14 May 2024

MARSTON'S PLC

 

("Marston's" or "the Group")

 

 RESULTS FOR THE 26 WEEKS ENDED 30 MARCH 2024

 

STRONG LIKE-FOR-LIKE SALES GROWTH, +7.3%, AHEAD OF THE MARKET, DRIVING GOOD GROWTH IN PUB OPERATING PROFIT, +22%, AND ENABLING CONTINUED REDUCTION OF DEBT; ENCOURAGING OUTLOOK FOR H2

Marston's, a leading UK operator of 1,395 pubs, today announces its Interim Results for the 26 weeks ended 30 March 2024 ("H1" or "the period").

 

	Underlying		Statutory
	2024	2023	2024	2023
Total revenue	£428.1m	£407.0m	£428.1m	£407.0m
Pub operating profit	£52.7m	£43.1m	£51.8m	£43.1m
Net finance costs	£(52.9)m	£(48.9)m	£(78.7)m	£(83.4)m
Income/(loss) from associates	£(0.6)m	£2.2m	£(16.6)m	£2.2m
Profit/(loss) before Tax	£(0.8)m	£(3.6)m	£(43.5)m	£(38.1)m
Net profit/(loss)	£(0.6)m	£(2.9)m	£(36.6)m	£(28.8)m
Earnings/(loss) per share	(0.1)p	(0.5)p	(5.8)p	(4.5)p
Net cash inflow	-	-	£30.5m	£11.5m
NAV per share	-	-	£0.95	£0.98
Underlying pub operating margin	12.3%	10.6%	-	-

 

Strong financial performance

·    Revenue up 5.2% to £428.1 million (H1 FY2023: £407.0 million), with good momentum across food and drink sales and like-for-like sales up 7.3%, outperforming the broader market¹

·    22% increase in underlying pub operating profit to £52.7 million (H1 FY2023: £43.1 million)

·    Underlying pub operating margin of 12.3% (H1 FY2023: 10.6%), with good progress on cost efficiency programme, despite inflationary environment

·    Underlying share of CMBC's profit/(loss): £(0.6) million (H1 FY2023: £2.2 million), reflecting CMBC's accelerated investment in brands; the CMBC H1 FY2024 dividend received was £13.8 million (H1 FY2023: £10.6 million)

·    Statutory loss before tax of £(43.5) million (H1 FY2023: £(38.1) million) is primarily a result of two non-cash items: the increase in liabilities from interest rate swaps of £25.8 million, together with a one-off charge of £16.0 million in respect of CMBC's ale brand impairment and onerous contract provision

 

Focus on cash generation, debt reduction and extension of bank funding

·    Operating cash inflow of £90.9 million (H1 FY2023: £69.9 million), with net cash inflow following interest, capex and disposals of £30.5 million (H1 FY2023: £11.5 million)

·    Continued progress with debt reduction strategy: net debt excluding IFRS 16 lease liabilities reduced by £24.5 million during H1 FY2024 to £1,160.9 million (FY2023: £1,185.4 million); debt reduction remains a key focus

·    Successfully secured amendment, extension and increase of banking facilities totalling £340 million

 

Ongoing operational improvement

·    Well-positioned to continue to capitalise on consumer lifestyle changes with a predominantly freehold pub estate and community focus with limited city centre exposure

·    Continued improvement in our Reputation score, up to 787, from 766 at FY2023, as we continue to work to improve quality and consistency across our pubs²

·    Operational efficiency initiatives progressing well, reflected in positive margin growth

 

Current trading and outlook

·    Encouraging start to H2 with like-for-like sales in the last six weeks +4.0% vs. last year, excluding the impact of the additional May bank holiday last year like-for-like sales were +5.3%

·    Continued progress on cost efficiency programme and targeting margin improvement of at least 200bps over the medium-term, with significant progress already made

·    As with prior years, the business will be impacted by the seasonality of trade which typically sees the majority of revenue, profit and cashflow generated in H2

Commenting, Justin Platt, CEO said:

"A positive H1, Marston's has delivered strong like-for-like sales growth of +7.3% outperforming the market and achieving an impressive 22% uplift in pub operating profit. We have managed costs well and made further progress to reduce debt. This performance is testament to the dedication and hard work of our talented team, who constantly strive to delight our pub-loving guests."

 

"The outlook for H2 is encouraging. With a number of 'must not miss' major sporting events, our massively upgraded pub gardens and much-loved food menus, we expect our pubs to be very popular this summer."

 

"Reflecting on my first few months with Marston's, I am very excited by the potential that lies ahead. The UK Pub Market offers significant value-driving opportunities for those who can engage and deliver for their guests. With our high-quality estate and guest obsessed team we are well placed to capitalise and to deliver consistent, reliable cashflows that will drive value for our shareholders."

Analyst Presentation

Marston's PLC will be hosting an analyst presentation on 14 May 2024. Attendance is by invitation only. A recording of the presentation will be available on the Marston's PLC website at https://www.marstonspubs.co.uk/investors/results-presentations/ following the event.

 

Notes

 

1.     Month-on-month outperformance of Peach Tracker in H1 FY2024.

2.     Reputation Experience Management, March 2024.

 

The Group uses a number of alternative performance measures (APMs) to enable management and users of the financial statements to better understand elements of financial performance in the period. APMs are explained and reconciled in note 17 of the financial statements.

 

ENQUIRIES:

 

Marston's PLC Justin Platt, CEO Hayleigh Lupino, CFO	Tel: 01902 329516
Instinctif Partners (Media Enquiries) Justine Warren Matthew Smallwood Joe Quinlan	Tel: 020 7457 2010/2005

 

NOTES TO EDITORS

Marston's is a leading pub operator with an estate of 1,395 pubs nationally, comprising managed, partnership ('franchised') and tenanted and leased pubs. Marston's employs around 10,000 people. It also holds a 40% holding in Carlsberg Marston's Brewing Company.

 

H1 2024 PERFORMANCE OVERVIEW

 

Performance in the first half of 2024 has been positive. Whilst the macroeconomic environment remains challenging, our focus on community pubs, with minimal exposure to the more volatile demand in city centre establishments, continues to deliver successful results. The Group benefits from an estate that is balanced across formats and locations, with well-invested pubs, and is set for sustainable like-for-like growth and shareholder value creation over the medium to long term.

 

We remain focused on our strategic priorities of driving enhanced guest satisfaction and team engagement. The Group continued to improve the quality and experience we provide across our sites which delivered positive progress on our guest satisfaction measures, with improvement in our Reputation score, up to 787, from 766 at FY2023. We were also extremely proud to win Best Large Pub Company Employer 2024, a testament to our ongoing effort to support and motivate our team.

 

Trading

 

Revenue increased by 5.2% to £428.1 million (H1 FY2023: £407.0 million). Retail sales in the Group's managed and partnership pubs rose by 5.7% to £396.6 million (H1 FY2023: £375.3 million) and total outlet sales increased by 5.8% to £411.0 million (H1 FY2023: £388.3 million). Like-for-like sales for the period were up 7.3%, reflecting strong trading over the festive period, with positive momentum in both drink sales and food sales highlighting the ongoing appeal of our business.

 

Underlying operating profit, excluding income from associates, was up 22% to £52.7 million (H1 FY2023: £43.1 million) and the underlying pub operating margin of 12.3% was 1.7% ahead of the prior year (H1 FY2023: 10.6%). The success of initiatives to manage price increases, product mix and drive enhanced efficiencies have enabled us to deliver margin growth, despite persistent inflationary pressures.

 

Underlying operating profit, including income from associates, was £52.1 million (H1 FY2023: £45.3 million), an increase of 15%. Underlying profit before tax was a loss of £(0.8) million (H1 FY2023: loss of £(3.6) million). Underlying profitability continues to reflect the seasonality of trade, which typically sees the majority of profit generated in H2. The statutory loss before tax of £(43.5) million (H1 FY2023: £(38.1) million) is primarily a result of two non-cash items, these are the increase in liabilities from interest rate swaps of £25.8 million, together with a one-off charge of £16.0 million in respect of CMBC's ale brand impairment and onerous contract provision.

 

Net assets and property disposals

 

Net assets were £601.5 million (H1 FY2023: £620.1 million) with net asset value per share of £0.95 (H1 FY2023: £0.98).

In FY2024 we expect to dispose of £50 million of non-core and unlicensed properties. Disposal proceeds of £9.6 million have been realised in H1, which, overall, achieved net book value. Since the end of H1, c.£16 million of additional disposals have either sold or exchanged.

Carlsberg Marston's Brewing Company (CMBC)

 

Underlying income from associates was a loss of £(0.6) million (H1 FY2023: £2.2 million), which is the Group's share of the loss after tax generated by CMBC. The H1 result reflects CMBC's accelerated investment in 1664 following the brand rights acquisition and further investment in Carlsberg.

 

The H1 dividend received was £13.8 million (H1 FY2023: £10.6 million).

 

Board

 

Justin Platt joined the Group as Chief Executive Officer on 10 January 2024. Justin has over 30 years' experience in hospitality and consumer-facing businesses, having spent the last 12 years at Merlin Entertainments; most recently as Chief Strategy Officer and prior to that in a variety of operational leadership roles. Justin's combination of operational and strategic experience in multi-site leisure businesses equips him well to lead Marston's through the next phase of its development.

 

Effective from the 23 January 2024, Rachel Osborne joined the Board as an independent Non-executive Director and Chair of the Audit Committee. Rachel also joined the Nomination and Remuneration Committees, at the same time.

 

As previously announced, William Rucker is due to step down as Director and Chair of the Board, with effect from 8 July 2024. A search for a successor is currently in progress.

 

Dividend

 

The Board confirms that given its priority to reduce the overall level of borrowing and the continued macroeconomic uncertainty, no dividends will be paid in respect of financial year 2024. The Board is cognisant of the importance of dividends to shareholders and intends to keep potential future dividends under review.

 

Outlook

 

The positive trading momentum which characterised H1 has continued, with like-for-like sales in our managed and partnership ('franchised') pubs +4.0% in the six weeks since the period end. Excluding the impact of the additional May bank holiday last year, like-for-like sales were +5.3%.  We have continued to invest in further enhancing our estate, including our pub gardens and, with major sporting events scheduled for H2, we are well positioned to capitalise on these key trading opportunities. Similar to prior years, the business will be affected by the seasonality of trade which typically sees the majority of revenue, profit and cashflow generated in the second half of the year.

 

As previously guided, the Group continues to drive efficiencies and remains confident of delivering at least £8 million of cost efficiencies in-year. This will be principally achieved from reduced energy and labour costs, as well as improving margins through simplification. With our predominantly freehold estate, our fixed energy costs and a significant proportion of our food and drink costs secured for FY2024, this provides us with a high degree of confidence going into H2.

 

Regarding interest costs, our borrowings are largely long-dated and asset-backed. 93% of our borrowings are hedged and therefore not at risk of changes in interest rate movements that may occur during the year. The refinancing will incur one-off transaction costs of c.£4 million.

 

We reiterate our previous commitment to reduce net debt excluding IFRS 16 lease liabilities to below £1 billion by 2026.

 

 

H1 2024 BUSINESS UPDATE

 

Market dynamics

 

Amid macroeconomic challenges, pub spending remains resilient, and is projected to grow steadily at around 3% CAGR from 2023 to 2028.¹ The post-pandemic shift towards remote work has redirected leisure activities away from city centres, benefiting community-centric pubs. Marston's is strategically positioned to benefit from this growing market opportunity.

 

Pubs remain integral to British culture, offering unique social experiences. Social engagement has surged post-pandemic, aligning with consumer preferences for experiences over possessions and pub visits are a primary means of fulfilling these fundamental aspects of connection. Pubs are expected to sustain popularity across diverse demographics, but success relies on tailoring offerings to local areas to foster lasting loyalty. Those catering to more rural locations, with higher disposable incomes, and those in areas where spending power is likely to recover fastest from cost-of-living pressures, will have a competitive edge in this respect.

 

Strong fundamentals

 

Marston's has strong business fundamentals on which to build, including: a predominantly community-based estate; freehold ownership; a balanced management model between managed, partnership ('franchised') and traditional tenanted and leased; along with positive cash generation.

 

We are a pub company with a core estate of c.90% community-based pubs. Operating in the mainstream market, with a pub for every occasion, our approach means we are well-hedged against changes in consumer trends. We target the sweet spot of consumers with higher disposable incomes, looking to spend more time in lower tempo social environments.

 

We have predominantly freehold ownership of our pubs, with a related asset value of £2.1 billion. This not only allows greater operational flexibility, but it also provides more stability in terms of fixed costs, as the vast majority of our estate is not subject to rent increases, or renegotiation.

 

Marston's operates a diversified ownership model, with 55% of our pubs being partnerships run by entrepreneurs operating under an agreement that drives their business forward. The remainder of our pubs are either managed (30%) or tenanted and leased (15%). This approach allows us the flexibility to match the right model with the right location and licensee, ensuring sustained success.

 

We have a clear, cash generative operating model, that will support our ongoing debt reduction plans.

 

Operational delivery

 

Operationally, we remain focused on driving guest satisfaction in a great environment served by engaged and motivated teams, and we continue to be a business driven by our data and insights.

 

We aim to delight our guests so they visit our pubs time and time again and we remain focused on our goal of achieving a Reputation score of 800+ for all of our pubs. Over the last six months, our operational delivery has been strong, with a further 101 pubs moving into the 800+ category, demonstrating our ongoing commitment to improving our service and guest satisfaction in a consistent manner.

 

We truly believe that people are an integral part of pubs, and we want Marston's to be a great place to work for our c.10,000 employees - happy, engaged teams deliver great guest experiences. To achieve this, we set ourselves a target of achieving a 'Your Voice' engagement score of 8 or more, and in 2023 achieved an average employee engagement score of 8.2, with participation rates of 84%.

 

ESG and sustainability

 

Our ESG agenda is structured around four core pillars where we believe we can make the biggest impact: Planet, People, Product and Policy.

 

Highlights for the year so far include:

·      The installation of Solar PV panels at our Pub Support Centre and, so far, at six of our pubs to increase the mix of renewable energy and reduce costs. Over H1 FY2024, this has contributed 23,056KWh of solar power and saved 5,188kg of CO2

·      Increasing the roll out of EV chargers within our estate with 437 EV chargers across over 190 of our pubs and five ultra-fast charging hubs. Our charging network has been responsible for c.65+ million miles travelled by electric vehicles, saving 12.5 million kg of CO2 - the equivalent of the average annual total mileage for 7,575 individuals

·      Progress on our target to reduce food waste by saving over 15,000+ meals from waste in partnership with Too Good to Go, and supporting charities like the Trussell Trust to help eradicate food poverty 

·      Industry recognition of our People-powered approach winning Best Large Pub Company Employer 2024 in the Publican Awards and Best Workplace Mental Health Strategy 2024 at Hospitality's Mental Health Heroes 2024, by Burnt Chef

 

Marston's future value drivers

 

Marston's is well-positioned to capitalise on the opportunity ahead of it:

 

·    We have strong business fundamentals on which to build, and a focus on delivering operational excellence and commitment to a sustainable future;

·    With our focus on community-based pubs, we operate in a structurally growing area of the market¹, and are well-placed to take advantage of changing dynamics with a focus on volume and revenue per guest;

·    Our predominantly freehold estate provides operational flexibility and certainty over fixed costs;

·    We are focused on driving cost efficiency improvements and margin expansion;

·    We have an industry leading reputation and continue to focus on improving key operational metrics; and

·    Our positive cash generation and streamlined debt profile, reducing debt to £1 billion, will further reinforce our financial stability.

 

Notes

 

1.     Broader market growth of c. 3% CAGR between 2023-2028, Mintel UK Pub Visiting Report, Dec 2023

 

 

PERFORMANCE AND FINANCIAL REVIEW

Revenue

 

Revenue increased by 5.2% to £428.1 million (H1 FY2023: £407.0 million) and like-for-like sales for the period were up 7.3%, with strong momentum from drink and food sales.

 

Retail sales in the Group's 1,186 managed and partnership pubs increased by 5.7% to £396.6 million (H1 2023: £375.3 million) and total outlet sales increased by 5.8% to £411.0 million (H1 2023: £388.3 million).

 

Within our pub business we operated 209 pubs under the traditional tenanted and leased model generating revenues of £17.1 million (H1 2023: £18.7 million).

 

Accommodation sales were consistently strong at £14.9 million (H1 2023: £15.0 million).

 

Profit

 

Underlying operating profit, excluding income from associates, increased by 22% to £52.7 million (H1 2023: £43.1 million) with an underlying pub operating margin of 12.3% (H1 2023: 10.6%). The significant increases reflect the positive impact of our cost efficiency programme and strong like-for-like sales. Underlying operating profit, including income from associates was £52.1 million, (H1 2023: £45.3 million), which reflects the £(0.6)m share of CMBC's loss for the period.

 

Underlying EBITDA, excluding income from associates, increased by 15% to £75.5 million (H1 2023: £65.9 million).

 

Underlying profit before tax was a loss of £(0.8) million (H1 2023: loss of £(3.6) million). Profit before tax was a loss of £(43.5) million (H1 2023: a loss of £(38.1) million).

 

Non-underlying items

 

The difference between underlying loss before tax and statutory loss before tax is a net non-underlying charge of £42.7 million, which includes a £25.8 million net loss in respect of interest rate swap movements, £12.5 million share of CMBC's brand impairment (in respect of some of CMBC's ale brands), £3.5 million share of a CMBC onerous contract provision (in respect of one specific contract), £0.5 million of reorganisation, restructuring and relocation costs (being the continuation of the £2.9 million restructuring programme previously disclosed as non-underlying in 2023) and £0.4 million of additional costs from the change of CEO.

 

Interest

 

Our borrowings are largely long-dated and asset-backed. The securitisation is in place until 2035 which provides financing security and high visibility of future cash flows; this is of particular importance in an environment where interest rates have increased to curb inflation. The securitisation is fully hedged until 2035. Other lease related borrowings are index linked, capped and collared at 1% and 4%, providing protection against high inflation. Of our £300 million bank facilities, £120 million is hedged. Overall, we are 93% hedged, providing protection against unknown changes in interest rate movements that may occur during the year.

 

Share of associate - Carlsberg Marston's Brewing Company (CMBC)

 

Included in our Group income statement is underlying loss from associates of £(0.6) million (H1 2023: £2.2 million). The H1 underlying share of associate reflects CMBC's accelerated investment in 1664 following the brand rights acquisition and further investment in Carlsberg and is not expected to be reflective of full year performance. The majority of profit is typically generated during H2.

 

Loss from associates of £(16.6) million (H1 2023: £2.2 million), which is the Group's share of the statutory loss after tax generated by CMBC, includes two non-underlying items: £12.5 million share of CMBC's brand impairment (in respect of some of CMBC's ale brands) and £3.5 million share of a CMBC onerous contract provision (in respect of one specific contract). These items are one-off in nature and are not expected to recur.

 

The Group also benefits from dividends received from CMBC, as shown in our Group cash flow statement. Dividends from associates of £13.8 million were received (H1 2023: £10.6 million). Dividends in respect of CMBC's calendar financial year are paid in September in year (for January - June) and March the following year (for July - December). The dividends are generated from CMBC's operating cash flows, adjusted for working capital and other movements.

 

Taxation

The estimated underlying tax rate is 25% (H1 2023: 19.4%). This is in line with the statutory rate of corporation tax of 25% for the year. The overall tax rate is 15.9% for the period and the key driver for this overall rate reduction is the post-tax share of loss from associates.

 

Earnings per share

 

Underlying earnings per share were a loss of (0.1) pence per share (H1 2023: (0.5) pence loss per share). Earnings per share were a loss of (5.8) pence per share (H1 2023: (4.5) pence loss per share).

 

Net assets

 

Net assets were £601.5 million (2023: £640.1 million, H1 2023: £620.1 million) with net asset value per share of £0.95 (H1 2023: £0.98). The decrease from FY2023 is primarily due to the increase in liabilities from interest rate swaps together with a reduction in carrying value of the CMBC investment driven by the CMBC ale brand impairment.

 

Capital expenditure and property disposals

 

Capital expenditure was £21.7 million in the period (H1 2023: £40.9 million), with a focus on deploying capital as efficiently as possible and maximising returns. We expect that capital expenditure will not exceed £50 million in FY2024.

In FY2024 we expect to dispose of £50 million of non-core and unlicensed properties. Proceeds of £9.6 million have been realised in relation to these disposals in H1, which, overall, achieved net book value. Since the end of H1, c.£16 million of additional disposals have either sold or exchanged.

Debt and financing

 

The Group remained focused on cash management during the year to date. We continued to prioritise cash preservation whilst maintaining an appropriate level of pub investment.

 

The Group generated an operating cash inflow of £90.9 million in the half year, significantly ahead of last year (H1 2023: £69.9 million). Net interest costs including bank fees were £48.3 million (H1 2023: £40.9 million), capital expenditure was £21.7 million (H1 2023: £40.9 million) and disposals proceeds received were £9.6 million (H1 2023: £23.4 million), resulting in a net cash inflow for the period of £30.5 million (H1 2023: £11.5 million).

 

Net debt, excluding IFRS 16 lease liabilities, was £1,160.9 million, a reduction of £24.5 million from last financial year (2023: £1,185.4 million). Total net debt of £1,536.5 million (2023: £1,565.8 million) includes IFRS 16 lease liabilities of £375.6 million (2023: £380.4 million).

 

We have successfully secured an amendment and extension to our banking facility, which was due to expire in January 2025.  The revised £340 million of funding comprises £300 million of bank facilities, maturing in July 2026, and an additional £40 million bank facility with a maturity of up to July 2026, drawings of which must be used to repay the existing £40 million private placement that matures in January 2025. There are one-off transaction costs of c.£4 million and the costs of the facilities are variable: to be determined by the level of leverage or drawings from time to time alongside changes in the SONIA rate. £120 million of the facilities remains hedged.

 

The Group continues to have a range of financing providing an appropriate level of flexibility and liquidity. As at the end of H1 FY2024:

·    £300 million bank facility - at the period end £232.0 million was drawn providing headroom of £68.0 million and non-securitised cash balances of £11.1 million

·    £40 million private placement in place until January 2025

·    Seasonal overdraft of £5-£20 million, depending on dates - which was not used at the period end

·    Long-term securitisation debt of approximately £581.1 million - at the period close the £120 million securitisation liquidity facility was not utilised

·    Long-term other lease related borrowings of £338.2 million

·    £375.6 million of IFRS 16 lease liabilities

 

The securitisation is fully hedged to 2035. Other lease related borrowings are index-linked capped and collared at 1% and 4%. There are £120 million of swaps against the bank facilities: £60 million is fixed at 3.73% until 2031 and £60 million is fixed at 3.45% until 2029.

 

In summary, we have adequate cash headroom in our bank facilities to provide operational liquidity. Importantly, c.93% of our medium to long-term financing is hedged thereby minimising exposure to movement in interest rates.

 

Pensions

The balance on our final salary scheme was a £11.4 million surplus at 30 March 2024 (£12.9 million surplus at 30 September 2023). The change can primarily be attributed to the increase in the benefit obligation resulting from a reduction in the discount rate, partially offset by corresponding increases in the invested asset values and the value of insured pensioners during the period. The net annual deficit contribution of c.£6 million is expected to cease at the end of FY2024.

 

Dividend

 

The Board confirms that given its priority to reduce the overall level of borrowing and the continued macroeconomic uncertainty, no dividends will be paid in respect of financial year 2024. The Board is cognisant of the importance of dividends to shareholders and intends to keep potential future dividends under review.

 

Going Concern

 

As part of the reporting process, we are formally required to assess the extent to which our forecasts and therefore our financing requirements may or may not affect our going concern assumption in preparing the accounts. In performing this assessment we have considered the Group's financial position and exposure to principal risks, including the cost-of-living crisis and inflationary pressure. The Group's forecasts assume moderate sales price increases, operational costs rising broadly in line with inflation, unless those costs are known, or fixed, in which case the known cost has been used, and increased borrowing costs in the short term, reducing to flat towards the end of the period. The assessment takes into account the newly revised banking facilities, which include a more accommodating interest cover covenant. The conclusion of this assessment was that the Directors are satisfied that the Group has adequate liquidity and is not forecast to breach any covenants within its banking group, private placement or securitisation in its base case forecast. 

 

The Group has analysed a downside scenario, in which a lower level of sales are achieved compared to the base case with similar cost assumptions to that of the base case and variable costs flexing with the reduced volume. The result of this downside scenario is that the Group would still have sufficient liquidity to settle liabilities as they fall due and headroom within its financial covenants throughout the going concern review period. 

 

The Group has also performed a reverse stress test case, which analyses to what extent sales would need to decrease in order to breach financial covenants, with similar cost assumptions to that of the base case and variable costs flexing with the reduced volume. This reverse stress test shows that the Group could withstand a reduction in sales of over 10% from those assessed in the base case throughout the going concern period. The Directors consider this scenario to be remote as, other than when the business was closed during the pandemic, it has never experienced sales declines to this level. Additionally, the Group could take management actions within its control to partially mitigate the financial impact.

 

Accordingly, the financial statements have been prepared on the going concern basis with no material uncertainty. Full details are included in Note 1.

 

Investment in CMBC

 

The balance sheet carrying value of Marston's investment in CMBC has decreased during the period, due to the share of CMBC's loss after tax, included in the Group's income statement, and the dividend received, included in the Group's cash flow statement.

 

Consistent with last year, we will perform an annual formal impairment assessment as at year end.

 

Key estimates and significant judgements

 

Under International Financial Reporting Standards (IFRS) as adopted within the UK and in accordance with the requirements of the Companies Act 2006, the Group is required to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The Group's key assumptions and significant judgements are:

 

·    Non-underlying items - determination of items to be classified as non-underlying

·    Property, plant, and equipment - valuation of effective freehold land and buildings

·    Retirement benefits - actuarial assumptions in respect of the defined benefit pension plan, which include discount rates, rates of increase in pensions, inflation rates and life expectancies

·      Financial instruments - valuation of derivative financial instruments

·    CMBC - recoverable amount of the investment in associate estimated on a value in use basis

 

Notes

 

Prior period was a 26-week period to 1 April 2023. The Group uses a number of alternative performance measures (APMs) to enable management and users of the financial statements to better understand elements of financial performance in the period. APMs are explained and reconciled in Note 17 of the financial statements.

Responsibility Statement of the Directors in respect of the Interim Results

 

The Directors confirm that these condensed consolidated interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R of the United Kingdom Financial Conduct Authority, namely:

 

·    an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

 

·    material related party transactions in the first six months of the financial year and any material changes in the related party transactions described in the last Annual Report and Accounts.

 

The Directors of Marston's PLC are listed in the Marston's PLC Annual Report and Accounts for 30 September 2023.  A list of current Directors is maintained on the Marston's PLC website: www.marstonspubs.co.uk.

 

 

By order of the Board:

 

 

 

Justin Platt                                          Hayleigh Lupino

Chief Executive Officer                      Chief Financial Officer

14 May 2024                                       14 May 2024