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Fri 12th Oct 2018 - Update: Restaurants and pubs ordered to shrink pizzas and pies in obesity fight, Numis on Whitbread
Restaurants and pubs ordered to shrink pizzas and pies in obesity fight: Pizzas and pies in restaurants and pubs are set to shrink under new targets to tackle child obesity. Health officials want chefs to limit their pies to 695 calories and have stipulated pizzas should not contain more than 928 calories. It is thought restaurants and pubs will have to reformulate popular recipes or reduce portion sizes to meet the new limits. The guidelines are to be unveiled by Public Health England (PHE) as part of a package of measures to reduce childhood obesity and promote healthy eating. A consultation this summer recommended mandatory calorie counts on all menus, including takeaways. The Department of Health is understood to be sticking to its proposals despite resistance from some ministers over the potential cost to businesses. Liz Truss, the chief secretary to the Treasury, said she was concerned the proposals would be “burdensome” to small companies and “could result in job losses and higher food prices”. Ministers want to cut calories in ready meals, pizzas and savoury snacks by 20% by 2024. PHE chiefs met food industry leaders this week to set out the proposals on how to meet calorie reduction targets. PHE chief executive Duncan Selbie said: “Excess calories is the next big challenge for the food industry to improve the food we all consume.” Alison Tedstone, the body’s chief nutritionist, said: “The simple truth is, on average we need to eat less. Children and adults routinely eat too many calories. These are early days in the calorie reduction programme but the food industry has a responsibility to act.” Action against childhood obesity has concentrated on reducing sugar in diets, targeting cereals and soft drinks. In September, Tedstone criticised the practice of trying to persuade customers to buy high-calorie foods such as cakes and pastries in coffee shops. The government is holding the threat of legislation over the industry should it fail to fall in line voluntarily. Many campaigners believe it will be necessary. A PHE spokesman said the pie and pizza plans were at an early stage, and targets could change before the publication of the guidance next spring. Figures released today (Friday, 12 October) revealed severe obesity among England’s ten and 11-year-olds is at record levels, affecting more than 24,000 children, while the number in Year 6 deemed severely obese has gone up 8% in a year. Government recommendations are adult women should consume 2,000 calories a day and men 2,500, although PHE suggests both aim for only 1,800 over three main meals to account for the calories in snacks and drinks. Children’s requirements vary by age. A boy of seven should consume about 1,650 calories and a girl 1,500.

Numis – market has yet to appreciate the value in Whitbread post-Costa: Numis leisure analyst Tim Barrett has said the market has yet to fully appreciate the value in Whitbread post-Costa. Issuing an ‘Add’ note on the shares with a target price of 5,400p following the decision by Whitbread’s shareholders to approve Costa’s £3.9bn sale to Coca-Cola, Barrett said: “We believe the market has yet to fully appreciate the fundamental change in risk profile post-Costa. Premier Inn’s customer base is more than 50% business users with a wide distribution across the UK. This is in direct contrast to ‘Old Whitbread’ eg Costa where 60% of the estate was still high street located. Furthermore, Premier Inn has grown Ebitda by a five-year compound annual growth rate of 10%, through self-funded investment. This pure-play, market-leading hotel business with strong stable returns and a five-year pipeline of growth is a step change from the consumer bellwether of old. The high and rising Ebitdar margin sets Premier Inn apart from much of the sector where minimum wage increases and business rates have eroded profits. Premier Inn’s margin has risen every year since FY10 and by a cumulative five percentage points since then (to 40.2%). We believe this reflects a culture of continuous improvements and sharp focus on returns. Reassuringly, as a group Whitbread delivered well on its original cost savings target (£150m), which it increased by £100m and of which £145m now remains (unadjusted for Costa). We are confident it can offset Premier Inn’s £50m of cost inflation this year, which, combined with room openings, modest revpar growth and a smaller head office, should support double digit earnings growth. Also notable is Premier Inn’s consistently high return on capital expenditure, demonstrating strong execution on estate expansion as well as underlying defensiveness of the business. Return on capital expenditure (with capitalised leases) is virtually unchanged from 2010 at 11.4% pre-tax, a healthy premium to weighted average cost of capital and with a peak-trough range of just 90 basis points, making it considerably more defensive than the wider owner-operator hotel universe and the market’s perception of a typical hotel cycle. In this note we run sensitivity analysis around three scenarios for distribution of Costa proceeds (from £2.7bn to £3.8bn), revpar growth (minus 2% to +3%) and downsizing of central costs post-disposal (from flat to minus 50%). That suggests a blue-sky earnings per share of 407p and implies a best case price-to-earnings ratio of 11.3 times. Even on a base case EV/Ebitda of 8.9 times and price-to-earnings ratio of 14.0 times the company looks undervalued relative to the visibility of returns, pipeline of growth and asset backing. We recently published a detailed analysis of Premier Inn’s real estate backing, which we believe is critical to unlocking value. A total of 60% of the estate is freehold backed, which at a 5% yield and five times operating company value supports our 5,400p target price.”
 
Aston Manor pays tribute following founder’s death: Birmingham-based cider-maker Aston Manor has paid tribute to its founder Sir Doug Ellis who has died at the age of 94. Sir Doug, who set up Aston Manor Cider in the 1980s, was still the owner until its takeover by French food and agricultural group Agrial in August. His grandson James remains with the company as its chief financial officer. A statement on Aston Manor Cider’s website said: “We are deeply saddened that Sir Doug Ellis has passed away. Our thoughts and condolences are with his family and friends today. He will be remembered fondly for his passion and commitment, not only at Aston Manor Cider, but throughout the local community and across the country. As a sprightly 59-year-old in 1983, Doug invested in a newly formed and struggling regional brewery. It was with great pride that he oversaw the company grow from such small beginnings to one of the world’s largest independent cider makers.”

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