Pub group Marston’s has warned that it does not expect venues to reopen until March at the earliest – with its boss calling on the Government to extend the business rates holiday beyond its current end date in April, and cut VAT when doors finally open again.
Total revenue across its estate of around 1,400 pubs – 21 of which are located in Scotland – during the last quarter period was just £54m.
In 2019, sales had been £1.17bn.
The update for the 13 weeks ended 2 January 2021 showed that trading was materially disrupted due to Covid-19 related restrictions imposed across England, Scotland and Wales.
Chief executive Ralph Findlay said the pub sector remains in a very difficult position.
“Regrettably there have been casualties across the sector and it is vital that the government reviews urgently the opportunity to continue to support pubs as we reopen the economy in the coming weeks.
“Pubs are viable businesses which are part of the social fabric of Britain and which make a major contribution to the economy and the communities in which they serve – it is vital that they not only survive the short-term crisis but are supported in order to recover and flourish.”
“Extending the business rates holiday and VAT cut for the rest of this year is a minimum requirement,” he added.
In October, Marston’s cut 2,150 jobs due to the pandemic lockdown restrictions.
Despite the disruption, Marston’s stated it remains focused on strategic development, with the £233m initial proceeds of a joint venture with Carlsberg UK – completed at the end of October – being used to reduce debt.
The profit on disposal into the joint venture is estimated to be around £280m and the spot value of the contingent payment due to be received in October 2021 is approximately £20m.
In December, the group also exchanged contracts with SA Brain to operate its portfolio of 156 pubs in Wales, on a combination of leased and management contract arrangements.
These pubs generated pre-Covid outlet earnings before tax of £14m, from which Marston’s will pay rent of £5.5m per annum with effect from April 2021.
During the last three months, Marston’s continued to focus on cash preservation, with all non-essential spend avoided.
Government support has been accessed through the job retention scheme – with 97% of employees currently furloughed – and business rates relief.
Despite the ongoing disruption to trading, the group reported net cash at 2 January of £104m, from a £280m facility which extends to 2024, providing bank facility headroom of £176m.
Within its securitisation, sufficient cash has been generated to make scheduled repayments of £18m which fall due on 15 January. The securitisation also includes a £120m liquidity facility, of which £10m is currently drawn.
Marston’s estimates that its cash burn in full lockdown is £3m to £4m per week, before scheduled securitised payments.
However, due to having significant liquidity in its financing arrangements, along with the absence of any near-term refinancing requirements, the expectation is that the outlook for the second half-year is much more positive.