The pub landlord, which put 93% of workers on the government furlough scheme but kept them all on the books, hailed the Prime Minister’s decision to allow the industry to re-open on 4 July.
“In advance of reopening, we have prepared comprehensive plans for our employees to be able to operate safely within the guidance, and for our pubs to trade efficiently and profitably given restrictions still in place,” the company said as it prepares to reopen 85-90% of its pub estate a week on Saturday.
While demand is unlikely to be sustained at pre-pandemic levels, the reduction of social distancing rules to one metre and the size of crowds flocking to Britain’s beaches in recent days shows that the county is keen to return to normality.
Marston’s, where 90% of its drinking holes having outside space, said that with many rival hospitality companies having succumbed as a consequence of COVID-19, it feels that it is well placed to gain market share, with a predominately freehold pub estate that it feels is less exposed than many peers to city centres “where we believe the long-term impact of COVID-19 may be more pronounced.”
Given this, plus a balance sheet that should be significantly strengthened with £273mln cash after agreeing to spin off its brewing arm into a joint venture with Carlsberg, the Wolverhampton-headquartered pubco feels “well placed” for the longer-term.
As for the results for the six months to March 31, revenue fell 8% to £510.5mln, with like-for-like sales in pubs for the 24 weeks to 14 March down 1% and beer volumes in line with expectations before the lockdown decimated demand.
The impact of the adoption of new IFRS 16 accounting rules severely affected earnings and net debt, with the group flopping to a £33.2mln statutory loss from a £16.3mln profit last time and net debt up to £1.7bn including leases.
The dividend was withdrawn last month and no payout is planned for this year, but the board plans to "revisit the payment of dividends only when the business is generating sufficient cash flow to cover the dividend and it is appropriate to do so".
Shares in Marson's fell 6% to 60.9p on Friday, around half their level at the start of 2020.
Broker Liberum said the initial trading recovery next month "should benefit from its predominantly suburban locations, diverse split of wet and food-led pubs and notable outside space".
"This should help entice customers back and relieve some of the social distancing limitations. Break-even should be achieved at between 50-70% reductions in volume with operations simplified and overheads reduced."
Shore Capital noted that the net asset value at end-March, when stripping out 31p of brewing assets and including the cash proceeds of 43p per share, gives a retained pubco NAV of 127p per share from the group’s circa £2.3bn pub estate net of debt, current liabilities and derivative losses.
In addition is Marston’s retained 40% stake in the beer joint venture, worth up to 50p per share.
"Given the uncertainty over the return to trade we see some risk to the property valuation near term," the analysts added, so will only reintroduce forecasts and a recommendation as a clearer pattern on trading emerges.
--Adds shares and broker comment--