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Greene King please the City with profits of £142million and possibility of REIT conversion
Greene King,the Suffolk-based group, which also owns the Loch Fyne restaurant group, and is brewer of Old Speckled Hen ale, is to sound out major City investors about whether it should convert into a tax-efficient real estate investment trust (Reit) and will update shareholders on the situation in December.
Rooney Anand, the chief executive, admitted he was "sitting on the fence" about whether to follow Enterprise Inns in becoming a Reit.
The brewer, which has promised to release the value in its property for shareholders, rejected plans to spin off its estate in December by splitting into what is known as an OpCo/PropCo. Its retail arm, comprises 753 managed pubs and 39 restaurants, and also operates another 1,800 mainly leased premises.
Greene King posted pre-tax profits of £142m for the 53 weeks ended May 3, up 2% from the year before, and broadly in line with market expectations.
Revenue & Customs has told Greene King that it could become a Reit without demerging the company, which analysts at Dresdner Kleinwort said was "a definite positive". It recently refinanced on good terms, removing any credit risk until 2012. The analysts said the company had "reported solid numbers, announced the possibly of a Reits conversion, confirmed the solidity of asset values and raised the dividend by 14%".
The shares jumped 8% to end at 433.25p after it reported higher than expected profits of £142m for the year to May 4 from £139m a year ago. The final dividend is 18.7p, taking the year's total to 26p.
Anand regarded the performance as exceptional given the smoking ban, pressure on consumer spending, cheap beer in supermarkets, last year's bad summer and the credit crunch. He warned, though, that conditions could remain tough for two to three years.
Analysts at Evolution Securities said the worst was still to come, with the "crunch" for Greene King and other licensed retailers arriving this winter and next spring.
Rooney Anand, the chief executive, admitted he was "sitting on the fence" about whether to follow Enterprise Inns in becoming a Reit.
The brewer, which has promised to release the value in its property for shareholders, rejected plans to spin off its estate in December by splitting into what is known as an OpCo/PropCo. Its retail arm, comprises 753 managed pubs and 39 restaurants, and also operates another 1,800 mainly leased premises.
Greene King posted pre-tax profits of £142m for the 53 weeks ended May 3, up 2% from the year before, and broadly in line with market expectations.
Revenue & Customs has told Greene King that it could become a Reit without demerging the company, which analysts at Dresdner Kleinwort said was "a definite positive". It recently refinanced on good terms, removing any credit risk until 2012. The analysts said the company had "reported solid numbers, announced the possibly of a Reits conversion, confirmed the solidity of asset values and raised the dividend by 14%".
The shares jumped 8% to end at 433.25p after it reported higher than expected profits of £142m for the year to May 4 from £139m a year ago. The final dividend is 18.7p, taking the year's total to 26p.
Anand regarded the performance as exceptional given the smoking ban, pressure on consumer spending, cheap beer in supermarkets, last year's bad summer and the credit crunch. He warned, though, that conditions could remain tough for two to three years.
Analysts at Evolution Securities said the worst was still to come, with the "crunch" for Greene King and other licensed retailers arriving this winter and next spring.
Fri, 4th Jul 2008