Greene King looks for 'OpCo/PropCo' partner

Greene King is to look for a partner to co-own the 872 pubs currently not covered by existing securitisation arrangements.

Announcing the group's annual results today, chief executive Rooney Anand said the group believes that an 'OpCo/PropCo' structure with a joint-venture partner for "all or a proportion of the unsecuritised part of the estate may deliver the best balance between realising value and retaining some operational control".

"With the right joint-venture partner, and on the right terms, we believe that we could benefit from additional skills and disciplines which will further help us to unlock property value from our estate," he added.

Anand said that a deal affecting the pubs - which comprise around 35 per cent of Greene King's pub estate - could take place sometime in the current financial year, although he declined to outline details, nor how much value might be 'unlocked' by the process.

The move - if it happens - would be the first undertaken by a regional brewer. Other groups in the pub sector, including Greene King rivals Marston's, have looked at similar proposals but most, with the exception of Mitchell's & Butlers (M&B), have declined to act.

M&B recently announced it was in discussions with shareholder Robert Tchenguiz over a 50:50 ownership split of its estate's assets.

Greene King meanwhile reported overall turnover up 12 per cent to £917.5m for the year to April 29 2007, with pre-tax profits up 17 per cent at £139.8m.

The group's managed pubs reported like-for-like sales up 3.4 per cent, while its tenanted division, Pub Partners, saw operating profit per pub up six per cent.

Turnover at Greene King's brewing operation rose four per cent to £87.7m, while operating profits rose 12 per cent to £23m, with operating margins up 1.8 percentage points to 25.2 per cent.

In Scotland, Belhaven's revenue, trading profit and trading profit margin "all grew year-on-year, a significant achievement in the first year of the Scottish smoking ban", the group said.

Adjusted earnings per share rose 16 per cent to 64.8p, while dividends per share are set to be 22.9p, up 14 per cent.

Greene King said it plans to return a further £100m to investors via share buybacks, in addition to the £28m already accounted for.

Anand noted that trading in the first eight weeks of the current financial year was "in line with expectations", with total like-for-like sales in its English and Welsh managed houses up one per cent, while underlying like-for-likes, excluding the World Cup "effect", were three per cent up.

Pub Partners has seen like-for-like sales up one per cent, with the brewing company's own-brewed volume sales up six per cent.