Result!
Greene King's latest results have kept it on top, as Hamish Champ reports.
So, another good set of results for Greene King. Overall turnover up 33 per cent to £732.6m. Trading profit up 39 per cent to £155.7m. Pre-tax profit up 14 per cent to £94m.
The successful integration of the Laurel neighbourhood estate, acquired last year, has clearly boosted the group's financial performance.
Underlying growth - five per cent - was not bad either given that, due to Laurel, 2004/05 saw less capital expenditure support than usual at £49m, versus £75m the previous year.
Divisionally, the group's leased/tenanted pub arm, Pub Partners, performed well with trading profits up 13 per cent to £54m, while its brewing operation - producer of Greene King IPA, the UK's number one cask ale last year - saw trading profits up 11 per cent to £17.8m.
Whether by organic growth or by progress through acquisition, it seems the group's trajectory is "onwards and upwards".
The integration of the 432-pub Laurel estate serves notice as to what can be done with the right assets in the hands of the right team. Pub Company, the group's managed division and obvious beneficiary of the Laurel deal, saw the number of its managed outlets rocket from 528 to 820, boosting the division's trading profit by 65 per cent to £93.8m.
The group's acquisitive strategy and integration skills are well regarded in the City and observers will be keenly watching the integration process of its latest purchase, the Essex brewer Ridley's. While jobs and some much-loved ales will almost certainly disappear, anyone expecting anything other than a profitable outcome is likely to be disappointed.
Meanwhile, chief executive Rooney Anand's "lean and mean" approach to costs looks like bearing fruit, with the group expected to meet its commitment to extracting £6m worth of savings during its first full year of ownership of the ex-Laurel pubs.
Similar savings can undoubtedly be eked out via other deals, and while some niche - but attractive - estates are struggling, for the right buyer they would make a good fit, with cost benefits thrown in for good measure.
As Paul Hickman, analyst with KBC Peel Hunt, comments: "Life is getting harder for the smaller, family-run operators who are increasingly challenged by things like rising rates, wages, licensing issues and so on. "The fact that Ridley's had an operating profit of £0.5m and that Greene King says it can get synergy benefits worth £3m from the deal says it all."
Another analyst adds: "Greene King has got great management, it's geared up, it's performing well across its estate, its brewery is doing well and its ad campaign is getting results. There's precious little it's doing wrong. It needs to grow, and the quickest way to do that is to acquire."
Yet while opportunities like Ridley's may beckon for Greene King in the months to come, Rooney says growth by acquisition is not in the group's overall gameplan. "We're under no pressure to do deals for the sake of it," he says. "This is not a numbers game. Acquiring estates is not a driver of this business."
True enough, but at the risk of flying a proverbial kite, what price a tie-up with Wolves? Now that would be a deal to talk about...
