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Morning Briefing Strap Line
Tue 23rd Oct 2018 - Update: Whitbread, Patisserie Valerie, Britvic
Whitbread reports solid First Half as it focuses on hotel business: Whitbread has reported sales grew 2.6% to £1,079m in the first half of its financial year. Profit before tax rose 0.2% to £257m. There was total UK accommodation sales growth of 4.8% and like-for-like accommodation sales growth of 0.2% impacted by weaker consumer demand. Underlying profit before tax increased in-line with sales by 2.5% to £270 million, supported by tight cost control and the benefit of the ongoing efficiency programme. Costa is now reported as a discontinued operation, statutory profit for the period increased 3.5% to £47 million. Chief executive Alison Brittain said: “The highlight of the first half was the announcement of our agreement for the sale of Costa to The Coca-Cola Company for £3.9 billion, which received the overwhelming approval of our shareholders in October. We intend to return a significant majority of the net cash proceeds to shareholders, although the exact amount, timing and method will be determined following discussions with stakeholders, including our shareholders, pension fund and debt providers. The sale of Costa now requires Coca-Cola to obtain regulatory approval in the EU and China. Much work still remains to be done to ensure a smooth and successful separation from Whitbread at completion and during the following transitional service period, which we are confident in our ability to execute efficiently. Following the sale of Costa, Whitbread will be a focused hotel business with operations in the UK, Germany and the Middle East. In the first half of the year, Premier Inn delivered total UK accommodation sales growth of 4.8%. Although we have seen some weakness in consumer demand over the summer, we have made further encouraging progress with our efficiency programme, ensuring we remain on track with our plans for the current year. We have grown the UK network to over 74,000 rooms, with a further 13,000 rooms in our pipeline and we have potential to further extend our growth runway in the UK to 100,000 rooms and beyond. Alongside this material addition of new capacity, we have maintained our leading occupancy rate increased the rate of customers booking with us directly and delivered a strong return on capital. In terms of innovation, we have recently announced the trial of a new format in the UK, “Zip by Premier Inn”, which will open in the first quarter of 2019. In Germany, our pipeline is now close to 6,000 rooms, equivalent to 30% of our total pipeline for Premier Inn. We are now looking forward to dedicating our focus to the significant structural growth opportunities available to Premier Inn in the UK and internationally. We will be holding an investor day in February to give an update on our ambitious plans to access these attractive opportunities. We will provide further detail on how we will enhance our investment in our unique, integrated operating model, which will enable us to maintain our market-leading position and access attractive growth opportunities. We will also discuss the optimal capital structure and property strategy to support our growth plans. Ongoing disciplined execution of our plan will continue to deliver sustainable shareholder value through growth in earning and a strong return on capital.”

Patisserie Valerie investor wants independent inquiry: The Times has reported that leading investors in Patisserie Valerie want Luke Johnson, chairman of the company, to give up control of an internal investigation into a £40 million hole in its accounts over concerns that the review is not sufficiently independent. The Times stated: “Invesco, a top ten shareholder in the Aim-listed company, has told Mr Johnson and the board of Patisserie Holdings, the parent company, to hand over the investigation to a law firm or an independent investigation firm during talks last week, according to people familiar with the matter. Invesco has also approached the Investor Forum, an influential group that brokers meetings between large shareholders and company executives, about its worries and could explore legal action to force the board to cede control of the investigation.” A person close to Invesco said: “Shareholders are concerned the board has given itself supervision of the investigation into [its] own conduct and potential incompetence.” A spokeswoman for Invesco, which owns 1.73% of Patisserie Holdings, declined to comment.

Britvic chief financial officer to step down: Britvic has announced that chief financial officer Mathew Dunn has informed the board of his intention to take up the role of chief financial officer at ASOS and has consequently tendered his resignation as an executive director. Dunn will continue to play a full and active role in the business and remain chief financial officer of Britvic until the end of his notice period in April 2019. The company will now commence a search process for his successor. Chief executive Simon Litherland said: “Mat has made a significant and positive impact since joining Britvic three years ago. I would like to thank him for his important contribution and wish him well in his new role.” Mathew Dunn said: “It’s been an absolute privilege to work for Britvic. Over the last three years I have enjoyed working with Simon and the team immensely and I wish them and the company continued success.”

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