Pre-tax profit in the period grew 5.7% to £85.6m on revenue up 5.2% to £595.4m.
Rooney Anand, Greene King chief executive, said: "Momentum across the business has continued since the period-end, helped by a strong sales performance around half-term week and Halloween.
"After 30 weeks of the year, LFL sales in Retail were up 3.5%, with food LFL sales particularly strong over the last six weeks. After 28 weeks, average EBITDA in Pub Partners was up 5.6% while, in the last six weeks, core OBV in Brewing & Brands was up 7.0%, taking year-to-date growth to 2.7%. Christmas bookings are ahead of last year by 13%.”
Retail estate
In the Retail estate, margin increased ten basis points to 20.5%. The Pub Partners estate saw average EBITDA per pub grow 5.2%, while core like-for-like EBITDA in the division increased by 1.7%. In Brewing & Brands, core own-brewed volume was up 1.7%.
Greene King said its Retail estate stood at 1,008 sites at the period end, an increase of 22 in the half year. It’s targeting a further 90 sites over next 18 months. Food now accounts for 41% of Retail sales.
Pre-exceptional operating profit in the half year increased by 3.7% to £127.2m. However, operating margin declined by 0.3pps to 21.4%. Adjusted basic earnings per share grew 6.3% to 30.4p.
Expenditure
Total expenditure during the period was £75.1m. Capital expenditure on the core estate, including maintenance capital, was £38.3m, an increase of £4m over the previous year.
A further £9.6m was invested in acquiring single sites and £24.1m was invested on these, previously acquired sites and transfers from Pub Partners. In addition, £3.1m was spent on reinstating fully insured fire-damaged sites.
Strong pipeline of retail sites
Looking forward, the group said it had a strong pipeline of new retail sites from a combination of new builds, single-site acquisitions and transfers.
Net debt at the period-end was £1,438.8m, a reduction of £11.6m from the previous year-end, with the key movements being positive free cash flow of £28.9m, disposal proceeds of £16.6m and investment in growing our retail estate of £33.7m.
Greene King said it strengthened its balance sheet in the period, with net debt to EBITDA having fallen to 4.6x.
New sites
During the period the group invested £9.6m on acquiring 14 new sites and exchanged on a further six sites for development. At the period-end, it had 1,008 Retail sites, up from 888 sites when it started its Retail expansion strategy.
The company said it continued to dispose of sites that it considers no longer have a long-term sustainable future within its estate. These mainly come from Pub Partners, from which it disposed of 59 sites in the period.
At the period-end, the group’s Pub Partners trading estate totalled 1,218 sites, down from a peak of 1,700. In total, the disposed properties raised proceeds of £16.6m, just ahead of book value.
The group said that it again invested in its core ale brands to drive own-brand volume (OBV) growth and UK ale market outperformance in Brewing & Brands.
It increased its volume share of the UK ale market by 30bps to 10.8% during the six months.
Right strategy
Anand said: “Although the economy is showing increasingly positive signs of picking up, we remain cautious given the ongoing weakness in real disposable income for our customers and the competitive nature of our markets.
"However, we are confident that we have the right strategy for current conditions and expect to open around 20 new-build sites in the second half of the year. Looking ahead, we will continue to tailor our strategy to maximise opportunities as and when conditions improve. As a result, we are confident we can continue to provide sustainable earnings and dividend growth, and improving returns, to our shareholders.”
He added: “This is a very pleasing set of figures and we have made great progress in the first half of this financial year. Growth has once again been led by our retail business, which grew profits by 8% over last year, helped by a combination of organic growth and further strategic acquisitions.
Improving outlook
"The tenanted and brewing businesses also performed well, helping the overall business to deliver healthy earnings, dividend growth and further improvement in our return on capital employed.
“While trading through the first half of the year and since the period-end has been strong, and the economic outlook looks to be improving, customers remain careful with their money, particularly outside London and the South East."