Sourcebio Share Discussion Threads

[ptolemy] 08/4/2022 11:13

Good to see the CEO increasing his shares holding...

[mfhmfh] 05/4/2022 21:08

SBI should benefit from this:

[base7] 05/4/2022 17:46

Positive Investor Meets & my question was responded to first -ie regarding rationale for cash purchase .Vendors have been in a close period ,until today ,have substantial amounts of cash & if they are as committed as our Leader suggests they should be keen to buy shares ,either in Market or from Mills or Fumagalli

[base7] 05/4/2022 16:40

James188 -point taken & hopefully vendors will then be tempted to use some of their cash pile to invest in their future as part of SBI

[james188] 05/4/2022 16:13

base7 - They paid for LDPath in cash because the share price is(and was)so low that it made no sense to pay in shares (even if the vendors had wanted to do that). Contrast that to the EKF acquisition of a US lab which was done when the EKF share price was pretty much double what it is now. That might also have been noticed.

I think that the market reaction today has been relatively cautious because there will have to be a huge increase in the core business revenues - and healthcare diagnostics in particular - to replace the large hole left by the drop in revenues from infectious diseases testing. It was alway known that that was going to happen, but it is still a challenge.

In my view, the management team deserves a lot of credit for spotting the COVID business opportunity and then executing it so well. They now need to repeat the trick and demonstrate that the price paid for LDPath was reasonable.

[9degrees] 05/4/2022 15:49

only 20 million share (28% total in issue )freely available not held by majors . Very tight holding therefore and illiquid but when it runs..................be there

[base7] 05/4/2022 10:31

Encouraging but curious as to why we paid 100% cash (& no SBI equity)for LD & that wasn’t addressed in this mornings Proactive interview but hopefully it will be raised in this afternoons Investor Meets as the question must be asked

[smithless] 05/4/2022 09:53

Yes a cracking set of results as the Birmingham guy states. So why only 9% up? Cos forecast eps drops to 4.84p in 2022 and goes up to 6.55p in 2023, so not particularly cheap. Source was floated mid covid madness and got a fab rating (well done management), but the earnings never lived up to the hype, thus 2021 forecasts were pulled back dramatically. Still think they over paid for the acquisition, but were desperate to get into the automated pathology business. Long term hold for me unfortunately, but if agreed at agm, share buyback may help this illiquid stock

[value hound] 05/4/2022 08:00

Yes, superb results and worth more than twice where it is IMO. It's not going to get there today, so off back to bed.

[buywell2] 05/4/2022 07:58

The market has known about these results for some time

Anyone know what the forecast revenue/profit is for 2022 ?

Also what would be the MAX the HMRC could possibly claim ?

Contingent liability



As detailed further in note 14, the Group is in dispute with HM Revenue & Customs ("HMRC") who have challenged the Group's VAT treatment of COVID-19 PCR testing services provided. On professional advice, the Group has treated the accounting for COVID-19 PCR services as VAT exempt. HMRC has suggested that some of those services should have been treated as standard rated for VAT purposes. The Group has continued to take advice, which supports the accounting treatment adopted, and remains in communication with HMRC to address their comments raised. The Board believes that HMRC's arguments are flawed and unlikely to succeed, and there is also uncertainty over any potential liability, so no provision has been made at the year-end date.


And why was no money put into play now like EKF did ?

And how much will be needed to be earmarked ?

Share buyback programme


As announced on 8 March, the Company intends to seek shareholder approval at the forthcoming AGM to implement a share buyback programme. Further details will be announced in due course.

[brummy_git] 05/4/2022 07:38

Cracking results from Sourcebio today.

Find out all the news & commentary here.

www.linkedin.com/posts/paul-hill-a5994116_sbi-activity-6916994848717692928-yDAW?utm_source=linkedin_share&utm_medium=member_desktop_web

Plus an excellent interview with Exec Chairman Jay Leque & CFO Tony Ratcliffe

www.voxmarkets.co.uk/articles/q-a-with-sourcebio-executive-chairman-jay-lecoque-cfo-tony-ratcliffe-2032354

[buywell3] 30/3/2022 00:17

Agreed

One would have thought that the LDPath owners were offered some SBI shares as part of the deal

They obviously declined if indeed they were --- as logic tends to make one believe

Probably because they read the SBI Trading Update RNS and knew the cash that was available to them --- so they said no thanks we want cash

Ask yourselves why ?

Why did they not want to take SBI shares ?

What do they plan to do with the cash now via perhaps partners or 3rd parties ?

What do they plan to do in 2024 when presumably they are not bound by any contractual agreements signed --- the clauses of which would make very interesting reading ?

This deal has been rushed imo like buywell said in an earlier post
Cos of what they saw coming in EKF most likely --- next years earnings are going to be small potatoes compared with these results later this week

And Mr Market knows it as the chart shows

[base7] 29/3/2022 23:34

Let's hope it's not Lecoque by name & nature then.Our major investors must have discussed the deal in detail & be happy with it -& they are not fools.A couple of mill in shares ,at least,would have given them some skin & hard to imagine how they could have negotiated for cash only without Lecoque not appreciating how poorly that reflects on their view of our prospects?

[base7] 29/3/2022 23:34

Let's hope it's not Lecoque by name & nature then.Our major investors must have discussed the deal in detail & be happy with it -& they are not fools.A couple of mill in shares ,at least,would have given them some skin & hard to imagine how they could have negotiated for cash only without Lecoque not appreciating how poorly that reflects on their view of our prospects?

[buywell3] 29/3/2022 22:47

smithless

There was NO mention of Intellectual Property (IP) in the acquisition RNS
(Will read it once more to check)
And there was no mention of any patents
There will be a trademark --- but imo that does not constitute any sort of IP regarding protection from copying (with tweaks as appropriate)

If there was any meaningful IP don't you think that the RNS would have said so ?



base7

buywell had similar thoughts
Namely that results would read good as the market knows BUT that the outlook statement needed to have something positive to counterbalance the negative effects of the Covid-19 PCR golden goose flying off

Thus they have been searching quickly for some sort of a fit and this was the best they could come up with , namely LDPath

LDPath who had been pushing work their way (to SBI) presumably imo because they could not handle it and were in debt


However the LDPath owners knew the SBI situation and imo played them like violin getting one of the most overly generous buyouts that buywell has ever seen in 30 years of investing

In effect the entire cash pile of SBI has been put on the line all 33.5M pounds

Does this represent good shareholder value ?

Without more explanations and details it is difficult to see how
Ref EKF buyback RNS

buywell assumes we won't get one of those here now as the cash has been spent elsewhere


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If paul reads this , please tell chris to pass on the following regards the way LeCoque speaks on videos

Talking fast might work in the USA regarding making listeners think that you are clever or know what you are talking about --- ie be impressed

In England that does not work --- slow down and pass on the messages in a clear and concise manner

Also ask him why there is no CEO

Perhaps one would have sat on the cash till a better value deal came along imo

Is LeCoque just a yes man ?


thank you

dyor


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Subscript

In the RNS it said

" LDPath's proprietary Digital Pathology "

Definition of proprietary

proprietary

ADJECTIVE

relating to an owner or ownership.
"the company has a proprietary right to the property"
behaving as if one owned something or someone.
"he looked about him with a proprietary air"
(of a product) marketed under and protected by a registered trade name.
"proprietary brands of insecticide"

What is the meaning of proprietary property?

pertaining to property or ownership: proprietary wealth. belonging or controlled as property. (of a brand name, product, service, formula, etc.) protected by a patent, copyright, or trademark: proprietary drugs; a proprietary name; a proprietary logo; a proprietary blend of ingredients.

buywell has looked for any LDPath patents or patents that might be registered under the owners names

Can't find any --- perhaps buywell missed out ---- this needs clarifying as :

If the Digital Platform has adequate patent protection --- then there is room to reconsider the valuation imo

[base7] 29/3/2022 17:58

My concern is that since the substantial reduction in PCR/LF testing exhausting that wonderful cash cow 9 for now ) the cash was burning a hole in their pockets & consequently overpaid for a relatively new company giving a fantastic capital return to the initial investors, who all appear to be taking cash rather than our cheap ( allegedly) paper.Poor that who ever negotiated this deal could not encourage a reasonable amount of equity in SBI -especially as their senior team all appear relatively/very young & therefore you would hope committed to the project.
I will await Results on 5/4 & IM before deciding but bailing is one distinct possibility for my insignificant holding here .

[smithless] 29/3/2022 12:21

Buywell3- perhaps the brummie-git can take the issue up with Mills/LeCoque nxt time on VOX if he by any stretch of imagination can call himself an analyst. Re the deferred payment, as we don't know the terms (if LeCoque and his team have any sense, would have made them v difficult to achieve), I would just focus on the £16.2m (£2.3m withheld)paid. Agree, expensive acquisition. Must think the IP has totally unique, non-duplicatable value, because if valued on just trading, the amount paid was bonkers.

[buywell3] 25/3/2022 23:17

WRT the acquisition of LDPath limited

In the RNS it stated:

'Unaudited accounts for the year to 31 January 2022 showed revenue of £4.6 million (a growth of 97% over the prior year), earnings before interest, taxes, depreciation and amortisation'

Can someone point buywell to which document contains this information please



-----------------------------

Ref this statement in the acquisition RNS:

'Earn-out payments

Subject to exceeding revenue thresholds for the remainder of 2022 as well as for calendar years 2023 and 2024, additional consideration will be payable to the vendors of LDPath. The aggregate earn-out payments are capped at a technical ceiling of £15.0 million. Any earn-out payments will be paid in cash following completion of the audit of the accounts for the relevant year. '


Does this mean that the total cost of this acquisition could end up at £18.5 million in cash + another £15 million in cash = £33.5 million in cash

Which is approx all the cash the company now has after the covid testing bonanza


This massive price being paid for a company with Net Assets reported of £431.47k



Can somebody please explain why so much ??

Especially as in recent months LDPath has outsourced work to SourceBio and presumably would have continued to do so

Will not this huge potential cost of £33.5 million in cash not hinder the proposed buyback of SBI shares now being muted by the company if agreed at the forthcoming AGM

ie --- Surely the company will have to keep an extra 15M cash on hand in case they have to pay the earn-out---Plus does this not now mean the SBI cupboard is now bare regarding another acquisition ?

---------------------------------------------------------


And another thing regarding the 3 owners of LDpath limited who stand to trouser circa 33.5M by 2024

Without giving the contractual details --- it is fairly obvious that these 3 will have signed a 3 year employment contract with SBI which ties them to the company and ensures they work like hell to get the extra earn out monies ---

What happens afterwards ?

What is to stop these 3 clever former LDPath limited owners --- who would then be very cash rich --- from starting their own company once more ?

And from poaching all the consultants that they had previously put together back into their fold for a MK2 LDPath ---- well ?
----------------------------------------------------------------------

buywell has read through the RNS ref the acquisition and can't see the words Patent or Intellectual Property or IP used in it

Do LDPath limited own any patents or IP that protect their Digital Platform ?
This is IMHO very important as if the platform is not patent protected then it can be duplicated

Please add links to any patents found --- thanks again and try to answer all of the above if you can and may thanks in advance

-------------------------------------------------------------


As it stands regarding the acquisition and assuming no Patents or IP exist or any other protection other than a trademark :





This imo ridiculously generous/desperate/foolhardy amount of money for a peanut sized company that was producing 0.3M profit and had circa 0.5M Net Assets ---- Simply defies belief ----

Even if it doubles pathology turnover and triples pathology profits in 2022 --- it will still look stupid imo

buywell stands to be corrected as always

Please explain the rationale for the 33.5M outlay in cash



dyor

[brummy_git] 25/3/2022 15:04

Smithless - If you have a problem with SBI &/or Christopher Mills, then please take it up with them.

[smithless] 25/3/2022 10:55

brummy-git - I suppose you are the brummy on VOX, who plays up to every bullish statement Mill's makes about Source?

[wakeyinvestor] 25/3/2022 10:34

Not sure how the donation is in the best interests of shareholders and I see the share price is now down to around 110p. Best concentrate on growing shareholder value perhaps than being so gooders on the shareholders dime. I’ve privately donated and not made myself feel good using other peoples money

[smithless] 25/3/2022 10:24

As a shareholder I would have preferred the donation to have came out of Mills pocket, but hey-ho. Depressing watching the share price, so glad I sold two thirds of my holding in December. Not very impressed with its acquisition and most probable would have been better doing share buy backs, until lab valuations come down to more realistic levels.

[9degrees] 09/3/2022 22:18

Well done to the BoD for such a proactive gesture to help the Ukranians , Fully approve

[base7] 08/3/2022 16:43

Hopefully it wont transpire to be expensive assuming continued high growth rates & economies of scale & increased prospective services enable us to win much larger contracts.The disappointment to me is that the 3 vendors are all taking cash whereas I would have they would have taken some equity as that would show confidence in the future of the combined entity & particularly as our share price has performed so poorly since IPO.

[smithless] 08/3/2022 14:35

Well quite an expensive acquisition, but it make sense (not the price paid) logistically and cash in the bank pays nothing. Stock is illiquid, so buy back of shares should help. Mills not selling, just moving around his different funds