Marston's (MARS) H2 2011 earnings summary

Executive summary

• FY 2011 revenue rose 4.8% to £682.2m; underlying operating profit increased 3.8% to £154.3m and underlying EPS grew 12% to 11.2p.

• Progress against priorities included ROCE of 9.8% versus 9.6%, leverage down to 5.6x from 5.7x, and dividend cover up to 1.9x from 1.7x.

Financial highlights

• Underlying PBT increased 9.4% to £80.4m; profit after tax was £68.8m versus £47.5m, and reported basic EPS was 12.1p versus 8.3p.

• Revenue reached £682.2m versus £650.7m; underlying operating margin was 22.6% versus 22.9%, mainly reflecting the growing Retail Agreement estate.

• EBITDA was £193.1m versus £172.3m; operating cash inflow was £182.4m versus £189.3m.

• Adjusted for exceptional items, basic EPS was 11.2p versus 10.0p; reported operating profit after exceptional items was £151.6m versus £132.4m.

Outlook and guidance

• Plan to open around 25 new pub-restaurants annually from 2012, funded from cash flow and existing resources; new-build sites averaged 18% EBITDA return on capital over five years.

• FY 2012 capital expenditure forecast at £100m–£110m; cost increases of around £8m in Inns and Taverns targeted for mitigation through purchasing, labour control and menu flexibility.

• Target net debt/EBITDA below 5.0x; medium-term dividend cover objective around 2x earnings.

• In the eight weeks to 26 November, managed-pub like-for-like sales rose 3.0%; tenanted, leased and franchise profit trends were estimated up 2.0%.