Marston's Plc · LSE:MARS

Marston's — FY2016 Earnings Presentation

40 slides from Marston's's earnings presentation, 2016

  1. Slide 1: Preliminary Results 2016

    PRELIMINARY RESULTS 2016

  2. Slide 2: Ralph Findlay, Chief Executive Officer

    Ralph Findlay Chief Executive Officer

  3. Slide 3: Highlights

    Marston’s PLC Preliminary Results 2016 3 HIGHLIGHTS 1. Continued progress in 2016 • Record turnover and operating profit • PBT growth of 7%, EPS up 9% • Increased dividend and cover • Leverage reduced, fixed charge cover up • Return on capital increased 2. Transformed pub estate delivering organic g

  4. Slide 4: Market Dynamics

    Marston’s PLC Preliminary Results 2016 4 MARKET DYNAMICS 1. Sector supply • Remains strong in high footfall locations • Anticipate some slowdown in 2017 • We remain focused on less competitive markets 2. Consumer outlook • No discernible changes since Brexit vote • Demand high standards in service a

  5. Slide 5: Improving Long-Term Returns

    Marston’s PLC Preliminary Results 2016 5 IMPROVING LONG-TERM RETURNS New-builds Broad appeal Take control Accommodation Destination Broaden capital Target 85% Higher quality of P&P, Revere allocation franchised earnings Community Smooth income + managed Leased stream Enhance pub Increase Maximise Im

  6. Slide 6: Pub Segmentation

    Marston’s PLC Preliminary Results 2016 6 PUB SEGMENTATION Operating Current no. Average no. Average profit 2016 profit £m of pubs of pubs per pub vs LY % Destination and Premium 90.2 416 405 +2 Taverns 56.0 812 832 +10 Leased 24.2 331 338 +3 Total 170.4 1,559 1,575 +8 2012 Profit Mix 2016 Profit Mix

  7. Slide 7: Operational Estate Review

    Marston’s PLC Preliminary Results 2016 7 OPERATIONAL ESTATE REVIEW 1. Last review in 2013 • Clearly defined segmentation • Disposal pubs identified 2. 2016 review • Review of estate to update on appropriate offer • Destination pubs that have become more wet led • Taverns pubs that have become more f

  8. Slide 8: Destination Pubs: Evolving Our Offer

    Marston’s PLC Preliminary Results 2016 8 DESTINATION PUBS: EVOLVING OUR OFFER Evolution and innovation have driven three consecutive years of market outperformance

  9. Slide 9: Customer Satisfaction

    Marston’s PLC Preliminary Results 2016 9 CUSTOMER SATISFACTION 110 Pub of the Digital Retail Systems Future 90 Apr Feb Jul Mar Jan Jun May Marston’s Hospitality InMoment Hospitality Benchmark October 2016 Our customers more satisfied relative to sector

  10. Slide 10: Taverns

    Marston’s PLC Preliminary Results 2016 10 TAVERNS Creating the community pubs of the future

  11. Slide 11: Leased

    Marston’s PLC Preliminary Results 2016 11 LEASED Quality • LFL profit growth +3% estate • £77k average EBITDA Hop Pole, Bewdley delivering • 2% rental growth growth • Licensee stability >90% Income • Bad debt <0.1% of turnover Marquess of Exeter, Lyddington stability • Moderate capital investment Cr

  12. Slide 12: Pub Expansion

    Marston’s PLC Preliminary Results 2016 12 PUB EXPANSION • At least 20 pubs planned for 2017 Site pipeline • Good visibility on future site pipeline • No material change to land and build costs • “Pub is the hero” Format • Decide appropriate offer based on demographics • No format targets • Around 20

  13. Slide 13: Growth in Accommodation

    Marston’s PLC Preliminary Results 2016 13 GROWTH IN ACCOMMODATION • Strong 2016 performance Goal - Occupancy up 2% £50m - REVPAR up 8% • Six lodges opened in 2016 • Future organic plans 5-10 lodges per annum - Larger lodges under review £11.2m £7.7m £9.2m Revenue: £6.2m 720 rooms in 722 rooms in 797

  14. Slide 14: Growth in Accommodation

    Marston’s PLC Preliminary Results 2016 14 GROWTH IN ACCOMMODATION Fallow Field Lodge, Telford Canterbury Bell Lodge, Thanet Six lodges opened in 2016

  15. Slide 15: Premium Expansion

    Marston’s PLC Preliminary Results 2016 15 PREMIUM EXPANSION Continued growth of premium estate, 3 planned for 2017

  16. Slide 16: Brewing: Market Leading Brand Portfolio

    Marston’s PLC Preliminary Results 2016 16 BREWING: MARKET LEADING BRAND PORTFOLIO 1. Unrivalled brand portfolio • Great brands with local credentials • Operating on a national scale 2. Brand expansion • Wainwright – relaunched in 2016 • 61% of mixed pack category • 56% of mini kegs 3. Leading brand

  17. Slide 17: Brewing: Innovation and Craft

    Marston’s PLC Preliminary Results 2016 17 BREWING: INNOVATION AND CRAFT 1. NPD • Total NPD value - £17.5m RSV • Consumer insight driven • Target 20% of turnover 2. DE14 • 600 pint micro-brewery • Leading edge research • Producing next wave of innovative beers 3. Shipyard • No. 2 Craft brand in the o

  18. Slide 18: Brewing: Evolution of Heritage Brands

    Marston’s PLC Preliminary Results 2016 18 BREWING: EVOLUTION OF HERITAGE BRANDS 1. New look Across the range. Authentic. Relevant. Deliberately blurs the lines. 2. New consumer campaign Telling our story. People. Brewery. Town. And our beers. Development of existing brands to meet constantly changin

  19. Slide 19: Clear Expansion Plans

    Marston’s PLC Preliminary Results 2016 19 CLEAR EXPANSION PLANS Destination At least 20 new-builds - mainly freehold 5 – 10 lodges - leasehold Premium 2-3 new sites - leasehold Conversions from Destination Taverns Franchise development New-build Beer Innovation Collaboration Acquisition Broad range

  20. Slide 20: Andrew Andrea, Chief Financial and Corporate Development Officer

    Andrew Andrea Chief Financial and Corporate Development Officer

  21. Slide 21: Financial Summary

    Marston’s PLC Preliminary Results 2016 21 FINANCIAL SUMMARY +9% +7% Growth in all +7% trading segments Cover up to +5% 1.9x (target 2x) +4% +4% £906m £213m £173m £98m 14.0p 7.3p Revenue EBITDA Operating profit PBT EPS Dividend Underlying numbers, statutory numbers in appendices Solid revenue and pro

  22. Slide 22: Like-for-Like Performance

    Marston’s PLC Preliminary Results 2016 22 LIKE-FOR-LIKE PERFORMANCE Destination and Premium Taverns +2.3% +2.7% Sales +2.5% vs market* +0.7% vs market* Growth Volume and mix Volume and mix drivers Margin In line +0.6% *Peach Tracker MAT to September 2016 outside London Consistent growth and market o

  23. Slide 23: Brewing

    Marston’s PLC Preliminary Results 2016 23 BREWING +28% +14% +13% +12% Volume Revenue Profit H2 margin growth Revenue and profit growth from core business and acquisition

  24. Slide 24: Cost Guidance

    Marston’s PLC Preliminary Results 2016 24 COST GUIDANCE 2017 2018 Drink c.1-2% 65% contracted Food c.1-2% 50% contracted Brewing raw materials c.1-2% 75% contracted Energy inflation c.1-2% 100% contracted - all variable fixed to 2018 Labour cost inflation - National Minimum Wage £6.95 from October,

  25. Slide 25: Cash Flow Summary

    Marston’s PLC Preliminary Results 2016 25 CASH FLOW SUMMARY 2016 2015 £m £m Comments Operating cash flow 183 162 EBITDA and pension Net interest (72) (72) Pre-investment FCF 111 90 Organic capex: Maintenance (45) (44) Growth (34) (30) Disposals 48 72 £31m lease related Dividend (41) (39) FCF pre new

  26. Slide 26: Financing Structure

    Marston’s PLC Preliminary Results 2016 26 FINANCING STRUCTURE Bank Total Fixed and (excluding Property Charge Securitised cash property) Leasing TOTAL Cover** Visible, smooth £287.5m Property amortising debt bank leases 35-40 to 2035* facilities year term Net Debt £m 2015 860 183 1,043 202 1,245 201

  27. Slide 27: Return on Capital

    Marston’s PLC Preliminary Results 2016 27 RETURN ON CAPITAL 10.9% 10.8% +1.3% Disposals 10.6% 10.5% 10.5% 9.8% 9.6% 2010 2011 2012 2013 2014 2015 2016 Pre-tax WACC 7.5% 5.5% CROCCE calculations included in Appendices Returns-focused strategy delivering long-term growth

  28. Slide 28: Summary

    Marston’s PLC Preliminary Results 2016 28 SUMMARY 1. Pub business outperforming market • Well managed estate • Profit per pub increased 8% to £108k • Clear and consistent expansion plans 2. Market-leading brewing business • Strong beer portfolio outperforming market • High quality supply chain impro

  29. Slide 29: Appendices

    Appendices

  30. Slide 30: Financial Summary – Statutory Basis

    Marston’s PLC Preliminary Results 2016 30 FINANCIAL SUMMARY – STATUTORY BASIS +210% +158% +44% +7% £937m £164m £81m 12.7p Revenue Operating profit PBT EPS Revenue and profit growth despite disposals

  31. Slide 31: Segmental Profit

    Marston’s PLC Preliminary Results 2016 31 SEGMENTAL PROFIT 2016 £m 2015 £m YOY % Turnover Destination & Premium 440.8 408.1 8.0% Taverns (inc AHFS) 221.0 214.7 2.9% Leased 50.7 53.6 (5.4)% Beer Division 193.3 169.1 14.3% Total 905.8 845.5 7.1% EBITDA Destination & Premium 106.3 99.8 6.5% Taverns 63.

  32. Slide 32: Pub Numbers

    Marston’s PLC Preliminary Results 2016 32 PUB NUMBERS Destination and Taverns Leased Total Premium 2015 Closing 397 859 341 1,597 New-build additions 6 1 7 Disposals (32) (2) (34) H1 2016 Closing 403 828 339 1,570 New-build additions 15 15 Transfers (2) 6 (4) - Disposals (22) (4) (26) 2016 Closing 4

  33. Slide 33: Historical LFL

    Marston’s PLC Preliminary Results 2016 33 HISTORICAL LFL Destination and Premium Taverns Total Food Wet Total 15 wks to 18/01/14 4.1% 5.6% 2.2% 3.0% 11 wks to 05/04/14 8.0% 6.1% 9.4% 4.9% 26 wks to 05/04/14 5.7% 5.8% 4.9% 3.8% 15 wks to 19/07/14 1.8% 1.9% 0.2% 0.5% 41 wks to 19/07/14 4.1% 4.2% 3.5%

  34. Slide 34: Capex, Tax and Share Capital

    Marston’s PLC Preliminary Results 2016 34 CAPEX, TAX AND SHARE CAPITAL Actual Forecast Comments 2016 2017 New-build capex £65m c.£70m Lodge investment Growth capex £34m c.£30m Maintenance capex £45m c.£40m Total £144m c.£140m Disposals £17m £20m Lease related £31m c.£50m Increase driven by lodges Ne

  35. Slide 35: Securitised Debt Profile

    Marston’s PLC Preliminary Results 2016 35 SECURITISED DEBT PROFILE Principal Final maturity Tranche Type outstanding at Step-up date date 1 October 2016 A1 Floating £79.5m July 2012 2020 A2 Fixed/Floating £214.0m July 2019 2027 A3 Fixed/Floating £200.0m April 2027 2032 A4 Floating £191.0m October 20

  36. Slide 36: Securitisation Profile

    Marston’s PLC Preliminary Results 2016 36 SECURITISATION PROFILE FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 Principal £m 28.4 30.0 31.7 33.4 35.4 37.3 39.4 41.5 43.9 46.3 48.8 51.5 54.4 57.4 60.5 47.6 47.8 50.6

  37. Slide 37: CROCCE

    Marston’s PLC Preliminary Results 2016 37 CROCCE CROCCE FY2016 FY2015 FY2014 FY2013* FY2012 FY2011 FIXED ASSETS: Bal Depn Reval Adj Bal Depn Reval Adj Bal Depn Reval Adj Adj Adj Adj Goodwill 227.5 227.5 227.5 227.5 224.2 224.2 224.2 224.2 224.2 Other intangible assets 37.3 7.5 44.8 37.6 6.6 44.2 25.

  38. Slide 38: Lost & Found, Knutsford

    Lost & Found, Knutsford

  39. Slide 39: Notes

    Notes

  40. Slide 40: www.marstons.co.uk

    www.marstons.co.uk

Marston's — FY2016 Earnings Presentation on 6ix