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Yes, net debt doubled in 2023. Could go even higher in 2024...
Post about Ocado Automated Storage and Retrieval liked on LinkedIn by an Argos logistics manager.
She has a recommendation on LinkedIn written by the Coles Head of CFC Operations.
Fluff with no substance of course but Argos owner Sainsbury's have been starting to make more investment in warehouse automation.
" 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) "
Ocado is in 114th position currently
https://www.stockchallenge.co.uk/ftse.php
Are you assuming that main shareholders never loan out their stock to Hedge Funds?
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.
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.
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."
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.
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 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"
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%
How much longer can they keep shorting this. The top 10 shareholders all lth have 71%. So they've shorted around a quarter of all available stock, if not more as there is likely other lth below the top 10. If a big deal gets announced they're going to be in big trouble.
Earnings out today, would expect some positive results and a nice jump in the share price.
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.
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.
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.
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.
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.
Clarification & correction:
intangible assets (like software development costs)
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?
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.
Some desperate selling from our shorty friends who have recently borrowed stock!
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
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).