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Bern, obviously we are all guessing, but your view that By Health will start off small doesn't seem accurate to me. Their MO is to go big on product launches, they have the infrastructure to promote nationally, and I'd fully expect that level of market penetration when they do decide to press the start button.
As for when the revenue would be reflected back to Provexis, that may well depend on how much of a contribution DSM are expected to make to launch costs. The big step is to see the launch take place, surely the rest of the story is then all upside. IMHO
Relatively slowly isn't small Alf.
As for DSM making a contribution to launch costs, we don't know how common, and to what extent they've been doing that. All we know is what they did for us.
For smaller companies, it's likely they'll help out, but, as larger companies come on board, I think that will likely change and they'll mainly, be not totally, be after a good discount on the ingredient price commensurate with the large volumes they're ordering and they'll be less interested in short term ( effective ) discounts.
The info we've been fed in the RNS's which talk about By-Health certainly support that. "That" being they'll want it cheaper than others are paying. DSM's job is to use economies of scale or other methods to make the price attractive to By-Health while still making a decent margin. Again, recent RNS's suggest we're confident they can do that, but not to the point where they can maintain present margins, which is fair enough, it's what you'd expect as you deal with bigger companies, and to be fair to Ford, that info is there in black and white for any shareholders to read.
BB
I am sure you are correct BB and BH will be looking at a discount for larger volume. I would also assume that cost of production for the raw material (fruitflow) would come down due to larger volume of product manufactured. This could also give a higher profit margin to dsm from smaller customers.
Gixer
Yea, that's a good point, so would give us more cash from existing customers as part of the profit share.
I also noticed in the last accounts that it appeared ( so not 100% definite ) that the cost of goods for FF+ had come down giving us a higher gross margin. That might be down to DSM continually working on production costs and passing savings on, but it might just have been down to us putting a bigger order in and consequently getting a better price, don't really know.
Time will tell on the difference that ByHealth actually getting going will make to our cashflow. It'll certainly be good, the debate really is how good ? You're also right when you say ByHealth might be a catalyst for other countries / companies sitting up and taking notice, but that'll likely take some time, so is very much more jam tomorrow.
If, some time next year ( or even this year, but that seems unlikely ), we get an RNS saying ByHealth has got regulatory approval for Fruitflow , and firm orders have been placed, then it'll be interesting to see if any financial guidance on it's effect to PXS is given at the same time.
For example, a statement of "... and we expect this to mean the company will be profitable this FY " , or H2 at least, " or "... and we expect this to mean the company will be profitable in FY 2022/23" would be helpful. Will we get such a statement ? Well, if only to control speculation, both overly negative and overly positive, we should do, but I wouldn't be surprised to see something unsuitably vague !
BB
"would give us more cash from existing customers as part of the profit share"
Or DSM could pass on some of the cost reduction to entice "prospective customers" in turn increasing sales.
:-)
Looks like some Diabetes products as alluded to in latest report are in the pipeline http://www.by-health.com/en/Blood
Gixer
Oh, absolutely, and that'll likely have been happening over the last few years and contributing to some of the growth we've seen from the AA.
Sadly, that's pretty slow progress, and until our income and therefore our profit ( or at least sensible forecasts underpinned by info from Ford ) justifies a market cap of 10 million plus, then the sp relies on peoples thoughts on the financial potential* or otherwise of Fruitflow
BB
*obviously there are plenty of people who are content with just saying "this'll be huge" without any idea of what huge is and how, long term , that'll be reflected in the market cap, because large parts of AIM is for dreamers, and for feeding off dreamers views.
What do you mean BB?
This time next month we will be Billionaires
:-)
Fair point.
First thing I'm going to do is buy Alfa Romeo and charge Alf extra for his next motor !
You'll be too late, I'll already own them and have sacked their entire design and product planning staff. :-)
Ah, oh well, there goes my dream :(