Slide 1: Interim Results 2024
INTERIM RESULTS 2024 The Manor House of Whittington, West Midlands
Slide 2: Agenda
Agenda KEY HEADLINES Justin Platt FINANCIAL RESULTS Hayleigh Lupino INITIAL IMPRESSIONS Justin Platt SUMMARY AND OUTLOOK Justin Platt QUESTIONS
Slide 3: Positive Momentum YTD with encouraging outlook for H2
Positive Momentum YTD with encouraging outlook for H2 Strong Trading Performance Good Earnings Growth ahead of market LFL Revenue +7.3% Pub Operating Profit +22% Continued Debt Reduction Solid Operational Progress Debt down £25M Reputation up to 787 Encouraging Outlook for H2 3
Slide 4: Financial Review
Hayleigh Lupino CFO FINANCIAL REVIEW 4
Slide 5: LFLs up vs. H1 FY2023, consistently outperforming the market
LFLs up vs. H1 FY2023, consistently outperforming the market Strong festive trading over key dates Extremely wet February and March +8.2% +7.3% +6.6% H1 FY2024 Q1 FY2024 Q2 FY2024 Oct-Dec 23 Jan-Mar 24 5
Slide 6: Strong earnings and operating profit growth, with significant margin improvement
Strong earnings and operating profit growth, with significant margin improvement H1 H1 Comments FY2024 FY2023 Revenue £428m £407m +5.2% growth Pub operating profit £53m £43m +22.3% pub profit growth Pub operating profit margin 12.3% 10.6% +170bps Net finance costs £(53)m £(49)m Income/(loss) from as
Slide 7: Improved margins to deliver further cash upside
Improved margins to deliver further cash upside 1.7% PUB OPERATING MARGIN IMPROVEMENT Operating Margin % - H1 FY2023 vs H1 FY2024 14.0% 13.0% 0.2% 0.4% 0.1% 0.4% 12.3% 12.0% 1.3% (0.6)% 11.0% 10.6% 10.0% 9.0% 8.0% H1 FY2023 Energy Business Head Office Pub Other Guest H1 FY2024 & Property Simplificat
Slide 8: Improving operating cash flow
Improving operating cash flow H1 H1 £m Comments FY2024 FY2023 Operating cash flow 91 70 Net interest (48) (41) Pre-investment FCF 43 29 Capex (22) (41) FY2024 c.£50m Disposals 10 24 FY2024 c.£50m Net cash flow 31 12 8
Slide 9: Continued debt reduction, underpinned by freehold estate
Continued debt reduction, underpinned by freehold estate SECURITISATION LTV c.50% WITH A LONG-TERM, LOW-COST DEBT STRUCTURE £m £m Debt and LTV – excl. IFRS16 Securitised Debt and LTV 1,240 80% 750 70% 1,220 700 65% 75% 1,200 650 60% 70% 1,180 600 55% 1,160 550 65% 50% 1,140 500 60% 45% 1,120 450 1,1
Slide 10: Financing
Financing Finance • £340 million amendment and extension to the financing facility to the end of July 2026 Facility • £120 million is hedged, £60 million fixed at 3.73% to 2031, £60 million fixed at 3.45% to 2029 • £581 million Long-term securitisation debt to 2035 Securitisation • £120 million secu
Slide 11: Stable NAV, continued strategic disposals
Stable NAV, continued strategic disposals • £10 million disposal proceeds in H1, c.£26 million by 14 May, £50 million expected in FY2024 Property • High quality 83% freehold pub estate, £2.1bn asset value Net Asset • NAV of £0.95 per share (H1 FY2023: £0.98 per share) Value • £11.4 million surplus v
Slide 12: Positive cash contribution from CMBC
Positive cash contribution from CMBC UNDERLYING RESULT: DIVIDEND RECEIVED: H1 FY2024 £(0.6)m H1 FY2024 £13.8m H1 FY2023 £2.2m H1 FY2023 £10.6m As with prior years, CMBC H1 result reflects seasonality, with majority of profit earned in H2 12
Slide 13: Summary
Summary Current • Encouraging start to H2 with like-for-like sales in the last six weeks +4.0% vs. last year Trading • Excluding impact of additional May bank holiday like-for-like sales were +5.3% • Expect to deliver £8 million of cost efficiencies in FY2024, including impact of Costs & financing t
Slide 14: Initial Impressions
Justin Platt CEO INITIAL IMPRESSIONS
Slide 15: Current focus is identifying Marston's future value drivers
Current focus is identifying Marston’s future value drivers Broad Consumer & Leisure Sector Background Immersion into Marston’s Business • Most recently in a multi-site leisure business • Nationwide UK Pub Visit Programme • Driving Guest Experience Operating Model • Understand what drives the busine
Slide 16: The UK Pub Market offers significant value opportunity
The UK Pub Market offers significant value opportunity Inherent human need to socialise Pubs weaved into the fabric of UK society UK PUBS & BARS MARKET – TOTAL REVENUE3 +£4.2 BILLION £28.4 £32.6 +3% BILLION BILLION CAGR 2023 2028 • 2/3 of UK adults socialise with friends/family every week1 • 88% of
Slide 17: Local Pub Segment will be lucrative for those who get it right
Local Pub Segment will be lucrative for those who get it right Local Pub Market is buoyant Relentless delivery to drive consumer demand HOSPITALITY MARKET LFL REVENUE GROWTH TOP 5 FACTORS DRIVING PUB VISITATION MARCH ‘24 MAT +7.4% +5.2% PUBS RESTAURANTS -4.3% LOCATION FOOD + DRINK EXCELLENT FRIENDLY
Slide 18: Marston's has strong fundamentals to build on
Marston’s has strong fundamentals to build on Community Based Estate Predominantly Freehold Ownership 10% City Centre Total Asset Value 90% Community Pub £2.1 BN Balanced Management Model Cash Generative Operating Model EXAMPLE MARSTON’S TOTAL PUB MANAGEMENT CASE 2023 P+L STUDY REVENUE £1,030K 30% 5
Slide 19: Operational delivery has been strong in the last 6 months
Operational delivery has been strong in the last 6 months Promising improvements in guest satisfaction MARSTON’S REPUTATION SCORE1 MARCH 2024 787 SEPT 2023 766 MARCH 750 • Simple and loved food menus 2023 • Enhanced premium drinks offer • Guest obsessed - a warm welcome and attentive service • Comfo
Slide 20: Operational delivery: early strides on reducing cost
Operational delivery has been strong in the last 6 months Early strides on reducing cost to drive margin improvements COST MARGIN IMPACT INITIATIVES • Head Office reorganisation – ongoing efficiencies LABOUR +0.5% • Right people, right time - Labour Scheduling Tool benefits • Continued menu simplifi
Slide 21: Continued passion for driving progress on our ESG agenda
Operational delivery has been strong in the last 6 months Continued passion for driving progress on our ESG agenda H1 HIGHLIGHTS • 15,000+ meals rescued from food waste in H1 PRODUCT • Supporting charities to eradicate food poverty Fallow Field, Telford PLANET • Increased electric vehicle chargers …
Slide 22: H2 outlook is very encouraging
H2 outlook is very encouraging Driving Demand to Sustain Revenue Continued Focus on Costs • Negated impact of NLW increase April 2024 LABOUR • Variable labour scheduling refinement FOOD • Majority of costs fixed + DRINK • 75-80% of food & drink contracted through H2 • MAJOR Sports TV Events UTILITIE
Slide 23: Future strategy focused on reliable delivery of free cash flow
Future strategy focused on reliable delivery of free cash flow Optimising the Operating Model Consumer-led drive for Growth • Holy Trinity of Pub Management The Industry Leading Reputation GUEST SATISFACTION Well-defined Differentiated Effective Target Consumer use of Capital Segments Propositions I
Slide 24: An Investment Case for a reliable growth company
An Investment Case for a reliable growth company Marston’s Autumn Investor Day Powerful value Sustained Free Cash Powerful drivers for Sustained cash flow drivers for growth Flow Generation growth generation Pathway to reduce Clear and consistent debt below a billion metrics to track success 24
Slide 25: Summary and Outlook
Summary and Outlook Strong H1 Performance Well placed to win in Encouraging H2 Outlook a growing market Future value drivers to Reliable cash generation provide platform for enabling continued sustainable growth reduction of debt Ship Inn, Tresaith, West Wales Autumn Investor Day 25
Slide 26: Q&A
MARSTONS Q&A
Slide 27: Appendix
Appendix MARSTONS
Slide 28: Statutory P&L summary
Statutory P&L summary H1 H1 £m Comments FY2024 FY2023 Revenue 428.1 407.0 +5.2% growth Pub operating profit 51.8 43.1 +20.2% growth Income/(loss) from associates (16.6) 2.2 £13.8.m dividend received Loss before tax (43.5) (38.1) Swap movement & CMBC one-offs Loss per share (p) (5.8) (4.5) 28
Slide 29: High quality pub estate
High quality pub estate Pubs Lodges Total Number Value (£m) Number Value (£m) Value (£m) Securitised 895 1,137 7 15 1,152 Non-securitised Unsecured freehold 141 247 5 13 260 Freehold – property lease 127 309 10 28 337 Total Freehold 1,163 1,693 22 56 1,749 Leasehold 232 270 8 13 283 Total 1,395 1,96
Slide 30: IFRS 16 – depreciation and interest analysis
IFRS 16 – depreciation and interest analysis £m Depreciation Interest H1 H1 H1 H1 FY2024 FY2023 FY2024 FY2023 Non-IFRS 16 16.7 16.9 46.0 42.0 IFRS 16 6.1 5.9 6.9 6.9 Total 22.8 22.8 52.9 48.9 30
Slide 31: Securitised debt profile
Securitised debt profile Principal outstanding Step-up Tranche Type Final maturity date at 30 March 2024 date A2 Fixed/floating £114.5m July 2019 2027 A3 Fixed/floating £200.0m April 2027 2032 A4 Floating £113.9m October 2012 2031 B Fixed/floating £155.0m July 2019 2035 Total £583.4m 31
Slide 32: Debt profile
Debt profile Max Securitised Debt Service 100.0 £81.2m 80.0 Debt Service 60.0 A3 Step Up Principal £m 40.0 20.0 Interest 0.0 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 Financial Year (£m) FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 Principal 41.5 43.9 46.
Slide 33: Estate analysis by operating model
Estate analysis by operating model Operating No. of Revenue EBITDA Profit Pubs (£m) (£m) (£m) H1 H1 H1 H1 H1 H1 H1 H1 FY2024 FY2023 FY2024 FY2023 FY2024 FY2023 FY2024 FY2023 Managed and Franchised 1,186 1,194 411.4 388.9 66.3 55.9 44.1 33.5 Tenanted and Leased 209 246 16.7 18.2 9.2 10.3 8.6 9.7 Tota