The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
According to last week's update, FY24 cash cost base is circa $23m and management expects to deliver FY24 bookings performance within the range of $13m to $15m. This was confirmed again this morning.
On the other hand it hardly takes a genius to work out that if the cost base is $23m and the bookings are $15m then there will be a $8m shortfall.
Management meanwhile maintains its aspiration to exit FY24 at cashflow breakeven and now reports a cash position of $13.3m as at the end of March 2024.
The firm currently employs 112 employees as at 31st Dec 2023 - it looks to me like that is going to have to drop a bit more to around 90 perhaps, meanwhile they are burning through cash at around $4m a quarter. With USD 13.3m left, that gives them until the end of 2024 to turn the ship around [i.e. enough for three more quarters]. That also of course assumes no revenue which is no plausible - any revenue made over the next three quarters must aid the cash position.
Getting in now is clearly right at the bottom of things, and it is a straight choice - do you think they are going to run out of money and need to raise funds before the end of the year, or will business improve to such a degree that the operation becomes self funding? As Mr Kelly advises today, there's been strong contract growth, and as last week's announcement advised, the growth will not be linear, more like a J curve.
The company currently has no bank loans, and a wealthy prominent large shareholder in Richard Griffiths. I am sure a favourable deal can be done with him if necessary, but frankly, I don't even think it will be necessary. This company is now set up for growth - I think it will deliver and have bought more today accordingly.
In time I suspect this may be my best performer in my portfolio.
FrDickByrne, absolutely agree.
Just waiting for the inevitable RNS confirming Mr Griffiths' stake has increased yet again.
I cannot believe how many shareholders clearly had no understanding about the fraud issues disclosed in March last year and found it a surprise that the company had so many issues arising from it
Am expecting a decent recovery from here. Just a shame the price could not have remained at 41p / 42p until Monday morning so we could all load up in our new ISAs.
Have to agree with you Oculusprime.
Am waiting for Monday and hopefully a bargain entry price for my 2024 ISA. The timing should be superb. They are kitchen sinking what went on for 2023 whilst you will note that the 2024 Q1 update is being promised next week.
I am surprised that there's such a massive over-reaction to these results. It's like current investors did not understand what happened in March last year. A proper recovery takes time to form and be established. But their client base looks very good indeed and is growing. Add in that J shaped expectation of growth, and I think in due course this will be seen as a growth stock again later on this year.
They are positioned in an area of very strong demand, it's a question of pulling in the deals now, but there's a great management team now in place.
For me, as mentioned before, the key question now is : what will Richard Griffiths do? We have a large potential predator out there - he now owns over 20% of the shares. I think he will be buying more, soon. Really, yet again, the market is giving away a company's shares on a plate to a potential bidder.
"Management is expecting that bookings will be H2 weighted in FY24 as the pipeline builds and the sales team become more proven. The growth trajectory is likely to be non-linear and establishing sales cycle predictability remains a key priority for management."
In other words, expect a J shaped curve for the growth as we start of slowly and build up momentum. So buying in now represents the bottom, as growth progresses over the year, the shares should noticeably appreciate as the market prices in the changing growth of the company. Given the market normally prices in a company's prospects at least six months ahead, I'd say the shares are banging along the bottom now, with a repricing coming from June onwards.
Unless of course Richard Griffiths shows his hand and bids. The price is now so low that he must be tempted......
Desertsands, the point is that the final results were always going to reflect what a tough year 2023 was for Cirata. These results were going to be the key time to kitchen sink everything - in essence they represent the bottom for the shares, similar to SFOR recently.
Any short term weakness in the shares is likely to be met by Richard Griffiths increasing his stake. I really don’t think he’s going to sell following this update!
Instead I expect further purchases by him especially after next week’s announcement.
Ravenswell, Happy Easter! I see you are talking drivel yet again. Looking back through your postings, I see that others have made that same comment previously.
Please, read the January update - it will give you some idea of what is going on.
I suppose you are one of the many investors who lost money when the shares collapsed last year. But the company is now in turnaround recovery mode. Why don't you put in some funds and benefit from this when the shares begin rising again? Afterwards, don't complain that you missed out if you fail to buy in now.
I accept that many lost out when the shares fell from over £13 to the current price, but it does show you the potential scope possible here. You can moan forever, but this is right now a bargain basement price - it is just a shame you are so mired in your past losses that you can't accept what is going on now or what is likely to be revealed imminently when CRTA release their next update.
As I say, afterwards don't say you weren't warned.......
I suspect that the company is at or close to free cash flow status, and that it is generating decent revenue from major clients such as Experian, GM, and NatWest.
The turnaround plan is supposed to be going very well. These shares will look radically undervalued once the update is released.
The company previously announced that the update would be released by mid April so we don’t have long to wait……
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