Marston’s, the brewer and pub operator, this morning reported a 9.4% rise in pre-tax profits on revenues up 4.8% in the year to 1 October 2011, with the new build programme and the growth of the Retail Agreements credited for the performance. Group revenue was £682.2m (2010: £650.7m), with underlying profit before tax at £80.4m (2010: £73.5m) and underlying earnings per share up 12% to 11.2p. Like-for-like sales in Inns & Taverns, the managed division, were up 2.9%, with underlying operating margins up 0.7% and profit per pub up 10%, from £132k to £145k. Revenue in the division increased 4.8% to £391.8m, with underlying operating profit up 9.1% to £71m. Total like-for-like sales were 2.9% above last year, with like-for-like food sales up by 5.0% and like-for-like wet sales up 1.8%. “The improved performance has been driven primarily through increased footfall, rather than through price increases. This good performance demonstrates that despite the challenging economic backdrop there is strong consumer demand for pubs offering great value for money, particularly in food, in a high quality, attractive environment,” the company said. Average spend per head was broadly unchanged at £6.10, despite the rise in VAT. Marston’s said it’s on-track to open 25 new-build sites in 2012 and is to continue this rate of opening from 2012 onwards. Nineteen new build sites were completed in the period, with performance “ahead of target” - average turnover per site is £27k per week. New-builds are achieving an average ebitda return on capital of 18%. Like-for-like sales growth was 7.2% in its 250 Destination pub restaurants, aided by its value for money “Two for One” offer. Like-for-likes in its 210 Taverns community pubs were up 0.8%, while Pitcher & Piano saw like-for-like sales growth of 3.6%. In the tenanted and leased arm, Marston’s Pub Company, revenue increased 7.7%, reflecting the increased contribution from the franchise-style Retail Agreements. Underlying operating profit was up 0.6% to £79.3m. Average profit per pub increased 2.1%. In the traditional estate, performance was described as “stable”, with revenue up 0.7% and operating profit up 0.8%, Rent increased by 1.6% and the company described the rate of tenant turnover as low, at around 10%. Performance of the 600 other pubs “improved significantly” as they are converted to the Retail Agreement - 337 pubs were on the Agreement at the year end. The conversions attributed £1.3m of profit growth, offset by profit decline at the pubs that are yet to be converted. The remainder of the 600 sites are to be converted over the next two years, Marston’s said. Operating margin was 3% lower, at 43.1%, primarily due to the Retail Agreements that generate higher profit but lower operating margin. Capital investment in the division was £33m, including £14m in Retail Agreement pubs and £13m in maintenance capital. Total revenue at Marston’s Beer Company was up 0.4% to £106.5m, with underlying profit up 0.6% to £16.3m. Ale sales were up 2% on last year, with premium cask ale and bottled ale leading the drive, with volumes up 5% and 6% respectively. Overall, capex for the year across the group was £11.5m (2010: £83.5m) and the firm expects the figure to be between £100m and £110m in 2012. Twenty five sites were sold in ten year, generating cash of £15.2m. An extra £16m was generated since the year end by selling five pubs to Fuller’s. Since the year end, a new bank facility has been agreed. The £257.5m facility is to expire in May 2016. It replaces its existing £295m facility, originally expiring in August 2013. Net debt at the year end was £1,100.8m (2010: £1,082.2m). The ratio of net debt to ebitda before exceptional items fell to 5.6 times (2010: 5.7 times). Meanwhile, the eight weeks to 26 November saw like-for-like sales in the managed arm increase 3%, with tenanted and leased division profits up c.2% and own-brew volumes in line with expectations. Ralph Findlay, Marston’s chief executive, said: “We achieved impressive sales and profit growth in each of our businesses despite the challenging consumer environment. “Customers are looking for affordable treats, and our focus on value, service and quality in a traditional pub environment has proved successful. Our new-build pub-restaurants; the introduction of franchise agreements in around 350 pubs; and increased commercial support to our tenanted and free trade customers are all contributing to the achievement of our key objectives. “The successful implementation of our strategy will mean that we will create around 1,000 new jobs in 2012. Pubs make a real contribution to employment, and the government can help by recognising that its policies on taxation, and beer duty in particular, are damaging to pubs, brewers and jobs.”