Marston's Share Discussion Threads

[wigwammer] 22/3/2020 09:01

Thanks 123, if something is "unprecedented" then simple logic suggests that past events aren't going to tell you much. It is your opinion that CV will have a long lasting impact, but it is not a fact.

[wigwammer] 22/3/2020 08:53

"No cash flow to support"... is this one of your facts? My understanding is the government is providing them with property grants running into tens of millions, wage subsidies running potentially over £150m, the brewing op is likely to contribute tens of millions to cash flow, and so on. But according to fenner, none of these inflows really exist. As for worrying about accounting depreciation - it doesn't take a lot of nous on the part of a lender to work out the assets aren't depreciating much when they aren't being used. ATB :)

[123trev] 22/3/2020 08:53

Wigwammer this is not my opinion it is a fact in economics,psychology and social science that although events of magnitude are different the results are similar. Given that this is unprecedented then past research would imply this would be far worse.

[wigwammer] 22/3/2020 08:47

Fenners - your posts are heavy on rhetoric, and light on fact. Perhaps you are an emotional type of investor. Best of luck with your other investments :)

[fenners66] 22/3/2020 08:42

What that depreciation and interest uncovered by profit causes a loss taken to the balance sheet ?
Or that borrowings used to cover interest cost with no cash flow to support , adds debt to the balance sheet ?

Surely if you invest you know how a balance sheet works ?

[wigwammer] 22/3/2020 08:33

Is it a well known a fact? Or is it your opinion? Given this is an unprecedented event in modern history, there isn?t much evidence to know anything as fact. But it is a fact that I will raise a glass to those tackling CV in a pub at the earliest opportunity.

[wigwammer] 22/3/2020 08:33

Is it a well known a fact? Or is it your opinion? Given this is an unprecedented event in modern history, there isn't much evidence to know anything as fact. But it is a fact that I will raise a glass to those tackling CV in a pub at the earliest opportunity.

[fenners66] 22/3/2020 08:26

wigwammer - I already did.

You look at interest cost for example and say its covered out of other borrowings....

But with no earnings - that is going straight to the balance sheet in accumulated losses.
Depreciation - not a cash cost to you, loss straight to accumulated losses , on the balance sheet.

Extra debt - on the balance sheet.

What's not to understand about a trashed balance sheet ?

[123trev] 22/3/2020 08:09

To be honest I hope your correct in that assumption but it’s a well known fact that that’s seldom the case.It can take many years to recover from events like these and we don’t yet know how long it’s going to last for.

[wigwammer] 21/3/2020 19:26

123trev... The vast likelihood is that the same number of people will continue to enjoy going to the pub and eating out, particularly so after months of isolation.

[wigwammer] 21/3/2020 19:21

Fenner. I have tried to explain to you why that is not the case, and all you respond with is dramatic rhetoric about "trashed" balance sheets etc. I'm interested in analysis, not stories/rhetoric. ATB

[fenners66] 21/3/2020 17:59

Wigwammer the balance sheet is still going to be trashed and losses will accumulate.

When the dust settles it will be the debt holders with the whip hand not the shareholders.

[john09] 21/3/2020 13:55

I predict that this sharply re-rates leaving the dawdlers on the sidelines. Seen it with GAN, LUCE and CINE this week

The future is one thing, allowing this never before seen entry price is another

[wigwammer] 21/3/2020 13:52

Marstons may also be eligible for the property grants. With 1500+ locations, this may also be worth tens of millions. Happy to be shown otherwise.. "Cash grants for retail, hospitality and leisure businessesThe Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property. For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000. For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000."

[amelia airhead] 21/3/2020 13:04

Marston's staff should be redeployed to improve their supply chain !

Chinese Investor (MARS) 18 Mar '20 - 11:32
Marston's beers are flying off the supermarket shelves !

[wigwammer] 21/3/2020 12:47

Thanks John.. that likely constitutes the vast majority of d/t staff

[gaysalmon] 21/3/2020 11:24

Not a bottle of marstonn empire to be had in Aldi today

[john09] 21/3/2020 11:18

Wigwammer the govt is paying salaries for all furloughed staff

[wigwammer] 21/3/2020 11:08

I should add - the dividend being forfeited starts from when operations normalise. Clearly no one should expect a dividend while the business is locked down.

[wigwammer] 21/3/2020 10:32

Fenners -Spend on inventory for destination/taverns = nil.Spend on capex for d/t = nil.Spend on tax = nil.Spend on staff = £250m for group last year.. around £200m of which d/t. There will likely be pay cuts across the board, the entire d/t division is made non viable by being forced to close, they are all at risk without intervention. Best guess, the plc pay £40m pa.Interest charge = £78m pa.Total outgoings from d/t = £118m pa.As yourself and john09 point out, the brewing business which made £32m op profit last year may recoup some of the outflow through packaged products, perhaps £20m pa.Net cash outflow and debt increment required = £98m pa.The dividend last year was nigh on £50m.So if this goes on 6 months - we forfeit one years dividend to pay back the government loan. If it goes on a year - we forfeit two years.No matter how conservative the numbers or approach, it is hard to substantiate the 80% fall in future business value from pre virus levels. It only has to get half way back for holders to make 200% from here.Very much hope the current inventory doesn't go to waste :)

[john09] 21/3/2020 09:19

Just saw a brewery covered on sky news he cannot keep up with demand for bottled beers. Bottled beer market is increasing 10 fold

[fenners66] 21/3/2020 09:14

wigwammer
21 Mar '20 - 04:55 - 1544 of 1546

"Dinvestor -
They will not be paying a wage bill.
They will not be buying inventory.
They will not be paying considerable depreciation on assets that are not being used.
The only substantial cost left is the £78m interest bill, an amount that can be covered using an interest free loan from the government, and repaid by forfeiting 18 months of div payments when operations normalise."


They will be paying wages - 80% up to a max of £2500/ month to be paid by the govt - when they are laid off.

So all the head /regional office staff , still working / working from home and and possibly top ups for more.

They cannot sell bottled beer without buying inventory.
Likely current inventory of cask beer will be thrown away.
Depreciation is a time cost - happens regardless - not cash cost - but without earnings hits P&L and adds its woes to the balance sheet.
Interest free loans will be extra - not freeloading to replace existing loans - so the interest will still be accumulating P&L will still get charged even if govt loans cover the interest payments - Balance sheet still gets hit.

Profit and loss accounts don't see off shareholders , lack of cash and weak balance sheets do.
Many businesses continue after the shareholders have been wiped out.

[lindowcross] 21/3/2020 07:31

And if any Marstons Directors happen to read this it'd be lovely to see you voluntarily cut your wages by at least 25%, preferably 50%. With the saved funds being retained in the business to support it and less well off staff. I note the directors at City Pub Company have cut their wages by 25%. And I hope you all stay well during the crisis and thanks for looking after the shop.

[wigwammer] 21/3/2020 04:55

Dinvestor -They will not be paying a wage bill.They will not be buying inventory.They will not be paying considerable depreciation on assets that are not being used.The only substantial cost left is the £78m interest bill, an amount that can be covered using an interest free loan from the government, and repaid by forfeiting 18 months of div payments when operations normalise.The CBI is saying they are "overwhelmed with relief". I suspect shareholders will be too - but not those who sold or shorted at the lows...