Slide 1: Preliminary Results 2022
Grouse & Claret, Rowsley PreliminaryResults Preliminary Results 2022 2022
Slide 2: Andrew Andrea CEO
Andrew Andrea CEO
Slide 3: Introduction
Introduction 3 • Changing and volatile macro environment • Significant change programme – strong platform for 2023 • Financial progress - revenue growth, debt reduction, NAV improvement • Good progress on the “inputs” – satisfaction, team engagement, standards • Pubs historically resilient and well
Slide 4: Hayleigh Lupino CFO
Pitcher & Piano, Birmingham Hayleigh Lupino CFO
Slide 5: P&L Summary
P&L Summary 5 2022 2021 Comments Revenue £800m £402m Revenue growth, above 2019 Pub operating profit £115m £6m Uninterrupted sales in H2 Income/(loss) from associates £3m £(15)m H2 profitability improvement Profit/(loss) before tax £28m £(101)m Earnings/(loss) per share 4.3p (13.6)p Underlying conti
Slide 6: Like for like sales performance vs 2019 and 2021
Like for like sales performance vs 2019 and 2021 6 +6.8% +5.0% +4.2% vs 2019 vs 2021 +3.1% 3 +1.3% (8.8)% (0.9)% (1.1)% Oct-Nov Nov-Jan Jan-Apr Apr-Jul Jul-Oct Oct-Nov -1 World Cup Sales +c.30% -5 Drink +c.50% -9 ➢ Encouraging sales performance post pandemic restrictions
Slide 7: Cash flow
Cash flow 7 2022 2021 Comments £m £m Operating cash flow (excluding one-off Duty/VAT) 184 35 Net interest (76) (96) Pre-investment FCF 108 (61) FY22 - £10m HQ relocation Capex (70) (47) FY23 c.£60-£65m FY22 - 40% higher than NBV Disposals 10 18 FY23 c.£5m-£10m Net recurring cash flow 48 (90) Excepti
Slide 8: Debt structure
Debt structure 8 2022 2021 2020 £m £m £m Medium term Bank and cash (£280m 2024 facility) 183 153 225 Private placement (2024 facility) 40 40 40 Long term Securitisation (2035 maturity) 655 702 727 Property leasing (35–40-year financing) 338 337 337 Net debt pre IFRS 16 1,216 1,232 1,329 Lease obliga
Slide 9: Property, NAV and pensions
Property, NAV and pensions 9 • Property o Disposals 40% higher than NBV o £2.1 billion estate, increase of £93.4m since last year, 5% increase o Moved to annual valuations from triennial valuations, 1/3 of pubs inspected on a rotational basis o Doesn’t reflect the full COVID recovery • NAV per share
Slide 10: FY2023 cost outlook
FY2023 cost outlook 10 Cost Impact Comments Food cost • Planned food and drink price increase in Q2 Food and drink +7-8% • 60% of food contracted • 74% of drinks contracts fixed until October 2024 • Increases above NLW/NMW in FY2022 Labour +£2m • Maximising labour scheduling system • Performance rel
Slide 11: Driving future value
Driving future value 11 Potential NAV upside c£200m c£850m +£1.34 Additional per share opportunities c£290m CMBC underlying growth Potential c£360m M&A Back to a Billion sales Reversal of COVID impairments Borrowings below £1bn Total ➢ Clearly identified value creation opportunities
Slide 12: Andrew Andrea CEO
Andrew Andrea CEO
Slide 13: Market dynamics
Market dynamics 13 • Demand to socialise outside home • “Brand Pub” in strong demand • Lifestyle changes favour community pubs • Experience vs Convenience key to growth o Al fresco drinking and eating ➢ Pubs well placed to weather economic challenges
Slide 14: Our vision – “Pubs to be proud of”
Our vision – “Pubs to be proud of” 14 Core Pub Goals Loved by Guests: All of our pubs 800 Reputation or more ‘Great Place to work’: Peakon engagement 8 or more ‘Trusted’: All of our pubs to be 5* EHO Sales Culture – “Never Full, Fancy Another” Core Corporate Goals “Better than the rest” Consistent m
Slide 15: Pub Goals: satisfaction, team engagement, standards
Pub Goals: satisfaction, team engagement, standards 15 Reputation – one year trend Employee Engagement Stabilisation / New menus launch consumer 80 760 Launch of / price increases / awareness / 70 Rep into cost of living behaviour Further price regulation increases 60 720 Marston’s concerns 50 40 68
Slide 16: “Guest Obsessed” – menu overhaul
“Guest Obsessed” – menu overhaul • Menu relaunch project o Nimble behaviour – three month turnaround for April launch o No compromise on quality o Comprehensive training and digital spec book o July 2022 - New Kids Menu; “course correct” tweaks • Outcome - focused and efficient category management o
Slide 17: “Guest Obsessed” – exit of challenged formats
“Guest Obsessed” – exit of challenged formats 17 • Two For One – 74 pubs o Lagging core food-led estate by 10% on LFL; poor customer scores o “Capex light” de-branding completed within 3 months o September performance: ▪ Sales gap narrowed by 4% ▪ Reputation score improved 23 vs pre conversion score
Slide 18: “Guest Obsessed” – Two for One exit
“Guest Obsessed” – Two for One exit 18 Before After Trigger Pond, Warrington Post –v- Pre Capex spend £85k Sales +22% Covers +8% Drinks +20% Triggerpond, Warrington SPH +11% ➢ Swift action on underperforming formats strengthens future growth platform
Slide 19: “Raise the Bar” – creating great teams
“Raise the Bar” – creating great teams 19 • Recruit o 30% change of leadership group (direct reports to Ex-Com) ▪ External hires for Digital, Resourcing, Operations (x3) ▪ Promotion of “bright” internal talent o 50% of field operations changed – fresh external perspective o Ex-offender programme: “L
Slide 20: “We will Grow” - food-led pub evolution
“We will Grow” - food-led pub evolution 20 2021 2026 Target Carvery 2 for 1 23% 29% Community Signature Food 42% 38% Firebrand 14% Signature 12% Revere Community Country Revere Wet Rotisserie 5% 6% 14% 17% 2021 2022 2023 2026 % Pubs Community Food 66% 64% 59% 38% c120 Signature 29% 29% 32% 42% c130
Slide 21: “We will Grow” - Community Wet
“We will Grow” - Community Wet Acorn Accrington Post -v- Pre Capex spend £376k Acorn, Accrington Sales +52% Covers +52% Drinks +68%
Slide 22: “We will Grow” - Signature
“We will Grow” - Signature The Wighton, Torbay Post -v- Pre Capex spend £414k The Wighton, Torbay Sales +76% Covers +40% Drinks +58%
Slide 23: “We will Grow” - wet-led pub evolution
“We will Grow” - wet-led pub evolution 23 • C.900 wet-led franchised and managed pubs o C.90 to be converted to “Signature wet” o Same category principles as food-led o First conversions in 2023 • Lower capital requirement o Utilise “heritage” buildings o Proposed conversion spend c.£150-200k • Mini
Slide 24: “We will Grow” - evolution of franchise
“We will Grow” - evolution of franchise 24 • Strategic intention to continue to expand franchise o Now operates in 641 pubs within the estate o Proven model attractive to new licensees; drives sales and earnings growth • Extension of Pillar agreement o Marston’s takes share of drink and food sales o
Slide 25: “We will Grow” – digital strategy
We will Grow – Digital Strategy “We will Grow” – digital strategy 25 • Requirement to overhaul digital agenda o Lagging competition o Required new talent and additional investment o New Director of Digital joined July 2022 o Digital talent: Investment in recruitment and capability build • 2023 focus
Slide 26: “We will Grow” – garden investment
“We will Grow” – garden investment 26 • Estate well-positioned to exploit “Al Fresco” trend o c.85% of pubs have outside space o Summer trading demonstrates demand for pubs with good outside space • Pandemic “catch up” of investment required o Full garden audit o Replace/refurbish furniture o Annual
Slide 27: ESG Agenda: “Doing more to be proud of”
ESG Agenda: “Doing more to be proud of” 27 • Environment o Net Zero: ▪ Targets announced and strategy on track ▪ “Going Green” initiative incorporated into incentive schemes o Innovation: ▪ Installation of 123 rapid EV chargers in our estate, 200 by 2023 ▪ Energy efficient technology: two fully elec
Slide 28: Summary & outlook
Summary & outlook • Current trading o Trading to end of November has been positive, World Cup benefit o Christmas bookings encouraging • Clear and focused strategy o 2022 activity provides strong platform for future growth o Clear growth opportunities • “Brand pub” – still loved and resilient o Comm
Slide 29: Questions?
Questions?
Slide 30: Appendices
Holly Bush at Penn Appendices
Slide 31: P&L summary - statutory
P&L summary - statutory 31 2022 2021 Revenue £800m £402m Pub operating profit/(loss) £142m £(91)m Profit/(loss) from associates £3m £(15)m Profit/(loss) before tax £163m £(171)m Earnings/(loss) per share 21.7pence (20.3) pence Continuing operations results for the period
Slide 32: High-quality pub estate
High-quality pub estate 32 Pubs Lodges Total Number Value (£m) Number Value (£m) Value (£m) Securitised 942 1,140 7 15 1,155 Non-securitised Unsecured freehold 155 277 5 11 288 Freehold – property lease 127 324 10 26 350 Total freehold 1,224 1,741 22 52 1,793 Leasehold 244 281 8 13 294 Total 1,468 2
Slide 33: IFRS 16 – depreciation and interest analysis
IFRS 16 – depreciation and interest analysis 33 £m Depreciation Interest 2022 2021 2022 2021 Non-IFRS 16 32.5 31.5 75.3 77.0 IFRS 16 11.7 11.2 15.7 15.5 Total 44.2 42.7 91.0 92.5
Slide 34: Securitised debt profile
Securitised debt profile 34 Principal Step-up Final maturity Tranche Type outstanding at date date 1 October 2022 A2 Floating £157.3m July 2019 2027 A3 Fixed/floating £200.0m April 2027 2032 A4 Floating £130.9m October 2012 2031 B Floating £155.0m July 2019 2035 Total £643.2m
Slide 35: Debt profile
Debt profile 35 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 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 Financial year FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY203
Slide 36: Estate analysis by operating model
Estate analysis by operating model 36 No of Pubs Revenue (£m) EBITDA (£m) Operating profit (£m) 2022 2021 2022 2021 2022 2021 2022 2021 Managed and Franchised 1,201 1,152 761.2 381.6 137.6 37.8 94.7 (3.8) Tenanted and Leased 267 353 38.4 20.1 22.0 10.6 20.7 9.5 Total 1,468 1,505 799.6 401.7 159.6 48
Slide 37: Capital expenditure
Capital expenditure 37 80 £70.0m £66.0m £66.0m £63.0m £46.6m 40 0 2021 2022 2023 2024 2025
Slide 38: ESG – pub decarbonisation pathway: Scope 1&2
ESG – pub decarbonisation pathway: Scope 1&2 38 100 Decarbonisation potential (90)% 0 Scope 1 Scope 2 Staff training Building LED lighting Energy Efficient Avoid gas Renewable Power grid Insulation Inductor Electric heat CO2 Electric On-site solar Scope 1 and baseline baseline and control monitoring
Slide 39: ESG – decarbonisation pathway: scope 3
ESG – decarbonisation pathway: scope 3 39 100 Decarbonisation potential (78)% 0 Scope 1 baseline Upstream reduction PG&S supplier Menu changes Local and sustainable Reduce food waste T&D fleet Electric vehicles Capital goods sourcing Scope 3 offsetting from Scope 1 engagement & sourcing decarbonisat
Slide 40: Preliminary Results 2022
Preliminary Results 2022 www.marstonspubs.co.uk