Marston's Plc – Final Results

MARSTON'S PLC

RESULTS FOR THE 52 WEEKS ENDED 2 OCTOBER 2021*

POSTIVE MOMENTUM, STRENGTHENED BALANCE SHEET;

CLEAR PLANS FOR FUTURE GROWTH

Improved trading post lockdown, sales levels above 2019

Full year 2021 sales impacted by significant disruptions from the pandemic

Improving trading trends since reopening outdoors in April

• Like-for-like sales** since restrictions lifted in July 102% of 2019

Strong accommodation sales benefitting from staycations

Strengthened balance sheet; strong cash management through pandemic

• Net debt of £1,232 million, £97 million reduction since 2020
• Strong cash management throughout pandemic; no recourse to equity market
• Financial strategy on track to reduce net debt to below £1 billion by 2025

Carlsberg partnership completed 30 October 2020

• £256 million of net proceeds including £28.2 million contingent due December 2021
• Retain 40% stake in a high-quality beer business currently held at £277 million
• Higher levels of synergies expected of c.£35-40 million, driving future value creation

Innovative transaction to operate SA Brain pubs

• Operate a high-quality portfolio of 107 pubs in Wales on long-term arrangement
• Proforma EBITDA of £7 million with additional opportunity of £2-3 million synergy benefits
• Capital-light acquisition provides template for future transactions

Clear strategy with clear targets

• High-quality pub estate nationwide, with limited exposure to city centres
• “Pubs to Be Proud Of” – Guest-focused pub strategy with clear operational targets
• “Back to a Billion” – Sales above £1 billion, borrowings below £1 billion by 2025
• Plan to reposition 290 food-led pubs to meet changing consumer dynamics
• Evolution of franchise model with formulation of the new “Pillar” agreement for food-led leased pubs  

Net Zero commitment

• Market-leading environmental actions to date
• Clear roadmap to achieve 2030 commitment to Scope 1 and 2 emissions
• Aligned to industry commitment to 2040 net zero for Scope 3 emissions

Encouraging current trading, navigating through headwinds

• Current trading encouraging – total LFL sales 1.3% versus 2019 despite reduction in VAT relief
• Christmas bookings encouraging and in line with 2019
• Hedging and long-term contracts in place to manage 2022 inflation headwinds
• Less exposed to labour challenges due to predominantly suburban pub estate

Financial Highlights

  * Total revenue includes continuing and discontinuing operations

• On a statutory basis revenue was £401.7m and loss before tax was £(171.1)m. This excludes discontinued operations.
• The financial performance for the period reflects the significant disruption to trading from the pandemic during the period and the sale of Marston's Beer Company to Carlsberg Marston's Brewing Company.
• The statutory profit before tax reflects the profit on disposal of the beer business of £291 million and a non-cash impairment charge of £84 million for property.
• The business has a strong balance sheet position.  As at the balance sheet date, the Group had drawn down £190 million of a £280 million bank facility providing headroom of £90 million.
• The financial figures above combine the total revenue and earnings of both continuing and discontinued operations in the period.

Commenting, Andrew Andrea, CEO said:

“It is extremely encouraging that trading momentum has built well since reopening and trading is now exceeding FY2019 levels. We were delighted to fully reopen our estate in July, once restrictions were lifted, and welcome our guests and team members back into our pubs.  Whilst there are still some challenges to navigate over the months ahead, we believe the worst of the pandemic is now behind us and Marston's has emerged a stronger, more focused business which is in great shape.  Importantly, consumer demand for the pub and the role which this great British institution plays, at the heart of communities up and down the country, has never been stronger.

“Over the last 18 months, the Government provided much welcomed support to the hospitality industry, which has been so hard hit by the pandemic. We urge them to continue to assist the sector as it continues its recovery by maintaining VAT at 12.5%. 

“Marston's enters the year ahead as a focused pub business with a clear strategic plan, a profitable and cash generative business, a strong balance sheet and a 40% share in CMBC, our partnership with Carlsberg, which has such exciting potential.  Our debt reduction plans remain on track and our well-invested, predominantly freehold, suburban pub estate is well placed to benefit from many of the positive consumer dynamics and drivers post pandemic.  Whilst still early days, Christmas bookings look encouraging and we look to the future with renewed optimism.” 

*Prior year was a 53-week period to 3 October 2020

**Like-for-like sales is defined as sales this year compared to sales in 2019, the same pubs trading in both periods, expressed as a percentage