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Tue 8th Sep 2015 - Punch, Whitbread, Greene King, City Pub Company, Tasty
Punch sells 50% stake in Matthew Clark for £100.7m: Punch Taverns has entered into an agreement to sell its 50% shareholding in Matthew Clark to Conviviality Brands, a wholly-owned subsidiary of Conviviality Retail, for £100.7 million in cash. The total consideration includes a dividend of £1.5 million that will be paid by Matthew Clark to Punch prior to completion. Completion is subject to, amongst other conditions, the approval of shareholders of Punch and Conviviality Retail. Subject to the satisfaction of these conditions, completion is expected to take place on or around 2 October 2015. The Matthew Clark business is a 50/50 joint venture between the company and Hertford Cellars Limited, a subsidiary of Accolade Wines. As part of the same transaction, Hertford Cellars will sell its 50% shareholding in Matthew Clark to Conviviality Brands. The unaudited value of the investment on the group’s balance sheet as at 22 August 2015 was £52.3 million (FY14 audited: £50.5 million). The unaudited share of post-tax profit attributable to the Group’s 50% shareholding in Matthew Clark for the financial year ended 22 August 2015 was £7.8 million (FY14 audited: £6.2 million). Net cash proceeds of the Disposal, after transaction costs and expenses, amount to approximately £98.7 million. The sale will enhance the Group’s financial flexibility to pursue its strategic objectives. At completion, the group will enter into a ten year non-exclusive drinks supply contract with Matthew Clark Wholesale Limited. Under this supply agreement, Matthew Clark Wholesale will supply selected wines and spirits drinks products for sale to members of the Group at agreed pricing levels. Punch chief executive Duncan Garrood, said: “We are pleased to have agreed the disposal of our investment in Matthew Clark and at a significant premium to our current book value. The sale of a non-core business will enhance our financial flexibility to pursue our strategic objectives for our core activities. At the same time, we will enter into a ten year drinks supply agreement with Matthew Clark for the supply of wines and spirits into the Punch estate.”

City Pub Company reports four more acquisitions, turnover up 90%: City Pub Company has reported turnover increased significantly by 42% to £9.0 million (2014: £6.35 million) in the six months ended 30 June 2015. Ebitda grew 75% to £1.25 million (2014: £0.7 million). Its pub portfolio has expanded to 22 sites and the company opened two pubs in the period: Dalys, The Strand (WC2) and The Cock & Bottle, Notting Hill (W8) It has acquired a further four pubs post year-end: Java, George Street, Oxford, Smugglers on The Lanes, Brighton, The Bicycle Shop, Regents Street, Cambridge and The Prince Street Social, Queen Square, Bristol. An additional £3.5 million raised through Convertible Preference Share issue (“CPS”) to strengthen balance sheet, reduce debt and create headroom for further expansion. The company stated: “City Pub Company has enjoyed a highly active six months and moves into the second half of the year in a strong financial position with headroom to expand with a number of new openings expected in early 2016. The Board is confident that the Company’s positive momentum and encouraging results will continue into the second half of the year. The target is to grow to around 30 pubs within the next two years”. Chairman Clive Watson added: “These are exciting times. We have achieved significant progress in the first six months of the year and anticipate further development. I am confident that our new acquisitions will deliver excellent returns to our shareholders. With £3.5 million raised and £700,000 pledged from existing shareholders our convertible bond has good momentum. We remain on track to build a portfolio of around 30 pubs by the end of 2017.”

Greene King reports managed like-for-likes up 1.3%: Greene King has reported, for the 18 weeks to 6 September, like-for-like sales in Greene King Retail grew by 1.3% with growth of 1.9% in the last ten weeks. All major sales categories are in like-for-like sales growth. Excluding the continued impact of drink-driving regulations in Scotland, like-for-like sales were up 1.8% in the first 18 weeks, and up 2.4% in the last ten weeks. Like-for-like sales in the Spirit managed estate grew by 0.8% over the last 18 weeks. In its Pub Partners business, like-for-like net income was up by 2.0% after 16 weeks, while it was up 1.1% in the Spirit leased estate. Brewing & Brands own-brewed volume grew 1.7% in the first 18 weeks of the year with good growth seen from Old Speckled Hen, Greene King IPA and Abbot Ale, despite strong Take Home comparatives due to the World Cup last year. The company added: “Although it is still early in the process, the integration of Spirit is going well and we remain confident of generating at least £30m of cost synergies. On 28 August 2015, we exchanged contracts on all 16 of the pubs that we were required to sell by the Competition and Markets Authority and we expect completion in early October 2015.”

Whitbread reports sales rose 11.1% in second quarter: Whitbread has reported total sales rose 11.1% in it second quarter, the 11 weeks to 13 August. Premier inn like-for-likes rose 4.3%, Costa Coffee like-for-likes were up 4% and restaurants were up 0.6%. Chief executive Andy Harrison said: “We are continuing to deliver our ambitious organic growth plans with another good quarter, growing total sales by 11.1% and like for like sales by 3.3% for the 11 weeks to 13 August. Premier Inn grew total sales by 11.6% with rooms available growing by 7.9%, total revpar growing by 3.9% and occupancy remaining high at 87.0%. We are particularly pleased with our London performance where we grew total sales by 21.1%, driven by a 20.3% growth in rooms available, a 1.5% increase in total revpar, as well as an increase in our occupancy by 0.3% pts to 92.2%. In the regions we delivered good total sales growth of 9.2%, growing rooms available by 6.2% and total revpar by 3.3% with good occupancy of 86.2%. This was against strong comparatives which benefitted from the Commonwealth Games and the Farnborough Airshow last year. Our Restaurants business outperformed a continuing soft pub restaurant market, with like for like sales growth of 0.6%. Costa maintained its rapid growth with worldwide sales growing by 16.2% and UK Retail system sales up 14.8%. In the UK like for like sales growth was good at 4.0%, against a strong performance last year. August is often affected by weather and holiday patterns and trading this August, across all our brands, was softer than expected against strong comparatives from an excellent month last year. We are developing plans to adopt the recently announced National Living Wage. We shall mitigate this substantial cost increase over time with a combination of productivity improvements, boosted by investment in systems and training, efficiency savings and some selective price increases. We shall announce more details of our plans with our Interim Results on 20 October 2015. Our first half performance keeps us on track to deliver full year expectations, as well as our ambitious growth milestones. This year we plan to open around 5,500 UK rooms, around 220 net new Costa stores worldwide and to install 700-800 new Costa Express machines. Our committed UK hotel pipeline has grown to 14,106 rooms.”

Tasty reports PBT of £1.3m in first six months: Wildwood operator Tasty has reported revenue up 24% to £17,050,000 (H1 2014 – £13,794,000) in the 26 weeks ended 28 June. Operating profit, before pre-opening costs, share based payments and interest, was up 39% to £1,684,000 (H1 2014 – £1,210,000). Pre-tax profit was up 36% to £1,327,000 (H1 2014 – £973,000). Six new sites opened in the period and one site opened since the period end. During the period capital expenditure of £4,335,000 (2014 – £1,962,000) was incurred. Six sites have been opened in the period, with a further site opened since the period end. The group is currently undertaking construction on four sites which are expected to open in Q4 of 2015. Overall, the net cash outflow for the period was £731,000 (2014 – £474,000). As at 28 June 2015, the Group had net borrowings of £1,737,000 (2014 – net cash £1,933,000). The Group has an available banking facility of £8,000,000. The Group continues to expand its operations through new openings. Actions are regularly taken to improve profitability at all sites, increasing sales through updated menus and improving food and labour margins. The new sites, as reported above, will bring the total number of restaurants operated by the group to 46, which will consist of six Dim t and 40 Wildwood and Wildwood Kitchens. The group continues to look at new sites, has the resources for further acquisitions and expects to have opened a further four restaurants by the year end.

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