Langton Capital – 2022-12-06 – Marston’s FY, SSP FY, Time Out FY, Vianet H1, W Cup, strikes & other:
Marston’s FY, SSP FY, Time Out FY, Vianet H1, W Cup, strikes & other:A DAY IN THE LIFE: Whilst global goliaths that sweep all before them might turn the stomach on one level, on another, the likes of Amazon do mean you shouldn’t have to rush out to the local petrol station on Christmas morning any more to buy plastic flowers, some thermal gloves, glow in the dark Santa stickers and a bonus oil dipstick for the loved ones you’d previously forgotten to buy for. At least, that’s the idea and, though finding a present that both a) doesn’t have a plug on it and b) has nothing whatsoever to do with kitchens could still be a challenge, at least you’ve got thousands of online pages of junk to sift through in an attempt to find something suitable so, for December at least, I’ve decided to cut Amazon some slack. I’m sure they’ll be mightily relieved. On to the news: LANGTON EMAIL: The Free Email is now written in short form. Extended versions of many stories are in the Premium Email. 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Or sign up for easy in, easy out monthly option HERE https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=87YUG2Z5W7PSN MARSTON’S FULL YEAR NUMBERS: Marston’s has reported full year numbers and our comments thereon are set out below: Headline numbers: • Marston’s reports revenues up to £799.6m from £401.7m last year with PBT of £27.7m against losses last year of £101.3m. • The company reports EPS of 4.3p against losses of 13.6p per share last year and there is no dividend. • Marston’s reports that NAV has risen sharply from 64p last year to some 102p per share Trading: • MARS updated on trading when it announced the short delay to its figures last week. • The group reports that ‘full year like-for-like sales [are now] 99% of 2019 despite disrupted Christmas trading period [last year]’ • It says ‘drink sales continued to outperform food sales demonstrating the trading resilience of the Group’s predominantly community pub estate’ and adds that in the final 10 weeks of FY2022, ‘like-for-like sales were +3% vs. 2019 and +4% vs. 2021.’ • The company reports that it has had an ‘improved share of CMBC’s profits: £3.3m (FY2021: loss of £(14.5) million).’ Current trading & outlook: • Regarding current trading and the outlook, MARS says it is ‘well-positioned to meet challenging market conditions’ and adds that it is seeing ‘positive current trading, with like-for-like sales in the last 8 weeks +6.8% vs. last year.’ • It says its ‘predominantly freehold pub estate with limited exposure to city centres’ is currently a positive when it comes to trends such as WFH and the current industrial action on the railways • Regarding costs, MARS says it is ‘’managing inflationary challenges within our control’ and it is ‘offsetting costs through efficiencies and pricing strategies.’ • The company says ‘the first winter World Cup and the first Christmas period without restrictions in three years to look forward to. For the two England World Cup games, like-for-like drink sales were c.+50% vs. 2021.’ Balance sheet issues: • MARS updated on its estate valuation last week saying that ‘following a valuation of Marston’s pub assets, the Group can also announce the carrying value of the estate is now £2.1 billion (2021: £2.0 billion); as a result of the valuation undertaken in H2.’ • The company adds that ‘during the period, net asset value increased by £241.7 million to £648.1 million. This is primarily due to the increase in the value of our estate and reduction in liabilities from interest rate swaps. As a result of this, net asset value per share has increased to £1.02 (2021: £0.64).’ • It says re debt ‘the vast majority of our borrowing is long-dated and asset-backed’ and adds that ‘90% of our borrowings are hedged and therefore not at risk of any changes in interest rate movements that may occur during the year.’ • Net debt, excluding IFRS 16 lease liabilities, was £1,216 million, a reduction of £16 million from last year (2021: £1,232 million). Total net debt of £1,594 million (2021: £1,604 million) includes IFRS 16 lease liabilities of £378 million (2021: £372 million). Company comment: • CEO Andrew Andrea comments ‘we have a clear and focused strategy which provides a strong platform for future growth, and it is encouraging to see the actions and initiatives which we have undertaken in 2022 beginning to deliver positive results.’ • He adds that ‘demand for our predominantly community-based pubs continues to be encouraging despite ongoing macro uncertainty and our estate is well-placed to benefit from changing patterns in consumer behaviour.’ • The company says ‘we are managing cost inflation well and remain confident that our commitment to continue to reduce the Group’s debt and return sales to back to £1 billion will drive NAV and shareholder value.’ • Regarding current trading, it says ‘trading to the end of November has been positive with encouraging levels of Christmas bookings as we look forward to the first restriction free festive period in three years.’ • It says ‘additionally, the World Cup has benefited trading, delivering like for like drink sales of c.+50% for the home team games.’ • MARS concludes ‘whilst uncertainty remains, Marston’s remains well-financed and in great shape to weather the challenges ahead with the right formula, the right strategy and the right team to continue to make progress and deliver shareholder value.’ Langton Comment: • The earlier delay to full year numbers was unfortunate but, as the group reassured trading was in line with earlier guidance and the audit issues were purely procedural, the delay had little impact on the group’s shares. • MARS says ‘we remain cognisant of the current macroeconomic environment with the cost-of-living crisis, the impact of the conflict in Ukraine and the resulting challenges this brings in respect of cost inflation and the potential impact on disposable income, as well as potential supply issues.’ • It says thus far ‘pubs have demonstrated their resilience time and time again and, to date, there is little in our trading performance to suggest that there has been a change to consumer behaviour; our guests still want to go out and have an affordable treat in a Marston’s pub.’ • Costs are an industry-wide issue. MARS says ‘we continue with a relentless focus on managing costs to mitigate the inflationary impact on the business. We are working hard to mitigate as many of these cost pressures as possible.’ • MARS says ‘the level of customer demand we are experiencing is encouraging and underpins our confidence that we have the right strategy in place and that it is delivering positive progress on our clearly stated strategic goals.’ • The market remains challenging and difficult to read but we believe that MARS is generating cash and cutting debt. • Would-be shareholders may currently be shying away from consumer stocks in general but, when a degree of discrimination between one consumer stock and another returns, Marston’s is well-positioned to prosper. SSP GROUP – FULL YEAR NUMBERS: SSP Group has reported full year numbers and our comments thereon are set out below: Headline numbers: SSP reports revenue of £2,185.4m (2021: £834.2m), up 162.0%, with underlying EBITDA of £142.0m compared to an underlying EBITDA loss of £108.3m in 2021 (both on a pre-IFRS 16 basis) • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. PUBS & RESTAURANTS: World Cup trading: With England through to the last eight, the boost to sales should continue – at least until either England’s run or the customers money, runs out. David Lee at Insight & Solutions has updated on World Cup says saying that sales for the week to Sunday were flat on the prior week (which was also, of course, a World-Cup impacted week) and was up 11% on the four week moving average pre-tournament… • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. Has the World Cup delayed or displaced Christmas? Maybe neither, of course, but foodservice analysts Peter Backman suggests perhaps the former when he says ‘Christmas is arriving – but not, it seems to me, as fast as it usually does. Decorations are out, sort of, in high streets, but in my part of the world anyway, there’s no Slade, no Band Aid yet.’ • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. UK services sector: S&P Markit has reported November PMIs for the UK services sector saying that it ‘registered another modest contraction of activity during November as levels of incoming new work continued to fall amid ongoing economic uncertainty and cost of living challenges weighing on discretionary spending.’ The number was 48.8 in November, the same as October and also in line with the flash reading… • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. Inflation: With energy, labour and costs continuing to rise, it is interesting to note that major bottle-producing company Allied Glass has told customers that, from 1 Jan, it will be putting its prices up by 26.9%… • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. Research from the Trades Union Congress (TUC) shows that the cost of the items that make up a traditional Christmas dinner has risen three times faster than wages this year… Footfall: Springboard reports last week offered a glimmer of optimism for retailers with a rise in footfall across UK retail destinations from the week before. Footfall rose from the week before on every day apart from Friday, when it was lower than last week due to the high comparable resulting from the increase in footfall on Black Friday. Energy bills: A report by Frontier Economics for the BBPA has shown that energy bills returning to their regular rate from April would put pubs and brewers at a loss of 20% on average… • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. WFH: Government plans announced today show workers gaining the right to request flexible working arrangements on the first day of a new job. The present law lets staff request flexible working only after having worked for an employer for 26 weeks. PwC will close most of its offices over Christmas and New Year for the first time to save on energy bills. Most staff will be taking annual leave over Christmas, but the Covid pandemic has meant that working remotely from home is now common practice. Other news: Government. Deaf, daft or uncaring? The MA reports that a government source has said it ‘understands the pressures on the hospitality sector’ and that it is ‘keen to hear from those impacted’ in order to find solutions… The RMT has announced further rail strikes over the Christmas period. Staff at Network Rail will walk out from 6pm on Christmas Eve until 27 December… COMPANY NEWS: Time Out has reported full year numbers to end-June saying that revenue was up by 62% at £72.9m. The company reports a group loss of £14.1m against a loss of £60.6m last year… • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. Vianet has reported H1 numbers saying that revenue rose to £7.2m from £6.3m last year. Chairman James Dickson says ‘the first half has benefitted from increased demand for data, which has positively impacted operating profit and our momentum going into H2.’ He says ‘despite the challenging economic backdrop, we are on track to meet market expectations for the full year and have a clear line of sight to achieving pre-pandemic trading levels during FY 2023 and into FY24…’ Whitbread has confirmed that Dominic Paul will join as the group’s new CEO on 10 January 2023, taking over from Alison Brittain. The MCA reports that Lucky Voice – the karaoke and F&B concept – is looking to expand to regional cities across the UK. Red Oak Taverns has announced that it has completed the acquisition of the Temple Inn in Liss Forest, Hampshire increasing their pub estate to 206 freehold leased and tenanted pubs. HOLIDAYS & LEISURE TRAVEL: The European Commission has ruled that carriers can provide 5G technology on board planes, alongside slower mobile data, meaning that EU passengers will be able to use their phones to make calls on planes from next summer. FINANCE & MARKETS: S&P Markit PMI readings, see Pubs & Restaurants above. Citi has suggested that the value of London office blocks will fall by around 38% in the next 2-3yrs as a result of falling rents and rising interest rates. Citi says that the chance for the UK to “avert a deep recession has passed.” Sterling down at $1.2182 and €1.161. Oil lower at $83.10 and the UK 10-yr gilt yield down 4bps at 3.10% since yesterday. Markets mixed & London set to open down around 11pts as at 6.30am. RETAIL WITH NICK BUBB: • See premium. Reply for sample or to upgrade. Single £345, multiple £595. Limited time offer: PayPal monthly £25 + VAT. Easy in, easy out. |
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