Slide 1: Preliminary results for the 52 weeks ended 30 September 2023
Preliminary results for the 52 weeks ended 30 September 2023 The King Charles, Chesham
Slide 2: William Rucker - Chair
The Hollybush, Penn William Rucker - Chair
Slide 3: Introduction
Introduction 3 • Strong trading ahead of the market despite consumer headwinds • Revenue and earnings growth, cash generation, debt reduced • Good operational progress • Good platform for sales, margin and cash progression into 2024
Slide 4: Market dynamics
4 Market dynamics • Resilience of demand to socialise remains strong • ‘Value for Experience’ key to growth • ‘Best near me’ • Strong reason to visit (Sport, Music) • High quality outdoor space • Maximise sales on high demand occasions • Offer value outside those periods • Hybrid working favours com
Slide 5: New Chief Executive Officer – Justin Platt
New Chief Executive Officer – Justin Platt 5 • Sense of momentum and pace after a challenging period for the sector which Andrew Andrea navigated the business through well • Justin Platt joins as CEO on 10 January 2024 • First-class management team in place to support Justin
Slide 6: Hayleigh Lupino CFO – Financial Review
Hayleigh Lupino CFO – Financial Review
Slide 7: Like-for-like sales performance versus FY2022
Like-for-like sales performance versus FY2022 7 FY2023 like-for-like +10.1% Impact of 20 +19.2% Omicron variant in Dec 2021 Hottest June on record +10.9% 10 +7.7% +6.8% +7.2% +7.4% 0 Oct - Nov Nov - Jan Jan - Apr Apr - July July - Sept 9 weeks Oct - Nov ➢ Like-for-like sales market outperformance; b
Slide 8: P&L summary
P&L summary 8 2023 2022 Comments Revenue £872m £800m +9.1% growth Pub operating profit £125m £115m +8.1% pub profit growth Income from associates £10m £3m Earnings growth, £21.6m dividend received Net finance costs £(99)m £(91)m Increase in base rates and new RCF costs Profit before tax £36m £28m +2
Slide 9: Cash flow
Cash flow 9 2023 2022 Comments £m £m Operating cash flow 141 134 Net interest (89) (76) Bank fees (4) Capex (65) (70) FY24 c.£50-£55m FY23 - higher than NBV Disposals 51 10 FY24 c.£50m Net cash flow – pre exceptionals 34 (2) Exceptional cash flows Brewing disposal proceeds 28 £28.2m contingent payme
Slide 10: Debt to asset value
Debt to asset value 10 Debt reductions and improving loan to value Debt and LTV - ex IFRS16 Securitised Debt and LTV 1,350 80.0 % 750 80.0 % 75.0 % 700 75.0 % 1,300 70.0 % 70.0 % 1,250 650 65.0 % 65.0 % 1,200 600 60.0 % 60.0 % 1,150 550 55.0 % 55.0 % 1,100 500 50.0 % 50.0 % 450 45.0 % 1,050 45.0 % 4
Slide 11: Property, NAV and pensions
Property, NAV and pensions 11 • Property • Disposals higher than NBV • £2.1 billion estate, fair values of core estate maintained • NAV per share • NAV per share £1.01 • Pensions • £12.9 million accounting surplus vs £15.1 million surplus October 2022 • £6m net annual cash outflow • Triennial valuat
Slide 12: CMBC
CMBC 12 • Income from associates • 40% share of PAT in CMBC • Non-cash item • FY23 £9.9m vs £3.3m in FY22 • CMBC dividends derived from operating cash flow of CMBC • Cash flow from the operating business including working capital movements and one-offs • FY23 £21.6m vs £19.4m in FY22 • Joint venture
Slide 13: Operational Review
Curious Cow, Harrogate Operational Review
Slide 14: Simplified business
Simplified business 14 • Creating a great pub business • A place to socialise – always welcome to simply have a drink • ‘Best around here’ – sport, music, ale • Well invested outside space • Menu simplification - great food quality, speed of service and guest satisfaction • Predominantly community p
Slide 15: Investment in people
Investment in people 15 • Recruit • Use of social media platforms • Alternative talent pools – ex-offender programme • Apprenticeship programme – 306 apprentices; c75% retention • Reward • Continue to pay above NMW • Boost – increased variable pay to pub teams • Retain • Aspire programme for deputy
Slide 16: Creating a sustainable business
Creating a sustainable business 16 Saved 302,575 pints of water per day Through ‘Doing more to be proud of’ Supporting ex-offenders back into we focus on four core pillars: Planet, employment People, Product and Policy, which reflect our core values and the areas we can make the biggest impact 23,84
Slide 17: Pub goals – satisfaction, engagement and standards
Pub goals – satisfaction, engagement and standards 17 46% 93% 84% 83% 79% 75% 29% 20% 41% 620 735 766 7.8 7.8 8.2 Guest satisfaction & Reputation score >800 Team engagement score & participation % Standards - EHO 5* % Oct-21 Oct-22 Oct-23 ➢ Strong progress on key pub goals
Slide 18: Driving efficiency
Driving efficiency 18 • Benefits of action taken in FY2023 will further drive efficiencies in FY2024 • Labour • Upgraded labour deployment system • Right number of people at the right time • Repairs • Process efficiencies – minimising call out charges • Energy • Smart meters integrated into reportin
Slide 19: FY2024 cost outlook
FY2024 cost outlook 19 Cost Impact Comments Food cost • Planned food and drink price increase in Q2 Food and drink • 80% of food contracted c2-3% • 75% of drinks contracts fixed until October 2024 • £1m H2 impact mitigated through efficiencies Labour Expect to mitigate • Increases above NLW/NMW in p
Slide 20: Key priorities
Key priorities 20 2024 Focused community pub business and outdoor trading Technology supporting and enhancing customer journey Evolution of partnership Stable cost outlook Impact of Head Office cost reductions in FY2024 - £5m Further £3m cost efficiency programme to flow through in FY2024 Predictabl
Slide 21: Outlook – FY2024
Outlook – FY2024 21 Operating profit - upgraded by £3m – based on cost efficiencies • Price increases in Q2 – expected to normalise thereafter Revenue • Targeting c.£50m disposals will naturally impact revenue growth • Net revenue still expected to grow Margins • Improvement of +0.9%, underpinned by
Slide 22: Outlook – expected margin development
Outlook – expected margin development 22 2% pub EBIT margin improvement through efficiencies 1.1% Post FY24 Margin Development ➢ Improved margins to deliver further cash upside
Slide 23: Summary
Summary 23 • FY2023 - year of simplification delivering positive momentum • Revenue and earnings growth • Cash generation and debt reduction • FY2024 will see benefit from actions taken in FY2023 to improve margins • Cost efficiency programme to drive operational efficiencies • Continued evolution o
Slide 24: Questions?
LP - ele Bp eB) - | > Se @ MARSTONS Questions? Where people make pubs.
Slide 25: Appendices
‘ity Mawr, Cardiff @ MARSTONS Appendices Where people make pubs.
Slide 26: P&L Summary
P&L Summary 26 2023 2022 Comments Revenue £872m £800m Pub operating profit £90m £142m Income from associates £10m £3m Net finance (costs)/income £(121)m £18m (Loss)/profit before tax £(21)m £163m Property valuation and swap movement (Loss)/earnings per share (1.5)p 21.7p Continuing operations result
Slide 27: High-quality pub estate
High-quality pub estate 27 Pubs Lodges Total Number Value (£m) Number Value (£m) Value (£m) Securitised 909 1,142 7 15 1,157 Non-securitised Unsecured freehold 141 247 5 13 260 Freehold – property lease 127 308 10 28 336 Total freehold 1,177 1,697 22 56 1,753 Leasehold 237 274 8 13 287 Total 1,414 1
Slide 28: IFRS 16 – depreciation and interest analysis
IFRS 16 – depreciation and interest analysis 28 £m Depreciation Interest 2023 2022 2023 2022 Non-IFRS 16 33.7 32.5 85.4 75.3 IFRS 16 11.8 11.7 13.8 15.7 Total 45.5 44.2 99.2 91.0
Slide 29: Securitised debt profile
Securitised debt profile 29 Principal Step-up Final maturity Tranche Type outstanding at date date 30 September 2023 A2 Fixed/floating £129.2m July 2019 2027 A3 Fixed/floating £200.0m April 2027 2032 A4 Floating £119.6m October 2012 2031 B Fixed/floating £155.0m July 2019 2035 Total £603.8m
Slide 30: Debt profile
Debt profile 30 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 Principal £m 39.4 41.5 43.9 46.3 48.8 51.5 54.4 57.4 60.5 47.6 47.8 50.6 53.6 Interest £m 34.6 37.4 37.3 33.6 31.5 29.4 25.8 22.1 18.4 30.6 27.3 23.7 19.8 Debt Service £m 74.0 78.9 81.2 79.8 80
Slide 31: Estate analysis by operating model
Estate analysis by operating model 31 No of Pubs Revenue EBITDA Operating profit (£m) (£m) (£m) 2023 2022 2023 2022 2023 2022 2023 2022 Managed and Franchised 1,184 1,199 835.9 766.1 149.6 140.6 105.2 97.4 Tenanted and Leased 230 266 36.4 33.5 20.7 19.1 19.6 18.0 Total 1,414 1,465 872.3 799.6 170.3
Slide 32: Never full, fancy another?
Never full, fancy another?