Marston's Share Discussion Threads

[jeffian] 06/12/2023 17:25

#6882,

That's rather an odd comment. The pub/brewery sector has been one of almost constant takeover activity for many years.

[alan@bj] 06/12/2023 17:13

I take the view the property sales are part of the trading activities. It makes sense to sell underperforming or strategically inappropriate pubs, and generate funds to reinvest in improvements to the retained estate. Refurbishments do generate increased footfall, and diners/drinkers stay for longer when they visit. The negative story here is exaggerated.

[careful] 06/12/2023 17:11

Interest rate swaps losses were significant this year.
It would have been a good report if it was not for that.
No way to escape the consequences of high debt and rising interest rates, despite fancy hedging and financial engineering.

There is a potentially sound business here, but it will be a long term grind.
I will check my shares in 5 years time, not before. (if only)

[wigwammer] 06/12/2023 16:56

Well if you don't believe the profit story or the asset story, the takeover story sounds like the biggest fantasy of all..

[jeffian] 06/12/2023 15:58

If you mean go bust, that just isn't going to happen but whilst it may not 'die', it certainly looks like a 'Zombie' company for some time in the future. The fundamental drivers in the hands of the management which are required to boost the share price are increased profitability (real and visible, not 'underlying'), increased cash generation (from trading activities, not property sales) and the return of a well-covered and sustainable dividend. Bleating about the NAV is meaningless unless they come up with a way of realising it, either by achieving those drivers or by a sale of the business. I still hold, but I'm not relying on the former, I'm hoping for the latter!

[123trev] 06/12/2023 12:07

It’s a dead duck the figures speak for themselves and the share price is here for that reason not even worth a gamble it’s on life support with the plug being pulled soon.

[pj84] 06/12/2023 00:07

fenners 66 you are right, there are still several headwinds and risks as highlighted in the going concern note in the statements.

The share price, however, has fallen from around 80p in early 22 to around 30p now and has been mentioned the NAV of around £1 now is still similar to the 22 NAV, so a lot of the risks you highlight, and which are highlighted in the going concern note have been priced in, because the market thinks the NAV will fall further because of those risks.

Whilst there is always a risk that the going concern risks materialise, my view is that for existing holders, if those risks don’t materialise the discount to NAV will start to reverse but it may take some time before that becomes clearer.

[cerrito] 05/12/2023 21:20

I thought the report read well.
 The fact that they have to run fast to stand still is seen in that they generated Free cash flow of £131m but £93m of that was spent on interest costs and a further £4m on debt arrangement fees ie only £34m left over. I appreciate these figures were distorted by one off working capital outflow of £29m and that in this current FY, the FCF should be higher. I read with some disquiet the Going Concern Statement and I note that in their severe but plausible scenario, which I quote below, they will break their interest coverage ratio. I share their confidence that they can get a waiver but no doubt it would cost them and a 5pc volume decline is very feasible. 
What do you folks think? I see we are given no info on what volumes did. I also note they got a covenant waiver earlier in the year.
In the current climate good that they are engaging now with the January 2025 maturity of the RCF and the private placement. Fingers crossed that financial conditions ease next year.
Quote
We have also considered a severe but plausible downside scenario, incorporating a 5% reduction in sales volume as a consequence of the cost-of-living crisis and current inflationary pressures along with a reasonably plausible increase in costs compared to the base case forecast.
Unquote
£50m/£55m of capex expenditure this current FY seems appropriate to me. I note this is equal to what they expect to get from the disposal of non core assets.
They have a well spread investor base with the largest holder currently being Morgan Stanley with 6.95pc.. Yes the likes of MS, Coltrane and Bayberrt are trimming their holdings but big picture we are not in a position of having someone with a big holding looking to exit and causing havoc to the share price. The big question of course in the disconnect between the share price of 30p and the NAV of 101p. In theory given the Marcap of £200m approx(not too large, not too small) there should be a deal there although of course the current environment in the UK is so cloudy that it would-for me at least-be a pleasant surprise. If there was such corporate action.
I hold and will remain with what I have. Given little prospect of dividends, I wonder if I am being obstinate.
PS
Good for them to have a training facility inside HMO Liverpool and for everyone 's sake hope it works well.  

[andplus] 05/12/2023 20:32

A lot of vanity but zero sanity - cash is king

[fenners66] 05/12/2023 19:35

"Total net debt of GBP1,566 million (2022: GBP1,594 million) includes IFRS 16 lease liabilities"

reduced thanks to pub sale receipts of £51.3m

They even spent more on refurbishing and capital than they got in receipts for sales of pubs and
exclaim that the estate valuation held up !

I see that despite the exclamation that 93% of their debt is fixed or hedged the interest cost still
rose.

Even taking the "underlying " measure interest rose from £91.9m to £100.4 m so swallowed the operating
margin on the equivalent of £59m in increased sales....

Revenue was up only £72.7m so despite trumpeting the sales performance they are swimming against
the tide of interest cost.

The debt is not declining fast enough and selling property to repay it , removes assets which someone
else wants at the same time so the LTV is not going to improve much.
7 % of debt is floating and has increased so how long before more % is added to that pile ?

Despite the headroom quoted at the balance sheet date I would not be surprised based on that interest
number to see that much diminished in between times...

[fenners66] 05/12/2023 19:21

In that article above

"We anticipate an improving outlook in which cost headwinds are largely abating"

that conveniently ignores the increase in the National Living wage.

23 and over will be 9.8% increase
but younger ages (table staff?) is much more
so apprentices and under 18s +21.2%
18-20 14.8%
21-23 12.4%

That may well affect some large numbers

[the grumpy old men] 05/12/2023 17:16

Marston's slumps to a loss but pub group eyes bumper Christmas

Wolverhampton-based firm see like-for-like sales up 7.4% since 30 September

It also recorded a 9.1% rise in revenues to £872.3m over the same time period

By Daniel Fessahaye

Updated: 13:43 GMT, 5 December 2023



Marston's is preparing for a 'promising' festive period, with bookings ahead of last year, after enjoying a jump in sales since the end of September.

The Wolverhampton-based firm, which owns 1,414 pubs across the UK, told investors positive trading momentum had continued in recent months, with like-for-like sales up 7.4 per cent since 30 September.

It followed a 9.1 per cent rise in revenues to £872.3million over the year to 30 September, thanks to 'encouraging' sales of both drink and food.

But Marston's still fell to a £20.7million pre-tax loss for the year after it was impacted by interest rate swap movements and charges linked to weaker property valuations, compared with a £163.4 million profit a year earlier.

On an underlying basis, Marston's pre-tax profits increased from £27.5million to £32million.

The pub giant, which owns 1,414 pubs across the UK, told investors that bookings for the key Christmas period have been 'tracking ahead of last year'


The group said: 'Bookings for the Christmas period are promising and tracking ahead of last year.

'As always, walk-in trade represents a significant proportion of overall sales over the period; however, the booking momentum demonstrates that, despite economic pressures, people still want to go out and celebrate in a pub.'

It follows similar reports from rival pub chain Fullers, which said early last month that bookings were already 11 per cent above last year.


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The update comes just weeks after Marston's announced the immediate departure of its chief executive Andrew Andrea.

Andrea, who led the business for two years, will be replaced by former Merlin Entertainments executive Justin Platt in January.

Platt will be charged with improving costs and reducing borrowing at the business in order to bring it back to sustainable profit.

In October, the firm said it reduced head office headcount costs by about £5million this year amid plans to trim its debt pile by between £60million to £70million in 2024.

Pub groups have been grappling with high costs of raw materials, energy and labour as inflation remains stubbornly high.

However, costs have started to ease over the last few months, although the cost-of-living crisis remains a threat as cash-strapped customers cut down on discretionary spending.

On Tuesday, the group said it was looking to save a further £3million due to reductions in its energy costs and pub labour costs in the current financial year.

It is also seeking to reduce its borrowing levels in the longer term and said it will sell around £50million worth of 'non-core' pub assets to help achieve this.

Chairman William Rucker said consumer demand has remained 'resilient' despite the challenging economic backdrop.

Rucker added: 'The consumer has remained resilient despite the macro backdrop and Marston's continues to trade well, achieving market outperformance.

'We anticipate an improving outlook in which cost headwinds are largely abating and like-for-like sales are up over 7 per cent since the year end.

'This, together with the actions we have taken this year to drive further efficiencies, leave us confident that Marston's remains well-placed to continue to outperform and to grow revenue, margin and profitability.'

Marston's shares fell by 1.45 per cent to 30.50p on Monday morning trading.

[careful] 05/12/2023 08:47

Worth holding.
Marston doing the right things, moving in the right direction, trading well.
It will sell a few non core pubs and gradually reduce debt.

With luck there could be some significant upside here.

[wigwammer] 05/12/2023 08:32

For clarity, nav same as last year 1.01... But price 20% below where it was this time last year ie the stock has derated for not much reason. Outlook positive

[careful] 05/12/2023 08:21

Nav 1.01.
Todays price about 30p.

70% below.

[wigwammer] 05/12/2023 08:12

Nav same as last year. Price 20% below. Decent outlook. Looks underpriced

[robertball] 05/12/2023 08:10

Surely it's all priced in. Op profit as per sector and debt is known

[robertball] 05/12/2023 07:30

Debt is massive.

[queenbreguet] 05/12/2023 07:25

Um not a great set of prelim results. lets see what the market thinks.

[heatseek77] 04/12/2023 11:29

Rimmy stick with Mars our current ridiculously low share price new CEO in place onwards and upwards 👍🏻

[rimmy2000] 01/12/2023 11:56

currently hold MARS but cannot decide if better to switch out to JDW. thoughts on comparable prospects welcomed

[careful] 01/12/2023 11:21

Trading cash flow and nett assets.

Looking at MAB results they seem to have written the value of properties down accounting for a small loss.
Trading seemed ok.

We may think that our assets per share are 100p, but with debt a bit over £1bn and assets over £1,5bn it would not take much of a write down in property values to reduce the theoretical assets per share number.

But at todays market cap of £190m every worst case scenario is baked into the pie.

If Marston, a well run company, are trading well they will be on schedule to hit their £1bn debt, £1bn turnover target.

Next week we shall know.

[heatseek77] 01/12/2023 09:55

Back above 30p, Christmas coming the local Marstons near us was packed out