The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
ValuePlay
one piece of deep knowledge tells me that whilst Ocado have net debt at the last FY end £1,075.1m the Group had £1,550.1m of un-utilised carried-forward tax losses.
so...not such a bad thing to have 50% more in tax loss credits than you have in your net debt !!
"There's a real lack of genuine deep knowledge re this company"
On that point ValuePlay
could you put your " genuine deep knowledge" to my 10:01 post and explain in detail the contract liability and " the consideration received in advance" against your understanding that " Then they recoup these (build) costs in the main via receiving a percentage of the value of the goods that pass through the CFCs."
I am wanting to understand what the £442m of contract liability from "consideration received in advance" ..actually is then ?
"For me a lot of this must be in the price "
Carrington
I would agree
The shorters and traders have carefully put it in an oversold position-- IMO ... ready to knock it if the BOD dont deliver ..but also ready to buy back , knowing they already over sold it anyway
"The market is also fearing the worst"
On that I would say that the investment Funds that the share price growth depends on, are currently invested elsewhere with better dividends and maybe less finance cost impact...so...for now..aren't even looking here
Funds will pay a lot more for this once they have the proof of recovery of margins and Operating profit recovery .... we are in the " see it to believe it " situation
It is easy to knock the price down when there are few buyers around ... which this share has had for a while.... unloved without a firm Update
Unfortunately the Investment Bank traders and Hedge Fund Hyaenas will no doubt pounce if the BOD do indeed miss margin expectations ... and are unable to demonstrate current H1Trading is showing further margin, cost control, and overall progress
I am tending not to expect any main impairments ...need though to see what things like the FX Derivatives trade at....gains or losses
I am more inclined to think things are past the worst of H1 2023 and as such "overall" moving in the right direction
As previously suggested I am looking to end of H2 to see the overall recovery situation rather than at this stage
The shareholder Equity has dropped from £651.4m to £223.5m inside of 2 years which is pretty horrendous
.... so you definitely have to want to think it has to get better ..... but... with the net insurance liabilities and lower cash once the 10% Haan loan kicks in , plus having to ask for consent before paying any further Corporate Debt off ..they are still sailing through delicate financial waters ..dividends look a long way off yet...
Given the Insurance liabilities and the impairments on Insurance it suggests they have come to realise the business isn't worth quite as much as they may have hoped for... looks like they are though being somewhat realistic to that fact
Current MCAP is below the book Equity so the market isnt being kind to the share at all
We are all entitled to an opinion
yes...but... technically we are all supposed to abide by the forum rules ....and so posting "it is the bottom", "it will multibag" without adding evidence to that view is technically Ramping ..and not within the Rules
" if the M&S dispute is not resolved sensibly"
well they are both essentially batting for the same team ....so... "sensibly" seems a more likely outcome ....
* they wouldn't need
" And needs to raise it through placing.What I dont understand is why did they let shareprice get this low and not raise it around 6 "
I suspect they would go for a book build , but ..you don't go and say what price you want it at ....such as 6p..... you get told what price investors will pay..... a begging bowl can make few demands
Thye did say in November they would need more cash but if so would look for non-equity....and if so.... they could look for a loan against the contract revenue ...but the interest rate wouldn't be so kind I wouldn't have thought
They also said in November the raise gave them £3m contingency...so..they may have that to fall back on.... but the raise looked very tight against all what they still had to do for phase 2 and 3 kit out
Sangijuelas1
that would be interesting if so..
a whopping £400m+ waiting to transfer over from liability to revenue ....hummm that is similar to the Rolls Royce account ...the NAV always looks far worse than it actually is because a whopping liability is actually revenue, waiting in the wings to move over in the books ...
Also suggests a lot of costs have been paid out which affects the profit margin unfairly...given the revenue from the costs incurred isnt there to balance the actual Reported margin
Alpha male manchildren playing with missiles and drones ... as if planet earth hasnt got enough to deal with
little wonder they think AI will overtake human development , measured against those d*ckheads
Joseywales
as has been posted ...99% of the presentation was already in the bag , no doubt weeks ago...being then held up by the German Regulator changes
so..in affect the final tinkering of provisions and re-writing of text regarding Germany wouldn't have actually added much ..... and .. it seems pretty obvious that behind the scenes they have been pretty frustrated by the hold up and the delay in getting 2023 behind them...
I suspect they cant wait to get these Results behind them... in all fairness ..and they probably have far more Urgency than what the auditors and Regulators have unfortunately allowed them
" Part of the reason was limited Kroger brand awareness in those areas"
yes ....but read ValuePlay and he will try and tell you that it is the end of the world for Kruger and Ocado ...despite the fact there are still a number of CFC commitments still out there for Kruger and Ocado ...
be careful what you read is my advice
" if Kroger did want to build out more Ocado"
The thing to remember about Kroger is that they already have a contract to build a set number of CFCs ... of which only a few have been completed...it is a long , on going contract ...with Kruger apparently picking sites in the New York State area for their next locations ..so I read
so..in effect Kroger has more than enough in its current contract without even having to think about " build out more"
The closure of 3 spokes is small fry when one is able to stand back at view the bigger picture
Kruger has annual revenue in 2023 of $1.8 TRILLION and people are panicking over the closure of 3 spokes
Valueplay seems obsessed over 3 spokes yet keen to ignore these bigger picture commitments
"such as the new Hatfield site etc"
sorry ..I mean the Luton site
Valueplay
part of the fund raise is to fund their own CFCs for Ocado Retail such as the new Hatfield site etc ..plus R&D ..for the advancements of the technology of course
Valueplay
I would be interested to clarify the issue of CFC Customers ....
The books have Contract liabilities of £446.7m (FY22: £422.9m) which is stated as
" primarily relate to the consideration received in advance from Technology Solutions and OIA customers."
" Revenue is recognised when the performance obligation is satisfied, typically when a site goes live or OIA products and services are provided. "
so...my understanding .....rightly or wrongly from the wording of "received in advance" indicates that the customers pay Ocado in advance , but it is a liability until Ocado actually achieves the obligation
Ocado have spent cash to achieve the "performance obligation" which is shown as CAPEX spend .....but... they dont remove the liability from the account and add it to revenue until the site goes live ...
Ocado does invoice for design aspects and that moves off the liabilities and onto revenue when the client shows satisfaction and signs the invoice document
so.... in affect ..Ocado are achieving more than the accounts suggest at this stage .... because the revenues of obligations complete have yet to be received as revenue...on the books
If you look at the RNS for example regarding McKesson Canada ( 15/11/2023) it states " Ocado will receive upfront fees during the construction process with the final payment upon final installation"
Middle East Iran/Israel on the surface, now, just looks like Alpha male bravado .... seems neither side actually wants to take things into war.....just a shame grown up manchildren need to have tit-for-tat exchanges with missiles...
" Investors take the risk then HM government plunder most of the profits."
but any tax is against net profits, after claiming full losses against gross profits
A lot of the cash isnt theirs ...it is their clients..which they spend on building the clients CFCs