Member Info for NudgeNudgeWinkWi

CORRECTION! My last post should instead read:

"Right now, this very minute, McColls could offer Morrisons a deal to let them take an equity stake in return for the £35 million they are trying to raise and make everyone very happy, very quickly with the minimum of fuss."

From almost every angle I can't see how bailing McColls out wouldn't be a win for them. Certainly if McColls went into administration they would be taking an unnecessary gamble that they would be able to buy the remains. IMO Morrisons *really* need this McColls partnership from a reputational point of view (getting it wrong twice would be very negative for them as last time was bad enough!), from a turnover perspective it's a growing chunk of their wholesale business and sometime in the future McColls would be the easiest bolt on ever via a takeover. What for them is not to like??? Right now, this very minute, McColls could offer Morrisons a deal to swap all of their debt for an equity stake and make everyone very happy, very quickly with the minimum of fuss. Even with the current potential Morrisons takeover going on, this would be such small beer to Morrisons, you'd have to think it would be a tick box exercise for them......if they were offered such a deal.

So why hasn't it happened....yet?

The good 10% of McColls estate I haven't seen much of personally as there isn't frankly much of it yet, but I've visited a couple of them. These shops are of course the recently converted Morrisons Daily stores which are the bigger, cleaner, fresher and hopefully much more profitable stores (again I haven't seen any figures for these). From what I have seen a Morrisons Daily is a world away from a McColls or Martin's and looks and feels much like a Tesco Express, as you would expect. If my shopping habits are anything to go by, I walk into a Tesco Express just for milk and by the time I've reached the self service checkout I've got a basket full. Obviously there is a massive difference in customer type, turnover, profit margins and possibly staff costs if self service checkouts are installed.

These according to McColls BOD are the money makers, but currently there aren't enough of them and there isn't enough cash under the mattress to fund the rollout fast enough to carry the 90% of stores that are dragging the company under. According to the figures released by McColls, the converted stores perform very well turnover and profit wise after conversion. BUT, I have several questions about these stores which the published results can't or don't answer which concern me.
a.) How many stores out of the whole estate will definitely make a significant profit after conversions? This would give a real figure of how many stores not able to be converted need to be got rid of as quickly as possible. I suspect 600-700 max are worth keeping.
b.) How quickly do stores pay back their refit costs and start making a "real" profit.
c.) Can all the stores actually be converted that the company would like to convert and in the time scales proposed? Planning issues, availability of fitting teams, availability of fridges/shop fronts/fittings etc, availability of stock could all be potential problems.
d. Why are Morrisons not being asked to lend money to McColls to accelerate the roll out of their branded stores? And, if they have been asked and they refused, why did they refuse?

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 100's of millions in losses. Their tie up with McColls is their way of clawing their way back into the convenience market and on the face of it, they need this to work. They have their name above the door and they signed contracts to supply McColls with Morrisons/Safeway branded goods until 2027, so they've got a significant amount of skin in the game. Why then wouldn't they (Morrisons) put a big foot forward and offer McColls some loose change to get these stores done quick sharp???

The simple reality is that as a business, McColls is 90% dinosaur and 10% modern day. The company has dripped it's way into more debt for more years than I care to remember and today's problems started at *least* a decade ago. Most of the current estate (the 90%) is the old traditional newsagent style shop with shopfronts and internal decor that is tatty, dirty, cramped with almost guaranteed broken fridges when you walk in. A lack of investment over the last decade is very, very obvious and IMO most customers only choose to shop there because a) there is no other choice, b) their mate works there, c) they sell beer, lottery and fags and you can park outside really easily, d) they need to use the post office as it's the only one around. No-one and I mean no-one I've ever met has said, I'm bored, let's go and pop in McColls for a browse and see what they've got because it'll be interestingto see what's new in there this week. And for me there is the big, big problem for those shops. They sell low margin, destination only items. Customers are in and out ASAP because they have to shop there, not because they want to. They don't browse, they don't spend much money, the money they do spend is on low profit items.
From experience staff in these shops are also very demotivated due to poor pay, long hours and frankly pretty terrible staff areas. Again, problems caused by lack of money and investment of long periods of time.

And then there is the good 10% of the McColls estate.

Firstly, to be fair, I'm not sure that there really is much BS in the interim statement. The truth is there, it's just fluffed up a bit to pad things out. That to me is a good, if we'll overdue sign. At least the board are finally owning up to the problems at hand, although if I had to summarise I'd have said the following instead:

We have a big problem we can't solve without a lot more money than we currently have. Due to being a company built on newspapers, fags and sweets we have a massive estate of shops which mostly sell things people don't want to buy any more. Because of lack of investment and the failure to ditch enough loss making shops fast enough we have broken fridges in most of our shops, dated decor and we've been fire fighting for many, many years. We had a plan (quite a good one actually), but we just couldn't turn the tanker round fast enough as Covid related issues over the last two years have drained us of the last dregs of money we still had left. It has proved to be the straw that has broken the camels back. The well is empty and either we get more money very quickly or the party is over.

On the face of it today's interim statement is a disaster both in terms of timing (last hour before end of trading - really????), effect on SP and content contained within it.
Having had a proper read through it, there isn't much good news, but also not much that really surprises me. Things are not on a Titanic level *yet*, but the iceberg is very definitely just off the port bow. So following on from my earlier posts, bearing in mind I have been, but am not currently a shareholder, I've been giving serious thought to whether McColls can pull this cash call off, perform a Houdini act and actually turn McColls back into a profitable company for the long term. What are the realistic risks/rewards, is this leadership capable of getting their stated objectives done (on time and on budget) and should buy in again?
These are of course just *my* thoughts, so please do your own research and act accordingly!

Sorry my mistake. I am due to receive my dividend on 23rd September, but it is showing as pending payment in my Degiro account along with the dividend tax deduction. I am a UK resident paying UK tax and haven't gone over the £2000 tax threshold for this 2021/2022 tax year, so I'm puzzled why Degiro are going to deduct dividend tax from me at all.

Sadly this news is just what I expected. To be honest I think it stinks that it's been released one hour before close of trade today and I'll be amazed if the SP holds above the placing price of 20p. This bodes very badly.

Hi.

I got my first dividend from Rio shares today paid into my Degiro account, but was disappointed to see a significant dividend tax deduction had been made by Degiro. I'm a UK tax payer and registered as such with Degiro and Rio is an Anglo-Australian company, so I assumed I would pay UK dividend tax at the end of the tax year to HMRC on these. The shares were bought on the LSE, so why have Degiro made a dividend tax deduction and can I get it back? I would be grateful if someone who knows could explain to me?

Thanks

......Yes this will massively dilute current shareholders, but if the company goes bust, all shareholders will lose everything and Morrisons will happily pick over the carcass. IMO as brands McColls and Safeway are worth very little, (how many people under 40 even remember Safeway??), so the only way I see McColls surviving and making any money in the future is to go all out Morrisons branding and just be a franchise with more smaller stores culled to leave around 700 stores. For me an estate of 1100 stores seems to leave a lot of dead wood/marginal stores still, which McColls can't afford to carry. The deal with Morrisons (once supply issues have been eventually sorted out) *should* IMO transform the company and it's finances. That's the golden egg waiting for McColls, the problem is can they last long enough to get it???

Finally, assuming that the refinancing does go ahead and get approval and the rollout of the new Morrisons Daily happens quickly and successfully, like many others I see McColls as a definite takeover target by either Morrisons themselves (under whatever ownership) or by a PE fund. It's a tough spot to be in for the McColls board as in many ways I think they are damned whatever they do. So from an investing point of view I confess I'm torn between steering well clear of a possible basket case (if the refinancing doesn't get approved and McColls go bust) or a medium term big winner if the board can turn the ship around and stop messing about with IMO stupid ideas like rapid delivery with Deliveroo!

First time poster here, but long time watcher and then shareholder of McColls. My first ever job was as a newspaper boy/Saturday lad at Martins some 30 years ago, so there's no denying I have a soft spot for McColls and would like to see them flourish. I don't generally post on message boards unless I think I have something useful to add, hopefully my experience/knowledge will help others now.

I've recently held MCLS shares but sold them last month as my business involves visiting many different McColls stores. Without exception staff in all of them were telling me that since April this year there have been ongoing and significant supply problems. At the time I was living in Essex and shelves in all the stores I visited in Essex were very noticeably low on stock - at least 20-30% empty of grocery items that would be supplied by Morrisons. I've now moved to the Midlands and the situation appears to be exactly the same still in the stores I'm visiting around here.

Now clearly supply issues are nationwide for almost all retailers at the moment due to driver shortages/Covid 10 day self isolation/Brexit, BUT my big worry with McColls is that unlike the "big boys" like Tesco/Sainsburys etc, McColls are now stuck at the butt end of Morrisons supply chain. Regardless of what any contract may or may not say, you would have to be very nieve to think that Morrisons won't prioritise there own stores over McColls. Morrisons clearly have much bigger things to deal with regarding their possible takeover as well, so McColls I fear is going to be sidelined for some time as they don't have enough part empty Morrisons Daily branded stores or the financial clout to be a big enough problem for Morrisons to deal with right now. Without an option of another supplier McColls are indefinitely stuck between a rock and a very hard place: a place that they don't have the finances to be in. It's hard not to think this is a similar crisis to Palmer and Harvey all over again, but in slow motion.

In reality I don't see McColls have any other option but to raise more cash quickly and to try and ride out this period. Store takings across the estate must be down significantly since April and the lack of interim results is very concerning to me. Lack of information from any board is never a good thing and only breeds distrust and worry. IMO they should have come clean several months ago about the problems and should be raising *more* than £30 million (probably nearer £40 million if possible to really push the conversions out at maximum pace and leave some in the bank for future unbudgetted costs/working capital) and just lay their cards on the table......continued