TIDMMARS
RNS Number : 8470O
Marston's PLC
13 October 2021
13 October 2021
MARSTON'S PLC
("Marston's" or "the Group")
YEAR END TRADING UPDATE
Trading continues to improve, now above 2019 levels
Introduction
Marston's PLC ("Marston's" or "the Group") issues its update for
the 52 weeks ended 2 October 2021.
Trading
Since restrictions were lifted on 12 April, the Group has seen a
continuous improvement in trading. For the most recent quarter from
25 July to 2 October, we saw a return to growth over 2019, with
sales 2% higher across our managed and franchised pubs. Overall,
trading since 12 April has been at 94% of 2019 levels which
includes the benefit of the temporary VAT reduction on food and
non-alcoholic drink sales.
As previously reported, trading during the year was
significantly disrupted by the impact of the pandemic. Our pubs
were open for only 54% of the total trading days. When they were
open, they operated under significant trading restrictions ranging
from outdoor only and table service only, to the different tier
systems across the UK.
Total pub sales were GBP402 million for the year, representing
78% of last year, reflecting the significant disruption to trading
from the pandemic.
During the lockdown period, Marston's entered into an agreement
to operate a portfolio of 156 pubs from SA Brain, under a
combination of leased and management contract arrangements. These
pubs reopened alongside the existing Marston's pub estate in Wales
and have performed well and ahead of expectations.
Pubs were permitted to reopen for outdoor trading from 12 April
in England and from 26 April in Scotland and Wales, and from 17 May
indoor trading was permitted across all of the Group's pub estate,
albeit still subject to the continuance of various social
distancing restrictions, until 19 July. Having invested GBP2
million in "Inside-Out" schemes in Autumn/Winter 2020, we were able
to open c70% of our pubs under outdoor trading restrictions and the
Group's entire estate of c1,500 pubs has been open since 17
May.
In managed and franchised pubs our like-for-like trading
performance since 12 April, reported as a percentage of sales
relative to financial year 2019 (open sites only), is as
follows:
12 April- 17 May- 25July - 12 April-
16 May 24 July 2 Oct 2 Oct
Drink 89% 93% 99% 95%
---------- --------- --------- ----------
Food 59% 90% 102% 90%
---------- --------- --------- ----------
Total 77% 92% 102% 94%
---------- --------- --------- ----------
The 10 weeks since 25 July have seen overall sales continue to
improve from the initial opening and are in line with our
expectations. During this period, sales growth resumed with like
for like sales achieving 102% vs 2019 levels. The Group's balanced
estate, largely comprising community pubs nationwide with limited
exposure to London and city centres, have supported this rapid
return to above pre-pandemic levels. In addition, trading has been
stronger in our premium pubs over the period. Accommodation sales
have been excellent benefitting from the growth in staycation
holidays.
Net debt and liquidity
The Group remained focused on cash management during the year,
particularly during periods of closure. We continued to prioritise
cash preservation whilst restrictions prevailed but also invested
to ensure our pubs were well maintained, primed and ready for
trading to re-commence. Net borrowings (excluding IFRS16
commitments) as at 2 October were GBP1,232 million, GBP97 million
below last year, following the completion of the joint venture with
Carlsberg in October 2020 which delivered net proceeds of GBP228
million. Further support from the Government in the form of the Job
Retention Scheme and business rates also helped to achieve this
number.
At the year end, we had GBP90 million of headroom against our
GBP280 million bank facility.
94% of our borrowings are fully hedged and therefore not at risk
of any changes in interest rate movements that may occur during the
year.
Cost and cash outlook
It has been well publicised that the wider industry is facing
challenges in respect of staff recruitment and cost inflation,
alongside supply issues. Whilst the labour market remains tight,
particularly in city centres, we are currently managing this well.
The national minimum wage increase was in line with our expectation
of a resumption of the 5-6% increase, which we were observing
before the pandemic. The majority of our 2022 costs are now
contracted in, specifically gas to 2023 and electricity to the end
of March 2022. With regards to supply chain challenges, we have
seen some small pockets of disruption however, we are working
closely with our suppliers to manage this.
Our cash strategy remains unchanged with a target to reduce
borrowings to below GBP1 billion by Financial Year 2025.
In 2022, as previously guided, there are two one-off cash items,
tax repayment of GBP50 million for VAT and duty and the contingent
consideration receipt for the disposal of Marston's Beer Company to
the joint venture, the value of which was GBP25 million at the half
year. The carrying value of Carlsberg Marston's Brewing Company at
the half year was GBP274 million excluding the contingent
consideration. Our capital expenditure is anticipated to be around
GBP55 million, comprising maintenance of cGBP40 million and
investment of cGBP15 million. This is materially lower than pre
pandemic capex (excluding Marston's Beer Company), however we are
changing our IT strategy to become cloud based and, whilst this is
cash neutral, there will be a shift of GBP6 million from capital
expenditure to operating expenditure. We are confident of making
good progress in our debt reduction in the year ahead.
The Preliminary results will be announced on 30 November
2021.
Commenting, Andrew Andrea, Chief Executive Officer, said :
"We are delighted to be fully open again since trading
restrictions were lifted in July. We are encouraged by the trading
momentum which we have experienced since April and pleased to be
trading robustly and above 2019 levels again. Our business benefits
from an optimally balanced pub estate of food and wet led pubs that
are predominately suburban, community based and well located for
the changes in consumer behaviour that we are seeing. However, we
are mindful of consumer confidence in the short term and the
challenges impacting the economy and our industry. Government
messaging will remain a key factor in determining sentiment.
"Looking ahead, we are now keenly focussed on our strategy of
delivering exceptional experiences for our guests. We will continue
to invest in our teams and pubs as we strive to meet our clear
goals."
ENQUIRIES:
Marston's PLC Tel: 01902 329516 Instinctif Partners Tel: 020
7457 2010/2005
Andrew Andrea, Chief Executive Justine Warren
Officer
Hayleigh Lupino, Chief Financial Matthew Smallwood
Officer
NOTES TO EDITORS
-- Marston's is a leading pub operator with a 40% holding in
Carlsberg Marston's Brewing Company
-- It operates an estate of c1,500 pubs situated nationally,
comprising managed, franchised and leased pubs
-- Marston's employs around 12,000 people
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