Slide 1: Preliminary Results 2010
Preliminary Results 2010
Slide 2: David Thompson, Chairman
David Thompson Chairman
Slide 3: Highlights
Highlights 1. 2010 performance in line with targets • Revenue, profit and earnings up • Improved leverage ratio, ROC 2. Focused and consistent strategy • Differentiated strategy executed well 3. Final dividend of 3.7p per share 4. Operational and Board changes planned 5. Good momentum in current fin
Slide 4: Andrew Andrea, Finance Director
Andrew Andrea Finance Director
Slide 5: Financial summary
Financial summary Profit and loss account 52 weeks 2010 2009 % change Revenue £650.7m £645.1m +0.9% Operating margin 22.9% 22.8% +0.1% Operating profit £148.7m £147.4m +0.9% Profit before tax1 £73.5m £70.3m +4.6% Adjusted EPS1,2 10.0p 13.4p (25.4)% Final dividend 3.7p 3.7p - 1 before exceptional ite
Slide 6: Strong second-half
Strong second-half Group Highlights H1 +0.6% • Group revenue H2 +1.2% H1 +0.4% • PBT H2 +7.3% Marston’s Inns and Taverns H1 +4.9% • Operating profit H2 +10.0% H1 +0.5% • H2 Operating margin of 20% +1.5% H2 Marston’s Pub Company H1 (4.5)% • Operating profit (2.9)% H2 Marston’s Beer Company H1 +8.6% •
Slide 7: Like-for-like performance
Like-for-like performance 2010 performance Current trading Like-for-like sales* % change Like-for-like sales* % change for 8 weeks to 27 November Drink +1.4% Drink +1.7% Food +2.5% Food +5.8% Total +1.7% Total +3.0% LFL food sales % Food mix % * excludes any pubs acquired in last two years 7 Present
Slide 8: Retail margin performance
Retail margin performance 0.4% 17.4% 0.2% 0.1% 0.2% 0.6% 16.4% (0.5)% Presentation name > date 8 Margin up by 1% through tight cost control and disposals
Slide 9: 2011 cost outlook
2011 cost outlook 1. Labour - manageable minimum wage impact of £1.5m 2. Food - modest increase of c.£0.5m • Mitigated by menu management and forward contracts 3. Lager - new contracts from October 2010, cost impact not material 4. Utilities - no increases anticipated 5. Carbon Reduction Levy - awai
Slide 10: Divisional KPIs
Heading (Arial Black 22pt) Divisional Heading (Arial KPIs Black 22pt) 2010 2009 Total Division % % EBIT vs. LY (4) (7) EBIT/pub vs. LY (2) (6) Substantive Estate % of estate 86 80 Rent/pub vs. LY +2 +2 Profit vs. LY +1 - First 8 weeks: EBIT down c.1.5%, EBIT per pub level Presentation name > date 10
Slide 11: Continued progress
Continued progress +16.8% +16.0% +13.2% % change +4.5% +3.9% +1.3% 1st 8 weeks: own-brewed volumes ahead of last year 11 Growth despite tough comparatives, Return on Capital improving
Slide 12: Cashflow summary
Cashflow summary £m 2010 2009 YOY Comments Operating cashflow 189.3 147.3 +42.0 Working capital and tax Net interest (72.6) (77.3) +4.7 Pre-investment FCF 116.7 70.0 +46.7 Net capex* (63.3) (32.6) (30.7) New-build Pre-dividend FCF 53.4 37.4 +16.0 Final dividend (33.0) (35.9) +2.9 Net cashflow 20.4 1
Slide 13: Financing structure
Financing structure £m Securitisation 1,060 • Amortises to 2035 Bank facility* 98 • Interest cover: 4.8x vs covenant >2.7x £295m to Aug 2013 • Debt to EBITDA: 1.4x vs covenant <4.5x 1,158 • 100% at fixed rates Net cash (60) Debt issue costs (16) Net debt 1,082 • Average cost of net debt c.6.9% Debt:
Slide 14: Securitisation highlights
Securitisation highlights Securitisation results Actual • Gross debt(1) outstanding as at 2 Oct 2010 £1,060.0m • EBITDA £128.7m • Free cashflow (FCF) £114.9m • Debt service (DSCR) £77.6m Financial covenants Actual Covenant • FCF : DSCR 1.5x >1.1x(2) • EBITDA : DSCR 1.7x >1.5x(3) • Net worth £540m £9
Slide 15: Summary
Summary 1. Focused strategy delivering growth • Progress in all three trading divisions • Improved margins, particularly in managed houses 2. Stronger cashflows • Improved working capital management • Capital investment increased to drive growth 3. Financing • Secure, stable and flexible finance str
Slide 16: Ralph Findlay, Chief Executive
Ralph Findlay Chief Executive
Slide 17: Polarising market presents opportunity
Polarising market presents opportunity 1. 2010: growth despite challenges • Economic - value, quality and service crucial to winning customers • Competitive - investment driving market share gains • Regulatory - the tie, town centre behaviour, health • Taxation - VAT, duty higher than in 2009 These
Slide 18: Clear divisional strategies
Clear divisional strategies STRATEGY KEY COMPONENTS OBJECTIVES • ‘F-Plan’ • New-build investment Exploit and develop • Sustainable growth • Innovative agreements competitive advantage • Greater control of retail offer • Lower gearing ratios in pubs and brewing • Increased ROC sectors • ‘Localness’ •
Slide 19: 'F-Plan' drives transformation
‘F-Plan’ drives transformation ‘F-Plan’: Food, Families, Females, Forty/Fifty somethings 2005 2010 28% Food sales mix: trends, strategy, development 40% 14m Meals served: 70% of visits are food-led 24m £11k AWT per pub: investment, churn £15k £5.70 Spend per head on food: value increased £6.06 62% F
Slide 20: New-builds drive higher returns
New-builds drive higher returns 2010 2010 2005-2009 actual target Number of pubs 15 15 30 Turnover per week £25k £20k £20.5k EBITDA conversion 31% 30% 31% Food mix 62% 55% 56% Food spend per head c.£6.50 c.£6.00 c.£6.00 EBITDA ROC* 17.3% 15.0% 16.7% LFL sales +4.5% *annualised pro-forma Presentation
Slide 21: Projection: returns to increase
Projection: returns to increase Illustrative pro-forma Actual New-builds ‘Pro-forma’ 2010 2011-2015 Number of pubs 490 120 610 AWT (£k per week) 15 25 17 Food sales mix 40% 60% 45% EBITDA (£m) 85 40 125 ROC c.9% c.15% c.11% 1. Visibility and control of plans • 2011: 20 sites under contract, 2 open a
Slide 22: Innovation in tenanted and leased pubs
Innovation Heading (Arial Black in tenanted 22pt) Heading andBlack (Arial leased22pt) pubs 1. MPC performance has benefited from relationships based on: • Fair rents • Transparency – Plain English agreements (2002), Rent Panel (2003) • Fair share of risks and rewards 2. Licensees have benefited from
Slide 23: MPC segmented: 2010 performance
Heading (Arial Black MPC 22pt)segmented: 2010 performance Heading (Arial Black 22pt) Long-term Retail Agreement Disposals Total leases Estate No. of pubs 1,000 600 64 1,664 % of estate 60 36 4 100 Divisional £71m £8m - £79m profit % of profit 90 10 - 100 YOY EBIT % +1 -24 -4 -4 STABILITY OPPORTUNITY
Slide 24: Retail Agreements: breaking the mould
Retail Heading (Arial Black Agreements: 22pt) Heading breaking the 22pt) (Arial Black mould 1. Improving consumer proposition key to success 2. Targets are achievable • £6m profit uplift from 600 Retail Agreement pubs by 2013 • Represents 20% ROIC 3. Leverages integrated model – food, systems, purch
Slide 25: Long-term leased pubs
Heading (Arial Black 22pt) Long-term Heading leased22pt) (Arial Black pubs 1. Well located, differentiated offers benefiting from entrepreneurial approach 2. Rent and profit increased • 90% of divisional profit (£70.9m) • Licensee stability in line with long-term average 2010 MPC Pub of the Year The
Slide 26: 'Localness' adds value
‘Localness’ adds value 1. ‘Localness’ • Provenance, tradition, heritage, authenticity 2. Signals of ‘Localness’ • Brewing, distribution, marketing 3. Competition • Regional brewers, micro brewers 4. Marston’s competitive advantage • Genuinely local • National distribution, cost-efficient • Industry-
Slide 27: Market leader in premium cask, bottled ale
Market leader in premium cask, bottled ale Premium Cask Ale 2005-2010 Marston’s Premium cask ale market share % vs. total ale market Bottled Ale 2005-2010 Marston’s market share % Total bottled ale market *source: BBPA market tracker Presentation name > date 27 Growth prospects, attractive consumer
Slide 28: Objective: 'best in class' service
Objective: ‘best in class’ service 1. Retail agreements – sharing best practice between pub divisions • Market insight, systems and resources MIT to take on management and development from Oct 2011 2. MPC and MBC – shared support and business initiatives in 2010 • Licensees face the same issues as i
Slide 29: Board changes from 2 Oct 2011
Board changes from 2 Oct 2011 1. Executive Directors to be reduced from 5 to 3 • CEO, COO, FD 2. Alistair Darby to be appointed COO reporting to Ralph Findlay 3. Derek Andrew standing down from Company after 30 years service • Will assist with momentum of new site acquisition programme 4. Pete Dalze
Slide 30: Summary
Summary 1. Clear strategy to exploit and develop competitive advantage • Key components identified by division • Linked to internal capabilities and external market trends • Affordable, deliverable, and within our control 2. Clear financial objectives • 2010 results demonstrate strategy is being wel
Slide 31: Appendices
Appendices
Slide 32: 85% of pubs are securitised
2,153 pubs + Marston’s Pubs Limited Other Group companies 273 Managed pubs 216 Managed pubs 1,563 Tenanted pubs 101 Tenanted pubs 1,836 317 + Presentation name > date 32 85% of pubs are securitised
Slide 33: Segmental analysis
Segmental analysis H1 H2 Total 2010 2009 2010 2009 2010 2009 £m £m % £m £m % £m £m % Turnover MIT 175.4 173.7 1.0% 198.4 194.1 2.2% 373.8 367.8 1.6% MPC 82.2 86.3 (4.8)% 88.6 89.5 (1.0)% 170.8 175.8 (2.8)% MBC 51.6 47.5 8.6% 54.5 54.0 0.9% 106.1 101.5 4.5% MGS Total 309.2 307.5 0.6% 341.5 337.6 1.2%
Slide 34: Shares, tax rate and capex forecast
• Average number of shares in 2010 568.8m • Number of shares in issue as at 2 December 2010 568.8m • Additional dilutive number of shares 2.0m Actual Forecast 2010 2011 • Tax rate 22.3% 23%-25% • Capex: Existing business £47m c.£45m Retail Agreements £6m c.£10m New-builds/sites £31m c.£45m £84m c.£1
Slide 35: Securitisation debt profile
Securitisation debt profile Tranche Type Principal Step-up Final Maturity outstanding Date Date at 2/10/2010 A1 Floating 176.2 July 2012 2020 A2 Fixed/Floating 214.0 July 2019 2027 A3 Fixed/Floating 200.0 April 2027 2032 A4 Floating 234.8 Oct. 2012 2031 AB1 Floating 80.0 Oct. 2012 2035 B Fixed/Float
Slide 36: Securitisation profile
Securitisation profile Securitised Debt Service (DS) RELEVANT YEAR Max £86.3m/£84.2m 100 A3 Step-up A1 Step-up DS pre Interest Income 90 80 Total DS 70 A4 AB1 A2 B 60 Interest Principal £m 50 40 30 20 10 Deposit Interest - '10 '11 '12 '13 '15 '16 '17 '18 '20 '21 '22 '23 '25 '26 '27 '28 '30 '31 '32 '
Slide 37: Avovraulins aave 7”
Avovraulins aave 7” a ON JUICE | F AN HEN , nA | R : England has it
Slide 38: www.marstons.co.uk
www.marstons.co.uk