News Column

Marston's Swings To Loss On Costs Of Pub Portfolio Sale

May 15, 2014

Hana Stewart-Smith

LONDON (Alliance News) - Marston's PLC raised its interim dividend and expressed confidence for further progress in its second half, despite swinging to a loss due the disposal of parts of its pub portfolio in the half year ended April 5.

Marston's proposed an interim dividend of 2.4 pence, up 4.3% from 2.3 pence in the previous year.

The pub manager and alcohol wholesaler posted a pretax loss of GBP54.8 million in the recent half, versus a pretax profit of GBP22.8 million a year before, sapped by exceptional costs as Martson's slimmed down its pub portfolio by selling off 202 pubs. Revenue rose to GBP384.5 million from GBP358.1 million.

Marston's posted an exceptional charge of GBP70.7 million for the period, including a GBP35.8 million loss relating to the sale of the pubs, GBP18.8 million relating to restructuring costs, and GBP27.2 million relating to the buyback of loan notes.

The company said that it expects to make further progress during the remainder of the year, with second-half performance boosted by the football World Cup. Looking further ahead, reductions in beer taxation and employment incentives for young people would be positive for the UK pub industry, Marston's said.

It will continue to lobby for wider tax cuts, and it awaits the outcome of the UK government's ongoing inquiry into the operation of the tenanted and leased model for pubs.

Revenue was driven by a performance from the company's Destination and Premium businesses, and its Brewing business. However, operating margin declined 1%, as increased lower profits from its franchised business offset higher margins in its Destination and Premium business.

Marston's opened 11 new pub-restaurants during the half year, and said it was on track to build at least 27 new pubs during the year. It converted 65 pubs during the first half as part of its strategy to build a "higher quality" pub estate.

The pub chain said it is looking to build 25 to 30 pub-restaurants each year, with an annual investment of GBP80 million to GBP90 million. Through this development, it hopes to have 85% of its pub profits generated from managed and franchised pubs by 2016.

Marston's said that its second half had started well, with Destination and Premium pubs seeing sales growth of 5.4% in the year to date. Tavern sales grew 3.7% in the to date.

"We are beginning to see some evidence of consumer confidence returning in the regions, leaving us confident of making positive progress for the remainder of the year," said Chief Executive Ralph Findlay in a statement.

Shares in Marston's were trading down 0.1% at 150.10 pence Thursday afternoon.

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Source: Alliance News