Marston's holds dividend as profits drop
Marston's has held its final dividend to shareholders despite recording a 13% in profit before tax for the year to 4 October.
Several other pubcos including Punch, Enterprise and Mitchells & Butlers had suspended dividends to reserve cash and Marston's was widely predicted to follow suit.
However, the brewer and operator said that it would pay 8.47p a share. The total dividend for the year is 3.4% up on last year at 13.27p.
Overall, Marston's recorded a 2% uplift in turnover to £666.1m.
Marston's Pub Company
Turnover in its 1,743-strong tenanted and lease division dropped by 7.2% to £186.4m with underlying operating profit down by 0.9% to £90m. Rents across the division increased by 5.2% to an average of £26,000 per pub.
Like-for-like profit per pub was 1.7% below last year, which represented a "robust performance in a difficult trading environment, reflecting the high quality of our pub estate; a long term strategy of setting sustainable rents on the basis of shared risks and rewards; and the development of a wide range of benefits for retailers to promote sales generation and better cost management".
Marston's spent £2m in rent concessions and additional discounts and expects to offer a similar level of next year. Around 83% of its pubs are let on substantive agreements and each Business Development Manager is responsible for 48 pubs.
On the Business & Enterprise Committee inquiry into pubco power, chief executive Ralph Findlay said: "Following the TISC inquiry, Marston's Pub Company issued a clear Code of Practice which has been approved by the British Institute of Innkeeping and we believe that we have complied with the recommendations of the Committee."
Marston's Inns and Taverns
Food sales across the 506 managed pubs and bars now accounts for 36% of sales with the average spend around £6 — the number of like-for-like meals sold increased by 4%.
Total turnover across the division increased by 5.6% to £388.3m with total like-for-likes down 0.6%. Wet sales were down 2.6% on last year. The average turnover per pub was up 2.9% to £14,100 a week.
The majority of accommodation rooms were refurbished in the year leading to a jump in occupancy from 50% to 65%.
Marston's Beer Company
Total volumes of its own brewed beers increased by 5% with premium ale volumes up 17.5% following the acquisitions of Ringwood and Wychwood. Total turnover was up 8.7% to £91.4m.
Outlook
Marston's spent £117m on improvements to its estate and new pubs but this level will now be cut to £60m in 2009. "Investment capital will reduce primarily driven by a significant reduction in our new-build development programme as a result of curtailed investment by house builders limiting the availability of new sites," said Findlay.
Marston's also expects to dispose of sites worth around £20m during the year. The company has also written off £0.8m worth of costs in investigating whether it could convert to tax efficient Real Estate Investment Trust status — which it now can't.
Current trading remains "very challenging" with like-for-like sales at managed houses 2.9% below last year for the eight weeks to 29 November.
"We remain cautious about the immediate trading outlook but are confident that steps already taken in respect of capital expenditure and cost management are appropriate for the current environment, and that our value for money offers will continue to perform well," said Findlay.
