These results were achieved in a year of significant change. As a consequence of detailed planning, investment and a continuing emphasis on the quality of our pub estate, we were prepared and well positioned for the introduction of smoking bans in England and Wales.
On 8 January 2007, we changed the name of the Company to Marston’s PLC. This has enabled us to adopt a more cohesive, integrated approach to the management of our pubs and beer brands and reflects the fact that in recent years we have become a national business.
The development of a national, high quality pub estate is one of our key strategic objectives. Acquisitions made during the year, including the Eldridge Pope estate of 153 pubs in the south of England, were consistent with this objective. This objective is also being achieved in our managed pub estate through becoming a leading developer of new build pubs.
The increasing quality of our pub estate is demonstrated by good like-for-like sales growth in our managed pubs, with particularly strong growth in food sales, and a significant increase in average profit per pub in our tenanted and leased estate.
In brewing, our increasing focus on national distribution of a range of premium cask ale brands is reflected in the fact that we are now the UK’s largest brewer of premium cask ale, with a market share in this segment of over 20% by volume. The trading performances of the Group and the individual trading divisions are contained within the Business Review.
Results
Turnover increased by 9.6% to £652.8 million (2006: £595.5 million). This includes the acquisitions of Sovereign Inns in January 2007 for £19.6 million, Eldridge Pope also in January 2007 for £156.5 million and Ringwood Brewery in July 2007 for £17.8 million. Each of these acquisitions was funded through debt.
On 10 May 2007, 279 smaller tenancies were sold to aAim Group for £82.5 million.
Underlying profit before taxation was £98.0 million (2006: £101.5 million) and profit after exceptional items and before tax was £94.7 million (2006: £101.5 million).
Earnings before interest, tax, depreciation and amortisation (EBITDA) and before exceptional items increased by 7.6% to £205.9 million.
Underlying basic earnings per share increased by 10.1% to 26.2 pence per share (2006: 23.8 pence). Basic earnings per share including exceptional items were 27.9 pence per share (2006: 23.8 pence).
Comparative figures in relation to earnings per share and dividends have been adjusted to reflect the 4-for-1 share split effected on 9 January 2007.
On 25 May 2007 we announced an increase in the share buy-back programme from £100 million to £150 million to be achieved during the calendar year through market purchases. During the financial period to 29 September 2007 we purchased 28.1 million shares at a total cost of around £120 million.
OUR SUCCESS IS DUE TO THE CONTRIBUTIONS MADE BY OUR EMPLOYEES, WHETHER THEY WORK IN OUR PUBS, BREWERIES OR IN SUPPORT FUNCTIONS
Net debt at the year-end was £1,189.1 million, resulting in interest cover of 2.5 times (2006: 3.0 times).
Dividend
The Board proposes a final dividend of 8.47 pence per share bringing the total dividend for the year to 12.83 pence per share (2006: 10.69 pence), an increase of 20.0% on the previous year. The Company has increased dividends by an average of over 12% per annum for a period of more than 30 years and continues to adopt a progressive dividend policy. The final dividend, if approved, will be paid on 31
January 2008 to those shareholders on the register at the close of business on 4 January 2008.
FTSE4Good
In September 2007 Marston’s PLC was added to the FTSE4Good Index, the leading global responsible investment index. This Index reflects increasing attention to the management of environmental and social risks. The fact that we have met the corporate responsibility criteria for the Index demonstrates the development of policies and management systems to manage these risks. These policies can be viewed on our corporate website at www.marstons.co.uk.
Employees
Our success is due to the contributions made by our employees, whether they work in our pubs, breweries or in support functions. In particular, our good response to the challenges presented by the smoking ban and the poor summer weather reflects the tremendous loyalty and dedication of our staff.
Directors
Peter Lipscomb has indicated his intention to retire from the Board at the Annual General Meeting on 25 January 2008. Peter was appointed as Deputy Chairman and Non-executive Director in 2000 and has made a significant contribution to the successful development of the Company. Lord Hodgson became the Senior Independent Director on 1 October 2007.
In October 2006 we were pleased to announce the appointment of Rosalind Cuschieri, Commercial Director of Warburtons Limited, as a Non-executive Director.
Outlook
Although we remain cautious about consumer confidence, regulatory cost pressures and the short term impact of the smoking ban over the winter months, we are confident that our high quality estate, strong balance sheet, conservative financing and strong cash flow will enable us to continue to exploit opportunities for further profitable growth. The Board remains confident in the future growth prospects of the Group.
David Thompson
Chairman