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Morning Briefing Strap Line
Tue 25th Jul 2017 - Update: Fuller’s, Domino’s, Revolution, Liberation, Authentic Alehouses, Fever-tree
Fuller’s reports like-for-likes up 6.6% in managed division: Fuller’s has reported ‘a very good start’ to the year, in the 16 weeks to 22 July, with like-for-like sales in its managed pubs and hotels rising 6.6% during the period. Like-for-like profits in its tenanted inns were up 5% and total beer and cider volumes in The Fuller’s Beer Company rose 5%. The perfect summer weather, which has dominated much of the period, has been instrumental in enticing people to come out to our pubs for a great experience. Chief executive Simon Emeny said: “We are very pleased with the new trading year so far and remain on course, despite the previously noted cost headwinds that are buffeting our industry including increased business rates, the impact of the National Living Wage and the introduction of the Apprenticeship Levy. We have a world leading hospitality sector in the UK and we urge the government to consider our needs as it negotiates the country’s exit from the European Union. One in ten new jobs created is in a pub, bar or restaurant and non-UK workers are an essential element in delivering the one billion meals that are served in pubs alone every year. In our own estate, the contribution made by colleagues from across Europe and beyond should not be underestimated and we will continue to invest record amounts in developing our team members across the business. We have a clear, long-term vision and an offer across all parts of Fuller’s that is relevant and attractive to today’s consumer. With outstanding pubs, great brands and well trained and motivated people to deliver excellent service, we are well- positioned for further progress.”

Domino’s reports strong First Half: Domino’s Pizza Group has reported group system sales up 10.5% to £546.5m in the 26 weeks to 25 June. UK system sales were up 6.5% with 40 new stores and 2.4% like-for-like growth before the impact store splits, held back by the heatwave and an 11% comparable. Underlying profit before tax was up 9.1% to £44.6m and underlying basic earnings per share up 9.9%. Online sales were up 11.5%, now 75% of total sales. A new Warrington supply chain centre is to go live in Q1 2018 to deliver additional capacity and future productivity gains. A total of £21m was invested in international growth opportunities. Chief executive David Wild, said: “The first half of 2017 has been another period of good progress for Domino’s Pizza Group, despite a more uncertain UK economic environment. The core business delivered strong year-on-year system sales, continuing to take pizza market share, with good like-for-like performance. We’ve had a record six months in the UK, opening 40 new stores and have consequently raised our expectations from 80 to 90 this year. I’m delighted we’ll shortly be opening our 1,000th British unit and we are well on track to achieve our goal of 1,600. DPG continues to lead the pizza market, with innovations such as the popular Lotta-Chocca pizza and our launch today of Amazon Echo voice ordering. Following a successful trial, we’ll be rolling out GPS, which will enable customers to track their delivery and help franchisees with labour management. This autumn, we’ll invest around £4m to improve customer value, supported by a bold new advertising campaign. We’ve taken controlling positions in our Nordics operations and completed the acquisition of the Dolly Dimple’s pizza chain in Norway, giving us immediate scale with promising early results in attractive markets, which are, as yet, underdeveloped. Our ongoing investment in growth, our new Warrington supply chain centre, digital capabilities and overseas expansion is balanced by returning capital to shareholders through dividends and share buybacks. Whilst we acknowledge that our UK consumers are currently more cautious about the economic outlook, we’re focussing on growth investment with our franchisees; boosting marketing; improving customer engagement and enhancing our leading position in food delivery. Pizza remains the world’s most popular delivered food, and Domino’s is the top choice for consumers.”

Revolution reports like-for-likes pick up to 2.7% over the last six weeks: Revolution Bars Group, operator of 68 premium bars, trading under the Revolution and Revolución de Cuba brands, has reported total sales for the 52 weeks to 1 July increased by 9.2% to £130.4m (2016: £119.5m). Like-for-like sales rose by 1.5%, down from the 1.7% reported after 44 weeks. The terrorist attacks in Manchester on 22 May and in London on 3 June impacted business during the days that followed, particularly in the north west where the Group has a significant number of venues – five in central Manchester and five in Liverpool. Like-for-like sales growth has since strengthened, up by 2.7% over the last six weeks. As planned, the group opened six new bars in the Period. Revolución de Cuba bars at Harrogate, Reading, Aberdeen and Glasgow, all of which were opened in the first half, were followed by new Revolution bars in Southend (late April) and Torquay (late May). Average weekly sales for the bars opened during the Period are ahead of the Board’s expectations. The Revolution bar in Macclesfield closed in early May for a relaunch in the coming months, while a further Revolución de Cuba bar opened in Belfast at the end of last week. The group currently trades from 68 sites, 54 under the Revolution format and 14 under the Revolución de Cuba format. The business continues to deliver high returns on invested capital and the group plans to open six new bars in the new financial year, including Belfast that has just opened, split equally between the two brands. The company stated: “The directors remain confident of the current strategy, the underlying strength of the business, its brands and the strong customer proposition, which has resulted in over three years of consistent like-for-like growth. As part of the year-end audit, the group has reviewed its historic accounting practices relating to short life assets and supplier rebates and expects to reflect the following two changes in its financial statements. Certain short life assets will be reclassified, reducing depreciation charges by approximately £1.0m in the 2016 financial year with an offsetting impact in operating costs. Profit before tax for the 2016 financial year will be unaffected by this adjustment. Also the treatment of supplier rebates in earlier years has been reassessed. A resulting adjustment is expected to lead either to an exceptional charge in the Period (relating to prior years) or to a reduction to profits in prior periods. It is currently estimated that the adjustment will be no more than £1.0m at the pre-tax profit level. The group’s full year results, which are expected to be in line with the Board’s expectations, will be announced on 3 October 2017.”

Time Out Group ‘in line’ in first six months: Time Out Group, the global media and entertainment business with food and cultural markets, has reported that trading is in line with management expectations for the first six months of the financial year. Time Out Group revenue is expected to increase by 13% year on year to circa £18.7 million compared to the first half of 2016 on a proformabasis. Time Out Digital delivered digital revenue growth of 25%, whilst there was, as expected, a small decline in revenue from print operations of 3%. Within digital revenue, advertising grew by 8%, Premium Profiles by 55% and e-commerce by 51% compared to the prior year. Time Out Market has shown strong year-on-year revenue growth of 59% in the six months to 30 June 2017. The group expects to report its interim results for the six months to 30 June 2017 on Tuesday 26 September 2017. Julio Bruno, chief executive of Time Out Group, stated: “Time Out has seen good progress in the key development areas of e-commerce, Premium Profiles and Time Out Market which in Lisbon continues to deliver an excellent performance demonstrating the strength of the format. We are well positioned to drive further growth, transactional traffic and monetisation of our unique content as millions of people rely on Time Out to experience the very best of the world’s greatest cities.”

Authentic Alehouses launches £5m peer-to-peer crowdfunding scheme: A new company Authentic Alehouses, led by Burning Night Group boss Allan Harper, is launching a £5m bid to revitalise pubs with the help of a £5 million loan-based crowdfunding campaign. Authentic Alehouses is looking to raise the cash on the Crowdstacker platform to fund investment in currently under-performing pubs in excellent locations and with strong community ties. The money will be used to refurbish the sites before reopening them, offering artisan food and entertainment alongside a wide range of drinks. Investors in the per-to-peer loan are being offered a 6.5% per annum gross interest rate, with the potential to earn income tax-free by investing via Crowdstacker’s Innovative Finance ISA. Efficiency is intended to be improved by centralising key areas of operational management such as ordering and use of up-to-date sales data technology. To achieve this, Authentic Alehouses will outsource much of the day-to-day management of the re-opened pubs to Burning Night Group’s operational team. Burning Night Group itself has hit a £7 million funding target on the Crowdstacker platform. “We feel there is a huge opportunity out there for pubs and bars to reinvent themselves to meet the demands of a modern audience and remain relevant to a new generation,” said Allan Harper, chief executive of Authentic Alehouses. “People still want to go out and enjoy themselves, nothing has changed there. But what they expect has changed. They want good quality food, a wide choice of drinks and entertainment that fits their lifestyle – whether it’s watching big international football games or taking part in friendly quiz nights. Pubs can thrive and become very profitable with the right strategy to suit their local market, and the right management to implement it, and we are confident Authentic Alehouses has all of those successful elements.” Crowdstacker chief executive Karteek Patel added: “The Authentic Alehouses team have made their careers out of setting up, turning around or managing successful drinking and eating establishments. Their track record, proven time and time again, demonstrates they have the expertise to identify a good buy with potential for profit.”

Liberation Group buys historic Bristol pub: The Liberation Group, owner of Butcombe Brewery, has acquired a historic pub in Bristol. The pub will join the company’s 27-strong Butcombe estate in the region. The Liberation Group has purchased The Hatchet Inn, located in the centre of the city. The pub is Grade II listed and has been serving pints since before the English Civil War. The Hatchet is famous for being Bristol’s oldest pub, first licenced in 1606. Its name was inspired by the woodsmen of the nearby Clifton Wood. The Hatchet Inn is The Liberation Group’s sixth pub acquisition in the South West in 2017, as they grow their estate of high quality pubs in the region. It marks another step towards The Liberation Group’s long-term target of doubling the size of their whole portfolio to 200 pubs across the Channel Islands and Southern England. The pub has been purchased in an off-market transaction for an undisclosed sum. Following the acquisition, The Liberation Group continues to seek to acquire good quality pubs in the South West. Mark Crowther, chief executive of the Liberation Group, said: “This historic pub is a fantastic addition to our Butcombe portfolio. The heritage and charm the pub offers has allowed it to draw in thirsty drinkers for centuries. We are delighted to have such a beautiful pub in our estate. The Hatchet Inn is an iconic pub in Bristol with an incredible and unusual legacy. We look forward to taking the reins and building on its impressive reputation.”

Fever-Tree reports 113% growth in UK distribution: Fever-Tree, the supplier of premium carbonated mixers, has reported revenue up 77% to £71.9m (H1 2016: £40.6m) in the period ended 30 June 2017. Adjusted Ebitda was up 102% to £25.2m (H1 2016: £12.4m). It reported exceptional growth of 113% in the UK as distribution gains continue to drive performance. Fever-Tree has driven 99% of the value growth in the entire UK mixer category within retail in the last 12 months and now holds a 30% value share (IRI). Tim Warrillow, chief executive of Fever-Tree said: “We are delighted to report another strong performance in the first half of 2017, continuing the momentum seen in 2016. We achieved growth in all our regions, driven by further distribution gains and underlying rate of sales growth as the two key trends of premiumisation and mixability continue to gather pace globally. We continue to invest and improve our infrastructure, relationships with key suppliers and customers as well as adding to our senior team. The strength of our brand and first mover advantage means we are well positioned as the opportunity for premium mixers continues to gather momentum across our key markets. Given the strong performance in the first half of the year, the Board anticipates that the outcome for the full year will be materially ahead of its expectations.”

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