Good morning!

Lots on the newswire today, including:

Finished at 5.15pm.

This section by Paul Scott:

Loungers (LON:LGRS)

  • Share price: 205.2p (+4%)
  • No. of shares: 92.5 million
  • Market cap: £190 million

Interim Results

Loungers plc ("Loungers" or the "Group") is pleased to announce its unaudited Interim results for the 24 weeks ended 6 October 2019 (the "period"). 

This is a hospitality sector roll-out, opening 25 new sites each year.  It floated in April 2019.

My hospitality sector expert tells me that the management team are very good.  After getting my fingers burned with losses on a bars roll out that went wrong, Revolution Bars (LON:RBG) , but seems to be starting to get back on track again, I’ve been a bit reluctant to get involved in another one. Hence I’ve had just a watching brief on LGRS since it floated.

The headlines look fine to me;


In particular, generating LFL sales growth (of 5.4% here) is the key number. Since many costs are rising, especially staffing related, then hospitality sector companies have to be eking out at least some LFL sales growth. In this case, 5.4% is good, and similar to what some of the pubcos are achieving.

The 25.6% rise in adjusted EBITDA is also good, and reflects the expansion capex on new sites. Although the recent changes in how leases are accounted for has distorted the figures, and made analysis more difficult (with no benefit whatsoever from the changes). Hence we’re given 2 different EBITDA figures. It seems to me that the lower figure is the only one that makes sense, since EBITDA really should be stated after all rental costs.

For my purposes, IFRS16 has completely messed up accounts for multi-site companies, rendering them largely useless, unless I adjust out all the spurious numbers inserted under IFRS16; 

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