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Edited Transcript of MARS.L earnings conference call or presentation 27-Nov-19 8:30am GMT

Full Year 2019 Marston's PLC Earnings Presentation

Wolverhampton Dec 8, 2019 (Thomson StreetEvents) -- Edited Transcript of Marston's PLC earnings conference call or presentation Wednesday, November 27, 2019 at 8:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew Andrea

Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director

* Ralph Graham Findlay

Marston's PLC - CEO & Executive Director

* Richard Westwood

Marston's PLC - MD of Beer & Pub Company

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Conference Call Participants

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* Douglas Jack

Peel Hunt LLP, Research Division - Analyst

* James Robert Garforth Ainley

Citigroup Inc, Research Division - Director and European Hotels and Leisure Analyst

* Julian Kenneth Easthope

RBC Capital Markets, Research Division - MD & Analyst

* Paul Ruddy

Goodbody Stockbrokers, Research Division - Research Analyst

* Richard Michael Taylor

Barclays Bank PLC, Research Division - Analyst

* Ted Nyhan

JP Morgan Chase & Co, Research Division - Analyst

* Timothy William Barrett

Numis Securities Limited, Research Division - Leisure Analyst

* Fred M. Forsley

Shipyard Brewing Company, LLC - Founder, Co-Owner, and President

* Patrick Dardis

Young & Co.'s Brewery, P.L.C. - Chief Executive & Executive Director

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Presentation

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [1]

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Right. Good morning, everybody. Welcome to our preliminary results presentation for 2019. Just before we go into the presentation, for information, the picture on the front of the pack is The Lazy Pig in the Pantry at Chesham. So this was a new build that we did a few years ago, and it was a rotisserie and we've converted it into a Revere country pub to reflect the strong demographics around that site, but it's quite a good example of some of the things that I'm going to be talking about later.

So moving on to the introduction of the results themselves. 2019 performance, Andrew is going to go into detail on the results themselves. So I'll just pick out a couple of highlights. We had revenue growth in each of our trading segments. In terms of like-for-like sales in pubs, this was the sixth consecutive year of LFL sales growth across all of our pubs. And in our beer business, we had a really strong year in 2018. I'm pleased to be able to say that we were able to build on that performance in 2019. On cash flow, we had strong cash flow. We've made good progress on debt reduction. Clearly, I'll come back to that. And just for clarity, the final dividend, as we had indicated, is maintained at 4.8p per share.

I think much of this presentation today is also going to concentrate on the evolution of our strategy. Earlier in the year, we reviewed our strategy in the context of the current uncertainty in the market, and the consequence of that was a prioritization on debt reduction and cash flow. Consequence of that is that our main objective is to drive excellent performance from the existing assets that we already have rather than building new pubs. We won't have any new openings in 2020. And as part of that, we are targeting a real step-up in our operational performance, and again, I'll describe that in some detail.

So what does that review of strategy mean? The top half of this graph, I think you are familiar with, our basic business is focused on a high-quality pub estate which operates across the sector. We have a beer business focused on brands and on service. The big changes to the strategy are on the bottom half of this slide, and there are really 2 elements to this. One, that increased focus on debt reduction and cash flow. What does that involve? It involves targeting a GBP 200 million debt reduction by 2023, and we are aiming to do that quicker. By the end of that period, the debt reduction period, we are seeking to have a business which generates at least GBP 50 million of cash after dividends, and at that point, that gives us a choice and options about what to do with that surplus cash flow. So debt reduction and cash flow, fundamentally important.

The second thing is we're not growing the business from new build. We are seeking to grow the business, and that means getting excellent performance from the assets we already have. And there are 2 or 3 things that I'm going to be talking about in that: one is how do we do that from the capital investment program that we have; secondly, how do we do that from raising the bar on our operational and commercial operations in the business; and thirdly, how, over time, do we premiumize what we do to achieve that increase and improved performance. So I think clearer strategic targets, reducing debt, improving return on capital. Our return on capital did improve in our 2019 results and strong cash generation. So I'll come back to some of these points, but in the meantime, I hand over to Andrew to talk through the 2019 results.

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [2]

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Thanks, Ralph. Good morning, everyone. As Ralph has just described, we've had a bit of a mixed year in 2019 and across the group. So revenues were up 3% in the period with growth in each of our trading segments. EBITDA was in line year-on-year and operating profit slightly behind, reflecting growth in our wet-led Taverns and beer businesses, offset by a more muted performance in our food-led Destination and Premium pubs. And that operating profit decline has fed through to both the PBT and earnings per share numbers in the year. We're proposing a final dividend of 4.8p per share, which is in line with last year. As Ralph said, it's consistent with the guidance we gave back in January, whereby we maintained a commitment to protect the dividend during the period of debt reduction that Ralph has just highlighted.

Looking at some of the operational metrics and starting with managed and franchised like-for-like sales. LFLs were up 0.8% in the period overall, reflecting a very strong performance in Taverns against a very tough 2018 comparative. And even though Destination and Premium sales fell short of our expectations, we still achieved like-for-like sales growth, nonetheless. And what this chart shows is that over a long period of time, our total LFLs from the business, our balanced pub portfolio, continued to deliver growth. And whilst we're on that point, as Ralph will describe later, we've realigned our pub business such that we are operating under a single Pubs and Bars umbrella, and as such, our segmental reporting will report a single Pubs and Bars segment henceforth. We will, of course, provide color like food sales and wet sales within that when we report going forward.

With regard to the start of this year, like-for-like sales are up and Christmas bookings are up. Just to be clear, October and November are fallow months. We earn twice the profit in December than we do in October and November combined. And although Christmas bookings up is encouraging, it still forms a relatively small part of trading over the festive period overall.

Looking at quality and composition of our pub estate, on an operating profit basis, profit per pub was in line with last year, reflecting an upside in Taverns offset by Destination and Premium. And as you can see on the column on the left-hand side, in profit terms, we have a balanced pub business that means we're equally exposed to both the eating-out and drinking-out markets.

And looking at EBITDAR, which is a metric, which I think is going to become more pertinent in a post-lease accounting era, we actually achieved EBITDAR growth in 2019. And over the last 5 years, this metric has improved by just over 10% in total in our pub business and on a per pub basis by around 20%, reflecting the continued improving quality of the pub estate overall.

In beer, we've had another solid period. Revenue's up 3%, reflecting strong performances in the independent free trade, ale within the off-trade and the benefit of the new distribution contracts that we entered into at the back end of last year. That has been offset by weaker sales of lager in the off-trade against a very tough 2018 comp. Operating profits were up 2% and margins broadly in line year-on-year, and that's important because we now have margin stability after a few years of structural margin decline in the beer business following the acquisition of the Charles Wells Beer Business. Again, at EBITDA level, the long track record of the beer business is strong, with growth of in excess of 50% in that 5-year period.

Moving now to costs and starting with products. So drink, food, brewing raw materials. We're pretty much locked in for the year overall and guiding inflation of around 2%. On energy, despite continued benign commodity pricing, and we're contracted well into 2021, the levies associated with the supply of electricity -- energy supply continue to outstrip inflation, and we're guiding an increase of 3%. On labor, clearly, this is a politically fluid cost, but at this juncture, we are assuming an increase in the national minimum wage at a similar proportionate level to that of 2019, and as such, guiding inflation of 3% to 4%. And on rental rates, we're guiding 2% to 3% increase overall. It's just worth noting that the rent costs will manifest itself in the interest line post IFRS 16.

In addition to that, as we highlighted at the year-end trading update. We're injecting an additional GBP 3 million of discretionary business -- investment into our pub business, into our people and digital marketing agendas that Ralph will touch on later.

So summarizing that, there's no material change to our cost profile. I think we need around a 1.5% increase in like-for-like sales to mitigate that inflation, which compares favorably to businesses more exposed to London and city centers.

Turning now to cash flow and balance sheet. Our operating cash flow was up GBP 13 million in the period driven by working capital improvements. Our interest is GBP 5 million lower, principally reflecting the benefits of the swap reprofiling that we announced earlier in the year. Our net CapEx of GBP 84 million is in line with the guidance we provided at the interims back in May, and I'll come back to CapEx shortly, and our net underlying cash flow, therefore, saw a GBP 50 million improvement relative to the 2018 figure.

And looking at our debt structure and the journey we are pursuing. Our debt at the end of 2019 was a splash shy of GBP 1.4 billion. Most of you are familiar with our debt structure. It comprises of securitization amortizing out to 2035. We've got a GBP 300 million or so drawn down on our medium-term facilities, which we have in place to 2024. So we have no short-term refinancing requirements. And we have around GBP 360 million of asset-backed long-dated property leases. What we are trying to do is reduce that GBP 1.4 billion, excluding lease commitments that will come on balance sheet with IFRS 16, to below GBP 1.2 billion. And for illustrative purposes, the shape of that debt profile at that target is about half securitization, a similar level of property leasing and a further reduction in the drawdown on those medium-term facilities, which, as Ralph highlighted, just gives us optionality should opportunities present themselves.

Concurrent with that absolute target, we are also seeking to reduce leverage on a like-for-like basis to below 5x, and in achieving that, we should improve fixed charge cover and the proportion of profits that we're running outside the securitization should also increase.

Coming back to CapEx. As I mentioned earlier, the net CapEx for 2019 was in line with the guidance we gave in May at GBP 84 million. Looking forward to 2020, we're maintaining the same level of organic CapEx and that comprises GBP 50 million of maintenance CapEx and GBP 35 million of growth CapEx across the group, for which we are targeting at least a 20% return on investment. There's a little bit of rollover spend from the new site program in 2019, and that's offset by GBP 70 million of disposals, which I'll come back to in a second. So our net CapEx projection is a GBP 60 million reduction on the 2019 figure.

And looking forward to 2021, we expect maintenance CapEx to fall by GBP 5 million to GBP 10 million for 2 reasons. One, we will complete the EPOS and IT pub infrastructure rollout this year. That will not recur next year. And secondly, quite simply, we will be operating a smaller pub estate in terms of pub numbers. To be clear, the growth CapEx number stays the same at GBP 35 million with the same ROI hurdles. There's no new site spend, and we're guiding disposals of around GBP 40 million. In 2021, therefore, we have a GBP 45 million to GBP 50 million improvement on the 2019 position.

Moving on to property and disposals and starting with disposals. On Monday, we announced the completion of the GBP 45 million portfolio disposal to Admiral Taverns. That was the disposal of 137 noncore lease tenanted and franchised pubs. That transaction is both profit per pub and ROC-accretive. And with regards to the GBP 25 million rump of our GBP 70 million target, we've already exchanged or completed on GBP 5 million of that GBP 25 million. We have high visibility of the remaining GBP 20 million. And for clarity, we are targeting to cover book value in those rump disposals.

With regards the carrying value of the estate, in 2019, we impaired the bottom 20% of our Destination and Premium business, reflecting some of the market challenges that Ralph will describe a little bit later. The overall carrying value, therefore, is at -- currently at 10x earnings, and within that, tenanted leased and franchised pubs are being carried at 9x earnings. So we've got clear visibility about our disposals target and we are carrying our pubs at an appropriate value.

Moving now on to net asset value. And our NAV has fallen by just over 20p in the period, and this waterfall chart sets out the moving parts within that. So our underlying earnings are NAV-accretive, and that's been offset by the asset impairment that I've just described. But in addition to that, gilt yields have moved significantly downwards year-on-year, and that's had quite a material impact on our balance sheet. In equal proportions, it's moved our pension from a pension surplus to a pension deficit, and it's also increased the mark-to-market on the swaps underpinning the securitization. So we've lost 18p of NAV this year due to gilt yield movements and it just highlights upwards or downwards the sensitivity of our NAV to movement in gilt yields.

Finally for me, on lease accounting, everyone's favorite subject, you'll be pleased to know I'm not going to dwell or tick in on this. At headline level, this is an accounting change. It does not impact the cash flows of the business. It does not affect the decision-making processes within the business. 2020 will be the first year that we adopt the new standard and as with most others in the sector, we're adopting the modified approach.

At headline level, at the upper range of our guidance, we're guiding an 8% reduction in the PBT, net debt up by around GBP 0.3 billion and an increase in leverage of 0.7x. There's a little bit more detail in the appendices, but clearly, I'll be speaking to each of you individually to make sure you've got your models in decent shape well ahead of the interims next time around.

Okay. That's everything from me. Back to Ralph.

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [3]

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Thank you, Andrew. Just going to talk a little bit about the dynamics of the market and things which are affecting our thinking and what we do. You're familiar with much of this. So I'll just cover 1 or 2 aspects of it. First of all, on the consumer side, spend overall is up despite the decline in consumer confidence over recent months. So people are still spending money on going out to eat and drink, and indeed, our own like-for-likes are up in that period.

The second point is the trend towards experience has been much documented, things like escape rooms, and so on, and this is pretty good for pubs, I think. Not all of it is transferable into the pub sector. So for example, there is a concept which involves throwing tomahawk axes at a wooden board, which I think is probably not going to work in a bar environment. But I do think that darts does work. So the kind of equipment that you can see in Flight Club, you can invest in that kind of equipment for a relatively modest amount of money, and we have been doing, and putting that digital darts experience into the community pub environment. So I just think that, that is a trend which, on balance, is pretty helpful towards us.

Other trends are quite well embedded, and I think they're likely to continue, health awareness, both in food and in relation to alcohol technology, obviously, the development of apps, but also the impact on digital marketing, and I will come back to what we're doing in that respect.

On the sector side, more M&A in 2019 than have been seen for quite some time, both in pubs and brewing. Why is that? I think you've got freehold assets, certainly, in our case and in much of the sector. And you've got what are, in comparison, you've got relatively high cash yields, and that is looking attractive, particularly when combined with the exchange rate for sterling.

A couple of deals came out last week, which you may not have seen in the brewing sector in the U.S., but I think are quite enlightening in respect of what's going on. One of the major U.S. craft businesses, Craft Beer Alliance (sic) [Craft Brew Alliance] was sold to ABI. I think that was about a $350 million deal at a very high multiple. Another major U.S. craft brewer, New Belgium, which brews Fat Tire, has just gone to Kirin. We have the U.K. license for the Kirin brand, but again, it just shows the appetite of global brewers for things in that craft kind of space when they are looking for outlets for growth.

Structural change. One of the things that is worth noting, and we've talked about increasing supply in the past. Market data does suggest that supply is reducing. So CGA data has restaurant supply reducing by just over 3% in the last quarter of 2019 that we're reporting on. I don't think we've seen a great deal of impact of that on trading at the moment, but 1, 2, 3 years down the line, I think we will see some benefit from that.

On the political and economic side, again, you're familiar with these things. Just worth noting, though, the environment is going up the government's agenda. We have a really good story to tell in relation to environmental matters, and I'll describe some of that. And also, just note as well minimum unit pricing is coming in, in Wales 2020. Probably not a huge impact for us given the size of distribution in Wales in the off-trade. But in Scotland, it was probably, on balance, a positive thing for Marston's when MUP came in, in Scotland. So generally, that trend towards minimum unit pricing is a positive for us.

So given that market and those dynamics, which I think are a mixture of challenges, but also opportunities for us, how are we going to do what I said we were going to do right at the beginning of this presentation and raise the bar? The start point for us on our pubs business is a really good start point. We've got a very high quality, mainly freehold portfolio. I think it's about 93% freehold business. And when I looked at what we're doing at the moment, in community pubs, we are outperforming that market. In our Premium business, which includes Pitcher & Piano, Lost & Found, foundry and rural locations, we are also outperforming that premium and bar market.

Our accommodation business, which includes 30 new build lodges is outperforming that market with growth in occupancy and RevPAR. Our family food business is behind the market. And this market is one where we have seen a more difficult environment. Capacity over a number of years has come in. There are significant increases in competition, structural change, grab-and-go, all those kind of things and a significant amount of discounting going on. It is worth noting that we were in like-for-like sales growth, and our LFL sales growth in 2019 was better than it had been in 2018 but it is behind the market, and I'm not happy with that. And I think in the context of doing more with the assets we've got -- that we have already got, what we have to do is to improve the performance of that particular part of our business.

So how are we going to go about doing that? There are really 3 main components of raising the bar in our commercial operations. The first is in reducing the complexity of what we do. And Andrew talked earlier on about segmentation, but the important point here to me isn't how we report the numbers in the segmentation. It's how we run the business. Back in April last year, we combined our Taverns and business -- Taverns business and our Destination business under one place, creating something called Marston's Pubs and Bars. And why did we do that?

We did that to create a common culture to have shared ways of working, to have greater clarity over menu development, those kinds of things. One consequence of that creation of Pubs and Bars was a clearer segmentation of our offer by customer. So whether it's a community, customer, that family food market, a slightly more premium food offer or the premium end of the market itself, we have much greater clarity over where our assets sit in relation to the demographics around the pub. What that led to is reduction and rationalization in the number of formats that we run, the number of menus that we have, that kind of thing.

And we have seen, over the course of the last 7 months or so, some very clear benefits from that. From a customer point of view, there is more consistency of offer and service. We've got improved audit and EHO scores, and we've got better guest satisfaction measures. And I do think that already, we're in a better place than we were a year ago. So that reduction in complexity is an important part of it.

The second is we're not building new pubs, but we are still spending capital, and that capital investment is tighter, and it is more focused. And it's mainly around premiumization experience and the maintenance of the estate, and I'll come back to that.

The third is on culture. We've increased our focus on 2 aspects of what we do. One is on our guests and the other is on the team, and each of those have got measurable KPIs, and I'm going to talk about that. But the objective of what we are going to do is to raise the bar on being a guest-focused dynamic business generating a stronger financial performance.

So the first of those is capital investments, the CapEx program, which I've described as being tighter and more focused and based on experience and premiumization and maintenance. So what do I mean when I'm talking about experience and premiumization? Andrew described earlier the capital allocation and where we're spending our money. This is really what we're trying to do with that capital. So these are all examples of where we've been improving the look and the feel and the standards of pubs in order to improve that guest experience and premiumize the offer of what we've got, both in our family pubs business and in our premiums business.

And what you can see from the numbers is that we can generate strong returns from individual capital projects like this. The key point is that across the entire program, we are achieving and are confident that we can deliver strong returns of 20% and above across the estate when we implement these kind of projects. So strong returns are available.

What is it that we are trying to achieve when we talk about premiumization and improving experience is really this kind of thing. So these are 4 examples. They're all in our premium estate, but it's about improving design, improving the ambience, creating more interesting spaces, making things more contemporary. So Lost & Found, Sheffield, top left; the Pitcher & Piano at Cornhill, which we did at the back end of 2018; The Lazy Pig, the one on the front cover, in Chesham, bottom left; the White Hart in Godstone, these are all examples of where we've done that, and I think they convey pretty accurately what we're trying to do. So those kinds of schemes on experience and premiumization are a big part of that plan.

The second is to be better and more focused on maintenance and core pub standards. So an example of this is we had 2 projects in 2019, quite modest: Project Showman, which was all about basically decor inside and out; and Project Hatton, which is a project to do with creating a wow factor in pub gardens. Neither of these were particularly complicated but what is quite interesting is how much they resonate with local communities and how much they get behind them. So relatively small amounts of capital, but they can have a transformational impact. And again, when we do these kind of projects, we are confident in our ability to generate 20% or more of return on capital.

The final thing is on basic maintenance. In the future, all of our pubs will be visited and maintained on a 5-year cycle. I think if there's one self-criticism I would have about the way we have historically gone about things is that we've had periodic big ticket investment to maintain the pub. So transformational stuff instead of regular maintenance. What we have done is to allow some pubs to drop below what I think are acceptable standards, and that leads to larger spend. So in future, that will not happen. All pubs will be maintained over a very clear cycle. So in terms of maintenance, in some aspects of it, we will get returns and the estate overall will be maintained at a higher standard.

The investment that we put into the 15 pubs, which were formerly M&B Pubs, which we acquired in October 2018 has really worked very well. That fitted that sort of premiumization experience description accurately. The design that we put into these pubs, it was contemporary. It's interesting, but it's not too challenging. The consequence of that is that we've beaten the targets that we set for the acquisition of those M&B pubs, both in relation to turnover and the ROC targets, which we had at 25% at the time of acquisition. The pictures on this page are of The Hesketh's Arms in Preston. So I think we do, do something different and better than the market in relation to community pub investment.

So in relation to raising the bar on performance, capital investment and getting returns from that capital and making it work harder, those are key. The second area I talked about is guest focus, and in that respect, what I've got here is an example of one aspect of our digital plan to improve our knowledge, understanding and communication with our guests. And I think this is something we just implemented and developed. And I think it is better than -- and different than anything else that's currently going on in the market.

What we've done is to take, first of all, on the left-hand side of the pub, pub data by every single pub. So that is what menus we have, what promotions are on, what entertainment is on, what games, what facilities it's got, gardens and all that sort of thing. And that pub-by-pub data is then used to create what's called dynamic content, so marketing based on individual pubs rather than formats, rather than brands in the entire estate. And that bit is probably not terribly different to what other people are doing, but what is different is how we use it because what we're then doing is linking up with app providers. So these are people like Sky Sports and the Daily Mail and people who have got apps that use location services. And we share data with those people, and they tell us, using location services, when our customers are within a certain geographical range of our pub and then they market the pub using bespoke data to those people directly. I'm told that's a very good thing and I'm told that about 12 million people so far have seen that marketing. So it's clearly getting reach and hitting people, which is obviously very effective. So improving digital presence is part and parcel of that improved guest focus.

The second thing that we have done is to completely overhaul our insight system, both in our mainstream Pubs and Bars business and in Marston's Premium Pubs and Bars. We've got new suppliers providing guest insights. Our objectives there are to increase response rates, increase the speed of feedback and the usefulness of the data that we get. They've only just gone in at the beginning of October. Early feedback looks really good, but that is an important thing that we've done. At the same time, and we've been doing this bit for quite a long period of time, we've got regular monitoring of all social media feedback sites so that we have real time monitoring not just of our own pubs by format but also those of our competitors. So we always know where we sit versus other people's brands, other people's formats. So a significant investment in guest experience, and what that basically means is that, that data is very important to us in how we run this business in future. So CapEx is important and guest focus is important.

The final thing that I talked about was teams. I think one of the biggest challenges that we in the sector have got is in relation to people, both in relation to a shortage of skilled people, particularly general managers and head chefs, but also to improve productivity from our teams at a time when costs are rising. And in that respect, what we do in recruitment, what we do to retain people and how we motivate and reward them, those things are key. I think we're very fortunate at Marston's. We've got a very strong culture, a really strong culture.

We're obviously doing a lot of things right because if we weren't, we wouldn't have won the Apprenticeship of the Year award -- Apprenticeship Employer of the Year award this year in 2019. And we wouldn't have the high engagement scores that we do, but we are ambitious to improve further what we do in this respect. And we've set ourselves some very key and clear KPI targets in relation to turnover, appointments, time to hire, all of those kind of things in those key roles.

Just note under motivation and reward, one thing that I think is interesting, and again a bit different, we have eliminated 0 hours contracts from the Marston's pub businesses this year and replaced them with contracted hours agreements. So that's quite a big change in terms of what we're doing with staff.

So those last few slides have really been all about how do we get more from the pubs that we've got by investing capital and by raising the bar on our commercial and operational activities. The consequence of all of that is that what we're looking to do is to achieve superior performance in Pubs and Bars.

Turning to Marston's Beer Company. I said at the beginning, Marston's Beer Company built on last year's record year with further growth this year. It's a great business based on strong brands. It's based on outstanding distribution reach. We distribute to 1 in 4 pubs across the U.K. and it's backed up by a first-class supply chain operation, supplying services in brewing, packaging and distribution to Marston's and the rest of the industry. That mix of attributes, brands, distribution and supply chain is one of the reasons why Marston's Beer Company is one of the most profitable beer businesses of scale in the U.K. beer market.

So why does premium matter? And why are we focused on premium? We are 25% of the premium ale market in the U.K. 80% plus of our portfolio with these kind of brands is rated as premium, including Wainwright, which is the U.K.'s #1 cask golden ale. Wainwright sponsors the boat race, which is the diagram on the bottom right. Brands such as 61 Deep, which has just won a major award in the World Beer Awards Hobgoblin IPA last year, was the #1 IPA in the world in the global beer awards. So why is it that we are focused on this part of the market? Basically, 2 or 3 reasons. One is it's consistent with market trends in the on and the off-trade towards premiumization.

Secondly, it has a more attractive margin structure. We can make money out of this segment. And thirdly, it's attractive to our customers. It's a badge of quality. So when we are talking to people, customers like the MCC of Lord's about what we can do for them that is different from other people. It's this kind of outstanding range of premium beers that really makes a difference to them. So premium is important.

What is also important is world beer. We are something like 7% of the world beer market in the U.K. with an outstanding portfolio of beers. That includes ERDINGER, the #1 wheat beer in the world. We've got U.S. craft brands in there, Founders and Shipyard. We've got Estrella Damm, Mediterranean lager. We've got German premium. We've got Kirin Japanese lager. We've got craft cider in Friels and cider in Kingstone. So that's important to us. And why is that important to us is because this part of the market is also [in growth]. World beer was up really strongly in 2018. World Cup, great summer, but it still grew in 2019 by a further 6%. So premium and world beer are really the 2 things that we are interested in brewing.

One example of that world beer market and craft has -- is the experience of Shipyard within our portfolio, which has been outstanding. That is now 100,000 hectoliter brand, has shown really strong growth since 2013/'14. It's currently the U.K.'s #4 craft beer brand. Our ambition is for that to be the #1. This year, 2019, we've launched in the low/no sector of the market, Shipyard Low Tide, 0.5% ABV. We are about 8% of the U.K. low/no beer market all together. So that's an important point for us. In terms of NPD, 2020 will see us launch Shipyard lager. And we've just signed, and we're really pleased with this, a new 15-year distribution agreement with Shipyard, which takes us out to 2034. This is what the founder of Shipyard and owner and manager of Shipyard, Fred Forsley, has to say about this relationship with Marston's.

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Fred M. Forsley, Shipyard Brewing Company, LLC - Founder, Co-Owner, and President [4]

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The first thing you look for in a relationship, in a collaboration, in a partnership is people you can trust. And honestly, that's the foundation of a relationship that I experienced at Marston's from the beginning with Richard Westwood and the rest of his team. It's been a professional, fun experiential relationship in which we've been able to participate in the sales and marketing and at the same time, be proud of what they've done with our product.

The growth that we've achieved in the U.K. has been phenomenal, really outpassed any of our expectations. The vision of being able to take it from 60,000 to 90,000 barrels is a true -- is a dream come true, really. The quality of the consistency of the execution is amazing. And they'll always be innovative in creating a more progressive and efficient brewing process and packaging process. But at the same time, not giving up on the tradition of brewing quality beer with quality ingredients.

So my goal is that this relationship outlives me and that our grandchildren are here celebrating and selling Shipyard in the U.K. with Marston's.

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [5]

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Sorry about the music. We don't pay for it. So yes. So I think that's a good example of one of the partnership reasons that we have.

Young's, I think, is another great example of partnership working in our beer business. So what is the relationship between Marston's and Young's? We have the license to perpetuity of the Young's brand, and there is no economic cost to that. We have the license to perpetuity, and we can distribute it how we see fit.

This year, we've done a number of things with the Young's brand. We've just refreshed the branding. That's been really successful since we refreshed that and put it in place to take London head on, advertising campaign, our volumes of Young's in the free trade are up by double-digit growth. That was done at the end of July. We also built a new distribution center in Thurrock, West of London. We brought in a new dray fleet for the London distribution, which has got Young's branding on the side of it. So all of those things have been really positive. And this is one of the reasons that our free trade business in 2019 had an outstanding year and grew its business in a market where other people have generally not grown. We've done really well.

So what -- this is what Patrick Dardis, the Chief Executive of Young's, has to say about this arrangement.

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Patrick Dardis, Young & Co.'s Brewery, P.L.C. - Chief Executive & Executive Director [6]

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The relationship between Young's and Marston's is hugely important for us. It's not just about the beer supply and logistics, it's also about our beers. Born in London in 1831, Young's beers and Young's pubs are absolutely fundamental to our success. And we wanted to make sure we had a safe home and not just a safe home, but with a business that we know will actually invest and drive those brands and create greater awareness for our brands than we ever had, and we can witness that. For the first time in 15 years, we've got Young's branded lorries going around delivering to our pubs. So the additional awareness that's been created already in such a short period of time has been remarkable. So that relationship with Marston's is significantly important for us. We hope it's a very long-term relationship and we feel very comfortable that our brands are placed with Marston's.

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [7]

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So to conclude on one point, which is the -- where we are in environmental matters. And I say this because I think the environmental story is not just more important to government, as I described earlier, but it's important to our employees. It's increasingly important to our customers. And based on the feedback we have, it is increasingly important to investors, and we have a really good story to tell in this area.

In 2018, Marston's won Energy Management Team of the Year. This year, we won the National Recycling Award and the sustainability award for water management.

In our pubs, we banned plastic straws and single-use plastics in 2018. We started our plan to install 200 car charging -- electric car charging points in pub carparks, and we're nearly through that program of development as we speak. I think we are still the only major pub business to be able to claim 0 waste to landfill. More recently, in this quarter, we have withdrawn the use of plastic bottles and single-use plastic in our lodges. That move alone will remove about 0.5 million bottles from the supply of plastic into our business. It's not just in pubs. It's also in beer and our brewing operations. We've had a range of initiatives and investments to reduce gas, fuel, water and that has been fantastically successful. And I would say all of that matters to us as much as it does to a wide range of stakeholders.

So to conclude, 2019 solid performance overall. The key points really, though, for me, are about the refocused strategy, where we are on our target for reducing debt and our objectives to improve our commercial performance both from better capital investment and from better commercial and operational management within the business. So those are the key things.

In relation to 2019/'20, the current financial year, I would describe it as a solid start. So what does that mean? Like-for-like sales in pubs are ahead of last year. At this point, Christmas bookings are also ahead of last year, which is positive. And for Marston's Beer Company, we're trading in line with our expectations given the time of year. So very clear plans to reduce debt and drive growth and a solid start to 2020.

That concludes our presentation, and we are happy to take any questions that you have on that.

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Questions and Answers

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Paul Ruddy, Goodbody Stockbrokers, Research Division - Research Analyst [1]

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Paul Ruddy from Goodbody. Just quick questions on the disposal program just in relation to how you see the future disposals. Obviously, the recent Project Harvest looked like a really attractive deal, and that was lower margin. Are there other blocks of pubs that you look to dispose of in the lower margin profile? Or will it be kind of more average margin pubs going forward? And then as you go through the disposals program a little bit further, I suppose, will you kind of look to more single sites? Or will it be a continuous kind of group of 20, 30 pubs?

And then just a second one for me, just on the re-CapEx-ing program and the newbuild program, how many pubs would you expect to invest in this year between maintenance CapEx and growth CapEx?

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [2]

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On disposal, so if you recall, as part of the GBP 200 million journey, we flagged up around GBP 150 million of disposals in aggregate. And we said about GBP 90 million of that would come from the lower end of our tenanted leasing franchise estate. We've got GBP 20 million to GBP 25 million of unlicensed properties to dispose of. Got a few golden bricks within the estate, GBP 20 million to GBP 30 million worth. And then there's GBP 20 million of churn at the lower end of our destination estate. Now we're constantly reviewing that because, as Ralph alluded to, we sell pubs to improve profit per pub and improve ROC. So that's under constant review, but we have visibility of what the aggregate GBP 150 million looks like. At headline level, it's at the lower end to improve quality of the estate.

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [3]

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In terms of the pub numbers, the pubs that we're going to touch this year with CapEx...

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [4]

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In terms of the capital program this year in aggregate, so the maintenance program means that we are going to touch, in maintenance terms, just shy of 200 pubs on a maintenance cycle. And with regards specific growth capital projects, it's about 80, I think, this year in total.

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [5]

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It will be 80 to 100 pubs (inaudible).

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Douglas Jack, Peel Hunt LLP, Research Division - Analyst [6]

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Yes, Douglas Jack at Peel Hunt. Just a quick one -- well, 3 questions. You've got GBP 10 million in terms of growth CapEx in new builds. So you've got no flow-through in terms of openings in 2020 from previous commitments. None? That's...

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [7]

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(inaudible) that is called rollover.

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [8]

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Okay. So the remainder, yes...

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [9]

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Effective cash management, I'll pay when I need to.

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Douglas Jack, Peel Hunt LLP, Research Division - Analyst [10]

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And in terms of the cost mitigation momentum that you've had, you still got a good runway of projects to maintain that going forward? And the last one, in terms of the pension, obviously, it jumped up by about GBP 40 million in the last year. Does that have any read-through in terms of any cash commitments you might have to make?

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [11]

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Okay. So just on the cost mitigation point, is there a plenty to go out? There always is, and that's investment in kitchen equipment. It's investment in all sorts of things, many different things, which make a difference to cost management. I would say that it is -- given the scale of increases in labor costs that we're seeing and potentially are talked about, those are the kinds of things that lead me to conclude that one way or another, that premiumization of the offer is important for us for the longer term. And I don't mean by premiumization getting away from value. I just mean in terms of being able to provide something that people want that covers the cost of providing it that, that is why that is important to me. So improving the offer is going to be as important as investing in things which take costs out because we're going to have to get spend per head up.

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [12]

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On the pension, Doug, it's a good question. Our next triennial valuation is September 2020. I haven't got a clue where gilt yields are going to be in September 2020. If anyone does have a clue, please let me know. I said a year ago I didn't think gilt yields could fall.

So we've always said that with regards -- we currently contribute GBP 8 million a year to top up the pension. We always flagged up that the profile of pension contributions, henceforth, would be gilt yield-dependent. What I'm encouraged by are 2 things: one, we have a very positive relationship with the trustees; and secondly, the regulator has recognized that gilt yield declines can imply that companies need to be throwing up more cash into pensions for something that might be a 5-year phenomenon when you're looking at 35- to 40-year profiles. So on that basis, if gilt yields are where they are now, in a year's time, are we going to remove GBP 8 million of contributions? No. Could we get a reduction? Possibly.

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Ted Nyhan, JP Morgan Chase & Co, Research Division - Analyst [13]

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Ted Nyhan, JPMorgan. Firstly, can you give us a sense of volumes, like-for-like pricing, covers? Anything there will be helpful. And then in addition, is there a large spread in LFLs within the different segments? Specifically, is there kind of a lower end where LFL momentum is particularly weak that would be right for addressing? Or is it -- is there a fairly limited spread across the estates?

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [14]

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Right. With volume and price, I think it's a pretty well trailed dynamic. Covers trends in the market are down and that's been offset by price. What I would say with that is where we have taken price through, we haven't had much in the way of customer or indeed, general manager kickback. So back to Ralph's point, if you're good enough, I think there is less price sensitivity out there. And the bottom line is, if you're a business living and surviving on GBP 5 a plate, you aren't going to be here in 5 years' time because we all know where the living wage is going to be.

On the spread of LFLs, the impairment was in on about 70 Destination and Premium pubs. The majority of the pain in Destination and Premium was in those pubs. And I do just want to sort of make an illustration. We have a pub that historically was taking GBP 30,000 a week, and this year, it was taking GBP 25,000 a week. So in LFL terms, that looks like a 15% LFL drop. That pub is earning over GBP 200,000 of EBITDA. It's still a good pub. It's not a pub you want to sell. But in valuation terms, because the multiple flows through, that pub is worth GBP 1 million less. And it's those dynamics that we've been playing around with at that bottom 20% part. So if you exclude the bottom 20%, the rest of the business is holding up pretty well.

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Julian Kenneth Easthope, RBC Capital Markets, Research Division - MD & Analyst [15]

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It's Julian Easthope from RBC. Yes, 3 questions as well for me. First, coming back to gilt yields. I think you were sort of talking that in the medium term, you wanted to refinance the securitization, and that was really dependent on the swap costs. Does that put you further out? So I suppose the question I have is what sort of gilt yields do you need for the securitization refinancing to make sense?

Second question is just in terms of maintenance CapEx. You talked about the 5-year cycle. I know that when Mitchells & Butlers decided to go down that route, they realized there was a whole rump that hadn't been touched for some time. I just wondered whether there was some catch-up to do and what the average sort of swap cycle was.

And the last little bit, is the GBP 2 million training increase just a one-off or is that going to be an annual -- continuation of that annually?

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [16]

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Do you want to say what gilt yields need to be before we do anything first of all? And the answer to that is no you don't.

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [17]

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We don't know. And clearly, you've got a scenario whereby a certain political outcome could possibly drive gilt yields through the roof, and our securitization becomes an asset.

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [18]

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(inaudible)

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [19]

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Yes. Exactly. So no one knows what the gilt yield profile looks like. Clearly, I can't refinance the securitization with a GBP 200 million-plus in aftermarket. I think you'd all be looking at me thinking I way slightly bonkers. So that number has got to be a sensible figure. Now clearly, we just need to understand a point in time where it might be worth crystallizing that mark-to-market in exchange for a significantly lower interest rate. But I think it's very difficult to prescribe that specifically. So I think it's just a very fluid situation.

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [20]

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On the CapEx point, I don't think we've got a big rump of stuff that needs to be improved. I do think this is a self-critical point. I think what we had allowed to happen is a sort of this: we would do maintenance capital as a catch-up when we repositioned pubs with a several hundred thousand pound investment. And I think that, that -- what that led to was allowing a certain number of pubs to decline in standards beyond what was acceptable. It also clouded the ROC calculation on the subsequent refurbishment because you've allowed the thing to decline and then you invest in it. And guess what? It magically improves. And we are going to get away from that. The whole point of this is to avoid having to go in and spending huge amounts of capital where it's not necessary to do so and to keep the pub in -- pub estate in the highest possible standard. That's what we're aiming to do.

On the training budgets, as we stand at the moment, that step-up in training costs, it's not likely to increase, as we see it right now at that rate in the future, but it is an increase in training cost that I think is going to be there for the foreseeable.

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [21]

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I think both the GBP 2 million and the GBP 1 million of digital marketing, we should see that as embedded investment. We've had for the last 10 years probably the best operating margins in the marketplace. We're investing a bit of that margin into customer and -- customer and people.

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [22]

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It's -- it's a really important point because I go back to one of the major challenges for the sector is about people and availability of labor. One of the ways of trying to address that is to identify a pipeline from within, which means we don't have to go and recruit from outside all the time to fill vacancies. That requires more focus on retention, training, development and all of those kinds of things. I think it is a market issue and it's a big one.

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [23]

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It's a really important point because I can be the Grumpy CFO and go to my boss and say, "We need to save some money." And easy targets historically have been, "Let's cut some marketing, let's cut something on training, cut a bit of communications." And I have a boss who says, there are easier things to cut now. Because they're investments. They're not costs.

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [24]

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That is roughly the conversation we have. Yes.

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [25]

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Yes.

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Timothy William Barrett, Numis Securities Limited, Research Division - Leisure Analyst [26]

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Tim Barrett from Numis. One question coming back to the very first one around disposals. You're obviously well ahead on this year's target. Did you say or could you say you're now expecting single site disposals versus portfolios? And is the market for single sites equally good?

And then just a second one, coming back to Brewing. You're talking about flat margins for this year now that Charley Wells is integrated. Is there another step-up in due course? Or are you now at sort of medium-term margin stability in Brewing?

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [27]

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On the disposals point, I think the market for single sites is very strong. I don't think that's weakened at all, both for alternative use and from people who want to run them as pubs. So it remains strong.

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [28]

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Yes, I don't envisage another 150 site portfolio disposal, but that doesn't mean we might not look at slightly smaller packages, slightly smaller tickets. Ultimately, ultimately, Tim, we've made a commercial decision on selling that portfolio to Admiral. It's the right decision to make. We're pretty confident with the disposals going forward that we can achieve book by selling in a slightly different way.

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [29]

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On the Admiral disposal, we were positively surprised at the extent of the demand for that kind of asset. We thought there would be decent demand, but it was really very strong from counterparties who, before we hadn't started that process, we weren't actually aware of in the market. So that was quite an interesting development. On the margin point, Richard.

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Richard Westwood, Marston's PLC - MD of Beer & Pub Company [30]

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I think there's a real opportunity for an upshift on the margin, mainly because a couple of things. The shift that we've been seeing over the last 5 to 10 years towards the off-trade, that's slowing down. But in particular, for us, that really strong result that Ralph described in the free trade, which is our biggest margin area by a long way, that grew by 6% this year, and that -- it'll probably be in the same kind of growth again this year. So that, in itself, that structural shift will bring an uplift in margin and also the fact that we continue to premiumize.

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [31]

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Got to manage that in my model, (inaudible)?

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Richard Westwood, Marston's PLC - MD of Beer & Pub Company [32]

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Yes.

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Richard Michael Taylor, Barclays Bank PLC, Research Division - Analyst [33]

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Richard Taylor from Barclays. Just a quick question on the GBP 3 million investment that you've made. Can you let us know when you put that in? Have you seen any benefits from that yet? And if not, when would you expect it to sort of kick in? What sort of metrics have you set yourself in terms of the sort of return on that?

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [34]

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The investment in digital and training went -- started to go in the last quarter of FY 2019. So it's already in the numbers.

In terms of the KPIs that we're looking for. First of all, there are a significant number of internal KPIs that we would be looking for. So for example, on digital, that's to do with the effectiveness of the marketing, the reach measuring the number of people. I mentioned 12 million people who have seen the digital campaign, but how many of them come in and what is the feedback on that campaign and all the rest of it. On the people side, our KPIs are very clearly about staff turnover, particularly for GMs and AOMs -- sorry, head chefs, and they're about time to hire and the number of positions we fill from outside versus inside. So those are the kind of internal KPIs that we have.

When you put all those together, what are we really aiming to do with all of that? The bottom line is we're looking for superior LFL sales and margin performance. So that ultimately is the KPI that we're looking to achieve.

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Richard Michael Taylor, Barclays Bank PLC, Research Division - Analyst [35]

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It's too early, but I mean, you've gone from underperforming the market to outperforming the market since your year-end. Are the 2 linked? Or is it a totally different issue?

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [36]

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I'm not sure I would say that. I think we've sometimes been ahead of our market and sometimes been behind it, and I would prefer to see a longer-term period of time before I made a comment on that.

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Unidentified Analyst, [37]

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Given the success of Estrella and Shipyard, are there any more of those type of deals out there?

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Richard Westwood, Marston's PLC - MD of Beer & Pub Company [38]

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Yes, there are. There are. And as you'd imagine, we are constantly talking to any 1 or 2 or 3 people because there's no doubt, that model for us with a business like ours, which has that infrastructure and the scale, there's big opportunities there. But you have to be quite careful. It has to be genuinely shareholder-adding value, and that's one of the criteria that we look at, does this business -- would that bring business, bring additional benefit to our business. But yes, they are available.

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [39]

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Well, Rich, it's probably worth flagging up as well. We have a choice between the partnership and you have so many craft brands come across your desk for acquisition deals.

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Richard Westwood, Marston's PLC - MD of Beer & Pub Company [40]

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When you look at those 4 or 5 license deals that we have, they're all slightly different. And so we've got the knowledge now, the experience now of running a particular model, which suits both the other party and ourselves, and which is incredibly flexible. The Shipyard, for example, is very different from Estrella.

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [41]

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It's an interesting one because I sometimes get asked the question, why are we interested in distribution. And part of the answer is that is we're interested in distribution for distribution's sake, and that it's something we do, and we do it well, and we can make profit out of it. But the other part of it is when you are talking to Shipyard about -- or Estrella about coming to the U.K. market and you say who you are, first of all, you're not a global brewer. That's quite an important thing. Not being Heineken and/or Molson Coors to these people is quite important because they regard them as their direct competition. We're not that.

The second thing is we've got amazing distribution, and that is really hard to get. There aren't many operators who can supply that and switch that tap on. So it is a really important thing, I think, within the business model.

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Richard Westwood, Marston's PLC - MD of Beer & Pub Company [42]

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(inaudible) more about independent free trade because it is one of our key core strengths. And -- but it's that channel which gives these license holders some real inroads into the market.

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [43]

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I think -- I was in the Lake District last week and one of Richard's free trade accounts. The only foreign beer on the bar, and it was a very well-stocked bar, was Guinness. Every single lager, craft beer was a Marston's licensed product. So you can own a whole bar, which is really powerful.

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James Robert Garforth Ainley, Citigroup Inc, Research Division - Director and European Hotels and Leisure Analyst [44]

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James Ainley from Citi. Just one question remaining, please. Can you talk about -- or can you talk about how we should think about the cost savings from merging the pub businesses? Is it just a reporting thing? Or are there more structural sort of interesting structural opportunities there that will drive profitability?

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [45]

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Okay. The intention is not to save cost. The intention is to change ways of working and behavior. I think there is a -- you will never save your way to prosperity. So what we've got to do is change internal behaviors to drive like-for-like sales. The success of this business is driving sales harder, not constantly chasing cost. You'll never succeed. So I think the restructure has been borne out of deploying people in a smarter way and making sure we're getting a better output as a consequence of that.

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [46]

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I'll give you an example of that, James. So we had 2 commercial teams, one in food and one in our wet-led business. We put the 2 together. The wet-led business has outperformed its market. It has got a particular knowledge and has developed a position on the wet-led offer in pubs generally. One of the things that we're doing and doing successfully in food-led pubs is improving the wet-led offer. So how you do that in terms of brand awareness, what you've got on the bar, the pricing points, there's a knowledge and expertise that we're transporting into the food business. And that's the one example I would use. Julian?

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Julian Kenneth Easthope, RBC Capital Markets, Research Division - MD & Analyst [47]

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It's Julian from RBC again. And is it possible to give us the net assets of the Brewing division, just so that we can work out -- no? Okay. That was quick.

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Ralph Graham Findlay, Marston's PLC - CEO & Executive Director [48]

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Right. We're going to conclude the presentation now because I think we've run out of time. Richard, you've got some beer. We bring beer here because we like to ensure a good turnout. It's free. So Richard, what have we got?

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Richard Westwood, Marston's PLC - MD of Beer & Pub Company [49]

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Right. I think we pushed the boat out a little bit this year. This is a bag of beer that I'm pretty sure you would not see anywhere else, anywhere in the world. So what we've got for the health-conscious, Mark, we've got Shipyard Low Tide, which is 0.5%. We've got a Wainwright gluten-free, which are both NPDs this year. We've got a very famous German beer. We've got a very famous Catalan beer. And the pièce de résistance, we've got 2 limited edition beers that, again, only this year, both bottle conditions, both at the top end of beer quality, both will be absolutely perfect for Christmas Day, 7.5% limited edition. And they're the only beers out of interest, they're the only beers that get produced on the Burton Union System other than Pedigree. So they're quite unique -- and they're individually numbered as well.

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Andrew Andrea, Marston's PLC - Chief Financial & Corporate Development Officer and Executive Director [50]

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Okay. So (inaudible) about what you do with these beers without putting the...

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Richard Westwood, Marston's PLC - MD of Beer & Pub Company [51]

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Yes, they are bottle condition, which means that they've got a small amount of yeast which sits on the bottom. So ordinarily, they'd be cloudy. So the idea, you put them in the garage. You don't put them in the fridge for a couple of hours just for that yeast to settle out at the bottom, and then decant it quite carefully into your pint glass. Perfect.