Flat drinks sector given some life: Profit rises and a cash call from Devenish, Matthew Clark and Marston

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The Independent Online
INVESTORS yesterday enjoyed some respite from the recent spate of flat results in the drinks sector with three companies reporting profit rises. There was also a pounds 35m deal and pounds 13m rights issue.

The trio were Devenish, the West Country pub group, Matthew Clark, producer of British wines and mineral waters, and Marston, Thompson & Evershed, the regional brewer.

Devenish, dependent on holiday trade, lifted taxable profits from pounds 3.95m to pounds 4.64m in the seasonably unfavourable first half to 31 March.

The company has also announced the sale of its 30 per cent stake in Freetraders, the drinks wholesaling company, to Matthew Clark for pounds 5.9m. Freetraders has 200 staff, six depots, 55 vans, and a 5,600-strong customer base.

Clark, which also reported a rise in annual profits from pounds 4.6m to pounds 5.3m, has agreed to buy the rest of Freetraders from the company's management in a structured profits-related deal. The total purchase cost could amount to pounds 34.6m.

Some pounds 12.9m of the funding for the deal is coming from a four-for-nine rights issue at 320p a share. The rest is being borrowed.

Shares in Clark, which has raised its dividend for the year to 30 April by 1p to 16.75p, held steady at 405p.

Devenish originally bought Freetraders for pounds 8.3m in 1988 and sold a 70 per cent stake to management for pounds 10.5m in 1991.

It said it would book a pounds 4m profit on the Clark deal, and use the money to add to its 540 pubs, which generated pounds 41.4m of sales in the half-year.

Devenish shareholders, who include the still hostile rival Boddington Group, will receive a 1.625p interim dividend, up from 1.5p.

Higher returns from Marston's 866 pubs provided much of a reported increase in the company's annual profits from pounds 15m to pounds 20m.

Pub food sales, which carry gross margins of around 60 per cent, rose from pounds 8.6m to pounds 10.9m, while liquor turnover advanced from pounds 27.4m to pounds 34.5m.

Marston, brewer of Pedigree real ale, is also looking to expand its pub estate. David Gordon, managing director, added: 'We were offered a package of pubs only 10 days ago, and we are looking at it seriously.'

The company's total dividend is being lifted by 10 per cent to 5.4p.