Slide 1: Preliminary Results 2021
Preliminary Results 2021 Andrew Andrea, Chief Executive Officer Hayleigh Lupino, Chief Financial Officer 1
Slide 2: Andrew Andrea
2 ANDREW ANDREA Lost & Found, Leeds
Slide 3: Agenda
Agenda 3 1. Looking back - Managing the pandemic Andrew Andrea 2. Financial Summary Hayleigh Lupino 3. Looking forward – Strategy and initiatives Andrew Andrea 4. Q&A
Slide 4: Managing the pandemic
Managing the pandemic 4 • Robust cashflow and balance sheet management o Strong cash preservation; accessed Government support o Borrowings below pre-pandemic levels; strong support from financial backers o No recourse to equity market • Transformational Beer Company transaction o Provided liquidity
Slide 5: Hayleigh Lupino
5 5 HAYLEIGH LUPINO Navigation, Stoke Bruerne
Slide 6: Financial summary
Financial summary 6 2021 2020 Comments Revenue £424m £821m Restricted trading Operating (loss)/profit £(7.4)m £74.0m Includes £(14.5)m loss from CMBC Loss before tax £(100)m £(22)m Loss per share (13.4) pence (1.7) pence Continuing and discontinued operations results for the period ➢ 2021 earnings s
Slide 7: Like for like sales performance vs FY2019
Like for like sales performance vs FY2019 7 12 April- 16 May 17 May – 24 July 25 July – 2 October 3 October – 27 November 1.3% 2% (23)% (8)% 2% from 5% to 12.5% VAT increased Restrictions lifted on 1 October LFL sales Indoor table service Outdoor only and table service ➢ Improved sales trends as res
Slide 8: Cash flow
Cash flow 8 2021 2020 Comments £m £m Operating cash flow 35 156 Net interest (96) (89) FY22 c. £90m Pre-investment FCF (61) 67 Organic capex (47) (61) FY22E c.£55m - £60m Disposals 18 78 FY22E c. £5m - £10m Dividend - (30) FCF pre new-build and acquisitions (90) 54 New-build and acquisitions - (3) N
Slide 9: Capital expenditure - pubs
Capital expenditure - pubs 9 Maintenance £116.0m* cycle reduced from 6 to 4 years £75.0m £60-65m £54.3m* £55-60m £46.6m** £22.0m £15.5m £14.0m £16.2m £41.0m £38.8m £41.0m £41.0m £30.4m £1.0m * 2019 2020 2021 2022 2023 Maintenance Projects Investment Projects *Excluding disposal of Beer business ** I
Slide 10: Debt structure
Debt structure 10 2021 2020 2019 £m £m £m Medium term Bank and cash (£280m 2024 facility) 153 225 296 Private placement (2024 facility) 40 40 Long term Securitisation (2035 maturity) 702 727 745 Property leasing (35-40 year financing) 337 337 336 Net debt pre IFRS 16 1,232 1,329 1,377 Lease obligati
Slide 11: Property and pensions
Property and pensions 11 • Property o H2 external valuation by CBRE concluded £84 million impairment charge to the P&L o Timing of the valuation reflects COVID caution at the time ▪ write-down on food-led pubs reflecting uncertain COVID recovery ▪ leasehold write-down reflecting city centre dynamics
Slide 12: Cost guidance
Cost guidance 12 2022 increase Comments Food c.3% 57% fixed beyond FY22 Drinks c.3% 70% fixed beyond FY22 Labour - National Minimum Wage - National Living Wage c.5-6% In line with previous plans Electricity fixed March 22 Utilities c.4-5% Gas fixed April 23 Simplified commercial plans, pricing and c
Slide 13: Andrew Andrea
13 13 ANDREW ANDREA Lost & Found, Leeds
Slide 14: Market dynamics
Market dynamics 14 • Fluctuating and evolving market o Breaking the home habit – off-trade sales still in growth. On-trade opportunity o Older customers beginning to return; sensitivity to pandemic newsflow o Historical resilience of pubs protects against potential discretionary spend pressures o Pr
Slide 15: Our vision – Pubs to be proud of
Our vision – “Pubs to be proud of” 15 Core Pub Goals Loved by Guests: All of our pubs Social 4* or more ‘Trusted’: All of our pubs to be 5* EHO ‘Great Place to work’: Glassdoor 4* or more Sales Culture – “Maximise sales per guest visit” Core Corporate Goals “Better than the rest” Consistent market o
Slide 16: Guest obsessed
Guest obsessed 16 • Insight at the heart of all decisions o New Head of Insight, further investment in data team o Reputation insight platform launched October 2021 o Utilisation of EPOS system • Experience not convenience, value remains important o Ambience and quality more important to customers o
Slide 17: Raise the Bar – creating great teams
Raise the Bar – creating great teams 17 • Resourcing – “attracting the very best people” o New Head of Resourcing appointed o Relaunched websites; embrace app-based recruitment platforms o Building programmes with local colleges • Training and development – “more effective teams” o Agile and dynamic
Slide 18: Make Great – focused activity drives stronger performance
“Make Great” – focused activity drives stronger performance 18 • “Make Sundays Great” o Sunday – showcase the rest of the week o Falling Sunday sales pre-pandemic o Historic food quality and experience impacting sales • Cross functional team to redefine Sunday experience Experience “Memorable” Sunda
Slide 19: We will Grow - Evolution of food-led business
“We will Grow” - Evolution of food-led business 19 • Three clear pub formats for both food and wet-led o Community – good value local pubs at heart of community o Signature – elevated experience; timeless country pub atmosphere o Revere – most aspirational offer; special occasion • Food-led estate o
Slide 20: We will Grow - Food-led pub evolution
“We will Grow” - Food-led pub evolution 20 Current Proposed Carvery 2 for 1 23% 29% Community Signature Food 38% 32% Firebrand 14% • Proposed conversion spend Signature 12% £50-55 million over next four years Community Wet Revere Country o New-build pubs lower cost to convert Revere 14% Rotisserie 8
Slide 21: Community Wet
Community Wet The Bankfield Inn, Bilston (previously White Rabbit) £250k spend Pre Capex £15k per week £77k EBITDAR Post Capex AWT - £21k per week Wet/food mix – 50/50 Projected EBITDAR - £230k ROIC - 61%
Slide 22: Signature
Signature The Inkwell, Lichfield (previously Saxon Penny ) £473k spend Pre Capex £16k per week £86k EBITDAR Evaluation £25k per week Wet/food mix – 40/60 Projected EBITDAR - £253k ROIC - 38%
Slide 23: Revere Country
Revere Country Hartford Hall, Northwich £600k spend (£250k pub, £350k rooms) Pre Capex £24k per week £339k EBITDAR Post Capex AWT - £42k per week Projected EBITDAR - £550k ROIC - 35%
Slide 24: We will Grow - Evolution of franchise
We will Grow - Evolution of franchise 24 • Pioneered franchise agreements in 2009 o Removes conflict of rent and drinks pricing o All stakeholders focused on revenue maximisation o Operate pub at minimum efficient cost leveraging Marston’s buying power o Draw on wider pool of talent • Now operates i
Slide 25: Pillar agreement conversions
Pillar agreement conversions 25 The Carriers The Rose Cottage Little John Hatchmere, Cheshire Ollerton, Newark Ravenshead, Notts Average (L&T) EBITDA £65,260 Average (L&T) EBITDA £71,345 Average (L&T) EBITDA £70,475 Projected EBITDA on Pillar £82,327 Projected EBITDA on Pillar £104,842 Projected EBI
Slide 26: We will Grow - innovative expansion
“We will Grow” - innovative expansion 26 • Agreement to operate Brains pub estate o 107 sites on long term basis – 99 leasehold; 8 freehold o 30 turnaround sites on short term basis – 18 disposals in progress o 10 leasehold sites on 2 year management agreement • High-quality business with scope for
Slide 27: Carlsberg Marston's Brewing Company
Carlsberg Marston’s Brewing Company 27 • Transaction valued Marston’s Beer Company at £580 million o £256 million net proceeds received o Carrying value of 40% stake - £277 million o Commencement of CMBC dividend expected in 2022; COVID impacted 2021 • Synergies greater than planned o £35-40 million
Slide 28: Environment – commitment to Net Zero
Environment – commitment to Net Zero 28 Market leading position • Award winning team ▪ Sector first to achieve zero-waste to landfill; 74% recycling rate • Strong progress to date ▪ All managed and franchise pubs fitted with LED lighting ▪ All replaced plastic garden furniture 100% recycled • Larges
Slide 29: Driving future value
Driving future value 29 Potential illustrative NAV upside c£100m c£710m Additional c£380m opportunities “Back to a Billion” £0.2bn sales growth CMBC underlying growth c£230m Potential M&A Borrowings below £1bn Reversal of COVID impairments Additional CMBC value Total ➢ Clearly identified value creat
Slide 30: Summary & outlook
Summary & outlook 30 • Strong management of pandemic • Outlook o Positive current trading +1.3% and encouraging December bookings o Limited 2022 inflation; clear mitigation plans • Clear vision – “Pubs to be Proud of” • Financial targets: “Back to a Billion” by 2025 o Sales above £1 billion o Borrow
Slide 31: Appendices
APPENDICES 31
Slide 32: Financials - statutory
Financials - statutory 32 2021 2020 Comments Revenue £402m £516m Operating loss £(105)m £(286)m Loss before tax £(171)m £(389)m Loss per share 25.7pence (56.8) pence
Slide 33: High-quality pub estate
High-quality pub estate 33 Pubs Lodges Total Number Value (£m) Number Value (£m) Value (£m) Securitised 945 1,087 7 13 1,100 Non-securitised Unsecured freehold 157 261 5 9 270 Freehold – property lease 113 248 7 18 266 Total freehold 1,215 1,596 19 40 1,636 Leasehold 289 309 11 17 326 Total 1,504 1,
Slide 34: IFRS 16 – Depreciation and interest analysis
IFRS 16 – Depreciation and interest analysis 34 £m Depreciation Interest 2021 2020 2021 2020 Non-IFRS 16 31.5 41.0 77.0 81.3 IFRS 16 11.2 10.6 15.5 13.8 Total 42.7 51.6 92.5 95.1
Slide 35: Securitised debt profile
Securitised Debt Profile debt profile 35 Principal Step-up Final maturity Tranche Type outstanding at date date 2 October 2021 A2 Floating £183.9m July 2019 2027 A3 Fixed/floating £200.0m April 2027 2032 A4 Floating £141.7m October 2012 2031 B Floating £155.0m July 2019 2035 Total £680.6m
Slide 36: Brains pub estate composition
Brains pub estate composition Debt Profile 36 Pubs Proforma* Proforma* Proforma* revenue (£m) EBITDA (£m) EBITDA per pub £k 99 sites on long-term lease – stable 5 year record 21 convert to franchise (non-franchise £220k per Managed 62 47 11 175 pub) Leased and Tenanted 37 3 2.5 68 Medium term conver
Slide 37: Estate analysis by operating model
Estate analysis by operating model Debt Profile 37 No of Pubs Revenue (£m) EBITDA (£m) Operating profit (£m) 2021 2020 2021 2020 2021 2020 2021 2020 Managed and Franchised 1,168 1,047 377.3 477.7 79.0 117.7 43.2 83.4 Tenanted and Leased 332 318 24.4 30.7 12.7 17.3 11.5 16.2 Total 1,500 1,365 401.7 5
Slide 38: Debt profile
Debt profile 38 Securitised Debt Service 90.0 Max £81.5m Debt Service 80.0 70.0 A3 step up 60.0 Principal 50.0 £m 40.0 Interest 30.0 20.0 10.0 0.0 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 Financial year FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 F
Slide 39: ESG – pub decarbonisation pathway: Scope 1&2
ESG – pub decarbonisation pathway: Scope 1&2 39 100 Decarbonisation potential (90)% 0 Scope 1 Scope 2 Staff training Building LED lighting Energy Efficient Avoid gas Renewable Power grid Insulation Inductor Electric heat CO2 Electric On-site solar Scope 1 and baseline baseline and control monitoring
Slide 40: ESG – decarbonisation pathway: scope 3
ESG – decarbonisation pathway: scope 3 40 100 Decarbonisation potential (78)% 0 Scope 1 baseline Upstream reduction PG&S supplier Menu changes Local and sustainable Reduce food waste T&D fleet Electric vehicles Capital goods sourcing Scope 3 offsetting from Scope 1 engagement & sourcing decarbonisat
Slide 41: Q & A
@ MARSTONS — Wwww.marstons.co.uk