Belhaven gives Green King cheer on smoking ban
BREWING group Greene King says the experience of its Belhaven business since the smoking ban was introduced in Scotland - with Best sales proving robust - will stand it in good stead when the ban comes to its English heartland from next year.
Unveiling a 25 per cent rise in underlying pre-tax profits to ?119.6 million, Suffolk-based GK, which acquired Scottish group Belhaven last year, said overall like-for-like retail sales in Scotland were down 2.2 per cent in the new financial year.
It said it appeared the impact of the smoking ban north of the Border was being partly offset by food sales.
GK, whose revenues rose 16 per cent to ?818.6m in the year to end-April, said: "Looking ahead to the English smoking ban ... our ownership of Belhaven also gives us very useful insights into the likely impact and best practice to adopt."
Rooney Anand, GK chief executive, said his company had two advantages in facing the onset of an English smoking ban: more than 90 per cent of its sites down south had outside areas and the company had focused on food sales over the past decade.
He said this focus on food had "hedged" against reduced takings from drinks and pub machines, and would also help combat the effects of a wider smoking ban.
However, Anand was sceptical that the English smoking ban would have less impact on outlets than the Scottish one because a milder climate in the south would encourage people to drink outside more. "We would like to think so, but in February it is going to be cold whether you are drinking in Bournemouth or Kelso," Anand said.
GK benefited from the World Cup, currently at the semi-finals stage, in the first eight weeks of the new financial year.
Belhaven's revenue for the 30 weeks since acquisition was ?64.8m, converting at a 19.3 per cent margin to ?12.5m operating profit. Both the pubs and drinks divisions of Belhaven recorded profit growth.
Belhaven Best volume was up 9 per cent year-on-year in Scotland. The group said it had had "very positive" responses to the trialling of Belhaven Best ale in 40 of its managed outlets in England, and was planning to extend this to another 100 pubs.
GK, which announced an 11 per cent rise in the total dividend to 20.15p, has been highly acquisitive in recent years apart from the Belhaven acquisition.
It bought Nottinghamshire-based Hardy & Hansons last month and Essex brewer Ridley's recently. Other acquisitions included over 400 pubs from Laurel in 2004, Oxford-based Morrells in 2003 and Old English Inns in 2003.
Asked if further purchases were on the cards, Anand said the balance sheet was strong, but added: "Who knows what is round the corner?"
GK's shares closed down 5p at 825p.
Taking Belhaven south
GREENE King's operating profit rose 21 per cent to ?191 million - while profit margins rose nearly a percentage point to 23.3 per cent.
Adjusted earnings per share were up 20 per cent at 56p, as acquisitive Greene King said its balance sheet "remains strong and flexible".
Chief executive Rooney Anand said of its acquisition of Belhaven last year: "With Belhaven, we were particularly keen to preserve the business's distinctive Scottish culture."
The company has trialled Belhaven Best ale at 40 of its pubs in England, and plans to extend this trial to another 100 outlets because of the "positive response".
