Slide 1: Brewing Partnership with Carlsberg UK
BREWING PARTNERSHIP WITH CARLSBERG UK
Slide 2: Important notice
2 This document, any ancillary documents relating to it, any oral presentation and any question and answer session (together, the “Materials”) have been prepared by Marston’s plc (“Marston’s” or the “Company”) solely for informational purposes. By attending this presentation and/or accepting a copy
Slide 3: Marston's PLC and Carlsberg UK to create a Joint Venture
3 Marston’s PLC and Carlsberg UK to create a Joint Venture “Carlsberg Marston’s Brewing Company” (‘CMBC’) • Long term JV between two leading brewers to create a best in class, brand-led UK brewer with increased scale, resources and distribution reach • Marston’s Brewing Business valued at up to £580
Slide 4: Strategic combination of leading UK brewing businesses
4 Strategic combination of leading UK brewing businesses Financials • FY19 sales of £389m • FY19 sales of £414m Unaudited financial information • FY19 adj. EBITDA of £44.6m • FY19 adj. EBITDA of £21.1m Market share • 9.6% share in total ale • 3.8% share in total ale in the UK1 • 1.5% share in total
Slide 5: Rationale for the transaction
5 Rationale for the transaction • Complementary assets combined to create a stronger, more competitive UK brewer with a greater relevance and reputation with customers • Best in class brand portfolio providing customers with greater choice • Greater scale with the ability to further invest in growth
Slide 6: CMBC strategy
6 CMBC strategy Five year business plan in place with a target to be the UK’s leading Beer and Distribution company growing ahead of the market CHALLENGER / ENTREPRENEURIAL / RESULTS ORIENTED / CUSTOMER AND CONSUMER FOCUSED BRANDS SERVICE RTM SUPPLY PEOPLE PROGRESSIVE RECOGNISED AS REACH INTO THE BR
Slide 7: Stronger, more competitive UK brewer with a complementary best in class brand portfolio
7 Stronger, more competitive UK brewer with a complementary best in class brand portfolio Brands Share1 Brands Share1 Combined 9.6% 3.8% (Total Ale) (Total Ale) Ale 12.3% n.m. 13.4% (Premium (Premium Ale) Ale) Lager 1.5% 12.9% 14.4% Craft Note: Market shares as at April 2020 1 On-trade market share
Slide 8: Improves scale for brands, marketing and distribution
8 Improves scale for brands, marketing and distribution • Distribution and logistics expertise • Key player in UK off-trade with significant distribution across grocers, discounters Distribution • Distributes to c. 11,000 customers and impulse and convenience and logistics including the independent
Slide 9: Significant shareholder value creation
9 Significant shareholder value creation • Reported run-rate joint venture cost synergies of around £24m expected by the end of the third year following completion ˗ One-off synergies cost estimated at £32m • Potential joint venture cost synergies comprising: ˗ Reduction in overhead costs ˗ Brewery
Slide 10: Overview of Marston's Brewing Business and Carlsberg UK financials
10 Overview of Marston's Brewing Business and Carlsberg UK financials Marston's Brewing Business Carlsberg UK 453 429 414 378 389 Sales (£m) 253 Unaudited financial information Sep-17 Sep-18 Sep-19 Dec-17 Dec-18 Dec-19 EBITDA (£m) 14.2% 11.3% 11.3% £44.6m of £21.1m of 43 44 adjusted 2.7% adjusted 36
Slide 11: From an ongoing operating cashflow perspective, this transaction is broadly cash neutral
11 From an ongoing operating cashflow perspective, this transaction is broadly cash neutral Marston's Brewing Business (Sep-19) £m Reported EBITDA 44 Less The transaction is expected to be broadly net operational cashflow BeerCo capex (17) neutral taking into account Central capex (3) Marston's shar
Slide 12: Recognises the value of Marston's Brewing (13.0x) and provides greater financial flexibility
12 Recognises the value of Marston's Brewing (13.0x) and provides greater financial flexibility Recognises value of Impact on capital structure Marston's Brewing Built through value accretive acquisitions: Strategic 2019 CMBC Ringwood £19m Target £m impact Refresh £14m £m2 Thwaites £25m Char
Slide 13: Debt update
13 Debt update • Banking arrangements ˗ Agreed £70m of additional liquidity through increased bank facility ˗ Agreement to amend covenants for September 2020 and March 2021 ˗ New facility together with mitigating actions and government support provide liquidity to meet financial obligations beyond t
Slide 14: Transaction structure
14 Transaction structure • The transaction values the Marston's Brewing Business at up to £580m, representing 13.0x 2019 adj. EBITDA1 and the Carlsberg UK Brewing Business at £200m • Marston's to receive 40% stake in CMBC and a cash equalisation payment of up to £273m2. Carlsberg UK to receive 60% s
Slide 15: Pub strategy
15 Pub strategy Focus on operational excellence within pub and accommodation business Clear strategic targets: reduce debt, improve returns, strong cash generation Pub strategy Balanced pub portfolio Quality estate Food-led Wet-led Focused investment Format development Premium Rooms Disposals ‘Raisi
Slide 16: Expected transaction timetable and next steps
16 Expected transaction timetable and next steps Announcement of transaction May 2020 Marston's shareholder vote June 2020 Marston's interim results June 2020 Expected completion of transaction Q3 of this calendar year
Slide 17: Conclusion
17 Conclusion • CMBC creates a brewer of scale with significant synergies and value creation • Immediate value crystallisation of undervalued asset with significant exposure to the future success of CMBC • Cash equalisation payment materially reduces debt outside the securitisation and increases fin
Slide 18: www.marstons.co.uk
www.marstons.co.uk