Slide 1: The Marston's Opportunity - Capital Markets Day
The Marston’s Opportunity CAPITAL MARKETS DAY 16 October 2024
Slide 2: Welcome
Welcome Ken Lever Chairman
Slide 3: The Marston's Opportunity
The Marston’s Opportunity Justin Platt CEO The Bell Inn, Shropshire
Slide 4: A New Chapter as a Leading Pure Play Hospitality Business
A New Chapter as a Leading Pure Play Hospitality Business Simplified & focused pub operating model with a clearly defined growth strategy Revitalised management team Key value drivers established to enhance operational performance & drive growth through accelerated investment capex across five disti
Slide 5: Agenda
Agenda The Marston’s Differentiated Financials & 1 Opportunity 2 Pub Formats 3 Capital Allocation Justin Platt Ed Hancock, Chief Hayleigh Lupino CEO Development Officer CFO Meet the Summary Q&A 4 Justin Platt 5 6 Get a flavour of Executive Team CEO Marston’s 5
Slide 6: Marston's is a pure play hospitality business
Marston’s is a pure play hospitality business Sold CMBC stake UK Pub Owner in July 2024 for & Operator £206M 1,339 Pubs Total assets Nationwide £2.1BN NAV/share £1.01 2023 financials Revenue £872M 83% freehold EBITDA £170M ownership 2023 financials. Pub only, excludes CMBC 6
Slide 7: The Marston's Opportunity
The Marston’s Opportunity Enterprise Value Identifying core value drivers ‘A focused pub business Strategy with lucrative value drivers that reliably deliver’ ‘A pub operator with a brewing business tacked on the side’ Format-led portfolio thriving Targeted pub acquisitions Execute new value drivers
Slide 8: Time Together is More Important than Ever
Time Together is More Important than Ever 8
Slide 9: Pubs continue to play a huge role in UK socialising
Pubs continue to play a huge role in UK socialising UK PUBS + BARS MARKET - TOTAL REVENUE1 +£4.2 £32.6 +3% £28.4 BILLION CAGR BILLION BILLION 2023 2028 1. Mintel UK Pub Visiting Report, Dec 2023 9
Slide 10: Pub Market Dynamics are Changing
Pub Market Dynamics are Changing Expanding range of occasions Consumers have a lot more choice UK PUBS – 2024 RANGE OF USAGE OCCASIONS INCREASED RANGE OF HOSPITALITY VENUES CASUAL PUBS 15 DINING CAFES COFFEE COMPETITIVE SHOPS SOCIALISING SPORTS FAST FOOD DISTINCT RESTAURANTS BARS FOOD POP UP - HALLS
Slide 11: 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 The Haywain P+L1 STUDY REVENUE £1,03
Slide 12: Fusing Marston's with reality
Fusing Marston’s with reality Consumer Reality Marston’s Magic Socialising not Drinking Suburban Dominated Locations Compelling Reason to Visit Flexible Estate to Evolve at Pace Variety of Usage Occasions Pubs with Scope for Multi-occasions Power of the Local Expertise in Running Local Pubs SOCIALIS
Slide 13: Shared Good Times
Shared Good Times • Friendly and authentically local • Teams embedded in the community • Socialising on your terms Best Service Best Best Environment Product • Welcoming, vibrant atmosphere for all • Leading drinks brands • Zoning and tempo to suit all occasions • Sector-leading food menus • Free fl
Slide 14: Opportunity for 5 well-defined Marston's formats
Opportunity for 5 well-defined Marston’s formats Occasion Occasion UK EATING + DRINKING OUT MARKET HITTING THE HIGH ST CITY SOCIALS WEEKEND MEAL UPSCALE SENIOR PREMIUM DINERS MAINSTREAM RURAL ADULT DINING FAMILY PUB FAMILY VALUE PUB EASY MIDWEEK REGULARS DINERS MEAL BIG NIGHT IN SPORT PUB THE LOCAL
Slide 15: 5 Differentiated Pub Formats
5 Differentiated Pub Formats Locals Pub Locals Sport Pub Adult Dining Pub Family Pub 2 Room Pub 15
Slide 16: Creating a balanced portfolio across consumer segments
Creating a balanced portfolio across consumer segments LOCALS PUB LOCALS SPORT PUB FAMILY PUB ADULT DINING 2 ROOM PUB Regulars + Locals Regulars + Locals Families Affluent Adults TARGET Families + Entertainment with Primary School SEGMENT Adults 35-64 Adults 35-64 Pub Regulars focused Adults Childre
Slide 17: Vision, Purpose and Strategy
VISION PURPOSE To be the UK’s leading Shared Good Times Local Pub Company * * by Total Revenue STRATEGY To create a high margin, highly cash generative local pub company based on differentiated formats and a brand portfolio that is naturally balanced to appeal across a range of consumer segments 17
Slide 18: Strategy & Priorities
Strategy & Priorities To create a high margin, highly cash generative local pubPURPOSE VISION company based on differentiated formats and a brand portfolio that is naturally balanced to appeal across a range of consumer segments KEY VALUE DRIVERS 1 Execute a Market Leading Pub Operating Model 2 • Ca
Slide 19: Execute a Market Leading Pub Operating Model
Execute a Market Leading Pub Operating Model Effective Pub Management Revenue + Cost Management Disciplines Revenue • Demand driving marketing Management • Enhancing revenue per guest GUEST GUEST SATISFACTION SATISFACTION Lean and • Reducing overheads flexible • Driving labour productivity cost mode
Slide 20: Capex to Create Differentiated Pub Formats
Capex to Create Differentiated Pub Formats Build Unique Propositions that Drive Consumer Penetration Family Pub Locals Sport Pub 2 Room Pub Eating & Drinking venue that drives appeal Create must-visit venue for event viewing Access broader demographic & wider with Parents AND Kids with leading edge
Slide 21: Digital Transformation
Digital Transformation Driving Revenue per Guest Optimising Cost Efficiency Data-led Digital Strategy • Enhancing Order & Pay user experience • Leveraging hyper- local pub guest data • Building format-centric loyalty programmes Technology driven AI-led Stock Labour Productivity Management 21
Slide 22: Expansion of Managed & Partnership Models
Expansion of Managed & Partnership Models A Balanced Model equipped to serve consumer-led formats Further Strengthen Partnership Model Expand Managed Estate • Innovate agreements to build Partner • Hothouse for Estate & Format Development flexibility and appeal • Talent Development & Partner Pipelin
Slide 23: Leveraging Marston's Synergies in Targeted Acquisitions
Leveraging Marston’s Synergies in Targeted Acquisitions Building Marston’s Strategic Synergies Leveraging in Acquisitions Market leading operating model Identify target local pub opportunities across Capex effectiveness across formats priority formats Brands + marketing scale + + LOCAL PUB SPORT PUB
Slide 24: Strategy & Priorities
Strategy & Priorities To create a high margin, highly cash generative local pubPURPOSE VISION company based on differentiated formats and a brand portfolio that is naturally balanced to appeal across a range of consumer segments KEY VALUE DRIVERS 1 Execute a Market Leading Pub Operating Model 2 • Ca
Slide 25: The Marston's Opportunity
The Marston’s Opportunity Enterprise Value Identifying core value drivers ‘A focused pub business THE UK’s Leading with lucrative value drivers Strategy that reliably deliver’ Local Pub Company ‘A pub operator with a brewing business tacked on the side’ Format-led portfolio thriving Targeted pub acq
Slide 26: Meet the Executive Team
Meet the Executive Team 2 NEW Executive roles have been added to drive the delivery of the strategy Justin Platt Hayleigh Lupino Mags Dixon Ed Hancock Chief Executive Chief Financial Commercial Marketing Chief Development Officer Officer Director Officer NEW role created to develop & deliver differe
Slide 27: Differentiated Pub Formats
Differentiated Pub Formats Ed Hancock, Chief Development Officer The Bluebell, The King Charles,Malvern Chesham
Slide 28: 5 Differentiated Pub Formats
Locals Pub Locals Sport Pub Adult Dining Pub 5 DIFFERENTIATED PUB FORMATS Family Pub 2 Room Pub 28
Slide 29: Slide 29
Slide 30: Locals Pub
LOCALS PUB Regulars + Locals Adults 35-64 WARM + WELCOMING ALWAYS ON ACTIVITY ENVIRONMENT CALENDAR Regulars + Locals Shared Good Times at Your Local COMMUNITY ENGAGEMENT FRIENDLY LICENSEE 30
Slide 31: Sports broadcasters
TNT} SPORTS sky /sports | “S _ eats sonrs puny “gas ‘e a @ MARSTONS
Slide 32: Local Sports Pub
LOCAL SPORTS PUB Regulars & Locals Entertainment-focused adults MARKET LEADING GREAT VIEWING AREAS TECHNOLOGY Regulars + Locals The Big Event Shared at Your Local PASSIONATE LICENSEE SPORTS ACTIVITIES 32
Slide 33: Signature Pub Collection
@ MARSTONS SIGNATURE PUB COLLECTION
Slide 34: Adult Dining Pub
ADULT DINING PUB Affluent Adults 35-64 CLASSIC CHARM 1ST CLASS FOOD QUALITY Regulars + Locals Good Food, Good Times RANGE OF LEADING DRINKS RELAXED FRIENDLY SERVICE BRANDS 34
Slide 35: Marston's
@ MARSTONS
Slide 36: Family Pub
FAMILY PUB Families with primary school kids FOOD & DRINK FOR ALL THE FAMILY EVENTS FAMILY Regulars + Locals Shared Good Times with all the family ZONED BAR AREA THAT FEELS KIDS SPECIFIC ZONE MORE ADULT 36
Slide 37: Marston's
< @ MARSTONS
Slide 38: Two Room Pub
TWO ROOM PUB Families & Pub Regulars LICENSEE WHO EMBRACES 2 CLEARLY DEFINED PUB ZONES 2 PUBS IN 1 Regulars + Locals Shared Good times for everyone FOOD & DRINK SPORTS ACTIVITIES FOR ALL THE FAMILY 38
Slide 39: 2 Room Case Study
2 ROOM CASE STUDY yowe vs, Boat WATCH LIVE sky INSIDE & OUT HAND STRETCHED FRESHLY MADE PIZZA FANTASTIC LIVE ENTERTAINMENT
Slide 40: The Acorn at Accrington
The Acorn at Accrington After Before Opportunity: Increasing the trade zone opportunity Results: 31% uplift in guest numbers & 30%+ ROIC to drive incremental guest penetration 40
Slide 41: Summary
Summary LOCALS PUB LOCALS SPORT PUB FAMILY PUB ADULT DINING 2 ROOM PUB Regulars + Locals Regulars + Locals Families Affluent Adults TARGET Families + SEGMENT Entertainment with Primary School Adults 35-64 Adults 35-64 Pub Regulars focused Adults Children The Big Event Share Good Times Share Good Tim
Slide 42: Financials & Capital Allocation
Financials & Capital Allocation Hayleigh Lupino, CFO The Bluebell, Rotherham
Slide 43: Marston's financial ambition
Marston’s financial ambition Focused on creating value and driving operational leverage Deleveraging Operational Revenue growth leverage and Free cash flow Shareholder returns ahead of the market EBITDA margin generation expansion Targeted M&A 43
Slide 44: LFL revenue growing faster than the market
LFL revenue growing faster than the market Track record of delivering growth above industry rates Total Revenue (£m) Monthly LfL Growth vs. Market3 898 Marston’s 872 Total Market 3 800 2022 2023 2024F1 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Jul-24 Aug-24 LfL (%) (1)2%
Slide 45: Focus on guest reputation will ensure sustained growth
Focus on guest reputation will ensure sustained growth Higher guest reputation scores drive greater uplift in revenue Guest reputation track record Guest reputation drives higher revenue growth 7.8 % YOY revenue growth 5.4 % 5.7 % 3.0 % 766 787 731 0.3 % 627 <750 750 800 850 900+ 2021 2022 2023 H124
Slide 46: Journey to margin expansion has begun
Journey to margin expansion has begun Cost and operational efficiencies will drive sustained margin growth EBITDA (£m) & EBITDA margin (%) Focus areas • Delivering cost & operational efficiencies, 191 including: 160 170 o Labour productivity o Central overhead efficiencies 21.3% o Menu simplificatio
Slide 47: Growing free cash flow generation
Growing free cash flow generation Positive free cash flow achieved in FY24 Underlying Free Cash Flow1 (£m) 2024 progress • Early actions taken to drive revenue growth c.30 & margin are already delivering clear cash flow benefit in 2024 2 • Free cash flow generation will improve 2022 2023 2024 furthe
Slide 48: Delivering £50m+ recurring FCF in near term
Delivering £50m+ recurring FCF in near term Revenue growth, coupled with sustained capex, will deliver increasing recurring free cash flow1 Recurring free cash flow1 £50m+ LFL Revenue faster Sustained EBITDA Investment Capex than the market2 margin expansion >30% ROIC 200-300bps3 over medium term Op
Slide 49: Illustrative EBITDA outputs
Illustrative EBITDA outputs Sustained revenue & margin growth will deliver strong EBITDA potential LFL sales CAGR Scenario analysis 3.50% 4.0% 4.50% 5.0% • Our strategy is set to deliver 23.0% 245 251 257 263 sustained revenue growth ahead of the market and EBITDA margin 23.5% 250 257 263 269 expans
Slide 50: Derisked and stable debt profile
Derisked and stable debt profile Strong financing position underpinned by significant asset value • Significantly derisked and stable debt profile with no material refinancing requirement for at least 10 years • Net debt1 reduced to c.£885m, achieving target ahead of FY26 schedule • Cash positive by
Slide 51: Financing structure
Financing structure Existing finance structure supports our growth Current structure • Able to successfully implement strategy under current financing structure • Growing surplus cash to deliver consistent organic growth • Continued leverage reduction & stable interest costs • Restrictions on shareh
Slide 52: Capital allocation framework
Capital allocation framework Disciplined capital allocation focused on enhancing shareholder value 1 Invest in long-term organic growth 2 Pay down debt and reduce leverage 3 Shareholder dividends Prioritising highest shareholder returns Targeted M&A 4 Additional shareholder returns 52
Slide 53: Summary
Summary Finance strategy, underpinned by disciplined capital allocation, will support our growth ambitions Value drivers will generate £50m+ recurring free growth, operational cash flow1 in the near leverage & sustained term margin expansion Deliver strong ROIC on Robust balance sheet investment cap
Slide 54: Summary
Summary Justin Platt CEO The Bell Inn, Shropshire
Slide 55: A New Chapter as a Leading Pure Play Hospitality Business
A New Chapter as a Leading Pure Play Hospitality Business Simplified & focused pub operating model with a clearly defined growth strategy Revitalised management team Key value drivers established to enhance operational performance & drive growth through accelerated investment capex across five disti
Slide 56: Strategy & Priorities
Strategy & Priorities To create VISIONa high margin, highly cash generative local pub PURPOSE company based on differentiated formats and a brand portfolio that is naturally balanced to appeal across a range of consumer segments KEY VALUE DRIVERS METRICS 1 Execute a Market Leading Pub Operating Mode
Slide 57: An Investment Case for a reliable growth company
An Investment Case for a reliable growth company Powerful value Differentiated to win Powerful drivers drivers for growth for Sustained cash flow in a growing market growth generation Sustained free cash Clear and consistent flow generation metrics to track success 57
Slide 58: Q&A
Q&A Grouse & Claret, Rowsley