Share Name Share Symbol Market Type Share ISIN Share Description
Optibiotix H. LSE:OPTI London Ordinary Share GB00BP0RTP38 ORD 2P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 59.00p 58.00p 60.00p 59.00p 59.00p 59.00p 82,078 07:45:29
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Health Care Equipment & Services 0.3 -1.5 1.7 35.3 47.49

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23/2/201816:34OptiBiotix - Better Science, Better Health. Better buy some!32,443
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14/12/201719:19Michaelmouse school of investing and fraud 51
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DateSubject
23/2/2018
08:20
Optibiotix H. Daily Update: Optibiotix H. is listed in the Health Care Equipment & Services sector of the London Stock Exchange with ticker OPTI. The last closing price for Optibiotix H. was 59p.
Optibiotix H. has a 4 week average price of 54p and a 12 week average price of 54p.
The 1 year high share price is 89.50p while the 1 year low share price is currently 54p.
There are currently 80,485,712 shares in issue and the average daily traded volume is 175,297 shares. The market capitalisation of Optibiotix H. is £47,486,570.08.
10/2/2018
22:08
parob: A repost of Risky's excellent post from 29th Jan:Had some time to kill on a flight so thought I'd give my thoughts over recent discussions on here. For those interested:Opti have been able to keep cash burn so low because they do not sell the products themselves. The fact is if they raised £10-£20m they could fund a marketing campaign and the products would be out there much faster though costs would be significant and risks far greater. As many will realise Opti rely on partners to sell the end product pulling in the cash through the license of its IP. It's a slow process as it involves not only discussions on deal structure and terms but actually getting these partners on track to create sell and advertise an entirely new product under their own branding and getting them to deliver within a certain timescale (though all at little to no cost to Opti when the ££ hits the bank). The model involves these partners going out and testing demand for the product, making sure stock levels will be sufficient to cope with continuous demand on launch, coming up with packaging, formulations, marketing campaigns and sometimes testing these new combinations together to see if there is any synergy between the ingredients. Obviously before all this there will be discussions from the interest leading to a contract and an RNS. It's not as quick and easy as negotiating the number of pencils your going to sell striking a deal and organising the transaction. The larger the partner and scale clearly the longer it will take to follow the process seeing as they will be making a significant investment. Galenicum for example (£100m+ revenues with double digit annual growth) they are a medium sized partner operating over multiple territories therefore a lot of planning and time will be required hence the H2 rollout. The first order will likely be significant for Opti imo due to their scale. Also take for example the recent surprise news via proactive interview of an American firm ordering LPLDL to trial before launch. This would suggest they are pretty sizeable and maybe have gone for a soft launch to test demand before putting in a larger order and signing a contract. An early order from the US whatever the case is a very very good sign.Some companies will be faster to market with Optis IP like HLH Biopharma who replaced an existing cholesterol reducing ingredient 'AB LIFE' made by AB-Biotics. AB-Biotics is an established Spanish pharmaceutical probiotic competitor that currently sells £6m+ annually of this inferior ingredient. Clearly represents what the industry thinks of the product and shows revenue potential for LPLDL.There is no revenue guidance yet because these companies have no clue how much they are going to sell before going out and actually doing it. SOH will also be trying to keep these companies within a particular timeframe from signing a contract to fully readying the product for launch, however they will not launch until they're completely ready seeing as they are taking all the risk so determine Y1 Y2 revenue accurately would be impossible. I'm glad Opti have not guessed and shows the experience and confidence of management. SOH must have investors nagging him for this daily. Getting something as important as revenue guidance wrong would be detrimental to the company going forward. Currently the share price is in limbo because of this so definitely take advantage if you have spare change. Low 60s is an absolute no brainer.Opti are changing an industry through their technology like the digital camera did to the Kodak - these pharmaceutical grade products are not available yet and won't be for maybe 4+ years as virtually all of Optis competitors have gone the costly, risky and time consuming Pharma route. Opti are years ahead of the microbiome curve due to their chosen route to market and the lower regulatory hurdles. When these Pharma groups start rolling out these products and more of these types of microbiome products become available the Optibiotic platform should become an extremely well sought after technology considering its enhancing abilities. Big pharma will be wanting their products to be as good as they possibly can be opening up an absolutely huge opportunity for Opti. LTH will hit the jackpot with this platform. Opti are becoming viewed due to their research as one of the leaders in an emerging market forecasted to be one of the fastest growth opportunities. Winning awards in yearly succession at global industry events such as Probiota tells its own story. Only an idiot would have you believe the corporates are not interested. For industry to value sweetbiotix at £20m already before having any type of commercial deal or product selling tells you a lot about the IP and the discussions that are taking place. That's almost half the current market cap and sweetbiotix though huge is still just 1 of 3 opportunities within the Optibiotic division alone.Opti will not necessarily be a guaranteed success however it's diversity in to so many major markets and the immense progress on all fronts means it's now highly likely. Opti have over £1m in cash, £95k cash burn per month, growing revenues from multiple partners and £4/5m of Skin holding which could be realised anytime after the April lock in. Very comfortable position to be in financially meaning Opti can play hardball or even walk away from the large players if any exclusivity deal does not maximise the potential value of the IP yet- the Opti bod know exactly what they're doing and the potential value of this IP if fully exploited. Skin, whilst offering a significant opportunity for Opti has mitigated any need to dilute via placement. SOH does not seem to be the kind of chap to lie to the market or lose track on the financials considering how tightly the ship has been run to date. Quite honestly I've never come across a company with such a strict control over finances.Even though they do not excite the market I can not stress how important these deals with HLH, Galenicum, Pharmabiota etc are to Opti as it will lead Opti to gain a far better exclusivity deal from a corporate then if it had no other revenues and relied heavily on a deal from a corporate. Corporate will want some type of exclusivity usually over a territory so clearly the amount needs to be significant to Opti. Likely this is where the waiting for the 'right deal' quote from SOH takes its meaning. By proving commercial viability through other outlets it presents little risk to the corporates hence increasing Optis stance in negotiations. The bigger the risk for them clearly the less they will offer Opti to take it on. Let's not forget they are making a huge commitment to rollout Optis IP. Opti just sits back and waits for the money from the license. It's as profitable a model you will come across but takes time to build. These smaller early deals will ultimately allow Opti to demand a larger MOQ or a Royalty payment for exclusivity over a particular territory/continent than if it was going solely for a deal with the corporates from the start. It's how to quickly increase the value of the IP within the industry very early on.On balance there is only one thing that concerns me about Opti at the moment and that is the time it takes to start building the revenues following signing these deals before the cash gets low and the market starts to get nervous. Though as discussed Skinbio shares of £5m mitigates this risk and Optis main outgoings are R&D based therefore they can cut these down if absolute necessary. Revenues should be building with the boss forecasting profit by YE 2018 so clearly revenues are on their way in size from somewhere. Of course I would like more deals to be signed but with such an unusual low cost model it's not surprising the time it takes even though the technology is brilliant. Holding out for the right deal will ultimately create a solid sustainable business for LTH.I've increased my holding by 10% the past month. The model is what is causing the slow appearance of commercialisation though anyone paying attention will realise IP is the most valuable thing Opti have and is what the business is built upon. Selling it cheaply early on would be the most stupid thing they could do. Therefore holding out building the smaller deals first is actually how you maximise and 'wait for the right deal'. When these exclusivity deals come through they'll be higher due to the methods used to get that better deal. When all this good news comes together in terms of potential ££ the market will be scrambling for the stock I have no doubt that will happen hence why I'm still here following my most successful investment decision to date. Unless you need to sell you should be rubbing your hands at these prices. Once all the deals really start flowing and the money is shown revenues should grow in excess of 100% per year, more when these exclusivity deals get signed off. Risky - from sunny Australia
31/1/2018
19:09
elrico: My email to SOH I know you are not concerned with daily fluctuations with the SP, your focus is building a £200-£600 company. However, we are once against testing the nerves of long term investors with the serious disconnect with commercial progress and the share price. Of course there are a number of factors for this; bloggers failed £1 by Christmas for a 2nd year, EIS balancing the books for tax year end, stale bulls. IMHO one of the fey factors is missing key events, investor expectation on progress; namely, LPGOS (as an example). We were told there would be a pilot production would commence in November, ahead of full scale production in December. We have had no news on this front - you of course say investors should not assume nothing is happening, or NDA are in place, etc. I don't think it is unreasonable for PI to expect some form of update, good or bad on LPGOS/TATA. Without it, PI's default position is something is wrong and this spooks investors. The other issue is the commercial end point on existing deals with CII, Galenicum, PharmaBiota, Knighton Foods, etc. We only know Galenicum launch their Stop&Go in H2 because the company told me. Investors see commercial deals signed off, but have no clue what this mean in terms of timeline for the end products to be available on the shelves, or distribution. I have tried to explain OPTI will bank license, production revenues and the end products/royalties come later. If I am correct, then investors are thinking we won't see any revenues for another 12 months+ and therefore OPTI will need a fund raise. I am sure you have much more important items on your agenda, but I felt compelled to voice these concerns after so many emails and chats I have had with PI's. I have suggested we may get a significant commercial update with the FY results, but this is 3 months away. SOH Thanks for the insight. I don’t worry about day to day changes but do follow trends so where possible I can identify sellers and manage sales to II’s. I have a number of II’s who have expressed an interest and this is often their opportunity to buy in subject to timings and price. Where sellers go direct to the market this creates a challenge and sometimes temporary impacts on the shareprice. I speak to brokers and MMS and their does not appear to be a sustained seller. Today, one MM decided to shake the tree as they were short of stock with a offer at 60p which then created the necessary volatility and a number of retail sells. My concern is that these less experienced retailers may not fully appreciate that we have just got shareholders approval for the share capital reduction which creates a potential for a dividend. I also communicate with investors like yourself on a daily basis to assess sentiment so I can address concerns, particularly where these are misplaced and there is a disconnect between the share price and the opportunity. We had a lot of deals before Christmas and as we close out more and larger deals and the potential turns to commercial reality we would expect that to be reflected in the share price. In terms of deals I am sure you can appreciate that in any agreement with a commercial partner you cannot disclose details without their approval. Given Tata, like many corporates, wouldn’t let us announce their name when we signed the first agreement and it took months of negotiation and cost just to get agreement that I could mention them in an interview I am sure you can appreciate the difficulty of sharing information with investors in this area. I will look to update investors via Proactive in the next day or so. All going well, no concerns, just looking to close out more and larger deals and build up revenues.
29/1/2018
02:50
riskybusiness1: Had some time to kill on a flight so thought I'd give my thoughts over recent discussions on here. For those interested:Opti have been able to keep cash burn so low because they do not sell the products themselves. The fact is if they raised £10-£20m they could fund a marketing campaign and the products would be out there much faster though costs would be significant and risks far greater. As many will realise Opti rely on partners to sell the end product pulling in the cash through the license of its IP. It's a slow process as it involves not only discussions on deal structure and terms but actually getting these partners on track to create sell and advertise an entirely new product under their own branding and getting them to deliver within a certain timescale (though all at little to no cost to Opti when the ££ hits the bank). The model involves these partners going out and testing demand for the product, making sure stock levels will be sufficient to cope with continuous demand on launch, coming up with packaging, formulations, marketing campaigns and sometimes testing these new combinations together to see if there is any synergy between the ingredients. Obviously before all this there will be discussions from the interest leading to a contract and an RNS. It's not as quick and easy as negotiating the number of pencils your going to sell striking a deal and organising the transaction. The larger the partner and scale clearly the longer it will take to follow the process seeing as they will be making a significant investment. Galenicum for example (£100m+ revenues with double digit annual growth) they are a medium sized partner operating over multiple territories therefore a lot of planning and time will be required hence the H2 rollout. The first order will likely be significant for Opti imo due to their scale. Also take for example the recent surprise news via proactive interview of an American firm ordering LPLDL to trial before launch. This would suggest they are pretty sizeable and maybe have gone for a soft launch to test demand before putting in a larger order and signing a contract. An early order from the US whatever the case is a very very good sign.Some companies will be faster to market with Optis IP like HLH Biopharma who replaced an existing cholesterol reducing ingredient 'AB LIFE' made by AB-Biotics. AB-Biotics is an established Spanish pharmaceutical probiotic competitor that currently sells £6m+ annually of this inferior ingredient. Clearly represents what the industry thinks of the product and shows revenue potential for LPLDL.There is no revenue guidance yet because these companies have no clue how much they are going to sell before going out and actually doing it. SOH will also be trying to keep these companies within a particular timeframe from signing a contract to fully readying the product for launch, however they will not launch until they're completely ready seeing as they are taking all the risk so determine Y1 Y2 revenue accurately would be impossible. I'm glad Opti have not guessed and shows the experience and confidence of management. SOH must have investors nagging him for this daily. Getting something as important as revenue guidance wrong would be detrimental to the company going forward. Currently the share price is in limbo because of this so definitely take advantage if you have spare change. Low 60s is an absolute no brainer.Opti are changing an industry through their technology like the digital camera did to the Kodak - these pharmaceutical grade products are not available yet and won't be for maybe 4+ years as virtually all of Optis competitors have gone the costly, risky and time consuming Pharma route. Opti are years ahead of the microbiome curve due to their chosen route to market and the lower regulatory hurdles. When these Pharma groups start rolling out these products and more of these types of microbiome products become available the Optibiotic platform should become an extremely well sought after technology considering its enhancing abilities. Big pharma will be wanting their products to be as good as they possibly can be opening up an absolutely huge opportunity for Opti. LTH will hit the jackpot with this platform. Opti are becoming viewed due to their research as one of the leaders in an emerging market forecasted to be one of the fastest growth opportunities. Winning awards in yearly succession at global industry events such as Probiota tells its own story. Only an idiot would have you believe the corporates are not interested. For industry to value sweetbiotix at £20m already before having any type of commercial deal or product selling tells you a lot about the IP and the discussions that are taking place. That's almost half the current market cap and sweetbiotix though huge is still just 1 of 3 opportunities within the Optibiotic division alone.Opti will not necessarily be a guaranteed success however it's diversity in to so many major markets and the immense progress on all fronts means it's now highly likely. Opti have over £1m in cash, £95k cash burn per month, growing revenues from multiple partners and £4/5m of Skin holding which could be realised anytime after the April lock in. Very comfortable position to be in financially meaning Opti can play hardball or even walk away from the large players if any exclusivity deal does not maximise the potential value of the IP yet- the Opti bod know exactly what they're doing and the potential value of this IP if fully exploited. Skin, whilst offering a significant opportunity for Opti has mitigated any need to dilute via placement. SOH does not seem to be the kind of chap to lie to the market or lose track on the financials considering how tightly the ship has been run to date. Quite honestly I've never come across a company with such a strict control over finances.Even though they do not excite the market I can not stress how important these deals with HLH, Galenicum, Pharmabiota etc are to Opti as it will lead Opti to gain a far better exclusivity deal from a corporate then if it had no other revenues and relied heavily on a deal from a corporate. Corporate will want some type of exclusivity usually over a territory so clearly the amount needs to be significant to Opti. Likely this is where the waiting for the 'right deal' quote from SOH takes its meaning. By proving commercial viability through other outlets it presents little risk to the corporates hence increasing Optis stance in negotiations. The bigger the risk for them clearly the less they will offer Opti to take it on. Let's not forget they are making a huge commitment to rollout Optis IP. Opti just sits back and waits for the money from the license. It's as profitable a model you will come across but takes time to build. These smaller early deals will ultimately allow Opti to demand a larger MOQ or a Royalty payment for exclusivity over a particular territory/continent than if it was going solely for a deal with the corporates from the start. It's how to quickly increase the value of the IP within the industry very early on.On balance there is only one thing that concerns me about Opti at the moment and that is the time it takes to start building the revenues following signing these deals before the cash gets low and the market starts to get nervous. Though as discussed Skinbio shares of £5m mitigates this risk and Optis main outgoings are R&D based therefore they can cut these down if absolute necessary. Revenues should be building with the boss forecasting profit by YE 2018 so clearly revenues are on their way in size from somewhere. Of course I would like more deals to be signed but with such an unusual low cost model it's not surprising the time it takes even though the technology is brilliant. Holding out for the right deal will ultimately create a solid sustainable business for LTH.I've increased my holding by 10% the past month. The model is what is causing the slow appearance of commercialisation though anyone paying attention will realise IP is the most valuable thing Opti have and is what the business is built upon. Selling it cheaply early on would be the most stupid thing they could do. Therefore holding out building the smaller deals first is actually how you maximise and 'wait for the right deal'. When these exclusivity deals come through they'll be higher due to the methods used to get that better deal. When all this good news comes together in terms of potential ££ the market will be scrambling for the stock I have no doubt that will happen hence why I'm still here following my most successful investment decision to date. Unless you need to sell you should be rubbing your hands at these prices. Once all the deals really start flowing and the money is shown revenues should grow in excess of 100% per year, more when these exclusivity deals get signed off. Risky - from sunny Australia
24/1/2018
11:39
rafboy: toyin, I know he has indicated he is not concerned with the current share price but I feel that is a bit of an excuse so he doesn’t have to discuss it. Our share price has been stagnant for 2 years despite some excellent progress on several fronts. If I was the CEO I would be concerned at this. Now I know the share price is beyond his control but I do think better PR for all that OPTI has achieved would see new investors come on board, to the benefit of the share price
28/11/2017
07:44
michaelmouse: The Capital re-organization proposed this morning is a non-event. Just a hoop that they need to pass through having said they would give Opti shareholders "free shares" in SBTX a year ago. Firstly, it begs the question why wasn't this done months ago? Secondly, it now suggests that the distribution is not a given, "should circumstances in the future make it desirable to do so." Thirdly, the biggest problem is this. Opti can only give away the shares in SBTX that they own. Herein lies the problem. How can they give them away without trashing the share price of both companies? Indeed why would they want to give them away? Think about it. If they give them away to shareholders then Opti's assets shrink by the amount they give away and the share price will fall. The SBTX share price would also fall in anticipation of the give away shares being sold directly into the market (it would be impossible to manage a lock-in period as some have suggested). The GM to propose a Capital Re-organization is a sop to keep you interested and attempt to prop up the share price. The elephant in the room is that they have reached the end of the financial year with no word on revenues, cash-flow, losses, cash remaining etc. As ever, aimho.
08/11/2017
20:10
parob: Had to copy and paste this well thought out post from Novy kluk on the iii bb. I've actually met this chap at 2 investor presentations: Subject: Crude attempt at a Target Price During 2016 when OPTI was developing its science, it had no real revenues. Its share price "soared" however based on the anticipation of its tremendous potential. In those early days it was no doubt over valued in economic terms. During 2017 with the"risk off" attitude of most investors, its share price has been range bound, despite the growing number of significant deals struck with large "players". One might now consider the company is undervalued against its revenue potential from those deals currently in the public domain. Its with that background I've attempted to make a crude target price calculation as a sort of "reality check" and to validate my own LTH in the company. I use the term "crude" calculations as a number of inputs are down to my own assumptions, and not all of those will be correct! However the following information is in the public domain (not my assumptions) and understood to be from reputable third parties and authoritative; * Each of the major contracts currently being announced will net OPTI between £250k and £500k per year. * OPTI's operating costs are virtually fixed and change little with the number of deals struck. They currently stand at £1m per year. * There are six LPLDL deals of substance already agreed, including the Galenicum LPLDL on 27th October. Apparently SOH had said publicly he expects another four to be agreed in the near future. This week's Supply and profit sharing agreement with Knighton Foods is for Slim Biome. So there are still a further 4 LPLDL deals expected to be announced in the short term. That will make ten LPLDL deals in place. * OPTI are paid their royalty revenues either 3 months or 6 months in arrears. * Some clients like Galenicum are fast off the mark and launch immediately a deal is struck. Other partners are slower. So it's possible that a deal signed today with a partner who has a "slow launch", will not generate any revenues for a year. But equally a deal could see revenues generated within three months. It seems almost certain there will be more than the ten deals mentioned above and each worth between £250k and £500k to OPTI. And that's only from the LPLDL Stream. SlimBiome is gaining traction now and a further large deal with Tata is expected to be announced "soon". Given the size and scope of the Indian market, revenue of £1.0 million is suggested from that particular deal (if and when it happens). Then there is the Sugars Stream which SOH has in the past suggested will have the greatest potential! Those are the inputs I've gathered in the public domain. The following inputs are my own assumptions; * Due to the "slow start" effect and quarterly or half yearly royalty payments, I've assumed no revenue is generated in the current year. i.e. The initial year a deal is struck. This is clearly incorrect. But I don't want to over state revenues and/or guess at partner start-up timings. * The average net revenue from each deal will be £375k in year one of revenue, increasing 10% compound for subsequent years. * The number of deals and revenues; LPLDL Stream: 10 deals by end 2017. Due to "slow start" and royalty payments, assume no revenue in current year i.e. the year the deal is struck. So revenue in 2018 is £3.75 million. 7 additional deals during 2018. So revenue in 2019 is £6.750 million. 5 additional deals during 2019. So revenue in 2020 is £9.300 million. SlimBiome Stream: Whilst there are a couple of Slimbiome deals in 2017, assume effectively they are in 2018. So Assume 10 deals during 2018. But one is expected to be with Tata where the revenue is thought more likely to be £1.0 million. So due to "slow start" etc no revenues are assumed in 2018. But revenue in 2019 is £4.375 million 5 additional deals during 2019. But I assume one deal is in the USA where I assume revenue is likely to be £1.0 million. So revenue in 2020 is £7.312 million. Sugars Stream: Assume 10 deals during 2018. Revenues only start in 2019. So revenue in 2019 is £3.75 million Assume a further 10 deals in 2019. So revenue in 2020 is £7.875 million. * No revenues are assumed from OPTI's 42% stake in SkinBiotheraputics. At UK Investor (April 2017) I was told that first product(s) would launch in 18 months time. So first product(s) possibly in October 2018. Revenues only likely from H2 2019. But are likely to be significant, particularly in 2020! * No revenues are assumed from OPTI's planned Internet on-line direct sales. Though that will generate revenues when it's eventually launched. * No revenues assumed from the cross selling opportunity from the JV with Bened. Though again there will be revenue from that source at some stage. * OPTI's cash currently stands at £1.6 million. So with costs of £1.0 million/year and cash starting to flow in, cash should not be an issue unless a further acquisition is considered. But if there were a cash call for such an acquisition, logically it would be earnings accretive. * It seems very logical that once OPTI's income streams become established, the P/E multiple for a such a growth company with such predictable earnings, will be quite substantial. Possibly 25 or 30? For my calculations I have assumed a constant P/E of 20 for all years. Though I think that will prove very conservative with a 2019 P/E of say 23 and for 2020 a P/E of 26 being more likely. Do the numbers - it makes a very big impact!! So from the above (Using a £1.0 million/year cost figure) the net earnings numbers become: 2018 - £3.75m - £1.0m = £2.75m. OPTI has 78.793 million shares in issue. So with a P/E of 20, the target price is 70p. (Market Cap of £55m) So the current market price is at last justified with economics (next year), rather than the anticipation on which it was driven during 2016. 2019 - £13.875m total net earnings. Price becomes 350p. (Market cap of £276m) 2020 - £23.487m total net earnings. Price target becomes 596p. (Market cap of £470m) Comments and intelligent critique welcomed! GLTA NK
12/9/2017
20:24
owenmo: Here's hoping Vanduke you have Skinbio in your sights too. Good to see someone talk up Opti share price even if it means paying higher price for planned purchases; integrity Vanduke; a rare enough commodity.
30/8/2017
16:45
fathenry: REF ABOVE, FWIW , HERE IS HIS VIEW ON OPTI ALONG WITH OTHERS. HE WANTS TO SEE SOME DEALS BEFORE HE BUYS, HOPEFULLY HW WILL HAVE TO PAY A LOT MORE WHEN THEY OUT. SOME OTHER COMMENTS ON SHARES , ALSO GYM (LON:GYM) Share price: 212p (up 3.4% today) No. shares: 128.2m Market cap: £271.8m Interim results - this company operates 97 low cost gyms in the UK. It reports today on the 6 month period to 30 Jun 2017. The shares listed in Nov 2015, at 195p each. So overall, little share price progress has been made since then, once the initial flurry of excitement wore off, as you can see from the 2-year chart below; 59a67f037c45aGYM_chart.PNG I like the chart - a long period of bottoming out, and now what looks like the start of an up-trend. Could this be a buying opportunity? Let's have a look. The financial highlights cover the main points, with my highlighting the most important bits; 59a6816e0f9fcGYM_highlights.PNG As you can see, there's good growth. This company is basically a self-funding roll-out - i.e. the cashflows from existing sites are being used to finance the opening of new sites. I really like self-funded roll-outs as investments. The beauty is that investors can just sit back for a few years, and watch the company expand & grow more profitable. That usually leads to considerable share price appreciation. The main risk to roll outs is that operational problems are considerable. Management has to not only manage the growth, but also keep control of a rapidly growing business, which is far from easy, and requires strong management. The other risk is that competitors spot what you're doing, and copy or improve on the format, thus reducing returns. Other key risks include poor site selection (especially signing up over-rented sites, which become loss-making). Multi-site businesses are also feeling the strain right now from business rates increases, and staff costs (Living Wage, pensions, apprenticeship levy, etc). This is quite a rapid roll-out; Expect to achieve the top end of the guidance range of 15 to 20 sites openings for 2017 That's a fairly rapid pace of expansion, given that the company currently has 97 sites. Mind you, having visited a site myself, they're not particularly complex fit-outs. It's just a big space with lots of exercise machines & other equipment in it. This company says that it is the market leader, in a sector (low cost gyms) with 515 sites (up from 450 in 2016, so competitors are expanding too). I really like the customer proposition with this company. It's a no-frills gym offering, so particularly no swimming pools. However, they are big, and well-equipped gyms, at an affordable price - average revenue per member is £14.28 per month (down slightly against 2016). The beauty with gyms is that lots of people sign up, but rarely actually use the facilities. Looking at the figures, the first point which jumps out at me, is the big difference between adjusted EBITDA (up 19.1%), and adjusted earnings is up a much higher amount at +40.3%. The main reconciling item is probably the depreciation charge, so I'll see if I can work that out. Ah, the company has given a reconciliation, and this confirms that the depreciation charge has only risen a modest amount, year-on-year. Therefore that helps boost the percentage increase in adjusted profits. 59a686630a4f0GYM_reconciliation.PNG I'm not explaining this point very well! What I'm trying to say is that the EBITDA figure has risen by £2.2m, but the depreciation charge has only risen by £0.4m, so that gives a leveraged increased in % adjusted profits. Note also that the site EBITDA margin is good, at 41.5% of revenues. I've just found an explanation for why the depreciation charge has increased so little; As a result of the annual assessment of the useful economic lives of property, plant and equipment, the useful economic lives of certain items of leasehold improvements and gym equipment have been increased. This has decreased the depreciation charge for the period by £0.8 million, compared to the depreciation charge under the previous useful economic lives. Depreciation as a percentage of revenue decreased from 16.8% in the six months ended 30 June 2016 to 15.0% in the six months ended 30 June 2017. That's a one-off benefit this year, in terms of the increased profit %. Therefore, I would treat the 41.7% increase in adjusted profit with caution. The underlying figure is actually lower than that, since the change in depreciation policy really should be adjusted out, in my view. EDIT: A broker has estimated that profit would have been up 24%, if the depreciation change is disregarded. So this is quite a significant point to note. Outlook comments are as expected; During the second half of 2017 we will continue to implement our plan, opening new sites and bringing to maturity the gyms that have been opened during the last two years. I am confident that the business is in as strong a position as ever to execute its strategy and deliver further profitable growth. After a good first half we are on track to meet market expectations for profit for the full year and I am encouraged by the progress we are making. Balance sheet - this is dominated by fixed assets (note that all property is leasehold), as you would expect. These have a net book value of £104.3m. There are also £48.8m in intangible assets (which I usually write off to nil). The working capital position looks very weak, with a current ratio of only 0.35. However, in this particular case that doesn't concern me, because the business is so cash generative, and has plenty of headroom on its bank facilities. I think this is just the nature of the business. The trade creditors figure of £36.7m is the stand-out number, in that it looks unusually large. No additional detail is given in today's interims. So I've checked the last Annual Report, to see what it contains, as follows; 59a695c70230dGYM_note_17.PNG (NB. figures as at 31 Dec 2016) I've highlighted the largest number within trade payables, which is £16.8m lease incentives & rental increases. Lease incentives are either cash receipts (reverse premiums) or rent-free periods, which a landlord offers to a new tenant, as an inducement for them to sign the lease. The tenant would end up paying a higher rent, if this type of deal is done, so that's how the landlord recoups the cost in the long run. In the case of a reverse premium, the way it is accounted for, is like this; DR Cash £x CR Trade payables £x Over a period of time, usually 5 years, the creditor is then gradually fed into the P&L as a negative cost - usually offset against rent payments. What this does is to spread the benefit of the landlord incentive over the number of years that it relates to, as opposed to it being booked as a one-off benefit in year 1. Anyway, for our purposes, the key point is that whilst this is classified as a creditor on the balance sheet, it's not actually a creditor! i.e. the £16.8m highlighted above does not, under any circumstances, have to actually be paid to anyone. What this means, is that we can safely ignore it, in terms of assessing the company's financial strength. Overall, NAV is £118.2m. Removing intangibles brings this down to £69.3m. That looks a perfectly adequate capital base, so I'm happy with the balance sheet. Bank facilities - these look well-structured, and note that the company has only drawn down £10m of a total £40m bank facilities. So it is well-financed, and can comfortably afford to continue its rapid expansion using cashflows, and maybe a bit more bank funding if required. There are no issues here anyway, it all looks fine to me. Cashflow - this is terrific. The business model generates loads of cash, which is then mostly used for capex - mainly new site openings. In H1 net operating cashflow was £14.5m (up from £13.9m in H1 last year) - remember these are just half year figures. The full year net cashflow in 2016 was £27.0m (before £0.9m exceptional costs). This is a fabulously cash generative business. I'm not sure how much of the capex is for new sites, and how much is maintenance capex on existing sites. It would be good to find out the split. The narrative does mention a 5-year refit cycle. Dividends - are negligible at the moment, but when the business matures, it will have the capacity to pay generous divis. So something to bear in mind for the future. Valuation - I think we've established that this is an attractive business, which is trading well. As a self-funding roll-out, it's not going to be cheap. Here are the Stockopedia stats; 59a69a993a1b9GYM_valuation.PNG I think that valuation, a forward PER of 23.9, looks about right. It's justified by the strong earnings growth, and the roll-out working well, in my opinion. My opinion - I like it. This seems a high quality company, which is performing well. It has a sound balance sheet, and is self-funding its own roll-out. Customers obviously like the format, and I've tried it out myself, and can confirm that the facilities are good, and excellent value for money. I reckon that the revenues might be a lot more sticky than some people think. The worry is that, in times of recession, gym memberships are often cancelled, as one of the few discretionary items of spending that we can cut when times are hard. However, at just £14 a month, it wouldn't surprise me if GYM customers keep their membership going, even when they're feeling the pinch. It's such a small monthly outgoing, for considerable health benefits. I must admit to being tempted to buy some shares in this company. I'm pretty certain that, on a buy and forget basis, this would probably be a good investment over say a 5-year period. My main reservation is that it's difficult to see much short-term upside on a valuation which is already quite high. So on balance, I think it might be best to go on my watchlist, as the type of share I would buy at a lower price, if markets generally have a wobble. EDIT: Many thanks to reader "bestace" who has kindly flagged up the investor presentation on GYM (LON:GYM) website. HSS Hire (LON:HSS) Share price: 47.35p (down 14.7% today) No. shares: 170.2m Market cap: £80.6m Interim results - covering the 26 weeks ended 1 Jul 2017. HSS is a tool & equipment hire business, in the UK & Ireland. Graham reported on a poor Q1 update in his report here on 24 May 2017, so I've just read that to refresh my memory. The company seems to be undergoing a restructuring, which the company describes as "substantial operating model changes". The highlights section looks awful to me - an adjusted loss before tax of -£14.2m in H1. This compares with a £2.2m equivalent profit in H1 last year. That's really bad, especially as the company has a very strained balance sheet, with tons of debt. 59a6a91ba3a7bHSS_highlights.PNG Debt interest is a highly material cost, therefore I would ignore the 3 items above my highlighting, as they're meaningless (due to them ignoring interest costs). Note that the divi has been passed. The company says that the trends improved in Q2 compared with Q1. So this share is really a punt on the company being able to turn itself around before it goes bust. Looking back to Q1, the adjusted EBITA loss was -£4.5m. In the table above, H1 on the same basis is -£7.3m. Therefore, by deduction this means Q2 was -£2.8m. That's still bad, although it is at least a smaller loss than in Q1. Cost savings - of £13m have been targeted, compared to the Q1 run rate. Outlook comments; 59a6ab0ccb6c6HSS_outlook.PNG So it's a profit warning for Q3. With a -£7.3m EBITA loss for H1, the £8-11m profit range for H2 means that the company seems likely to report a small adjusted EBITA profit for the whole year, of c. £1-4m. That's all very well, but bear in mind that the interest cost last year was £14.7m. So assuming something similar this year, a small EBITA profit would turn into a hefty loss before tax for the full year of £10-13m. Net debt - this is the elephant in the room, at a gigantic £230.6m. I would be worried about possible covenant breaches, given the very poor performance year to date. Nothing is said about this in today's announcement. Unless performance drastically improves, I cannot see how the company would be able to renew its debt facilities. Its revolving credit facility expires in Feb 2019, and the Senior Secured Notes expire in 1 Aug 2019. This looks a very similar situation to Johnston Press (LON:JPR) - where the company looks unlikely to be able to refinance its loan notes when they fall due. In the worst case scenario, that means the equity could end up being worth nothing. The hire fleet has a book value of £125.6m (see note 9 in today's announcement). So to have net debt which is £105m greater than the book value of the hire fleet, looks an extremely imprudent state of affairs. The bank and the loan note holders must be praying that the company's performance improves in time for them to get their money back in 2019. If not, then a hefty, dilutive equity fundraising could be the only option to refinance the company next year, in advance of debt facilities expiring. My opinion - I've repeatedly warned about this company's awful balance sheet, right from the moment it floated in Feb 2015. Net tangible assets were negative, at -£54.1m at 1 Jul 2017. The balance sheet would need to be strengthened by at least £100m in fresh equity before I would consider this share investable. Tool hire businesses can be good investments when the cycle is turning up. They then see leveraged increases in profits. However, in the good times, capacity tends to increase until there is a glut. Then weaker players end up going bust in recessions, when over-supply meets sharply reduced demand. So a classic cyclical business model. The UK economy is showing some worrying signs of a slowdown possibly on the horizon, so I'm not currently amenable to the idea of buying into very cyclical shares like this. Given poor trading, and a train wreck balance sheet, I have no idea why anyone would want to hold this share. Risk:reward looks pretty bad. I suppose an OptiBiotix Health (LON:OPTI) Share price: 68.5p (down 2.8% today) No. shares: 78.5m Market cap: £53.8m Half yearly report - for the 6 months ended 31 May 2017. This company describes itself as; OptiBiotix Health plc (AIM: OPTI), a life sciences business developing compounds to tackle obesity, high cholesterol and diabetes I note that it has produced negligible turnover to date, and is loss-making. So that's normally the type of thing that I would ignore - as they nearly always go wrong as investments/punts, in the long run. There can be huge speculative moves up during bull markets though, for this type of story stock. Anyway, I just thought it might be useful to do a quick review of today's numbers, so that we have something in the archive to refer back to in future. Reading through the results statement, there's not really any point in me analysing the numbers, because again revenues were negligible at £75k. The company's valuation clearly hinges entirely on future expectations of revenues & profit from new products that are in the pipeline. There was an operating loss of £981k in H1. An exceptional profit of £4.1m was booked from OPTI spinning off one of its subsidiaries, with a separate AIM listing, SkinBioTherapeutics (LON:SBTX) . That is shown as an investment on OPTI's balance sheet. Cash - cash is king at jam tomorrow stocks. In this case, it reports £1.9m in cash, and there are negligible creditors. That looks enough to last about a year, assuming no meaningful revenues appear. So possibly looking a little tight? The company reckons it has enough cash though, but blue sky companies always say that, then do more Placings! Contracts/agreements - the company has an impressive-sounding list of deals underway, with named partners. So this gives some confidence that it's not just all hot air. 59a6c1929f37aOPTI_contracts.PNG Although personally I'd want to see some of these agreements actually generating some real cash inflows before considering investing here. My opinion - I don't touch companies like this, as practically all of them go wrong, after all the hype dies down. Maybe there's something good here, it's impossible for me to tell at this stage. Although I do like the newsflow, which sounds credible. Also management seemed credible in a video I watched online. Overall, it's too speculative for me at this stage, but I'll monitor future results to see if there's any commercial substance to the company. The danger is that people chase up the share price on promising-sounding newsflow, but then hard cashflows fail to materialise. That's the outcome with most jam tomorrow companies on AIM - things tend to take far longer, and cost far more, than originally anticipated. I've got an open mind though, so will keep an eye on this company for signs of genuine commercial progress.
23/8/2017
08:04
michaelmouse: You're getting over confident Sienna. We'll see. Don't let recent rises in the Opti share price fool you. It's simply bounced off a 24 month low. The down trend is still very much in tact. Come the interims who knows what might happen? ;)
17/8/2017
07:57
joyjoy13: OptiBiotix Health PLC Q&A with CEO Stephen O’Hara (LON:OPTI) Posted by: Amilia Stone 17th August 2017 OptiBiotix Health PLC (LON:OPTI) Chief Executive Officer Stephen O’Hara caught up with DirectorsTalk for an exclusive interview to discuss the recent share price movement, their deal pipeline, the 39 potential RNS’s that could be announced in the following months & what this all means for investors Q1: Just recently, there’s been a fall in OptiBiotix Health’s share price, how would you explain the share price performance? A1: There has been some volatility in the share price, the first thing I wanted to do was to reassure investors that there’s nothing wrong. If you look back at where we are now to where we were say 12 months or so ago, the share price was higher 12 months or so ago but undoubtedly, we’re in a stronger position today than we were when the share price was trading at 80p. Even more importantly, if we look towards the future, there are a lot more opportunities we are progressing which are at a later stage, we touched on in previous RNS’s, and are entering the commercialisation phase. We do recognise there is uncertainty in small caps in general, and that’s across the board, and we do have a large retail investor base so we will get peaks and troughs, some shareholders just take profit and there’s also some uncertainty in the external environment which means that some retail investors start to take a shorter view. I would say that if you look at where we are with the company, we’ve just entered a commercialisation and I believe this next stage of growth, there’s a potential for share growth which will come when we gain commercial traction with our products. Based on the high level of interest and lots of ongoing discussions, this look extremely promising and investors who attended my investor share results presentation earlier on in the year will recognise we have a structured plan and that’s the reason we appointed a new Commercial Director, Per Rehné and a new Sales Director in January 2017. They joined us at the end of March and as planned, we launched products in May and as I reported in previous RNS’s, there’s been a lot of interest, extensive interest, from our launch of Vitafoods in the middle of May, we’ve been working hard to close out deals from those discussions. We have closed out 2 deals, one with HLH and one with Pharmabiota, both these are privately-owned pharmaceutical companies so they are far quicker in decision making. As people are also aware, HLH they had an initial order of 100,000 and last week they ordered another 200,000 units so you can see that it’s not just signing deals, HLH for example signed a deal, put the products on the market and now re-ordered twice the number of units they ordered initially. We have a number of agreements in our pipeline, 4 private companies like HLH and Pharmabiota but also some larger corporates, we hope to see these agreements start to close out after the summer break. Q2: You mentioned the deal pipeline, when can investors expect to see these cross the line? A2: OptiBiotix Health do have a strong deal pipeline, it’s very difficult to give accurate timelines for deals because, as I’m sure investors can appreciate, it’s a two-way negotiation and once any partners suspect you’re working to a time limit, this can give them leverage in any negotiation. You’ve just got to think of situation where you’re trying to buy and sell a car, if you’re trying to sell your car very quickly, the price changes. However, to give our investors flavour of the amount of interest in OptiBiotix Health, we’ve had large interest since Vitafoods but a number of discussions prior to Vitafoods. As a team, we review the potential news flow going forward and we estimate that there are 39 opportunities for RNS’s between August of this year and the end of year so that’s an awful lot of opportunities. Now, not all of these will turn into RNS’s, as often there are 2–3 companies looking for deals in the same territory, investors will note that our deals with Pharmabiota and HLH are non-exclusive deals so that creates opportunities for maybe 2 or 3 companies in the same territory. Generally speaking, particularly with larger corporates, they want a single territory or a single continent so it would exclude others but hopefully those sort of numbers, we’re sitting on opportunities that we’re looking at, maybe not all of them will develop but it gives investors flavour about the amount of activity taking place and the scale of the opportunity. So, there’s an awful lot going on, that in itself creates a challenge of the breadth of capability within the team, particularly over these summer months when people are on holidays but we hope to be closing out a number of deals as we exit the summer holidays. Q3: Can you tell me what all this means for OptiBiotix Health investors? A3: I think it looks very promising for investors and of course, I am probably the largest single private investor and my family have a large stake holding in the company, many of those bought at 75p and we’re below that now. So, as I said at the start of this interview, I want to reassure investors that the fluctuation in share price don’t worry me but in terms of what it means for investors, you need to look at this across the board. We’re in a really exciting space, the microbiome, we’re building not just a single product technology platform but we’re developing a number of product platforms and these are at different stages of development and I created this purposely as it spreads investor risk across a number of opportunities. Of course, those earlier platforms, the SlimBiome and the OptiScreen platform that creates the cholesterol product LPLDL, they’re now entering the commercial phase of development with the launch of Vitafoods in mid-May of this year so early stage of commercialisation. As mentioned earlier, these products have stirred up a lot of commercial interest and I think there’s a number of times now, that this is probably the greatest interest I’ve had in any product and we hope that these will come to fruition in the next few months. Investors should also note, if they look up Biopharma or Pharmabiota, these companies have a very good reputation for investing in scientifically validated products which they sell into the high-value pharmaceutical market. It’s the growing trend in both small and large companies in Pharmabiota products of this type so these are products that are natural products, that have a strong clinical evidence base and a lot of science behind them. From OptiBiotix Health’s point of view, we are establishing early sales in these pharmacies and this helps build credibility in the science and consumer acceptance as pharmaceutical products. This opens up opportunities then to larger retailers to maybe recognise the opportunity there in terms of the science behind these products and the traction in the pharmacies will then build into their sales pipelines going forward. I just hope investors can start to see the momentum building up as we create multiple partnerships across multiple territories with each partner starting to contribute small amounts but incrementally increasing to grow revenue. We see this as a very low risk, low cost approach to accessing multiple healthcare markets and pharmaceuticals markets across the world which, if we’re successful in this, we can generate 7-figure revenues in the forthcoming years. So, we can see a lot of opportunities with the early stage and that early stage development, as I touched on earlier, creates the opportunity for substantive share growth. So, initially, we we’re in early stage of scientific development and now we’re in the early stages of commercial development and there’s a lot of activity taking place which have the potential to create substantial value. Now, we hope that investors will see that and stick with us as we go forward.
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