Capex sets Marston's for the ban

Marston's says it doesn't expect to spend "much more" on facilities for its smoking customers than the near-£20m it has already shelled out on its 2,500 pubs.

Ralph Findlay, the brewer's chief executive, said the group would have all its smoking solutions in place by the introduction of the ban on July 1 and didn't envisage much more in the way of capital expenditure.

"We got in early with our plans and we've been able to work with suppliers and our pubs to get the work done in time. There's not much more to spend," he said.

Findlay said he believed the impact of the smoking ban on his group's pubs in the first year of the ban would be "earnings neutral".

"In the short term we'll have lower beer sales and machine income, but we're encouraged by the fact that we're seeing 14 per cent like-for-like growth in food sales," he said.

Discussing the brewer's performance for the first half of the current financial year prior to going into the closed period, Findlay said its beer volumes were down in line with the UK market.

"Business is weak in standard ale and we're tracking that. This sector of the market is very tough and some [competitor] brands are in very significant double digit decline" he said.

"But we're around four per cent up in premium ale, which is where we're spending more of our energy. There's growing interest in quality ales, which we believe is linked to food sales growth."

Findlay said its managed pubs arm - Inns & Taverns - reported like-for-like sales seven per cent up on the same period last year, while in Pub Company, its tenanted and leased business, trading had been "satisfactory", with rising food sales' trends offsetting lower overall volume growth, boosting average profit per pub versus last year.

Margin performance was aided by better management of labour and energy costs, while the recent Eldridge Pope acquisition was expected to be broadly neutral.

And after share buybacks and the EP acquisition Marston's has around £200m of debt capacity for further acquisitions, Findlay said.

The group unveiled seven new managed pubs in the first half and expects to open around 20 new or acquired managed pubs by the end of the year.

Analysts were generally positive on the trading update, expecting first half pre-tax profits to be flat, in the region of £40m. Marston's shares were up 3p at 454p.