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Fri 30th Jan 2015 - Update: Rooney Anand, Fuller's trading and Eclectic
Greene King boss renews call for Minimum Unit Pricing: Greene King chief executive Rooney Anand has renewed his call for the introduction of Minimum Unit Pricing (MUP) to curb alcohol abuse. In an opinion piece published this morning in the Daily Telegraph, he wrote: “I am a strong supporter of the campaign to introduce a minimum unit price (MUP) for alcohol right across the UK. Binge drinking continues to adversely affect our nation and the government needs to take decisive action to help people change their drinking habits. Why is alcohol causing so much damage in an era of economic adversity where household expenditure is tight? The answer, as everyone knows, is price. When it is possible to walk into a shop and buy a bottle of beer for less than a bottle of water, it is no surprise that, as a nation, we are moving in the wrong direction in our relationship with and consumption of alcohol. Legislation was introduced last year to ban below cost sales of alcohol but this is woefully inadequate. Studies have shown that the policy may save the healthcare service as little as £9.5m a year, while a 50p MUP could reduce costs by as much as £417m. Over ten years, MUP is expected to have between 40 and 50 times more effect than the ban on below-cost selling. It targets those prone to binge drinking, with their consumption expected to fall 7% through raising the price of approximately 30% of units sold to harmful drinkers. The ban on below cost selling affects a mere 1% of such units. A recent study by the University of Sheffield has indicated that MUP would have a larger positive impact on those in poverty, particularly high risk drinkers. It also showed that they would experience larger relative gains in health. MUP would not restrict consumer choice. By targeting those most at risk we would allow responsible drinkers to enjoy alcohol, as they should. It would have only a small impact on moderate drinkers, the Sheffield study indicated. After the government decided to drop the policy of MUP in 2013, Prof. Kevin Fenton of Public Health England said: “There is strong evidence that MUP would make cheap and higher strength alcohol less available, with the greatest impact being in younger and in heavier drinkers.” In the lead up to the general election, I would like to see MUP in the manifestos of the main parties. With Nicholas Sturgeon, Scotland’s First Minister, pushing ahead with plans to introduce it north of the border, and Wales and Northern Ireland following suit, England is being left behind. It is imperative that all our politicians begin to appreciate its value. Dry January might have seemed a virtuous way to begin 2015, but even better would be a commitment from government to support this effective and targeted measure to properly tackle the impact of excessively cheap alcohol in our society.”

Fuller’s reports managed like-for-likes up 6.8%, two new sites: London brewer and retailer Fuller’s has issued a trading update for the 43 weeks to 24 January, with like-for-like sales in Managed Pubs and Hotels up 6.8%, like-for-like profits in the Tenanted Inns division growing by 4% and total beer and cider volumes in the Fuller’s Beer Company also up by 4%. The company stated: “Since we last reported, the Company has acquired two new sites – The Cromwell Arms in Romsey, Hampshire, and The Three Guineas at Reading Station, an area that will benefit from the arrival of Crossrail. In addition, the Company opened One over the Ait, Kew Bridge, and acquired the freehold of The Stable in Falmouth. This continued policy of acquiring premium sites and investment in the existing estate has led to a slight rise in debt to £157.8m at the end of our third quarter on 27 December 2014, up from £155.9m at the half year. Meanwhile, net debt to Ebitda remained at 2.6 times.” Chief executive Simon Emeny said: “Trading in our estate has been consistently good during the year and it was particularly pleasing to have a record Christmas – especially against very strong comparative figures last year. Our commitment to three key principles – an unrivalled portfolio of premium brands, engaging service, and freshly-cooked food delivered in a stylish environment – continues to deliver great results and delight new and existing customers alike. We are confident of meeting our expectations for the full year and look forward to updating the market on 5 June 2015, when we announce the Company’s preliminary results for the 52 weeks to 28 March 2015.” Numis Securities leisure analyst Douglas Jack issued an ‘Add’ note with a Target Price of 1150p on Fuller’s shares. He said: “Although the company is trading ahead of our assumptions, we are holding our forecasts at this stage, but are raising our target to 1150p from 1100p to reflect the ongoing upgrade risk. We are holding our forecasts, which assume managed Like-for-like sales rise 4%, tenanted like-for-like profits rise 1% and brewing volumes rise 3%. Due to the strength of trading and expansion momentum, we continue to believe forecast risk remains on the upside.”

Eclectic reports trading in line, Lowlander ‘flourishing’: Premium bar and nightclub operator Eclectic has reported trading in line with the Board’s expectations for the six months to 28 December. The company stated: “Eclectic invested in and refurbished Embargo Republica and Bristol Lola Lo during the period and both venues have shown improved performance. Additionally, we have closed Bournemouth Sakura, which continued to underperform despite every effort to stimulate increased trade. Sheffield is scheduled for opening to coincide with the start of the new student year in late September 2015. Timing of the development and opening of Liverpool is currently under review. We are delighted with the three new venues acquired during the last financial year: Manchester Lola Lo and Coalition (Brighton) have both now operated for 12 months and are trading well; and Lowlander has continued to flourish since its acquisition at the end of March 2014. As reported in November, Derby Lola Lo and Dirty Blonde in Brighton were not trading as projected, but the company is making progress with these sites. Following our internal review we have instigated a number of new initiatives to reinvigorate and encourage student trade in the next quarter, reduce costs and to mitigate the effects of competition. We remain cautious about trading for the second half which will depend on the outcome of our initiatives to target mid-week student trade and other competition across a number of our locations. The company intends to announce its interim results for the six months ended 28 December 2014 towards the end of March 2015.”

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