Greene King, the Suffolk-based brewer and pub operator, has achieved annual revenue of more than £1bn for the first time as it reported a 5.1% rise in operating profit, with its managed Retail division driving much of the growth.
Revenue for the 52 weeks to 1 May 2011 increased 6% to £1.0427bn, with operating profit of £222m (2009/10: £211.3m) and profit before tax up 13.8% to £140m.
Revenue in the 892-strong Retail arm was up 8.1% to £710.7m, with operating profit up 11.2% to £132m. Ebitda per site was up 8.2% to £193.9k.
Food was the major driver in Retail, with like-for-like food sales growth of 8.1% and food-related sales now approaching 60% of income.
This was helped by the £55.7m acquisition in January of the 12-strong Cloverleaf estate, which has a wet/dry split of 31/69 and produces an average weekly turnover of £40k and average ebitda per site of £540k. Greene King plans at least 10 more Cloverleaf sites by the end of April 2013, and is looking to expand further south and into Scotland.
The £52.2m acquisition of Realpubs is expected to deliver average ebitda per site of £450,000.
Net acquisition costs of the acquired sites was £130.7m and they are expected to deliver average per site editda if £436.4k, more than double the existing estate average.
Greene King’s Hungry Horse brand saw like-for-like sales up more than 10% for the third year running and average weekly turnover up 7% to £19k. Average weekly turnover at Old English Inns was up 6.6% to £18,000. In addition, its new mid-market Eating Inn brand, where food is 68% of sales, is set to grow from 14 to 33 sites this year.
Its Scottish managed estate Belhaven Retail saw like-for-like sales growth of 4.1%, with coffee sales up 71%, wine sales up 6.4% and food growing 130bps to more than 30% of sales. However, Loch Lyne Restaurants saw like-for-like sales dip.
Revenue in the tenanted Pub Partners estate fell 1.4% to £166.4m but it increased 1.7% on a per-pub basis; the estate reduced in number over the period by 3% to 1,554. Ebitda in the division fell 1.2% to £82.6m and operating profit dipped 1.6% to £74.5m.
Ebitda per pub increased by 1.9% to £53,200.
The company said investment in its tenanted pub estate increased 33% to £16.3m, with the average return on expansionary capital of 37%.
Greene King said there are 60 pubs with one of its three innovative agreements - Blueprint, Business Builder or Local Hero - and it plans to add a further 150 this financial year.
Revenue in its Brewing and Brands division increased 5% to £165.6m, with editda up 1.9% to £38.3m and operating profit up 4.1% to £33.1m.
Own-brew volumes fell 2% against a UK ale market down 6.3%, while the freetrade and Belhaven business was up 2.5% against a total UK beer market down 2.1%.
Old Speckled Hen was the biggest selling brand, with its growth of the premium off-trade market rising 70bps to 13.2%.
Across the company, capex was £71.9m, slightly ahead of last year. Investment included 383 schemes with a return on investment of 20% in Retail and 30% in Pub Partners.
Net debt was up £62.1m to £1,410.2m. A final dividend of 16.8p per share is to be paid on 12 September. Total dividend for the year is up 7.4% to 23.1p.
The first eight weeks of the current financial year saw Retail like-for-like sales grow 1%, with underlying growth excluding last year’s World Cup of 3%. Pub Partners average ebitda per pub growth is 1% with LFL ebitda at -1%. Core brand and own-brewed volumes fell 2%.
Rooney Anand, Greene King chief executive, said: “This has been a very successful year for Greene King, delivering revenue of over £1bn for the first time, record profits and a 7.4% dividend increase.
“Our Retail business continues to spearhead our growth, as we increase our share of the eating out market. Our Retail expansion strategy is on track with our most recent acquisitions, Cloverleaf and Realpubs, trading well. Our teams across the business have delivered these results by giving our customers compelling value, service and quality and going forward, there are numerous opportunities for further growth.
“Looking ahead, we foresee another testing year. The UK economy continues to face inflationary pressures, impacting on both our customers’ spending power and our cost base, and the impact of the government’s cutbacks is still to take full effect. However, these results show, through our sales momentum, our Retail expansion strategy and our strong profit conversion, that we can continue to deliver attractive returns to our shareholders.”
