Hostmore Share Discussion Threads

[loglorry1] 06/5/2023 11:16

Yep let's see if they deliver!

[sidam] 03/5/2023 07:39

I thought the big take away was the estimate that the group could generate £10m of free cash flow in the foreseeable future. If that is correct the current market cap of £22m is ludicrously low.

[muzerewa] 03/5/2023 06:20

A reassuring presentation yesterday, refreshingly free of corporate BS. Seems a compelling investment opportunity at this price.

[raquet] 28/1/2023 11:25

Stephen Welker is not only on the board, he's become Chairman designate.

[muzerewa] 21/11/2022 10:56

This share is trading at distressed levels, suggesting bankruptcy on the horizon. Looks cheap if the company can survive....

Interesting to note recent shareholding notifications from Edward Bramson and Steven Welker, activist investors who were involved with Electra PE trust. I believe Welker is now on Hostmore board..

[km18] 11/7/2022 14:57

Hostmore (MORE) issued a trading update for the HY ended 3rd July this morning. Trading is in line with expectations, growth opportunities remain despite consumer caution. LFL revenues for the period since 23 May 2022 are in line with the expectations set out. Organic growth continues in line with previously stated plans of the Group, with the recent opening of the fourth 63rd + 1st restaurant, in Edinburgh, on 7 July 2022. More than one million customers visited the Group’s brands during June. The Group has extended its primary banking facilities for an additional 12 months, the terms include an increase in the value of the Revolving Credit Facility to £30m from £25m in support of the Group's capital allocation policy. The share price has fallen over 75% since listing last year, valuation is now very attractive. The balance sheet is improving, but near term share price momentum is lacking. One to monitor for now, but valuation is a big plus...

...from WealthOracleAM

[jtourer] 18/3/2022 16:57

Interesting analysis, I remember TGIFs when they were newish in UK. I used to sometimes take customers there. They were a tad pricey but a generally good experience. However in recent years TGIf seems to have morphed into nothing more than an expensive MCDonalds as the one in Reading was full of kids birthday parties etc. So I for one welcome an up-tick in quality and service in TGIF's

[napoleon 14th] 18/3/2022 13:46

Dunno about Paul Scott, but here is another opinion.
Rather pertinent questions being asked....

Small Caps Live Weekly.

Hostmore (MORE) - Final Results, Here’s the headlines:

As a restaurant chain, this is dominated by lease assets, so taking the pre-IFRS EBITDA is largely meaningless. Thankfully, they provide the pre-IFRS16 figure and we don't have to try to calculate it. This is of course still an adjusted figure, and looking at those adjustments, the big difference is listing costs. How on earth did it cost them £8.1m to list a sub £200m market cap company?! Smacks of the PE float/demerger that this was. At least these costs should be genuinely one-off.

These figures put them on a P/E of 13 and a EV/EBITDA of 5.6. This isn't crazy expensive, but isn't cheap either,

However, the FCF figure does look impressive. But the first thing to note is that this is not what we would typically call Free Cash Flow:

Free cash flow is calculated as the profit/(loss) for the period adjusted for depreciation, non-cash items, changes in working capital, tax paid and maintenance capex, and excludes cash used in financing activities.

This is not cash generated that can be used to pay dividends, buy back shares or reduce debt. To get to FCF from OCF they take off what they define as maintenance capex but not what they consider expansion capex.

Even putting aside that this split is open to considerable opinion, Mark considers this inappropriate because otherwise companies with significant growth capex, such as say Capital Limited, could claim that they generate great FCF figures. High-quality companies such as Capital don’t, of course, because that cash flow isn’t free, it is committed to growing the business.

Given the recent float, all the IFRS16 calculations, maintenance vs growth capex debate then we are disinclined to spend hours unravelling the details. The much simpler way is to look at net debt, which went from £28.6m to £12.2m; so a £16.4m reduction. However, they received £13.1m from their listing and didn't pay a dividend. So actual FCF was £3.3m.

Partly this was because they spent £8.1 on listing costs so it may be fair to add this back in. But they also received government payments in this time, although they don’t quantify this. About £1m of the FCF was due to working capital changes, so while we agree this is FCF it also isn't necessarily repeatable.

With the share price down this week, the market seems to have been able to see through the attempts to put lipstick on, what may or may not turn out to be a pig. Or it may simply be unimpressed by the outlook:

LFL revenues for the 8 weeks ending 27 February, adjusted for stadium venues, is c.3% lower than FY19

They have hedged gas and electricity costs:

Early hedging of gas and electricity costs, both volume and pricing, substantially reduced the negative impact on future margins, with recent hedging contracted prior to the start of the Ukraine crisis

But no indication for how long, and of course, labour inflation could well be challenging for them too. The CEO does say:

I am equally appreciative of the ongoing loyalty of our many guests that continued to support us by visiting our restaurants and indicated their appreciation of the improvements in quality and service which have resulted in higher and more consistent levels of guest satisfaction.

This suggests they are willing to address the fundamental issues with the business that have been evident for some time - that the reviews are poor for the core "Friday's" business, and that their offering is priced at a premium to other restaurants without offering a premium experience. Personally, Mark would much rather go to one of the independent local restaurants that provide chef-prepared food and nice wines for a lower cost.

This quote stood out to Leo:

With the combination of the permanent closure of somewhere between 15-20% of restaurants as a result of the pandemic and a growing acceptance from consumers that pricing has to reflect value...

What about an acceptance from TGIs that their pricing has to reflect value? Perhaps the Chairman could be part of the problem:

Having had responsibility for the stewardship of the TGI Fridays brand over the last five years as Chairman of Electra Private Equity PLC, I am now delighted to present the inaugural Chair's Statement of Hostmore plc as an independent listed business.

So this is good news:

It is therefore my intention to step down as planned at the Annual General Meeting in May.

However, this is a highly competitive sector, and nothing in these results changes our fundamental view: if we wouldn't eat at their restaurants then why would I buy their shares?

[eezymunny] 15/3/2022 09:19

It's not remotely illegal jtourer. IFRS16 is ridiculous IMO but companies are using it to quote meaningless numbers in their results headlines.

Quoting EBITDA which doesn't even include your rent is clearly daft.

[big7ime] 14/3/2022 16:07

Waiting for Paul Scott’s analysis. He’s a huge fan and reckons they should be £2

[jtourer] 14/3/2022 16:03

Surely if they made an earnings statement that contained such an obvious piece of creative accountancy they'd be hugely illegal ???

[eezymunny] 14/3/2022 08:51

Interest on lease liabilities is......... mostly rent I guess. Quoting EBITDA that excludes rent is really sickening IMO.

[spooky] 14/3/2022 08:09

Interest on lease liabilities is definitely ......... interesting.

[mashman] 13/3/2022 19:02

Fridays and go opened in Dundee last week, their first fast food outlet.

Also, investor relations call tomorrow at,

[mashman] 22/1/2022 21:14

That was very erm, interesting :-) Thank you Paul.

[paulypilot] 19/1/2022 14:07

I interviewed CEO & CFO of Hostmore yesterday - audiocast here:


Not a puff piece, as I don't charge, but am a shareholder, so obviously I take a positive view of the company's shares.

Regards, Paul.

[mashman] 17/1/2022 21:53

Acquisitions will drive this north. If you look at someone like Loungers we should start to catch up.

Loungers 153 units + 31 Cosy Clubs MK £290M

Hostmore 88 units MK £146M

[mashman] 17/1/2022 18:00

Maybe unlocked shares are being sold from the Electra deals but no matter. Today's statement will most likely set off a few institutional buy bots to gobble them up.

[theisland] 17/1/2022 17:19

Interesting that the price found resistance in the 118p area... I noticed by the RNS out on the 10th that a big holder reduced on 6/7 January presumably around that price. Could it be they are still selling and preventing the share to move up? IMO we could be at a good entry point... Sooner or later sellers will be done with it...

[mashman] 17/1/2022 16:51

Nice update. I wouldn't worry too much about trying to mislead the markets it's not their style and they have no reason. They are doing well and are perfectly positioned for post covid trading. It's also less accurate to include IFRS because the rents are so fluid and landlords are much more open to negotiation
IMO opinion this was floated too cheap. If we start to see a lot of AT trades going through we should rerate to value IMO

[eezymunny] 17/1/2022 12:24

Hmm I'll be waiting to see the cash flow statement! There are DOZENS of IFRS standards. Are they saying the number excludes them all??

[eezymunny] 17/1/2022 08:12

I presume the EBITDA doesn't include rent costs? In which case, quoting it is very misleading to those that don't understand IFRS 16 IMO.

Can't wait for the truth, whole truth, nothing but the truth to be revealed with the next cash flow statement...