Greene King: its in the can

The 200-year-old company, whose results are out next Wednesday, has slowly built its business over the years, growing from a small brewery into a major pub retailer and brewer across Southern England.

Recent broker recommendations and trading updates reinforced investor hopes in established companies that grow slowly but steadily. In its trading update, Greene King indicated it had grown 5.6% in the four weeks to January 5 and 3.3% in the 36 weeks to January.

Finance director Michael Shallow was encouraged by the company’s strong performance in the first half-year, when Greene King’s turnover grew by 5% despite the company’s sale of its non-strategic assets.

The chartered accountant oversaw the acquisition of Old English Inns for £105.2m in September. The acquired company had been experiencing problems in the last year and could not invest in the maintenance of its properties.

Shallow also saw the company’s own-brewed ale volumes grow by 5%, led by Old Speckled Hen and Ruddles County, which was relaunched in March. According to the company, more than 70% of the beer it brews is sold to external customers.

Following the acquisition, Greene King turned the business around, retaining 81 of the acquired pubs, but selling 20 others and leasing the remaining 35. The company anticipates cost savings of £2m of from the acquisition, which will come through in next year’s figures.

Chairman David McCall was optimistic about the new buy, saying: ‘The acquisition of Old English Inns plc in September represents an excellent opportunity to deliver future profit growth once its integration has been completed in early 2002.’

Shallow has also dealt with the implementation of FRS 19, the accounting standard which is to become effective for years ending on or after 23 January 2002 and requires deferred tax to be provided for on a ‘full provision’ basis.

As a result Greene King adjusted its earnings per share making them were 10% higher than last year at 29.5p. And chairman McCall also stated his optimism at the time Greene King released its interim results.

He said: ‘The business has achieved another period of sound organic growth while maintaining its strategic momentum as it pursues its goal of generating sustainable shareholder value from high quality operations in the traditional hospitality sector.

‘Like-for-like sales are ahead in both pub businesses while our beer brands continue to grow both volumes and market share.’

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