Mitchells & Butlers plc (MAB) Earnings Call Transcript & Summary

Good morning. Thanks for dialing in. I'm sitting here with Phil and Amy, appropriately distanced. We're in the [ Samson Head ] pub in [ Battonsville ] it's one of our PCPs, very successful pub. Very good to see it being restocked and cleaned as we speak and fully booked previous weekend as well. So a good place to kick off our call today. We've had done some small number slides, which are on the website. If you've got access to a laptop, I'll pull them up. There's not specifically a lot of detail, and give you a little bit of a structure to the call as we go through it. So worth doing that, if you can. What I would like to do is, Phil will say a few words to pull out some of the main themes of our performance and looking forward. And then I'll pick up on some of the financial issues, and then we'll throw it open to everybody for Q&A. So with that, over to Phil.

Thanks, Tim. Good morning, everyone. Our first half results include 4 weeks impacted by closure and by government advice to avoid pubs and restaurants, which undermines what was looking to be a solid and encouraging first half for the business. My update will briefly talk about the business performance through lockdown, about the steps we took to close down and are now taking to reopen, and I will then finish with some comments on our expectations for the coming weeks using our Alex business in Germany, which has been largely open since the end of May as a useful comparison. I'll then hand over to Tim, who will summarize the recently announced extension to our unsecured financing facility and the terms of our temporary agreement with our bond holders. Looking at lockdown, I don't think that I need to remind anyone that Mitchells & Butlers has been building a sustained track record of market outperformance in terms of like-for-like sales as measured by the Peach Tracker for over 3 years now. Our Ignite program has worked -- was bearing real fruit, both in terms of building new sales channels and in terms of improving our efficiency. Before the lockdown, we were good year-on-year profit growth and optimistic about the rest of the financial year. Lockdown has clearly impacted us and the rest of the sector. But it's worth reflecting that we had and we still have a strong portfolio of brands. We still have good sites in good locations, 81% of which are freehold. And we still have a strong and experienced management team. Despite the setback of COVID-19, we are confident that these attributes will mean that we can quickly rebuild and get back on to the journey of growing the business as we de-gear. Looking at the lockdown, the lockdown announcement, whilst expected came suddenly, and we and the rest of the sector had to immediately close our doors. This left little chance to run down stocks, and we had to work quickly to sell what we could locally and minimize wastage, but also to give what we could to our charitable partner FareShare. Managers had to remove cash from their sites and secure them for what was an unknown period of closure. We furloughed over 99% of our team, putting them onto the Coronavirus Job Retention Scheme. And clearly, the business rate support has also been welcomed. I have to say our trade buddy, U.K. hospitality has done an excellent job throughout lockdown, enabling the sector to join us in the united views of the issues we all face to government. M&B has played a full role of this process, contributing to and fully buying into the sector protocol documents issued by government 2 weeks ago and also in help shape government thinking on the support that the sector will need as they recovered post lockdown. Turning to reopening, we built -- we have built our own operation manuals adapted for each brand based on the protocol document that ensures that we should reopen each of our businesses safely for our team and our guests, while still creating a hospitable atmosphere. General managers, assistant managers and kitchen managers have returned to their businesses 7 days before reopening to complete site risk assessments, lay them out for social distancing and compliance and restock ready for reopening. Our supply chain partners had also furloughed chief teams during lockdown. So the reopening plans required a very detailed logistics exception to ensure that a wide range of products arrived at each of our sites in time for this week's reopening in England. We intend to have over 90 percentage of the estate reopened by the end of this month. By the time, Scotland and Wales are trading again. Those sites that remain closed will be the smallest sites deemed too difficult to operate with a current social distancing restrictions, those compromised by locations. For example, some city center businesses that are dependent on an absent workforce for their trade and sites that are dependent on the third-party anchor landlord. For example, we have a couple of sites in the O2 Arena in London. There were no point opening until the O2 is back on its feet. In the first 2 weeks of reopening, our priority will be on establishing the new operational protocols, even if we have to hold back the norm slightly to ensure that our teams and get our confidence in what we are doing. We then expect to be able to slowly rebuild our trade as consumer confidence returns. Looking forward is difficult as it will remain to be seen how or its consumer confidence has been permanently affected by COVID-19 and how the COVID secure actions will affect the operations. However, we believe that there is a pent-up demand for what we do. And judging by the social media interest and the bookings demand for this weekend, we are optimistic that the business can and will rebuild quite quickly over the coming months. One advantage that we have is being able to use our Bar Alex business in Germany as an insight into what we might expect to see in the U.K. when we reopen. For those governed globally by 16 separate regional authorities with involve accountability to COVID-19 protocols, all 40 of our Alex businesses reopened with very similar requirements, including clear signage, space marking, 1.5m distancing of tables, sanitizing stations and the requirements for the team and guests to wear masks when walking around their businesses. Crucially, they were not allowed to offer their [ boost ] breakfast which is the brand [indiscernible] in Germany, and therefore, a key session for us. Early trading, however, has been very encouraging, with trade climbing each week and year-on-year settles in the latest week, running at over 70% to prior year levels. There was also quite a paralyzation with a city center sites 40% to 45% the prior year due to office buildings remaining empty, but with some suburban businesses already enduring days of like-for-like growth. Restrictions are already being slowly lifted. For example, we are now allowed to operate with breakfast in all but 10 sites. And so the Bar Alex team are very confident that consumer attitudes are quickly relaxing and that sales will continue to grow week on week. A repeat of this pattern in the U.K. would delight us all and exceed our expectations. I will now hand over to Tim, who will take you through the financial details.

Okay. Thanks, Phil. So before we get on to Q&A, just a few areas I'd like to pull out and talk about, but start with the financial statements. They're dominated, of course, by the fact that we've got nearly 4 weeks of enforced closure in this. So I don't really propose to go through any year-on-year variances other than to reiterate Phil's point that we've had a very good start for the year. We're ahead on sales, we're ahead on profits, we're ahead on margins and have absolutely continued our outperformance on the Peach Tracker. What these are is the first set of results that we've announced under IFRS 16. I talked a little bit about this in November last prelim. So all of that is consistent with what we're reporting today. We're using the modified retrospective method. So comparators in the income statement are not restated. On our balance sheet, you'll see a right-of-use asset of GBP 466 million. We see a lease liability of GBP 545 million come through on transition. Within the income statement, again, this was disclosed at the interims, our EBITDA is increased or flattered by GBP 50 million, because we don't have a lot of rental costs going through. By the time we get to operating profit, the increase is GBP 9 million and at PBT, actually, this implementation leads to a decrease of GBP 8 million. Now those are full year numbers, I would expect them to accrue evenly throughout the year. So they give you a very ready reckoner if you want to take last year's comparatives and translate them into what they'd look like under IFRS 16. Second point, I think I'll pull from these statements is we wouldn't normally undertake an impairment or property valuation at the half year, but these are exceptional times. So I think it's right that we've done that. We've -- it's been difficult, certainly, we haven't been able to visit our sites for obvious reasons. We have no comparable transactions and there's enormous uncertainty. But we've undertaken the exercise extensively and with CBRE, our advisers and have followed the right protocol as always. Overall, we've written down GBP 524 million, and there's 2 main drivers for that. The first is that we've elected to take 1 turn of the EBITDA multiple across the whole of the portfolio. So that's taken the average EBITDA multiple down to about 7.4x. And secondly, we've taken deduction against the portfolio for what we believe we'll see the closure period we're going to have at the time. I think, obviously, we'll redo this valuation at the year-end. I think it's important to understand that this is a valuation as at the 11th of April versus the balance sheet date. And therefore, it reflects conditions and expectations and our thoughts as at that time. In hindsight, that is probably the period of maximum uncertainty for us. We've been closed for 2 or 3 weeks. We really have no idea as society or as a sense of what we're dealing with, and we certainly have no idea how long we're going to be closed for. I think as we stand here today or sit here today, we feel a little bit better, a little bit more benign about the conditions that sit ahead of us. So I'll wait and see, certainly, what we're able to do in September and the experience of trading again will give us an ability to redo and refine that valuation. On the 12th of June, we announced our refinance package, probably more immediate and direct interest to us. We believe this gives us a really strong platform of both liquidity and flexibility to get through the closure period and start to rebuild our sales. You'll all have the detail is a broad brief summary. We've extended the terms of our committed unsecured facilities of GBP 150 million to 31st of December next year. Plus, we've secured an additional GBP 100 million unsecured facilities, which are going to run to the same term. Within the securitization, we've got numbers of waivers against potential covenant pools. They run through into September next year, and we've secured consent to draw up to GBP 100 million of the liquidity facility sets within the securitization vehicle. That essentially allows us to fund 3 quarters worth of debt service. Now this package is really constructed around the downside scenario for us, whereby we don't open until October. So as we sit here today, 48 hours away from opening a substantial proportion of our stake, I think it gives us a really, really strong platform in which to focus on what's ahead of us and start to build out this business and achieve our previous outperformance. If you're interested in where we are today, and you've got some of the statements, as of last night, we had cash of about GBP 100 million on deposits, and we have committed unused facilities of GBP 150 million, so additional firepower, if you like. And that constitutes GBP 100 million of the additional unsecured facilities and GBP 50 million from the liquidity facility within the securitization. Lastly, and I think most certainly for all of us looking forward, right, life is very, very uncertain. What we do know is that the strategy we've been following for the past 2 or 3 years to de-gear and take down the debt on our balance sheet is absolutely been the right thing to do in hindsight and puts us in the best possible position for where we can be today. We've got great assets in this business. We've got great brands. We demonstrated strong management plans and Ignite, in particular, has worked very well for us with a number of initiatives still to come through with Ignite. And we've got a platform of financial arrangements, as I said, that should allow us to prosper. So in relative terms, we are really keen to get ready again, and we're really optimistic about the success we could have. Now clearly, what the macroeconomic environments and what sector in the future holds for us those is highly uncertain. And for that reason, we just can't -- don't really feel able to give you any detailed guidance about forward earnings at this stage. What can we do to help you? We have some learnings from our business at Alex, 46 bars. They've been trading for nearly 5 weeks. I think that's really helpful. Really costs for us, both in terms of planning and in terms of operational setup. Alex sort of opened around about 50%. And 3 to 5 weeks spills up to just over 70% actually last week. So that's quite illustrative for us. Some interesting polarization within their estate, and that's absolutely been the sort of city center and travel hub sites that struggled the most, as you would expect, whereas a lot of their sites in suburbia have done very, very well. So we need to be careful that we don't over apply that to the U.K., but I think it's very helpful insight to us. And that 50% to 70% probably provides you with some sort of guidelines or tram line, if you like, where we might expect to open coming forward. On that basis, we're going to open 90% of our estate by the end of July. Firstly, most of those in the U.K. a couple of days and then starting in Wales opening through the month. And we believe that should allow us to build for recovery over the time that we've got ahead, uncertain to that might be. With that, we'd like to open the meeting to Q&A.

[Operator Instructions] Our first question comes from Jamie Rollo from Morgan Stanley.

Three questions, please. First, could you talk a bit about the sort of shape of the estate relative to the wider market and the advantages you enjoy on things like the residential breakdown, the pubs, outdoor space, the actual size of the unit where you are, all the technology, just to get a feeling of what advances you might have perhaps versus more [ wet lab ], more city center sites. Secondly, Tim, I appreciate you're not giving any sort of guidance on revenues. So it would be quite helpful for us to understand where EBITDA or margin might be when sales do get to 50% or 70% of pre-COVID, those tramlines you mentioned, and maybe 80%, 90%, what sort of operational gearing or fixed or cost that should we think about? And then finally, it would be really helpful for us to get a feeling for where you see the eventual drawdown of the unsecured loans at the plc, how much of the RCF and the civil loans you think you'd end up needing and the ability to fund that those loans if securitized structure remains in the cash trap for a few years?

So I'll take the first one, Jamie. In terms of shape of the estate, I think one of our strengths is our estate for sure. I think over the years, I've talked about an M&B back in the day, having the pick of many locations. And that we would, therefore, most impacted by all that growth back in 2015, but we have got strong locations and strong sites, tend to be a big, big footprint. I think 90% of our estates have outsized space. We're probably about 20%, 25% city-fenced at suburban. So there's a read across to Germany, you could sort of say that it's pretty similar actually to the Alex split in that sense. We have booking engines in our restaurant brands. So we can -- one of the ways we are controlling capacity as we reopen is we are putting everything through that booking channel, so we think we know who we have and therefore, can control capacity, I would say. In the [ wet lead ] businesses, we have order at table live in all our suburban and the high streets and All Bar One brands, the bar brand, so you can order at table and they have a booking-light system. So there's not quite a full-on booking system, but again, can take bookings and for this weekend coming, we are doing just that. So we sort of feel we have the right estate, we have the capacity to be able to deliver the COVID secure protocols and still have a meaningful trade. And when the sun shines, we've obviously got good outside spaces where that becomes that much easier. So that is one of the reasons I think we are confident that we can open up and see the business build over the coming weeks.

Maybe to your second question, Jamie, as you said, thanks for noting. We can't give record guidance. If you just pull out the Alex sort of 50% to 70% tramlines, for example. And clearly, with businesses like these, we have fairly high operational gearing. You get a very, very different profit performance from 50% sales than you do to 70%. I think if it's helpful, what I could say is that across the estate of sort of breakeven level of sales, if you assume there is no furlough, right, so I guess you're past October, our breakeven level of sales is probably 60% to 65% of sales. That will vary widely depending on whether your freehold leaseholds will be selling through the [ tram ]. But across our estates, that's probably the breakeven, which, I guess, is helpful for you. In terms of gearing around that, and then our fixed cost base is -- would be around about GBP 650 million. Most of the rest of the costs should either be directly variable or it'll be variable in steps. So if you're looking at additional sales coming through, you might get a 50% contribution flex on additional sales in each direction, if that helps. Hopefully, that gives you some sort of a feel for the scenarios. In terms of drawdown of the unsecured facilities and the additional facilities, I mean, it really is going to depend on what lies ahead of us. We depicted a couple of scenarios in our going concern, which is hopefully a help to you. We're on our base case, which is that we open, reckon, on Saturday, we have an extended build of over 9 months till we get back to where we were a year ago or 2 years ago. We wouldn't need those facilities at all. So we just wouldn't even renew them. What they're there for is to provide balance against our downside scenarios. Well, the one that we've been using is we don't open until October, that's looking increasingly sort of unrealistic now, doesn't it. It's sort of more the risk of sort of further shutdowns once we've got started. And we just don't know. It depends on how extensive they would be, how widespread they would be and how prolongated they would be. But what we do know is against our base case, which we think is the best estimate case, we have significant liquidity headroom to see us through a number of bumps in the road.

Next, we have a question from Tim Barrett from Numis.

I wanted to ask about the balance sheet, a couple of questions, please. On the refinancing, how closely did you look at an equity solution? Obviously, several in the sector went for that. Just thinking in terms of also how quickly you'd want to get leverage down back below 4x. And whether the cash burn will have implications for your reinvestment and your growth CapEx, which has obviously been a very good part of the story. That was the first chunk of questions.

Do you want to say all your questions, Tim, and then we'll adjust them down and take them at one go like Jamie.

Of course. So other on book value. Obviously, you caveat and said it was coming April, and you guys definitely uptake more frequently than others on book value. Is there any change in terms of the value as being with fair maintainable trade in the estate? So are they taking a view on sales capacity? Or is it simply that multiple, the 1x multiple on EBITDA? That was it.

I'll start on the balance sheet. I mean when we came into COVID, we felt it was appropriate for us to fund that especially from additional facilities. They've been raised under the CL build. So the government has been very helpful in guaranteeing 80% of that. So I mean, it just seems the most pragmatic and sensible approach for us to take rather than to try and sort of second-guess what a longer-term structure for this balance sheet and capital structure of this group would be at a time when, frankly, no one had not a clue what was going to happen on what was going to. So the debt was absolutely the right [ reason ] for us at that time. I think going forward, it's given us a really strong platform, as I said to Jamie, to withstand quite a lot of downside scenarios. And the group will keep our capital structure under review. We've always done that. And of course, we'll continue to do that. We'd like to get leverage down. I'd love to be back where we were at the beginning of the year, which is nicely paying down our secured debt. We were net cash outside of securitization. But we had GBP 150 million of facilities that were there, should we need them for acquisitions or anything. So I think we'll always have uncured facilities because we'll want that flexibility. And we don't mind having too much sort of unsecured debt, we can see that, that's temporary and that's fundable and serviceable. But we wouldn't want to come see that become sort of structural within the group, which was really what we talked to you all about 2 or 3 years ago when we stopped our dividend payment. So that will be a decision we'll make as we come through this at the end of this year and into next year and beyond that, what is the right level of leverage for this group, what is the right capital structure to deliver that. And your question about how much CapEx will we want to spend? Well, that's really just an input into that decision in this we'll look at sort of forward cash flows that we think the business can generate net of what we have to reinvest back in it. And that tells us what sort of capital structure it can support. So that's an input that we'll have to address going forward. In terms of property valuation, the changes here, and I think going forward aren't really around the definition of the firm intangible trade, which is sort of a longer-term EBITDA. It's more about the multiple that we apply to that firm intangible trade. And we took a whole turn of that multiple, which is large, actually. But it represents the fact that you just wouldn't have wanted to go-to-market on the 12th of April and sell all your properties. So no comparable transactions. A lot of people would have been perhaps constrained by ability to finance any transactions. Fact is we haven't sold them then and we won't sold them then. And we'll see where we get as we come out of that, which is where it really why I think you just need to be very careful to interpret that valuation in the context of the conditions that prevailed at the time that it was made. And we'll do it again in September, and we can have a good debate around how it's moved across the year and also from the half year as well.

Okay, got it. And just going back to the first point. You guys are not simply saying that below 4 -- until you get below 4x leverage, you won't have the ability of growth CapEx into the business, that's due to [ the subsidiary ].

No, I don't really want to get on the numbers because I think what is the right sort of multiple of leverage for us depends on what our forward cash-generating ability is really. So that will depend on the circumstances, both within M&B and the sector and the outlook at that time. So I'll be very wary of giving you a number that I think is going to be applicable going forward for the next 2 or 3 years that we expect to because that number could change. So we're going into an uncertain world, and I think we do have to be very -- we'll all going to have to be very holistic around how we look at, how we best prosper in that environment.

Next question comes from Douglas Jack from Peel Hunt.

I've got 3 questions, if that's all right. First one really is on working capital. Can you just talk about the expense is unwound so far and the potential for it to rewind from Saturday onwards? Secondly, to what extent are you making any pricing adjustments for when you reopen? And thirdly, some others are taking the opportunity to sort of make their operating templates more efficient, smaller menus, more technology, perhaps secure kitchen staff. So what extent are you doing that? And so if you think you do, would that be permanent or temporary?

I think I'll walk through cash flow, Doug, particularly, an outflow in the first half as it would be no surprise to any of you, sort of sales dry up, and we're still paying some suppliers. We have essentially carried on paying our suppliers as best we can. So haven't sort of locked up the checkbook. So that's been helpful. But we still do have some very fairly sizeable balances to HMRC, in particular, has been very helpful in giving us deferrals and payments. We haven't paid all our rents quarterly in advance by a long shot. So to the extent that we haven't really got holidays on rent, it's more just a deferral. We've got to catch up a little bit of that and then there's a small number of some rather larger suppliers that have been very supportive. So there's a little bit to make up on AP, but not huge amount. I think if you put that in the mix. I mean, the second half, we -- it could be slightly negative on working capital or flat to slightly negative, leaving the full year sort of negative. And then we'll see it all sort of come back late this year and early into next year.

And Doug, on your other 2 questions, repricing, we were about to do a pricing increase anyway just before lockdown, so that has been put through and will go live when we reopen. In terms of your second part of the question about operational efficiencies. I think, firstly, I would say, I think our general view here is, of course, there are things we're doing for the reopening. But I think it'd be wrong just to knee jerk. We're obviously going to use the experience of lockdown to challenge our thinking. So what I mean by that, I think for opening, we will open some of our brands on a reduced menu, disposable menus. That has allowed us to reduce the number of items, make it easier to get out of the kitchens, et cetera. So that won't be a permanent thing; that will be why we are reopening. We have, however, sort of taken the opportunity to roll out some more technology. So like I mentioned earlier, order at table in our [ cup ] brand has been successfully rolled out while we've been shut. But I think the one thing lockdown has made us all do is to look at some of the things that we perhaps have done just systematically over the years. And actually, in the absence of being able to do it and being field-based and doing things remotely has made some challenges, why do we do that. So we absolutely intend to take the advantage to take the learning and anything that's good come out of it to roll forward. One of the things that, that has sort of led to us is an acceleration of our delivery and click-and-collect plans. We were on that path anyway. But we sort of feel that one side effect of lockdown is more consumers have bought into delivery. And so no great surprise, we're using that as a catalyst to accelerate our plans in that space. So I think the answer is absolutely. There is a chance now to rethink some of the things we're doing. But we intend that to be sort of a well thought through plan as opposed to a knee jerk of coming out of a lockdown.

Our next question comes from Anna Barnfather from Liberum Capital.

Yes. Just got 2 questions, which are really follow-ons. Firstly, on the working capital question. Just in terms of supplier terms, have you seen any notable change on payment terms 45 days or whatever that may probably impact that sort of working capital cycle? And then the second question, on the sort of recovery curve of 50% to 70%. Can you just talk about the capacity restrictions that you have to operate under? So on social distancing, it seems you sort of taken out tables in some locations. So where could it get to if demand -- if the demand is there?

Okay. I mean, Anna, on working capital, not really. I mean, for the past, in terms of check payment and changes to terms, the past 3 months, we haven't really been talking to our suppliers because a lot of our people have been furloughed and a lot of their people have been furloughed. So there haven't really been any changes to contractual terms. And most of ours are sort of 30 to 40 days, that's where they have been. And that's where I expect them to be as we sort of unwind and come out of this and move on into the new world. Certainly haven't had any pressure for anything different on that. And I don't see any reason why that would change going forward. In terms of sort of capacity, I mean, broadly, again, it varies a lot by site, but broadly, on 2-meter distancing were about 50% to 55% capacity. Beyond 1.5, we're about 75%. From 1-meter distancing, we're up about 90%. But of course, if you're at, let's say, 75% capacity doesn't mean you're at 75% sales because that only bites when you're at peak and when you're at full. There's plenty of time slots through the week when you can trade unencumbered at 75% capacity. So that sort of overstates the restriction, if you like, with some of your sales.

The other thing, if I could just jump in to add to that. One of the things we're noticing for this weekend is, we have chosen to reopen with slightly greater distancing between tables at some of our restaurant brands just to ensure we -- the first day we don't swamp the team. So our teams have got to get used to the new protocols. But what's happened is, its spread out the demand through the day. So actually, what we see is the shoulder period spinning up as well. So we're still going to get it in some of our businesses and be the one we're sitting in right now. The GM was just telling me that he's not far off a normal Saturday booking just spread far more evenly through the day, which is a nice place to be. And so as Tim said, whilst, I think capacity limitation is a concern for sure, it is only in 2 or 3 days that, that happens an issue for it. But if the result as it spreads the demand through different time slots, that's probably good news. And the other thing we're seeing in Germany is actually spend ahead is rising slightly quicker than it's been expected. And I think that's also true in the retail sector that spend seems to be higher. So maybe with a slightly lower capacity, we'll see our dwell times be different than [ standard queues ]. So I wouldn't read it just in terms of capacity numbers being a direct leader across to what you should expect to see sales has been.

Next, we have a question from Joe Thomas from HSBC.

Just again, a couple of follow-ons. You talked about 10% of sites being closed or 90% being open from the end of July. Of the 10% that are closed, should we think about them being -- how should we think about that relative impact on the group? Are they disproportionately big or small? I'm guessing it's smaller, but perhaps you could clarify that. And again, coming back to the point on pricing, et cetera. Is there any indication you can give about the sort of quantum of discounting that you'd likely to be doing and where pricing is? But also, I'm also interested in knowing, on the ground, what you are seeing in terms of competitors particularly because you might have sat here before that are no longer going to reopen. Any color there would be helpful.

Sorry. Could you just repeat that last bit of that competitors?

Yes. I'm just interested in knowing what the competitive landscape is going to look like, whether you see competitors closing -- that were closed and that are just not going to reopen and how that might impact your behavior?

Okay. So firstly on the close of 10% that have shut. So when we are -- we've taken sort of a fairly lump sort of approach to working out a way to reopen. And when we originally hatched these plans, government guidelines were 2-meter distancing. So the sites that fell out of that were the ones that predominantly [ recollect ] and were too small to really operate profitably with 2-meter social distancing. Obviously, that 2-meter distancing now moved to 1-meter plus. The plus being the steps you can take to compensate for not being at 2-meter distancing. So I would -- the way I would view that, that 10% is a, they're predominantly smaller [ recollect ] businesses or as I say, sites in the city of London, for example, that are dependent on the offices being full again. But I would imagine some of that 10% will quite quickly come back on stream as we get more confident in the protocols as 2 meters comes down from 1.5 to 1, some of those sites will come back into play. But I think I can't give you a definitive because we don't know until we reopen where we'll be. But I would say, based upon a 2-meter assumption, we now know we don't have to operate at 2 meters. Some of those businesses will open up fairly quickly. I think the ones that will remain shut for the longest will be those that are absolutely dependent on office blocks that are emptying and that they won't come back on stream until the offices are back. And as I say, those that are dependent on the third party. So O2 Arena, 1 or 2 in shopping centers will be dependent on the timing of those businesses reopening. So we're slightly outside of our control in those ones. In terms of pricing, I think one of the things that were sort of fairly optimistic about, and it goes back to Doug's question about what you might change. I think the industry has historically run a lot of discounting mechanics. Obviously, we're not -- we haven't got that built into our base at the moment because we're not open. And so actually in reopening, we're not intending to go with a huge amount of discounting because we don't think with a reduced capacity, I don't think that's going to be our issue. Our issue will be servicing the demand we have as we rebuild. So I think one of the positives here is we probably won't dive straight back into all the discounting mechanics. In terms of the competitive landscape, well, I think you probably have got a stronger view as mine. I mean we all know the sites -- the companies unfortunately have already gone to the wall through lockdown, so that is reduced supply. I am sure there are other businesses out there that are rethinking whether it's viable for them to reopen. Certainly, some of the tenancy businesses we will see while furlough is in place as a protection. Once furlough unwinds, I'm sure that's going to lead to a few more casualties. So look, I mean it feels the wrong time to be talking about reduced competition because I think everybody is been through a whole lot of pain. But I suppose the reality is, one, there is a positive. Sort of those that remain, it will be a -- the supply side will undoubtedly be less than it was before lockdown. We'll see, I think, more of that as the furloughs unwinds.

Our final question for today's call comes from Julian Easthope from RBC.

Just one question just for me. In terms of the reopening costs, we hear that the cost of cleaning and getting staff up and running, et cetera, is about between GBP 10,000 and GBP 20,000 a unit for some of the operators. I just wondered whether you'd cost fit that and what the likely cash -- sort of accepted cash cost would be on the reopening?

For us, Julian, across the whole of the estate, sort of GBP 2 billion or GBP 3 billion is about what we're spending on cleaning by sanitizer, fixing stuff that's broken while the pubs have been closed. So I mean it's not a major cost. That's what it is across all of our estate, that sort of GBP 2 billion to GBP 3 billion. Okay. Well, that's great. Thank you all very much. And we look forward to maybe sharing a drink with you sometime soon if it is chosen that...

That would be nice.