Scancell founder says the company is ready to commercialise novel medicines to counteract cancer. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
An except from the latest Ocado annual results released in Feb 2024 as below. Ocado cash reserves are being depleted quickly. Debt rising sharply. When will they next tap shareholders for cash?
"Cash and cash equivalents of £884.8m at the end of the period (FY22: £1,328.0m) and liquidity of £1.2bn (FY22: £1.6bn) (including the undrawn revolving credit facility ("RCF") of £0.3bn). Net debt* at the end of the period was £(1,075.1)m (FY22: £(577.1)m).
You can't have it both ways VP.
First you say they won't be getting any more CFC orders and now you say they are running out of cash. This despite the fact that what would deplete the cash pile most would be having to pay for more CFCs
Some desperate selling from our shorty friends who have recently borrowed stock!
There's over 2 years left at the current burn rate. Losses are also reducing each year so there's likely more than that. By that time the mckesson deal will also be EBIDTA positive.
VP Re: ‘ Cash and cash equivalents of £884.8m at the end of the period (FY22: £1,328.0m) ….’
That drop is largely in respect of the £536.4m purchases of property, plant, equipment and intangible assets (like software)
So it’s investments (exactly as it is termed in the results you quoted) it's not cash burn as you seemed to imply. Did you intend to portray it as that? I haven't fully checked the rest but liquidity looks fine doesn't it?
Clarification & correction:
intangible assets (like software development costs)
Boyo,
I simply stated that Ocados cash reserves are being depleted quickly and it's debt is rising sharply. Ocados liquidity has reduced £400m since previous year. Of course Ocado will want to raise funds well ahead of needing them. Significant likelihood of another cash raise possibly this year, most likely next year imo.
Ocado eats through a lot of cash.
Just going over the lastest annual report again for the year ending 3rd Dec 2023, the following points are of note from the cash flow statement...
Net cash flow used in investing activities was £500.1m for the year ending 3rd December 2023.
This figure was even higher at £717.4m for the year ending 27 november 2022.
Now of course I fully understand that Ocado is investing in it's business to grow it and this is fine. However, almost all it's cash has come from borrowings and share placings. This is the problem. Hence my concerns about liquidity.
OK VP - but they are a way off needing more cash at present and revenue should now be building. Those investments will be amortised - better than left as cash sat in a bank I'd say.
I wouldn't say they are a long way off needing more cash. At current cash spend rates Ocado group will run out of cash in less than 2 years from 3rd Dec 2023. Of course Ocado will not run down their cash reserves to anywhere near zero, far too risky. Id say a new cash raise is coming in a years time, could be earlier.
Revenue is building but losses are still very high too. This year's losses would have been higher than the last were it not for the one off Autostore receipt of funds re legal case settlement.
Considering the rate at which Ocado burns through cash, the sooner it can raise more cash the better. If it doesn't raise any more money by the end of this year I predict that it's cash pile will dwindle down to around £400m by the end of this year. If it fails to make a positive net profit (after operating costs, finance costs and taxes) by that time, I fear that the company will be in trouble.
Ocado already has almost £1.5bn of borrowings - at least half of these are in the form of convertible bonds with quite close maturity dates from 2025-27. So it's not ideal for the company to take on more debt.
The only hope, and there is absolutely no guarentee that this will happen, would be for the share price to near double from current levels to around £6-7 a share at some point in the coming months. If this happens then the company should jump at the chance to do another placing and raise an extra £1bn of cash. It could do this be issueing another 150m of shares and the total number of shares in circulation would still be below one billion.
Earnings out today, would expect some positive results and a nice jump in the share price.
The one off Autostore receipt of funds re legal case settlement is being paid in 20 instalments:
Group reached an agreement with AutoStore to settle all patent litigation and cross-licence pre-2020 patents, for which AutoStore undertook to pay the Group a total of £200m in 24 monthly instalments, beginning July 2023. The settlement has been recorded as a receivable measured initially at fair value and subsequently at amortised cost.
Payments totalling £41.7m had been received in FY23, so a little over 20%
It's being paid in installments but the whole amount has been taken into account as received. Below is recent FY 23 accounts.
"Loss before tax of £(394)m, taking into account £187m from the settlement reached with AutoStore, an improvement of £107m versus FY22"
Underlying cash outflow is £472.5m (FY22: £828.2m) and improved by £355.7m year-on-year.
Current borrowing facilities include a £600m convertible bond that matures in December 2025, a £500m senior unsecured note that matures in October 2026 and a £350m convertible bond that matures in January 2027. These facilities are expected to be refinanced on a timely basis to maintain appropriate liquidity.
It's being paid in instalments but the whole amount has been taken into account as received:
Well that was clear from my post: The settlement has been recorded as a receivable measured initially at fair value and subsequently at amortised cost.
Most of the cash inflow from the receivable is yet to occur.
It is true that "This year's losses would have been higher than the last were it not for the one off Autostore receipt of funds re legal case settlement."
This thread is about cash burn - which actually reduced y-o-y .
Recording the AS settlement as a receivable is standard practice but only 20% of it has yet appeared as cash.
As pointed out previously, the losses figure is a consequence of handling large software and system development costs (which have already been paid for) in a tax-efficient manner.
Conflating separate elements of the accounts can give misleading conclusions about future cash burn.
The thread is about Ocados cash reserves. 443m was spent last year leaving less than 2 years of reserves left at that spending rate. Debt has doubled this year.
Cash raise in around a year's time imo.
" Debt has doubled this year. "
VP
I think you mean last year and NET Debt ( as a result of a drop in cash) +86%
Gross Debt remained pretty much the same
"Gross debt (including lease liabilities) at the period end was £1,959.9m (FY22: £1,905.1m), with net debt* at the period-end of £1,075.1m (FY22: £577.1m) "
Yes, net debt doubled in 2023. Could go even higher in 2024...
Sorry, I tend to associate significant and continuing reduction of cash reserves with cash burn.
I apparently made the same mistake as AquarianAge (Considering the rate at which Ocado burns through cash...)
If the cash outflow continues to halve every year, then the picture would be very different. And with all the hard development work done and CFCs earning revenue, that doesn't seem an unrealistic prospect to me.
Boyobach
outside of any argument about share prices ....
You could argue that a lot of " cash burn" is used to enrich( or whatever word) the company ....as a result of R&D investment ( + tax rebate) , future non invoiced revenues ( currently a book liability) and accumulated Tax losses as a result of bottom line "losses"
so... I personally would use the term "cash investment" rather than the commonly used term "cash burn"
Of course this "investment" isnt shown within share prices generally , as terms like "burn" and "loss" are always taken in a fully negative way
I absolutely agree Pokerchips and in trying to dismiss the notion of cash reserves being depleted in an uncontrolled way (ie cash burn) I missed the opportunity to emphasise that the cash was used in a planned way to invest in key aspects of the business. Although VP would have seen the word investment used in the Financial Statement and understood this, but AquarianAge possibly hadn't.
And I also agree that many people are missing the point about the pre-tax 'Loss' including amortised costs (like the cash just invested).
Thanks for pointing that out.
Boyobach
following on with regards cash needs , towards the end of the FY Report ..it states
" Contracts placed for future capital expenditure but not provided for in the financial statements are as follows: "
" Of the total (£105m) capital expenditure committed at the end of the period, £66.5m relates to new CFCs (FY22: £232.4m), £2.3m to existing CFCs (FY22: £1.3m), £nil to fleet costs (FY22: £7.6m) and £34.7m to technology projects (FY22: £26.5m)."
so does that indicate in itself the lowering of CAPEX for committed infrastructure....?
Do you have any 2024 Guidance figure on the TECH spend ??
....again, was a large amount of the requirement spent in 2023 meaning far less now needed in 2024?