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Why have loan note agreements been breached, if borrowings are under control? Marstons credit rating is under review, suspect agencies are waiting on details of the temporary waivers negotiated in December. Those waivers are short term until 31st March. Is it possible Lenders want to see dramatic moves to bring borrowings under control?
It is well recognised within the hospitality sector, post Christmas income comes under pressure. Spoons are taking action to protect cash flow with some drink and meal offers.
Terry's general thrust goes someway towards addressing the significant fiscal issues facing Marstons. Debt must be drastically reduced. A review of poorly performing venues. The inclusion of the Welsh estate ( Brains) was a step to far. A deal arranged behind closed doors for an estate which had not been surveyed was crazy. MARS then payed upfront considerations for pubs that needed serious maintenance and to cap it all for a 20 year agreement. Brain's retained the freeholds and with little warning warning placed the estate on the market within a few months of the management agreement with Marstons. It is difficult to extraplorate peformance figures for the Brain's estate. Has it been a bad investment for Marstons?
The spectre of a RI will not be easy to get away given the current Share price. The opportunity was missed, as a few of us suggested almost 3 years ago. Concentration on the best performing venues may well be the way forward to recover shareholder value. A forced sale of the Brewery interest (40%) is more likely than not.
Any reliance on updated property values (July 22) should be considered against RICS latest Economy and Property review, in essence Commercial and Residential values have fallen since August and are projected to fall even further this year into 2024.
As a long term investment, with NO restitution of dividends on the horizon, the risk/reward is 60/40 imo.
AIMO DYOR
TT - Borrowing is at pegged low interest rates and not a problem especially when we have high inflation. i.e. The old economic philosophy in times of inflation in real terms those that borrow get richer could apply here? With the Estate just revalued and with the on paper share price now far below true paper value per the accounts this share looks good value when even on a per share basis they now earn more than Mitchell and Butlers. Sooner or later the end of year and Christmas sales figures will be released which by recent reports in the press are now in excess of pre-covid levels. The fact most are now staying at home also helps their network based local pubs too so they look good to me over Mitchell and Butlers, but I do hold Whitbread too for different reasons. Good luck what ever you decide as always best to spread the risks across ones portfolio which could be why Morning star and the LSE are quoting a growing list of Corporates taking approx a 5% share of this Company.
Wolf-Thanks for your comment and I agree there is a lot of recovery ground here can be found from previous prices, especially as the Shropshire news interviewed the new CEO of Marston's and he said that they were fully booked for Christmas whilst indicating they had now surpassed prev.covid levels of sales at Christmas. So the future looks a lot brighter based on his comments and lets wait for the next release as the figs should be up now and encouraging!
If I recall, this sp was well over £2 when RF took over as CEO and look where it is now.
Many errors made as FD says, in debt, lost opportunity to sell, questionable deal with Brains ..no dividend likely for a long time, etc etc.. Oh, but we have a new HQ : https://www.shropshirestar.com/news/business/2022/12/19/marstons-employees-prepare-to-move-to-new-wolverhampton-headquarters/
Can't wait for the next sales figures to be released because News 25 now were reporting Marston's had said Christmas sales and booking had exceeded all expectations.
This might tempt the Corporate buyers of this share (for which Morning Star shows a growing list of Companies in ownership) start increasing their fund ownership further for future growth on a share value on paper worth far more than its market price.
One or two diners at Christmas who were left without a Pudding will not affect this share price longer term despite the attempts by some. We need a new updated post Christmas sales release to correct the price which will come I am sure.
But apart from that, he was alright.
Lets face it, the Platinum offer was only 105 or thereabouts and looks at the sp now !
I have not forgiven him for selling the breweries for less than half a lager factory ...
In meantime, sounds like a good idea to sell the HQ and run ops from a pub ... which is where I am going right now.
Happy New Year.
Some may remember how he increased debt, sold assets below mkt value, did a behind the scenes deal with Brains, kept the offer from Platinum secret and then rapidly departed. This was all before the pandemic.
For services to the Hospitality sector..... what a joke the honours system has become.
Looks like Asset sales are underway....the Headquarters is going
He had a good f*ing good idea once. 'Forties, fifties, females, families, fine beers, food' (or something like that) ... Not his fault the pandemic came along ...
Ralph Findlay recognised in New Year’s Honours,,,,,doesnt it make you feel like *******
I think it will be 2024 or 2025 before this stock recovers
As many have stated I think there could be some rough times still to come throughout 2023, and the risk with this share is pretty high but the reward could be great!
I’d be interested to see the next trading update as being out for a few over the holiday season every where I went was full to the brim.
Will this continue into January, February when the cost of living really starts to hit ? Who knows? I’m happy to pick a few more up at this level whilst the team are working on debt reduction as if they get through the next year or so there could be significant upside
All the best all and happy new year to you all
Assets may cover debt, but tax bills and creditors will need to do paid. If this goes pop, nothing left for share holders.
This is a very high risk share to hold, going into a recession...
I think your money is safe here. The assets roughly equate to the debt. The company has history and a good name.
Why did I sell today?
I’ve made a profit from Mars of 150% during the pandemic. Thanks. Today is different. Local pubs are closing. We are heading for tough times. When it costs £9.99 for 20 Budweiser in Lidl not many people will pay £5 a pint in a pub.
Good luck to holders, I genuinely wish you well. However, I’m confident that selling today was a good idea.
Now that sounds a sensible & enjoyable way of spending money, can't argue with that...
If you buy some as part of a balanced portfolio mate, who cares... I will be buying new cars and motorcycles with my profits in 2024!!
Peaky
I hear you but what about all the pub/restaurants they have, not to mention the rooms in their pubs , will they be seeing the turnover too ?
I fear not and the debt mountain was made by building the above structure by the oaf who turned down a £ a share, namely RF
I still think this will bounce back well, I'm taking my first position at 35p.
Most of their pub estate is working class areas, they will always find money for the pub!
FD & Peaky
I agree, 3 months is far from ideal & the post December outlook is not great
FD as you say in your post the news elsewhere re divis is good, witness a particular rns this morning.
As you say, 3 months not actually good news, think they will need some cash... Pubs will be dead after 25th of December.
barchid just seen. The loan note holders are being very caustious only allowing 3 months extension when the previous waivers were granted for 12 months. Am trying to find details of the agreement, guess it will be delayed a few days. The way the economy is tanking, strikes hindering travel etc, it is highly likely Lenders are becoming very nervious. It will not be surprising if the BOD conducts a fire sale of properties.
Am yet to study the accounts, warts and all.
At least we are getting dividends elsewhere, a good time to top up. You may have noticed the "Boardmaster" dismisses factual company statements. I could have responded but have held back. I'll ley others disrupt that board, for the moment!!
FD
Covenant updates rns out now, any thoughts ?
Also the full, unexpurgated accounts too...
Will be outcome of negotiations with Loan Note Holders regarding further Waivers as existing conditions have been Breached. Unlikely the Company will recieve a nice Christmas Present especially with the latest Bank Rate hike.
Pharma D - well it could set them up for a Management "buy out" which happens quite often when a share price is below its paper worth, or when the Management might have caught wind of an offer coming in for the Company.
I can see the "in towns" hospitality and retail sector is starting to suffer but "Marston stand by their local community pubs" and the Joint venture brewery home sales and therefore their own business might pick up with more being at home? Who knows - but the next statement will be very interesting I am sure whatever way one looks at it.
Today's grant of awards under the Long Term Incentive Plan in the form of nil-cost options, should give the Director's an incentive to get the SP moving in the right direction. But I guess a lot is out of their control given the current negative factors affecting the economy. Certainly one to stick with until the good times return - ever the optimist!
Wolf - good point re. the name. Not so sure re. the ratings as my own bank have upgrades re. the share regarding its recent report. Suppose based on Christmas bookings sale higher than expected. More likelihood for people to now stay in the Uk and spend their money (due to strikes at a/ports, borders, etc. and most English Football supporters will have spent some more money on drowning their sorrows, whilst others being the true supporters will still attend until the Tournament has finished. Its strange how it happens some times. I never forget Wetherspoon saying his Sales went up when the bankers had their redundancy season. Those staying on went down one pub and those leaving went down to another. He said sometimes when the news is bad more alcohol is consumed not less? Interesting human behaviour is never as it first seems?