The statutory loss reflects a non-cash impairment charge of £305.7m for goodwill and property, plant and equipment, triggered by the ongoing pandemic, according to its results statement.
News of the Wolverhampton-based operator’s loss comes despite the Group receiving £232m proceeds from its joint venture with Carlsberg to create the Carlsberg Marston’s Brewing Company, following the deal’s completion in October.
What’s more, while its Q4 like-for-like sales recovered to 90% of 2019 levels - 7% ahead of the wider UK pub sector according to Coffer Peach figures - the business has drawn down £270m of a £360m bank facility, providing headroom of £90m.
Marston’s results also showed that the group improved net cash flow by £61m by making £75m worth of disposals, though the company also invested £2m in its “inside-out” scheme to increase site capacity during the winter months.
Moving forwards, Marston’s says it has “sufficient cash liquidity” to absorb the impact of current restrictions across England Wales and Scotland and is targeting £5m worth of overhead reduction, with £3m to be realised this year, and hopes to reduce borrowings to below £1bn by 2024.
As reported by The Morning Advertiser (MA) in October 2019, Marston’s revealed net debt of £1.39bn in a trading statement for the year ending 28 September 2019.
‘Fit for the future’
Discussing the results, Marston’s CEO Ralph Findlay explained that 2020 has been “an extraordinarily difficult year” for both pubs and wider hospitality sector, which has been particularly hard hit by Covid-19.
“I would like to thank the entire team at Marston’s for their loyalty, dedication and hard work in such trying circumstances,” he said.
“Whilst short-term uncertainty remains, we have taken swift action to future-proof the business to withstand the challenges presented by the pandemic and Marston’s has emerged a significantly stronger business, with a substantially strengthened balance sheet and well placed to rebuild trading momentum when restrictions are eased.
“The roll out of the vaccine is clearly critical to that, but in the meantime the sector continues to face major challenges and Government support will need to continue in order for many viable businesses to survive.”
Looking ahead, Findlay explained that Marston’s has entered the current financial year “fit for the future” and excited about a new chapter in the operator’s development as a focussed pub and accommodation operator.
“We look forward to realising the potential of the Group’s brewing JV with Carlsberg and wish the team at CMBC every success,” Findlay continued.
“There is clear evidence that consumer demand for our pubs remains strong and our geography, as a predominantly community pub operator with 90% of our well invested, high quality pubs located outside city centres, leaves Marston’s well placed to leverage the market opportunities available to us over the medium to longer term.”