Member Info for NewCashquack

With Government threats to public service pensions and the OAP I am increasingly looking to my investments eventually to cover basic income and have a smallish holding in M and G. I am wary of placing my eggs in too few baskets, though, and my other high income stocks include 24 income, other insurers (perhaps unwisely) and other high yielding stocks and probably average 6% return all over, despite also having investments in low dividend growth stocks like Cranswick. Certainly if I invested the lot in M&G then I could be very comfortable but insecure. I am now 74 and still working but that may not be the case in two years, so it depends a lot on your circumstances. The other thing to consider is reviewing yields on every stock - if one of the high dividenders has become a flyer the yield will have fallen, perhaps by enough to consider swapping it for higher dividend payers, although there is a lot to be said for hanging onto one's winners! Depending on age I read regularly that one should shed high risk shares for low risk bonds and Gilts, which I have started to do at a modest level but the yields are not so good - yet.

Nationalisation is not the answer, from one who was brought up in the age of nationalisation - you were clearly not.. But you are right about HS2. It starts nowhere and goes nowhere and it is doomed in its present form. The sum spent could have upgraded the entire railway network.

Positive full page on LWDB in today's IC.

Https://www.marstonspubs.co.uk/docs/financials/2024/prelim-year-end-2024.pdf

MARSTON’S PLC (“Marston’s” or “the Group”) PRELIMINARY RESULTS FOR THE 52 WEEKS ENDED 28 SEPTEMBER 2024 LFL REVENUE GROWTH AHEAD OF MARKET, SIGNIFICANT MARGIN EXPANSION AND RECURRING FREE CASH FLOW GENERATION Marston’s, a leading local pub business with an estate of 1,339 pubs across the UK, today announces its Preliminary Results for the 52 weeks ended 28 September 2024. The period under review commenced on 1 October 2023. Underlying Statutory / Total FY2024 FY2023 Change FY2024 FY2023 Change Total revenue (£m) 898.6 872.3 3.0% 898.6 872.3 3.0% EBITDA1 (£m) 192.5 170.3 13.0% --Pub operating profit (£m) 147.2 124.8 17.9% 151.7 90.2 68.2% Profit before tax1 (£m) 42.1 25.6 64.5% 14.4 (30.6) n/a Total earnings per share1 (pence) 5.2 3.5 48.6% 2.8 (3.0) n/a NAV per share (£) ---1.03 1.01 2.0% EBITDA margin1 (%) 21.4 19.5 190bps --Underlying operating margin1 (%) 16.4 14.3 210bps --Recurring free cash flow (£m) ---43.6 (38.5) n/a Net debt excluding IFRS16 (£m) ---883.7 1,185.4 25.5% 1 -Results from continuing operations Strong Financial Performance • Revenue up 3.0% to £898.6 million (2023: £872.3 million) and LFL sales up 4.8%, consistently outpacing the broader market, with growth in both food and drink sales1 • Underlying pub operating profit up 17.9% to £147.2 million (2023: £124.8 million) with strong topline performance and operational efficiencies delivering improvement in underlying profitability • Underlying EBITDA margin increased to 21.4% (2023: 19.5%) highlighting early success in strategic plan to drive margin improvement • Underlying operating margin improved over 200bps to 16.4% (2023: 14.3%) driven by energy, property and simplification efficiencies, delivering further cash upside • Underlying profit before tax of £42.1 million (2023: £25.6 million), representing growth of 64.5%, and statutory profit before tax of £14.4 million (2023: loss before tax of £(30.6) million) Positive Cash Flow and Debt Reduction • Robust recurring free cash flow of £43.6 million (2023: outflow of £(38.5) million), with operating cash inflow of £207.4 million (2023: £141.2 million), supported by the proceeds from Carlsberg Marston’s Brewing Company (CMBC) sale • Material reduction in net debt, excluding IFRS 16 lease liabilities, to £883.7 million, (reduction of £301.7 million (2023: £1,185.4 million)) driven by proceeds from sale of stake in CMBC, robust levels of organic recurring free cash flow generation and disposal proceeds from non-core and unlicensed properties • Significant progress on debt reduction has resulted in pre-IFRS 16 debt/EBITDA leverage ratio reducing to

Two pages on Marston's in the penultimate issue (two weeks ago) of IC with buy recommendation.

Questor in Daily Telegraph doubling up on its previous buy recommendation in 2022.

I had a huge commercial mortgage with Aviva. Following a severe car accident they wouldn't budge an inch. I did eventually clear it, but my thought was "Any company that treats its customers with such contempt and gets away with it must be hugely profitable." My investments with Aviva are a small fraction of that original mortgage, but I am now at least getting quite a lot back. Most comments on this thread are about insurance policies which can be ditched. Well if they are undercut by other insurers they will need to adapt or get out of the field.

In theory the value of the business is unchanged by buyback but as there are fewer shares after a buyback, the profits available for dividends per share increase as there are fewer shares to pay dividends to. With respect to company assets, If you take the logic to absurd levels, if a company buys back large quantities of shares then eventually you might be left with one single share worth the same as the company. Thus the share price should increase as the net assets of a company are divided by fewer shares, and the dividends should increase. In practice, one has to ask if the business had better purposes for using the funds, like growing the business, and ultimately share prices are largely determined by market sentiment which should be rational but is largely determined by emotional sentiment and group think. Broadly shareholders benefit.

Interesting seeing comments on all sorts of shares I hold, but never on this. Steady growth in profits and dividends - obviously boring!

Annual results from Marston's (MARS) were released less than three weeks after the pub operator confirmed that chief executive Andrew Andrea would stand down with immediate effect. Justin Platt, the former Merlin Entertainments chief strategy officer who will take the reins in January, has a significant task on his hands to rejuvenate the share price, which is stuck far below pre-pandemic levels.

Like-for-like (LFL) sales rose 10.1 per cent against last year, with food and drink spend rising by 8.1 per cent and 8.6 per cent respectively. Momentum slowed after the year-end, with LFL sales up 7.4 per cent, although management flagged that Christmas bookings are ahead of last year.

Elsewhere, income from the company's joint venture with Carlsberg (DK:CARL.B) tripled to £9.9mn.

Despite revenue growth getting the company closer to returning to £1bn in annual sales, it fell into the red as £21.6mn of losses on interest rate swap movements and £31.2mn of property impairment charges dragged it down.

Looking ahead to the medium term, management is targeting a 200 basis point uplift in margin. The underlying profit margin was flat in the year at 14.3 per cent, on increased operating profits of £125mn.

Analysts at Peel Hunt argued that the 9.8 per cent increase in the national living wage, which is coming in April, "should be mitigated by adjusting prices from one of the lowest price points in the sector and the acceleration of the cost efficiency programme".

The valuation is cheap, with the shares trading hands at just four times forward consensus earnings. But as we have noted before, the hefty discount to net asset value could also highlight justified market disinterest. Hold.

Last IC view: Hold, 35p, 16 May 2023

I am not in the same league as many commentators on here but I do have the advantage of age: I have commented previously on here about the effect of inflation on debt and how inflation erodes debt. I lived through 25% inflation in the 1970's, and saw how a house would be sold for the same nominal value as a year previously, but in reality was 25% cheaper.

First, this company is not trading at a loss and there is no reason why it should not continue to increase sales short of another epidemic or everyone suddenly becoming teetotal. Therefore the key financial points are revenue, debt and net assets. On net assets this company is worth three times more than the shares are presently worth, and my reckoning is that the valuation of the estate is probably an underestimate. Pubs tend to be large buildings and with large car parks, and while I personally hate to see a watering hole closed and its premises converted to flats and development, as an investor this is a reassuring thing. A share worth less than 1/3rd of a companies asset is a no brainer to hold.

On debt, the high inflation rate of 10% in the last year has seen this eroded in real terms by some 10%. The repayment of loans seems low, at about 30 million, but inflation has seen it eroded by far more.

Take the 22 and 23 figures. 2022 Debt 1560 million, 2023 debt 1529 million. Revenue 2022 799 million 2023 872 million.

The ratio of debt to revenue for 2022 is 1.95. In 2023 the figure is 1.75, with only a token reduction in actual debt. This is against a background of an increasing financial squeeze on Consumers.

Like many I cannot understand why this share price is fatally wounded by good news, but despite my age I really do understand that long term means long term. My timing for my initial tranche was perfect - about a month before the first lockdown. I am not an idiot but I am happy to act as a consultant in share recommendations: Whenever I buy a share, despite my research, the price falls out of the sky. Marston's may well be better managed than it is now, but I am prepared to wait.

I had a huge commercial mortgage with Aviva but ran into problems following a severe car accident. I have a large shareholding in Aviva: The Reason? Any company that can treat its customers with complete contempt and can get away with it must be hugely profitable.

Hugely successful results and the shares go down. Yoof - buy. Us Oldies hold on. This is a really good company.

Interesting how there are never any comments on this share. Pretty impressive growth over a long period of time both in turnover and profits. Is this because it is not a speculative stock or considered boring by commentators?

Inflation of ten percent is a reduction of debt of ten percent in real terms.

Inflation of 10% in the last year effectively reduces the debt by 10%, a lot more than the company is repaying.

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!

The company has to pay the annual interest on its loans without fail or the banks will become tricky. As long as the interest is paid, then inflation will erode the real size of the debt. Companies can also claim tax relief on interest but not on capital repayment so nibbling away at the debt makes sense. Repaying 50 mil each year and ten percent inflation is going to see this debt as a fraction of value and turnover fall quite significantly.

I have posted previously on the debt issue. Marstons is nibbling away at its debts, but the real reduction is coming about in the effect of inflation. With 10 % inflation over a year a billion pound debt is reduced by 100 million in real terms. 6% interest on a fixed rate secured loan seems pretty steep but then there is tax relief on the interest. We have had 10 percent inflation in the last year, assuming 5 % this year and (an unlikely optimistic) 2% and a 50 million repayment per annum and over seven years the actual real debt is about 430 million, and if sales increase in value by the rate of inflation then the debt ratio becomes even smaller. Inflation is the debtors friend and the savers enemy, something my generation have experienced but perhaps not many of the commentators here.