Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Everyone had their chance to unload this shxt at 100p or thereabouts, I think I got out about square at 107, no brainier to get clear, it was a vile share to own but tbh brexit basket case U.K. listed shares are all dire since 2016 as capital outflows have been massive ever since, nobody to buy the shares and now anything with huge debts is toast as rates will now be higher for years. It writes itself, this is another AA, will be taken out for pennies.
Barchid,
Posters arrive here without a complete knowledge of MARS history. Whether any of us like it or not management decisions of the past affect a company going forwards. It could be good or in MARS case bad. RF was focused on enlarging the Estate through borrowing but forgot to take account how Pubs have gradually and consistently become unprofitable, consequently closures continued at an increased rate, especially since Covid.
Shareholders need to understand under RF's watch not only did debt escalate, he agreed terms with Brains to manage a bunch of run-down pubs that required serious maintenance, his discreet rejection of Platinium's offer ( exceptional against today's SP) and his curtailment of Dividends which many of us valued ( I remeber Trent's comments each time the iv was due). THe list of Findlay's discressions is considerable.
Trading updates are only a guide as to how income has increased(decreased) against previous records. This trading data fails to provide any meaningful detail of Profits which we know will have been impacted by the increased input costs. These costs effect every Hospitality business, however sector company's use the same method of presenting Trading reports, which to me is clouding the true state of affairs, especially with a company, any company, that has over borrowed. It will be the full yera's audited accounts that will dsiclose the real state of finances. It is all very well Anreas predicting increased profitabilty in the next fiscal year. Maybe his crystal ball tell something the market does not see??
You are right, the sale of Pubs will determine how book value is translated into actual value. There is no mention of how well or otherwise Christie's have managed to move the tranche of Pubs listed back in the spring. I know of several PUbs, close to Wolverhampton, that have been closed and boarded up for almost 2 years, some Marston's Houses.
Redevelopment of Pub sites can be fraught with Planning issues. Developers in the current climate are reluctant to take unnecessary risks.
FD
Indeed you are 100% correct, if debt was inflation adjusted the UK national debt would be rather insignificant.
But we all know it is not. Debt is debt & we are aware MARS has too much, hence its shares trade like option money at present.
As for longtime taking 6 posts between 20.17 & 21.04 on Thursday to argue about MARS debt & Findlays crassness in locking shareholders in to some debt on high interest suggested to me that perhaps he could have been enjoying some of Marstons finest, not that I would blame him for that as I am most partial to their beers myself, but posting whilst "having fun" is less than ideal.
On a more serious note what was your take on the trading update, my first read was that it was relatively encouraging but the fact that they have not indicated where the property sales were compared to the book value leaves me fearing we have taken losses, indeed there are so many ex pubs for sale in my area of London that they appear to be "offered and not bid", some have been empty for over a year now. Not Marstons area, I know, but not a good read on the market in general, for sure.
So in your opinion the total capital debt owed by MARS has decreased by more or less £180m.!!!
I do'nt think so. If I take out a loan of say £100m it stays at that amount until repayed.
Inflation is a measure of price movements ( Wholesale and reatail) and not connected to to basic loan debt.
Inflation of ten percent is a reduction of debt of ten percent in real terms.
There are some quite astonishing suppositions sprinkled with sarcasm.
As at the company's last published accounts Liabililties ( debt) was over £1.8 billion. Even when interest rates were fixed and lower, the company did not keep up repayments and breached Loan agreements not once but TWICE and now lenders have agreed waivers and put the company on a quarterly review
Could the bright spark confirm lenders have reduced the Capital Debt by the inflation figure?
Millions of mortgage holders will be interested to know, it would be a huge relief.
The company has consistently liquidated assets, selling selling Pubs, even the sale of the Brewery was to raise funds to reduce debt.
The problems go back a long time, Ralph Findlay's management. The existing management is a continuation of RF's style. The company needs a change of Leadership, people with inspiration and flare.
Bar
''BofE base rate was 0.5% in March 2009''
? and?
what has that got to do with Marstons
https://www.reuters.com/article/uk-marstons-idUKTRE50C1Q420090113
Longtime
"interest rate on debt at start of 2009 was 6.3%"
BofE base rate was 0.5% in March 2009 with a further fall to 0.25% in August 2016, (having falllen from 5.75% which they were in July 2007).
They moved up again to 0.75%.
Then with covid in 2020 even more QE occurred so yes as I said "interest rates were an awful lot lower than they are now", MARS problem was they locked in some debt at high levels, with hindsight beimg 20/20 at precisely the wrong time, & to compound that error failed to pay down other, floating, debt before covid when business was good & rates were low due to QE.
Thus MARS is now saddled with huge debt in a business sector which has proved less than stellar.
Inflation of 10% in the last year effectively reduces the debt by 10%, a lot more than the company is repaying.
Net debt as at 4 April 2009 was £1,296.9 million paying 6.3% interest.
Today interest rate is a little lower and debt level is lower
Interest rate on debt at the start of 2009 was at 6.3% - I believe the current rate is a bit below that
Debt can also get eaten away with inflation
Share price was at 130p pre pandemic.
https://www.proactiveinvestors.co.uk/companies/news/1029437/could-marston-s-shares-be-worth-130p-one-broker-thinks-so-1029437.html#:~:text=Shore%20Capital's%20investment%20case%20for,(Carlsberg%20Marston's%20Brewing%20Company).
Marstons should be receiving good income from its 40% stake in CMBC in the coming years, which when set up the stake was worth over £300 million (a lot more than the current Marstons market cap).
Bar
''now they are trying to grow back to what they were''
precisely , and that is what Marstons will be doing. It was the pandemic that hit the industry very badly indeed. 29p back up to ? in a timeframe of X.
NAV currently at about £650 million
current market cap about £207 million
Longtime
Debt was higher pre pandemic & interest rates were an awful lot lower then than they are now, thus encouraging growth.
Pre pandemic pubs were open as usual, during & post pandemic they were closed/open in restricted hours.
Businesses were growing pre pandemic, now they are trying to grow back to what they were,
I can list a few other points but I hardly feel it is necessary...
NAV currently at about £650 million
current market cap about £207 million
Starting to move up.....increasing revenue and asset backed to the hilt....great bargain....Should double in quick time....
Shap
''to get involved in a desperatly stuggling business that still owes £1.18 billion in debt and is desperatly hoping for a miracle''
debt was higher pre pandemic with a share price of about 130p
JAdams5000
“See you at 15-20”
Really? That would be roughly 1/6 of the NAV and less than 1x net profit.
Mars is plainly unloved and the debt is an issue but that is absurd. Doesn’t mean it won’t happen of course. The markets are nothing if not unpredictable but I can’t see it being stuck at that level for long.
This is a share for those with great levels of patience.
It is a shame the board turned down 105p.
GLA
What has happened to Supercharger ? the doyen of all things impossible, the great ramper who knew absolutely nothing
and yet exoled us all
to get involved in a desperatly stuggling business that still owes £1.18 billion in debt and is desperatly hoping for a miracle
to save their skins. Behave all you shareholders who are still involved ( like me) and show your contempt for a board that has screwed your money , without a thought for the consequenses - i bet they still draw their inflated salaries though - You are paying for garbage !!!!!
Is that in reaction to a bit of UK growth so holding interest rates or the restaurant group getting bought out??
Of about 8% from the days low
Investors are worried with this fact: Asset disposal £55m but debt only reduced by £31m , does this mean the company will have to dispose more properties to get the debt down? The management could have explained this much clearer, for example what happened to the £24m (i.e. £55m-£31m)? I think the most plausible answer is the money is added to the cash, and it is a sensible move at this environment, why rush to pay down the debt if it is not mature yet?
I have been buying Mars in the past 3 months and will continue to buy more.
I am of an age where almost everyone I see or meet is younger than me but by way of recompense I have seen it all before. The good news from Marston's today seems to have been greeted outside this chat board with a monumental yawn, but I am certain the negatives about Marston's will be blown away soon.
Having lived through a period of high inflation for some 25 years, it was obvious that inflation was the debtor's friend and the saver's enemy. There is much concern about Marston's debts, which I can see from the annual report YE 2022 reports borrowings at 1.56 billion against revenue of 799 million. The ratio of debt to revenue is 1.95 debt to 1 revenue. Using todays figures, that ratio is already down to 1.72. On a modest case base, assume a 7% growth per annum in revenues and an annual 31 million payback of debts (echoing the figures today) the ratio is down to one by the end of 2028. Assuming a slightly more optimistic scenario, assuming a growth in revenues of 10% a year and repayments of debts of 50 million a year and ratio of 1 is reached about a year earlier.
The growth in revenue may be much higher in times of high inflation, and the company may decide to increase repayments, but while my parameters may not be the best choice the principle is sound. I bought this lot just before covid struck so while I will have to be in it for the long term, it is also wise for anyone else to be patient!