Marston's pub company to sell 202 pubs for £90m amid positive annual results

Marston's pub company has agreed to dispose of 202 sites for £90m in 2014 and 2015.

The deal with NewRiver Retail Limited, a specialist retail investment trust (REIT) focused on the UK food and value retail sector, sees Marston's sell 58 community pubs from Marston's Taverns estate and 44 Leased pubs.

Under the terms of the agreement, Marston's will manage the pubs for five years in return for a management fee. For the first four years Marston's has provided a minimum income guarantee.

Marston's said it had made the move because it wanted to target growth through investment in higher turnover pub-restaurants, improve the quality of its estate and reduce its exposure to smaller wet-led pubs.

The company sold 130 pubs and other assets over the past year for around £50m, and said it was targeting another £60-70m of disposals per year in 2014 and 2015 from its Taverns estate. The business currently has around 2,500 pubs stretching across England, Wales and Scotland.

The news came as the company posted 8.8% increase in revenue to £782.9m for the year ended 5 October 2013, while underlying operating profit went up by 6.6% to £168.3m.

That growth was in part explained by the fact that last year's operating profit had been low due to bad weather, high disposals and "a more subdued" market, while this year had seen more profitable new-build pub-restaurants, tighter cost control and reduced management costs.

The company said its performance in the second half of the year was much stronger than the first, which was also affected by poor weather. Operating profit in the first half of the year to 5 October 2013 was down 1.5% on the same period a year before, whereas it increased by 12.6% in the second half.

Chief executive officer Ralph Findlay commented on the results, saying: "In 2013 we achieved good growth in turnover and operating profit despite significant challenges. This reflects our unstinting focus on what our customers want: excellent service and value for money in high quality pubs and bars. In 2013 we served 30 million meals, with food now the principal reason for around 80% of customer visits in our Destination pubs."

Trading since the year end has also been strong, with like-for-like sales up 3.1% in the destination and premium arm of the business, driven by food sales up 4.6%.

Managed and franchised taverns saw a like-for-like sales rise of 2.1%, while tenanted profits were "in line with expectations".