Slide 1: Preliminary Results 2018
Preliminary Results 2018 Ralph Findlay, Chief Executive Officer Andrew Andrea, Chief Financial Officer Fisherman’s Cot, Tiverton
Slide 2: Introduction
Marston’s PLC Preliminary results 2018 2 INTRODUCTION 1. Record revenue and underlying profit achieved 2. 5th consecutive year of LFL sales growth in pubs • Wet-led pubs outperformed food-led pubs 3. Strong growth in Brewing • Charles Wells Beer Business acquisition performing 4. NAV of £1.51 per sh
Slide 3: Andrew Andrea, Chief Financial Officer
Andrew Andrea Chief Financial Officer
Slide 4: Financial Summary
Marston’s PLC Preliminary results 2018 4 FINANCIAL SUMMARY 2018 YOY Revenue £1,140m 15% Growth in all trading divisions EBITDA £223m 4% Growth in all trading divisions Operating profit £183m 5% Growth in all trading divisions PBT* £104m 4% Reflects higher finance costs EPS* 13.9 pence 2% Reflects eq
Slide 5: Managed and Franchised Like-for-Like Performance
Marston’s PLC Preliminary results 2018 5 MANAGED AND FRANCHISED LIKE-FOR-LIKE PERFORMANCE Operating +0.1 +0.1 +0.1 +0.2 - +0.6 (0.4) +0.2 (0.5) (0.3) Margin +4 3.8% LFL sales % 0.6% 2014 2015 2016 2017 2018 (1) Destination and Premium Managed and Franchised Taverns Total (1.2)% • H1 weather • World
Slide 6: Pub Segmentation
Marston’s PLC Preliminary results 2018 6 PUB SEGMENTATION Operating profit No. of Average no. Average profit per 2018 £m pubs of pubs pub vs LY% Destination and Premium 89.4 406 402 -3 Taverns 86.1 1,139 1,155 +4 Total 175.5 1,545 1,557 +2 2012 Profit Mix 2018 Profit Mix 36% 49% 51% 64% Destination
Slide 7: Beer Company
Marston’s PLC Preliminary results 2018 7 BEER COMPANY Turnover: £378m Operating profit: £32m 26% 49% • Charles Wells annualisation - £3m synergies achieved - at least £1m more in 2019 • Distribution contracts • Underlying growth 2yr profit growth : £9m : CWBB £8m : Underlying £1m 10.1% (1.0)% (1.0)%
Slide 8: Cost Guidance
Marston’s PLC Preliminary results 2018 8 COST GUIDANCE 2019 Mitigation Drink c.2% • c.85% fixed for 2019 • Price • c.85% contracted to 2020 • Premiumisation Food c.2% • c.65% fixed for 2019 • Menu simplification • c.40% contracted to 2020 • EPOS Brewing raw materials 2-3% • Malt increase of c.£0.3m
Slide 9: Capex
Marston’s PLC Preliminary results 2018 9 CAPEX £m 2018 2019 YOY Comments (Fcst) change Maintenance capex 50 50 - Recurring growth capex 30 30 - Pub one-off 10 - (10) • PY acquisitions + energy Beer Co one-off 10 - (10) • £8m canning line • £2m vehicles Organic Capex 100 80 (20) New-site 63 50 (13) •
Slide 10: Cash Flow Summary
Marston’s PLC Preliminary results 2018 10 CASH FLOW SUMMARY 2018 2017 £m £m Operating cash flow* 182 181 • Profit growth Net interest (80) (78) Pre-investment FCF 102 103 Organic capex (100) (85) Disposals 47 62 Dividend (47) (44) FCF pre new-build and acquisitions 2 36 New-build and acquisitions (6
Slide 11: Debt Structure
Marston’s PLC Preliminary results 2018 11 DEBT STRUCTURE Illustrative 2018 2018 2017 (all new-build leasehold) £m £m £m Securitised (amortisation profile to 2035) 776 806 Bank (£360m facility to 2023) 246 222 Debt excluding property leasing 1,022 1,028 1,022 Property leasing (35-40 year financing) 3
Slide 12: Estate Valuation and Pension
Marston’s PLC Preliminary results 2018 12 ESTATE VALUATION AND PENSION 1. Estate value broadly in line at £2.2bn • Upsides from new-builds and franchised pubs • Reduced values for value end of Destination • Impairment of £31m - £39m recognised in P&L offset by increase in revaluation reserve 2. Sept
Slide 13: Medium Term Cash Flow Opportunities
Marston’s PLC Preliminary results 2018 13 MEDIUM TERM CASH FLOW OPPORTUNITIES Beyond 2020 From • Target: £20-30m additional free cash flow Business growth Ongoing within 3 years Reduced pension contributions 2021 • Target: 1x reduction in leverage in 3-5 years Organic capex reduction 2020 • Maintain
Slide 14: Ralph Findlay, Chief Executive Officer
Ralph Findlay Chief Executive Officer
Slide 15: Consistent Strategy, Clearer Targets
Marston’s PLC Preliminary results 2018 15 CONSISTENT STRATEGY, CLEARER TARGETS PUBS BREWING New‐builds Sector wide Leading brands Leading service Premium ale Well invested, Quality of Food-led Pubs with rooms Regional beers Rooms skilled supply earnings Wet-led Lodges Craft beers chain World lagers
Slide 16: Delivering Financial Growth
Marston’s PLC Preliminary results 2018 16 DELIVERING FINANCIAL GROWTH 1. 2. 3. Turnover PBT* EPS* £m £m pence Total +44.6% Total +25.3% Total +18.8% CAGR +9.7% CAGR +5.8% CAGR +4.4% 1,140 104 13.9 14.2 13.9 992 100 12.9 97 905 91 11.7 788 846 83 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014
Slide 17: Market Dynamics
Marston’s PLC Preliminary results 2018 17 MARKET DYNAMICS Consumer Sector Economic, Political • Leisure spend still growing • Ingrained discounting • Regulatory tax cost increases • Eating out vs drinking out • Structural change • Limited direct interest rate exposure • Continued consumer caution -
Slide 18: Destination & Premium – balancing sales and margin
Marston’s PLC Preliminary results 2018 18 DESTINATION & PREMIUM – balancing sales and margin 1. Location • Avoid hotspots (city centre locations), increased focus on urban sites 2. The brand – Marston’s, the pub • Pub values, brewing heritage and quality • The pub experience vs. a fast food or resta
Slide 19: Destination & Premium – balancing sales and margin (cont'd)
Marston’s PLC Preliminary results 2018 19 DESTINATION & PREMIUM – balancing sales and margin (cont’d) 5. Breadth of offer • Family mainstream to premium ‘independent’ • Cross-sector learning 6. Technology • EPOS investment to complete - Speed of service, customer data - Margin control • Superfast br
Slide 20: Growth in Accommodation
Marston’s PLC Preliminary results 2018 20 GROWTH IN ACCOMMODATION Room income £20.6m - 5 year growth +332% - CAGR +27% - Lodge ROI targets met £14.5m £11.2m £9.2m £7.7m Revenue: £6.2m Rooms 720 in 2013 722 in 2014 797 in 2015 953 in 2016 1,269 in 2017 1,551 in 2018 The goal: a 4,000 rooms business g
Slide 21: Taverns – growth in an improved wet-led market
Marston’s PLC Preliminary results 2018 21 TAVERNS – growth in an improved wet-led market 1. Reduced capacity* • 57,000 pubs in 2008, 48,000 pubs in 2018 – mostly wet-led 2. Growth in franchise-style pubs, improvements to T&L model • Low risk model pioneered by Marston’s in 2009 – most peers have int
Slide 22: Taverns – transformation 2014 - 2018
Marston’s PLC Preliminary results 2018 22 TAVERNS – transformation 2014 - 2018 >200 pubs sold in 5 years -19.8% Average number of pubs trading Operating profit +8.7% Franchise profit Profit per pub +35.2% 28% 48% in 5 years A high quality wet-led estate fit for the future
Slide 23: Taverns Growth – Aprirose pubs, organic investment
Marston’s PLC Preliminary results 2018 23 TAVERNS GROWTH – Aprirose pubs, organic investment 1. 15 pubs to be acquired • 7 in November 2018 and 8 in January 2019 2. Well located, wet-led pubs • England, Midlands and South 3. Minimum target • £4m investment, 25% CROCCE (yr 2) 4. 2019 organic growth c
Slide 24: Marston's Beer Company Today
Marston’s PLC Preliminary results 2018 24 MARSTON’S BEER COMPANY TODAY UK No.1 Premium Developing licensed Supply chain Proven acquisition Ale Brewer brands excellence with scale capability Packaging 27% of PBA market Ringwood - 2007 40% of PBA market £19 million New £8m canning line Refresh – 2008
Slide 25: Our Growth Strategy
Marston’s PLC Preliminary results 2018 25 OUR GROWTH STRATEGY Extend No1 Develop licensed Supply chain Premium Beer position brands excellence Drive brands: Experienced Licensed Brewing Brands team Packaging Increase market share in Estrella Damm opportunity Distribution PBA, PCA and Premium can Gro
Slide 26: Beer Company – Charles Wells one year on
Marston’s PLC Preliminary results 2018 26 BEER COMPANY – Charles Wells one year on 1. Acquired for £55m • Trailing EBITDA £6.1m • £4m synergies by 2019 2. Integration synergies on track • £3m synergies to date, £1m + in 2019 • £8m canning line investment in Burton 3. Strong brand portfolio • Bombard
Slide 27: Summary
Marston’s PLC Preliminary results 2018 27 SUMMARY 1. Continued growth across all segments of the business 2. Clear plans to deliver growth: • 10 pubs and bars, 5 lodges, 15 Taverns in 2019 • Targeting full mitigation of cost increases • Addressing market challenges in organic business 3. NAV of £1.5
Slide 28: Appendices
Appendices
Slide 29: Financial Summary – Statutory Basis
Marston’s PLC Preliminary results 2018 29 FINANCIAL SUMMARY – STATUTORY BASIS 2018 YOY Revenue £1,141m +13% Operating profit £133.4m -22% PBT £54.3m -46% EPS 7.1 pence -50%
Slide 30: Segmental Profit
Marston’s PLC Preliminary results 2018 30 SEGMENTAL PROFIT 2018 £m 2017 £m YOY % Turnover Destination & Premium 450.7 438.0 2.9% Taverns 312.0 301.3 3.6% Beer Division 377.7 252.9 49.3% Total 1,140.4 992.2 14.9% EBITDA Destination & Premium 105.8 104.5 1.2% Taverns 95.3 93.7 1.7% Beer Division 42.7
Slide 31: Pub Numbers
Marston’s PLC Preliminary results 2018 31 PUB NUMBERS Destination and Taverns Total Premium 2017 Closing 397 1,171 1,568 New-build additions/Acquisitions 14 - 14 Transfers (3) 3 - Disposals (2) (35) (37) 2018 Closing 406 1,139 1,545 2017 average numbers 387 1,177 1,564 2018 average numbers 402 1,155
Slide 32: Historical Total LFL
Marston’s PLC Preliminary results 2018 32 HISTORICAL TOTAL LFL Destination Taverns Total and Premium 52 wks to 04/10/14 3.1% 2.1% 2.8% 52 wks to 03/10/15 1.8% 2.0% 1.9% 52 wks to 01/10/16 2.3% 2.7% 2.4% 16 wks to 21/01/17 1.5% 1.5% 26 wks to 01/04/17 1.1% 1.1% 1.1% 30 wks to 29/04/17 1.6% 1.7% 12 wk
Slide 33: Capex, Tax and Share Capital
Marston’s PLC Preliminary results 2018 33 CAPEX, TAX AND SHARE CAPITAL Forecast Actual 2018 2019 New-build capex £63m c.£50m Organic capex £100m c.£80-85m Total £163m c.£130-135m Disposals £47m c£40-45m Net capex £116m c£85-95m Tax rate 15.5% 16-17% Average number of shares in 2018 633.1m Shares in
Slide 34: Securitised Debt Profile
Marston’s PLC Preliminary results 2018 34 SECURITISED DEBT PROFILE Principal Final maturity Tranche Type outstanding at Step-up date date 29 September 2018 A1 Floating £40.1m July 2012 2020 A2 Fixed/Floating £214.0m July 2019 2027 A3 Fixed/Floating £200.0m April 2027 2032 A4 Floating £172.0m October
Slide 35: Securitisation Profile
Marston’s PLC Preliminary results 2018 35 SECURITISATION PROFILE FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 Principal £m 30.0 31.7 33.4 35.4 37.3 39.4 41.5 43.9 46.3 48.8 51.5 54.4 57.4 60.5 47.6 47.8 50.6 53.6 Intere
Slide 36: CROCCE
Marston’s PLC Preliminary results 2018 36 CROCCE CROCCE FY2018 FY2017** FY2016 FY2015 FY2014 FY2013* NON-CURRENT ASSETS: Bal Depn Reval Adj Bal Depn Reval Adj Bal Depn Reval Adj Adj Adj Adj Goodwill 230.3 230.3 230.3 230.3 227.5 227.5 227.5 224.2 224.2 Other intangible assets 70.0 6.2 76.2 67.6 6.8
Slide 37: www.marstons.co.uk
www.marstons.co.uk Bridge, Duffield