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Tue 20th Jan 2015 - Update: Eagle Eye, NewRiver Retail, M&B
Eagle Eye reports revenue growth: Eagle Eye, the provider of digital consumer engagement solutions to the retail and hospitality industries, has reported sales grew 276% to £2.3m (H1 2014: £600,000) in the six months to 31 December 2014 – 81% of this is transactional revenue (H1 2014: 61%). The company stated: “This growth reflects both the increasing understanding of the value that Eagle Eye’s services offer to retailers and brands as well as the growing number of customers using the company’s network. Redemption volumes on the Eagle Eye Air platform increased by 200% year on year to more than 8.3 million vouchers, versus 2.7 million in the comparable period in the prior financial year. The Group has continued to make good progress in increasing the number of retailers and brands using the Eagle Eye AIR platform, with more than 110 customers live at 31 December 2014 (31 December 2013: 40). This momentum reflects the growing awareness and understanding of the significant operational cost savings, enhanced consumer experiences and competitive advantage that Eagle Eye offers. New projects included a coupon app for One Stop, the Tesco-owned convenience store chain, a loyalty app for Nicholson’s Pubs, which includes a digital stamp card for rewarding frequency of visits, and a barista stamp card app for Marks and Spencer, rewarding coffee consumption. The Group was also delighted to be recognised with a number of key industry awards for Eagle Eye’s Greggs Rewards programme during the period.” Chief executive Phill Blundell said: “I am very pleased with the excellent progress Eagle Eye has continued to make in the first half of the year. We have delivered exceptionally strong growth in both transactions on our network to 8.3 million and in revenue, which reflects the structural market shift to the digital delivery of promotions, giftcards and rewards. In addition, we have successfully integrated and grown the Messaging business, acquired from 2ergo in April 14, volumes from which were 23.2m, up 97% from prior year. We are clearly demonstrating the value our business brings to our customers as well as seeing the results of the hard work and commitment from the excellent team that we have assembled. The board and I look forward to announcing further progress alongside our interim results in March.”

NewRiver Retail – majority of Marston’s pub applications submitted this month: Property company NewRiver Retail has reported progress in submitting planning application to create Co-op convenience stores within the 202-strong Marston’s pub portfolio it acquired. The company stated: “Strong progress continues across the company’s pub portfolio following the Agreement for Lease with The Co-operative Group Limited in September to lease new convenience stores from the portfolio acquired from Marston’s PLC. Following detailed planning and local consultations with respective stakeholders during the latter part of 2014, the majority of intended planning applications will have been submitted by the end of January 2015. The current portfolio Ebitda is performing above the guaranteed income received from Marston’s by 2.75%.”

Douglas Jack upgrades Mitchells & Butlers: Numis Securities leisure analyst Douglas Jack has upgraded his Mitchells & Butlers forecast with an ‘Add’ recommendation and a target price of 480p. He said: “Mitchells & Butlers’ AGM statement is due on 29 January. We expect this to be reasonably upbeat, given the signs that operational improvements are finally starting to be reflected in like-for-like sales, in addition to which, the company should be benefiting from the improving consumer backdrop. Like-for-like sales rose 2.4% during the first eight weeks following two years of sub-1% like-for-like sales growth. Like-for-like sales are being supported by reduced staff turnover (at 78% in 2014), higher net promoter scores (up four ppts to 63% in 2014), food and drink volume growth (both rose 1% in 2014), as well as increased levels of capex on rebranding and IT systems. Ebit margins fell 50bps last year and are forecast to fall slightly this year largely due to dilution from the Orchid acquisition (initial costs, including refurbishment downtime, without all the synergies). Much depends on like-for-like sales and pricing behaviour. Being January, food discounts are prevalent (including 20% off food at Toby and Harvester, as well as two-for-one at Embers Inns), but drinks prices are up 3.4% over the last 12 months (versus +2.9% over the previous 12 months) according to CGA. 25 new outlets are expected to open in 2015E. The main priority must be to improve Ebitda returns, particularly from 18% on leaseholds and 16% on conversions (freehold returns are 13%, on average), whilst continuing the conversion programme for the acquired Orchid estate. Despite rising capex, we forecast the company’s net debt/Ebitda to fall to 4.4x from 4.6x this year. We are upgrading our forecasts by 4% (2015E PBT to £192m from £185m), largely by now assuming that like-for-like sales grow by 1.5%, rather than 1.0%, resulting in margins falling 10bps. This adjustment reflects how M&B remains operationally and financially geared into any recovery in like-for-like sales.M&B’s shares are fairly valued, in our view, but there is plenty of growth potential to drive the shares. We are forecasting 32% earnings growth over the next three years; consensus 41%. Any further recovery in like-for-like sales or reduction in the pension deficit would be an added bonus.” 

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