Slide 1: Brains Transaction Update
E | ‘ =, i ' Ue * ‘Brains Transa ., » Update ~ 7 Pris lg }. : ‘ke
Slide 2: Strategic considerations
2 Strategic considerations • Clear financial strategy • Reduce borrowings to below £1bn by 2024 • Clear organic growth plans • M&A considerations • Expansion does not always require us to own bricks and mortar • Capital light M&A will be considered • We aspire to be operating partner of first choice
Slide 3: Brains opportunity
3 Brains opportunity • Pub estate • Principally based in South and West Wales; comprising managed and leased pubs • Comprising destination food and wet-led community pubs which are highly complementary with Marston’s existing portfolio of 106 pubs in Wales • Good quality pub estate with stable earni
Slide 4: Ty-Risha Alehouse, Tynant Inn, The Ship Tresaith
4 Ty-Risha Alehouse Pen-Y-Cae Bridgend CF32 9SN Tynant Inn Morganstown Road, Morganstown Cardiff CF15 8LB The Ship Tresaith, West Wales
Slide 5: Pub estate composition
5 Pub estate composition Pubs Proforma* Proforma* Proforma* Revenue EBITDA (£m) EBITDA per (£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 franchise Total
Slide 6: Summary financials
6 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 Investment growth opp
Slide 7: Cashflow implications
7 Cashflow implications Cashflow considerations Cashflows for completion Rental prepayments £m Completion - Yr1 rent in advance 5.5 April - Yr2 rent in advance 5.5 Freeholds 4 15 Funding ULP sales in March 8 H2 Disposals 7 Annual maintenance capex 2 Growth capex TBC Must meet return criteria ➢ Initi
Slide 8: Future opportunities
8 Future opportunities • Will consider similar opportunities • ROI accretive • Reduces operating leverage • Consistent with financial strategy to reduce borrowings • Establish Marston’s as “operating partner of choice” • Market-leading national pub operator with strong credentials • Operate pub form
Slide 9: Questions
Questions
Slide 10: Pub Numbers
10 Pub Numbers Marston’s Brains Total Core Core Managed 490 70 560 Partnership 874 37 912 Total pubs 1,364 107 1,471 Brains Pubs operated under short-term arrangements: 40
Slide 11: IFRS16 financials
11 IFRS16 financials Proforma IFRS 16 £m EBITDA 14 Overhead (2) Depreciation (2) IFRS 16 depreciation (3.5) EBIT 6.5 Interest (4) IFRS16 PBT 2.5 IFRS16 Debt 80
Slide 12: Red Dragon, Pheasant, Duke of Wellington
12 Red Dragon High View, LitchardHill, Bridgend CF31 1QJ Pheasant Heol Eglwys, Pen Y Fai Bridgend CF31 4LY Duke of Wellington The Hayes Cardiff CF10 1AJ
Slide 13: Slide 13