28th Mar 2007 07:01
Marston's PLC28 March 2007 28 March 2007 Marston's PLC Pre-close Trading Statement In accordance with its usual practice, the Board of Marston's PLC issues thefollowing trading update prior to the end of the first half of the currentfinancial year on 31 March 2007. Trading Trading overall in the 24 weeks to 17 March 2007 has been satisfactory and inline with expectations. In Marston's Inns & Taverns, our managed pub division, like-for-like sales were7.0 % ahead of last year in the 24 weeks to 17 March 2007, includinglike-for-like food sales growth of 13.9 %. In Marston's Pub Company, our tenanted and leased pub division, trading has beensatisfactory with continued growth in average profit per pub compared to lastyear. Total beer volumes remain below last year in Marston's Beer Company, althoughpremium ale volumes and market share have increased. Marketing investment inpremium ale, particularly Marston's Pedigree, has been increased throughsponsorship of the England and Wales Cricket Board (the 'ECB') and, morerecently, becoming the principal sponsor of Sky Sports televised coverage of theCricket World Cup. Underlying margins have been in line with expectations and costs wellcontrolled, notwithstanding significantly higher energy costs and the 5.9%increase in the minimum wage from October 2006. The Eldridge Pope estate ('Eldridge Pope') Eldridge Pope was acquired on 25 January 2007 for £155.1 million. Performancesince acquisition has been strong and in line with expectations. Like-for-likesales growth in the 95 managed pubs in the 24 weeks to 17 March 2007 was similarto that achieved in Marston's Inns and Taverns. As expected, the trading profit contribution from Eldridge Pope to our half-yearresults will be modest due to seasonality and the fact that, as planned,synergies of approximately £4.6 million per annum will start to be realised fromApril 2007. The integration of Eldridge Pope is well advanced, with full systemsintegration anticipated from 31 March 2007. The acquisition of Eldridge Pope is expected to be earnings enhancing in thefirst full financial year following the acquisition, and broadly earningsneutral in the current financial year. Estate development In the first half-year, Marston's Inns and Taverns has opened 7 new managedpubs: in Brighton, London, Hertfordshire, Cheshire, Nuneaton, Bristol andExeter. We expect to open around 20 new sites or acquired managed pubs thisyear. Our new build programme continues to offer attractive growth opportunitiesand returns. Marston's Pub Company has acquired 42 tenanted or leased pubs to date, includingthe acquisition of Sovereign Inns, an estate of 33 freehold pubs across theMidlands, for £19.4 million on 16 January 2007. Our first 'new-build' tenantedpub in Devizes, Wiltshire is expected to open in the second half-year. Share buy-backs and financing On announcing the acquisition of Eldridge Pope we confirmed our intention toreturn around £100 million to shareholders this financial year, subject toretaining the flexibility to make further acquisitions should suitableopportunities arise. Accordingly, during February and March 2007 we purchasedand placed in treasury 9.1 million shares at a total cost of £40.2 million. New bank facilities of £500 million have been put in place to finance theacquisition of Eldridge Pope, to provide funds for the return of capital toshareholders, and to refinance an existing £275 million facility. The share buy-back programme will be earnings enhancing this year and thereafterreflecting the more efficient balance sheet structure. The impact on interestcosts of funding the share purchase programme and the acquisition of EldridgePope will be approximately £2 million in the first half-year. Therefore, weexpect earnings per share for the first six months to be ahead of last year withprofit before tax and exceptional items in line with the prior year period. Outlook The impact of the smoking ban in Wales from April 2007 and in England from July2007 is uncertain, but our investment plans are very well advanced. Over 90% ofour pubs have gardens, patios or some form of outside trading area, and we havemade excellent progress in developing our food offers in Marston's Inns andTaverns. Food sales now make up 33% of total retail sales within our managedpubs. The high quality of our estate and operational approach is enabling us todeliver good growth in today's trading environment. Our integrated business model provides us with wider investment opportunitiesand increased operational flexibility. The Board remains confident that ourstrong balance sheet, relatively conservative financing and strong cash flowwill allow us to continue to target further investments meeting our return oncapital criteria. ENQUIRIES: Marston's PLC Hudson Sandler Ralph Findlay, Chief Executive Andrew HayesPaul Inglett, Finance Director Nick LyonTel: 01902 329516 James White Tel: 020 7796 4133 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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