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Marstons (MARS) Trade Receivables

Analysing companies' finances and value from their financial statements using ratios and formulae
Hypster
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Marstons (MARS) Trade Receivables

#305701

Postby Hypster » May 4th, 2020, 11:23 pm

Inspired by Phil Oakley's article in this week's Investors Chronicle, I decided to look up the ageing of Marstons' trade receivables to see how it varies over the years. I've gone back as far as 2012 and every annual contains a table that describes how overdue their invoices are, like this (where the bottom total matches exactly the trade receivables in the financial notes):

Code: Select all

                             | 2018 £m
Neither overdue nor impaired |    46.5
30 days or less              |      14
31 to 60 days                |       2
Greater than 60 days         |     4.3
                             |    66.8


Every annual report except the one for 2019 that is. Does anybody know why Marstons have not published this table for 2019 - is it a change in IFRS accounting standards perhaps? There's a similar section describing expected credit losses but I don't think that's the same because the total (59.4m does not match the trade receivables of 64.2m:


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Re: Marstons (MARS) Trade Receivables

#305704

Postby Dod101 » May 4th, 2020, 11:48 pm

Wonderful. But why are you doing that? As an academic exercise that is great but really it is something for the Directors and the execs at that, to be concerned about. If you do not trust them then take a good look at this sort of thing, but if you do not trust them why would you be considering an investment anyway?

Dod

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Re: Marstons (MARS) Trade Receivables

#305714

Postby TheMotorcycleBoy » May 5th, 2020, 5:09 am

I've not read the fine details, but I thoroughly applaud any actions that undercover how exactly our investments earn us money. Regards both analysis of reported numbers, Terry Smith's bread and butter (Accounting for Growth) , and a more general "investigative Googleing".

Whilst investigating differences between VCT and JMAT for my Dad, I found even comparison between either outfits "Goodwill + Intangibles"/Net Assets ratio useful, since it revealed 44% (JMAT) vs 6% (VCT) of what seem to be essentially, the side effects of Acquisitions and other "hard to value assets".

Matt

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Re: Marstons (MARS) Trade Receivables

#305736

Postby dealtn » May 5th, 2020, 9:15 am

Hypster wrote:Every annual report except the one for 2019 that is. Does anybody know why Marstons have not published this table for 2019 - is it a change in IFRS accounting standards perhaps? There's a similar section describing expected credit losses but I don't think that's the same because the total (59.4m does not match the trade receivables of 64.2m:



I suspect it's due to the change from IAS 39 to IFRS 9. See Note 35 of the latest set of accounts in the Annual Report.

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Re: Marstons (MARS) Trade Receivables

#305761

Postby TheMotorcycleBoy » May 5th, 2020, 10:33 am

I suppose that some firms may wish to understate their "receivables" since it will make it look as if they get their bills paid more promptly, and will juice up certain ratios e.g. ROCE and CROCI to a slight extent.

I'm not implying that Marstons (or any of firm) do this - and indeed it would probably be incredibly difficult for an outsider to spot from a read of the ARs.

Just thinking aloud.

Matt

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Re: Marstons (MARS) Trade Receivables

#305921

Postby Hypster » May 5th, 2020, 9:14 pm

Dod101 wrote:Wonderful. But why are you doing that?


Hi Dod, I'm doing it for enjoyment and for the educational benefit it brings me. Every now and then Phil Oakley's articles really get me thinking and I like to understand more by getting stuck in with a real example in my portfolio. In this case I got thinking about Marstons.

We all know the pubs are closed and so the revenue is not coming in at the moment (except for the bottled beer sold through the supermarkets I imagine). But I was pondering about all those barrels of beer and all that rent that was invoiced before the lockdown. Did the tenants pay those bills in the early days of the lockdown or did they delay; did they apply for the government support package and then pay the Marstons HQ - or did they prioritise the staff and other suppliers; and so on.

One day we will be able to visits pubs again and I hope Marstons is still around when that time comes. When that first trading statement or interim report comes out, I thought it would be good for me to understand what the historical profile* looked like to compare with the unfolding situation.

*Between 2012 and 2018 an average of around 25% of trade receivables was considered overdue. I wonder what that number will be next time round.

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Re: Marstons (MARS) Trade Receivables

#305926

Postby Hypster » May 5th, 2020, 9:36 pm

dealtn wrote:
Hypster wrote:Every annual report except the one for 2019 that is. Does anybody know why Marstons have not published this table for 2019 - is it a change in IFRS accounting standards perhaps? There's a similar section describing expected credit losses but I don't think that's the same because the total (59.4m does not match the trade receivables of 64.2m:



I suspect it's due to the change from IAS 39 to IFRS 9. See Note 35 of the latest set of accounts in the Annual Report.


Thank you dealtn, that's an informative note.

On looking at the table again I notice that the total gross carrying amount of 59.4m matches exactly the amounts invoiced to non-tenant customers. Therefore I think they are saying that the amount due from current tenants and 'miscellaneous' are not considered overdue or impaired. When put that way, 92.5% of the invoices are overdue compared with a long term average of 25% under the old system.

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Re: Marstons (MARS) Trade Receivables

#305977

Postby Dod101 » May 6th, 2020, 7:07 am

Hypster wrote:
Dod101 wrote:Wonderful. But why are you doing that?


Hi Dod, I'm doing it for enjoyment and for the educational benefit it brings me. Every now and then Phil Oakley's articles really get me thinking and I like to understand more by getting stuck in with a real example in my portfolio. In this case I got thinking about Marstons.

We all know the pubs are closed and so the revenue is not coming in at the moment (except for the bottled beer sold through the supermarkets I imagine). But I was pondering about all those barrels of beer and all that rent that was invoiced before the lockdown. Did the tenants pay those bills in the early days of the lockdown or did they delay; did they apply for the government support package and then pay the Marstons HQ - or did they prioritise the staff and other suppliers; and so on.

One day we will be able to visits pubs again and I hope Marstons is still around when that time comes. When that first trading statement or interim report comes out, I thought it would be good for me to understand what the historical profile* looked like to compare with the unfolding situation.

*Between 2012 and 2018 an average of around 25% of trade receivables was considered overdue. I wonder what that number will be next time round.


Good for you. A good exercise indeed. I was given a crash course very early in my career in double entry book keeping and the rudiments of finance which I sorted of needed for my job) and I have found it very useful ever since and particularly understanding company accounts so you are doing much the same.

Dod

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Re: Marstons (MARS) Trade Receivables

#306009

Postby scrumpyjack » May 6th, 2020, 9:21 am

It does remind me of my days as an articled clerk in the early 70's auditing a greeting cards company. I asked the finance director why they hadn't made provision against a 3 year old debt.

His answer was 'If it wasn't bad last year, how can it be bad this year?'

Needless to say the company was in dire trouble!


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