Pub giant Marston’s plc has published its results for the 52 weeks ending 2 October 2021.
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
o Like-for-like sales since restrictions lifted in July 102% of 2019
• Strong accommodation sales benefitting from staycation
Strengthened balance sheet; strong cash management through pandemic
• Net debt of £1,232m, £97m reduction since 2020
• Strong cash management throughout pandemic; no recourse to equity market
• Financial strategy on track to reduce net debt to below £1bn by 2025
Carlsberg partnership completed 30 October 2020
• £256m of net proceeds including £28.2m contingent due December 2021
• Retain 40% stake in a high-quality beer business currently held at £277m
• Higher levels of synergies expected of c.£35-40m, 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 £7m with additional opportunity of £2-3m 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 £1bn, borrowings below £1bn 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
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 £171.1m. 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 £291m and a non-cash impairment charge of £84m for property.
• The business has a strong balance sheet position. As at the balance sheet date, the Group had drawn down £190m of a £280m bank facility providing headroom of £90m.
• The financial figures above combine the total revenue and earnings of both continuing and discontinued operations in the period.
CEO Andrew Andrea (pictured) 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.”