Marston's ups disposals goal

Why the change? The impact of the smoking ban and cut-price supermarket booze convinced many publicans to switch their focus some time ago, but the recent travails of casual dining chains such as Pizza Express and Prezzo helps to explain why pubcos are increasingly reverting to wet sales. Diners are now spoilt for choice, but anyone looking to boost sales through pub grub will effectively be selling into a saturated market. You might fare better by saturating your customer base in the traditional manner.

Aside from altering the hospitality mix, the broader picture sees Marston’s aiming to cut net debt by £200m by 2023 by selling off pubs and halting expansion spending. Earlier this month, the group said it had made a deal with Admiral Taverns to offload 137 pubs for £44.9m, at around 10 times annual cash profits (Ebitda). 

This promising start has led Marston’s to up its disposal target for the 2020 financial year from £40m to £70m. While the Admiral deal was done at a 28 per cent discount to book value, chief executive Ralph Findlay said he “strongly expects” future sales will cover book value, though it's worth noting that profits were held in check due to £112m in non-cash impairments from lower gilt yields and revaluations in the estate, with £43m in impairments on “underperforming destination and premium properties”.   

Marston’s saw flat like-for-like sales, which management said was a positive given that the year before had the FIFA World Cup (the men's one) and better weather to drive sales, though it will be interesting to see whether England's progress through to the final of the recent Rugby World Cup translates into rising sales in the first half of FY2020 – watch this space. 

Peel Hunt expects adjusted pre-tax profit to stay flat at £101m in 2020, but sees the free cash flow yield climbing from 8.9 per cent in 2019 to 9.8 per cent.