Marstons Regulatory News (MARS)

4 Oct 2007 07:01

Marston's PLC04 October 2007 4 October 2007 Marston's PLC ('Marston's') Close Period Trading Update In accordance with its usual practice, the Board of Marston's PLC reports ontrading for the 52 weeks ended 29 September 2007. The preliminary results areexpected to be announced on 30 November 2007. Trading Overall the Group continues to benefit from targeting the growing pub foodmarket in both managed and tenanted pubs. Marston's Beer Company is alsoachieving growth and greater market share in its key ale brands. In our interim results statement on 25 May 2007 we reported strong first-halftrading. Legislation to ban smoking in public places was introduced in Wales on2 April and in England on 1 July. Planned investments in outside trading areaswere completed before the ban came into effect, and there has been nodiscernable impact on trading to date. Trends seen in the first half-year,including strong growth in food sales, have continued. The unseasonal weather over the summer included severe flooding in June and Julywhich directly affected approximately 150 pubs, with all but 5 having re-openedby the financial year-end. With the exception of the short term impact of theseweather conditions trading has been in line with expectations. In Marston's Inns & Taverns, which now comprises 550 managed pubs, like for-likesales growth for the year was 4.6% despite the poor summer weather and thebenefit of the World Cup in 2006. Like-for-like wet sales increased by 0.6% andfood sales, which now represent 34% of total retail sales, increased by 13.3% onthe same basis. Marston's Inns and Taverns like-for-like sales growth - % change* 33 weeks to 10 weeks to 4 weeks to 5 weeks to 52 weeks to 19 May** 28 July 25 August 29 September 29 September Food sales 13.5 9.2 17.2 13.4 13.3Total sales 6.6 (2.3) 9.6 2.8 4.6 *including pubs affected by flooding **as reported in the interim results statement on 25 May A strong first-half performance continued during April, but trade weakened inMay, June and July as a consequence of unseasonal weather and flooding. Sincethe end of July like-for-like sales growth has been strong notwithstanding theintroduction of the smoking ban. The performance of the Eldridge Pope managedestate, acquired in January 2007, has been in line with our expectations. Marston's Inns & Taverns organic development included the opening of 19 newoutlets in the year, mainly new-build pubs. We expect to open 20 new outlets in2008. In Marston's Pub Company, which comprises 1,722 tenanted and leased pubs,estimated average profit per pub increased by around 13% after allowing for theeffect of the disposal of 279 pubs to aAim Group in May 2007, demonstrating theimproving quality of the estate. Like-for-like profit per pub, including pubsaffected by flooding, is estimated to have increased by approximately 3%. Marston's Beer Company performed strongly and ahead of the market, with core alebrand volumes up by over 6% overall. Our premium ale brands have continued toshow strong growth, with Marston's Pedigree up by nearly 6% and JenningsCumberland Ale up by 30%. Ringwood, acquired in July 2007, also performed well.Our own brands market share of the premium cask ale market is now over 20%. Financing During the year just ended, higher short term interest rates increased the costof borrowing under bank facilities of £500m by around 1%. Since the year-end wehave taken advantage of more attractive long term interest rates to fix the costof all of our bank debt using interest rate swaps. All borrowings are noweffectively at fixed rates of interest with a blended cost of just over 6%. During the year we purchased 28.1 million shares at a total cost of around £120million. Profit before taxation and earnings per share Profit before taxation for the financial year to 29 September 2007 isanticipated to be slightly below our original expectations due to the impact ofhigher interest rates, flood related repair costs and poor summer weather.However, earnings before exceptional items are anticipated to be in line withour original expectations reflecting the impact of share buy-backs and the factthat the effective rate of tax is expected to be lower than last year. Pensions The Eldridge Pope Pension Scheme was merged with the Marston's PLC Pension andLife Assurance Scheme on 7 September 2007. An additional contribution of £11.3million has been made to the Marston's PLC Scheme since the year-end as aconsequence of the different funding levels of the schemes prior to merger. Thepreviously disclosed current schedule of top-up contributions of £7.2 millionper annum, intended to eliminate the Marston's PLC Scheme funding deficit by2014, will continue to be made. Outlook Trading has continued to be good after the introduction of smoking bans inEngland and in Wales, and although we are more cautious about the impact of thislegislation over the winter months we believe that well located, well investedpubs with high standards of service will benefit in the longer term. The outlook for costs is broadly neutral overall. Food purchase prices and rawmaterials in brewing are rising ahead of inflation, but we have fixed themajority of our energy costs over the next financial year and we have completedthe negotiation of lager supply contracts on improved terms and with a widerportfolio of brands available. The recent increase in the minimum wage is inline with inflation. We are well positioned to continue to benefit from current market trends,including growth in casual dining, and to derive further value from ourintegrated business model. We remain confident about the future prospects forthe Group. Enquiries: Marston's PLC Ralph Findlay, Chief Executive Paul Inglett, Finance Director Tel: 01902 329516 Hudson Sandler Andrew Hayes Nick Lyon James White Tel: 020 7796 4133 This information is provided by RNS The company news service from the London Stock Exchange