Slide 1: Interim Results 2022
1 Interim Results 2022 Andrew Andrea, Chief Executive Officer Hayleigh Lupino, Chief Financial Officer Navigation, Stoke Bruerne
Slide 2: Andrew Andrea
ANDREW ANDREA 2 Pitcher & Piano, Taunton
Slide 3: Introduction
Introduction 3 • Resilient trading despite Omicron disruption; improving trends • Improving net underlying cashflows • Encouraging progress on guest, standards, engagement scores • Significant change management activity underpinning new strategy • Simplification of business – segmentation and catego
Slide 4: Market dynamics
Market dynamics 4 • Stable and resilient consumer o Footfall decline versus 2019 slowly improving; older customers beginning to return o Sales trends stable, more predictable monthly sales cycle o Increased discounting by some in market place, return of 50% offers o Do not compromise experience – se
Slide 5: Hayleigh Lupino
5 HAYLEIGH LUPINO Pitcher & Piano, Taunton
Slide 6: H1 P&L summary
H1 P&L summary 6 2022 2021 Comments Revenue £370m £55m Pub operating profit/(loss) £40m £(57)m Return to pub profitability Loss from associates £(2)m £(21)m No CMBC dividend expected in FY22 Loss before tax £(8)m £(122)m Loss per share (1.0) pence (17.0) pence Underlying continuing operations result
Slide 7: H1 like for like sales performance vs FY2019
H1 like for like sales performance vs FY2019 7 3 Oct - 27 Nov 28 Nov – 22 Jan 23 Jan – 2 Apr 3 Apr – 14 May (8)% in 2 weeks of VAT reversion; circa. 4% Omicron February Storms 1.3% Slightly positive (0.9)% LFL (8.8)% sales ➢ Positive momentum interrupted by Omicron, moving towards 2019 recovery
Slide 8: H1 cash flow
H1 cash flow 8 2022 2021 Comments £m £m Operating cash flow (excluding one-off Duty/VAT) 80 (47) Net interest (41) (45) Pre-investment FCF 39 (92) Organic capex (29) (19) FY22E c.£55m FY23 c.£60-£65m Disposals 3 13 35% higher than NBV Net recurring cash flow 13 (98) Exceptional cash flows Deferred D
Slide 9: H1 debt structure
H1 debt structure 9 2022 2021 2020 £m £m £m Medium term Bank and cash (£280m 2024 facility) 191 148 274 Private placement (2024 facility) 40 40 40 Long term Securitisation (2035 maturity) 679 705 728 Property leasing (35–40-year financing) 337 337 337 Net debt pre IFRS 16 1,247 1,230 1,379 Lease obl
Slide 10: Property, pensions and NAV
Property, pensions and NAV 10 • Property o Move to annual valuations from triennial valuations o 1/3 of pubs valued on a rotational basis o First tranche in H2 o Disposals 35% higher than NBV • Pensions o £4.9 million accounting surplus vs £14.4 million deficit Oct 2021 o £6m annual cash outflow o N
Slide 11: Cost guidance H2 FY22 vs previous guidance
Cost guidance H2 FY22 vs previous guidance 11 Cost Impact Comments/mitigation Food and drink Food cost +7% • Food and drink price increase in March • Menu simplification in March and July • 60% of food contracts fixed past 2022 Labour £1.8m • 76% of drinks contracts fixed past 2024 • Cost savings -
Slide 12: Business Evolution since 2019
Business Evolution since 2019 12 Marston’s Pubs CMBC • Disposals - £(8)m • Brains - £10m • MBC -2019 • IT - Cap-ex to Op-ex £(6)m o £44m – EBITDA o £33m - EBIT • H2 Cost guidance – o £17m - Cap-ex o Energy - £(5)m • £(10)m annual • No expected dividend in FY22 • IFRS 16: o Rent £24m o Depreciation &
Slide 13: Andrew Andrea
ANDREW ANDREA 13 Pitcher & Piano, Taunton
Slide 14: Our vision – "Pubs to be proud of"
Our vision – “Pubs to be proud of” 14 Core Pub Goals Loved by Guests: All of our pubs 800 Reputation or more ‘Trusted’: All of our pubs to be 5* EHO ‘Great Place to work’: Peakon engagement 8 or more Sales Culture – “Maximise footfall and sales per guest visit” Solid H1 progress: Reputation +c100 EH
Slide 15: Guest obsessed
Guest obsessed 15 • Insight at the heart of all decisions o All trading decisions: “Does it matter to Guest? o Reputation insight platform significantly changing behaviour • Segmentation of estate o Driven by target guest and reason to visit o Conversion plans key to driving growth • Category overha
Slide 16: Category management – menu overhaul
Category management – menu overhaul 16 • Food quality - number one driver of satisfaction o Too many menus, dishes, ingredients o No alignment to segmentation o Low internal advocacy • Menu relaunch project o Nimble behaviour – three month turnaround o Commercial, operations, HR and finance alignmen
Slide 17: Raise the Bar – creating great teams
Raise the Bar – creating great teams 17 • Recruit o Key external hires in H1 ▪ Recruitment and Resourcing, Category Management, Digital ▪ 2 x Director of Operations (Food-Led) o 30% change of leadership group (direct reports to Ex Com) o Apprenticeship programme key to future talent pipeline. o “Lat
Slide 18: "We will Grow" – segmentation of pub estate
“We will Grow” – segmentation of pub estate 18 • Simplified segmentation of business 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 review completed September
Slide 19: Community Wet
Community Wet Kings Arms, Killingworth (Previously Shire Horse) £280k spend Pre Capex £17k per week £118k EBITDAR Post Capex AWT - £24k per week Wet/food mix – 50/50 Projected EBITDAR - £305k ROIC – 66.7%
Slide 20: Signature
Signature Fields of Aylesford, Maidstone (previously Poppy Fields) £495k spend Pre Capex £22k per week £259k EBITDAR Evaluation £33k per week Wet/food mix 40:60 ROIC - 30%
Slide 21: Revere Country
Revere Country Curious Cow, Harrogate (previously Old Spring Well) £686k spend (pub and rooms) Pre Capex £20k per week £243k EBITDAR Post Capex Target AWT - £32k per week Projected EBITDAR - £409k ROIC – 24.2%
Slide 22: "We will Grow" - evolution of franchise
“We will Grow” - evolution of franchise 22 • Strategic intention to continue to expand franchise o Now operates in over 600 pubs within the estate o Proven model attractive to new licensees; drives sales and earnings growth • Extension of Pillar agreement o Marston’s takes share of drink and food sa
Slide 23: "We will Grow" - Brains
“We will Grow” - Brains 23 • High-quality business o H1 sales outperform Marston’s Wales estate o 31 conversions to franchise o Rolling out Marston’s new menus • Scope for growth o 2 conversions with strong returns, 4 planned for FY2023 o Further opportunities identified within estate o Plans to nov
Slide 24: Illustrative "Back to a Billion" - £1bn sales target
Illustrative “Back to a Billion” - £1bn sales target 24 c.£60m c. £200m Target growth £m c.£15m c.£140m c.£30m c.2% LFL 100 c.£25m c.£70m 0 Food conversions Wet conversions Franchise Brains LFL Total conversions ➢ Organic plans targeted to achieve £1bn sales targets
Slide 25: ESG commitments
ESG commitments 25 • Environment o Net Zero: plans remain on track despite continued pandemic disruption ▪ “Going Green” internal campaign. Incentive based, league table drive to reduce usage. o Food wastage reduction: Plan being evaluated – targets to be set out at year-end • Social o Local and Nat
Slide 26: Summary & outlook
Summary & outlook 26 • Outlook o Positive current trading; guest, standards, engagement o Price mitigating majority of inflation – no compromise on guest experience o Pubs historically resilient – “affordable socialising” • “Pubs to be proud of” creating a simpler and more efficient business • H1 ac
Slide 27: Questions
27 QUESTIONS Curious Cow, Harrogate
Slide 28: Appendices
APPENDICES 28
Slide 29: H1 P&L summary - statutory
H1 P&L summary - statutory 29 2022 2021 Revenue £370m £55m Pub operating profit/(loss) £46m £(59)m Loss from associates £(2)m £(21)m Profit/(loss) before tax £26m £(106)m Earnings/(loss) per share 3.1 pence (14.6) pence Continuing operations results for the period
Slide 30: H1 high-quality pub estate
H1 high-quality pub estate 30 Pubs Lodges Total Number Value (£m) Number Value (£m) Value (£m) Securitised 943 1,095 7 13 1,108 Non-securitised Unsecured freehold 157 263 5 9 272 Freehold – property lease 113 251 7 18 269 Total freehold 1,213 1,609 19 40 1,649 Leasehold 269 310 11 17 327 Total 1,482
Slide 31: H1 IFRS 16 – depreciation and interest analysis
H1 IFRS 16 – depreciation and interest analysis 31 £m Depreciation Interest 2022 2021 2022 2021 Non-IFRS 16 16.2 15.6 37.3 37.5 IFRS 16 5.9 5.2 8.1 7.2 Total 22.1 20.8 45.4 44.7
Slide 32: H1 securitised debt profile
H1 securitised debt profile 32 Principal Step-up Final maturity Tranche Type outstanding at Date date 2 April 2022 A2 Floating £170.7m July 2019 2027 A3 Fixed/floating £200.0m April 2027 2032 A4 Floating £136.6m October 2012 2031 B Floating £155.0m July 2019 2035 Total £662.3m
Slide 33: Debt profile
Debt profile 33 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 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 Financial year FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY203
Slide 34: H1 estate analysis by operating model
H1 estat Debt e ana Profil e lysis by operating model 34 No of Pubs Revenue (£m) EBITDA (£m) Operating profit (£m) 2022 2021 2022 2021 2022 2021 2022 2021 Managed and Franchised 1,185 1,152 349.3 51.8 50.5 (37.9) 29.1 (58.1) Tenanted and Leased 297 353 19.7 3.1 11.4 1.8 10.7 1.3 Total 1,482 1,505 36
Slide 35: "We will Grow" - food-led pub evolution
“We will Grow” - food-led pub evolution 35 2021 2025 Target Carvery 2 for 1 23% 29% Community Signature Food 38% 32% Firebrand 14% • Proposed conversion spend Signature £50-55 million over next four years Community 12% o New-build pubs lower cost to convert Wet Revere Revere 14% Country 5% Rotisseri
Slide 36: ESG – pub decarbonisation pathway: scope 1&2
ESG – pub decarbonisation pathway: scope 1&2 36 100 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 37: ESG – decarbonisation pathway: scope 3
ESG – decarbonisation pathway: scope 3 37 100 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 38: www.marstonspubs.co.uk
www.marstonspubs.co.uk 38