Marston's underlying profits bubble up, but writedowns hit bottom line

Marston's reported strong revenues throughout the first six months of the trading year, however, the pubs group swung to a statutory loss as a result of write-downs on its income statement.

Marston's increased revenues 20% to £528.1m in the half-year to 31 March, with underlying pre-tax profits up 7.7% to £36.3m. On a statutory basis, the landlord and brewer recorded a loss before tax of £13.4m, principally reflecting accounting adjustments relating to the estate valuation and changes in the fair value of interest rate swaps.

The Midlands-based group posted a basic loss per share of 2.0p, a significant drop from the 5.2p earning per share recorded a year earlier. Directors maintained the 2.7p interim dividend

Marston's expects to deliver growth in both revenue and underlying profits before the year-end, despite the impact of recent adverse weather on its first-half results.

The FTSE 250 group's drinks-led said the forthcoming World Cup was seen as presenting "a further opportunity", with an improvement in like-for-like sales trends anticipated over the second half-year against softer comparatives.

A triennial pension valuation was concluded for the three years to 30 September 2017, revealing a £40m funding deficit that was a £10m improvement, despite the adverse impact of lower gilt yields.

Chief executive Ralph Findlay said, "Strong trading in brewing and taverns and leased pubs offsets the adverse impact of poor weather on 'drive-to' pubs in our Destination estate, further validating the resilience of our model."

"We have made modest and prudent adjustments to our capital plans to reflect the current economic and consumer climate. However, Marston's is a balanced business and we are confident that the medium-term outlook for the eating-out and wet-led pub sectors remains good and that targeting an increased profitable share of a growing market through an unremitting focus on quality, service, standards, and value for money remains key," he added.

As of 1110 BST, Marston's shares had fallen 6.71% to 104.49p.