Slide 1: Preliminary Results 2015
PRELIMINARY RESULTS 2015 Ralph Findlay, Chief Executive Officer Andrew Andrea, Chief Financial Officer
Slide 2: Ralph Findlay, Chief Executive Officer
Ralph Findlay Chief Executive Officer
Slide 3: Highlights
Marston’s PLC Preliminary Results 2015 3 HIGHLIGHTS 1. Good progress in 2015 • Revenue and profit growth despite disposals • PBT growth of 10% • Growth in all trading segments • CROCCE, EPS, dividend cover up; leverage reduced 2. Pub estate transformation well advanced • 25 new-builds opened this ye
Slide 4: Market Dynamics
Marston’s PLC Preliminary Results 2015 4 MARKET DYNAMICS 1. Sector supply • Over-investment in high footfall “hotspots”, with unsustainable high rents • Lower pressure on secondary/market towns regionally 2. National Living Wage • Around 60% of Marston’s employees under 25 • Majority of impact alrea
Slide 5: Improving Long-Term Returns
Marston’s PLC Preliminary Results 2015 5 IMPROVING LONG-TERM RETURNS New-builds Broad appeal Take control Disposals Destination Target 85% Better quality of P&P, Revere Funds for new-build franchised earnings Community investment + managed Leased Increase Maximise Improve Increase ROC opportunity pr
Slide 6: Estate Development: Vision and Progress
Marston’s PLC Preliminary Results 2015 6 ESTATE DEVELOPMENT: VISION AND PROGRESS Operating 2013 2014 2015 Model Destination and Premium 349 372 397 Managed Franchised, Taverns 1,316 974 859 Managed Leased 385 343 341 Leased TOTAL 2,050 1,689 1,597 Consistent progress on clearly stated strategy
Slide 7: Pub Segmentation
Marston’s PLC Preliminary Results 2015 7 PUB SEGMENTATION Operating No. of Average no. Average profit 2015 profit £m pubs of pubs per pub vs LY % Destination and Premium 83.6 397 382 +3 Taverns 55.9 859 913 +20 Leased 23.8 341 342 +4 Total 163.3 1,597 1,637 +15 2012 Profit Mix 2015 Profit Mix 17% 15
Slide 8: Leading Pub Innovation
Marston’s PLC Preliminary Results 2015 8 LEADING PUB INNOVATION 2015 Brand Development Food & Drink Development Looking Forward Rotisserie New-build P&P, Pizza Kitchen re-design Revere Generous Burrito EPOS George P&P, Revere Revere e.g. Fire Station, ‘Burger Digital Farmhouse and Pizza’ Craft beers
Slide 9: Operating Flexibility
Marston’s PLC Preliminary Results 2015 9 OPERATING FLEXIBILITY Taverns Destination Premium Food Pubs Buying power Flexible formats Increased control Shared insights Managed Leased Franchised Right model for right pub
Slide 10: Customer Satisfaction
Marston’s PLC Preliminary Results 2015 10 Jul-14 CUSTOMER SATISFACTION Mar-15 May-15 Jul-15 Nov-14 Dec-14 Apr-15 Oct-14 Feb-15 Aug-14 Sep-14 Jan-15 Jun-15 Aug-15 Hospitality Marston's InMoment Hospitality Benchmark October 2015 Our customers more satisfied relative to improving sector
Slide 11: Destination Expansion
Marston’s PLC Preliminary Results 2015 11 DESTINATION EXPANSION Site • 25 new-build sites completed this year • Good visibility on future site pipeline pipeline • Modest pressure on site costs Build costs • Higher standards of environmental compliance • Build cost +£100-200k per site vs. 5 years ago
Slide 12: Accommodation
Marston’s PLC Preliminary Results 2015 12 ACCOMMODATION Destination – 34 pubs Revere – 10 pubs • c.670 rooms • c.130 rooms • Occupancy 72% • Occupancy 70% • RevPAR +14% • RevPAR +12% 2015 3 new lodges 2 conversions • Dunbar • Elephant at the Market, • Balloch Newbury • Whitby • Farmhouse, Derby • c.
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Slide 14: Premium
Marston’s PLC Preliminary Results 2015 14 PREMIUM Pitcher & Piano Revere Country Revere Town Centre • Branded • Independent feel • Independent feel • Premium bars in a • Great food – distinctive • Great food – distinctive mainstream market menus menus • High tempo, high energy • Relaxed, informal am
Slide 15: Leased
Marston’s PLC Preliminary Results 2015 15 LEASED Quality • LFL profit growth +4% estate • £75k average EBITDA delivering • 2.5% rental growth growth • Licensee stability >90% Income • Bad debt <0.1% of turnover stability • Moderate capital investment reintroduced Sustainable income through quality e
Slide 16: Evolution of Strategy
Marston’s PLC Preliminary Results 2015 16 EVOLUTION OF STRATEGY 2015 Future New-build c.£70m New-build £60-70m per year Freehold returns target 13-15%* Freehold returns target 13-15%* Leasehold returns 30% Leasehold returns 30% Destination Destination 25-30 new-builds 20-25 new-builds - mainly freeh
Slide 17: Brewing: Focus on Premium and Bottled
Marston’s PLC Preliminary Results 2015 17 BREWING: FOCUS ON PREMIUM AND BOTTLED Marston’s leads PCA, • 1 in 5 premium cask ales* • 1 in 5 premium bottled ales* PBA • 2015 outperformance in both segments markets Off trade • Market growth 15% in 2015 • £0.5bn value - £1bn by 2020 at current growth mar
Slide 18: Brewing: A Transformed Business
Marston’s PLC Preliminary Results 2015 18 BREWING: A TRANSFORMED BUSINESS 2005 2015 Change Premium ale mix c.40% c.70% +30% Take Home c.30% c.55% +25% External sales as % of total ale c.70% c.80% +10% Transformed business appropriate for market trends
Slide 19: Andrew Andrea, Chief Financial Officer
Andrew Andrea Chief Financial Officer
Slide 20: Financial Summary
Marston’s PLC Preliminary Results 2015 20 FINANCIAL SUMMARY +10.2% +10.3% Growth in all trading segments +7.4% Cover up to +5.7% +6.0% 1.8x (target 2x) 4.5% £846m £203m £165m £92m 12.9p 7p Revenue EBITDA Operating profit PBT EPS Dividend Revenue and profit growth despite disposals
Slide 21: Like-for-Like Performance
Marston’s PLC Preliminary Results 2015 21 LIKE-FOR-LIKE PERFORMANCE Destination and Premium Taverns +1.8% +2.0% Sales +1.6% vs market* +0.9% vs. market* Growth Volume and mix Volume and mix drivers Margin +0.1% +0.2% *Peach Tracker MAT to September 2015 outside London Volume driven LFL sales outperf
Slide 22: Brewing
Marston’s PLC Preliminary Results 2015 22 BREWING +28% +28% +19% +15% 10% Thwaites 5% Organic Volume Revenue Profit Revenue and profit growth from core business and acquisition
Slide 23: 2016 Cost Guidance
Marston’s PLC Preliminary Results 2015 23 2016 COST GUIDANCE Food and drink inflation c.1-2% Brewing raw materials c.1-2% Energy inflation - 50% fixed c.1-2% Labour cost inflation - National minimum wage up 3% to £6.70 - Living wage up 7.5% to £7.20 for over 25s from April - Annualised impact of NLW
Slide 24: Cash Flow Summary
Marston’s PLC Preliminary Results 2015 24 CASH FLOW SUMMARY 2015 2014 £m £m Comments Operating cash flow 162 128 EBITDA and working capital Net interest (72) (79) Pre-investment FCF 90 49 Organic capex (74) (64) Disposals 72 144 2014: NewRiver £90m disposal Dividend (39) (37) FCF pre new-build and a
Slide 25: Financing Structure
Marston’s PLC Preliminary Results 2015 25 FINANCING STRUCTURE Total Bank and (excluding Property Securitised cash property) Leasing TOTAL Visible, smooth Property amortising debt to £287.5m bank leases 35-40 2035* facilities year term Debt £m 866 177 1,043 202 1,245 Debt: EBITDA 7.5x 2.0x 5.1x 6.1x
Slide 26: Property and Pensions
Marston’s PLC Preliminary Results 2015 26 PROPERTY AND PENSIONS Property • H1 external valuation concluded £54m uplift • New-build valuation demonstrates value accretion - 40% uplift in valuation on new sites - 2% uplift on mature sites • 96% freehold tenure Pension • Accounting surplus £15m • Concl
Slide 27: Return on Capital
Marston’s PLC Preliminary Results 2015 27 RETURN ON CAPITAL +1.2% +10.8% +10.6% +10.5% +10.5% +9.8% +9.6% 2010 2011 2012 2013 2014 2015 CROCCE calculations included in Appendices Returns focused strategy delivering long-term growth
Slide 28: Summary
Marston’s PLC Preliminary Results 2015 28 SUMMARY 1. Transformed pub estate fit for future • Well managed estate outperforming market • Profit per pub increased to £100k • Clear and consistent expansion plans • Disposal programme largely complete 2. Market leading brewing business • Strong beer port
Slide 29: Appendices
Appendices
Slide 30: Segmental Profit
Marston’s PLC Preliminary Results 2015 30 SEGMENTAL PROFIT 2015 £m 2014 £m YOY % Turnover Destination & Premium 408.1 376.9 8.3% Taverns (inc AHFS) 214.7 225.1 (4.6)% Leased 53.6 53.1 0.9% Beer Division 169.1 132.5 27.6% Total 845.5 787.6 7.4% EBITDA Destination & Premium 99.8 91.4 9.2% Taverns (inc
Slide 31: Pub Numbers
Marston’s PLC Preliminary Results 2015 31 PUB NUMBERS Destination and Taverns Leased Total Premium 2014 Closing 372 974 343 1,689 New-build additions 8 8 Disposals (65) (65) H1 2015 Closing 380 909 343 1,632 New-build additions 17 17 Transfers 2 (2) - Disposals (52) (52) 2015 Closing 397 859 341 1,5
Slide 32: Estate Revaluation
Marston’s PLC Preliminary Results 2015 32 ESTATE REVALUATION No of Old New Change Sites NBV NBV (£m) (£m) (£m) Managed New-Build post 2009 103 332 404 72 Other Managed 369 840 879 39 Total Managed 472 1,172 1,283 111 Tenanted, Franchise and Leased 929 653 610 (43) Disposals 234 65 54 (11) Other – In
Slide 33: Historical LFL
Marston’s PLC Preliminary Results 2015 33 HISTORICAL LFL Destination and Premium Taverns Total Food Wet Total 26 wks 30/03/13 0.0% 2.0% (2.0%) 0.0% 16 wks to 20/07/13 5.4% 6.3% 4.8% 0.0% 42 wks to 20/07/13 2.1% 3.7% 0.5% 0.0% 11 wks 05/10/13 2.2% 4.0% (0.7%) 0.0% 53 wks 05/10/13 2.2% 3.9% 0.2% 0.0%
Slide 34: Capex, Tax and Share Capital
Marston’s PLC Preliminary Results 2015 34 CAPEX, TAX AND SHARE CAPITAL Actual Forecast Comments 2015 2016 New-build capex £68m c.£70m Pub growth £26m £25m Pub maintenance £26m £25m Brewing and Group £22m £20m Total £142m c.£140m Disposals £72m c.£60m Net capex £70m c.£80m Tax rate 19.3% c.20% Averag
Slide 35: Securitised Debt Profile
Marston’s PLC Preliminary Results 2015 35 SECURITISED DEBT PROFILE Principal Final maturity Tranche Type outstanding at Step-up date date 3 October 2015 A1 Floating £97.8m July 2012 2020 A2 Fixed/Floating £214.0m July 2019 2027 A3 Fixed/Floating £200.0m April 2027 2032 A4 Floating £199.4m October 20
Slide 36: Securitisation Profile
Marston’s PLC Preliminary Results 2015 36 SECURITISATION PROFILE Securitisation Debt Service 90.0 Max £80.7m Debt Service 80.0 70.0 A3 step-up A2, B step-up 60.0 Principal 50.0 Interest £m 40.0 30.0 20.0 10.0 0.0 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 Fin
Slide 37: CROCCE
Marston’s PLC Preliminary Results 2015 37 CROCCE FY2015 FY2014 FY2013* FY2012 FY2011 FY2010 FIXED ASSETS: Bal Depn Reval Adj Bal Depn Reval Adj Bal Depn Reval Adj Adj Adj Adj Goodwill 227.5 227.5 224.2 224.2 224.2 224.2 224.2 224.2 224.2 Other intangible assets 37.6 6.6 44.2 25.1 5.3 30.4 24.1 6.1 3
Slide 38: www.marstons.co.uk
_ Www. marstons. CO. uk