OCDO - liquidity12 Mar 2025 11:23
Just been reading through Ocado’s latest FY24 annual report.
On the subject of cash burn/liquidity, I think the following paragraph in the going concern section is important to understand…
“At the reporting date, the Group had cash and cash equivalents of £732.5m (FY23: £884.8m), external gross debt of £1,959.3m (FY23: £1,943.4m) (excluding lease liabilities payable to MHE JVCo Limited of £12.4m (FY23: £16.5m)) and net current assets of £1,240.8m (FY23: £860.7m). The Group has a mixture of financing arrangements, including £172.8m of senior unsecured convertible bonds due in 2025, £223.7m of senior unsecured notes due in 2026, £350.0m of senior unsecured convertible bonds due in 2027, £250.0m of senior unsecured convertible bonds due in 2029 and £450.0m of senior unsecured notes due in 2029.”
So £172.8m is due this year. A further £223.7m next year. £350m in 2027 and £700m in 2029. So in total over the next four years £1,446.5m is due.
Even with a cash balance of £732.5m (probably less now), I think Ocado will need to raise more money.
Last year, Ocado raised £720m through borrowings and in that same year repaid £674.3m of borrowings (and a further £55.7m of lease liabilities).
For a company that still hasn’t made a net income profit, Ocado employs a staggering number of people - 21,156. Gross employment costs for 2024 were £992m.
Personally, I think there is very little chance of this company going bust. That would mean a huge number of job losses. But I do worry about a highly dilutive equity raising in the future. This would be terrible for shareholders, but at least it would allow the company to keep going (and growing/developing) and have its debt burden massively reduced.
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