02 Greene King Limited | The Year in Review - 2021
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Contents
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04
06
08
12
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16
18
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26
34
Highlights
CEO Statement
Covid Update
Strategy
Business Model
Destination Food Brands
Local Pubs
Premium, Urban & Venture
Pub Partners
Brewing & Brands
Greene King for Good
Financial Review
Highlights
REVENUE
£1.34B
ADJUSTED
OPERATING PROFIT
£18.6M
STATUTORY
OPERATING PROFIT
£63.8M
(52-weeks to 2 Jan 2022) vs £562m
for the 36 weeks up to 3 Jan 2021
(52-weeks to 2 Jan 2022) vs (£186m)
loss for the 36 weeks up to 3 Jan 2021
(52-weeks to 2 Jan 2022) vs (£149m)
loss for the 36 weeks up to 3 Jan 2021
FREE CASH INFLOW
INVESTMENT
NUMBER OF EMPLOYEES
£7.2M
(52-weeks to 2 Jan 2022) vs (£253m)
outflow for the 36 weeks up to 3 Jan 2021
£114.7M
on new build capital expenditure
& freehold purchases
39,000
NUMBER OF PUBS
RAISED FOR MACMILLAN
2,617
£2.2M
Shorter financial reporting period – the previous reporting period was a short period of 36 weeks to 3 January
2021 reflecting the move to align our reporting period with our ultimate owners, CKA Asset Holdings.
04 Greene King Limited | The Year in Review - 2021
05
In October, we could finally bring 2,000
managers together at our ‘Unleashed Festival’
where we focused on how we could align
the whole company behind our purpose
‘we pour happiness into lives’ as well as
our long-term vision for the business.
Our team members were incredibly
positive about the future direction we
are taking and there is more information
on Unleashed in the Strategy section.
Our people
Every year, our ‘Rant and Rave’ engagement
survey asks our people what they think
about working for Greene King. I am
delighted that our ‘sustainable engagement’
score of 79% means the vast majority of
our team members are engaged, enabled
and energised. I am also extremely pleased
with our ‘business pride’ score of 82% from
our people who said they were proud to
work for Greene King. These results are
much improved from previous surveys
although we still have much more work
to do to make sure we are the employer
of choice and the pride of British hospitality
in the minds of or teams.
Our communities
During the pandemic the importance of,
and the role of, the pub in the community
has become much more evident. Our pubs
act as community hubs by giving local people
a place to sit down, socialise and help good
causes and local services. I am incredibly
proud of the way our pubs and our team
members have worked tirelessly to help
the communities within which we operate.
Despite being closed for much of the
start of the year, our teams and customers
raised a record-breaking £2.2m for our
national charity partner, Macmillan Cancer
Support and hit the £10 million fundraising
mark during the year. Thank you all –
and congratulations!
Diversity and inclusion
At Greene King, we are guided by our
purpose – to pour happiness into lives – and
a clear set of values. Central to the values is
the need to create an inclusive environment
for all our team members that gives
everyone a fair and equal chance to fulfil
their potential; and to provide a welcoming
environment for all our customers.
This year, we launched our race manifesto,
‘Calling Time on Racism’. It sets out our
ambition to embrace and value our Black,
Asian and minority ethnic colleagues and
the wider community; to increase their
representation within the hospitality
sector; and to become a leading and truly
antiracist organisation. We have set out
four commitments and set up a number of
partnerships and projects to help us do this.
Achievements
I am really proud of our achievements last
year, from raising money for Macmillan
Cancer Support, to winning ‘Best Leased
& Tenanted Pub Company’ and ‘Best
Community Pubs’, among others, at the
Publican Awards. We are going to continue
our hard work building an award-winning
business that cares about its people,
communities, customers and partners.
Looking ahead
As we come out of Covid and start to
turn strategy into action, much work remains
to be done to transform Greene King and
create a business that is truly the pride of
British hospitality. We have committed to
significant investment and transformation
programmes and we will complete our
cultural transformation programme,
investing in step-change digital capabilities
and building our people capability and
people management infrastructure.
We will increase our emphasis on creating
a sustainable business and increase focus on
environmental aspects of our Environmental
Social Governance (ESG) programme,
Greene King for Good. Specifically, in
2022, we will agree and publish our
carbon reduction targets.
Covid has shown how amazingly creative
our sector can be. Hospitality has responded
brilliantly to the challenges faced by Covid –
not just in terms of business but also in how
we have helped the communities we serve.
As the industry recovers, I am excited by
the prospect of our towns and cities once
again becoming the thriving social hubs we
enjoyed before Covid.
I would like to thank everyone who works
for Greene King, our owners, our tenanted
and leased partners and our suppliers as
well as the trade bodies who represented
our sector so well, for all they have done
in 2021 and throughout the pandemic.
We could not have got through the last
two years without you.
CEO Statement
I WOULD LIKE TO THANK OUR 39,000 TEAM
MEMBERS FOR THEIR HARD WORK, SUPPORT AND
RESILIENCE THROUGHOUT 2021, AND BEYOND.
Nick Mackenzie, Chief Executive Officer
Review of the year
As our report shows, 2021 was another
year spent tackling the impact of Covid.
We started the year in lockdown and
unable to trade. These challenges continued
in the first half with enforced closures and
months of limited trading. We could finally
move towards business as usual during the
second half and enjoyed better trading
in the summer and autumn.
However, Omicron’s arrival towards the
end of the year prompted the Government
to introduce its Plan B, advising people to
work from home and to limit socialising.
This impacted our all-important
Christmas trading.
Despite everything, our team members
rose to every occasion and adapted to
every challenge. As in 2020, they showed
incredible resilience and I thank them for
their non-stop support and hard work. I
would also like to thank our shareholders for
their continuing support throughout the year.
UK outlet numbers
In 2021, there were 42,754 pubs across the
UK, down 6% on 2019 but just 1% lower
than 2020. The decline is mainly due to
the reduction in numbers of leased and
tenanted as well as independent free trade
pubs. This was offset by some growth in
managed and branded pubs, particularly
premium wet-led pubs. It is expected that
pub numbers will stabilise by 2023 as the
growth of managed and independent pubs
matches the continuing closure of leased,
tenanted and independent free trade pubs.
Market value
Pub market revenue in 2021 was forecast
at £14.8bn, equating to 64% of the sector’s
revenue before the pandemic. Full recovery
is expected by 2024.
Recovery in the pub market has lagged
that in the broader eating and drinking
out market, where delivery and takeaway
services are propelling growth. As we
shake off Covid restrictions in 2022, it
is anticipated there will be a slight fall in
consumer spending on takeaway and delivery.
However, they will remain a significant factor.
2021 key trends
Unsurprisingly, Covid continued to influence
how we traded this year, and it accelerated
some existing trends that were surfacing
pre-pandemic. These included the growth
in use of technology, focus on health and
wellbeing, premiumisation and the increase
in importance of quality outdoor space.
We increased our investment in all these
areas during 2021 and will continue to do
so in 2022. In addition, giving customers a
safe, secure service remained essential, so
we kept our Pub Safe promises in place
even after they were no longer required.
Our trading environment
This year, we have not only had Covid
to deal with, but also the combination
of inflationary pressures, labour market
shortages and weak consumer confidence.
I feel confident that our strategy and our
transformation and investment programme,
will put us in a good place to bounce
back strongly.
We can mitigate inflationary pressures
by becoming more cost-efficient and
sustainable across our business. We can
address consumer confidence by delivering
exceptional experiences and evolving our
portfolio of compelling brands.
Finally, we are nothing without our team
members and current labour market
pressures make this more important
than ever.
We are investing significantly in our people
and our culture to become an employer of
choice, and these investments will help us
continue to attract, develop and keep the
very best in the business.
Strategy into action
We have used the time during the pandemic
to set ourselves up to bounce back strongly
as the impact of the pandemic diminishes.
During 2020, we introduced our team
members to our new strategy. It centres
on our goal to be the pride of British
hospitality, famous for outstanding customer
experiences and a balanced portfolio of
high-growth, consistently profitable brands.
In 2021, we could begin to turn this strategy
into action as we developed the strategic
drivers that will help us achieve our goal.
Customers’ expectations of digital capability
are rocketing, fuelled by their experience in
other sectors. Consequently, we are focusing
on transforming our digital presence so we
can connect with customers in a relevant
way and their journey with us is smooth
and enjoyable.
During the year we rebuilt our web
shop to give customers a more efficient
experience and introduced handheld
ordering to our Chef & Brewer brand to
let our pub teams manage orders and
payments more flexibly.
There are many more examples in this
report illustrating how we’ve been
putting our strategy into action.
Cultural transformation
One bright light this year was launching
Greene King ‘Unleashed’, our cultural
and transformational change programme
which will unleash the full potential of
the business.I
06 Greene King Limited | The Year in Review - 2021
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Covid Update
DURING 2021, THE COVID PANDEMIC CONTINUED TO RESTRICT
TRADING IN THE UK AS GOVERNMENTS ACROSS THE DEVOLVED
NATIONS ENFORCED DIFFERENT SOCIAL RESTRICTIONS.
At the start of the pandemic, we had
three objectives: to ensure the financial
stability of the business, to exit the
crisis as the strongest in the sector
and ready to bounce back; and, as far
as possible, to protect our employees
and our leased and tenanted partners
from the worst impact of the crisis.
Emerging from the third lockdown in 2021,
we introduced three new objectives:
• To bounce back into action and be
stronger for our customers, partners,
people and owners
• To finish the strong foundations we
are building in Culture, Organisation
and Strategy
• To maximise our performance
in a balanced way
These objectives helped us chart our
course through the pandemic during 2021.
Supporting team members
We entered our third national lockdown in
January 2021. We closed all our pubs and
placed most of our team members, support
teams, along with our Brewing & Brands
and Pub Partner teams, into the extended
Coronavirus Job Retention Scheme (CJRS),
the flexible furlough scheme. It enabled
some people in key roles to continue
working and, with most people working
less than their normal hours, get a furlough
top-up for those hours they could not work.
From April 2021, we could reopen some
pubs for outdoor-only service; indoor
hospitality reopened in May. We therefore
removed our salaried team members
from the furlough scheme in June 2021
and hourly-paid team members from July.
Following the launch of our Team Member
Support Fund in the first lock-down in
2020, we set up a second fund in January
2021 and provided £500,000 for our team
members in most financial need. This takes
the total amount provided to £1,160,000
since the start of the pandemic. We
partnered with the Licensed Trade
Charity to administer this on our behalf.
The fund was partly paid for by salary
sacrifices from our executive board
and senior leaders in the business.
Additionally, we continued the wellbeing
support for our teams that we had begun
in 2020. As before, our Employee Assistance
Programme gave team members live
support online and our mental health
first-aiders offered help to line managers
and team members. We also responded
to calls to work from home during
lockdowns by introducing agile working
that demonstrated our flexible approach
to changing employment needs.
Information, engagement & thanks
We felt it was essential to update our
team members about the latest changes
to restrictions in our sector. That is why
our CEO, Nick Mackenzie, recorded
weekly video updates; we also put
relevant news on Kingdom, our team
engagement social media tool.
We also wanted to continue engaging our
team members, especially during furlough.
This prompted our first-ever virtual ‘Pride
of Greene King Awards’ to recognise those
who had gone the extra mile during the
year. In addition, in May 2021, we held
our first virtual employee talent show to
celebrate the hidden talents of our pub,
brewery, and office support teams.
Finally, we rewarded our pub, brewery
and support teams with a £6m Christmas
bonus scheme to thank them for their
support during a tough year. The scheme
included various rewards for different
roles, including a £300 cash bonus, extra
holiday allowances, an uplift in hourly
rates, increased team member discount
and a free meal per shift.
Assisting our partners
We continued to give our tenants rent
concessions of 90% even when pubs were
able to open outdoors in the spring of
2021, reducing to 40% from April to July
when restricted trading was allowed.
We were delighted that the Publican
Awards recognised the efforts we made
to do the right thing. Our Pub Partners
division won the Best Leased & Tenanted
Pub Company award, earning the judges’
praise for looking after our tied pub
tenants during the pandemic.
Reassuring our customers
As restrictions eased, we wanted both our
teams and our customers to feel they could
work and socialise in our pubs safely, so we
continued our Pub Safe promises even
when they were no longer required.
Pub gardens could reopen for hospitality
outdoors in April 2021 and indoors in May.
Finally, in July, pubs in England could reopen
without restrictions (August for Scotland
and Wales). We were elated by the return
of the Great British pub atmosphere, with
customers able to order at the bar and
stand up in the pub once more.
Surviving Omicron
After some positive trading through the
summer and autumn, the Omicron variant
arrived. Governments introduced Plan B
with advice to limit socialising and work from
home, denting vital Christmas and New Year
trade. Business was even tougher in Scotland
and Wales, which had further restrictions.
Despite all these challenges, we proved
we have a winning formula by picking up
a hat-trick of titles at the prestigious 2021
Publican Awards. We won Best Community
Pub Operator for our Local Pubs division,
Best Leased & Tenanted Pub Company
for the Pub Partners division, and CEO
Nick Mackenzie was named Business
Leader of the Year.
Working in our communities
Our communities and charity are the
beating heart of Greene King. Although our
pubs were closed or had trading severely
limited in 2021, we broke our annual
fundraising record and raised £2.2m for our
national charity partner, Macmillan Cancer
Support. This included the ‘Brave the Shave’
fundraising and took our charity partnership
fundraising total to over £10 million!
When the January 2021 lockdown began,
we signed up to The Sun newspaper’s
‘Jabs Army’ campaign where our team
members, many of whom were furloughed,
volunteered as stewards at vaccination
centres. When schools had to close,
we teamed up with the Unity Schools
Partnership and donated 110 laptops
to help families in Suffolk cope with
home schooling.
Case study : London recovery
One impact of the pandemic was that many workers chose to work remotely
rather than in their London offices. To get people back into the city, the Greater
London Authority launched its ‘Let’s Do London’ initiative. In support, our Urban
Pubs launched a ‘London Recovery’ multi-channel marketing campaign to position
our pubs as the destination of choice and convert city footfall into pub visits.
A significant three-month marketing campaign launched with a narrative around
‘Come Back Inn’, using creative artwork symbolising the iconic pub sign. In October,
we launched a paid digital media plan alongside a front-page promotion with the
Evening Standard which gave away 10,000 pints of Ice Breaker Pale Ale. To maintain
the momentum, we followed this up with a London tube takeover that featured
‘Come Back Inn’ at three major stations. We reinforced this with a robust influencer
programme, a partnership with the lifestyle app Dusk and supporting PR.
Overall, results showed a strong performance in the 17 selected test sites
with an uplift of 15% vs. a baseline period, compared to a 10% uplift in
shadow sites and 8% like-for-like improvement for other London sites.
08 Greene King Limited | The Year in Review - 2021
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Strategy
A MAJOR HIGHLIGHT OF THE LAST TWO YEARS HAS BEEN THE
DEVELOPMENT AND LAUNCH OF ‘GREENE KING UNLEASHED’,
OUR CULTURAL AND STRATEGIC TRANSFORMATION PROGRAMME.
Greene King Unleashed is designed
to unite our 39,000 team members
under a common purpose and shared
corporate values so that we can all
start to unleash Greene King’s
full potential.
Our new purpose and values were
shaped from within our company.
They have guided all our decisions
during the Covid pandemic, giving
us clarity of thought amid all
this uncertainty.
Defining our strategy
We have defined and communicated
a new strategy to the business. At its
core is our goal to be the pride of
British hospitality, giving customers
outstanding experiences through a
balanced portfolio of high growth,
consistently profitable brands.
This goal is underpinned by several
key strategy drivers which inform our
strategic planning and capital allocation.
By focusing on these strategy drivers,
such as transforming our culture and
leveraging digital, we made really good
progress turning this strategy into reality
during 2021, despite the continuing
pandemic and trading restrictions.
Here are three cases studies highlighting
our progress; further case studies
throughout this review illustrate
work on other strategy drivers.
To be the pride of British hospitality, famous for outstanding
customer experiences and a balanced portfolio
of high growth, consistently profitable brands.
Grow sales through
compelling brands
Transform our culture
Invest in
our people
Leverage digital
Operational excellence by
managing cost inflation and
building sustainable processes
Expand through innovation
and targeted acquisitions
Unlock value through making
the most of our assets
How we will drive the future success of our business, in pursuit of purpose we are proud of,
delivered by a clear strategy, underpinned by Our Greene King values and behaviours
10 Greene King Limited | The Year in Review - 2021
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WE HAVE MADE GREAT HEADWAY IN
TRANSFORMING OUR CULTURE. OUR PEOPLE
MATTER TO US ENORMOUSLY AND WE ARE
DETERMINED TO BECOME THE EMPLOYER
OF CHOICE IN THE PUB SECTOR.
CUSTOMERS’ EXPECTATIONS OF OUR DIGITAL CAPABILITY
ARE ROCKETING, FUELLED BY THEIR EXPERIENCE OF OTHER
SECTORS. AS A RESULT, ONE STRATEGY DRIVER IS TO FOCUS
ON DIGITAL TRANSFORMATION SO THAT OUR CUSTOMERS
CAN CONNECT WITH US IN A SMOOTH, ENJOYABLE WAY.
Andrew Bush, Chief People Officer
Maria Sebastian, Chief Marketing Officer
Case study :
Cultural transformation
In 2021 we developed our culture
programme which included three
key elements:
• Our new purpose:
We Pour Happiness into Lives
• Our company values: who we are
• Our behaviours: what we do
In October, we could finally bring over
2,000 of our managers together at a
festival. There, we explained our plans
for cultural change and mobilised them
to help bring our cultural transformation
to all 39,000 team members. We are
now looking to achieve real change.
Towards the end of the period, we
launched the Dartboard, a balanced
scorecard which tracks and monitors
group performance against a broad range
of key performance indicators (KPIs).
Rather than simply focusing on financial
and commercial elements, they now
include behaviour, culture and how our
people feel, so we can take a holistic
approach that includes both short
and long-term performance.
Our culture change programme is now
well underway, and the next stage is to
train and develop our pub managers.
Case study :
Leveraging digital
During the year we completely revamped
our web shop. Customers can now shop
with us in a much more satisfying and
efficient way, and we have built a future-
proofed, flexible platform that can
adapt to changing customer needs.
We have also successfully rolled out
handheld ordering and automated
telephony in Chef & Brewer, letting our
pub teams manage orders and payments
more flexibly. This digital investment makes
it easier for our team members to deliver
excellent customer service while saving
time and driving efficiencies.
WE ACQUIRED THE ICONIC MEMORIAL HALL
BUILDING IN MANCHESTER AS PART OF OUR
STRATEGY TO EXPAND METRO’S FOOTPRINT
OUTSIDE OF LONDON.
Nick Elliot, Group Property Director
Case study : Acquisition of the Fountain House
As we turn strategy into action and look to expand through targeted acquisitions, a key
piece of activity in 2021 for the property team was the purchase of the Memorial Hall
building in Albert Square, Manchester for our Metropolitan Pub Company (Metro).
The five-storey Venetian Renaissance Gothic grade 2 listed building dates back to 1866
and we identified it as a great site for Metro to bring its gastro menu proposition to the
people of Manchester. It offers customers a premium wine selection and craft beers,
alongside fresh, seasonal and innovative premium gastro pub food and drink. Following
investment in the site, we reopened in November as The Fountain House. Completion
of building works in Albert Square, along with development of a two-storey hotel and
roof terrace, should let us expand further in the future.
12 Greene King Limited | The Year in Review - 2021
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Business Model
THE RESOURCES
AND RELATIONSHIPS
WE COUNT ON
HOW WE CREATE
AND ADD VALUE
HOW WE MEASURE OUR SUCCESS
PEOPLE & PARTNERSHIPS
More than 39,000 talented team
members and and around 800 Pub
Partners licensees across the UK
SUPPLIERS & RESOURCES
A network of trusted suppliers
providing us with the resources and
goods we need to run our pub and
brewing businesses sustainably
COMMUNITIES &
GOVERNMENT
The engaged communities which we
operate in the UK and the support of
government and trade bodies
QUALITY ASSETS
The estate of pub and brewing
assets we own and operate across the
UK and the sector leading brands
that reflect our rich heritage
BRANDS
Grow sales through compelling brands
CULTURE
Transform our culture
PEOPLE
Invest in our people
DIGITAL
Leverage digital
OPERATIONAL EXCELLENCE
Operational excellence by managing cost
inflationand building sustainable processes
EXPAND
Expand through innovation and
targeted acquisitions
ASSETS
Unlock value through making
the most of our assets
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14 Greene King Limited | The Year in Review - 2021
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Case study :
Chef & Brewer, The Riverside Inn
Chef & Brewer is one of our most established brands, and this
year we focused on refreshing and improving the offer to support
its promise to be ‘Britain’s Most Welcoming Escape’. We wanted
to reignite the fire behind this much-loved brand, to improve
our customers’ experience and enable it to fulfil its potential.
We felt the brand had got a little lost in the busy mid-market
sector, so we created a fresher look. Our customer research
prompted us to put greater emphasis on design, both inside
and out, to improve our food and drink offer, and dial up our
service to ensure our customers instantly feel at home,
helping them to relax and appreciate the moment.
We launched this refreshed look at the newly acquired
Riverside Inn near Shrewsbury. We want our customers
to be able to escape their busy everyday lives by giving
them the chance to relax either in the cosy interior or the
beautiful garden with its external bar and stunning views.
Since opening in August 2021, the pub has consistently
exceeded our expectations and we plan to reflect the
newbrand template across our Chef & Brewer portfolio.
Destination Food Brands
REVENUE
ADJUSTED
EBITDA
ADJUSTED
OPERATING
PROFIT
£527.1M £67.4M £20.9M
Andy Wilson, Managing Director,
Destination Food Brands
I AM REALLY PROUD OF OUR TEAMS, WHAT THEY ARE DOING AND HOW THEY
EMBRACE OUR NEW CULTURE. WE HAVE WORKED HARD TO BE AT THE HEART
OF EACH OF THE COMMUNITIES WE SERVE AND ARE PROUD TO HAVE RAISED
OVER £1M FOR MACMILLAN.
Engaging our people
We completed a full Engagement Survey in
September. Overall, 11,739 team members
took part and we were very happy that we
scored 79% for sustainable engagement and
82% for business pride. Both scores are in
line with the Greene King average.
Looking forward
The first three weeks of trading this year
were negatively affected by the restrictions
and advice from central and devolved
governments and there will be continued
challenges due to the Ukraine crisis.
Nonetheless, we feel confident that
our business is in a great place to
bounce back early in 2022.
Our Destination Food Brands consist
of seven key brands and formats, and
our focus is on running pubs to bring
family and friends together for a broad
range of food and drink occasions.
Grading our performance
Our revenue grew by 39.5% against the
2020 52-week proforma and increased
+126.5% against the shorter financial
reporting period of 2021.
However, our like-for-like (LFL) sales
versus 2019 were marginally down for
the periods that the pubs traded, broadly
in line with the market (Coffer Peach).
Excluding the final three weeks, when the
Omicron variant impacted trading, our
LFL sales for the second half of the year
were slightly favourable compared with
2019. Despite all the closures, we are
pleased we stayed profitable. Our adjusted
operating profit was £20.9m an increase
of £93.3m compared with the 52-week
2020 proforma adjusted operating loss.
Investing for the future
In 2021, we spent £4.9m on core
development capital expenditure. Of this,
£2.2m went on developing existing sites,
£1.7m developed gardens to boost business
during outdoor-only trading which were
a tremendous success and forms part of
this year’s plan, and we spent £1.0m on
transferring two sites from the Pub Partners
business into Destination Food Brands.
Excluding the transfers, 37 sites benefited
from core capital expenditure this year.
During the year we opened a new site
under the Chef & Brewer brand, the
Riverside in Shrewsbury. More details
are in the case study.
Satisfying our customers
Our teams faced lots of difficulties this
year, including changes in trading restrictions,
labour shortages and supply chain challenges.
Despite everything, happily our customer
satisfaction improved across the board.
Our Reputation.com score improved by
18 points from the prior year and complaints
per 1,000 covers ratio improved by 0.09.
Our safety scores also improved with our
average Environmental Health (EHO)
rating at the year end at 4.86 out of a
maximum of 5.0.
16 Greene King Limited | The Year in Review - 2021
17
Local Pubs
Clair Preston-Beer,
Managing Director, Local Pubs
REVENUE
ADJUSTED
EBITDA
ADJUSTED
OPERATING
PROFIT
£315.9M
£32.8M
£2.6M
THIS YEAR WE HAVE FOCUSED ON CREATING MORE OCCASIONS FOR CUSTOMERS
TO STAY LOCAL – INVESTING IN OUR ENVIRONMENTS, MENUS AND TEAMS.
OUR GARDEN INVESTMENTS HAVE BEEN A HUGE SUCCESS, CREATING SOME
AMAZING OUTDOOR SPACES. THROUGHOUT 2021, OUR TEAM’S COMMITMENT
TO THEIR LOCAL COMMUNITIES HAS BEEN INCREDIBLE.
Our Local Pubs lie at the heart of
communities up and down the UK
with c.600 pubs offering a unique
place for customers.
The ambition of Local Pubs is to
grow sales by keeping our existing
customers, while also bringing new
customers through our doors.
Improving our performance
Our revenue grew by +41.3% against the
2020 52-week proforma and increased
+139.7% against the shorter financial
reporting period of 2021, which suffered
from more extensive lockdowns.
Compared with 2019, like-for-like (LFL)
sales for trading pubs were down across
the year. However, we traded ahead of
the Coffer Peach market over the year
on a trading pub LFL basis. We made an
adjusted operating profit of £2.6m, which
was +£60.3m ahead of the 52-week
2020 proforma adjusted operating loss.
Targeting fresh investment
We spent a total of £4.8m of core
development capital expenditure on the
estate this year, mostly on pub gardens.
This reflected our customers’ preferences
during the pandemic and helped produce
a strong increase in sales over the year.
We also invested in our new concept
developments – Pub & Social,
Pub & Kitchen and Proper Locals.
Keeping customers happy
These have been really tough times, yet
our customers are increasingly happy with
what we are doing. Measured against 2020,
our Reputation.com score increased by 86
points and our complaints per 1,000
covers ratio improved by 0.03.
In addition, our safety scores also improved
with our average Environmental Health
(EHO) rating at the year end at 4.83
out of a maximum of 5.0 for our
environmental performance.
Engaging our people
We completed a full Engagement Survey
in September, and we are delighted by
what our colleagues said. Of the 7,985
team members taking part, our Sustainable
Engagement result was 80%, 1% pt. better
than the average across the wider Greene
King group, whilst business pride was 82%,
in line with the wider Greene King group.
Looking ahead
In the coming year, we will be focusing ever
more on targeted occasions and our new
customer capture. We will also be working
hard to get ready for trading opportunities
around the 2022 World Cup.
Case study :
Attracting new customers
We want to grow sales by keeping our existing customers while
also bringing new pub customers through our doors. That is why
we have spent the year studying the latest consumer trends. They
helped us develop three distinct pub formats: Pub & Social, Pub
& Kitchen and Proper Locals. Each one offers customers a more
targeted food and drink service, so should appeal to customers
today who expect more when they are eating and drinking in pubs.
To demonstrate the new formats, we invested a six-figure
sum to re-invent three existing pubs.
• Pub & Social: We opened The Paul Pry in Rayleigh in October.
It has distinct areas for different social and eating out occasions,
a premium range of drinks and sharing foods, plus a weather-
proof garden where customers can eat and drink.
• Proper Locals: In November, we re-opened The Nabb Inn in
Hucknall. It is a new take on the classic community pub, with
a bright, open and contemporary environment, a great value,
high-quality classic menu and drinks range, and spaces to host
community events.
• Pub & Kitchen: We then opened The Governors House in
Cheadle Hulme in December. Its upgrade has given it distinct
dining and drinking areas, 10 boutique-style hotel rooms and
a restaurant-quality menu with signature specials and a
home-style Sunday lunch.
We are thrilled to report that the plans are working. All three
pubs are proving popular with a growing number of customers
and sales up by a third, compared to 2019. Given these encouraging
results, we will be developing new test sites of these formats in
2022, before rolling them out further over the next three years.
18 Greene King Limited | The Year in Review - 2021
19
Premium, Urban and Venture
REVENUE
ADJUSTED
EBITDA
ADJUSTED
OPERATING
PROFIT
£235.8M £38.3M £6.8M
Karen Bosher, Managing Director,
Premium, Urban and Venture
IT WAS A GREAT YEAR AND I AM EXTREMELY PROUD OF THE TEAM AND GRATEFUL
TO OUR SUPPORT CENTRE. EVERY BUSINESS MOVED FORWARD ON THEIR STRATEGIC
OBJECTIVES DESPITE SIGNIFICANT CHALLENGES. I AM EXCITED FOR THE FUTURE WE
CAN CREATE FOR OUR TEAMS, OUR CUSTOMERS AND FOR GREENE KING.
Our Premium, Urban and Venture
division contains a collection of iconic
pubs, which celebrate their unique
identity and personality through our
people, our product and our spirit.
The Premium and Urban estate includes
a wide variety of different pubs, including
historic buildings which have seen hundreds
of patrons passing through their doors.
The Venture side of the division is driven
primarily by Metropolitan Pub Company
(Metro). There are over 60 pubs which
are individual and unbranded, each
embodying its own personality and
character. We invested £2.3m through
2021 by continuing the growth strategy
and refurbishing some core sites including
garden trading space. The Fountain House
in Manchester was acquired in the period
and refurbished to trade as the first
Metro pub in northern England.
Crafted Pubs is our new premium pub
concept. It connects two key parts of our
strategy, growth through compelling brands
and asset optimisation. Crafted Pubs is
designed to not just meet, but exceed
those expectations. In 2021 we opened
our first Crafted Pub, The Boat in Solihull.
It has been a huge success, trading well
above expectations and achieving
record-breaking sales. More details
are in the case study on page 19.
This year Urban pubs invested in three pubs
in Cambridge as part of a new investment
programme, Project DNA, and more
information is in a case study on page 20.
The division also invested significantly in a
marketing campaign to support London’s
recovery from the pandemic, and a case
study on page 7 provides more details.
Assessing our performance
Our revenue this year was up 49.2%
compared to the 2020 52-week proforma
and increased 181.7% against the shorter
financial reporting period of 2021. Like-for-
like (LFL) sales, measured for open sites only
and against 2019 sales, were materially down.
The central London estate was particularly
hard hit by Covid restrictions. Our London
estate recovery was supported by an
innovative media investment programme
which we will continue into 2022.
Spreading our investment
We invested a total of £7.0m in core
development capital expenditure to
take full advantage of the re-opening
of the pub industry.
Pleasing our customers
Despite a very challenging year, we saw
fantastic improvements in our guest metrics.
Our Reputation.com scores improved by
82 points from the prior year, and complaints
per 1,000 covers also improved by 0.02 in
Premium and Urban.
Our safety scores also improved with
our average Environmental Health (EHO)
rating at the year end at 4.87 of out a
maximum of 5.0.
Listening to our people
We conducted a full Engagement Survey
in September, which involved 4,557 team
members. We scored 79% for sustainable
engagement, inline with the average across
the wider Greene King group and 79%
for business pride, 3% point lower than
the average across the group.
Looking ahead
2022 is expected to see a continuation of
our recovery from the pandemic and focus
on key strategic areas. We will open our
third Crafted Pubs site and further expand
this premium format in the future. We are
also expecting more and more customers
to want a premium experience, so we are
planning to expand our Metro estate to
meet this demand.
While people are returning to offices,
there is a bigger work from home culture.
Combining that with international tourism
not at pre pandemic levels, London has not
bounced back to the same levels as the rest
of the country. Therefore we are continuing
to invest in marketing in London.
Premium Case study :
Creating Crafted Pubs
Crafted Pubs is our new premium pub concept. It connects two key parts of our
strategy – growth through compelling brands and asset optimisation – and sits within
our Premium, Urban and Ventures division.
We launched the concept after listening carefully to customers, who told us what they
want from a premium pub. As a result, Crafted Pubs is designed to not just meet, but
exceed those expectations and increase sales. We want to give customers an industry-
leading outdoor space and a winning combination of fantastic social pub food and gastro
dining. We have considered every detail and customer touch point, from the food, drink,
lighting and music down to the hand soap in the toilets.
In 2021 we opened our first Crafted Pub, The Boat in Solihull. It has been a huge success,
trading well above expectations and achieving record-breaking sales. The local community’s
given the pub a warm welcome and it is now hosting lots of local activities and groups,
local florist partnerships and mums’ clubs, which all increase footfall, awareness and spend.
On the back of The Boat’s success, we plan to open four new Crafted Pubs in 2022.
20 Greene King Limited | The Year in Review - 2021
21
Urban Case study :
Project DNA
This year, Urban Pubs invested in three high street pubs in Cambridge
as part of ‘Project DNA’, a new investment programme. This benefits
from a full team effort from across the business and identifies the
genetic make-up and key components that drive sales and make a
pub perform really well. Like ‘cracking the code’, we are trying to
optimise our pubs and make them ‘Best in Class’.
The Prince Regent, The Bath House and The Grain & Hop Store
pubs all benefited from the multi-million-pound refurbishment
package. They now offer bespoke, modern interiors and serve
premium food and drink. They are designed to be a blueprint
for growth and asset optimisation in further Urban sites.
Since opening in 2021, all three have enjoyed above-target trading
weeks, they are growing share in urban spaces and their reputational
scores, based on online reviews across different platforms, have
been outstanding. Meanwhile, we are continuing Project DNA,
using customer feedback and focus groups to constantly refine
an outstanding pub offering ahead of further expansion.
Venture Case study :
The Chesterfield Arms
As part of our strategy pillar to optimise our assets, we moved the Chesterfield Arms
in Mayfair from Premium and Urban into Metro during the year. It was one of Metro’s
first major projects following the easing of Covid restrictions and now sits in its Gastro
segment, which is innovative, modern and rooted in pub-charm. We invested £150,000
in the site before it reopened in August 2021, with vast improvements to the kitchen,
bar set up, furniture and layout.
The pub is steeped in history and has been a pub since 1737. It was originally known as
The Chesterfield Arms until 1938 when it was renamed the Shephard’s Tavern. The team
at Metro returned it to its roots and reinstated its former name, The Chesterfield Arms.
The team combines the best of British cuisine and hospitality with a curated selection of
draughts and wines full of personality. Seasonal food and drink flavours allow the chef to
have the freedom to explore and create new and engaging pub experiences.
As the pub is located in Mayfair, London, like much of hospitality in that area it had
challenges with footfall following Covid, as a result of reduced tourism and workers.
However, we are pleased that it traded above its budget and vs 2019 and we
look forward to increasingly improved trading in 2022.
22 Greene King Limited | The Year in Review - 2021
23
Pub Partners
Wayne Shurvinton,
Managing Director, Pub Partners
REVENUE
ADJUSTED
EBITDA
ADJUSTED
OPERATING
PROFIT
£109.6M £46.7M £35.1M
LOOKING BACK AT LAST YEAR, WE ARE PROUD OF THE SIGNIFICANT FINANCIAL
AND EMOTIONAL SUPPORT WE PUT IN PLACE TO SUPPORT OUR PARTNERS THROUGH
COVID, AND THIS WAS RECOGNISED EXTERNALLY WITH PUB PARTNERS WINNING THE
BEST LEASED AND TENANTED PUB COMPANY IN THE UK AT THE PUBLICAN AWARDS.
Pub Partners runs a high-quality
portfolio of 1,002 tenanted, leased and
franchise pubs, generating significant
and stable cash flow for the group.
During Covid, our guiding principles were to
avoid business failures, support our partners
and come out as the strongest in the sector.
Importantly, our close relationships with
our tenants meant we could give them the
right kind of support. We feel proud that
these actions enabled our tenants to survive,
and then recover and rebuild. By working
together, we have come out stronger, as
shown by lower partner surrenders and
fewer recruiting pubs than in 2019.
Providing financial support
Covid meant that all our pubs were
closed for most of the first half of the year.
During this time, we supported our tenants
financially through a 90% rent concession.
Once pubs could re-open with restrictions,
we kept on supporting our partners with
a 40% concession. This support continued
until mid-July, when all trading restrictions
were removed.
Offering help and advice
We provided our partners with survival and
recovery initiatives, including beer returns,
free personal protective equipment (PPE)/
screens, point of sale, 24 hour advice, free
British Institute of Innkeeping membership,
and our new Wellbeing and Recovery
Hubs. Overall, this financial support in 2021
was worth c.£18m, mainly through rent
concessions, and came on top of the
£26m we provided in the prior year.
Tracking our performance
As a result of the pandemic, trade was
very much weighted towards the second
half of the year. Total revenue in the year
was £109.6m, with c.70% of this
delivered in the second half.
Investing with impact
Investing in our estate is a critical part of our
strategy and we continued doing so in 2021.
Overall, we invested £11.5m of total capital
expenditure in our estate and our partners.
Of this, £6.4m was development capital
that we invested to drive income growth
across 120 pubs. Despite really tough
trading conditions, our capital investment
continued to deliver a strong return.
Our partners and our people
Once again, both our internal teams and
our partners gave us some brilliant feedback.
Over 90% of our tenants have stayed in
their pub during 2021, the Licensee Index
shows that they are the most positive about
the future in the sector, and average tenant
tenure has increased to six years 10 months.
Our team is extremely dedicated and we
received high engagement levels from those
that took part in our Engagement Survey.
We scored 91% for sustainable engagement
and our business pride score score was 94%,
both 12% points better than the Greene
King average.
Responsibility and recognition
We are governed by the Pubs Code and
take our responsibilities seriously. We held
a Code Compliance Officer Meet & Greet
session for tenants with the Pub Code
Adjudicator, Fiona Dickie. The Licensee
Index confirmed the level of awareness
of the Pubs Code was the highest amongst
our tenants versus the other regulated
pub companies.
Case study : Hive Pubs
During 2021, we launched a new pub franchise
concept, Hive Pubs. This is a branded community
pub model, operated by franchisees who have local
knowledge and experience of running a pub. It lets
them bring their individual know-how to the Hive
pub to deliver the best customer experience.
We set up the pub and are liable for the property.
We pay running costs, such as stock and supplies,
marketing, training and ongoing support. Our
research and insight means that every Hive pub
has an innovative range of drinks, a food menu
with quality pub classics, year-round outdoor
spaces, and regular entertainment from live
sport to quizzes, music and events.
We are also building an online platform
where franchisees can connect to each other
and share ideas.
We will be investing up to £300,000 in each
Hive Pub. Alongside this investment each pub
will operate with best-in-class systems and
processes so that we can deliver a consistently
superior level of service.
Besides Hive, our branded concept, we currently
have our unbranded Pub Franchise agreement
and, over the next five years, we intend to grow
our franchise estate to more than 100 sites.
24 Greene King Limited | The Year in Review - 2021
25
Brewing & Brands
REVENUE
ADJUSTED
EBITDA
ADJUSTED
OPERATING
PROFIT
£153.2M £11.1M £0.9M
Matt Starbuck, Managing Director,
Brewing & Brands
WE ARE PROUD TO HAVE SUPPORTED OUR CUSTOMERS OVER THE LAST YEAR WITH
A DETERMINED FOCUS TO MAINTAIN SUPPLY INTO THE OFF TRADE AND HELP OUR
ON TRADE CUSTOMERS QUICKLY RECOVER FROM THE RESTRICTIONS OF COVID.
Brewing & Brands brews, sells and
distributes a wide range of market
leading beers, including Greene King
IPA, Old Speckled Hen, Abbot Ale,
Ice Breaker and Belhaven Best,
from our two breweries in Bury
St Edmunds and Dunbar.
Monitoring our performance
Revenue was £153.2m, up 33.1% against
the 52-week 2020 proforma. It was a
very challenging year in on trade against
a backdrop of lockdowns and social
restrictions, as well as a quiet Christmas
trade. The free trade market, where we
are strongest, suffered the most, with the
managed, tenanted and leased sectors
performing stronger as we have come
out of lockdowns. However, the off trade
remained buoyant as shoppers switched
out of pub into home drinking, allowing
us to outperform the market in 2021.
Investing in fundamentals
Although trading was challenged, we
increased our capital expenditure.
Investment in our breweries, packing lines
and supply chain improved our operating
standards. This investment allowed us to
continuously improve, most notably in
beer quality and new technology to enable
the brewing of modern beer styles. Our
investment in distribution was vital against
the anticipated need to protect service levels.
Coping with challenges
Higher costs of logistics and materials –
most notably malt, glass, cans, sugar and CO2 –
put our supply chains under pressure in the
second half of the year. Our focus to mitigate
some of these issues meant we kept disruption
to a minimum. Despite the shortages of HGV
drivers and warehousing operatives often
caused by Covid infections and self-isolation,
we put in place effective mitigation plans. A
combination of our own fleet complemented
with third party operations provided an
amazing level of support to protect our
customers from the worst effects of product
shortages. It has been a challenging year for
drinks deliveries, having to contend with
significant variations in order profiles due
to various lockdowns and regional Covid
restrictions. Supply issues resulting from
staff availability, retention and sickness were
overcome with a combined effort of our
Greene King depots and our third-party
logistics partners, both of whom provided
excellent support to the Scottish Central belt.
Nurturing our brands
In the off trade, we achieved higher growth
than any other major brewer. Our moving
annual total value market share grew 0.7ppts
to 16.6%, maintaining our position as the UK’s
third-largest brewer. We are delighted that
Old Speckled Hen kept its top spot in off
trade traditional ale brands, maintaining its
leading volume share throughout 2021.
In the on trade, we continued to drive share
in the independent free trade and managed
pub sectors. Greene King IPA remains the
number two cask brand (number one in free
trade), and Abbot Ale remains one of the
nation’s favourite premium cask ale brands.
The continued strategic rebalancing of our
beer portfolio to suit modern tastes led
to higher sales for Ice Breaker, which we
explore in the case study in this section.
Engaging our people
We completed a full Engagement Survey in
September. Overall, 564 people took part,
and gave us a 69% sustainable engagement
score, 10% points lower than the average
across the Greene King group, and 79%
business pride measure, 3% points lower
than the average Greene King figure.
Looking ahead
For on trade, more normal trading will let
us recover our position for our core own
brewed volume cask ale brands; in the off
trade, we want to keep our market share
gains. Our primary focus areas for the year
ahead is the modernisation of our beer
portfolio and investing in our brewing and
supply chain infrastructure. Finally, we are
planning to invest over £2m in 2022 into
‘Proud to Pitch’, led by Greene King IPA. It is
our community engagement initiative that
raises funds for grassroots sports clubs
across the UK.
Case study : Abbot Ale rebrand
In 2021, we completely rebranded Abbot Ale, one of the
UK’s most popular premium ales amongst cask ale drinkers
and supermarket shoppers alike. It is part of our strategy
to grow sales through compelling brands.
Our challenge was to ensure that we were able to refresh
the image of this famous brand and invite new drinkers to
consider trialling without disenfranchising our millions of
loyal customers. We therefore took the time to consult
with drinkers and get beneath the skin of why this brand
means so much to them. The resulting design was a balance
between a more contemporary image with clear links
to its heritage. The mitre-shaped pump badge really
does stand out on the bar and makes the most
of the history of this wonderful brand.
We supported this refresh with close to half a million
pounds worth of investment into a marketing and PR
campaign, including trade media and promoted social media
posts. We introduced our new look to customers through
our ‘Abbot Mobile’, which is touring our pubs in 2022, and
through our ‘Relax with An Abbot’ campaign, promoted by
the sports and TV presenter, Jeff Stelling. We are thrilled with
the positive reception we have received from publicans and
customers – and want to be clear that we have not changed
the ale itself in any way, so it is just as delicious as ever.
Case study : Ice Breaker
A modern craft style of unfiltered pale ale, Ice Breaker, continues to go from
strength to strength. This year we invested over £1.5m into the brand which
was originally created by our apprentice brewers. The investment has been
focused on driving trial and awareness of this rapidly growing drinker favourite
in and around key off trade outlets and has resulted in Ice Breaker now being
sold in over 2,000 Greene King pubs and free trade outlets.
Highlights of the marketing campaign included major sampling initiatives in
both the on and off trade, new bespoke on trade glassware, fonts and tap
handles, ‘Summer Takeovers’ at the famous Anchor Bankside pub in London,
and a strong social media presence throughout the year.
With this significant distribution now secured for Ice Breaker, 2022 will be a
landmark year for the brand as it launches its first advertising campaign and
becomes available for purchase in further major supermarkets, with
agreements already in place for launches across the summer.
26 Greene King Limited | The Year in Review - 2021
27
Case study : From reverse logistics recycling to zero waste to landfill
We introduced our first logistics recycling scheme
in 2010. This cut our environmental impact by
recycling packaging and waste across our managed
pubs. In 2019, we upgraded our reverse logistics
model to increase efficiency and improve recycling
quality, quantity and waste. We began by removing
all single-use packaging from our estate and
focusing entirely on re-use and recycle. We now
collate plastic produce packaging trays centrally
before the supplier collects them for reuse.
Furthermore, all of our pubs, hotels and
restaurants now return all recycling by our
dedicated food distribution network.
This includes food, used cooking oil, plastic,
metals, card and paper. We are working with
our waste management partner, SWRNewstar,
on further improvements.
Finally, we have invested lots in our pub resources
and training to help our pub teams recycle even
more. We can now see everything we recycle
and we have developed a team culture of caring
for the environment. In 2020, this work helped
us become the first pub company to achieve
the Carbon Trust’s certified ‘Zero Waste to
Landfill’ standard.
Greene King For Good
Assad Malic, Chief Communications
and Sustainability Officer
WE FEEL WE CAN HAVE A REAL AND POSITIVE IMPACT ON THE
COMMUNITIES AND ENVIRONMENT AROUND US. UNDER OUR CORE
VALUE OF ‘WE CARE’, WE ARE COMMITTED TO MAKING A DIFFERENCE
THROUGH OUR ENVIRONMENTAL SOCIAL GOVERNANCE PROGRAMME,
GREENE KING FOR GOOD.
OUR IMPACT
OUR ENVIRONMENT - CARING FOR OUR PLANET
It has long been very important to us
that we operate sustainably and minimise
our environmental impact. We have
implemented several key environmental
initiatives, such as introducing reverse logistic
recycling across our managed pubs, and
in 2020 we achieved the Carbon Trust’s
‘Zero Waste to Landfill’ standard.
We are founder members of the Zero
Carbon Forum, a forum of hospitality and
brewing businesses who work together to
reach carbon net zero. We are committed
to achieving sector-wide change and were
the first pub company to work with ‘Too
Good to Go’, the surplus food app.
In January 2021 we piloted ‘Tub2Pub’, our
new recycling scheme where customers can
drop off empty Christmas sweet and biscuit
tubs at their local Greene King pub for
plastic reprocessing. It was really successful!
All the money raised from Tub2Pub
has gone to Macmillan Cancer Support,
our national charity partner and we are
extending the scheme across our
managed pubs in 2022.
For Greene King, 2021 has been a year
of discovery. We began mapping our
carbon footprint to 1.5º, in line with the
Greenhouse Gas (GHG) protocol and
the Science Based Target Initiative (SBTI).
This complex, business-wide project will
enable us to identify and publish our
carbon reduction targets in 2022.
After the discoveries of 2021, 2022
will be about establishing the solid
foundations and framework needed
for us to begin this journey.
As Britain’s leading pub company and
brewer, we want to be the pride of
British hospitality. Our goal is much more
than simply delivering fantastic customer
experiences and serving award-winning
beers. It is about Greene King being a
positive force for good and having a
social purpose that threads through
every part of our business.
We are committed to driving social and
environmental change and promoting
inclusion and diversity within our business,
through our partnerships and in the
communities we serve.
Our Environmental Social Governance
(ESG) strategy, Greene King for Good,
has three core pillars:
• Our environment:
caring for our planet
• Our communities:
being a good neighbour
• Our people:
creating life opportunities for all through
innovative social mobility programmes
28 Greene King Limited | The Year in Review - 2021
29
Case study : Greene King becomes number one corporate
fundraising partner for Macmillan Cancer Support
We launched our national charity partnership
with Macmillan Cancer Support in 2012.
What a success it’s been!
In 2021, we were the top corporate fundraising
partner for Macmillan Cancer Support. Donations
were seriously affected by Covid so we called
our teams into action and they stepped up.
Macmillan Cancer Support was named the
official charity partner of the 2021 Virgin London
Marathon. We supported them by raising money
and awareness and by providing charity runners
and friends with official locations to celebrate
their achievements.
Two executive board members, Wayne Shurvinton
and Andy Wilson, volunteered to become VIP
runners for Macmillan, supported by many other
Greene King team members who also ran. Pubs
near the route became official Macmillan cheer
stations and fuel stops, and we held pre- and
post-marathon events in pubs across England,
Scotland and Wales.
Finally, Andy Wilson, our Managing Director
of Destination Food Brands, was awarded an
MBE in the Queen’s New Year’s Honours for
services to business and charity during Covid.
What a wonderful way to start the celebration
of our 10 year partnership with Macmillan
Cancer Support in 2022!
OUR COMMUNITIES - BEING A GOOD NEIGHBOUR
Helping team members
We have also been helping our own people
during these tough times. In January 2021
we launched our second Team Member
Support Fund. Managed by the Licensed
Trade Charity, it helps team members
facing financial hardship during the
pandemic. The fund donated £500,000,
which partly came from voluntary salary
sacrifices by the executive board and
Leadership team. Overall, across both
funds, we have donated over £1.1 million.
Other great causes
Besides our own schemes, we are still
supporting industry initiatives. ‘Pub is
The Hub’ provides free advice to licensees,
communities and local authorities. ‘Only a
Pavement Away’ helps homeless people off
the streets and into careers in hospitality,
and Pub Aid highlights how pubs are a
force for good. We have also continuing to
help charities close to our support centre
communities in Bury St Edmunds and
Burton on Trent, including Bury in Bloom,
Abbey 1000 and Bury St Edmunds for
Black Lives.
Our pubs, breweries, depots and offices
support our communities in two ways:
• We support people living with cancer
through our national charity partnership
with Macmillan Cancer Support
• We help people fight loneliness through
our No One Alone programme, which
brings communities together.
Despite the impact of Covid restrictions on
pub trading, 2021 was a record breaking
year for our partnership with Macmillan
Cancer Support. Teams across Greene King
took part in lots of fundraising events and
raised £2.2 million – that is our biggest total
since the partnership began in 2012!
No One Alone
Covid restrictions on social interaction
also made it tricky for our pubs to promote
No One Alone this year. Its events use local
pubs’ naturally welcoming and inclusive
atmosphere to bring people together. On
Christmas Day 2021 Greene King launched
a Christmas Day community table pilot
scheme, which we are extending across the
business in 2022. We are really proud about
how enthusiastically our team members have
embraced the Greene King value ‘We Care’
– they have put it into action and supported
their local communities day in, day out.
DESPITE THE IMPACT OF COVID RESTRICTIONS
ON PUB TRADING, 2021 WAS A RECORD BREAKING
YEAR FOR OUR PARTNERSHIP WITH MACMILLAN
CANCER SUPPORT.
30 Greene King Limited | The Year in Review - 2021
31
OUR PEOPLE - CREATING LIFE OPPORTUNITIES FOR ALL THROUGH INNOVATIVE
SOCIAL MOBILITY PROGRAMMES
We believe that everyone has a right to
great career opportunities. Our ‘Stepping
Up’ report challenged the barriers of social
mobility and reinforced our commitment
to create the best opportunities in the
hospitality sector for individuals from
all backgrounds.
Our award-winning social mobility
programmes support:
• Apprenticeship opportunities for all.
We offer over 30 different
apprenticeships, ranging from front-
and back-of-house to finance and
accounting, project management and
coaching. In 2021, 920 team members
started apprenticeships and 740
completed them. We start 2022
with 1,400 team members learning
through apprenticeships.
• Young people from disadvantaged
backgrounds into employment through
our partnership with The Prince’s Trust.
We have pledged to create 1,000 job
opportunities for young people over the
next five years. Of these, we want 40%
to be from Black, Asian, and minority
ethnic backgrounds in support of our
manifesto, ‘Calling Time on Racism’.
Moving into 2022, we have an ambitious
plan of training programmes with
The Prince’s Trust.
• Ex-offenders and people experiencing
homelessness into fulfilling careers
through our Releasing Potential
programme. We launched this in 2018
and work with the Ministry of Justice,
Only a Pavement Away, New Futures
Network and Novus. By the end of 2021,
89 team members had joined Greene
King through this programme, of whom
42 joined during the year.
• People with learning disabilities or
difficulties into work through our
Supported Internships programme.
In 2020, we launched our first programme
in partnership with Landmarks College;
in 2021 we expanded our programme
partnership with Mencap to provide
work experience and job opportunities to
young people. This year, 39 young people
joined the Greene King family through
our Supported Internships programme.
Case study : Releasing Potential programme goes from strength to strength
When we launched ‘Releasing Potential’, our social mobility
programme to support ex-offenders into employment, we could
never have imagined how quickly it would expand. We now work
with 39 prisons across England and Wales, despite restrictions
imposed on prison recruitment during the pandemic.
Another team member who joined through the scheme added:
“When I was sat in jail, I wondered what I was going to do out
there, no one was going to see any potential in me. Greene King
came in and gave me an opportunity. They didn’t look at what
I had done, but what I can do now.”
Ian joined us through the ‘Released on Temporary Licence’ scheme,
available to prisoners completing a sentence in an open prison. He
could work at the pub during the day before returning to custody
at the end of each shift. He joined as a kitchen porter and very
quickly moved to a line chef role. Living close to the pub when he
was released, he progressed to a Team Leader role before being
appointed acting Assistant Manager. Ian said: “From my own personal
experience, one of the most beneficial things I found about the
Releasing Potential programme was the opportunity to get rid of
the stigma in my own mind about being an ex-offender and the
possibilities of getting back into the community,” Ian says. “The building
of self-esteem to know that you can succeed and can be a normal
member of society – it’s one of the most important things I’ve found.”
A general manager who works with a team member who joined
via the programme said “One of the benefits is that the person
joining the team wants to be there, they want to learn, they want to
change, they are invested in their job role. When hired, the candidate
was invested; she’s worked her way up, becoming a front-of-house
member to pub leadership team and is continuing to take training
to further her career in the business. She manages my TAP training
portal helping develop other team members and has supported my
business development manager by sharing her story and engaging
other general managers to consider similar recruitment route.”
In 2022 Greene King will be extending the programme thanks
to a new partnership with the Scottish Prison Service.
32 Greene King Limited | The Year in Review - 2021
33
INCLUSION AND DIVERSITY
OUR RESPONSIBILITY
We are absolutely committed to creating an inclusive environment
for all our team members; giving everyone the opportunity to have a
fair and equal chance to fulfil their potential; and creating a welcoming
environment for all our customers. During 2021 we continued our
journey towards everyday inclusion where everyone feels welcome,
can thrive and truly belong. We have also signed up to external
commitments including the Valuable 500 and ‘If Not Now, When?’
In 2021, we published our race manifesto, ‘Calling Time on Racism’.
It sets out our ambition to embrace and value our Black, Asian and
minority ethnic colleagues and the wider community; to increase
their representation within the hospitality sector; and to become
a leading and truly anti-racist organisation.
We also launched several initiatives outlined in our race manifesto.
They include a new reverse mentoring programme where 11
members of our Black, Asian and minority ethnic community mentor
our executive team. We took part in National Inclusion Week and
joined Inclusive Employers. We also asked our employee-led inclusion
groups to drive an inclusion calendar of activities – spotlight months
included Pride Month and Black History Month. We teamed up
with the International Slavery Museum and Slave Free Alliance to
use training resources and webinars to educate our team members
on the history and modern-day reality of slavery. Our recruitment
teams also began developing plans to make our recruiting
practices more inclusive.
Modern Slavery
Providing good and safe work is a priority at Greene King. In 2021
we worked with our charity consultants Slave Free Alliance to
complete a full modern slavery gap analysis of our business. Their
recommendations will underpin our action plan in 2022 to further
minimise the risk of modern slavery in our business or supply chain.
Responsible Retailing
Our responsible drinking scheme, ‘Enjoy Responsibly’, gives
customers advice in our pubs and on our website. It shares
government guidance, tips on responsible drinking and outlines
how we are responsible retailers. As a minimum, we also follow the
‘Challenge 21’ or ‘Challenge 25’ schemes in our pubs and at our tills
to remind team members behind the bar to check customers’ ages.
Every new bar team member must complete our training before they
can serve alcohol so that they understand their legal responsibilities
and obligations, as well as the impact of alcohol on children.
In addition, we operate the ‘Ask for Angela’ scheme across our
managed pub estate. This trains our team members to help
customers if they find themselves in vulnerable situations.
Animal Welfare
We have a robust animal welfare policy which covers all meat, poultry
and fish, regardless of country of origin. All our suppliers must comply
with EU and UK animal welfare legislation. This includes adhering to
the Five Freedoms and following, as a minimum, sustainable fishing
and statutory livestock codes of practice (including specific animal
welfare standards for each species).
Antibiotics and Pharmaceutical Usage
We do not permit the routine prophylactic use of antibiotics and
pharmaceuticals across any species supplied to Greene King.
Allergens and gluten
We provide full allergen information in all our pubs, restaurants
and hotels so that our customers can make informed meal
choices according to diet and preferences. We are proud of
our expanding non-gluten and vegan range and our teams
all have allergens training.
Healthy eating
We want to serve great-tasting, quality food and to give customers
a wide range of menu options that support a healthy, balanced diet.
Many of our menus now offer at least ten dishes under 500 calories.
Our children’s menus offer fresh fruit, salad and fresh vegetables,
in line with the government’s five-a-day recommendation. We have
also signed up to eight pledges in the Government’s Public Health
Responsibility Deal.
IN 2021, WE PUBLISHED OUR RACE MANIFESTO, ‘CALLING TIME ON RACISM’.
IT SETS OUT OUR AMBITION TO EMBRACE AND VALUE OUR BLACK, ASIAN
AND MINORITY ETHNIC TEAM MEMBERS AND THE WIDER COMMUNITY;
TO INCREASE THEIR REPRESENTATION WITHIN THE HOSPITALITY SECTOR;
AND TO BECOME A LEADING AND TRULY ANTI-RACIST ORGANISATION.
34 Greene King Limited | The Year in Review - 2021
35
Financial Review
THE GROUP RECOVERED STRONGLY DURING THE
YEAR, GENERATING AN £18.6M ADJUSTED OPERATING
PROFIT AND FREE CASH FLOW OF £7.2M WHILST
INCREASING INVESTMENT IN DEVELOPMENT
AND EXPANSIONARY CAPITAL.
Richard Smothers, Chief Financial Officer
Statutory
Adjusted
52 weeks ended
2 January 2022
36 weeks ended
3 January 2021
£m
1,341.6
63.8
(134.2)
(70.4)
£m
562.1
(149.3)
(99.3)
(248.6)
Proforma 52
weeks ended
3 January 2021
£m
947.4
(433.0)
(184.2)
(617.2)
52 weeks ended
2 January 2022
36 weeks ended
3 January 2021
£m
1,341.6
18.6
(132.4)
(113.8)
£m
562.1
(185.8)
(93.7)
(279.5)
Proforma 52
weeks ended
3 January 2021
£m
947.4
(186.9)
(137.0)
(323.9)
Revenue
Operating
(loss)/profit
Net finance costs
(Loss)/profit
before tax
Revenue was £1,341.6m, an increase of 138.7% compared to the 36 weeks ending 3 January 2021 (52-week proforma: up 41.6%), with
increases in all five revenue generating segments due to increased levels of trading in the period as a result of fewer restrictions. Destination
Food Brands revenue was up 126.5% (52-week proforma: up 39.5%) to £527.1m, Local Pubs revenue was up 139.7% (52-week proforma: up
41.3%) to £315.9m, and Premium, Urban and Venture revenue was up 181.7% (52-week proforma: up 49.2%) to £235.8m. Pub Partners revenue
was £109.6m, up 168.6% (52-week proforma: up 50.3%). Brewing & Brands revenue increased 109.6% (52-week proforma: up 33.1%) to £153.2m.
Group adjusted operating profit/(loss) by segment
52 weeks ended
2 January 2022
36 weeks ended
3 January 2021
change from
F20SY
£m
20.9
2.6
6.8
35.1
0.9
(47.7)
18.6
£m
(62.3)
(54.3)
(42.0)
0.9
(18.1)
(10.0)
(185.8)
%
133.5
104.8
116.2
3,800.0
105.0
(377.0)
110.0
Proforma
52 weeks ended
3 January 2021
£m
(72.4)
(57.7)
(39.6)
13.1
(20.2)
(10.1)
(186.9)
YOY
Change
%
128.9
104.5
117.2
167.9
104.5
(372.3)
110.0
Destination Food Brands
Local Pubs
Premium, Urban and Venture
Pub Partners
Brewing & Brands
Corporate
Group adjusted
operating profit (loss)
Net finance costs before adjusting items were up 41.3% to £132.4m, which decreased 3.4% compared to the 52-week proforma primarily
due to a reduction in lease interest costs following the acquisition of several freehold reversions. Loss before tax and adjusting items was
£113.8m, which is materially improved versus the loss before tax, adjusting items of £279.5m for the 36 weeks ending 3 January 2021
(52-week proforma: £323.9m loss). A statutory loss before tax of £70.4m was incurred (36 weeks ended 3 January (“2021”): £248.6m loss),
after net impairment reversals of £8.2m (2021: £30.1m), a credit in respect of VAT on gaming machines including interest of £33.4m
(2021: £7.0m credit) and a credit of £5.4m in relation to Covid (2021: £8.7m credit). Corporate adjusted operating loss increased £37.7m
to £47.7m compared to the 36 weeks ended 3 January 2021 primarily due to increased investment in central functions as well as an
increase in net payroll costs as a result of fewer corporate employees being furloughed in the current period.
Tax
The effective rate of corporation tax (before adjusting items) of 19.0% (2021: 19.3%) is in line with the UK corporation tax rate of 19.0%.
Adjustments to the rate include non-deductible interest under UK Transfer Pricing rules (-3.8%), the effect of accelerated Capital Allowances
(+1.4%) and non-adjusting accounting movements on Property, Plant & Equipment (+2.4%). This resulted in a tax credit against operating
profits (before adjusting items) of £55.5m (2021: £53.8m credit). The adjusting tax charge of £16.9m (2021: £74.9m charge) is discussed
under adjusting items.
The group generates revenue, profits and employment that deliver substantial tax revenues for the UK government in the form of VAT, duties,
income tax and corporation tax. In the year, total tax revenues paid and collected by the group were c.£298m (2021: c.£152m). The decrease
in tax liability in the year was driven by reductions in duty and VAT liabilities as a result of the impact of Covid. The group’s tax policy, which
has been approved by the group’s board committee and which will be subject to regular review by the board of directors of the group,
has the objective of ensuring that the group fulfils its obligations as a responsible UK taxpayer.
Adjusting Items
Adjusting items was a credit of £26.5m (2021: £43.7m charge), consisting of a £45.2m credit (2021: £36.5m credit) to operating profit,
a £1.8m (2021: £5.6m) charge to finance costs and a net adjusting tax charge of £16.9m (2021: £74.6m). Material items recognised
in the year included the following:
1. During the period to 2 January 2022 the group has recognised
a net impairment reversal of £8.2m (2021: £30.1m), comprising
£8.2m (2021: £30.4m) net reversal in relation to property, plant
& equipment, and right-of-use asset and £nil (2021: £0.3m charge)
on other financial assets.
2. A credit of £5.4m (2021: £8.7m credit) in relation to Covid.
This includes a charge of £0.9m (2021: £5.1m charge) in
respect of stock write-offs or provisions, a net credit of £5.0m
(2021: £19.3m) on bad debt provisions on both free trade loans
as well as trade debt, a net £2.1m credit (2021: £5.5m charge)
of direct one-off items directly attributable to the forced closure
and reopening of pubs and a £0.8m charge (2021: £nil) in respect
of costs incurred in obtaining certain waivers from its bondholders.
3. The group previously paid c.£30m of disputed VAT to HMRC in
relation to gaming machines post 2005 claims. Due to the strength
of the ruling from the First Tier Tribunal regarding this case and
HMRC’s decision not to appeal the group considers the £29.2m
recoverable (2021: £7.0m relating to the pre 2005 claims). This has
been recognised as income in the period along with associated
interest of £4.2m relating to the pre and post 2005 claims.
4. The £1.8m charge for adjusting finance costs included a
£7.3m charge (2021: £5.6m charge) recycled from the
hedging reserve in respect of settled interest rate swap
liabilities, £4.2m income (2021: £nil) in respect of interest
on indirect tax claims (see above) and £1.3m gain (2021: £nil)
in respect of market-to market movements in the fair value
of interest rate swaps not qualifying for hedge accounting.
5. The adjusting tax credit of £16.9m (2021: £74.6m) is primarily
in respect of an increase to the deferred tax asset recognised on
the Corporate Interest Restriction of £37.2m offset by a one-off
adjustment to increase the net deferred tax liability following the
recognition of deferred tax balances at the enacted Corporation
Tax rate of 25% of £18.0m.
36 Greene King Limited | The Year in Review - 2021
37
Cashflow and Capital Structure
Balance sheet
2 January 2022
£m
3 January 2021
£m
912.6
3,723.5
136.8
913.4
3,668.7
48.3
(2,994.3)
(2,877.9)
(112.8)
(353.1)
(63.6)
195.4
1,444.5
308.4
1,136.1
1,444.5
(161.2)
(223.2)
(123.6)
118.7
1,363.2
308.4
1,054.8
1,363.2
EBITDA
Working capital and other movements
Net interest paid
Tax (paid)/received
Adjusted cash generated/(used) from operations
Core capital expenditure
Net repayment of trade loans/ Other non-cash movements
Repayment of lease liabilities
Free cash flow
Net disposal proceeds
New build capital expenditure & freehold purchase
Adjusting items
Advance of borrowings
Net (decrease)/increase in cash and cash equivalents
52 weeks ended
2 January 2022
£m
36 weeks ended
3 January 2021
£m
156.3
89.3
(102.7)
(0.2)
142.7
(68.0)
2.8
(70.3)
7.2
0.6
(114.7)
(8.0)
63.9
(51.0)
(77.5)
(61.7)
(67.4)
10.4
(196.2)
(36.9)
1.1
(21.3)
(253.3)
7.7
(389.1)
(11.6)
771.4
125.1
The group has historically been highly cash generative, but the
adverse impact of Covid on both trading and working capital flows
has been unprecedented. The group continued its cash conservation
measures during the first half of the year so the group was in a strong
financial position to bounce back when pubs re-opened. The full year
cash inflow from operations was £142.7m (2021: outflow £196.2m)
demonstrating the group’s recovery in the second half of the year
when the pubs were predominantly trading throughout the period.
Overall the cash outflow for the period was £51.0m (2021: inflow
£125.1m) predominantly due to investment in capital expenditure of
£182.7m (2021: £426.0m), rent payments of £70.3m (2021: £21.3m)
including £28.0m relating to amounts due at 3 January 2021 offset
by a net advance of borrowings of £63.9m (2021: £771.4m).
Core capital expenditure was limited to that of a maintenance
nature, investment in some development of outside space in
managed sites and investment in digital transformation projects.
No dividend has been proposed or paid. Net disposal proceeds
of £0.6m were generated from 12 non-core pubs. The group
purchased the freehold of 30 sites that were previously leased
via a company share acquisition for £95.4m consideration.
In addition, £19.3m was spent on four single site acquisitions
and the freehold reversion of three further sites, including
subsequent development spend on these sites.
In order to support the long-term strategic priorities, the group’s
objective is to maximise the strength and flexibility of its balance
sheet, and to maintain a capital structure which meets the short,
medium, and long-term funding requirements of the business.
The principal elements of the group’s capital structure are its
£600m bank facilities, which were £300m drawn at the year end,
£1,500m revolving loan facility with CKA Holdings UK Limited,
which was £1.376m drawn at the year end, and two long-term
asset-backed financing vehicles. In April 2022 the revolving loan facility
with CKA Holdings UK Limited was extended to November 2024.
At the year end, the Greene King securitisation had secured bonds
with a group carrying value of £1,314.6m (2021: £1,360.5m) and an
average life of eight years (2021: eight years), secured against 1,481
pubs (2021: 1,485 pubs) with a group property, plant & equipment
carrying value of £1,945.7m (2021: £1,953.1m). The Spirit debenture
had secured bonds with a carrying value of £99.5m (2021: £99.8m)
and an average life of nine years (2021: ten years), secured against
518 pubs (2021: 530 pubs) with a group property, plant &
equipment carrying value of £461.2m (2021: £462.2m).
During the period the Greene King securitisation breached its
FCF DSCR covenant, resulting in a borrower-level event of default.
In May 2021 the group obtained a bondholder waiver in relation to
breaches of the four quarter lookback FCF DSCR covenant for the
five quarters ending April 2021 through April 2022 and the two
quarter lookback FCF DSCR covenant for the three quarters ending
April 2021 through to October 2021. As a consequence of the Covid
pandemic, in the prior period the Spirit debenture breached its Free
Cash Flow Debt Service Coverage Ratio (FCF DSCR) covenants,
resulting in multiple borrower-level events of default. In August 2020
the group sought, but failed to obtain, a bondholder waiver in respect
of certain of these events of default, and in light of the failure to
obtain that initial waiver the group has not sought further waivers
in respect of subsequent covenant breaches. As a result, the Spirit
debenture remained in a state of technical default at the year-end.
We consider the risk of enforcement to be very low, but we maintain
sufficient headroom under our loan facilities to fund the repayment
of the outstanding debt should the bondholders seek to enforce.
Although it is certain that the group’s credit metrics have
deteriorated as a result of the reduced trade arising from the
Covid pandemic, its liquidity position remains strong reflecting
the resilience of the group’s capital structure. The group’s average
cash cost of debt reduced to 3.5% from 4.1% last year, and at
the year-end 93.2% of the group’s net debt was at a fixed rate.
Goodwill and other intangibles
Property, plant and equipment (inc. assets held for sale)
Post-employment assets
Net debt
Derivative financial instruments
Trade and other payables
Net IFRS 16 liability
Other net assets
Net assets
Share capital and premium
Reserves
Total equity
The Greene King secured vehicle had a two quarter lookback
FCF DSCR of 1.3x at the year end, giving 17% headroom to the
covenant limit of 1.1x. The Spirit debenture vehicle had a FCF
DSCR ratio of -2.8x, which is below the covenant limit of 1.3x.
Overall, the group’s net debt increased in the year by £116.4
to £2,994.3m.
Pensions
The group maintains two defined contribution schemes, which are
open to all new team members and two defined benefit schemes,
which are closed to new entrants and to future accrual.
At 2 January 2022, there was an IAS 19 net pension asset of £136.8m
representing an increase of £88.5m since 3 January 2021. The closing
assets of the group’s two pension schemes totalled £1,002.6m and
closing liabilities were £865.8m compared to £993.3m and £945.0m
respectively at the previous year end. Included in the remeasurement
are key assumptions relating to the discount rate of 1.9% (2021:
1.4%), RPI inflation of 3.3% (2021: 2.9%) and CPI inflation of 2.6%
(2021: 2.1%). In the current year, the remeasurement relating to
the Spirit pension scheme also included the adoption of a scheme
specific mortality table. Total cash contributions in the period were
£4.5m (2021: £3.0m).
The triennial valuations are ongoing for both pension schemes and
are on track to meet the regulatory deadlines of 5 July 2022 for the
Greene King scheme and 30 September 2022 for the Spirit scheme.
Dividend
No dividend has been proposed by the board in the current
or prior period.
38 Greene King Limited | The Year in Review - 2021
39
Registered office
Westgate Brewery, Bury St Edmunds, Suffolk, IP33 1QT