their usage isn't clear. Just as illustration - if 300 machines were deployed evenly over 14 weeks 21 machines would have to be ready each week & guessing it'd take a week to get one operational & another for luck, we could say the first week's lot would be used 12 weeks, next week's lot 11weeks etc.
Reality will never be straight line, production ramps up, teams improve, there are pinch points but whatever is said it would be odd to have NO sales after 28 Jan. Is the rule of thumb is that £150m of phase 1 was for machine sales (is that it £500k each?!) NCYT would have its manufacturing capacity ramped up by 28 Jan. Lets say they are churning them out at 21 p wk - that'd be 210 machines in 10 weeks or another £100m revenue at least.
If Phase 2, 700 did not happen, or not happen as envisaged back in Sep, NCYT will have had the chance to make in roads into to meet a new DHCS requirement. I can't help also noticing the timing window for a sale under a new DHSC contract dated 29 March before YE on 31 March!!
Confidentiality would be sky high because of other procurement discussions underway with other suppliers of different kit.
Or instruments have been sold elsewhere, if not required.
Sorry for length of this, it is wh