Slide 1: Interim Results 2017
INTERIM RESULTS 2017
Slide 2: Ralph Findlay, Chief Executive Officer
Ralph Findlay Chief Executive Officer
Slide 3: Highlights
Marston’s PLC Interim Results 2017 3 HIGHLIGHTS 1. Continued progress in 2017 • Growth despite H2 Easter • Turnover up 3% • PBT growth of 3%, EPS up 4% • Dividend up 4% to 2.7 pence per share • Leverage maintained, fixed charge cover up 2. Transformed estate in growth • Like-for-like sales growth in
Slide 4: Market Dynamics
Marston’s PLC Interim Results 2017 4 MARKET DYNAMICS 1. Consumer outlook • No material changes to consumer behaviour • “Affordable treats” not being compromised • Modest price increases achievable - Provided quality, service, environment are right 2. Sector supply • Slowdown in rates of opening • Fr
Slide 5: Improving Long-Term Returns
Marston’s PLC Interim Results 2017 5 IMPROVING LONG-TERM RETURNS PUBS BREWING New-builds Broad appeal Accommodation Leading premium World class beer business service Well invested Destination Broaden capital Leading market supply chain Higher quality of P&P, Revere allocation share in premium Contra
Slide 6: Pub Segmentation
Marston’s PLC Interim Results 2017 6 PUB SEGMENTATION Operating Current no. Average no. Average profit 2017 profit £m of pubs of pubs per pub vs LY % Destination and Premium 34.6 377 374 - Taverns 24.1 823 818 +3 Leased 13.9 365 365 +3 Total 72.6 1,565 1,557 +3 +2.5% LFL performance vs Market* (%pts
Slide 7: Transformed Pub Estate Over Last Decade
Marston’s PLC Interim Results 2017 7 TRANSFORMED PUB ESTATE OVER LAST DECADE 2006 – 2016 : c.200 new freehold sites 2006 – 2016 : c.1,000 disposals High quality pub estate; 60% of Destination estate < 10 years old
Slide 8: 2017 Estate Expansion on Track
Marston’s PLC Interim Results 2017 8 2017 ESTATE EXPANSION ON TRACK 1. On track to meet 2017 openings targets • 20 pub-restaurants • 8 lodges • 3 premium bars 2. Acquisition of existing pubs and bars • 7 Destination and Premium pubs for £13m – expected completion June 2017 • Pointing Dog – 3 premium
Slide 9: Accommodation Increasingly Important
Marston’s PLC Interim Results 2017 9 ACCOMMODATION INCREASINGLY IMPORTANT 1. Strong 2017 performance • REVPAR up 5% 2. 8 lodges planned for 2017 • 5 opened in 2016; 3 opened in 2015 3. Future organic plans – 10 lodges per annum • Larger lodges under review – Ebbsfleet 2018 (100 rooms) Accelerating e
Slide 10: Premium Revere, Pitcher & Piano Opportunity
Marston’s PLC Interim Results 2017 10 PREMIUM REVERE, PITCHER & PIANO OPPORTUNITY Foundry, Harrogate Kings Head, Beverley Pointing Dog, Sheffield Lost & Found, Knutsford Continued growth of premium estate, 3 openings planned for 2017
Slide 11: 2018 Plans – Growth Maintained, Wider Opportunities
Marston’s PLC Interim Results 2017 11 2018 PLANS – GROWTH MAINTAINED, WIDER OPPORTUNITIES 1. Strong pipeline for pub-restaurants, lodges, premium pubs and bars 2. Maintain consistent level of capex and strong returns discipline 3. Current 2018 plan: • 15 pub-restaurants • 10 lodges • 3-5 premium bar
Slide 12: Optimum Operating Structure
Marston’s PLC Interim Results 2017 12 OPTIMUM OPERATING STRUCTURE +28% Structure focused on consumer occasion with cross-segmental learning
Slide 13: Digital Strategy
Marston’s PLC Interim Results 2017 13 DIGITAL STRATEGY 1. Discovery Improve the visibility of Marston’s pubs & inns when searching online Pub websites Marstoninns.co.uk Partnerships Targeted Ads 2. Customer Relationship Marketing Use enhanced customer insight to deliver more profitable communication
Slide 14: The Pub Brand Is at the Heart
Marston’s PLC Interim Results 2017 14 THE PUB “BRAND” IS AT THE HEART Pub authenticity critical to success
Slide 15: Marston's Beer Company Today
Marston’s PLC Interim Results 2017 15 MARSTON’S BEER COMPANY TODAY UK No.1 Premium Developing licensed Supply chain Proven acquisition Ale Brewer brands excellence with scale capability Ringwood - 2007 40 brands delivered Bottling to 9,000 pubs £19m consideration 37% of PBA bottled by Marston’s Ring
Slide 16: Charles Wells Brewing and Beer Business (CWBBB)
Marston’s PLC Interim Results 2017 16 16 CHARLES WELLS BREWING AND BEER BUSINESS (“CWBBB”) OVERVIEW: • Brands with national resonance: Bombardier, Young’s*, Courage, McEwan’s • Innovative quirky brews: Banana Bread Beer, Double Chocolate Stout • Brew Kirin Ichiban and distribute Estrella Damm under
Slide 17: Our Growth Strategy for CWBBB
Marston’s PLC Interim Results 2017 17 OUR GROWTH STRATEGY FOR CWBBB Extend No1 Develop licensed Supply chain Premium Beer position brands excellence Increase market share Experienced Licensed in PBA, PCA, Premium can Lager scale brewing Brands team and Export Strengthen Free Trade presence in Estrel
Slide 18: Increased Market Share
Marston’s PLC Interim Results 2017 18 INCREASED MARKET SHARE Combined Total Ale (%)* 11 5 16 Premium Cask Ale (%)* 19 6 25 Premium Bottled Ale (%)* 26 3 29 Premium Canned Ale (%)* 8 4 12 * BBPA Market Share Data Strengthens position as category leader
Slide 19: Andrew Andrea, Chief Financial and Corporate Development Officer
Andrew Andrea Chief Financial and Corporate Development Officer
Slide 20: Financial Summary
Marston’s PLC Interim Results 2017 20 FINANCIAL SUMMARY +4% +4% +3% +3% +1% £441m £71m £34m 4.8p 2.7p Revenue Operating profit PBT EPS Dividend PBT impact of late Easter: £1.5m Underlying numbers, statutory numbers in appendices Continued progress in revenue and earnings supports dividend growth
Slide 21: Managed and Franchised Like-for-Like Performance
Marston’s PLC Interim Results 2017 21 MANAGED AND FRANCHISED LIKE-FOR-LIKE PERFORMANCE 3.0% 3.0% 2.4% 1.7% 1.6% 1.5% 1.5% 1.5% H1 2016 H2 2016 2017 16 weeks 2017 30 weeks Destination and Premium Taverns 30 week operating margins in line with last year Improving LFL trajectory without foregoing margi
Slide 22: Leased
Marston’s PLC Interim Results 2017 22 LEASED Quality estate • Profit per pub growth +3% delivering • 2% rental growth growth • Licensee stability >90% Income • Bad debt <0.1% of turnover stability • Moderate capital investment Sustainable income through quality estate and strong support
Slide 23: Brewing
Marston’s PLC Interim Results 2017 23 BREWING +4% +28% +2% +1% +0.2% Volume Revenue Profit Margin 30 week volume +2% Continued revenue and earnings growth at improved margins
Slide 24: Cost Guidance
Marston’s PLC Interim Results 2017 24 COST GUIDANCE 2017 2018 Drink c.1-2% 65% contracted Food c.1-2% 50% contracted Brewing raw materials c.1-2% 75% contracted Energy inflation c.2-3% c.3% Labour cost inflation - National Minimum Wage £6.95 from October, £7.05 from April c.4% c.4% - National Living
Slide 25: Cash Flow Summary
Marston’s PLC Interim Results 2017 25 CASH FLOW SUMMARY 2017 2016 £m £m Comments Operating cash flow pre w/cap movements 75 73 Working capital movements (15) 8 Expected to reverse by year-end Operating cash flow 60 81 Net interest (43) (38) One off £3m arrangement fee Pre-investment FCF 17 43 Organi
Slide 26: Financing Structure
Marston’s PLC Interim Results 2017 26 FINANCING STRUCTURE Total Fixed Bank and (excluding Property Charge Securitised cash property) Leasing Total Cover** Visible, smooth £320m bank Property amortising debt facility leases 35-40 to 2035* to 2022 year term Net Debt £m 2017 820 241 1,061 261 1,322 Net
Slide 27: Financial Impact of Acquisitions
Marston’s PLC Interim Results 2017 27 FINANCIAL IMPACT OF ACQUISITIONS • Cash consideration of £55m Charles Wells • Volumes: 585k brls, 260k brls own brand, 155k brls licensed. 50% brewery utilisation Brewing and • Current MAT: Turnover £92m, EBITDA £6.1m, EBIT £5.1m Beer Company • Target synergies
Slide 28: Return on Capital
Marston’s PLC Interim Results 2017 28 RETURN ON CAPITAL 10.9% 10.8% +1.3% Disposals 10.6% 10.5% 10.5% 9.8% 9.6% 2010 2011 2012 2013 2014 2015 2016 Pre-tax WACC 7.5% 5.5% CROCCE calculations included in Appendices Returns-focused strategy delivering long-term growth
Slide 29: Summary
Marston’s PLC Interim Results 2017 29 SUMMARY 1. Transformed pub estate • Continues to outperform market • Profit per pub continues to grow • Flexible expansion plans 2. Market-leading brewing business • Volume and share growth 3. Returns enhancing acquisitions • CWBBB post synergy return >18% • Pub
Slide 30: Appendices
Appendices
Slide 31: Financial Summary – Statutory Basis
Marston’s PLC Interim Results 2017 31 FINANCIAL SUMMARY – STATUTORY BASIS +61% +24% +7% +2% £452m £72m £37m 5.2p Revenue Operating profit PBT EPS Revenue and profit growth despite disposals
Slide 32: Segmental Profit
Marston’s PLC Interim Results 2017 32 SEGMENTAL PROFIT H1 2017 £m H1 2016 £m YOY % Turnover Destination & Premium 202.6 193.9 4.5% Taverns 118.0 115.9 1.8% Leased 25.8 26.3 (1.9%) Beer Division 94.4 92.6 1.9% Total 440.8 428.7 2.8% EBITDA Destination & Premium 42.3 41.1 2.9% Taverns 28.2 28.6 (1.4%)
Slide 33: Pub Segment Changes
Marston’s PLC Interim Results 2017 33 PUB SEGMENT CHANGES H1 2016 FY 2016 FY 2016 H1 2016 FY 2016 H1 2016 Pub movements Original Original Revised Change Change Revised £m £m £m Turnover Destination & Premium (39) 204.8 440.8 (10.9) (21.8) 193.9 419.0 Taverns 4 107.1 221.0 8.8 17.5 115.9 238.5 Leased
Slide 34: Pub Numbers
Marston’s PLC Interim Results 2017 34 PUB NUMBERS Destination and Taverns Leased Total Premium 2016 Closing 416 812 331 1,559 New-build additions/Acquisitions 4 22 - 26 Transfers (39) 4 35 - Disposals (4) (15) (1) (20) H1 2017 Closing 377 823 365 1,565 2016 average numbers (restated) 366 836 373 1,5
Slide 35: Historical LFL
Marston’s PLC Interim Results 2017 35 HISTORICAL LFL Destination and Taverns Premium Total Total 15 wks to 18/01/14 4.1% 3.0% 26 wks to 05/04/14 5.7% 3.8% 15 wks to 19/07/14 1.8% 0.5% 41 wks to 19/07/14 4.1% 3.0% 11 wks to 04/10/14 (0.3%) (0.8%) 52 wks to 04/10/14 3.1% 2.1% 16 wks to 24/01/15 2.0% 2
Slide 36: Capex, Tax and Share Capital
Marston’s PLC Interim Results 2017 36 CAPEX, TAX AND SHARE CAPITAL Actual Forecast Comments 2016 2017 New-build capex £65m c.£75m Lodge investment Growth capex £34m c.£30m Maintenance capex £45m c.£40m Total £144m c.£145m Disposals £17m £20m Lease related £31m c.£50m Increase driven by lodges Net ca
Slide 37: Securitised Debt Profile
Marston’s PLC Interim Results 2017 37 SECURITISED DEBT PROFILE Principal Final maturity Tranche Type outstanding at Step-up date date 1 April 2017 A1 Floating £70.0m July 2012 2020 A2 Fixed/Floating £214.0m July 2019 2027 A3 Fixed/Floating £200.0m April 2027 2032 A4 Floating £186.7m October 2012 203
Slide 38: Securitisation Profile
Marston’s PLC Interim Results 2017 38 SECURITISATION PROFILE 90.0 Max Debt Service 80.0 70.0 A3 step-up A2, B step- 60.0 Principal 50.0 Interest £m 40.0 30.0 20.0 10.0 - '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 Financial year FY2017 FY2018 FY2019 FY2020 FY2021 FY20
Slide 39: CROCCE
Marston’s PLC Interim Results 2017 39 CROCCE CROCCE FY2016 FY2015 FY2014 FY2013* FY2012 FY2011 FIXED ASSETS: Bal Depn Reval Adj Bal Depn Reval Adj Bal Depn Reval Adj Adj Adj Adj Goodwill 227.5 227.5 227.5 227.5 224.2 224.2 224.2 224.2 224.2 Other intangible assets 37.3 7.5 44.8 37.6 6.6 44.2 25.1 5.
Slide 40: www.marstons.co.uk
www.marstons.co.uk