Langton Capital – 2016-12-06 – – Stonegate buys Intertain, OTB, Vianet, T Cook & other:
Stonegate buys Intertain, OTB, Vianet, T Cook & other:
A DAY IN THE LIFE:
Trying to get the email out a shade earlier today. On to the news:
PUB, RESTAURANT & DRINKS PRODUCERS:
• Stonegate acquires 30-strong Intertain (Walkabout) from Better Capital, for an undisclosed sum. It says it ‘has a proven track record of success in identifying, unlocking value and ultimately delivering higher returns from the pub assets which it has acquired and has built a reputation for consistently achieving industry-leading returns on its investments.’
• Stonegate & Intertain. Says the latter shed some its unprofitable sites post the CVA in 2015. Stonegate will invest in remaining sites. Says ‘following the acquisition, Stonegate will comprise 692 operating venues, further consolidating the Group’s position as a leading high street, managed pub operator in the UK. The acquisition is due to complete on 7 December 2016.’ CEO Simon Longbottom comments ‘we are delighted to be acquiring iNTERTAIN which is a business we know well and which we have hand-picked for its complementary fit with our existing portfolio. This is another great acquisition for Stonegate and is being acquired at an attractive multiple of c.5.0x pro forma EBITDA, taking into account anticipated synergies. Our track record of integrating, investing in and ultimately maximising value from drinks-led, town and city centre sites is unparalleled as we continue to
• CEO of Intertain John Leslie comments ‘I couldn’t wish for a better home for iNTERTAIN than within Stonegate…It is a great cultural fit with Stonegate’s growing portfolio and I look forward to seeing the business go from strength to strength.’
• Vianet reports H1 numbers. Sales +1.4% at £7.06m ‘principally due to Vending Division growth’
• Vianet H1: Reports normalised operating profit +7.2% at £1.64m with PBT +8.65% at £1.13m. EPS +12.1% at 3.42p.
• Vianet H1: Says dividend for H1 unchanged at 1.7p with net cash of £1.98m vs debt of £2.32m last year. CEO James Dickson reports ‘I am pleased to report that the Group’s focus on growth areas has delivered increased profits in our continuing business for this period.’ He says ‘against a modest improvement in the challenging backdrop to the UK pub sector, our strategy of focussing on newer products such as iDraught, coffee vending telemetry and contactless payment services has progressed well. We believe there is substantial scope to grow sales of these and other existing products and services as well as bringing new offerings to both the vending and leisure markets through enhanced technology.’
• Vianet says it ‘remains confident that Vianet’s long term strategy is appropriate and the Group is capable of delivering consistent and sustained growth.’
• The Craft Beer Co. is opening its seventh site in London and eighth overall in London’s Limehouse on Wednesday 7 December, replacing the Railway Tavern. The Craft Beer Co. MD and Founder, Martin Hayes, commented: ‘It’s a smaller site than many our others, but it has a lot of character, full of history and it’s in an area that’s progressive, I like that about it. We’ve also taken a very different approach to the look and feel of the site, I’d place the design mid-century, there’s lot the 50’s and 60’s influence, it’s pretty daring.’
• Shell’s forecourt convenience stores have renewed their coffee-on-the-go relationship with Costa Express and now has 740 machines in 536 of its UK service stations. The two brands also have partnerships in Canada, Poland and the Czech Republic and trials are taking place in other overseas markets. Costa Express has grown to more than 6,000 machines in nine international markets, expanding at a rate of more than 70 coffee bars every month, since Whitbread bought Coffee Nation for £59.5m and rebranded 900 Coffee Nation machines as Costa Expresses.
• McDonald’s is planning a big push to improve its McCafé brand and is asking operators to install new $12,000 machines to improve the quality of its beverages. The big deal will be a promotion next year, offering $1 coffee and $2 small specialty coffees for a limited time, including lattes and mochas.
• JD Wetherspoon bought back 50k of its own shares for cancellation on Friday at an average price of 822.7p.
• City Pub Co has increased sales by 36.7% in the first 9mths of this year to £19.7m. The group now has 29 pubs.
• City Pub Co should grow to around 35 units by this time next year with 50 planned post a late-2017 AIM listing. Founder Clive Watson told The Telegraph ‘when you’re a rapidly growing company you don’t focus on costs as much as turnover. To be honest we can see a lot of fat that can be cut from the business as we grow to scale, which will more than mitigate the higher costs which are expected.’ Mr Watson adds ‘we would never open in a shopping centre, retail parks or areas where everyone is chasing the same pound. We stick to semi-residential, semi-commercial areas. We offer a locals’ local.’
• The HIS Markit/CIPS purchasing managers’ index for the UK’s service sector rose from 54.5 to 55.2 in November, reaching its highest level since January. IHS Markit said price inflation for goods bought by service sector firms, driven by ‘the weak sterling exchange rate driving up import costs such as food, higher fuel prices, international travel (again linked to exchange rates) and rising labour costs’ eased last month but remained ‘sharp’. Chris Williamson, chief business economist at IHS Markit, said: ‘Rising prices – often linked to the weaker pound – are a big concern, however, and suggest that inflation is set to lift higher.’
• Spectator food and wine writer Bruce Palling has named and shamed operators that charge exorbitant prices for wine, making London the ‘rip off capital of the wine world’. Typically, in the London on-trade, wines are priced at three times the retail price plus VAT – a margin of 70% – however mark-ups of 400% or more are not unknown.
LEISURE TRAVEL & HOTELS:
• Thomas Cook has announced that it is to take full control of the retail stores currently operating under a JV with the Co-op.
• TCG to purchase Co-op’s 30% share in retail network. CEO Peter Fankhauser reports ‘this purchase gives us full control over our retail store network, enabling us to better integrate our stores with our online offering, while also helping us to focus on growing sales of added extras such as holiday-related financial services.’ He adds ‘over the next two years, we will bring all of our UK stores under the Thomas Cook banner so we can make full use of the best brand in travel.’
• On the Beach reports FY numbers, says has seen ‘strong profit growth in a challenging market’. Sales +13% at £71.3m.
• OTB reports normalised operating profit +30.3% to £22.8m with group PBT of £16.8m. EPS is 11p, maiden dividend 2.2p.
• OTB says its ‘results are testament to the strength and flexibility of our agile business model amidst difficult conditions in the travel industry. On the Beach has delivered a 47% increase in underlying profit before tax, ahead of market expectations despite a number of challenging external factors and a market-leading performance for UK EBITDA as a percentage of revenue at 36%. During the year, the Group has showcased its unique strengths and attributes to deliver profitable growth. On the Beach continues to use its modular technology platform to innovate and deliver value and flexibility to an increasing audience of beach holidaymakers.’ CEO Simon Cooper continues ‘we are well placed to capitalise on the structural changes in the market which will only accelerate given the difficult conditions in the market this year’ and concludes ‘we remain confident in the resilience and
• IAG’s group traffic increased by 3.2% and group capacity grew by 3.7% year-on-year in November. The group is introducing wifi across its airlines’ shorthaul fleets in partnership with Inmarsat, while Aer Lingus is adding new transatlantic routes and British Airways is also bringing on new routes.
• Leeds Bradford airport is to get its own rail station as a part of a £270m improvement programme. It should open in 2021. Judith Blake, the leader of the Leeds City council, reports ‘providing a connection by rail to the airport has long been an ambition for the city and this plan will deliver it in a cost-effective way, along with two other new stations.’ CEO of the airport John Parkin adds ‘as one of the country’s fastest growing regional airports, it is vital that we give passengers more choice about how they are able to get here. Investing in the public transport network in this way will enable people to travel to and from the airport easily. We’re pleased that steps are being taken to implement this transformational project and look forward to seeing it progress.’
• EasyJet has reported that it carried 4.95m passengers in November 2015, up 2.9% on last year. Load factor 89.7% vs 90.3%. For the last 12mths, the group has carried 73.7m passengers (+5.9%) with a load factor of 91.3% (2015: 91.8%).
• A Kantar TNS study suggests almost half (47%) of UK adults intend to take an overseas holiday in the next 12 months, with a further one in five (18%) undecided. Two out of five (41%) expect to spend more on their holiday – 11 percentage points up on the same time a year ago. The research among more than 1,200 UK consumers was undertaken in October for the 2016 Travel Weekly Insight Report.
• Data from the Expedia Group points to a rise in overseas visitors over the main summer months, with cities including London, Leeds, and Edinburgh all seeing increases.
• Blackstone has sold the DoubleTree by Hilton hotel next to the Tower of London to the Bhatia family for over £300m.
• Wyndham Hotel Group has acquired management group Fen Hotels, adding 26 hotels across Latin America.
FINANCE & MARKETS:
• Mark Carney said yesterday that Britain has endured its first lost decade in 150yrs. He said global trade was under attack.
• Mark Carney says a retreat into isolationism would be a ‘tragedy’. He accepts that there has recently been a backlash saying he saw that, for some, globalisation was ‘associated with low wages, insecure employment, stateless corporations and striking inequalities’ but added ‘why doesn’t it feel like the good old days? Because anxiety about the future has increased, because productivity hasn’t recovered and because real wages are below where they were a decade ago, something that no one alive today has experienced before.’
• Carney says ‘monetary policy has been highly effective’ & says wages would be £2k per year lower & unemployment 1.5m higher in its absence
• Greek Finance Minister Euclid Tsakalotos has welcomed ‘progress’ in debt talks but warns Greece’s creditors not to push it too hard
• Euro up sharply as Italian setback shrugged off
• World markets: UK & Europe higher yesterday with US also up. Far East up in Tuesday trade
• UK new car registrations up 2.9% in November
• Brent up over last 24hrs at $54.55 per barrel. Declining a little at present
• Sterling $1.274 and Euro 1.18. Euro strong post Italy vote
• US long bond yields down a little at 3.05%
YESTERDAY IN A NUTSHELL – SELECTION OF TWEETS, LIVE TWEETS ON WEBSITE:
• Pat Val in ‘advanced talks’ to buy 13-strong Maison Blanc per reports
• BBPA is calling for an increase in the maximum stake in pub amusement machines from £1 to £1.50 and a maximum prize of £150, up from £100
• Research by CGA among business leaders shows that confidence is slowly returning to the eating and drinking out market
• A new report from Public Health England shows that people in the UK drink more than in the 1980s despite recent falls
• BRC says shop prices down 1.7% in Nov vs same month last year. It says, however, that deflation could be ending
• Coaching Inn Group has secured a further £10m cash injection from the Business Growth Fund to aid expansion
• Admiral Taverns has reported revenues +1.7% to £69.5m and underlying EBITDA +11.7% to £12.8m in the year to end-May
• Yum! Brands is putting its corporate KFC sites in the UK up for sale as the company strives to become more efficient & capital light’
• A report from the Low Pay Commission has confirmed the abandonment of the £9 an hour target for the NLW by 2020
• BrewDog has launched a new crowdfunding round to support its 2017 expansion plans and is aiming to raise between £500,000 – £10m
• Thomas Cook has repeated its commitment to the high street, although it is re-focusing its retail network & closing some stores
• The Euro fell sharply against the US$ overnight as Italian PM Matteo Renzi offered his resignation post a poll defeat
• US rate rise now pretty much nailed on as unemployment there falls to 9yr low of 4.6% of the workforce
• ECB likely to announce 6mth extension to QE programme later this week per Reuters poll of economists
• B of England MPC member Andy Haldane has said that the Bank should not be ‘too hasty’ in raising rates.
• Later tweets: BRC flagging up the end of deflation. Get some while it lasts. Nervous shopkeepers unlikely to jack prices till N Year, though
• YUM looking to go even more asset light via sale of UK KFC managed outlets.
• Italy & the Euro. Needs quite a bit of weakness elsewhere to make the Pound look strong these days.
• Brexit means Brexit says Ms May but, if we pay into EU & keep access to single market, it’s all looking decidedly murky
• £9/hour dropped, triple lock for (relatively very well insulated) pensioners to go, unemployment & prices to rise etc. Happy Xmas etc.
• May, Davis, Boris, Farage can’t agree on what day it is, manage to make Messrs Major, Cameron, even Blair look statesmanlike, purposeful…
RETAIL NEWS WITH NICK BUBB:
Nick is on holiday.