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"we now expect Creo to reach net profitability in H126 compared to FY25 previously. However, we expect underlying EBITDA, a key metric used by Creo, to turn positive in H225 (£1.1m in FY25).
Creo ended FY22 with gross cash of £13.1m (estimated net cash position of £6.3m excluding our forecast total debt of £6.8m), which, based on our projected burn rates, should be sufficient to fund operations into Q223. We anticipate the need to raise another £25m (FY23: £15m and FY24: £10m), which we model as illustrative debt, to support its growth plan."
https://www.edisongroup.com/research/progressing-on-all-fronts-2/31884/
Seems to imply no funding will be needed for 2025, presumably because it will be close to breakeven.
Elsewhere in the report they warn that dilution due to fundraising is a distinct possibility in Q2 2023. So great value at current price, but possibly even cheaper very soon? Odd situation
"FY22 year-end cash was reported at £13.1mln. Due to investment in doctor training, Creo is expected by us to need £15-20mln in further funding during 2023 ". OK, so slightly lower cash-burn than last year, but still more than we have available. Then there is 2024. Looks like we have a funding gap of something like £30M to make it to profitability in 2025?
Despite this, they currently value the company at £100m, compared to £36m MCAP
Really intrigued as to what happens next here, I've never seen a share price walked down for such a long period of time. Any buying results in a slowly declining ask price and any selling at all causes an instant drop (see 5k at 21p just now). This tells me that the market makers don't want to hold any stock at all.
I expect the company to put all stakeholders before shareholders, so it honestly wouldn't surprise me to see a 5-10p placing price if they want £20m, that's certainly what the market maker movements are suggesting.
" combination of strong core product revenue growth and active cost control means that the business is well-positioned to further reduce cash burn in FY 2023"
Well-positioned is too weak: the current burn rate gives slightly less than 6 months of fuel, so something stronger is needed to inspire confidence
"the Board is considering a number of options to ensure that the Group is sufficiently funded to meet its stated growth ambitions"
Surely it's high time to stop considering and make a decision? The business does seem to be making good progress, but it's difficult to envisage any SP turnaround with the spectre of (ambitious) fundraising hanging over it. Presumably it will be re-rated downwards, with the level depending on how they spin it
"Creo said it is on track for earnings before interest, tax, depreciation and amortisation breakeven during financial year 2025, in line with market expectations. Cash and equivalents were at GBP13.1 million as at December 31, about half of GBP26.1 million at June 30."
So, about 6 months cash left at that burn rate, and 2+ years until breakeven. Therefore...
wait, is there a page missing?
If the just announced YGEN placing is a guide then CREO are going to be raising around 5p…
I thought it interesting that Cenkos published a substantial broker research note on 23rd November with forecasts out to 2027, it felt to me as if this had been produced for a placing and then released for the market. Shares held around 40p in the weeks beforehand which I suspect was the intended placing price, the recent plunge / lack of news tells me that they were unable to get what they wanted and have withdrawn the offer for the time being.
More volume at 25p but I’m not touching it until they are financed. FWIW the broker note forecast cash requirements of ~£18m before they hit cash flow breakeven in 2025, so a placing of £20m would be my guess…
Fair. We could do with more communication. If it’s Baillie Gifford doing the dumping, they historically never care about a graceful exit and the chart suggests that’s what has happened here. I’m interested in whether they’re disappointed in Creo biz development or whether they’ve got too many fast growing mouths to feed and have had to prune (given poor recent numbers and redemptions). Creo will wait until the seller is finished before updating us. There’s no point pushing on a string. I still like this name and will hold.
Even sharper decline now, some throwing in the towel. Revenue trajectory ought to be good, but management failure to make any comment to stem this freefall suggests either a lack of confidence, or complete indifference. Market seems to be anticipating severe disappointment coming. Communicate Creo!
These guys are horrific . We've been saying the same thing the last 2 years with their antics and underhanded reporting / fund raising and acquisitions to show "revenue".
Only management receiving a wage have made anything here, despite $150m in equity raised plus so many grants.
Management owe many people an apology.
Share price is now about half what it was 5 years ago. The last 8 months have been uninterrupted descent. The management silence on dilution has clearly unnerved the market - better bite the bullet, boyos, or should that be "lance the boil"?
Baillie Gifford TR1 showing a reduction to 9m shares from 13m, explains some of the share price weakness, of course the vast majority of weakness is from the imminent need to raise a large amount of capital...
FYI -
https://docs.publicnow.com/viewDoc?hash_primary=6284D09D9F75FD4E01273F34DE955F896153ADA5
Link above is a new Creo market presentation from the following: https://www.marketscreener.com/quote/stock/CREO-MEDICAL-GROUP-PLC-32411263/news/Creo-Medical-Corporate-Presentation-Q3-2022-42273271/
they don't give enough information with the partnership deals in order to help us determine where they are. Everything is really opaque, which isn't great in any circumstance, but especially not in a market like this and the share price seems to be suffering the consequences. Appreciate deals are sensitive in nature, especially if they are still negotiating others, but they haven't even told us if there has been any upfront payments (which could negate the need for a fundraise).
The lack of transparency is really frustrating, if they don't want to tell us the exact royalties they could at least say "low single digit to low double digit tiered royalties", give a total for milestone payments if they don't want to list them individually and an idea of partnership length so we can get an idea of when we expect to start seeing results. The pharma companies manage to give this level of information when they announce deals, not sure why Creo can't.
The figures don't seem to make sense but they are ploughing on with partnership deals and hype. Could be that they believe their technology to be so impressive that they expect to be bought up by a big player for the product conceptual value?? If this is the plan, then just how clever is the kit and how well is IP protected and how hard to copy????
Something is very wrong at Creo. In the middle of Covid, when sales growth was non existent due to hospital restrictions, the remuneration committee awarded the top brass extraordinary bonuses. A bad bad sign. After a share price collapse of more than 75% the company announces an investor presentation. Where? Chepstow! So the two main men couldn’t be bothered to come to London. Incredible. Then at the presentation no mention of the cash crisis. And a sales forecast showing growth over the next three years from £30m to £35 to £40. Basically a prediction of the company’s demise, because if that is all they can manage with 300 employees and a suite of ground breaking products then they are going under. Cash will be gone in 6 months and the next raise will need to be huge. With a sp of 40p it doesn’t even bear thinking about. Yet no sign of urgency, either these guys are resident on another planet or they have some colossal trick up their sleeve. Unfortunately I think it’s the former!
https://www.proactiveinvestors.co.uk/companies/news/996258/creo-medical-gets-more-validation-with-second-robotics-deal-says-broker-996258.html
redduk.....no idea m8,not looked
Isnt creo out of cash ? With £26m on the balance sheet at half year, ebitda losses of £11m plus then capex (and r&d if capitalised) , they can't have much left come December? The company needs to update and provide forecasts.
800% increase from core activities in 12 months is pretty impressive. I see no reason for the exponential growth not to continue.
I think today's rns makes my point - core revenue is £0.9m, that's it. Now you can see why they had to spend our money on existing businesses so they could show some turnover.
Not clear what you mean by "acquisition based turnover" Redduke. Last year most of the revenue was attributed to major purchase Albyn, but they were acquired nearly two years ago now, and there have been other acquisitions. Difficult to strip out every acquisition and account separately, since most of them will be rapidly integrated. Anyway, it all counts, and if an acquisition is earnings enhancing, that's sound business. The revenue "surge" is promising, and plenty of good looking growth numbers, but the loss continues to increase, so once again, it's jam tomorrow folks. Market seems to like it though, probably impressed by the robots.
It is underhand to compare this years FY sales inclusive of acquisition based turnover vs last year which is excludes it.
This is why like for like or inorganic and organic comparisons need to be used in accounting standards.
Management are supposedly pursuing partnerships as well as acquisitions, but the market clearly lacks confidence in the strategy.
The latest trading statement said "Revenue from the Company's core Creo product portfolio is growing and is in-line with management's cumulative revenue forecasts at the time of IPO in December 2016." That sounds convoluted. It comes across as if they are having to aggregate 6 years worth of revenue in order to find something positive to say? I can't find any such forecast so it is not clear what this statement actually means (if anything). IIRC last years revenue from core products was the first ever anyway, so "growth" from such a small base is meaningless until they put actual numbers on it. In all likelihood it's going to be modest.