Slide 1: Interim Results 2011
Interim Results 2011
Slide 2: Pitcher & Piano, Newcastle
Pitcher & Piano, Newcastle
Slide 3: Highlights
Highlights 1. Encouraging performance against challenging consumer backdrop • Revenue and profit growth, margins broadly level 2. Focused and consistent growth strategy • New-builds performing ahead of target • Continued roll out of Retail Agreement, performing in line with expectations 3. Interim d
Slide 4: Andrew Andrea, Finance Director
Andrew Andrea Finance Director
Slide 5: Financial summary
Financial summary 26 weeks 2011 2010 % change Revenue £317.9m £309.2m +2.8% Operating Margin 20.9% 21.2% (0.3)% EBITDA £86.8m £85.5m +1.5% Operating Profit £66.4m £65.5m +1.4% Profit before tax* £29.2m £27.8m +5.0% Adjusted EPS* 4.1p 3.8p +7.9% Interim Dividend 2.1p 2.1p Level Dividend Cover 1.9x 1.
Slide 6: Sales performance
Sales performance Like-for-like sales* 26 weeks to 32 weeks to 9 weeks to Sales % change 2 April 14 May 14 May Mix Drink +1.5% +2.7% +5.4% 55% Food +4.7% +5.0% +5.6% 41% Total +2.4% +3.2% +5.0% * Excludes any pubs acquired in last two years (%) Reported Sales Reconciliation +7% New- +4% build (3)% L
Slide 7: Retail margin performance
Retail margin performance (%) 0.1% (0.1)% 0.1% 14.6% 14.5% (0.5)% 0.5% Margin 7 Continuing the improved margin performance
Slide 8: 2012 cost outlook
2012 cost outlook £m £1.0m £2.0m £1.5m 1% RSP £3.0m £2.0m 2% RSP £1.5m £1.5m £2.0m £1.5m 8 Longer-term cost pressures will be mitigated
Slide 9: 2011 performance
Heading (Arial Black MPC 22pt)segmented: Heading (Arial Black 22pt) 2011 performance Long-term Retail Agreement Total leases estate No. of pubs c1,000 c600 c1,600 Turnover +0.2% +15.2% +4.5% Rent +2.7% n/a Margin % +0.3% (3.2)% (1.9)% Profit £34.1m £4.5m £38.6m YOY EBIT % +0.8% (3.3)% +0.3% STABILIT
Slide 10: Strong performance maintained
Strong performance maintained 1. Revenue performance • Strong group ale sales - Group ale volumes up 4% - Premium cask ale up 4%, bottled ale up 15% • Offset by: - Timing of Easter - Market driven decline in Free Trade lager sales; account distribution in growth 2. Improved margin and profit perform
Slide 11: Cashflow summary
Cashflow summary £m H1 2011 H1 2010 YOY Comments £10m higher tax Operating cashflow 79.0 81.3 (2.3) payments Net interest (36.6) (36.9) 0.3 Pre-investment FCF 42.4 44.4 (2.0) New-build/Retail Net capex* (42.4) (31.4) (11.0) Agreements Pre-dividend FCF - 13.0 (13.0) Final dividend (21.0) (21.0) - Net
Slide 12: Financing structure
Financing structure £m Securitisation 1,050 • FCF cover: 1.5x vs covenant >1.1x • EBITDA cover: 1.7x vs covenant >1.5x Bank facility 111 • Interest cover: 4.4x vs covenant >3.0x • Debt to EBITDA: 1.9x vs covenant <4.5x 1,161 • 100% at fixed rates Net cash (42) Debt issue costs (14) Net debt 1,105 •
Slide 13: Summary
Summary 1. Consistent and focused strategy driving sustainable growth • Momentum in all three trading divisions, tenanted now in growth • Strong margins despite inflationary pressures 2. Strong cashflows • Net debt in line with last year despite additional capital investment 3. Financing • Secure, s
Slide 14: Ralph Findlay, Chief Executive
Ralph Findlay Chief Executive
Slide 15: Profitable growth in a challenging environment
Profitable growth in a challenging environment Challenging environment requires growth strategy that is •Appropriate and affordable •Clear and focused •Controllable and consistent •Mitigates risk 15 Attractive growth opportunities exist with good returns
Slide 16: Clear divisional strategies
Clear divisional strategies STRATEGY KEY COMPONENTS OBJECTIVES • ‘F-Plan’ • New-build investment • Innovative agreements Exploit and develop • Greater control of retail offer 1. Sustainable growth competitive advantage 2. Lower gearing ratios in pubs and brewing 3. Increased ROC sectors • Localness
Slide 17: 'F-Plan': differentiation in food retailing
‘F-Plan’: differentiation in food retailing Pub standards Quality • pub-restaurants, NOT restaurants • menu/design/range • design: ‘F-Plan’ target customers • portion size • driven by consumer research • attractive ‘specials’ boards • external space – gardens project • provenance, freshness • consis
Slide 18: 'F-Plan' growth drivers
‘F- Plan’ growth drivers Value Service Growth Main meal prices +1.5% Maintained quality and Volumes +10% portion size Starters, desserts and Extended table service Starters +17% coffee prices held and upselling Desserts +12% Coffee +11% Children’s prices held Family friendly Children’s meals +10% •
Slide 19: Pub investment consistent with 'F-Plan'
Pub investment consistent with ‘F-Plan’ Wheatsheaf, Baslow Park Gate, Wolverley 19 Core estate investment of £10 million driving organic growth
Slide 20: New-build performance
New-build performance 2009 Pre 2010 Post 2010/11 target sites sites Turnover per week £20k £21k £27k EBITDA conversion 30% 31% 32% Food mix 55% 56% 64% Food spend per head c.£6.00 c.£6.00 c.£6.50 EBITDA ROC* 15% 17.1% 18.6% LFL sales +2.8% *annualised pro-forma 20 Strong performance continues; inves
Slide 21: New-build pipeline
New-build pipeline 2011 - 20 new pub-restaurants Uttoxeter Fakenham Bishop Auckland Huddersfield Northwich Derby Trowbridge Norwich Peterborough Mansfield Wincanton Amesbury Southend Hendon Cambridge Cardiff Spennymoor March Crediton Gloucester Visibility and control of plans • 2012: 25 sites identi
Slide 22: New-builds: regional performance
New-builds: regional performance MAT Performance on new-build sites: 47 sites 2005-Dec 2010 North East 9 pubs AWT: £22.0k EBITDA ROI: 17.3% South East 15 pubs AWT: £21.3k EBITDA ROI: 17.5% 22 Strong trading across all regions, key factor is pub location and offer
Slide 23: Three year profit performance
Heading (Arial Black 22pt)Three Heading (Arialperformance year profit Black 22pt) 2 +0.3% 0 YOY Reported EBIT (%)* (5) (10) (15) (20) 2009 2010 2011 H1 * Taken from latest peer group published results Best results Presentation name >in daterecession, 1st company to report return to absolute EBIT gro
Slide 24: Retail Agreement performance
Heading (Arial Black 22pt) Retail Heading (Arial Black Agreement 22pt) performance 104 Retail Agreement sites at September 2010 LFL profit and volume performance 200 Index – Oct ‘09 = 100 150 100 Oct Nov Dec Jan Feb Mar Apr May Aug Sep Oct Nov Dec Jan Feb Jun Jul Mar 2009 2010 2011 MAT volume per pu
Slide 25: Retail Agreement benefits
Heading (Arial Black 22pt) Heading (Arial Blackbenefits Retail Agreement 22pt) 1. Higher number of applicants • 3x higher than traditional tenancy • Drawing from new markets - 30% from outside industry • Seeking franchise accreditation 2. Higher retention • Only one change from 104 sites in 2010 • L
Slide 26: Retail Agreements licensee feedback
Heading (Arial Black 22pt) Retail Heading –(Arial Agreements Black licensee 22pt) feedback 1. Independent attitude survey: 132 responses (77%)* “You have full support • Average score of 4 out of 5 running yo ur own bus – it’s a part iness nership” 2. What attracted you to the agreement? • Open and c
Slide 27: Development of lease agreements
Heading (Arial Black 22pt) Headingof Development (Arial leaseBlack 22pt) agreements 1. c.1,000 pubs will continue to be operated as leases • Entrepreneurial operators • Good licensee stability - retention in excess of 90% • Adapted well to the challenges of recession - like managed pubs 2. Continued
Slide 28: 'Localness' and 'Premium' add value
‘Localness’ and ‘Premium’ add value Own-brewed ale brand volumes +4% 1. ‘Localness’ – strong Free Trade performance • 8% growth in independent free trade customers • 6% growth in cask ale volumes • ‘Solution selling’ adding value 2. ‘Premium’ • Bottled ale market share up 1% to 26%* - Hobgoblin up 1
Slide 29: Summary
Summary 1. Encouraging performance • Revenue growth assisted by new-builds and Retail Agreements • Profit growth in all divisions; continuing in current trading • EPS growth and increased dividend cover 2. Clear and focused strategy 29 Improving trends, clear agenda for growth
Slide 30: Appendices
Appendices
Slide 31: 86% of pubs are securitised
2,146 pubs + Marston’s Pubs Limited Other Group companies 276 Managed pubs 210 Managed pubs 1,561 Tenanted pubs 99 Tenanted pubs 1,837 309 + 31 86% of pubs are securitised
Slide 32: Segmental analysis
Segmental analysis Interim 2011 2010 £m £m % Turnover Marston’s Inns and Taverns 181.7 175.4 3.6% Marston’s Pub Company 85.9 82.2 4.5% Marston’s Beer Company 50.3 51.6 (2.5%) Marston’s Group Services - - - Total 317.9 309.2 2.8% EBITDA Marston’s Inns and Taverns 36.5 35.3 3.4% Marston’s Pub Company
Slide 33: Retail Agreement: target 600 pubs
Heading (Arial Black 22pt) Heading (Arial Retail Agreement: Black target – 60022pt) pubs 1. Target EBITDA uplift - £10k per pub (20% EBITDA ROC) p.a. Cumulative 2010 2011 2012 2013 2014 Retail Agreements 100 300 500 600 600 Target profit uplift £m 1.0 1.5 3.5 5.3 6.0 2. Key objectives • Increased co
Slide 34: Average number of shares and forecast capex
Average number of shares in 2011 568.9m Number of shares in issue as at 2 April 2011 568.9m Additional dilutive number of shares 5.0m Forecast Forecast 2011 2012 Tax rate c.21% 22 - 24% Capex Existing business c.£45m £40 – 45m Retail Agreements c.£10m c.£10m New-builds/sites c.£45m c.£50m c.£100m £1
Slide 35: Securitisation as at 2 April 2011
Securitisation as at 2 April 2011 Securitisation results £m Actual • Gross debt(1) outstanding as at 2 Apr 2011 1,050.2 • EBITDA 131.3 • Free cashflow (FCF) 114.2 • Debt service (DSCR) 77.7 Financial covenants Actual Covenant • FCF : DSCR 1.5x >1.1x(2) • EBITDA : DSCR 1.7x >1.5x(3) • Net worth £558.
Slide 36: Securitisation debt profile
Securitisation debt profile Tranche Type Principal Step-up Final Maturity outstanding Date Date at 2/4/2011 A1 Floating £169.2m July 2012 2020 A2 Fixed/Floating £214.0m July 2019 2027 A3 Fixed/Floating £200.0m April 2027 2032 A4 Floating £232.0m October 2012 2031 AB1 Floating £80.0m October 2012 203
Slide 37: Securitisation profile
Securitisation profile Max £86.3m/£84.2m A3 Stepup A1 Stepup A4 AB1 A2 B1 Stepup Stepup 37
Slide 38: www.marstons.co.uk
www.marstons.co.uk