Langton Capital – 2017-10-30 – Assets for sale, Revs, Monarch, M&C, Easyhotel & other:
Assets for sale, Revs, Monarch, M&C, Easyhotel & other:
A DAY IN THE LIFE:
Frost on the ground here, crunchy grass, the works.
So maybe the blooming stuff will stop growing meaning that I can take the battery out of the mower and put the thing to bed for the winter and stop spending two hours every other weekend getting scratched to pieces and stung as I try to keep the thistles, brambles and nettles at bay by mowing them alongside what we rather laughingly call our lawn.
Though it’s colder out there the temperature at Westminster seems to be rising as politicians let their inner beast come out and their spin-masters look for anything, really anything, even de facto depressing news, to deflect attention from Brexit.
Anyway, it’s time for the news but if you would like to come off this email list please simply hit the unsubscribe button above. Similarly, if you are getting it forwarded and would like to go on directly or if you would like to recommend it to one of your colleagues, please just hit the subscribe button and/or suggest that your colleague does too.
PUB, RESTAURANT & DRINK PRODUCERS:
• With administrators and let’s call them pre-administration advisors putting more and more sites onto the market, it could soon be a buyers’ market for assets,
• That’s if it isn’t already. Byron, Restaurant Group, Prezzo and others continue to market sites. In some cases, full businesses are for sale.
• Serial investor Luke Johnson has said in his column in the Sunday Times that ‘advisers tell me they are being inundated with company founders looking to sell up under the current tax regime’. The ongoing Brexit debacle would appear to have driven the young into Labour’s arms. Labour is currently ahead in the polls. Triggering an election, however, which could usher in the UK’s most left wing government ever, is more easily said than done.
• November on Wednesday and Budget later in that month. Industry bodies pleading with the government not to launch a tax raid on beer, pensions, whisky, the self-employed and a number of other potential milk cows. The BBPA’s Brigid Simmonds has said ‘the tax on beer in Britain is already an astonishing three times the EU average — yet further tax hikes are planned. This hits jobs, pubs, and pubgoers. A pint in the pub must not become an unaffordable luxury, so it’s time for a rethink.’
• Sunday Times looks into the Hotcha collapse as would-be Domino’s for Chinese food enters administration. Says HMRC operation ‘involved more than 80 officers targeting 12 business and three private addresses’. Hotcha raised some £7.5m from Beechbrook, which invests in the debt and equity of small businesses, in October last year. It had failed in an attempt to raise money on Crowdcube.
• Escape Games company Tick Tock has failed in an attempt to raise money on Crowdcube. The business, which was attempting to raise £1m on a £4m pre-new money valuation, had raised less than £3,000. The group’s fund raising effort was moved to a private page earlier this month ‘in order to give those close to the business a chance to invest before the offer was opened to the wider public’. The valuation looked crazy and the fund-raise failed. Perhaps this is akin to the frivolous cases that you may get under a no-win, no-fee type of situation?
• Lloyds Pharmacy is to close 190 branches in a further blow to the High Street. F&B units have recently moved back onto High Streets but, to be honest, we maybe have enough of them now. Landlords will be wondering just what or who will now fill the gap left by departing phone, electrical, CD, DVD, clothing, book and now chemist shops.
• Revolution Bars Group’s shareholders warm to the proposed merger with Deltic, the Sunday Times has reported. The 60-strong Revolution Bar Group recently turned down a £100m takeover bid from Stonegate Pub Co. Revolution’s manager of Legal & General, Rod Oscroft said: ‘Clearly, the next few months is a crucial trading period for the company, so it needs to focus on making sure it gets that right’.
• The ALMR has renewed calls for the government to make clear commitments to residents in the UK. Chief Executive of the ALMR, Kate Nicholls said: ‘There are around 150,000 EEA workers in the UK’s eating and drinking out sector, making a huge contribution and helping businesses grow. Our sector has the second highest number of EEA workers and the fifth highest by proportion. If we do not have a streamlined immigration system in place, then the growth that these employees have helped drive will be severely undermined’.
• The 11 strong Thai cafe chain, Rosa’s has increased LfL sales by 9% in the first half of the current financial year, the MCA has reported.
• China’s wine imports have increased in both volume and value in Q3 2017. From July to September, the country imported 56.29m litres of bulk wine valued at $47.17m, these are 92.92% and 100.74% increases on the same period last year respectively.
• Household finances have fallen for the fifth month in a row in August, data from YouGov has indicated. Despite the declining spend, the YouGov Consumer Confidence Index stands at 107.6 this month, up on July’s 107.2 (scores above 100 mean that customers are more confident than unconfident).
HOLIDAYS & LEISURE TRAVEL:
• EasyHotel has announced it has acquired a ‘central site in Cardiff to develop a new 120-bedroom freehold easyHotel’. The deal is subject to planning permission. Easyhotel says ‘located at Fitzalan Place, just 0.3 miles from Cardiff Queen Street Station, the site is located between the city centre and Cardiff Bay, which has been redeveloped into one of the city’s main leisure areas, with many bars, restaurants, cinemas and visitor attractions, including the Dr Who experience at the BBC Roath studios.’
• Easyhotel says the Cardiff site takes its pipeline of owned/leased projects to 895 rooms in addition to the 1,636 franchise rooms under development. CEO Guy Parsons comments ‘we are delighted to be investing in Cardiff, a well-connected modern city that attracts 20 million visitors each year. This acquisition is part of our ongoing strategy of offering comfortable, affordable accommodation in key tourist and business locations in the UK and internationally. We expect easyHotel Cardiff to attract a variety of leisure and business customers and look forward to being part of the City’s ongoing growth and success.’
• Millennium & Copthorne reports Q3 numbers. REVPAR +4.6%, profit +19.6%
• MLC reports ‘REVPAR for the nine months of 2017 increased by 11.5%. In constant currency, Group RevPAR grew by 4.0% with increases in occupancy and average room rate of 2.2% points and 0.8% respectively.’
• MLC comments ‘Like-for-like Group RevPAR for the nine months of 2017 increased by 1.4% and was up in all regions except for Asia (down by 2.1%) and Rest of Europe (down by 0.2%). London and New York registered like-for-likeRevPAR growth of 5.2% and 1.1% respectively.’
• MLC says London & Europe down but US up in recent weeks.
• MLC says ‘at 30 September 2017, the Group had net debt of £668m (Dec 2016: net debt £707m).’ The group refers briefly to the bid for the company. Re current trading, it says ‘on a constant currency basis, Group RevPAR was up by 1.8% for the three weeks ended 21 October 2017. RevPAR for New York and Regional US were up by 7.5% and 7.0% respectively. RevPAR for London and Rest of Europe were down by 1.7% and 5.0% respectively. In Asia, RevPAR for Singapore and Rest of Asia were down by 5.3% and 0.8% respectively. Australasia had a RevPAR growth of 16.2%. In reported currency basis, Group RevPAR was up by 9.1%.’
• The former owner of the recently bust Monarch Airlines, has said that the company had a moral obligation to repay some of the bill to bring passengers home, if it profits from the administration of the carrier. The repatriation programme has been estimated to have cost the Government around £60m, and involved bringing over 100,000 passengers back home.
• Thomas Cook’s Turkey capacity has nearly returned to 2015 levels. Trade Partnership Manager for the group, Katrina Latimer said: ‘It actually became our number one selling destination in the lates period,” she said. “And that’s what it’s going to look like moving forward into summer 2018 as well’.
• Shareholders in Millennium & Copthorne Hotels have continued to argue with the company’s directors in relation to the £1.8bn takeover offer from its billionaire chairman. Two large shareholders in the group have asked the directors to not recommend the possible take over from the Singaporean Kwek Leng Beng.
• Per HotStats, UK hotel profit per room was up 2.7% yoy in September indicating UK hoteliers are on course for a fifth consecutive year of profit growth. RevPAR grew 2.7% to £106.61, ADR was up 2.8% to £125.10 but occupancy declined 0.1% to 85.2% last month.
• Hotel booking websites will be the subject of an investigation by the Competition and Markets Authority over concerns the sites ‘could mislead people, stop them finding the best deal and potentially break consumer law’.
• The U.S. Travel Association says recent hurricanes have had ‘a disproportional impact on on the travel industry’ temporarily affecting consumer confidence, employment, income growth and inflation. The U.S. Labour Department reported 33,000 jobs lost last month, the first monthly decline in seven years.
• North American hoteliers are ending the year strongly, according to data from TravelClick’s October 2017 North American Hospitality Review (NAHR). Overall, average daily rates (ADR) and occupancy are both up 1.6% and 4.3% respectively. ‘October’s key reservation metrics offer encouraging news for hoteliers, with structural growth across all travel segments and noteworthy gains in group bookings specifically,’ said John Hach, TravelClick’s senior industry analyst. ‘What’s more is that we also see promising signs in organic market growth, which is helping to support increases in rates at the same time.’
• Betting companies that fail to deal with problem gambling will be named and shamed. The charity Gamble Aware said it will name operators who are not donating the recommended amount to them, after the association was £5m short of its £13m industry contributions target.
• Apple has reassured that pre-orders for the 10th anniversary phone are ‘off the charts’. Shares in the group have fallen recently over concerns of muted demand.
• Mattel sales fell 13% and the barbie maker made a net loss of $603.3m in its third quarter as the group made ‘strong progress against [its] transformation plan’.
• Google owner Alphabet’s Q3 profits jumped year-on-year from $5.1bn to $6.7bn, while revenue increased to $27.8bn from $22.5bn.
FINANCE & MARKETS:
• Oil up a dollar to breech $60. Trading at $60.40
• Sterling broadly level vs dollar at $1.3144
• Pound up 0.3c or so at €1.1314
• UK 10yr gilt yield down 2bps at 1.36%
• World markets: UK mixed on Friday with Europe & US higher. Asia mostly up in Monday trade
o Labour tees up Tories for a fall. Brexit is their baby. Shadow Brexit secretary Sir Keir Starmer has warned that a no-deal exit would be “a really bad outcome”.
o Starmer told the ICAEW that the government’s approach was now a little less belligerent. Akin to slapping your spouse about & then saying you want a friendly divorce? But he said the Tories had no better idea what they actually wanted from Brexit.
o Junior trade minister Mark Garnier admits what looks like inappropriate & bullying behaviour.
o UBS says that, if Brexit can be clarified, it may move less staff from London.
o EY Item Club says business spending ‘will slump’ unless the Tory party in taking us out of Europe can negotiate a quick transition deal’
PRIOR DAY’S LATER TWEETS:
• Costs, capacity & new openings still anf issue. Food costs +6.5%, Fleurets mentions increased capacity, Pragma likewise
• UKinbound finds inbound tour operators see Brexit problems in future despite good summer. Peel Hotels cautions on trading
• ONS stats show that real wages fell by 0.4% in the year to April. First fall in 3yrs. Interest rate rise next Thurs
• Milk price sharply higher. Up 50% now from lows 15mths ago. Good for farmers. Less so for users of the product
• CBI says slump in retail spending. Sharpest fall since 2009. BDO: Weather-impacted 1wk fashion sales down 9.4%. Online growth slows to 8.2%
START THE DAY WITH A SONG:
Last Friday’s song was the legendary Louis Armstrong, with ‘What a Wonderful World’. Today’s song:
Love, love is a verb,
Love is a doing word,
Fearless on my breath,
RETAIL NEWS WITH NICK BUBB:
• Saturday Press: The front pages of the Saturday papers were full of the crisis in Spain (the FT headline was “Madrid fires Catalan government”), whilst the surge in the tech stocks on Wall Street on Friday (after strong Q3 results from Amazon, Microsoft and Alphabet) also got plenty of coverage. The FT had a feature on how “Amazon and Alphabet take Wall Street by storm”, as well as an article about a new US tech light switch start-up called Noon Home and the general surge in interest in the “smart home”. Lex column in the FT looked at Amazon and concluded that “…sceptics can stay awake worrying about the lack of profits. The rest of us are wide-eyed at the growth”, whilst Tempus column in the Times also looked approvingly at the sales-growth driven growth in the Amazon share price. Nearer to home, the Business editorial in the Times looked at the CMA’s decision to investigate hotel
• Sunday Press: The big story in the Sunday papers was the Sunday Times story that the embattled Russian tycoon Alexander Mamut has appointed Rothschilds to look at selling his Waterstones chain to raise money. The Sunday Telegraph grabbed the photo opportunity provided by the news from duty-free shopping experts Global Blue that Gulf shoppers spent a record £28m in high-end London shops like Harrods during the Eid holiday and it also flagged that the owners of the London health foods chain Planet Organic are looking to sell the business for c£50m. The Sunday Times had a big feature about how UK supermarkets are defying the big short bets made by US hedge funds: “Unexpected fightback in bagging area”. Finally, the Observer and the Sunday Times highlighted that Next will in focus on Wednesday, when CEO Simon Wolfson unveils the Q3 sales figures and updates the City on his outlook for
Today’s Press and News: The report that the Russian owner of Waterstones, Alexander Mamut, has appointed Rothschilds to look at selling the business justifies the many photos in today’s papers of the actress/model Cara Delevingne at her Waterstones book signing, eg in the Times and Daily Mail. The Telegraph instead seizes on the fashion model photo opportunity provided by the latest, improved results from the fashion chain All Saints, as does the Guardian (!) and the Times. The Telegraph also flags that the CMA will issue its provisional findings this week on the Tesco bid for Booker (and may insist on the sale of the One Stop convenience store chain) and notes that October new car sales have been awful (with a feature article on the problems of the car industry). City AM highlights that HMV has overtaken Amazon in terms of DVD market share, according to Kantar figures for the last
News Flow This Week: With the end of the month coming up very quickly, first thing tomorrow we will get the widely-followed GFK Consumer Confidence Index for October. November then starts with a bang in the form of the much-awaited Next Q3 update on Wednesday. Thursday is then very busy, with the Morrisons Q3 update, the Howden Q3 update and the Intu Properties Q3 update, together with first dealings in the Footasylum IPO, the much-awaited MPC interest rate decision at mid-day and the Apple Q4 results in the US in the evening. And one day soon the CMA will issue its provisional findings on the Tesco bid for Booker. Finally, by tradition, the much-hyped Christmas TV ads get going in early November…