PUB and brewing giant Marston's has hailed a 3.6 per cent fall in underlying profits before tax as a "very solid performance", after earnings were hit by pub disposals and a shorter trading period.
The company, whose 100th new-build pub was recently opened in Dumfries, booked profits of £83 million for the 52 weeks ended October 4. Revenue edged up one per cent to £787.6m.
Midlands-based Marston's put the profits fall down to the sale of 388 pubs for £144m, as well as a shorter trading period compared with the 53 weeks in last year's accounts. The two factors had boosted last year's profits by around £12m.
Marston's announced a final dividend yesterday of 4.3p per share, taking the total dividend for the year to 6.7p per share - up 5 per cent on 2013. Ralph Findlay, the company's Scottish chief executive, said: "Our underlying growth was about 12 per cent in the year, having regard to those two things, so it was a very solid performance.
"As far as the strategy is concerned, we are very much on track. We achieved our openings target - we opened 27 new pub restaurants last year - and sold nearly 400 pubs for £144m.
"Trading was good, the strategy was on track, and overall that reflected our confidence in raising the (final) dividend by 4.9 per cent."
The period saw Marston's, whose overall estate spans about 1,700 pubs, continue the new-build strategy it has pursued since 2009.
The company plans to add a further 25 new-build outlets to its estate this year. This will include four in Scotland, where it is currently on-site in Balloch and has recently opened in Dunbar. Both come with 30-bed lodges.
Marston's new-build estate in Scotland includes pubs in Port Glasgow, Braehead, Forfar, Dunbar, Dunfermline and Dumfries, with those outlets typically employing 50 staff. A high proportion are young people.
Mr Findlay said: "What we build are modern, attractive pub restaurants in good locations at the value-for-money end of the market.
"That is proving to be absolutely the sweetspot as far as the UK customer is concerned.
"The average turnover for those pubs is about £1.5m because they are quite big, and we make good return on the capital that we invest as a consequence of that.
"We see a good opportunity for the same model in the Scottish market."
Marston's continued to shift its tenancy operations to a pub franchise model last year, and has now made 536 conversions in the five years. It declared its intention yesterday to offload the remaining 200 outlets in its tenancy division, with a view to completing its exit by the end of 2015. However it does retain a small division of leased pubs which it intends to develop.
Mr Findlay said the franchise model presents less risk to the operator, who does not pay rent or buy beer from the company, and takes a 20 per cent cut from the revenue earned.
Marston's, which devised the franchise model, supplies the pubs with food, drink and systems.
Asked if scrapping the beer tie and allowing tenants to seek open market rent reviews in England will lead to any change at Marston's, Mr Findlay said: "We think the impact on franchise-style pubs will be pretty much zero because it's a different model and because our leased estate is such a small part of the group.
"If there is any impact from it, it would not be material in relation to Marston's overall profitability."
On whether he thinks removing the tie will be positive for the industry, Mr Findlay added: "As an owner of pubs, the fact we have been exiting tenanted pubs for five years probably tells you what we think about that generally."
Meanwhile, Marston's noted its brewing operation saw total underlying revenue increased by 4.1 per cent to £132.5m. The company said it benefited from the strong performance of its Hobgoblin ale over Hallowe'en.
In Scotland its ales, which are made at five breweries owned by Marston's in England, are largely sold through supermarkets, as well as in its own pubs.
Shares in Marston's closed up 2p or 1.39 per cent at 146.2p.
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