Marston’s PLC, with an estate of around 2,150 tenanted, leased, franchised and managed pubs, has issued a trading update for the year ended 29 September 2012
Trading
Performance for the year has been resilient against the challenging economic backdrop and the very wet weather during the summer months. Earnings before tax and exceptional items are in line with expectations.
In managed pubs, like-for-like sales were 2.2% ahead of last year including like-for-like food sales growth of 2.4% and like-for-like wet sales growth of 2.1%. Operating margins were slightly ahead of the previous year.
In leased, tenanted and franchised pubs, operating profits are estimated to be around 3% ahead of last year. This improvement is principally due to the growth of the franchised estate, which now constitutes around 500 pubs. Pubs operated under the traditional leased and tenanted model contributed profits in line with last year.
In brewing, own-brewed beer volumes are 2% higher than last year with growth in both premium cask and bottled ales.
Development pipeline
25 new pub-restaurants have been completed, with investment returns remaining strong and above target. The impact of the new-build programme over the past three years has been significant, substantially increasing exposure to the informal dining market and contributing to continuous improvement in the quality of the pub estate. The aim is to continue to develop the managed pub estate at a similar rate of growth for the foreseeable future, and have a clear development pipeline including 20-25 sites planned for completion in the 2013 financial year subject to planning.
Estate Valuation
During the second half year the pub estate and other properties have been valued externally in accordance with Group accounting policy. The key results are as follows:
- The estate value of £2.0bn is broadly in line with that reported in the 2011 accounts.
- The managed estate has increased in value by £163m reflecting value created through building new pub-restaurants and the higher quality of the managed estate generally. The new-build sites that have been built since 2009 have been valued at a premium to build cost of over 50%.
- The value of the tenanted and franchised estate has reduced by £186m reflecting the lower multiples being achieved from the sale of tenanted pubs in the current market.
- For accounting purposes, revaluation surpluses are recognised in the revaluation reserve, whilst some deficits are required to be recognised in the income statement. Accordingly, there will be a pre-tax exceptional charge of around £215m through the income statement. This will be accounted for in the year ended 29 September 2012.
Board Appointment
Peter Dalzell has been appointed as a main Board Director with immediate effect. This appointment follows the decision to bring together the management of all of the pubs in one team, reporting to Peter, to provide the optimal structure for ensuring maximum operating flexibility within the pub estate. Peter joined the Group in 1995; he has extensive experience in operating the managed, leased and tenanted pubs, and was instrumental in the development of the franchise business for which he has been responsible since 2011.
Stephen Oliver will continue to report to Ralph Findlay, Chief Executive Officer, as Managing Director of Marston’s Beer Company.