27th Jan 2010 07:00
PRESS RELEASE
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27 January 2010 |
GREENE KING plc
INTERIM MANAGEMENT STATEMENT & ACQUISITION
Interim Management Statement
Greene King announces its Interim Management Statement for the 38 weeks to 24 January 2010.
Trading across the business over the last nine weeks has remained relatively strong despite the negative impact from the poor weather across the UK in recent weeks.
After 38 weeks, Greene King Retail like-for-like sales were +4.3%. Up to the end of week 35, like-for-like sales were +5.0%, slightly ahead of previously reported trends. We again delivered very strong growth in the two weeks over the Christmas period, despite the tough comparisons with last year. Like-for-like food sales growth remains very strong and combined with growth in food-related drinks' sales, continue to drive our underlying performance in both Destination and Local Pubs. It is expected that total like-for-like sales growth will moderate through the rest of the financial year due to ongoing tough comparatives and the VAT rise. Second half margins are expected to be broadly in line with the corresponding period last year.
The improving profit trend in Pub Partners has continued up to week 36. Average EBITDA per pub was -4.9% with trading in the second half of the year, since 18 October, at -0.8%. The improvement is being driven by stronger beer sales trends in response to the continued success of our price support for our licensees and is also benefiting from the continued success of our non-core disposal programme in Pub Partners. The 'health' of our licensees continues to strengthen and new applications in December were 20% up on the same month last year. We still anticipate targeted licensee support of between £6.0m and £6.5m in this financial year.
Brewing Company own-brewed volumes were +7.2% after 38 weeks. The performance of the business in recent weeks has been especially strong given the significant weather-related issues it has had to face. We continue to expect volume growth to moderate in the second half of this financial year, given the extremely strong performance delivered by Brewing Company in the final months of the previous financial year.
Belhaven remains on course for another successful year. After 38 weeks, Retail LFL sales growth was +7.4%, well ahead of the market, underlying tenanted profit per pub was broadly in line with last year and strong Belhaven Best volume growth had been maintained at +14.9%. The seven pubs recently acquired from Mitchells and Butlers have bedded in well and are trading in line with our expectations.
Cash generation and our balance sheet position remain sound and in line with expectations. We continue to focus on reducing our overall net debt position through organic cashflow generation and non-core property disposals. We are paying down our debt whilst investing in the business and delivering returns to shareholders. There continue to be acquisition opportunities that further strengthen and expand our retail offer and geographic presence and which meet the financial criteria set out at the time of the rights issue.
Acquisition
In line with this strategy, we have agreed to acquire a further eight freehold, managed pubs from Punch Taverns PLC ("Punch Taverns") for a total consideration of £15.9m, funded from the rights issue proceeds. The deal is expected to complete in February. These very high quality, food-led pubs are located across the UK and generated EBITDA of £1.3m in the FY09 year. After their full integration into Greene King, we expect to return these pubs to normalised, historic trading levels which, when supported by operational synergies, will equate to c.9x EBITDA, in line with the financial criteria of the rights issue. The intrinsic quality and location of these pubs, combined with the historic yield they have generated, would support a value in excess of £16m for these assets.
Following this acquisition, we have now invested £79m of the rights issue proceeds, in acquiring 26 high quality, freehold, managed pubs and repurchasing below par debt.
Summary
All of our businesses are winning in the marketplace and gaining market share, enabling us to deliver profitable growth despite the challenging conditions. We remain focused on providing the best value, service and quality to our customers and our licensees, with a continued commitment to investment and the long-term development of the business.
We are well placed to continue strengthening our competitive position and, whilst the UK consumer outlook is still uncertain, we are confident that we will meet the board's expectations for this financial year.
For further information:
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Greene King plc |
Rooney Anand, Chief Executive Ian Bull, Group Finance Director |
Tel: 01284 763222 |
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Financial Dynamics |
Ben Foster |
Tel: 0207 831 3113 |
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