Download - Annual General Meeting 28 January 2011. Marston’s today 1. National pub operator Marston’s Inns and Taverns – 485 managed pubs Marston’s Pub Company –

Annual General Meeting 28 January 2011

Marston’s today

1. National pub operator

• Marston’s Inns and Taverns – 485 managed pubs

• Marston’s Pub Company – 1,663 tenanted/leased pubs

• Situated across England and Wales

• 98% freehold estate (by value)*

2. National Brewer – Marston’s Beer Company

• Ale brewer; market leading position in premium ales

3. Vertically integrated business

• Cost efficient

• More opportunities

• Reduced risk

*includes long leaseholds

Presentation name > dateA leading pub operator and brewer with a flexible business model

Marston’s today

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Presentation name > date

Financial snapshot

2010 2009 % Change

Revenue £650.7m £645.1m +0.9%

Operating Margin 22.9% 22.8% +0.1%

Operating Profit £148.7m £147.4m +0.9%

Profit before tax1 £73.5m £70.3m +4.6%

Final Dividend 3.7p 3.7p -

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2010 2009

Operating cashflow £189.3m £147.3m

Pre-investment FCF £116.7m £70.0m

Net capex* (£63.3m) (£32.6m)

Pre-dividend FCF £53.4m £37.41 Before exceptional items

* Includes disposal proceedsFCF = Free cashflow

Return to turnover and profit growth, strong cash generation

> date

Clear divisional strategies

A clear strategy focused on growth and return4

Exploit and develop competitive advantage in pubs and brewing

sectors

• ‘F-Plan’• New-build investment

• Innovative agreements• Greater control of retail offer

• ‘Localness’• Premium ales

• Sustainable growth• Lower gearing ratios• Increased ROC

STRATEGY KEY COMPONENTS OBJECTIVES


‘F-Plan’ drives transformation

A higher quality business adapting to today’s consumer

‘F-Plan’: Food, Families, Females, Forty/Fifty somethings

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2005 2010

28% Food sales mix: trends, strategy, development 40%

14m Meals served: 70% of visits are food-led 24m

£11k AWT per pub: investment, churn £15k

£5.70 Spend per head on food: value increased £6.06

62% Food margins: ‘Every Day Value’ 66%


Managed - new build investment

Illustrative pro-forma

Actual2010

New-builds2011-2015

‘Pro-forma’

Number of pubs 490 120 610

AWT (£k per week) 15 25 17

Food sales mix 40% 60% 45%

EBITDA (£m) 85 40 125

ROC c.9% c.15% c.11%

1. Visibility and control of plans• 2011: 20 sites under contract, 2 open and 8 on site• 2012: 25 sites identified• 2013 – 2015: c.100 sites under constant review

2. ROC anticipates pressure on returns• 15% target below current run-rate – returning competition, build costs

Importance of food retailing skills continues to increase6


Heading (Arial Black 22pt) Heading (Arial Black 22pt)Tenanted - innovative agreements

Majority of profit stable, significant Retail Agreement opportunity7

Long-term leases

Retail Agreement Estate

Disposals Total

No. of pubs 1,000 600 64 1,664

% of estate 60 36 4 100

Divisional profit

£71m £8m - £79m

% of profit 90 10 - 100

YOY EBIT % -4+1 -24

STABILITY OPPORTUNITY REVIEW

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Heading (Arial Black 22pt) Heading (Arial Black 22pt)Retail Agreement: target – 600 pubs

1. Target EBITDA uplift - £10k per pub (20% EBITDA ROC) p.a.

2. Key objectives• Increased consumer appeal• Increased market share• Response to market trends – ‘F-Plan’• Reduced overheads• Reduction in % of income derived from traditional leased model

Cumulative 2010 2011 2012 2013 2014

Retail Agreements* 100 300 500 600 600

Target profit uplift £m* 1.0 1.5 3.5 5.3 6.0

Clear growth plan focused on delivery of high ROC8

1. ‘Localness’• Provenance, tradition, heritage, authenticity

2. Signals of ‘Localness’• Brewing, distribution, marketing

3. Competition• Regional brewers, micro brewers

4. Marston’s competitive advantage• Genuinely local• National distribution, cost-efficient • Industry-leading guest ale programme

5. Measuring success – Free Trade outperformance• Volume +10%, premium cask ale +18%, sales +13%, profit +10%• Account base +11%


Brewing - ‘Localness’ adds value

Unique: a local brewer with national distribution and high service level9


Market leader in premium cask, bottled ale

Growth prospects, attractive consumer profile and margins10

*source: BBPA market tracker

Marston’smarket share %

Premium cask ale vs. total ale market

Total bottled ale market

Premium Cask Ale 2005-2010

Bottled Ale 2005-2010

Marston’smarket share %

Presentation name > date Improving trends, clear agenda for growth

Summary

1. Clear strategy to exploit and develop competitive advantage

• ‘F-Plan’, new-build investment• Innovative agreements, greater control of retail offer• ‘Localness’, Premium Ale

2. Clear financial objectives

• 2010 results demonstrate strategy is being well-executed

3. Current trading

• Encouraging and robust performance despite weather• Profitability in line with our expectations• Good progress in each of our trading divisions

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