Member Info for NudgeNudgeWinkWi

And yet the SP didn't even blink. With such thin trade recently you would expect a couple of sizeable purchases like those to create some noticeable upward movement!

Odd, very odd.

@ Devon-Trader

Whilst I fully accept the state of the stores you visited, I think it is important to bear the following things in mind.

1. Those three stores represent 0.025% of the whole estate, so a much bigger sample of stores across the country is needed before you can make a fair assessment of the company as a whole. With 1200 stores, 3 in one town is a tiny number to base any research on.

2. As some unprofitable McColls stores are being closed down and Morrisons Daily's are being converted, it's quite possible the store you found low on stock is being run down deliberately. With so many stores in one town, it's likely one at least will be shut - maybe that one very soon?

3. McColls stores are often run with only two staff on at a time. For security, if one of those people is out of the store (on a lunch break for example), the store needs to be closed as the stock delivery can't be moved off the shop floor immediately whilst serving customers. Unattended stock in cages on the shop floor blocks isles so customers can’t shop and is also a significant theft risk. From my personal experience working in small shops like McColls, deliveries often arrive at the most inconvenient times, you just have to deal with it the best you can at the time!
Sure it would be great to have fully stocked stores all the time with three people waiting to serve every customer, but in the real world, when you have a small shop with very small margins, that’s just not going to happen.

That would indeed make sense islandgirl, *if* Zephyr's share price had gone up when the oil price rose. Which sadly it didn't.

6. The latest delay in giving final accounts (may 2022) whats the reason for that.Clearly no immediate news likely.
Answer: I suspect the reason for the delayed final accounts is to give McColls time to deal with other matters than could materially effect those figures. Only McColls management know exactly what those matters are, but they have already made it public that they have had offers of interest for parts of the business.
7. The fact that an offer was on the table and it was not disclosed is strange and quite fishy.
Answer: I agree it is strange that the approach was not announced in an RNS to shareholders, but I don’t believe an offer was ever made.
8. No directors buying in why [Maybe no more money lft] ?
Answer: Because the full year results are due, I believe the company is i “closed period”, so directors are not allowed to buy shares until the results have been published due to their inside knowledge.

9.The recent resigning of Director in favour of Sainsburys is suspisious
Answer: The director in question left because his role was no longer required. I believe he was responsible for marketing and getting a deal done for the Morrisons Daily rollout. Basically his job had been done and his role became redundant, so him leaving was a naturally occurring event which also helps McColls cut costs.

@toli

1.No other local store or supermarket experienced such dramatic issues with both supplies and omnicron over Christ mas .Whats wrong here.
Answer: I think quite simply Morrisons had a driver and stock supply problem and prioritised their owned stores and supermarkets. Not fair perhaps, but understandable, so McColls only got what was left. Regarding staff and Covid, have you ever seen the back areas of a McColls or Martins? You couldn’t swing an ant in the back areas, let alone a cat. Staff areas are almost non existent and 2 metre self distancing would have been virtually impossible in almost all stores. Hence Covid levels were much higher amongst staff which had a huge effect.

2.They are looking to make £40m-£50m profit next year were supply issues so bad to wipe out all profits.
Answer: I think supply issues were certainly to blame for quite a lot of the loss of profit, but I think there is another more important but so far not mentioned reason. A lot of McColls fags, newspapers, lottery/scratchcards, Paypoint, post office and sweets customers are older, elderly customers who visit almost daily. A lot of these customers stayed indoors during Covid and didn’t/still don’t feel comfortable going out of their homes except for absolutely essential reasons. You might be surprised how many still feel worried about Covid and won’t leave their homes even now. Those that are going out still wear face masks everywhere, even in the street – just have a look the next time you go shopping yourself. This is a large number of people with disposable income who stopped going into McColls on a daily basis and will probably never do so as regularly again. This is why the Morrisons Daily roll out is so important as it’s customers are a much higher percentage of younger customers.
3.Sky news reported debt was sold to Hedge funds this was not reported in the RNS if true why not if false should sky not be guilty of misinformation and libel.
Answer: I have no idea if some of the bank debt has been sold on, but Sky is a business and makes money from getting viewers. Tasty story with lurid headline = click bait = viewers = money earned for Sky. No official announcement has been made, so you have to make up your own mind if it’s true and if it matters if it is. I suspect McColls management have better things to do at the moment than reply to every bit of press speculation.
4. Why are banks so reluctant to lend it seems quite a viable bussines?
Answer: Who said the banks are reluctant to lend? They already have and are lending McColls money, no official news has said this isn’t continuing as before.

I totally agree. If you had any idea how good C.H. has been at getting regular news updates to shareholders, you would never be complaining about a couple of days delay for a CPR that is being compiled by a *third party company*.
My advice to you would be to sell your shares here as you don't appear to have done much if any background research on Zephyr and your patience appears to be even less.

In case anyone is interested, Vox Markets have just had their daily chat between interviewer Justin Waite and lan Green about todays major share news. They discuss McColls at 22 mins 50 seconds into the programme.

https://audioboom.com/posts/8039057-alan-green-discusses-bp-batm-advanced-comm-kavango-resources-mosman-o-g-mccoll-s

Iceland trials new Swift convenience store

https://www.retailgazette.co.uk/blog/2021/03/iceland-officially-opens-first-swift-store-its-brand-new-convenience-format/

Potential bidder for McColls?

"For anyone looking to acquire McColls stores, why would they pay millions for the company when they could just leave it to go into administration and then buy the assets from the administrators at a knockdown price?"

The answers are simple. If McColls fails and goes bust, Morrisons have to potentially bid against others to keep a substantial (and profitable) chunk of their wholesale business, as well as probably losing the Morrisons brand at those stores forever. The liquidator gets to choose which offer/s if any are accepted to acquire bits of the business and Morrisons could lose all that business overnight. That's without looking at an overseas supermarket chain or investor.
Morrisons have spent several years growing this side of the business with McColls and are trying to increase their wholesale side, not shrink it by 70% overnight. They have a lot to lose if they don't have control of the stores and stock. Why do Morrisons want to take that risk when they don't need to?

For any other party other than Morrisons, the attraction of buying McColls now rather than wait for insolvency is similar. By acquiring McColls at this stage, the wholesale deal with Morrisons is kept in place and continues. No new deal to negotiate = much, much simpler transfer with known, guarantee supplier.

Is this the end and insolvency for McColls? Call me an eternal optomist, but, I don't think so.

At the time of the raise, I posted on here that I was surprised that more funds hadn't been sought than the £30 million and I stand by that. With the number of stores due to be converted, it didn't look like enough to me. I was also surprised at just how much money Jonathan Miller personally put in. Putting £3 million in was either a crazy gamble or he knew/knows something we don't. I suspect the latter.
McColls has continued converting stores and has had considerable support from Morrisons who must know the financial situation McColls are in. As their largest wholesale customer by a long way, it's a big problem for Morrisons if McColls fail, as there is absolutely no guarantee they would be able to pick McColls up for a song from the administrator to keep the Morrisons brand name above the doors. If another buyer took on a significant portion of the stores, or they were shuttered, Morrisons just lost a huge chunk of their wholesale business. There will certainly be several other interested parties looking for a ready made, 1000+ stores convenience business as well. No ifs, no buts about that.
This could be a valuable business, it just needs time for the store conversions to be completed and the debt reduced. Another company with stronger finances can easily make that happen and IMO will.
Now the flag has been raised, I fully expect several competing offers for McColls as a business this size in the growing convenience sector just isn't going to be available to buy again at this sort of price. A name I've not heard mentioned, but a company I have worked for (Iceland) have been trialling convenience stores and are just one example of a company that I think could be *really* interested in McColls with their large and growing existing network of food stores.

Long term holder here.

Having watched the latest interview, why is Zephyr getting involved with joint venture drills in the Paradox? With the latest equity raise, I thought the three planned drills were supposed to be fully funded, so why are we going to give a partner a big slice of our cake??? One of the drills is going to be a 50/50 venture which seems crazy to me.

Hi bingb0ng, interesting first post.

If as you say, you were a director at Morrisons until recently, I think many of us would be extremely interested to know why you "...couldn’t see M buying McColls...".

Also you say that "The restart of store conversions is significant." Is that because it was not certain that the store conversions would continue after the pause at Christmas? Does the fact that the conversions have continued, signify that the banks and/or Morrisons have offered further backing and support that was not guaranteed before Christmas?

Previously Morrisons made an absolute dogs breakfast of their effort with Morrisons Local. It was an complete and utterly disaster from the word go and cost them a fortune financially and almost as much reputationally within the industry. Morrisons almost literally threw money at the project in a crazy attempt to catch up Tesco and Sainsbury in the local convenience store race. Morrisons signed long and expensive leases on unsuitable buildings in low footfall areas just to get a presence.

I knew several Morrisons Local store managers and the cost of fitting out and the pitiful turnover the shops then generated were just eye-watering. Morrisons Daily is a *totally* different animal. Morrisons can't afford to get this wrong again, which I think in part explains them wanting to support McColls, but at arms length - in case the s**t hits the fan.

Personally I think there are five key points to McColls success or failure over the next 12 months.

1. Stock availability needs to continue improving across the company.
2. Morrisons Daily rollouts need to continue at new faster pace, with no major problems (e.g. due to a new strain of Covid etc).
3. Interest rates must not go up significantly.
4. Banks need to remain supportive (linked to previous points).
5. No further, unseen problems like major I.T. failures or key board members leaving need to happen.

If MCLS can steer itself safely through the above, I think with time, the company could be a winner again. Clearly it will take some years to clear the debt mountain, but it's still doable in my opinion.

The Morrisons Daily stores *are* significantly more profitable than the old McColls stores, they just need to be converted fast enough before either the debt burden becomes unsustainable and/or the cash raised in August runs out. Simple really!

For me at 10p a share, MCLS is high risk, but a definite buy until 20p is hit again (the raise offer price) is met. Then I could see institutional holders and possibly some of the board selling and de-risking to recover some of their investments, causing a re-trace in the SP.

All in my opinion. Please do your own research!

Continued....

In my opinion at 10p, the shares are a definite buy at these levels. For me, not much has changed risk wise since the August raise, BUT the SP has more than halved, so I think the upside for an investor looking to make a short to medium profit is pretty good. The company set out it's recovery plan and has accelerated it with Morrisons backing and help over the Christmas period. McColls is able to service it's not inconsiderable debts and profitability should be improving weekly as more stores are converted and the dead wood stores are now all but gone. From what I've seen personally, stock levels in stores have improved greatly over the last few months, so shelves are full again. Covid risks are also receeding rapidly so sales patterns should be returning to normal in most stores. Finally as mentioned before, the board have a considerable amount of "skin in the game" and have a lot to lose personally if the walls come crashing in. The banks have said they still back the board and it's recovery plan, so I don't think that's about to happen. Then there is still the chance of a takeover at some point when the company has rolled out all the store conversions and stabilised the finances.

Disclaimer. I have no association with McColls in any way. I do not currently hold any shares in MCLS. All opinions are my own, please do your own research before investing.

Hark, is that the fat lady I can hear, or is it a certain CEO with his nuts in a vice starting to wail the immortal words to "My Way"??? MCLS shares at 10p now - BIG ouch!

Oh to be a fly on the wall in any of the MCLS board's homes right now. I imagine family mealtimes are pretty awkward right now when it comes to the "how was your day at work honey?" and then the "how is our family savings/house remortgage share investment in MCLS going?". Difficult times.

Five months on from my last post here and with the SP now at a milestone 10p I thought an update was due. As I wrote before, I feel that the current board have made some well discussed mistakes over the years that have left the company in a very precarious position. Huge debts, huge turnover, but little profit has left little room for manoeuvre. A successful raise of £30 million and a ramping up of Morrisons conversions should improve company profitability sooner rather than later.

But still the shares have plummeted. So is McColls really a 10p basket case heading rapidly towards insolvency or an oversold bargain?

Way, way back in August last year before the raise, the shares were circa 35p. The raise was oversubscribed at 20p, with £3 million of the £30 million raised put up by the MCLS board. Not exactly chicken feed and a very brave/stupid move (delete as applicable) by people who knew *exactly* where MCLS was financially at that time. So unless they had money to burn, they collectively thought then that the future for MCLS was very bright. It's worth remembering this.

So what has changed in 5 months apart from the huge share price decline? Well assuming the company hasn't kept anything back, I don't think anything much has changed at all. Full year results showed the expected declines in sales due to Covid and stock shortages. Store numbers were reduced to anticipated levels, profitability at converted stores showed the increases in sales hoped for. And just for good measure, the rate of store conversions has been accelerated and we have been reassured that the banks are still backing the company. This week we also got the news that the board has been slimmed down with the resignation of the Chief Commercial Officer, so a decent cost saving there as the role is disappearing.

So is the current SP of 10p fair, overpriced or a bargain that should be snapped up pronto?

Not wishing to be a pedant, but can I politely point out it should be "Queen's English" and not "Queens English" as it's possessive. I'll get my coat....

:)

This might seem like a really dumb question and I apologise if it is, but is there a chance of natural gas being discovered instead of HE1 when drilling and testing in the basin? If so, what happens then? Can geophysics tell the difference on 2D or 3D scans?

Apologies, another correction to a previous post (due to no edit function on here!). It should have read:

"My last point (point d.) is the one that puzzles me the most and I would really like the answer to. Morrisons are HUGE and made a monumental c*ck up of their Morrisons Local venture several years ago which cost them 10's (NOT 100's) of millions in losses."

All the previous comments made by me on here are just my personal opinions. I don't work for McColls, Morrisons or any associated companies. Please do not use my comments as any form of financial advice and do your own research before making any financial decisions regarding investments in McColls or Morrisons. Thanks and good luck what ever you do.

Putting aside for the moment the question why Morrisons aren't offering McColls any further financial assistance, I come back to the dilemma of whether there is value in McColls today, with the SP at around 22p, based upon the proposed plans, risks and potential rewards.

IMO investing in McColls is very risky. More so because Morrisons don't appear to be interested in standing firmly behind McColls in their hour of greatest need. I'm also very worried that the logistics problems getting stock into stores can or will be resolved soon as there is a basic lack of HGV drivers in the UK at the moment and everyone wants them. Driver pay is skyrocketing and drivers are moving to companies that pay the most. For the last four months McColls don't seem to have been able to do much to change this and that is a huge problem as it doesn't matter how good the refitted Morrisons Daily shops look if stock isn't on the shelves for people to buy. Covid hasn't gone away either and predictions of a bad winter for flu only add to my concerns about possible increased delivery driver unavailability and missed deliveries, shop staff sickness, increased likelihood of another lockdown and downturn in sales again. And that's before I even mention the chances of the SP going below the share offer price of 20p and it not being taken up in full.

Sadly for me there are just too many red flags for me to invest right now in McColls. Too many unanswered questions, too many potential problems in the coming months and too many risks.

No doubt the board have a significant amount to potentially lose if the company goes bust, but they have also earned OK over the last 5-10 years without solving the obvious problem that McColls needed to change or die and quickly. This they haven't IMO achieved and with all their experience of the business I think they should have done more many years ago. In some ways I think today's problems stem from the fact that the leadership has been in place for so long at McColls and that they perhaps haven't made tough enough decisions early enough, precisely because they are too greatly invested both financially and emotionally in the business. With so much to lose themselves if McColls fails, I wonder if their decision making would be the same as me, a non share holder? Probably not. I don't know any of the board personally but I see no reason why they wouldn't all have done what they thought was best at the time, I just think their luck has finally run out with Covid dealing the final blow to an already struggling business. I sincerely hope I'm wrong as my heart hopes that Morrisons or someone else ride to the rescue at the eleventh hour, but my head says there are sadly no more rabbits left to pull out of this McColls hat.