Slide 1: Interim Results
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Slide 2: (anna
(anna | MARSTON’S | www.drinkaware.co.uk
Slide 3: David Thompson, Chairman
David Thompson Chairman
Slide 4: Highlights
Highlights 1. Challenging trading environment • resilient performance • clear benefits from vertically integrated business model 2. Progress made in each division • growth in food sales • growth in premium ale volume • supporting tenants and lessees 3. Dividend maintained at 4.80 pence per share 4.
Slide 5: Andrew Andrea, Finance Director
Andrew Andrea Finance Director
Slide 6: Financial summary – profit and loss account
Financial summary – profit and loss account 26 weeks to 4 April 2009 % change Revenue £307.5m (2.8)% EBITDA* £87.7m (7.3)% Operating margin* 21.3% (1.6)% Operating profit* £65.4m (9.9)% Profit before tax* £27.7m (20.9)% EPS* 8.1p (19.0)% Dividend 4.80p - *before exceptional items resilient performan
Slide 7: Like-for-like sales
Like-for-like sales food 37% drink 58% Like-for-like sales* % change drink (3.4)% food +1.3 % machines 3% accommodation +2.4 % accommodation 2% machines (9.1)% Like-for-like sales % change for 13 weeks to 16 May TOTAL (1.8)% drink (1.5)% food +5.6 % TOTAL +1.0 % *28 weeks to 18 April 2009: excludes
Slide 8: Retail margin performance
Retail margin performance duty (0.3)% food inflation (0.8)% c£2.0m sales 15.4% c£1.2m profit c0.4% 14.4% (1.1)% 1.3% 14.0% (0.4)% 0.3% (1.8)% 0.3% *adjusted for the timing of Easter underlying* margin only down 1% due to tight cost management 8
Slide 9: Margin drivers
Margin drivers: stable performance Volume • rate of decline easing • annualised £1m additional discounts Wet margin • reduction in wine, spirit and mineral prices • delayed supplier price increases • annualised rent concessions of £0.8m Rent • non-substantive rents under pressure • substantive agree
Slide 10: Asset impairment
Asset impairment Impairment No of pubs value £m High street pubs 82 (9.2) Pubs not on substantive 128 (22.7) agreements Pubs identified for disposal 78 (10.3) 288 (42.2) • over 350 pubs reviewed • no upward valuations • reflected in revaluation reserve • 279 pubs sold 2 years ago – already disposed
Slide 11: Securitisation highlights: year to 4 April 2009
Securitisation highlights: year to 4 April 2009 Securitisation results Actual • gross debt(1) outstanding as at 4 April 2009 £1,088.7m • EBITDA £132.5m • free cash flow (FCF) £113.9m • debt service (DSCR)` £77.3m Financial covenants Actual Covenant • FCF : DSCR 1.5x >1.1x(2) • EBITDA : DSCR 1.7x >1.
Slide 12: Financing structure
Financing structure £m securitisation 1,089 • amortises to 2035 bank facility* 272 • £400m facility to August 2010 • £295m facility to August 2013 1,361 • 90% at fixed rates net cash (43) debt issue costs (21) net debt 1,297 • average cost of debt c.6.3% 1. No refinancing requirement until August 20
Slide 13: Financial summary
Financial summary 1. Resilient trading performance • food growth in managed houses • relatively stable margins despite cost pressures 2. Balance sheet • asset values predominantly freehold • appropriate impairment of weakest assets 3. Financing • no refinancing requirement until August 2013 • still
Slide 14: Ralph Findlay, Chief Executive
Ralph Findlay Chief Executive
Slide 15: Marston's today
Marston’s today 1. Pub operator – over 2,200 pubs • Marston’s Inns and Taverns – 503 managed pubs • Marston’s Pub Company – 1,718 tenanted/leased pubs • situated across England and Wales 2. Brewer – Marston’s Beer Company • market leading position in premium ales 3. Vertically integrated business •
Slide 16: Marston's strategy
Marston’s strategy 1. Develop national, high quality pub estate • mainly community pubs, substantially freehold estate • refurbishment, new build-pubs or pub acquisitions • managed and tenanted pubs 2. Develop greater food skills, broaden consumer appeal • ‘F’ Plan – Food, Families, Females, Forty/F
Slide 17: Market drivers of strategy 2008
Market drivers of strategy 2008 Demographics Market trends Competitors • ageing population • choice, vfm, service • the home • rising female employment • eating out • supermarkets • flexible working • provenance, authenticity • other ‘pubcos’ • increasing diversity • on-trade vs. off-trade • restaur
Slide 18: Marked change in 12 months
Marked change in 12 months Market trends recent experience • choice, vfm, service • value for money • eating out • ‘local’ • provenance, authenticity • high quality environment • on-trade vs. off-trade • ale performance strong vs lager relevant today Economic recent experience • value • rising infla
Slide 19: 'Eating out' continues to increase in importance
‘Eating out’ continues to increase in importance Food as % of retail sales 37% 36% 34% 31% 28% 27% % of total retail sales dining occasion drives 65% of customer visits 19
Slide 20: Food sales facts and figures
Food sales facts and figures 1. Average spend per head on food £6.09 • reduction of 3p on 2008 • volume growth in meals sold +7% • shift from higher priced menus to value menus 2. Around 23m main meals sold each year 3. Other ‘dishes’ also in growth • side orders +18% • desserts +13% • coffee + 3% s
Slide 21: Choice, value and quality in managed pubs
Choice, value and quality in managed pubs 1. Increase in value offers • Two for One offers – main meals £7.25 - £8.25 • ‘2 Meals for £10’ offers extended throughout week • Pitcher & Piano - £5 meals including drink 2. Menu development • ‘hotpot’ meals £7.00 - £7.75 per plate • improved desserts rang
Slide 22: Choice, value and quality in managed pubs (2)
Choice, value and quality in managed pubs(2) 4. Cask beer focus emphasises quality, regionality • own-brewed ale brands volume +1.6% • premium ale volume +5.6% 5. Marston’s Inns offer high quality, good value accommodation • comfortable accommodation in a pub environment - free wifi and Freeview in
Slide 23: New build developments offer high returns
New build developments offer high returns £2,000k £’000k £1,000k £300k £260k • c.£20k per week • low maintenance • EBIT return 13% • site + build cost • 50–60% food sales - energy efficient • EBITDA multiple 6.7x high turnover, high food sales, high return on capital 23
Slide 24: New-build plan improves average quality of estate
New-build plan improves average quality of estate over 50 pubs and bars built in the last 5 years 24
Slide 25: 'Sustainable growth, uncompromising standards'
‘Sustainable growth, uncompromising standards’ 1. Market context • beer volumes down 9%; 40 pubs closing each week • beer duty +20% in 2 years; VAT to increase Dec 2009 2. Marston’s unique approach • ‘plain English’ agreements, BII accredited • independent Rent Review Panel since 2003 • award winnin
Slide 26: Substantive agreement performance
Substantive agreement performance % of total YOY % MPC performance No. of pubs 80 (1) Rent 90 3 EBIT 91 - pubs on substantive agreements perform strongly 26
Slide 27: Sustainable rents, fair pricing to tenants
Sustainable rents, fair pricing to tenants • wet margin 46.5% other 5% - pricing control over ‘own brewed’ ales rent 40% - supplier price increases held back wet sales 55% • average rent per pub c£26k - competitive by industry standards • ‘other’ is mainly machine income • net profit margin unchange
Slide 28: Tenants health check issues
Tenants health check issues 1. Few closed pubs • 9 pubs for re-let currently closed 2. 20% of estate not let on substantive agreements • 6% of those currently in the process of being let • 100 pubs to be sold over time – 25 sold in H1 3. Rent concessions increasing, but ‘sustainable’ strategy works
Slide 29: BEC Inquiry – referral to the Competition Commission?
BEC* Inquiry – referral to the Competition Commission? 1. The tie offers opportunity • low cost of entry vs. franchise vs. ownership • existence of the tie provides imperative to support the business 2. Tenant/operator relationships are evolving • market will cause operators to improve further • lic
Slide 30: Our beers significantly outperformed the UK markets
Our beers significantly outperformed the UK markets 1. Share of UK ale market c.9%(1) • volume up by 18% in H1 - level with last year excluding Wychwood Brewery 2. Share of on-trade premium cask ale 22.7%(1) • volume up by 39% in H1 - now 53% of our ale portfolio 3. Share of premium bottled ale mark
Slide 31: Progress made in each channel of trade
Progress made in each channel of trade Turnover mix Profit vs last year 44% Independent free trade 30% Off-trade 18% Sales to on-trade retailers 9% Other (including export) 100% strong performance in on and off-trade 31
Slide 32: Off-trade strategy and performance – premium ale
Off-trade strategy and performance – premium ale
Slide 33: Switch from on to off-trade
Switch from on to off-trade % of beer volume • The switch of drinking from the On Trade to the Off Trade is accelerating on-trade off-trade • 20m adults (43% of the population) drink alcohol at home every week • 1 in 5 lapsed pub users say they now drink more at home. • The average age of men when %
Slide 34: Off-trade drinks category development
Off-trade drinks category development Total off-trade value: % change vs LY £13,138m £3,377m £5,814m £3,017m £631m £199m Source: Nielsen Scantrack/DMSO MAT to April 2009 valuable category, in growth 34
Slide 35: Off-trade drinks category development
Off-trade drinks category development Total off-trade value: % change vs LY £13,138m £3,377m £5,814m £3,017m £631m £199m £2,814m £451m £112m Source: Nielsen Scantrack/DMSO MAT to April 2009 valuable category, in growth 34
Slide 36: Off-trade drinks category development
Off-trade drinks category development Total off-trade value: % change vs LY £13,138m £3,377m £5,814m £3,017m £631m £199m Sta nda rd A £2,814m £451m £112m le Total +5.2% Total +2.8% Bottle Can Bottle Can Source: Nielsen Scantrack/DMSO MAT to April 2009 £176m £70m £12m £193m valuable category, in grow
Slide 37: Interest in bottled ale has never been greater
Interest in bottled ale has never been greater Morrissey/Fox & Oz Clarke/James May TV programming; increased editorial exposure in lifestyle mags & press themes: regionality, flavour, food-matching, quality, ingredients 35
Slide 38: Bottled ale market shares – top 10
Bottled ale market shares – top 10 MAT Market share*(%) 1. Marston’s Pedigree • MAT volume* +15.9% - last quarter* +25.8% 2. Hobgoblin • MAT volume* +10.5% - last quarter* +14.9% 3. Brakspear Oxford Gold • MAT volume* +13.9% - last quarter* +39.4% *source: Nielsen data to March 2009 category leader
Slide 39: Marston's Pedigree: 'wholehearted' English beer
Marston’s Pedigree: ‘wholehearted’ English beer local marketing leverages local brewery strategy 37
Slide 40: Summary
Summary 1. Resilient performance in a very challenging market • good progress against key operating priorities 2. Clear objective to reduce debt this financial year • financing structure sound, no refinancing requirement 3. Dividend maintained at 4.80 pence per share • dividend cover 1.7x 4. Current
Slide 41: Appendices
Appendices
Slide 42: Split of assets
Split of assets* 2,221 pubs + Securitisation Bank facilities Marston’s Pubs Limited Other Group companies 251 Managed pubs 252 Managed pubs 1,612 Tenanted pubs 106 Tenanted pubs 1,863 358 + * as at 4 April 2009 84% of pubs are securitised 40
Slide 43: Financial highlights
Financial highlights1 2009 2008 % change Revenue £m 173.7 183.8 (5.5)% EBITDA £m 35.9 39.9 (10.0)% Operating profit £m 24.3 28.3 (14.1)% Operating margin % 14.0 15.4 (1.4)% Average no. of pubs 504 550 1before exceptional items 41
Slide 44: Financial highlights
Financial highlights* 2009 2008 % change Revenue £m 86.3 92.7 (6.9)% EBITDA £m 45.4 48.7 (6.8)% Operating profit £m 40.3 43.3 (6.9)% Operating margin % 46.7 46.7 - Average no. of pubs 1,729 1,723 *before exceptional items 42
Slide 45: Financial highlights
Financial highlights* 2009 2008 % change Revenue £m 47.5 39.9 19.0% EBITDA £m 11.6 10.9 6.4% Operating profit £m 7.1 7.0 1.4% Operating margin % 14.9 17.5 (2.6)% * before exceptional items 43
Slide 46: Estate movement
Estate movement Pub numbers 4 October 2008 506 1,743 2,249 New builds/single site acquisitions 4 - 4 Disposals (7) (25) (32) 4 April 2009 503 1,718 2,221 44
Slide 47: Additional information and guidance
Additional information and guidance • Average number of shares in H1 2009 270.3m • Number of shares in issue as at 22 May 2009 270.3m • Additional dilutive number of shares 2.0m Forecast Forecast 2009 2010 • Forecast tax rate c21% 24%-26% • Capex forecast: existing business £45m new builds/sites £10
Slide 48: www.marstons.co.uk
Sah SSAC ee, SN | England has it. @& pedir Englar