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Morning Briefing for pub, restaurant and food wervice operators

Wed 20th Apr 2016 - Update: Punch, Heineken and Tim Bacon
Punch Taverns report average profit per pub up 3%: Punch Taverns has reported that average profit per pub across the entire estate rose 3.0% in the 28 weeks to 5 March 2016. The core estate saw like-for-like net income growth of 1.6% with the total estate (including non-core) in like-for-like outlet Ebitda growth. Underlying Ebitda was £94 million (March 2015: £105 million) reflecting the impact of £288 million of strategic disposals completed over the last 18 months. There was £59 million of non-underlying profit on asset disposals in the period. Nominal net debt reduced by £191 million (14%) in the half year and by £293 million since the October 2014 refinancing. The company reported £235 million of cash on the balance sheet, no bank debt and low scheduled amortisation at circa £36 million per year over the next five years. Disposal programme is ahead of target with £199 million of net proceeds: £47 million – individual property and land sales; £12 million above book value; £53 million – package disposal of 158 non-core pubs (previously announced); £99 million – disposal of 50% holding in Matthew Clark (previously announced). Loan to value reduced to 59% (August 2015: 64%). It has £847 million of property in excess of nominal net debt; equivalent to 382 pence per share. It reported its retail division is operating ahead of expectations: 121 pubs identified to operate under the Retail contract (50 pubs open at April 2016) and it is on track to have c.100 pubs open by the year end. Underlying profit and sales are ahead of management expectations. Anticipated pub Ebitda of between £90,000 and £110,000, representing a profit uplift of between £15,000 and £25,000 as compared to historical Ebitda under the tied tenanted and leased model. Mercury pub division has been formed to manage lower profitability sites under a reduced cost operating model. Targeting like-for-like growth in this division from the end of 2017 as we sign-up pubs on more flexible tenancy agreements. Punch also reported a growing commercial free-of-tie lease division with 41 pubs in operation with an average rent of £72,000. Its strategic disposal programme is now substantially complete, with focus now on realising additional value from the non-trading parts of our extensive freehold property and land estate. Chief executive Duncan Garrood said: “We are already making good progress delivering on the strategy we set out in November 2015. We have launched new operating models, renewed our focus on customer service and delivered improved support to our publicans. The roll-out of our new Retail contract is progressing well with underlying profit and sales post conversion being ahead of our initial expectations. The combination of our growing cash balances, strong cash flow and limited scheduled amortisation over the next five years puts the Group in a stronger financial position going forward.”

Heineken reports good First Quarter: Heineken has reported a good First Quarter with consolidated beer volume grew 7.0% organically, positive across all regions. Heineken volume in the premium segment grew 4.8%. The first quarter is seasonally less significant in terms of both volume and profit to full year group results. Jean-François van Boxmeer, chairman of the executive board and chief executive, said: “This has been a good first quarter supported by a strong Vietnamese and Chinese New Year period and the earlier timing of Easter. There was good volume growth in Americas and Europe. In Africa Middle East and Eastern Europe, volume growth reflected easier comparatives in Nigeria, and the region remains challenging. Our full year expectations remain unchanged. Adverse currency development continues to weigh on results and foreign exchange markets remain volatile.” In Europe, organic consolidated beer volume growth of 2.3% was helped by mild weather in some countries as well as the earlier timing of Easter. In Spain, France, the UK, Austria, Poland and Italy volume development was positive. In the Netherlands volume was down slightly due to less participation in Off Trade pricing promotions.

Tim Bacon reunites with Dave Hinds to open The Red Door in Manchester: Living Venture founder Tim Bacon will partner Chester-based entrepreneur Dave Hinds and former Living Ventures bar expert, Lee Lynch, to open Red Door to Deansgate in Manchester, located underneath The Botanist. Bacon and Hinds’s business relationship stretches back to the early 90’s when they set up JW Johnsons, followed by Via Vita and Life Café across the UK, at which time they were joined by business partner Jeremy Roberts. Together, the trio spearheaded a revival of the dining scene in Manchester city centre. Those venues were sold to Whitbread in 1999 after which Dave Hinds decided to concentrate on his property interests, leaving Tim Bacon and Jeremy Roberts to establish Living Ventures. The subterranean Red Door will undergo a major overhaul costing £350,000 and is set to open in June 2016. Occupying 2800 square foot with a capacity of 250, it will create 20 jobs. Managing director Lee Lynch, who is a partner in Red Door, said: “Following the huge success of our venues in Chester and Liverpool, we are delighted to bring Red Door to Manchester, our intention is to make it one of the best bars around, with highly trained bar-tenders and live music. It will hopefully make a significant contribution to the return of a positive and thriving bar scene at that end of Deansgate.”

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