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Thu 4th Dec 2014 - Greene King reports LfLs up by 1.5% in past 12 weeks |
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Greene King reports LfLs up by 1.5% in past 12 weeks: Greene King has reported managed like-for-like sales grew 0.8% in the 24 weeks to 19 October but have increased to 1.5% in the last 12 weeks. Overall sales grew 3.3% to £614.9m in the 24-week period. Profit before tax was up 3% to £81.6m in the underlying retained business (excluding the performance of non-core pub that have been sold). Bookings for Christmas within the managed business are up 7.2%. Within the 864-strong tenanted division, Ebitda per site is up 13.8% with like-for-like net income up 3.4%. Chief executive Rooney Anand said: “In the first half of our financial year, we delivered record sales, driven by both organic growth and new sites in Retail, and supported by continued progress in our Pub Partners and Brewing & Brands businesses, strong returns and further operational and strategic progress. In the 24 weeks to 19 October, and on a retained business basis, we achieved group revenue growth of 5.3%, which converted into operating profit growth of 1.8%. Due to lower Retail like-for-like sales growth, labour and utility cost increases in Retail and the ongoing change in channel mix within Brewing & Brands, the retained business operating margin fell 70 basis points (bps). We expect the decline in operating margin for the retained business to moderate slightly over the course of the full year due to improved trading, increased cost savings and lower net cost inflation. Adjusted earnings per share for the retained business were up 5.3% in the period, and this, combined with the strength of our people, our brands and our strategy, gives us the confidence to increase our dividend per share by 4.6% to 7.95p. We also delivered a return on capital employed (ROCE) of 9.2%, in line with the end of the previous financial year, but a 20 bps improvement over the first half last year. This performance was achieved despite a subdued consumer environment. The consumer outlook is favourable, but current consumer caution has been reflected in volatile spending on eating and drinking out over the last few months, as highlighted by the Greene King Leisure Spend Tracker. In this market context, we made progress in a number of key areas of the business including food sales rising to 42% of Retail sales, achieving a material improvement in our Net Promoter Score (NPS) and improving our food hygiene scores by 4.7%. We were surprised and disappointed with the amendment to the Small Business, Enterprise and Employment Bill, after our period-end, which introduces the concept of a ‘Market Rent Only’ option for tied licensees. While there are a number of unknowns in the amendment, we are confident we will have sufficient optionality to mitigate the potential impact, if and when the proposed changes take effect. We are into the final year of our current five-year strategic plan to improve growth and returns to our shareholders. During the period we made further significant progress: 1. Expanding Retail to 1,100 sites and improving estate quality. We acquired or transferred in 11 sites to take the estate to 1,040 pubs, restaurants and hotels. Since our current strategy commenced, the average Ebitda per pub generated by new sites of £413k is significantly higher than our original expectation for the five-year plan; 2. Reducing the Pub Partners estate and improving estate quality. In Pub Partners, we accelerated our strategy with the disposal of 275 non-core pubs to Hawthorn Capital. In total, we sold 299 non-core sites in the period and transferred two to Retail, taking the estate to 864 pubs and generating growth in the average Ebitda per pub of 13.8%; 3. Maintaining industry-leading beer brand investment to strengthen our leadership position. We again invested in our core ale brands to drive own-brewed volume (OBV) growth and UK ale market outperformance in Brewing and Brands. We increased our volume share of the UK ale market by 80bps to 10.1%.”
Sky sells 80% stake in Sky Bet for £800m: Sky has agreed to sell a controlling stake in its online betting and gaming business, Sky Bet, to funds advised by CVC Capital Partners in a deal which values Sky Bet at £800 million. The sale crystallises value for Sky that has been created in Sky Bet, and enables the enlarged Sky to focus on the significant opportunity for growth in pay TV across the five markets in which it now operates. Under the terms of the transaction, Sky will receive cash of £600 million on completion and further deferred and contingent consideration up to the value of £120 million. The total value of £800 million represents a multiple of approximately 15x Ebitda for the 12 months ended 30 June 2014. Sky will retain an equity stake of approximately 20% in Sky Bet and ongoing board representation. As part of the transaction Sky has also entered into a long-term brand licence agreement with Sky Bet. Sky Bet was formed in 2001 and has grown rapidly to become one of the leading operators in the UK’s online betting and gaming market, through its strong partnership with Sky Sports and its track record of technology and product innovation. Sky Bet was one of the first operators to recognise the potential of online and mobile platforms for betting and gaming, and today operates a range of sports, betting and gaming services. The Sky Bet management team, under the leadership of managing director Richard Flint, has been instrumental to Sky Bet’s success. They will remain with the business under the new ownership structure with all Sky Bet’s employees moving across into the new entity. The business will remain headquartered in Leeds. Jeremy Darroch, group chief executive of Sky, said: “In the last ten years, we have successfully grown Sky Bet from a start-up to one of the leading online betting and gaming companies in the UK. This transaction will allow us to focus further on the substantial growth opportunities in our core international pay TV business while realising significant value for our shareholders.” The transaction is subject to regulatory clearances in the UK and Ireland and is expected to close in the first quarter of 2015.
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