Slide 1: Interim Results 2023
Y Cerrig Glas, Pembroke Interim Results 2023
Slide 2: Andrew Andrea - CEO
Bell Inn at Tong Andrew Andrea - CEO
Slide 3: Introduction
3 Introduction • H1 trading resilient despite consumer pressures; trading more predictable • Financial progress - revenue growth, debt reduction, NAV underpin • Good improvement on the ‘inputs’ – satisfaction, team engagement, standards • Continued progress on key strategic objectives • More stable
Slide 4: Hayleigh Lupino - CFO
Hayleigh Lupino - CFO
Slide 5: H1 P&L summary
5 H1 P&L summary 2023 2022 Comments Revenue £407m £370m +10.1% Pub operating profit £43m £40m +8.0% Income/(loss) from associates £2m £(2)m Earnings growth, £10.6m CMBC dividend received Loss before tax £(4)m £(8)m Increased interest costs Loss per share (0.5)p (1.0)p Underlying continuing operation
Slide 6: H1 like for like sales performance vs FY2020 and FY2022
6 H1 like for like sales performance vs FY2020 and FY2022 50 +47.9% LFL sales vs FY2020 up to 4 March (pre-Covid 40 closures) +8.4% FY2020 = Oct 2019 – March 2020 30 20 +19.2% +17.9% +10.7% 10 +6.8% +7.2% +7.9% +5.0% +4.1% 0 Weeks 1-8 Weeks 9-16 Weeks 17-26 Total 26 weeks Weeks 27-32 vs FY2020 vs FY
Slide 7: Cash flow
7 Cash flow 2023 2022 Comments £m £m FY22, excluding exceptional cash flows, Operating cash flow (excluding one-off Duty/VAT) 70 80 £13m working capital timing benefit Net interest (41) (41) Pre-investment FCF 29 39 FY23 – c.£60m-£65m Capex (41) (29) FY24 c.£50-£55m H1 FY23 - 39% higher than NBV Dis
Slide 8: Debt structure
8 Debt structure 2023 2022 2021 £m £m £m Medium term Bank and cash (£300m 2025 facility) 190 191 148 Private placement (2025 facility) 40 40 40 Long term Securitisation (2035 maturity) 636 679 705 Property leasing (35–40-year financing) 338 337 337 Net debt pre IFRS 16 1,204 1,247 1,230 Lease obliga
Slide 9: Property, NAV and pensions
9 Property, NAV and pensions • Property • Disposals 39% higher than NBV • £24 million of disposal proceeds in H1, £30 million - £35 million expected in H2 • £2.1 billion estate, 84% freehold underpin • NAV per share • NAV per share increased to 98p from 71p H1 2022 • Pensions • £19.3 million account
Slide 10: Cost outlook - update
10 Cost outlook - update • FY2023 – no change to operating cost guidance • Interest • Increased SONIA rates for the unhedged RCF • Bank and PP margin – leverage dependant • Issue costs for the new facility, short term 2 year cost • FY2024 • Energy H1 fixed at lower levels • Food cost outlook improvi
Slide 11: Andrew Andrea - CEO
Wighton, Torquay Andrew Andrea - CEO
Slide 12: Market dynamics
12 Market dynamics • Demand to socialise outside home; ‘Brand Pub’ remains strong • ‘Red Letter’ occasions key to success – maximise sales • Lifestyle changes favour community pubs • Experience vs Convenience key to growth • Enables frictionless price increases • Increasing importance of ‘best near
Slide 13: Our vision – 'Pubs to be proud of'
13 Our vision – ‘Pubs to be proud of’ Core Pub Goals Loved by Guests: All of our pubs 800 Reputation or more ‘Great Place to work’: Peakon engagement 8 or more ‘Trusted’: All of our pubs to be 5* EHO Sales Culture – ‘Never Full, Fancy Another’ Core Corporate Goals ‘Better than the rest’ Consistent m
Slide 14: Pub Goals – satisfaction, team engagement, standards
14 Pub Goals – satisfaction, team engagement, standards Employee Engagement Rep Score since launch 760 % of pubs hitting 800 90 740 80 720 29% 36% 70 700 60 680 50 40 660 30 640 20 620 2% 10 600 0 580 560 Monthly Participation % Rolling Aggregate Participation % 7.8 7.7 7.6 7.5 7.5 7.5 7.6 7.6 7.7 7
Slide 15: Progression on key strategic objectives
15 Progression on key strategic objectives • ‘Better than the rest’ • Consistent outperformance of Peach Tracker in H1 • Satisfaction – #1 gap reduced from 117 to 11 points • Standards – Managed houses moved from #6 to joint #2 Marston’s total estate vs Peach* – LFL sites 3.5 % • ‘Back to a Billion’
Slide 16: Category evolution
16 Category evolution • Continued menu simplification • Further 7% reduction in menu items (2022:20% reduction) • Enhanced ‘Rhythm of the Week’ offer • Specials: ‘Earn the Right’ philosophy • New drinks strategy • Significant spirits SKU reduction (>50%) to simplify customer offer • Enhanced premium
Slide 17: Evolution of estate
17 Evolution of estate • ‘Pubs to be Proud of’ • We are a pub business and not a restaurant, casual dining or QSR business • Non-branded - reduce complexity and distraction • ‘Engine room’ of business is the mainstream market • Minimal representation in ‘extreme’ low value, high volume or premium •
Slide 18: Capex strategy
18 Capex strategy • Simplified estate plan reduces requirement to materially reposition estate • Reduce ‘capital risk’ of repositioning capex • Maximise returns – lower spend = higher return • Trialling Signature project at 40% lower cost • Capital light repositioning of Rotisserie to Signature • ‘T
Slide 19: Creating great teams
19 Creating great teams • Recruit • ‘People Promise’ Employer value proposition driving applications growth • Improving social media engagement • Community focused campaigns • Latitude (ex-offenders) – H2 launch of Marston’s/HMP Liverpool Chef Academy • Apprenticeships – embedded programme; 280 appr
Slide 20: Evolution of franchise
20 Evolution of franchise • ‘Franchise style’ retail partnerships well established; operates in 715 pubs • Pillar – continues to perform well • Key benefits • Sales focused relationship for all stakeholders; ‘owner-driver’ mindset • Full visibility of performance of pub • Marston’s buying power opti
Slide 21: Digital and technology
21 Digital and technology • Technology enables team and customer flexibility but will not replace people • Most customers want to engage with a person • Digital – retain existing customers, discover new ones • Architecture - pub website overhaul; new email platform • Card linked marketing and partne
Slide 22: ESG agenda: 'doing more to be proud of'
22 ESG agenda: ‘doing more to be proud of’ • Environment • Net zero – Going Green incentive scheme, Zero Carbon forum • Innovation – 150 pubs with EV chargers; Waste into resource – cooking oil repurpose • Food waste reduction – menu simplification; Too Good to Go • Social • Pay and reward – support
Slide 23: Summary and outlook
23 Summary and outlook • Encouraging H1 performance and start to second half year • Pub ‘inputs’ creating higher quality business • Operating profit inline with expectations • Cost outlook stabilising; growing consumer confidence • Well invested community pubs still loved and resilient • Consistent,
Slide 24: Questions
Y Cerrig Glas, Pembroke Questions
Slide 25: Appendices
Wighton, Torquay Appendices
Slide 26: H1 P&L summary
25 H1 P&L summary 2023 2022 Revenue £407m £370m Pub operating profit £43m £46m Income/(loss) from associates £2m £(2)m Profit/(loss) before tax £(38)m £26m Earnings/(loss) per share (4.5)p 3.1p Continuing operations results for the period
Slide 27: High-quality pub estate
26 High-quality pub estate Pubs Lodges Total Number Value (£m) Number Value (£m) Value (£m) Securitised 926 1,148 7 15 1,163 Non-securitised Unsecured freehold 150 272 5 11 283 Freehold – property lease 127 326 10 26 352 Total freehold 1,203 1,746 22 52 1,798 Leasehold 237 282 8 13 295 Total 1,440 2
Slide 28: IFRS 16 – depreciation and interest analysis
27 IFRS 16 – depreciation and interest analysis £m Depreciation Interest 2023 2022 2023 2022 Non-IFRS 16 16.9 16.2 42.0 37.3 IFRS 16 5.9 5.9 6.9 8.1 Total 22.8 22.1 48.9 45.4
Slide 29: H1 securitised debt profile
28 H1 securitised debt profile Principal outstanding at Step-up Final maturity Tranche Type 1 April 2023 date date A2 Floating £143.3m July 2019 2027 A3 Fixed/floating £200.0m April 2027 2032 A4 Floating £125.6m October 2012 2031 B Floating £155.0m July 2019 2035 Total £623.9m
Slide 30: Debt profile
29 Debt profile Securitised Debt Service 90.0 Max £81.3m 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 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 Financial year FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY
Slide 31: Estate analysis by operating model
30 Estate analysis by operating model No of Pubs Revenue (£m) EBITDA (£m) Operating profit (£m) 2023 2022 2023 2022 2023 2022 2023 2022 Managed and Franchised 1,194 1,185 388.9 352.8 55.9 52.4 33.5 30.7 Tenanted and Leased 246 297 18.2 16.9 10.3 9.8 9.7 9.2 Total 1,440 1,482 407.1 369.7 66.2 62.2 43
Slide 32: www.marstonspubs.co.uk
Y Cerrig Glas, Pembroke www.marstonspubs.co.u