Chairman's statement DIVIDEND GROWTH
I became chairman of Greene King on 2 May 2016 and so this is my first report to you on the company, its performance and prospects. Greene King is a strong business with an excellent track record and, following the acquisition of Spirit Pub Company during the year, we are at an exciting time in our development. I look forward to working with the board and senior executive team to build upon the success of my predecessor in creating further value for all our stakeholders.
2016 was a year of strong growth for Greene King, reflecting a continued good performance from the underlying business, enhanced by a substantial contribution from Spirit. Including a 45 week contribution from Spirit, group revenue grew 57.6% and exceeded £2bn. Including synergies, operating profit before exceptional items increased by 53.1% and profit before tax and exceptional items grew 52.2% to £256.5m, resulting in a 14.6% increase in adjusted earnings per share to 69.9p. Cash generation remained strong and net debt to EBITDA improved to 3.9x. Excellent progress has been made integrating the Spirit business and we realised synergies ahead of target in the first year.
As a result of this strong growth and reflecting confidence in future prospects, the board has recommended a final dividend of 23.6p, giving a total dividend for the year of 32.05p. This represents growth of 7.7% compared to last year and continues the long-term track record of progressive dividends. The board continues to target minimum cover of around two times earnings.
Greene King is a people business and the strength of the business performance during the Spirit integration demonstrates the dedication, hard work and passion of our teams. I would like to thank everyone who has worked so hard within the enlarged group during the last year to deliver such strong results while successfully integrating Spirit.
On 2 February 2016, it was announced that Tim Bridge would be retiring at the end of the financial year after more than 45 years with the company including ten years as chief executive followed by over ten years as chairman. Under Tim’s leadership, Greene King has been transformed and it is a testament to his astute assessment of people and business opportunities that the group is in such a good state both operationally and financially. It is a privilege to succeed Tim Bridge as chairman and on behalf of the board I would like to thank him for his enormous contribution to Greene King over the years.
At the beginning of the financial year, Rob Rowley took over the role of senior independent director and will be taking the chairmanship of the audit committee at this year’s annual general meeting (AGM). Ian Durant will be retiring at the AGM after completing nine years as a director, latterly as chair of audit, and I wish to record our sincere thanks for his valuable input and advice over this period.
The choice available to the UK consumer who wants to enjoy a drink or a meal with family or friends has never been wider and capital continues to be attracted to leisure dining. Greene King has great teams, great brands and great assets and is well placed within this dynamic environment. The recent decision by the UK to leave the EU will need time to be implemented and the uncertainty this brings is likely to weigh on the economy in the near term. We will not be immune from its effects, but our business has shown resilience in the past, our teams are motivated and, particularly following the Spirit acquisition, we have many opportunities. I look forward to reporting on our continued progress.
28 June 2016