Marston's Interims

[idpickering]

INTERIM RESULTS FOR THE 26 WEEKS ENDED 31 MARCH 2018

Strong revenue and underlying PBT growth, dividend maintained, asset value underpinned

· Revenue and underlying PBT growth with underlying EPS and dividend maintained



- Underlying profit growth in Taverns, Leased and Brewing

- Destination and Premium (D&P) profits in line with last year despite poor weather



· Managed and franchise like-for-like sales in line with last year
- Taverns like-for-like sales up 2.9%, D&P like-for-like -1.8% (drive-to destinations weather
impacted)

- Average profit per pub up 1%



· Strong organic growth in Brewing and from CWBB acquisition

- Total volume +74%, market share growth in premium cask ale to 23% and premium packaged ale to 24%

- On track to deliver at least £4 million target synergies from CWBB acquisition

- CWBB brands have helped us penetrate new markets/geographies



· Operating cash flow up 6%, pro-forma leverage and pension deficit reduced

- Pro-forma leverage down 0.2x to 4.8x, fixed charge cover unchanged at 2.6x

- Triennial pension valuation - funding deficit reduced by £10 million to £40 million



· Net asset value of 142 pence per share supported by estate revaluation

- Three year estate revaluation at £2.2 billion

§ Statutory loss principally reflects write-downs in income statement



· Interim dividend maintained at 2.7 pence per share

https://www.investegate.co.uk/marston-s ... 00041939O/

[IanTHughes]

More Dividend Information

We expect to deliver growth in both revenue and underlying profit before tax in 2018 despite the impact of weather on our first-half results. Our drinks-led businesses are in growth and the forthcoming World Cup presents a further opportunity. In Destination, we anticipate an improvement in like-for-like sales trends over the second half-year against softer comparatives.

and

It remains our policy to target dividend progression commensurate with earnings growth and achieving dividend cover of 2 times over the medium term.

Interim Dividend dates

An interim dividend of £17.1 million, being 2.7p (2017: 2.7p) per ordinary share, has been proposed and will be paid on 3 July 2018 to those shareholders on the register at the close of business on 25 May 2018.

Ian

[monabri]

We did well to keep the dividend.

"On a statutory basis, the loss before tax was £13.4 million principally reflecting accounting adjustments relating to the estate valuation and changes in the fair value of interest rate swaps, both of which are non-cash items. The basic loss per share was 2.0 pence per share. "

http://www.londonstockexchange.com/exch ... 42603.html

[idpickering]

Thanks for that Ian. I'm always wary of copying too much from the original source in fear of breaching their copyright.

I hold Marston's, and am satisfied with these results. In fact, MARS are my only share that I hold in my HYP, that is listed in the lower index. I have no intention of selling them, and actually doubled my holdings of MARS last month, as part of my new ISA dollop of cash.

The results don't appear to have gone down well, as the sp is down 3.75% currently.

Ian.

[blobby]

Results seem OK for the business; wet sales are up and the food sales are down due to weather. Overall underlying profit seems good and going in the right direction. I think the disappointing thing is the property revaluation: “external estate valuation undertaken in the period, which resulted in a £39.8 million charge”.

Can anyone explain what the “external estate” is and why it should lose value? Are these the taverns that are owned by Marston’s but not directly managed by them perhaps?

[tjh290633]

Results seem OK for the business; wet sales are up and the food sales are down due to weather. Overall underlying profit seems good and going in the right direction. I think the disappointing thing is the property revaluation: “external estate valuation undertaken in the period, which resulted in a £39.8 million charge”.

Can anyone explain what the “external estate” is and why it should lose value? Are these the taverns that are owned by Marston’s but not directly managed by them perhaps?

If you do a search in the RNS on "revaluation", you will find:

At 28 January 2018 the Group's freehold and leasehold properties were revalued by 
independent chartered surveyors on an open market value basis. The resulting revaluation 
adjustments have been recognised in the revaluation reserve or income statement as 
appropriate. The amount recognised in the income statement comprises:

                                                             31 March
                                                                 2018 
                                                                 GBPm
 Impairment of other intangible assets                            0.1
 Reversal of impairment of other intangible assets              (0.3)
 Impairment of property, plant and equipment                     70.6
 Reversal of impairment of property, plant and equipment       (31.4)
 Impairment of assets held for sale                               0.4
 Valuation fees                                                   0.4
                                                                 39.8

That's where it comes from.

TJH

[PinkDalek]

… Can anyone explain what the “external estate” is ...?

Following on from Terry's reply, what they mean by "external estate valuation" is not a valuation of an external estate but an external (third party, rather than in house) valuation. From further down the announcement, this external valuation would appear to be undertaken three-yearly.

[blobby]

Thanks Terry, I did read that but it has not satisfied my quest to understand more about why the estate valuation has dropped. Is this happening to the whole sector perhaps.

Thanks PinkDalek, I think you are right on that one.

[scrumpyjack]

It will be happening to the whole sector as pub profitability falls, because an important element is the pubs trading performance

https://www.morningadvertiser.co.uk/Art ... know-facts

They are not simply judged on what the pub might be sold for if it was able to get change of use permission.

[idpickering]

As we near the market close today, MARS sp is down over 8%. I must admit to being surprised at this, as I didn't think the results were that bad? But what do I know? It's all about the income, right?

Ian.

[blobby]

Scrumpyjack,

Many thanks for your link, that is very interesting. I note that Marston's are saying the underlying earnings are doing OK however.

Ian,

The result indicated that Marston’s had taken a hit of £40 million from a property revaluation.

Doing some calculations… There are 633 million shares in issue so a hit of £40 million on the NAV equates to about 6p per share. On that bases a significant drop in sp is perhaps understandable, however a drop of 12p is over-doing it unless the market was expecting a property value increase. I’m still looking to see if I can find how other pub-cos property values are doing. E.g. Green King if anyone knows?

[idpickering]

Scrumpyjack,

Many thanks for your link, that is very interesting. I note that Marston's are saying the underlying earnings are doing OK however.

Ian,

The result indicated that Marston’s had taken a hit of £40 million from a property revaluation.

Doing some calculations… There are 633 million shares in issue so a hit of £40 million on the NAV equates to about 6p per share. On that bases a significant drop in sp is perhaps understandable, however a drop of 12p is over-doing it unless the market was expecting a property value increase. I’m still looking to see if I can find how other pub-cos property values are doing. E.g. Green King if anyone knows?

Thanks for your post, and effort blobby. Praise be to my HYP's diversification.

Ian.

[Gengulphus]

I’m still looking to see if I can find how other pub-cos property values are doing. E.g. Green King if anyone knows?

You're most likely to get reasonably up-to-date figures about that from Greene King's final results, which are due on June 28th according to https://www.greeneking.co.uk/investor-c ... -calendar/ .

Gengulphus

[blobby]

A positive note from Langton here:

http://www.langtoncapital.co.uk/daily-n ... -mars-etc/

One comment will be appreciated by holders here "The final dividend could yet be raised and, with real wages in positive territory and LfL sales up (ex the snow) across the company, trading is solid."