MARS Marston's Plc

 

TIDMMARS 
 
RNS Number : 8004W 
Marston's PLC 
04 August 2009 
 

4 August 2009 
MARSTON'S PLC ("MARSTON'S") 
INTERIM MANAGEMENT STATEMENT 
43 weeks to 1 August 2009 
 
 
Trading 
 
 
Our performance continues to be resilient with sales trends showing some further 
improvement since the end of the first half-year on 4 April 2009, despite the 
recent wet weather. We have achieved encouraging sales growth in Marston's Inns 
and Taverns; there has been no material change to previously reported trends in 
Marston's Pub Company; and in Marston's Beer Company our premium ale brands have 
maintained strong sales momentum in the on-trade and the off-trade. 
 
 
Group turnover was 1.9% below last year for the 43 week period compared to the 
2.8% decline previously reported for the 26 weeks ended 4 April 2009. 
 
 
In Marston's Inns and Taverns, our managed pub division, like-for-like sales in 
the 43 week period were 1.2% below last year. This reflects improved trading 
since March including like-for-like sales growth of 2.3% in the last 6 weeks to 
1 August. Food like-for-like sales continue to be strong, up by 2.2% in the 43 
weeks and by 6.0% in the 6 weeks to 1 August. Food sales now represent 
approximately 38% of total retail sales. Operating margin trends continue to be 
in line with those reported for the first half-year largely driven by tight cost 
controls; an easing of food input cost inflation; and the careful management of 
promotional offers. 
 
 
In Marston's Pub Company, around 80% of our estate is on substantive agreements 
which demonstrate the long term commitment of the licensee to the pub, and 
profits in these pubs continue to be in line with last year. We are committed to 
developing long term solutions for the remainder of the estate. The "Tracker" 
variable rent agreement launched earlier this year has been well received, with 
around 100 tenants now having signed up. In addition, we have recently launched 
an innovative franchise-style retail agreement that further reduces risk for the 
licensee whilst improving flexibility and the commercial offer to pub customers. 
In this agreement Marston's Pub Company defines and controls the pub's retail 
offer and is responsible for all operating costs with the exception of labour. 
The licensee is paid a turnover related sum to cover licensee remuneration and 
staff costs. Results from the 10 pubs currently operating under this agreement 
have been encouraging, and we plan to extend it to around 80 more pubs in the 
next financial year. 
 
In Marston's Beer Company our aim is to market a wide 
range of high quality beer brands with strong local provenance, together with 
national marketing investment in Marston's Pedigree.  This differentiated 
strategy is achieving good results. In the 43 weeks to 1 August own brewed ale 
volumes increased by around 13%. Premium ale volumes increased by 31% and now 
represent 53% of the ale portfolio. On a like-for-like basis we estimate that 
our market shares in premium cask ale and premium bottled ale have both 
increased by around 1% in the current financial year. Of particular note is 
the performance of Marston's Pedigree 'The Official Beer of England Cricket' 
which has seen off-trade bottle volumes more than double since the end of the 
first half-year on 4 April 2009. 
 
Financing and cash flow 
 
 
Net debt and cash flow are in line with our expectations. We remain on target to 
realise around GBP20m from the disposals of smaller pubs and other properties in 
the current financial year, and have achieved book values overall on sales to 
date.  Capital expenditure continues to be controlled carefully. 
 
 
Following the extension of our bank facility announced earlier in the year we 
have no further refinancing requirements until August 2013. 
 
 
On 22 July 2009 we announced that the rights issue had been completed 
successfully, raising net funds of GBP165 million.  As announced previously, we 
anticipate that approximately GBP140 million will be invested in 
developing around 60 new managed pubs over the next 3 years. Marston's is a 
market leader in new-build pub development having opened over 50 new pubs and 
bars in the last five years. 
 
 
We also intend to repurchase securitised bonds at an appropriate level of 
discount and to make selective pub acquisitions as and when good opportunities 
arise. 
 
 
Progress made on new-build programme 
 
 
As a consequence of the rights issue we are able to take advantage of current 
market conditions to acquire excellent sites at attractive prices and to build 
new, high quality managed pubs which target the growing part of the 
pub-restaurant market. We are making good progress with development already 
underway on sites in Caterham, Surrey; Ashbourne, Derbyshire; Aylesbury, 
Buckinghamshire; and shortly to commence on a site in Sittingbourne, Kent. By 
the end of the current financial year we expect development to have started on 9 
sites and plan to open 15 new pubs in the next financial year. 
 
 
Legislation - BEC enquiry 
 
 
There have been no further legislative developments since the Interim Results 
announcement on 22 May 2009, although decisions are awaited in respect of 
possible reviews relating to tenanted and leased pubs by both the Office of Fair 
Trading (OFT) and the Competition Commission.  Marston's Pub Company continues 
to develop its relationship with tenants and lessees, and to operate in a 
transparent manner with the objective of a fair division of risk and reward 
between the Company and the licensee. We are adapting the model where 
appropriate to assist licensees as a consequence of current economic conditions 
and market trends, but we are clear that the principles underlying existing 
agreements, including the tie and fair, sustainable rents, confer real benefits 
to tenants. 
 
 
Outlook 
 
 
Although we remain cautious because of the current challenging economic and 
trading environment, we are confident of meeting our expectations for the year. 
We are encouraged by the robust performance of the business which reflects the 
high quality of our pubs; our value for money offers; the popularity of our ale 
brands; and the continued implementation of our stated approach.  We have a 
differentiated strategy and, in our accelerated new build programme, a 
significant development opportunity from which we aim to deliver good and 
sustainable returns. 
 
 
Enquiries 
 
 
Marston's, PLC  Hudson Sandler 
Ralph Findlay, Chief Executive  Andrew Hayes 
Andrew Andrea, Finance Director                 James White 
Tel: 01902 329516  Tel: 020 7796 4133 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 IMSUOANRKKRWRAR 
 

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