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Anyone know why this has suddenly started to shoot up?
Uplift across the hospitality sector.
Maybe that bustle that I noted yesterday is being reflected across all of Marstons properties, hence the sudden uplift in share price...
How do you see it back to 60p?
Barchid...unpaid rent is less of an issue as the pub can be converted to a foundation agreement where Marston’s take control and 80% of the pub income is taken rather than rent...like for like they typically are more profitable. On the whole this balances out and is a bit better.
You are quite correct about the estate valuation, particularly the big new builds...
Trent
Good luck for you & yours, another (local) lockdown will be as about as helpful as breaking wind in a lift to Marstons !
Hoolicat
Great input again, many thanks.
As you say a chunk of change but rather less than I was fearing, thankfully.
The real issue is, of course, if the tenants can pay the rent. That is a liability we have no solid numbers to evaluate but my suspicion has been, ever since the sale of a bunch of pubs late 2019 at a nasty loss to book value, that the estate is somewhat aggressively valued, especially as that followed the abortive sale of "pitcher & piano" bars due to no interest at the offered price.
could be on the way back there..
Hi Barchid, I think you are asking for my input on tenancy debt and beer wasted? I wouldn’t give info that is not in the public domain, but debt has been relatively low and not a big impact. This is mainly due to the ability to switch a tenancy into a retail or foundation (types of franchise) agreement which tends to mitigate business failure cost as these retail agreements are more profitable like for like for the low turnover, wet led tenancies. So debt right off has been fairly small. It that was in a stable, well controlled environment where agreement conversion could be proactive. The current situation will be more reactive and need to be faster paced if tenancies start faIling...debt will rise from unpaid rent and the vacancies hard to fill with competent operators. I would estimate that the tenancy and leased division would be £1million behind budget for the whole year, conservatively...i.e. this is the profit loss compared with if all was normal.
The beer loss due to wastage...if you assume 10 days stock holding, with draught beer being 75% of the wet turnover, then you are looking at £2k per pub at cost as a general average for T&L pubs and also the franchises...For 900 pubs or so. The Managed pubs have a lower % of draught beer but higher stock holdings, a guesstimate would be £4K per pub for 600 pubs...a chunk of change. I would stay clear of any specials involving steak and ale pie...
Fairdealer
First the motel piece, certainly variable in quality, which one can understand up to a point in this climate but could mean a general staff/skills upgrade is needed to maximise occupation of rooms.
My only experience in one was in Devon, pretty dire, even on the loyalty card it still rankles....
WRT the trade receivables, you have confirmed, but in greater detail than I had knowledge of, the possible iceberg we might meet in some months time.
Hopefully not but it is best to have eyes wide open.
Thanks for your response, appreciated.
Got in yesterday at the bottom, 36.3p unfortunately for a relatively small amount but nice to see a big engulfing candle after filling the JV announcement gap. Bodes well looking ahead. I would be happy to buy more if the new trend is days like today.
Trent. Hope you don't but if regional lockdown occurs you come out of it quickly.
Srostron, you have more will power than me sitting and watching someone eat fish chips beans and ice cream!
@Ash78. I live in Greater Manchester & it seems we're going into a regional lockdown again, same as parts of The Midlands. Doubtlessly this will have some impact on the pubs in this region.
So thanks a bunch all those selfish B'Stards that went out protesting and ignoring the Virus
@Ash
I took my sons out yesterday and ordered 2 big fish and chips and beans finished off with 2 ice cream puddings with soft drinks and the bill was something like £11.00 which would probably cost that if you bought it all in a supermarket. I didn't eat but had a smooth pint. Probably gonna go out again tomorrow :)
I overheard a manager on the phone say to a customer that they we're fully booked later and would advise to book in advance.
Barchid
Stayed at the same motel
The experience was a bit like the Curate's Egg.
I'll start with the best part. The Breakfast team ( yes breakfasts were on this time), were helpful cheerful, attentive and wearing masks. On the contary the Receptionist on Friday night was anything but friendly, remained sedantry and when presented with my confirmation Booking email insisted on me giving my name. Presented my Privilege card but am not sure whether or not the discount was given ( will wait for my Visa statement). Used the electronic card to access the room, in separate block to Bar and restaurant , however even though kettle, cups etc were present NO tea, coffee, milk etc. Did not complain having just driven over 250 miles. Did understand later, the receptionist should have given a sealed bag with tea, coffee etc.
The first impression always sets the tone of the establishment even though the Breakfast team performed well, the receptionist gave me a bad impression.
If, as promised, Marstons are to provide Operational Excellence, serious staff training must happen, focusing on Customer care particularly Front of House staff.
Given the motel is in a good location and a Friday night I estimate the Bar and Restaurant was no more than 40% occupied and outside tables possibly 50% occupied. I asked staff on Saturday morning how trade is since re-opening, answer "slow but we are getting there"
In regards Tenancy arrears, aware as you state overdue rents etc have been bundled together up to the end of year 2018.
There can be no doubt that number is going to explode during the current year, we are unlikely to know precise figures until year end accounts are published. Had hoped Hoolicat may have been able to give us a clue? I will continue to dig but am under no illusion the numbers will be revealed yet.
I do not know but it is conceivable disagreements are ongoing between Landlords and Marstons regarding payment of Beer tipped down the drain. This in itself brings up another very important liabililty...alcohol tax. HMRC require payment of Alcohol Tax at point of manufacture when Bottled or Casked and not at point of sale as some think. Am pretty sure HM Gov have granted a tax holiday which means at some point the Tax will be payable as will other Taxes . The latter element will effect most if not all Trading company's many will have used these funds to survive, hope Marstons have it locked away.
A lot of bad and potential bad news is priced in, however I suspect there are other nasties lurking.
I'd be interested to know if anyone else has a similar update from around the country...
Hi Darkarches. Its actually quite chilly around here at the moment so on this occasion there was only one other person outside but inside was full. As you say, a sign of confidence!
That's great news Ash. Was it full inside as well as outside? The Marston's I went to yesterday was packed outside but probably only a quarter full inside. But if it's looking like people are getting more comfortable sitting inside during Covid then there's more hope for the Winter and the normally bumper festive season.
Just been to my local Marstons, the Foxglove, for a couple of lunchtime pints. There was a real good atmosphere in there with no spare tables whatsoever. I sat outside to relish a couple of scoops - a Cumberland and a Hobgoblin Gold.
The manager says it's been similar throughout yesterday and today which is great news.
Surely takings across the board this month will help create a bit of a peak to the share price.
I'm booked in tomorrow night with the family for steaks all round 50% plus the privilege discount on top! :)
Fairdealer
Firstly did you have a better experience in the Motel this trip than you did last trip, presumably a different one ?
Secondly, you are good at these things regarding tenancies etc but if I am not mistaken between 2012 to 2018 the average of trade receivables considered overdue was around 25% ?
Presumably this is going to be a very different number this year, I know they have modified their banking agreements recently but who is going to pay, for instance, for all the old beer which was tipped away, tenants or Marstons ?
Is this something you have looked at recently ?
Clearly there is a lot of bad news built into the price already, could this come as another nasty surprise or am I misunderstanding something ?
Fingers crossed this will get back to 50p soonish. But in August who knows?
Same here Codejunkie.
The Avacta 'spit test' seems to be taking a long while though. If successful economies can begin the repair process.