Holmes Place: How Much Cash Really Remains After Leases, Capex and Dividends
The main article already showed that Holmes Place's real test starts only after leases. This follow-up isolates the cash bridge and shows that even in 2025 operating cash flow still did not cover lease cash, capex, and dividends together.
The main article already established that the comfortable read on Holmes Place stops too early. EBITDA still rose by about NIS 4.5 million, but net profit fell by about NIS 17.8 million, and the presentation itself attributes that gap mainly to finance costs, tax, and depreciation. This follow-up takes the next step, and it is the more important one for shareholders: how much cash really remains after the hard uses of cash.
The framing here is deliberate. I start with the all-in cash picture, meaning cash flow from operations against total lease cash paid, capex, and dividends. That is not the only legitimate bridge, but it is the bridge that answers the practical question of what actually remained after the uses the company already paid or committed to in real cash. On that reading, 2025 looks materially tighter than the banking read alone suggests.
The arithmetic is straightforward. Cash flow from operations was NIS 164.3 million. Total cash paid for leases was NIS 134.5 million, leaving only NIS 29.8 million before capex and dividends. Net purchases of property, plant and equipment were NIS 81.9 million, so the picture was already down to negative NIS 52.1 million before any shareholder distribution. A dividend payment of NIS 38.0 million pushed the residual to negative NIS 90.1 million. And if the NIS 7.3 million paid for a business purchase and an acquisition of control is added on top, the gap widens to negative NIS 97.4 million.
That is the core point. This is not an immediate liquidity wall. Year-end cash was NIS 20.8 million, the company still had a fully unused short-term NIS 20 million line from Bank A and another unused NIS 40 million line from Bank B, and it says it remained in compliance with all financial covenants. But that is exactly where banking comfort and shareholder cash diverge: the covenants are tested after neutralizing IFRS16, while the cash goes out in full.
Where The Cash Bridge Turns Negative
That bridge matters because it isolates what is truly recurring in the network's economic model. Leases are not a side accounting noise item here. At Holmes Place they are central to the platform. Most clubs sit on long-term lease contracts of 15 to 24 years, and in 2025 the company paid NIS 134.5 million in cash for leases. So any read that stops at EBITDA, or even only at lease principal, is still incomplete.
That said, the narrower framing is also worth showing so the bridges are not mixed together. If the reader counts only lease-liability repayments rather than total lease cash paid, 2025 includes NIS 86.1 million of lease principal payments. Even on that narrower basis, after NIS 81.9 million of capex and NIS 38.0 million of dividends, the result is still negative NIS 41.7 million. In other words, one can debate the width of the frame, but it is hard to argue that there was free excess cash left over.
| Cash frame | Starting point | Lease component included | Net capex | Dividends paid | Residual |
|---|---|---|---|---|---|
| All-in cash picture | 164.3 | 134.5 total lease cash paid | 81.9 | 38.0 | (90.1) |
| Narrower picture | 164.3 | 86.1 lease-liability repayments | 81.9 | 38.0 | (41.7) |
The second chart sharpens another important point: this is not a one-year distortion unique to 2025. Even in 2024, after leases, capex, and dividends, there was no surplus left. In 2025 the gap simply widened. So the real question is not whether one quarter was unusually weak. It is whether the network has already reached the point where new clubs are generating more shareholder cash than they consume. This filing still does not prove that.
Why The Bank Sees One Number And The Shareholder Sees Another
Bank debt did come down. Total loans stood at NIS 84.4 million at the end of 2025 versus NIS 109.8 million a year earlier. The company also prepaid about NIS 40 million of long-term loans after the equity raise, and the presentation already points toward 2026 with an expectation of lower finance costs. On the surface, that sounds much calmer.
But this is exactly where the reader needs to slow down. It is a mistake to read banking calm as if it were free cash generation. The filing explicitly says the financial covenants are tested after neutralizing IFRS16. That is a legitimate banking framework. It simply does not answer the shareholder question of how much cash remains after real lease payments.
At the same time, the lease profile remains heavy. The contractual maturity analysis of lease liabilities reaches NIS 1.097 billion, of which NIS 94.4 million falls in year one and NIS 633.3 million falls in year six and beyond. Right-of-use assets stood at NIS 963.6 million at year-end, and during 2025 the company recognized NIS 151.9 million of right-of-use assets against lease liabilities through non-cash activity. In plain terms, club openings and network expansion are not only a growth engine. They are also the mechanism that keeps renewing the future payment layer.
That chart explains why the distinction between bank debt and cash burden matters so much. The bank can be more comfortable, with reason, because facilities are available, debt fell, and the company remains in covenant compliance. Shareholders, by contrast, still need to ask whether the machine of leases, capex, and distributions is already leaving room for genuine surplus cash. As of the end of 2025, that answer is still cautious.
What The Equity Raise Bought, And What It Did Not Solve
To understand why year-end cash fell by only NIS 6.4 million, the whole financing picture has to be kept in view. In 2025 the company raised NIS 69.3 million through an equity issuance, took on NIS 60.7 million of loans, and repaid NIS 86.0 million of loans plus NIS 86.1 million of lease-liability repayments. The relatively small decline in cash reflects the fact that the equity raise and new borrowing offset part of the heavy financing and investment uses.
But the equity raise did not create free surplus out of operations. It bought time, improved the financing structure, and reduced part of the future interest burden. That matters, but it is not the same claim. Even in the presentation, when management explains the expected decline in finance costs in 2026, it anchors that on a lower loan base and lower interest rates. In other words, the improvement flagged ahead is supposed to come through cheaper financing, not because 2025 suddenly left abundant cash after leases, capex, and distributions.
That gap is especially visible in the fourth quarter. In the presentation, finance expense excluding IFRS16 in Q4 2025 was NIS 2.943 million versus NIS 2.061 million in Q4 2024, even though end-period loans had already fallen to NIS 84.4 million from NIS 109.8 million. The company explains that by one-off interest and linkage costs set in an arbitration ruling. That does not contradict the case for relief in 2026, but it does remind the reader that the path from lower debt to a cleaner shareholder result is not immediate.
Another pressure point rolls into 2026 faster than it may seem. The presentation explains that payables rose partly because of an NIS 11 million dividend declared in November 2025 and paid in January 2026. So even after NIS 38.0 million of dividend cash left during 2025, the company entered the following year with another shareholder distribution already sitting in the balance sheet. That is not inherently problematic. It does reinforce the point that the real question is the rate of cash left after all hard uses, not only the debt headline.
The Bottom Line Of This Follow-Up
Holmes Place is not facing an immediate liquidity cliff here. It still has unused credit lines, remained in covenant compliance, and the 2025 equity raise allowed it to reduce debt and enter 2026 with a cleaner financing profile. But none of that answers the follow-up question raised by the main article.
The right question is how much cash remains after leases, capex, and dividends. In 2025, even the narrower framing did not leave a surplus. And on the all-in reading, which is the more appropriate one for a lease-heavy network, the gap was deeply negative. That does not mean the model is broken. It does mean the network still has not proven that growth in clubs and members already translates into cash that truly reaches shareholders.
That is also why 2026 is the test year for this continuation thesis. If finance costs decline, and if the clubs opened during the cycle start producing more operating cash flow without another similar jump in cash uses, the read will improve quickly. If not, Holmes Place will remain a company that the bank can live with comfortably while the shareholder still gets less free cash than the EBITDA line implies.
Disclosure: Deep TASE analyses are general informational, research, and commentary content only. They do not constitute investment advice, investment marketing, a recommendation, or an offer to buy, sell, or hold any security, and are not tailored to any reader's personal circumstances.
The author, site owner, or related parties may hold, buy, sell, or otherwise trade securities or financial instruments related to the companies discussed, before or after publication, without prior notice and without any obligation to update the analysis. Publication of an analysis should not be read as a statement that any position does or does not exist.
The analysis may contain errors, omissions, or information that changes after publication. Readers should review official filings and primary sources before making decisions.