Slide 1: Interim Results 2019
Ralph Findlay, Chief Executive Officer Andrew Andrea, Interim Results 2019 Chief Financial Officer
Slide 2: Introduction
Marston’s PLC Interim Results 2019 2 INTRODUCTION 1. Continued progress in 2019 • Turnover up 5% • PBT and EPS growth of 2% • Dividend maintained at 2.7 pence per share in line with previous guidance 2. Pub sales and profit growth • LFL sales growth of 2.2%, +3.2% in final 10 weeks of period • LFL m
Slide 3: Andrew Andrea, Chief Financial and Corporate Development Officer
Marston’s PLC Interim Results 2019 3 Andrew Andrea Chief Financial and Corporate Development Officer
Slide 4: Financial Summary
Marston’s PLC Interim Results 2019 4 FINANCIAL SUMMARY 2018 YOY Revenue £553m 5% Growth in all trading divisions EBITDA £97m 2% Growth in all trading divisions Operating profit £76m 2% Growth in all trading divisions PBT* £37m 2% EPS* 4.9 pence 2% Interim dividend 2.7 pence Dividend cover 1.8x *Unde
Slide 5: Managed and Franchised Like-for-Like Performance
Marston’s PLC Interim Results 2019 5 MANAGED AND FRANCHISED LIKE-FOR-LIKE PERFORMANCE LFL Operating +0.1 +0.1 0.2 (0.4) +0.2 (0.2) (0.5) (0.3) (0.4) (0.1) +0.1 0.0 Margin % 3.8% 3.9% +4 3.8% 2.8% 2.4% 2.2% LFL 1.9% sales % 1.8% 1.2% 1.1% 0.9% 0.8% 2014 2015 2016 2017 2018 2019 (1) Destination and Pr
Slide 6: Pub Segmentation
Marston’s PLC Interim Results 2019 6 PUB SEGMENTATION Operating profit No. of Average no. Average profit per 2019 £m pubs of pubs pub vs LY% Destination and Premium 90.0 408 406 - Taverns 86.8 1,143 1,145 +1 Total 176.8 1,551 1,551 +1 2012 Profit Mix 2019 Profit Mix 36% 49% 51% 64% Destination and P
Slide 7: Beer Company
Marston’s PLC Interim Results 2019 7 BEER COMPANY STRONG REVENUE GROWTH STRONG EARNINGS GROWTH +8% +8% • Driven by sales growth • Own-brewed and licensed volume +4% • Operating margins in line with • Strong growth in Free Trade, Off Trade last year and Export • On target to hit at least £4m • Increa
Slide 8: Cost Guidance
Marston’s PLC Interim Results 2019 8 COST GUIDANCE 2019 Mitigation Drink c.2% • c.95% fixed for 2019 • Price • c.85% contracted to 2020 • Premiumisation Food c.2% • c.90% fixed for 2019 • Menu simplification • c.45% contracted to 2020 • EPOS Brewing raw materials 2-3% • Malt increase of c.£0.3m in 2
Slide 9: Cash Flow Summary
Marston’s PLC Interim Results 2019 9 CASH FLOW SUMMARY 2019 2018 £m £m • Earnings growth; £6m extra stock Operating cash flow 67 63 vs. LY Net interest (44) (43) Pre-investment FCF 23 20 Organic capex (47) (46) Disposals 29 26 Dividend (30) (30) FCF pre new-build and acquisitions (25) (30) • 3 pubs
Slide 10: Debt Structure
Marston’s PLC Interim Results 2019 10 DEBT STRUCTURE Illustrative 2019 2019 2018 (all new-build leasehold) £m £m £m Securitised (amortisation profile to 2035) 761 791 Bank (£360m facility to 2024) 321 268 Debt excluding property leasing 1,082 1,059 1,082 Property leasing (35-40 year financing) 356 3
Slide 11: £0.2bn Debt Reduction Plan – Reduced Net Capex
Marston’s PLC Interim Results 2019 11 £0.2BN DEBT REDUCTION PLAN – reduced net capex £m 2018 2019 2020 (Forecast) Target Maintenance capex 50 50 45 Recurring growth capex 30 30 25-30 Pub one-off 10 - - Beer Co one-off 10 - - Organic Capex 100 80 70-75 New-site 63 50 25 Total Capex 163 130 95-100 Dis
Slide 12: Debt Reduction Plan – Interest Charge Reduced by £5m pa
Marston’s PLC Interim Results 2019 12 DEBT REDUCTION PLAN – interest charge reduced by £5m pa 1. Opportunity to “smooth” amortisation profile of securitisation 2. Achieved through re-profiling swaps 3. Reduced payments 2019-24 offset by increased payments 2031-35 • NPV neutral • No swap break-costs
Slide 13: Debt Reduction Plan – £0.2bn Reduction by 2023
Marston’s PLC Interim Results 2019 13 DEBT REDUCTION PLAN – £0.2bn reduction by 2023 Business growth Ongoing Organic capex reduction H2 2019 onwards Reduced new-build spend 2019 onwards Disposal proceeds at least £120m 2020-2023 2020 onwards Interest savings of at least £5m per annum H2 2019 onwards
Slide 14: Ralph Findlay, Chief Executive Officer
Marston’s PLC Interim Results 2019 14 Ralph Findlay Chief Executive Officer
Slide 15: Consistent Strategy, Clearer Targets
Marston’s PLC Interim Results 2019 15 CONSISTENT STRATEGY, CLEARER TARGETS PUBS BREWING New-builds Sector wide Rooms Leading brands Leading service Quality of Food-led Pubs with rooms Premium ale earnings Wet-led Lodges Well invested, Regional beers skilled supply Craft beers 2019: 2019: 2019: chain
Slide 16: Market Dynamics
Marston’s PLC Interim Results 2019 16 MARKET DYNAMICS Consumer Sector Economic, Political • Experiential • Structural change • Regulatory burden continues to rise • Ethical - alternative supply • Limited direct interest rate exposure - rising costs • Health aware • Brexit uncertainty • Oversupply -
Slide 17: Destination – Offering Everyday Value
Marston’s PLC Interim Results 2019 17 DESTINATION – offering everyday value VOUCHERING STRATEGY • Consistent everyday value • Widespread price promotion - £2m margin investment 2019/20 - Unknown margin investment Sales/covers Profit Service Customer satisfaction Consistency Loyalty Current LFLs in l
Slide 18: Destination – Improving Pub Values
Marston’s PLC Interim Results 2019 18 DESTINATION – improving pub values 1. Our market position - pubs with food, not restaurants 2. Project “Showman” - £2m investment in 40 pubs 3. Project “Hatton” - £1m gardens investment in 30 pubs 4. Investment in training – specific drinks training programme 5.
Slide 19: Accommodation
Marston’s PLC Interim Results 2019 19 ACCOMMODATION 1. Marston’s Inns • Small regional player but growing • Investment strategy similar to pubs – invest away from “hotspots” • Stable income stream and positive food and drink sale contribution to pubs • LFL sales in line with last year despite late E
Slide 20: Taverns – Great Community Pubs
Marston’s PLC Interim Results 2019 20 TAVERNS – Great Community Pubs 1. Achieving continued growth in drinks sales • Trends towards premiumisation continue - Premium beer +65%, Craft +7% - Premium gin +147% • “Healthy” drinks growth - Non-alcoholic beer +33% - Low sugar soft drinks +160% 2. Franchis
Slide 21: Taverns – Pub Acquisition
Marston’s PLC Interim Results 2019 21 TAVERNS – Pub acquisition 1. 15 pubs acquired from Aprirose in H1 2. £4m conversion investment substantially complete • Target 25% CROCCE in 2020 • £0.4m opening costs in H1 2019 • Target £10.5k average weekly take 3. Initial trading encouraging • AWT converted
Slide 22: Beer Company – Beer Market Trends
Marston’s PLC Interim Results 2019 22 BEER COMPANY – beer market trends Total Beer - On & Off Trade* Mkt. +3.2% MBC +4.8% PREMIUM Marston’s Market WORLD Marston’s Market ALE Market Beer Co share BEER Market Beer Co share On Trade** - +5% 22% On Trade** +9% +15% 7% Off Trade*** - +5% 28% Off Trade***
Slide 23: Beer Company – Wide Brand Portfolio
Marston’s PLC Interim Results 2019 23 BEER COMPANY – wide brand portfolio Local Ales National Ales Lager, craft and cider • Authentic ‘local’ beers • Consumers default to • Growth categories • Higher margin brands they trust • Complements core ale • Market leading choice for • National brand portfol
Slide 24: Beer Company – Clear Route to Market Opportunities
Marston’s PLC Interim Results 2019 24 BEER COMPANY – clear route to market opportunities Free Trade National Accounts Off Trade Export • Highest profitability • Scale customers to • Doubled volume, tripled • #1 Beer Exporter • Full drinks range offer build brands EBIT in 5 years • Winning share and
Slide 25: Beer Company – Supply Chain Excellence Adds to Growth
Marston’s PLC Interim Results 2019 25 BEER COMPANY – supply chain excellence adds to growth Brewing Packaging Logistics • 6 breweries nationally located • Marston’s Brewery – centre of • Delivering to 1 in 4 pubs in the UK • 10 Master brewers excellence • 12 Distribution depots – Thurrock • Top rate
Slide 26: Beer Company – Strong Platform for Future Growth
Marston’s PLC Interim Results 2019 26 BEER COMPANY- strong platform for future growth Medium term earnings opportunity Brands • Own ale: continued brand development £3m • Licensed lager: Estrella Damm £5m • Licensed US Craft: Shipyard and Founders £2m Customer • Free Trade: market share of own ale/L
Slide 27: Summary
Marston’s PLC Interim Results 2019 27 SUMMARY 1. H1 sales and earnings growth • Improving LFL momentum • LFL margins maintained 2. Clear actions in Destination driving growth; Taverns continue to perform well 3. Beer Company outperforming market; benefiting from consolidating market 4. Debt reductio
Slide 28: Appendices
Appendices
Slide 29: Financial Summary – Statutory Basis
Marston’s PLC Interim Results 2019 29 FINANCIAL SUMMARY – STATUTORY BASIS 2019 2018 Revenue £553.1m £529.0m Operating profit £66.0m £28.8m PBT £19.1m £(13.4)m EPS 2.6 pence (2.0) pence
Slide 30: Segmental Profit
Marston’s PLC Interim Results 2019 30 SEGMENTAL PROFIT 2019 £m 2018 £m YOY % Turnover Destination & Premium 215.7 210.7 2.4% Taverns 154.2 148.2 4.0% Beer Division 183.2 169.2 8.3% Total 553.1 528.1 4.7% EBITDA Destination & Premium 43.7 42.9 1.9% Taverns 44.1 43.2 2.1% Beer Division 20.2 19.1 5.8%
Slide 31: Pub Numbers
Marston’s PLC Interim Results 2019 31 PUB NUMBERS Destination and Taverns Total Premium 2018 Closing 406 1,139 1,545 New-build additions/Acquisitions 3 15 18 Transfers - - - Disposals (1) (11) (12) 2019 H1 Closing 408 1,143 1,551 2018 average numbers 402 1,155 1,557 2019 average numbers 406 1,145 1,
Slide 32: Historical Total LFL
Marston’s PLC Interim Results 2019 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% 26 wks to 01/04/17 1.1% 1.1% 1.1% 52 wks to 30/09/17 0.9% 1.6% 1.1% 16 wks to 20/01/18 (0.9%) 2.6% 0.
Slide 33: Capex, Tax and Share Capital
Marston’s PLC Interim Results 2019 33 CAPEX, TAX AND SHARE CAPITAL Forecast Actual 2018 2019 New-build capex £63m c.£50m Organic capex £100m c.£80m Total £163m c.£130m Disposals £47m c£45m Net capex £116m c£85m Tax rate 15.5% c16% Average number of shares H1 2019 632.6m Shares in issue at 30 March 2
Slide 34: Securitised Debt Profile
Marston’s PLC Interim Results 2019 34 SECURITISED DEBT PROFILE Principal Final maturity Tranche Type outstanding at Step-up date date 30 March 2019 A1 Floating £29.5m July 2012 2020 A2 Fixed/Floating £214.0m July 2019 2027 A3 Fixed/Floating £200.0m April 2027 2032 A4 Floating £167.1m October 2012 20
Slide 35: Securitisation Profile
Marston’s PLC Interim Results 2019 35 SECURITISATION PROFILE FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 Principal £m 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 Interest £m 40.3 41.7
Slide 36: Notes
Marston’s PLC Interim Results 2019 36 NOTES
Slide 37: Notes
Marston’s PLC Interim Results 2019 37 NOTES
Slide 38: www.marstons.co.uk
www.marstons.co.uk