Wolverhampton& Dudley Breweries PLC
26 January 2001
26 January 2001
THE WOLVERHAMPTON & DUDLEY BREWERIES, PLC
CHAIRMAN'S AGM STATEMENT
At the Annual General Meeting to be held in Wolverhampton later today the
Chairman, David Miller, will say:
Shareholders will recall that on 9 October 2000 we announced a strategic
review of the options available to maximise shareholder value which might or
might not lead to an offer for all or part of the company. Since then we have
pursued all these options including the development of internal plans for
enhancing the Group's profitability and the investigation of various
expressions of interest in acquiring both the whole company and parts of its
operations, including an approach from management. Active discussions with a
number of interested parties are continuing, although it should be noted that
the outcome of these discussions cannot, by their very nature, be certain.
The internal plans we have developed are founded on our long-established
belief in the benefits of combining a strong community managed and tenanted
estate with ownership of strong regional brands. Within this framework, we
believe that our performance can be sharpened by rationalising our brewing
operations and by building on the competitive advantage we have with our
community pubs, both managed and tenanted.
However, mindful of our obligation to maximise shareholder value, we are first
investigating the expressions of interest we have received in the whole
company, and in parts of its operations, to see whether they are capable of
delivering better value than these internal plans. This process has taken
longer than we had originally hoped but we will seek to conclude it in due
course and as soon as possible. We will make an announcement as soon as we
are able to do so.
On 29 November, we announced the results for the 52 weeks ended 30 September
2000 which have since been sent to shareholders. These showed that the Group
had been successful in restoring retail margins in the second half of the
Group turnover in the 13 weeks ended 30 December 2000 was £153.5m, 18.4% ahead
of the equivalent period last year, an increase driven by the acquisition of
Mansfield Brewery plc in December 1999.
Overall, the performance of the business has been in line with our
expectations despite difficult trading conditions in October and November
caused by very wet weather, which severely affected the trade of 65 pubs in
the Midlands and Yorkshire through flooding.
In the Retail Division, like for like sales in the 14 weeks to 6 January 2001
(note that this includes New Year, to be comparable with last year) were 2.4%
behind last year, with community pub like for like sales down 0.9%. In the six
week period to 6 January, total like for like sales were 0.5% behind last
year, with community pubs ahead by 0.8%. Net operating margin improved in line
with our expectations. New openings and capital investment have been curtailed
as a consequence of the strategic review.
The Union Pub Company also performed in line with our expectations, with the
impact of last year's disposals and the transfer of 51 pubs from management to
tenancy offsetting underlying weak trading in October and November as a result
of the very wet weather. Like for like volumes for the 13 weeks to 30
December were 6.1% behind last year, though the decline in the final five
weeks of the period was reduced to 2.4%. Net operating margin was in line
with our expectations.
The Brands Division saw strong trading in December, offsetting the weaker
start to the year in October and November, and good progress has been made
with the core Banks's, Pedigree and Harp Irish Lager brands. Turnover and net
operating margin were in line with our expectations. Our strategy of
re-focusing activity on business that yields a higher return on capital is
producing results, as we have reduced the free trade loan book by £10.1m.
The net debt of the Group as at 30 December 2000 was £551m, compared to £572m
at 30 September 2000. This reduction has been achieved through active
management of the free trade loan book, and a small number of pub disposals
which yielded £4.2m.
Having successfully completed the integrations of Marston's and Mansfield, the
Group is benefiting from increased stability. Trading in January has been
quiet, but we are confident that the changes made to the operation of the
business and actions taken to improve margins are producing satisfactory
I had previously announced that I would be standing down as Chairman at this
meeting. In the light of the delay in concluding the strategic review, I have
agreed with my colleagues that I will stay on as Chairman until the review has
been completed. Accordingly, David Thompson will remain Managing Director and
Deputy Chairman, and Ralph Findlay Finance Director and Chief Executive
Designate for this period, but are clearly not participating in Board
discussions about approaches for all or part of the company.
Keith Hann / Andrew Hayes
Tel: 020 7796 4133