Slide 1: Interim Results 2021
Interim Results 2021 Ralph Findlay, Chief Executive Officer Andrew Andrea, Chief Financial Officer
Slide 2: Ralph Findlay
Ralph Findlay Chief Executive Officer
Slide 3: Emerging stronger out of lockdown
3 Emerging stronger out of lockdown 3 1. Strong consumer demand; encouraging outdoor trading since 12 April; EBITDA break-even in April 2. Clear guest focused pub strategy 3. Innovative Brains transaction provides an alternative model for future M&A 4. Optimistic for more normalised trading when res
Slide 4: Andrew Andrea
Andrew Andrea Chief Financial Officer
Slide 5: Financial summary
5 Financial summary 2021 2020 Comments Continuing Operations* Revenue £55m £343m Operating (loss)/profit £(78)m £47m £21m share of losses from JV Loss before tax £(122)m £(1)m Loss per share (17.0) pence (0.1) pence Group Statutory earnings/(loss) per share 31.5 pence (4.4) pence £291m profit on dis
Slide 6: "Outdoor Trading" LFL sales performance
6 “Outdoor Trading” LFL sales performance Drink Food Total (11)% (41)% (23)% LFL sales* Pubs Open (Managed w/c 12 April w/c 26 April and Franchise) England 710 776 Wales and Scotland - 145 Total 710 921 * LFL sales are defined as sales compared to comparable period of 2019 adjusted for timing of Eas
Slide 7: Cash flow
7 Cash flow 2021 2020 Comments £m £m Operating cash flow (47) 58 Net interest (45) (44) Pre-investment FCF (92) 14 Organic capex (19) (45) FY21E: £30-35m; FY22:£45-50m Disposals 13 64 FY21E: £15-20m; FY22:£10-15m Dividend - (30) Net recurring cash flow (98) 3 Exceptional cash flows Brewing disposal
Slide 8: Debt structure
8 Debt structure 2021 2020 £m £m Medium term Bank and cash (£280m 2024 facility) 148 274 Private placement (2024 facility) 40 40 Long term Securitisation (2035 maturity) 705 728 Property leasing (35-40 year financing) 337 337 Net debt pre IFRS 16 1,230 1,379 Lease obligations under IFRS 16 (includes
Slide 9: COVID-19 response and current position
9 COVID-19 response and current position 1. Waiver support from all financial providers • Bank/PP - covenant waivers/amendments to January 2022 • Securitisation: - waivers/amendments to January 2022 (99.9% voted, 92.6% in favour) - utilised £28m of £120m liquidity facility to date 2. Limited residua
Slide 10: Brains transaction – summary financials
10 Brains transaction – summary financials Proforma Income (Pre IFRS16) No. £m Core Estate Outlet EBITDA 107 14 Rent (5.5) Overhead (1.5) Net EBITDA 7 Depreciation (2) EBIT 5 Opportunities Conversion to franchise 1-2 Overhead synergies 0.5 Purchasing synergies 0.5-1 Total cost/conversion synergy 2-3
Slide 11: Brains transaction – cash flow implications
11 Brains transaction – cash flow implications Cash flow considerations Cash flows for completion Rental prepayments £m Completion - Yr1 rent in advance 5.5 April - Yr2 rent in advance 5.5 Freeholds 4 15 Funding Unlicensed property sales in March 8 H2 Disposals 7 Annual maintenance capex 2 Growth ca
Slide 12: Ralph Findlay
Ralph Findlay Chief Executive Officer
Slide 13: COVID-19: Response to Winter closure
13 COVID-19: Response to Winter closure 1. Prioritise cash preservation • Financial stability and liquidity provided through brewing disposal • Repeated learnings from first lockdown • Accessed government support 2. Look after our people • Well-being programme of support; strong engagement survey sc
Slide 14: COVID-19: Clear reopening plans
14 COVID-19: Clear reopening plans 1. Well-positioned estate; proactive external investment • Low city centre exposure, mainly suburban locations • 90%+ of our pubs have gardens/outside areas • “Inside-Out” programme to increase capacity in Autumn and Winter 2. Clear operational plans • Investment i
Slide 15: Reopening roadmap
15 Reopening roadmap 1. Over 70% of estate reopened in April • Outdoor trading in England and Wales • Indoor trading permitted in Scotland with no alcohol • Table service only 2. All of estate opened for indoor trading on 17 May • Social distancing rules still apply • Full table service 3. Expectati
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Slide 17: Market demand strong, dynamics changing
17 Market demand strong, dynamics changing 1. Demand remains strong • Pent-up demand evident from April opening – guests have missed the pub • Increased forward planning – higher bookings • Resilience of guests – cold April weather 2. Value for experience is key to replacing price discounting • Home
Slide 18: Our vision: "Pubs to be proud of"
18 Our vision: “Pubs to be proud of” We are Guest Obsessed We Raise the Bar We will Grow • Start with Guest • Ways of Working • Grow our profit • Experience not convenience • Operational focus • Grow our people • Know your Guest • People strategy “Good to Great” • High returning organic capex • Rewa
Slide 19: Guest obsessed
19 Guest obsessed 1. Value for experience • Experience above price • Create happy, memorable and meaningful experiences • “Pride in Plate” - improve food quality 2. Guest satisfaction • Clear pub targets • Investment in new feedback systems • Overhaul complaints handling 3. Digital and technology •
Slide 20: Raising the bar
20 Raising the bar 1. Investing in people • Training – including introduction of app-based system • Communication – Microsoft platform for all • Engagement – new system permits more frequent and timely feedback 2. Operational excellence • More pub; less admin - new “working week” for operations team
Slide 21: We will grow
21 We will grow 1. More from guests • Development of sales culture – Project Boost incentive programme • Focus on key sessions – “Make Sundays Great” 2. More from capex • Modest 2021 capex to trial format evolution • Looking at long-term target not incremental ROI • Long-term roadmap under review 3.
Slide 22: Brains opportunity
22 Brains opportunity 1. Pub estate • Principally based in South and West Wales • Complementary with Marston’s existing portfolio of 106 pubs in Wales • Good quality pub estate with stable earnings and some iconic sites • Brand opportunity – right to use Brains brand on existing Welsh pub estate 2.
Slide 23: The Ship Tresaith, West Wales; The Maltsters Cardiff
23 The Ship Tresaith, West Wales The Maltsters Cardiff Ty-Risha Alehouse Red Dragon High View, LitchardHill, Pen-Y-Cae Bridgend Bridgend
Slide 24: Future opportunities
24 Future opportunities 1. Will consider similar opportunities to Brains • ROI accretive • Reduces operating leverage • Consistent with financial strategy to reduce borrowings 2. Establish Marston’s as “operating partner of choice” • Market-leading national pub operator with strong credentials • Ope
Slide 25: Building a sustainable business
25 Building a sustainable business
Slide 26: Social impacts
26 Social impacts Pub Food Safety Information Property safety Increased investment in standards to be proud of food information collection a SA Brait ibs bi hi I Sr Supplie Health of craven ermine Guest Our Guests gitar Satisfaction Promotion of healthy choices G.U.E.S.T. focused strategy Drinkaware
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Slide 28: Clear ESG targets
28 Clear ESG targets ESG Targets ESG Carbon Net Zero E Recycling >80% and overall reduction in waste produced E Landfill diversion – maintain 100% E Absolute reduction in water compared to activity E Food Supplier Charter – full compliance S Community Heroes event S Apprenticeships circa 500 S Suppl
Slide 29: Outlook
29 Outlook 1. Await clarity on 21 June • Anticipate significant reduction in trading restrictions • More normalised trading would return sooner with restrictions lifted • Great team in place focused on delivering great guest experiences 2. Carlsberg Marston’s Brewing Company • Trading impacted by pa
Slide 30: Summary
30 Summary 1. Emerging from crisis as a stronger business • Financial stability; no recourse to equity • Access to significant CMBC synergies 2. ESG – building a sustainable business 3. Relaxed restrictions platform for a “normalised” summer 4. Clear pub strategy and goals; well-placed to take advan
Slide 31: Appendices
» APPENDICES MARSTONS
Slide 32: Financial Summary – Statutory basis
32 Financial Summary – Statutory basis 2021 2020 Revenue* £55m £343m Operating (loss)/profit* £(80)m £21m Loss before tax* £(106)m £(31)m Statutory Profit/(Loss) £199m £(28)m Earnings/(Loss) Per Share 31.5 pence (4.4) pence * Continuing Operations
Slide 33: Estate analysis by operating model
33 Estate analysis by operating model No of Pubs Revenue (£m) EBITDA (£m) Operating Profit (£m) 2021 2020 2021 2020 2021 2020 2021 2020 Managed and Franchised 1,152 1,028 51.5 315.8 (26.8) 70.2 (44.1) 52.4 Tenanted and Leased 353 343 3.5 21.6 2.0 12.6 1.5 12.1 Total 1,505 1,371 55.0 337.4 (24.8) 82.
Slide 34: IFRS 16 – Depreciation and Interest analysis
34 IFRS 16 – Depreciation and Interest analysis £m Depreciation Interest 2021 2020 2021 2020 Non-IFRS 16 15.6 22.3 36.3 39.9 IFRS 16 5.2 5.3 8.3 8.0 Total 20.8 27.6 44.6 47.9
Slide 35: Securitised debt profile
35 Securitised debt profile Principal Step-up Final maturity Tranche Type outstanding at date date 3 April 2021 A2 Floating £196.6m July 2019 2027 A3 Fixed/Floating £200.0m April 2027 2032 A4 Floating £147.1m October 2012 2031 B Floating £155.0m July 2019 2035 Total £698.7m
Slide 36: High-quality pub estate
36 High-quality pub estate Pubs Lodges Total Number Value (£m) Number Value (£m) Value (£m) Securitised 947 1,120 7 13 1,133 Non-securitised Unsecured freehold 157 274 5 13 287 Freehold – property lease 113 290 7 19 309 Total freehold 1,217 1,684 19 45 1,729 Leasehold 292 337 11 18 355 Total 1,509 2
Slide 37: Brains pub estate composition
37 Brains pub estate composition Pubs Proforma* Proforma* Proforma* Revenue EBITDA EBITDA per (£m) (£m) pub £k 99 sites on long-term lease – stable 5 year record 21 convert to franchise (non-franchise £220k Managed 62 47 11 175 per pub) Leased and Tenanted 37 3 2.5 68 Medium term convert to franchis
Slide 38: Brains acquisition – pro-forma IFRS 16 financials
38 Brains acquisition – pro-forma IFRS 16 financials Proforma IFRS 16 £m EBITDA 14 Overhead (1.5) Depreciation (2) IFRS 16 depreciation (3.5) EBIT 7 Interest (4) IFRS 16 PBT 3 IFRS 16 Debt 88
Slide 39: Securitisation profile
39 Securitisation profile 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 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 Financial year FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY203
Slide 40: www.marstons.co.uk
www.marstons.co.uk www.marstons.co.ukThe White Hart, Ford