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at what price will Nova start buying up there own shares, with 89 mil in bank?
imo
So this debt free company valued at £38m could, tomorrow, buy a £70m company outright in cash and still be fully financed to manage day to day operations.
Certainly never seen anything like this before.
It’s the dispute causing it. The poor business outlook is bound to play a part but the bulk of this is the market assuming we lose the dispute.
Wild applause for our board for not seeing fit to put out an Rns reach this morning.
Sure so by that reasoning we are largely below cash value because of the dispute. So leaving everything out besides the dispute we could end up with anything from wipeout to ~ £150m in cash?
So the range of outcomes from here are 100% loss of capital to 4X - if you think there’s more than 50/50 chance of a positive outcome then it’s a no brainer to buy now and just wait for the outcome in 2024- you’ll never get odds like this from the bookies!
I’m thinking to buy back the ones I sold when I last reduced as I don’t need the cash anytime soon.
The market is causing drop.... Nothing else.... 52. 56......... 67.... =.. 20...25........ Money is a virus usa stability.... Cure.....silly banker monkees....
Rns for what, Wilson?
It is the lack of communication from the BoD to the shareholders, its almost to little to be normal? Why...
Going to be voting no, to an awful a lot this agm :(
HC, fair point but none of us have any clue whether it is 50/50 or better/worse. Given how badly this company is run, it makes you wonder what state the contract was in.
We’re also looking at a circa £15m drop in income this year so that’s another huge hit to the P&L unless we dramatically cut more costs.
"It’s the dispute causing it."
p100.....i think the dispute got us down to 65p.
this additional drop is imho because there seems to be nothing going on....and we seem rudderless.
I still think it’s the dispute. The market priced in a heavy loss from it, but as time goes by and the company shows how badly it is run I suspect it is more and more pricing in a negative outcome and gradually bringing down the marcap to reflect that. £39m for a company that will go bust if it loses is actually quite high a valuation.
The cash burn shrinks considerably now (all things being equal) because there’s no huge LTIP payments to dole out.
As giz said, look at the Markets, nothing happens in isolation.
We are now entering the situation I've been talking about for over a year now - worsening economic conditions that leave any low cash debt ridden companies extremely vulnerable. The past three months have seen small caps moving very early and executing placings at huge discounts to prevent the risk of insolvency, now all those that took their time will face even more difficulty in finding the necessary financing to keep them operating.
All that has played out as expected, the question is is there a functioning management team here at Novacyt to start acquiring those troubled businesses?
The directors are being very cautious because of the dispute. Should they misuse the money, they could be held responsible for it. But I believe that a good acquisition would bring value to the company, and could count as a tangible asset in the event of losing the dispute.
However, they would have to buy in cash, without offering shares because who would take shares knowing they could be worthless if the dispute is lost?
"£39m for a company that will go bust if it loses is actually quite high a valuation."
i am not sure it will go bust....but it will be worth b*gger all.
the thing is the market can't go too far one way or the other ..it has to hedge its bets to a certain extent.
if the company would show some sign of progress then I think the market would respond
I certainly hope they use cash for M&A rather than shares at this lowly valuation - what’s the point of it otherwise? £10m would be enough to give them huge working capital legroom and they have almost nine times that.
"is there a functioning management team here at Novacyt to start acquiring those troubled businesses"
1 James McCarthy is acting CEO and FCO and as such will have all he needs to keep a tight reign on spending while sales are not good.
IMO JM's acting CEO status accords with JW being able to find a suitable CEO when he feels the time is right, providing JW with maximum flexibilty.
2 We await a replacement for Ed Snape, who retired at the end of last year.
RNS 07.12.2022 "Ed's retirement from the Board will take effect from 31 December 2022"
For info - RNS 15.07.2022 - Dr. Snape's beneficial shareholding is unchanged at 17,919 ordinary shares representing 0.03% of the Company's issued share capital.
Perhaps someone to Ed Snapes and JW's liking will be the replacement.
3 The Novacyt website has a 'board & management' page, https://novacyt.com/about/#board.
The board is displayed, but the management page has been missing since mid February.
22.02.23 - In response to my enquiry, Mandy stated "There is no regulatory requirement to show senior management on the website and the site is in full working order, however we are currently making various changes to it"
4 I think it might be too soon to pick up troubled businesses, and JM / JW will want to assure any M&A prospect will not be a drag on Novacyt finances even short term.
This is all about keeping as much in the bank as possible, now the prior LTIP scheme payments to GM & AD are complete, whilst awaiting business conditions to improve.
So until business conditions improve, and/or the DHSC dispute is not ended, I would assume that a list of possible M&A targets is regularly being compiled and updated, in line with JM / JW's strategy.
In JW's case I would think might regularly update a short list of preferred suitable CEO's on the back burner.
Whether company strategy is still in line with DA's attempts remains to be seen, - one more reason for an R&D update soon.
Thanks for such a thorough reply B2, but do you really think holding on to £87m constitutes keeping a tight rein on spending? That is above and beyond the sort of cash position necessary to make it through a rocky 12-24 months.
I do agree though that there's no rush for M&A however frustrating it is for us shareholders sitting on paper losses - all the while they have such a war chest there is the potential for a complete turnaround here.
and all the while they keep taking their (increased) salaries and I would not be surprised to see increases again put in for, this year as well ?
I think the saying is.... #otherpeoplesmoney ! #ours
'This is all about keeping as much in the bank as possible, now the prior LTIP scheme payments to GM & AD are complete, whilst awaiting business conditions to improve'
B2h , if that is the aim ,then it is the exact opposite of what I'd be doing.
If NCYT lose the DHSC dispute they need the strongest balance sheet possible to negotiate repayment terms. Why would they not pursue some form of M&A to have an increased income to service such payments in the worst case scenario.
I know for a fact that there are several small biotechs that already had CE approval ,that they could have targeted , that do similar tests to those they've partnered with Clonit to market , as effectively a distributor and taken 18 months to do so. It is just not logical to me. I await the next R &D update , but if all they offer is the Clonit tests I will not be impressed.
Live in hope and die in vain , tie up with Katalyst out in our mobile labs with a full menu of new tests R&D have been working on and a heavy take up of the new water test across all NHS labs , seems to be a vast improvement, but would like Poidsters opinion as he served his time in a lab.
Re read this last week and boy were the government pushing. We want it , we want it now and we want delivery to commence yesterday. They undoubtedly put Novacyt under extreme pressure , GM reacted and sourced vast quantities of reagents etc ( the write down ) and then we were as we all know right royally ........
https://bidstats.uk/tenders/2020/W41/736296992
June 2024 can't come some enough .
HarChris - I have no basis for this, but I think the BoD has an expectation that successfully refuting the DHSC claim, (and resultant payment of funds claimed by Novacyt), will produce Cash at Bank of considerably more than the present £87mil.
I think they will be willing to spend big at that point in time.
I expect that the M&A delay is because if they 'fritter funds away' then they will not be in such a good position to spend big after winning the dispute.
Spending big may be a succession of purchases or one or two bid purchases, we can't know what they intend here.
Kaeren - an M&A purchase now, may not be as much value for money as an M&A purchase of similar / the same prospects in the future. HarChris stated "worsening economic conditions that leave any low cash debt ridden companies extremely vulnerable." I agree with him for now, but future situations may well make M&A more attractive, as those prospects might be more likely to make immediately accretive profit contributions to the Novacyt group. (of one).
Hearing Mandy say there is no present M&A embargo, and we are willing to spend cash on M&A doesn't feel right to me, because they haven't done in the past what they said they were willing to do in the past.
But these are two hypothetical points of view, as nobody knows anything about Novacyt's circumstances, as they play their cards so close to their chest.
B2H I hear what you are saying and Harchris , my strong preference would still be to make an acquisition under 30mm.
But not my choice and may well not be JM's either , who knows .
JW, as always, will have the last word.
JM owes both CFO and acting CEO positions to Wakefield.
He is at liberty to find himself another position if he should become so disposed.
Until then, if JW says jump, JM says 'how high'.
That can't be of help to many here, but it's my way of seeing the present situation, and I hope for improvements soon.
Board can't spend it, would be seen as deliberate deprivation of funds, they'll have been told they cannot spend anything above usual day to day operations, certainly no more acquisitions or share buy backs.
Just a case of waiting will June 24, and make a decision whether to stick more money in to average down enough to see some profit if the court case is favourable and counter case is also upheld, balanced with chucking money down the drain it they lose or have to settle at detrimental terms.