Progress has been made across all three divisions at Marston’s, according to the regional brewer and pub operator this morning, as it a revealed a 1.4% increase in like-for-like sales at its managed pubs.
Unveiling its interim results for the 26 weeks to 3 April it said that like-for-like profits at its leased and tenanted pubs was down by 4.5% but it reflected an improving trend in that arm of the business.
The company, which has embarked on an ambitious new build plan and introduced a new retail agreement at its leased and tenanted pubs, said revenue had seen a slight increase of 0.6% to £309.2m and profit before tax and exceptional items had grown incrementally by 0.4% in the period to £27.8m, up from £27.7m.
Underlying profit was slightly ahead by 0.2% at £65.5m, up from £65.4m.
Sales at the Marston’s Beer Company improved by 8.6% and operating profit at the brewing division grew by 1.4%.
Ralph Findlay, chief executive at Marston’s, said: “We are pleased with the encouraging performance of the business in the first half year. The economic environment remains challenging, but there are two key areas that provide the basis for continuing out performance in this market: our new-build programme for large managed pub restaurants; and the introduction of innovative agreements in our tenanted and leased pub estate.”
Findlay added that recent trading had been in line with expectations, with a 1.2% hike in like-for-like sales at its managed houses for the six weeks to 15 May and that trends in Marston’s Pub Company and in Marston’s Beer Company were consistent with the half year.
Commenting on its new build rollout of managed houses, Marston’s said it was seeing sustainable high returns on its investment. It said the current trend for revenue and returns was slightly ahead of its targets – which were £20,000 per week for revenue and 15% ebitda return on capital.
The like-for-like sales performance of 30 similar pub restaurants that have been opened in the past five years had increased by 4.5% in the first half – which Marston’s said was, “ahead of the average for the division”.
Marston’s aims to build 60 of these new pub-restaurants in the next three years, funded via last year’s £165.6m rights issue last year. It plans to open 15 this financial year and to date has opened eight.
To date it has opened eight new pub-restaurants located in Aylesbury, Ashbourne, Caterham, Daventry, Dover, Killingworth, Newark, and Sittingbourne. It is also on site in all of the remaining seven locations.
On its leased and tenanted pubs, of which Marston’s has around 1,700, it said it had completed the review stage of its new retail agreement and plans to roll it out across 600 pubs.
It said the new agreement: “Permits us to bring our retailing expertise and buying power to the partnership with our retailers. The principal terms of this agreement are that the retailer retains a percentage of revenue, and is responsible for the employment of pub staff. All other costs are our responsibility.”
The 1,000 that remain will continue to operate on long-term leases, said Marston’s. However it said it would offer them the ability to buy beer, wines and spirits from the company at the same prices available to its free trade customers and it will also offer free-of-tie options for leases but added, “we do not expect the take up of these to be significant.”
Marston’s said it planned to sell off around 60 pubs from its leased and tenanted division within the next 18 months.
The group has a banking facility of £295m and said that as of April 2010, the amount drawn down was £93m. It added: “The new bank facility, together with the Group’s securitisation of approximately £1.1 billion and strong cash flow, provides a secure and flexible medium term debt profile.”
Net debt at 3 April 2010 was £1.1bn, compared to £1.09bn at 3 October 2009.Underlying earnings at Marston’s were 3.8 per share and the interim dividend was 2.1p per share.
