Marston's PLC Q1 Update (9950K)
January 08 2021 - 1:00AM
UK Regulatory
TIDMMARS
RNS Number : 9950K
Marston's PLC
08 January 2021
8 January 2021
MARSTON'S PLC
("Marston's" or "the Company")
Q1 Update
Marston's PLC issues the following update for the 13 weeks ended
2 January 2021.
Trading and Business Outlook
During the 13-week period, trading was materially disrupted due
to Covid-19 related trading restrictions imposed across England,
Scotland and Wales. Total pub revenues for the quarter were GBP54
million.
Following the imposition of lockdowns across the UK in recent
days, all our pubs are closed. We do not have certainty about the
timing of reopening, but in view of comments from the Prime
Minister about the potential for lifting restrictions as the
vaccination programme progresses we anticipate that pubs will be
closed for trading until March at the earliest, and expect some of
the previous restrictions to remain on reopening.
Despite this disruption, we remain focused on the strategic
development of the business. The joint venture between Carlsberg UK
and Marston's Beer Company completed on 30 October 2020 and we
received initial proceeds of GBP233 million which were used to
reduce debt. The profit on disposal of Marston's Beer Company into
the joint venture is estimated to be around GBP280 million and the
spot value of the contingent payment to be received in October 2021
is approximately GBP20 million.
In December 2020 we exchanged contracts with SA Brain to operate
its portfolio of 156 pubs in Wales, on a combination of leased and
management contract arrangements. These pubs generated a pre-COVID
outlet EBITDA of GBP14 million from which we will pay rent of
GBP5.5 million per annum with effect from April 2021, representing
a 2.5x rent cover. This transaction does not compromise our stated
financial strategy of reducing borrowings to below GBP1 billion by
financial year 2024. A more detailed presentation of the
transaction will be set out on completion in early February.
As we outlined in our preliminary results in December, when
restrictions are lifted we expect consumer demand to be strong and
that our pub estate, which is predominately located in suburban
locations, will be well positioned. The SA Brain transaction
demonstrates our commitment to growing our pub business and our
confidence in the medium-term outlook for the UK pub sector.
Financing and Liquidity
During the quarter we have continued to focus on cash
preservation with all non-essential spend avoided. Government
support is being accessed through the job retention scheme, with
97% of our employees currently furloughed, and business rates
relief. Recently announced grants will be applied for subject to
compliance with State Aid rules.
Despite the ongoing temporary disruption to trading, we have
significant liquidity following the completion of the joint
venture. Bank drawings net of cash at 2 January were GBP104
million, from a GBP280 million facility which extends to 2024,
providing bank facility headroom of GBP176 million.
In addition, within the securitisation we have generated
sufficient cash in the period to make scheduled repayments of GBP18
million which fall due on 15 January. The securitisation also
includes a GBP120 million liquidity facility of which GBP10 million
is currently drawn.
Our providers of finance have continued to demonstrate support
by granting waivers and amendments to covenants when requested, and
we are confident of receiving their continued support in the future
if it is needed.
As previously reported, we estimate that our cash burn in full
lockdown is GBP3-4 million per week, before scheduled securitised
payments. As a consequence of our having significant liquidity in
our financing arrangements, the absence of any near-term
refinancing requirements, and in the expectation that the outlook
for the second half-year is much more positive, we remain confident
in our ability to navigate the current difficult environment.
Ralph Findlay, Chief Executive of Marston's commented:
"The pub sector has been closed for much of the last nine months
and remains in a very difficult position. Regrettably there have
been casualties across the sector and It is vital that the
Government reviews urgently the opportunity to continue to support
pubs as we reopen the economy in the coming weeks. Pubs are viable
businesses which are part of the social fabric of Britain and which
make a major contribution to the economy and the communities in
which they serve. It is vital that they not only survive the
short-term crisis but are supported in order to recover and
flourish. Extending the business rates holiday and VAT cut for the
rest of this year is a minimum requirement.
Despite these challenges, Marston's has a significantly
strengthened balance sheet following the creation of the joint
venture with Carlsberg and the financial headroom to weather the
extended period of current trading restrictions. With the roll out
of the vaccine programme now underway nationwide, we remain well
positioned to rebuild trading momentum once restrictions are
lifted, as well as to leverage potential market opportunities open
to us. We have a clear strategy in place which leaves us confident
for the future of our business over the medium term ."
ENQUIRIES:
Marston's PLC Tel: 01902 329516 Instinctif Partners Tel: 020
7457 2010/2005
Ralph Findlay, Chief Executive Justine Warren
Officer
Andrew Andrea, Chief Financial Matthew Smallwood
and
Corporate Development Officer
NOTES TO EDITORS
-- Marston's is a leading pub operator with a 40% holding in
Carlsberg Marston's Brewing Company
-- It has an estate of 1,368 pubs situated nationally,
comprising managed, franchised and leased pubs
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