Greene King, the brewer and pub owner that today reported another year of double-digit growth, has unveiled its plans for the newly acquired Morrells of Oxford business.
Of the 107 pubs bought three weeks ago for £67m, 77 will be taken into the tenanted division, 15 houses will be run by the managed business - Greene King Pub Company - and 15 of the properties will be sold.
All pubs to be retained will be rebranded under the Greene King identity. "We believe our name is much stronger than the Morrells name in that area," said chief executive Tim Bridge.
"Licensees are already keen to get our beer into the estate - it is perceived as better than the present Morrells beers brewed under contract by Thomas Hardy."
Most of the Morrells pubs are within 30 miles of Oxford, proving a neat fit with Greene King's estate, the lions share of which stretches across the country from The Wash in the east to the River Seven in the west.
The company expects to incur £1.2m exceptional costs in connection with the deal, but will save £400,000 in buying and brewing synergies, in the first year.
Reporting full-year results, the company unveiled profits up 10 per cent to £69.2m on sales up 15 per cent to £494.5m.
Excluding the Old English Inns acquisition, pub numbers in the managed division went down slightly this year. This was due to the "perpetual desire to improve the quality of the estate". Some were transferred to tenancy, some were sold.
Average managed pub sales rose to £10,300 per week.
Like-for-likes on an uninvested basis - pubs that have had less than £20,000 spent on improvements - rose 3.6 per cent.
Like-for-like sales in the tenanted business rose five per cent. "We have never regarded the tenanted business as simply a cash-cow," said Mr Bridge.
Around 75 per cent of the company's beers - Abbot Ale, IPA, Ruddles and Speckled Hen - are sold outside the Greene King pub estate. "We think we can lay claim to having the best beer business in Britain," said Mr Bridge.
The company has one brewery at Bury St Edmunds, which currently operates at 95 per cent capacity on two shifts.
The company currently brews about 450,000 barrels each year.
Mr Bridge said there was plenty for the company to get its teeth into in terms of integrating the Morrells and Old English pubs, as well as the nine Dalgety Taverns pubs bought for £12.1m earlier this year.
The nine houses have been converted to the Hungry Horse value-led brand. "If assets become available we would always have a look and then make a decision based on what is best for shareholders," he added. The company expects to generate about £25m from selling 60 pubs in the forthcoming year.
The chief executive said as well as developing a quality estate the company relied heavily on the quality of its people. "This year both our tenanted and managed pubs won their respective divions as pub company of the year at The Publican Awards," said Mr Bridge.
"This is very good for morale and helps to attract the best staff in the country.
"Developing high calibre people is something we will continue to do. Ultimately, pub businesses are people businesses - it is their quality and motivation that drives this business."
Greene King buys £67m Morrells of Oxford (18 June 2002)
Publican Awards 2002 salute industry's best (27 March 2002)
Greene King in Highland fling (10 April 2002)
Greene King to sell 20 former Old English Inns pubs (14 November 2001)
Greene King takes control of Old English Inns (27 September 2001)