Member Info for shandypants2

another good day for HVO. Not sure if the rise was all down to the new contract as that is mainly for 2024, perhaps the share tip in the Times had a bigger effect.
The share options for Mo may indicate that there is takeover interest too.
Who knows.
What we do know is that HVO is in a good space, has a decent moat and is being well run. What is not to like?

in the last week i've been at the Embankment pub in Bedford and then at the weekend in The Revolution in Deansgate, Manchester.
The embankment is brilliantly located in a really affluent part of town. It was steady, rather than packed, for a Thursday evening. The meal was nice if a little expensive. Definitely a well run pub.
Revolution at 6pm on Saturday was packed, i couldn't get a table. This is in a great location amongst a number of bars. Always a good, lively crowd. At the weekend this place is a gold mine (although i suspect rents reflect that!).
So yes we have a cost of living crisis, and the bottom 20% to 30% are suffering, but i'm not sure these people really go to RBG pubs and bars. People still want to go out and spend money and RBG is well positioned to meet this demand.
At the current SP, and assuming the BOD know what they are doing this is a great risk v reward IMHO

Paul Deano, i'm hoping that is a joke as that is one of the most stupid statements i have ever read.

Every economist said Brexit would result in a GDP reduction and what a surprise that has happened. We have the lowest growing economy in the G7.
All this horribler EU red tape would be removed. Well actually when trading within the EU there was no red tape and now there is a massive amount.
But of course it was such a great idea.
Please can we get back to TWD

its all gone quiet regarding the Vigilant sale/divestment.

I think i remember reading that there's a big contract up for renewal in March so potentially both sides are waiting for the outcome of that.
Hopefully news soon.

yep, all looking good. HVO is in a great space with a moat. What's not to like?
The potential divi has bizarrely created some negativity, maybe as there was nothing else to moan about!
The fact is a 1p divi is £6.7m so of little impact to HVO as the current cash position is over £28m. The only question is whether it's a one off (special) or something more permanent.
Hopefully we'll get some spin off news in the not too distant future.

noel you are confusing the spin offs with a capital redistribution, or are just being pedantic.

In the same presentation CEO mentioned the spin offs will occur when the market improves so clearly this event is separate from that. We were also told the high cash position has facilitated this redistribution event. The quickest and cheapest way to do this is via a dividend. So IMHO the only area of discussion is the amount and the structure - ordinary and/or special divi. Clearly 2022 results have not been completed or audited so it would be premature to discuss it in more detail at this point, but it will clearly happen at some point this summer

Another good week for HVO, an excellent trading update and a positive presentation.
A couple of points. The EDITDA margin of 17% is great but will include the £1m non refundable deposit. Excluding this and the margin is a lower but still good c15%. The reason i mention this is if H1 does not produce say a 20% margin some may interpret it as margin pressures.
Mo as CEO is a safe pair of hands. He knows the business and has managed to cross sell and also to perform concurrent studies. Both of which will clearly drive revenue growth.
The dividend is also good news. With 670m shares a 1p divi would be very manageable and would represent over 5% yield. Maybe even 1.5p (so c£10m)?
Personally i would like to see this as maybe 0.5p as a standard (yearly dividend) and any extra paid as a special divi, rather than getting all as a special divi.
I think positioning HVO as a regular divi payer will be well received.

Have to agree Latic.
So covid sales declining, as expected, but non covid sales fell too so god knows what the BOD think they are doing. Should this not be the growth area?
It's all well having £87m in the bank but if you are losing over £10m a year then this cash pile will diminish quite quickly.

Whilst the DHSC case is frustrating and has clearly tied the BODs hands how about going down the mediation route - quicker and cheaper surely.

RNS looks ok - revenues on target despite some contracts being pushed to H2. EBITDA a little lower than i was hoping but H2 is usually the bigger earner. With the higher debt payments now EBITDA is IMHO a little misleading - it is PBT that is key.
Hopefully fall is 'just' because a larger holder is reducing. The fundamentals haven't changed. At £10m this looks really cheap now. Also topped up!!

revenues were always going to increase substantially as new sites opened, however, the big plus for me is the cash position. The upfront costs of acquiring sites and fitting them out has now been absorbed and now hopefully they will become cash generative. To have over £3m cash after such an aggressive expansion is quite good IMHO.
Maybe they need to slow the expansion down a little now - the extra £3m bank facility will is currently at 8.5% and will continue to increase when the base rate does, as is expected in 2023. Not sure why bother opening a site on 28/12 - you've missed the pre xmas period and Jan/Feb are always terrible months for hospitality.
Also notice an extra 25m shares will be issued to Boom - so essentially almost a 20% dilution coming at some point.

i have to say i've lost faith in BRSD and have sold the majority of my holding at a large loss. For me the big red flag in the last accounts was a marketing spend increase larger than the increase in revenue. This is madness.

I had high hopes for WeShop, especially as the book value of c$4m looks quite conservative. However, it seems quite a complicated process if they want to materialise its value. The updates regarding this are few and far between so that's the only info i have to go on. Hopefully we will suddenly find out it's been sold for maybe £5m, however, i'm not holding my breath.

Regarding costs i have many concerns. Considering this is essentially a family business the BOD is massively overpaid and they are loads of warrants and options too. Another red flag. No cost saving measures seem to have ever been implemented.
The 2 most recent RNSs are essentially PR with no info re current trading etc. Another concern IMHO.

Hopefully this will come good one day, the tech is good and i think when signed up customers are quite loyal, however, the cost of acquiring them is the big issue here.

the City Pubs trading update is quite interesting as their pubs are in a similar space to Peach. They have performed quite well and have increased both revenues and profit. City pubs is valued at c£80m and is about twice the size of Peach (44 pubs v 21 etc). It's estate is mainly freehold which gives them an advantage against RBG's leasehold model.
In the recent RNS Peach seems to be performing quite well too which is encouraging.
I'm not saying Peach is worth £40m (half of City Pub valuation) but 1/4 would not be unreasonable - £20m. This was purchased for £16m in October and the total valuation of RBG is currently £13m.
If the BOD can navigate a tricky few months there is some serious value here IMHO

well we need positive news ASAP as the cash levels must now be very low - less than £400k on 30/9 after 'only' managing to raise £270k in August. Are we expecting any royalties from nxp001 anytime soon?

based on the SP performance you are 100% correct, however, if you lift the bonnet DVRG has built 2 excellent brands - STC and Modern Water.
The question now is where do they go from here - the latest fundraise only gives limit working capital as about half was to pay off the loan.
I strongly suspect Modern Water expansion will slow and the focus will be maximising the returns with existing partners.
STC has so much potential but in hindsight probably launched too soon. The US market is huge so hopefully this will reach fruition this year. I can easily see either a JV or an outright sale to a large cosmetic brand at some point.

cashburn is a massive concern IMHO. It is clear the distributor change has taken longer to bed in than the company expected and the 'one-off' impact is not just for a single quarter as we were let to believe. It is now already a 6 month impact and there was nothing in the RNS to give any optimism that the teething problems have now been resolved. Ultimately DIS is a small player so maybe some of the purchasers have just decided not to renew when we requested they switch from dist A to B.
For example Blackwoods was stocked by Wetherspoons. They have about 20 different gins behind the bar. I suspect they haven't bothered renewing as sales didn't justify it.
However, on a positive surely the logic of a new distributor was to open up new opportunities etc. Maybe we will see some of this in H2.

good summary Green, as usual.
IMHO i'd be pleasantly surprised if we hit £50m rev for 2022 as the H1 was only £18m. However, the number has been re-iterated a couple of times since so they must have visibility of invoice amounts and timings etc. Anything above say £48m will be ok with me as this still represent good YoY growth.
I do agree with 2023 figures though. £55m looks very conservative. Would be nice to see this nearer £60m so again 20% YoY growth.
A new CS (covid or malaria etc) and/or any spin off news would also be well received.

i do think Tru is undervalued, however, a paid for broker target should always be taken with caution.
I think the big question is whether it can get to EBITDA positivity with the current cash in bank. Based on today's update it is a big if, and this will be a drag on the SP until we have more clarity.

i presume you've seen the update released on 11th Jan. Headline revenue growth is good as more bars open, however, lift the bonnet and it says like for like revenues for H1 were down over 5%. When you remember 2021 xmas was covid impacted this is a concern.
I suspect the train strikes impacted city centre and late opening establishments, so Nightcap would have been hit. The train strikes the week before xmas probably had a significant impact.
Also cash is a concern. On 3/7 net debt was £200k now it is £4.1m. Whilst some of this would have been used on bar openings and refurb that's a big reduction in 6 months.
Interestingly Revolution had similar results. H1 was down on last year and they also blamed train strikes.
As the xmas period is peak trading both updates were a bit underwhelming IMHO.

RPW talks about Truss's actions now being history and yet mentions stuff from 2008 when there was a global recession. The same playbook repeated - all the current issues are due to Russia and covid but all the older global issues were Labour's fault. Unbelievable.
Just out of interest how much was wasted on an unworkable test and trace system and unusable PPE??
Incidentally i am not a Northern and not left wing!

Based on H1 cash burn is c$400k a month. There was cash of $2.2m at 30/6/22 so this would have been spent by YE. We had the c$2m placing in November so that will give the company another 6 months.
Unless revenues increase substantially and/or costs are reduced (and it appears both staff costs and marketing spend just keep increasing) they will need another placing or debt finance within the next 3 months.
Best scenario IMHO is another placing at 4p unless Leahy have got fed up funding this.
Such a shame as the tech looks great.