A Year in Review 2022
02 Greene King Limited | The Year in Review - 2022
03
Contents
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04
06
07
08
12
14
16
18
20
24
26
28
32
33
34
38
40
At a Glance
CEO Review
Business Model
How we Measure Success
Strategic Progress
Celebrating Success
Our People
Destination Food Brands
Local Pubs
Premium, Urban & Venture
Pub Partners
Brewing & Brands
Greene King for Good
Macmillan Cancer Support
Untapping Potential
Financial Review
Executive Board
Setting ourselves up for Success
At a Glance
REVENUE
£2.18B
(52 weeks to 1 Jan 2023) vs £1.34B
for the 52 weeks up to 2 Jan 2022
ADJUSTED
OPERATING PROFIT
£192.6M
(52 weeks to 1 Jan 2023) vs £18.6m
for the 52 weeks up to 2 Jan 2022
STATUTORY
OPERATING PROFIT
£249.2M
(52 weeks to 1 Jan 2023) vs £63.8m
for the 52 weeks up to 2 Jan 2022
FREE CASH INFLOW
INVESTMENT
NEW APPRENTICESHIPS
£13.1M
(52 weeks to 1 Jan 2023) vs £7.2m
for the 52 weeks up to 2 Jan 2022)
£242.3M
Capital expenditure and acquisitions
1,173
New apprenticeships started across
Greene King in 2022
NUMBER OF EMPLOYEES
NUMBER OF PUBS
RAISED FOR MACMILLAN
38,600
Monthly average across 2022
2,636
£3M
Taking our total raised since 2012 to £14m
04 Greene King Limited | The Year in Review - 2022
05
CEO Review
THE WAY OUR TEAMS HAVE RISEN TO THE
MULTIPLE CHALLENGES OF 2022 HAS BEEN TRULY
AWE-INSPIRING AND, WHILE THOSE CHALLENGES
ARE SET TO CONTINUE, I AM EXCITED BY THE
LONG-TERM PROSPECTS WE NOW HAVE IN
FRONT OF US. Nick Mackenzie, Chief Executive Officer
Overview
Coming out of the backdrop of Covid, this
year has been all about the progress of
putting our strategy into action and realising
our purpose of pouring happiness into lives.
It has been a strong financial performance
against a challenging backdrop, including
significant inflation and the domino effects
of the ongoing war in Ukraine, particularly
on energy bills. For our leased and tenanted
partners, these challenges have been
particularly debilitating.
It feels like we are facing into higher cost
headwinds than at any time previously and
the significance of this cannot be stressed
enough. We have seen very high inflation
across our cost base throughout 2022,
and continue to see the wider cost of
doing business increasing as a result of
compliance with existing and new
regulation on our industry.
Nevertheless, I believe that pubs and
brewing can continue to thrive and
contribute to the UK’s economy. This year
alone we have paid over £500m in tax
to the Treasury and this amount will be
going up further in 2023. It is vital we take
a long-term approach in our thinking to
ensure that businesses can support the UK
Government’s wider aims around economic
growth and achieving net zero ambitions,
something that we have placed at the
heart of our business this year.
To have come through these crosswinds
in a strong position is testament to the
incredible hard work and dedication of
our teams and our partners and I would
like to pay tribute to all of them here.
* Lumina Intelligence: UK Pubs & Bars Market Report 2022
Our markets
In 2022, there were forecast to be 42,793
pubs across the UK, down less than 1%
on 2021. However, it will continue to be
a challenging 12 to 18 months for the
market and outlet decline is expected
to continue until 2024*.
Pub market value through turnover in 2022
was forecast at £22.5 billion, equating to
98% of its 2019 value before the pandemic
and growth of 56.7% from 2021*. However,
price increases over the past 12 months
will have contributed to this, with volumes
remaining down on pre-Covid levels.
Strategy into action
The plans we began formulating in 2021 as
part of a longer-term strategy have begun to
be put into action this year, including a greater
emphasis on creating a sustainable business
and increasing our environmental focus.
We have added ‘Environment & Social’ as
an eighth driver to our strategy, putting it
at the heart of our business.
We have made ambitious science-based
commitments to reduce our carbon
emissions. It is the right thing to do as we
aim to ensure the long-term commercial
sustainability of Greene King’s pubs and
breweries. There is more detail on page 8
of our strategic progress to date, but some
of the highlights include expanding with
our investment in Hickory’s and investing
in our people by rolling out our Elevate
coaching programme.
Our People
Not too long before this annual review
went to press, we were proud to be named
the winner of the Best Pub Employer
(501+ employees) at the Publican Awards,
an award we entered in December 2022
based on our work throughout the year.
We were also equally thrilled to win
Best Leased & Tenanted Pub Company
(501+ sites) at the same event.
These were great accolades to win,
especially as a big part of 2022 was about
setting our people up for success. Every year,
our Rant & Rave engagement survey asks
our people what they think about working
for Greene King. I am delighted that our
increased ‘sustainable engagement’ score
of 84% means the vast majority of our
team members are engaged, enabled
and energised.
Building meaningful careers for people in
hospitality is something we are passionate
about and was recognised in our award
win. This year we celebrated reaching
the landmark of 16,000 apprenticeships
supported since 2011. Our employee
turnover has continued to reduce this
year, by 6%, equating to 2,340 more
team members whom we have retained.
We want to help people build careers
with us and it’s been great to see us
commit this year to delivering a further
5,000 apprentices by 2025 as part of
our Untapping Potential report. You
can read more about that on page 33.
I was also proud to see our teams’
achievements celebrated at our Pride of
Greene King awards, which can be read
about later in this report on page 12.
Our customers
With rising inflation fuelling a cost-of-
living crisis, the manner in which many
of our customers view a visit to the pub
has changed. It has become even more
important that we focus on providing an
outstanding experience for them, so they
feel a visit to the pub represents good
value for money.
We have invested significantly in our
estate this year, providing quality internal
and external areas but also investing in
our people and operational excellence
to help us stand out as we aim to be
the pride of British hospitality.
Our communities
Our pubs continue to be vital hubs for
their communities, not just a place to eat
and drink, but a place for people and
groups to be together and socialise.
Our purpose of pouring happiness into
lives extends into these communities as
our pubs bring people together from
all walks of life where they can socialise,
relax and be themselves.
Whether it is raising more than £3m
this year for Macmillan Cancer Support,
providing Christmas Day meals as part of
our No One Alone initiative for those who
would otherwise spend the day on their
own, or becoming the first national partner
of Best Bar None, we put our pubs’ place in
the community at the heart of what we do.
Inclusion and Diversity
We are on a journey to everyday inclusion,
making Greene King a place which is
fully inclusive for our team members and
customers. This isn’t just about words, we
are also committed to using data to measure
our own performance and also launching a
number of new initiatives to educate and
inspire people.
From my own personal perspective, I
took part in our first reverse mentoring
programme this year, which you can read
more about later in this review. I was
nervous to take part, but my confidence
grew and my ability to talk to people about
racism has certainly grown. I feel able now
to have these conversations, to promote
inclusion and to challenge where necessary
to meet Greene King’s aim of being a
truly anti-racist organisation.
Looking ahead
While we have made great strides this
year, our strategy is a long-term one and
the focus is now firmly fixed on setting
ourselves up for success in the years ahead,
while at the same time continuing to
overcome significant cost pressures that
will continue in 2023.
We will put more focus on growing and
enhancing the Greene King brand. Part of
this involves a realignment of our business,
moving from five divisions to four and
building the strength of our brands on one
side, while also expanding our Ventures arm
to explore more exciting innovation and
asset optimisation opportunities.
The way our teams have risen to the
multiple challenges of 2022 has been truly
awe-inspiring and, while those challenges are
set to continue, I am excited by the long-
term prospects we now have in front of us,
as we continue investing in our people, our
customers and our communities to fulfil our
purpose of pouring happiness into lives.
I would like to thank everyone who works
for Greene King, our owners, our tenanted
and leased partners, our franchisees, and
our suppliers. Furthermore, I would also like
to thank our trade bodies who continue
to highlight the enormous benefits of pubs,
breweries and the wider hospitality sector
to the UK.
06 Greene King Limited | The Year in Review - 2022
07
Business Model
How we Measure Success
INPUTS
STRATEGY
VALUE
WE USE THE DARTBOARD, A BALANCED SCORECARD WHICH TRACKS AND MONITORS
GROUP PERFORMANCE AGAINST A BROAD RANGE OF KEY PERFORMANCE INDICATORS.
Resources and relationships
we rely on to...
...operate the UK’s largest integrated
Pub Company and Brewer...
...in pursuit of our purpose to
pour happiness into lives
PEOPLE &
PARTNERSHIPS
Approximately 39,000 talented
team members and around
1,000 pub partners
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
CUSTOMER
Grow reach through compelling
profitable brands
We put customers at the heart
of our decision making and strive
to consistently deliver outstanding
customer experiences
CULTURE
Transform our culture
PEOPLE
Invest in our people
ENVIRONMENT & SOCIAL
Supporting our communities and
reducing our environmental impact
EXPAND
Through innovation and
targeted acquisitions
ASSETS
Unlock value through making
the most of our assets
DIGITAL
Turbocharge the digital experience
for our guests and teams
OPERATIONAL
EXCELLENCE
Managing cost inflation and
building sustainable processes
PEOPLE
We care about and invest in our
people to support fulfilling
careers in hospitality
OPERATIONAL
EXCELLENCE
We create safe and secure
environments for our customers
and people at the same time as
mitigating cost inflation through
sustainable and efficient
business processes
FINANCIAL
Our business model
delivers long-term growth and
consistent cash generation to
benefit all our stakeholders
PRIDE
We create a culture of pride
in our business as a positive
contributor to our communities
and our environment
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08 Greene King Limited | The Year in Review - 2022
09
Strategic Progress
Work began in earnest in 2021 to prepare a longer-term strategic plan and during 2022 the focus was on putting the plan
into action. The foundational projects commenced in 2021 continued during the year to underpin our brand development
strategy, including work on customer segmentation, the Greene King brand and a customer engagement programme.
This year we have made great progress in executing our strategy towards our goal of becoming the Pride of British Hospitality, famous
for outstanding experiences. As we continued to refine our strategy in 2022 we added a new strategy driver: Environment & Social.
Our goal and purpose are underpinned by the following strategy drivers:
OPERATIONAL
EXCELLENCE
• Invested £2.2m in a new and efficient
kegging line in our Belhaven Brewery
• Achieved our highest ever average
environmental health score for our
c1,600 managed pubs: 4.89/5
• Helped develop the first national
accreditation process for Best Bar None,
the Home Office and industry supported
scheme that recognises and promotes
the highest operating standards. All
Greene King pubs and Destination pubs
will complete training and assessment
for accreditation in 2023
BRANDS
EXPAND
PEOPLE
DIGITAL
• Launched our new range of premium
beers: Flint Eye and Level Head, which
are now available in pubs across the
UK and beginning a roll out into
shops and supermarkets
• Invested in Hickory’s, a highly
differentiated, leading BBQ smokehouse
restaurant group, with potential to grow
it into a national dining brand
• Made targeted purchases of individual
• Grew our new Hive Pubs franchise
venues across the country
to 28 sites
• Used detailed customer research to
shape and evolve our Chef & Brewer
Collection of pubs, completing several
transformational investments of over
£1m each
• Announced a move for our Bury St
Edmunds distribution depot to a new
purpose-built 160,708 sq ft site on
the outskirts of our hometown
• Spent more than £1m rolling out
• Launched one of our biggest-ever IT
our Elevate leadership development
programme
• Launched a new and much improved
maternity policy as part of our journey
to everyday inclusion
• Made progress against the commitments
in our Calling Time on Racism manifesto
projects: Pub Network of the Future, to
bring high-quality WiFi to all our pubs for
both customers and our own network
systems. We completed 184 sites by
the end of the year and the aim is to
complete the full rollout in 2023
• Strengthened our IT security systems
and cyber resilience
ASSET
OPTIMISATION
CULTURE
ENVIRONMENT
& SOCIAL
• Completed a full estate review of
all our pubs to confirm which part
of our business would optimise their
performance and through this process
identified key brand transfers. For
example a number of pubs have
been given a new lease of life in
our Hive Pubs franchise or our
Pub & Social managed business
• Further explored opportunities to
premiumise with pubs transferring
to Metropolitan Pub Company and
Crafted Pubs
• Identified 39 hotels in our Destination
Food Brands division and transferred
them over to form a new Venture
Hotels business
• Completed our first year using our
new Dartboard to measure company
performance based on a range of
metrics, not just financial
• As part of our Dartboard, we now
reward our general managers for
managing teams’ hours successfully,
for example so that people finish their
shifts on time to allow for a better
work-life balance
• Committed to set a near term target
of 50% reduction of greenhouse gas
emissions across scopes 1, 2 and 3
(direct and indirect emissions) by 2030
and net zero target of 2040 through the
Science Based Target Initiative (SBTi)
• Launched our Untapping Potential
report, making a number of pledges
including the training of 5,000 more
apprentices by 2025
• Launched our Reverse Mentoring
• Raised £3m in 2022 for Macmillan
programme to bring fresh perspectives
and experiences to our senior leaders
as well as Inclusive Leadership training
Cancer Support
10 Greene King Limited | The Year in Review - 2022
PURPOSE WHY WE DO IT
11
Culture and Values
Significant progress continued during the year with regard
to the company’s programme of cultural and strategic
transformation. Supported by the board, the following
elements of the programme were delivered during the year:
• Approximately 2,000 managers took part in our intensive
leadership development programme called Elevate, to build the
skills and capabilities to embed the cultural change programme.
• Continued the drive to improve inclusion and diversity across
the business, by delivering inclusive leadership training to our
senior leaders and promoting our Employee-led Inclusion
Groups (ELIGs).
• We ran a high performing teams programme for our leadership
team to equip them with additional skills to ensure they get the
best out of their teams.
• The consistent use of the “Dartboard” balanced scorecard to
measure and assess performance against strategy in a more
rounded way, including shifting our mindset to look at
behaviours and not just performance.
• The implementation of a new performance management
and talent process which started at the beginning of 2022.
Expand
With the ending of the Covid restrictions the business was
able once again to consider taking advantage of opportunities
to expand via appropriate acquisitions and investments.
A number of single site acquisitions were made during the year to
enhance the estate, with a particular focus on pubs and restaurants
suitable for inclusion with our Metropolitan Pub Company.
In July the acquisition of a package of three restaurants in Glasgow,
including the acclaimed Ubiquitous Chip, was approved.
We also invested in Hickory’s, a leading authentic BBQ smokehouse
restaurant operator in the UK, which underpins Greene King’s
strategy of growing our reach through compelling brands. It is a
family friendly smokehouse and BBQ restaurant business, with
a strong focus on food quality with meats slow cooked for
up to 12 hours on smokers specially imported from Memphis.
Customers are offered unique dining experiences, such as
chef ’s tables, dining verandas, cinemas and children’s play areas.
Hickory’s is highly complementary to our current portfolio of
brands and geographical reach. We plan to leverage its scale
and expertise to accelerate the national roll out of the Hickory’s
brand beyond its north-west heartland, with significant growth
over time by optimising Greene King assets.
STRATEGY GOAL WHAT OUR AIM IS
To be the Pride of British Hospitality,
famous for outstanding experiences
STRATEGY
DRIVERS
WHAT WE WILL DO
Turbocharge the digital experience
for our guests and teams
Grow reach
through compelling
profitable
brands
Transform our culture
Supporting our communities, giving
people better lives and reducing
our environmental impact
Invest in
our people
Managing cost inflation and
building sustainable processes
Through innovation and
targeted acquisitions
Unlock value through making
the most of our assets
OUR GREENE KING
VALUES WHO WE ARE
customer first
we take ownership
we care
freedom to succeed
win, learn, celebrate together
OUR GREENE KING
BEHAVIOURS
HOW WE DO IT
achieve
connect
drive
grow
How we will drive the future success of our business, in pursuit of a purpose we are proud of,
delivered by a clear strategy, underpinned by Our Greene King values and behaviours
12 Greene King Limited | The Year in Review - 2022
13
Celebrating Success
Pride of Greene King Awards
In May we held our first in-person Pride of Greene King Awards,
which we started virtually during lockdown to celebrate and
thank our amazing people.
As well as an outstanding contribution prize – chosen by CEO
Nick Mackenzie – other awards reflected the new behaviours
embedded across Greene King as part of our Unleashed culture
change programme, with the previous year’s winners judging the
majority of the awards.
The Procurement, Supply Chain & Distribution teams won
the outstanding contribution prize because of the challenges they
overcame to keep our pubs well-stocked, despite a number of
world events putting continual pressure on product availability,
inflation, and deliveries.
Other winners at the awards ceremony were:
• Terry Rigg, general manager at the Fox & Pheasant in Stoke
Poges, won the High Flyer award for producing consistently
fantastic sales while always putting his customers first and
making his pub a real cornerstone of the community.
• Pete Taylor, a dray driver based at the Eastwood depot, won
the Building Bonds award after he hired a truck and filled it with
donations of much-needed goods including first-aid items, sleeping
bags, clothes and sanitary products. He drove on his own to the
Polish border with Ukraine to deliver to the Polish Red Cross.
He travelled 2,000 miles and spent 40 hours driving.
• David McBride, operations director for Greene King Local
Pubs, won the Nourish and Flourish award for supporting his
team. Since he joined in 2020, the way he coached his team
has been praised repeatedly and led to three internal business
development manager appointments. He has a natural flair
for getting the very best out of people.
• Andrea Greenwood, operations manager for Greene King
Local Pubs, won the Pedal to the Metal award for producing
consistently strong financial results for her pubs, while
simultaneously encouraging her pubs to fundraise for
Greene King’s charity partner Macmillan Cancer Support,
with her pubs raising £165,000 the previous year.
• Angelo Vitale, holding general manager at The Packhorse &
Talbot in Chiswick, was voted by Greene King team members
as the winner of the We Pour Happiness into Lives award.
• Paul Wishart, national operations manager for Scotland, and
Chris Shimwell, corporate communications manager, were
highly commended in the outstanding contribution category
for the commitment they had shown to help realise one of the
pledges in Greene King’s Calling Time on Racism manifesto.
Greene King’s Chief Executive Officer Nick Mackenzie
Awards
As an employer of approximately 39,000 people
nationwide, we know that without the dedication and
passion of our teams we would not be able to bring
our strategy to life and meet our performance targets.
We are honoured to receive a number of accolades
for our work in 2022, including the following:
• Top-rated pub company on Britain’s Most Admired
Companies list – the longest-running annual survey
of corporate reputation in the UK
• Our Village Greene employee-led inclusion group
was named ‘New Employee Network of the Year’
at the Rainbow Honours awards
• Our Breaking the Bias campaign for International
Women’s Day won the Diversity & Inclusion
Award at the PRCA Dare Awards
• We were listed in the Financial Times & Statista
Climate Leaders 2022
• We won two awards at the Better Society Awards:
Best Scheme to Encourage Staff Fundraising –
long-term partners with Macmillan Cancer
Support, and the Supportive Employer Award
• Belhaven Brewery was named Visitor Attraction
of the Year at Global Beer Awards
• Greene King was named Best Pub Employer (501+
employees) at the Publican Awards, while our Pub
Partners business unit was named Best Leased &
Tenanted Pub Company (501+ sites)
Award winner David McBride pictured with executive board
members Richard Smothers (left) and Clair Preston-Beer (right)
Award winner Andrea Greenwood, pictured with executive
board members Andy Wilson (left) and Assad Malic (right)
The outstanding contribution award went to the Procurement, Supply Chain & Distribution teams
14 Greene King Limited | The Year in Review - 2022
15
Our People
Supporting Our People
Inclusion and Diversity
The cost-of-living crisis has made things tough not just for
businesses but for so many individuals across the country.
People and culture are at the heart of our strategy, and
we wanted to do all we could to support our teams
through difficult times they may have been experiencing
outside of work.
We want to show we care and help where we can – whether
that is through practical financial support or helping to promote
physical and mental wellbeing.
Here are some of the measures that we have ongoing or
have introduced this year at Greene King:
New maternity policy
In September, we launched a new industry-leading maternity
offer entitling our hourly-paid team members to 13 weeks’
full pay, then 13 weeks’ half pay, then 13 weeks statutory
maternity pay.
Our salaried team members are entitled to 26 weeks’
full pay, then 13 weeks’ statutory maternity pay.
Team Member Support Scheme
We launched our Team Member Support Scheme,
administered independently on our behalf by The Licensed
Trade Charity, to support any team members facing financial
hardship. £150,000 was donated to The Licensed Trade Charity
to administer grants in 2022.
Employee benefits
All our team members have access to a range of benefits,
including a discount in our managed pubs of 33% off food
and drink, and also discounts off overnight stays in
Greene King hotels.
We operate a Friends and Family Scheme, for employees to
give friends and family a 15% discount.
We also offer access to the Wagestream app, giving employees
financial education and the option to access earnings quickly if
needed, and work with a third-party to offer a range of external
discounts for employees from supermarkets to travel across
a range of sectors, including discounted gym membership.
Mental wellbeing
Our Employee Assistance Programme is available 24/7 and
includes a confidential telephone hotline for all team members
to access free support and counselling.
We have also continued to work with Mental Health First Aid
England (MHFA) to train more than 100 mental health first aiders
at Greene King, who are spread across a range of departments
across the country. Everyone who took part has undergone a
professional and in-depth training course and is now available
to be contacted by someone who needs support.
We are committed to our journey towards everyday
inclusion, sharing the awareness and lived experiences
of minority populations in our business.
Our aim is to:
• build and sustain a more diverse environment where all
our people are embraced and valued for who they are
so that they reach their full potential and thrive.
• set the bar as an inclusive organisation where all feel a
sense of belonging and are made welcome.
We were pleased that between 2021 and 2022, under-represented
groups saw increases of 6-8% positivity across our Rant & Rave
engagement survey, outperforming the 4-5% increase seen by
the Greene King population as a whole.
This is important not just for our teams but for our customers
as well. As well as broader everyday inclusion at Greene King,
including ongoing awareness education and an annual inclusion
calendar, we also carried out a number of areas of focused
activity and planning in 2022, including:
• Reverse Mentoring
• Inclusive Leadership Training
• Progressing our Calling Time on Racism manifesto
• Female Mentoring programme
• Creation of ‘I’m Not Prejudiced, but…’ video
Reverse Mentoring
Our Reverse Mentoring programme flips the normal hierarchy
of mentoring and partners senior leaders who hold a wide
influence over the organisation with members of the diverse
communities that the company is working hard to support
and increase representation of.
Starting at the end of 2021 and continuing across 2022,
the executive board and senior leaders across the business
embarked on the scheme with 30 partnerships undertaken
in 2022, supported by an external provider, School for CEO’s.
Each programme lasts seven months and encourages positive,
challenging and engaging conversations, all designed to inspire
and to support leaders across the business to understand their
role in making marginal gains in changing Greene King’s culture
for the better.
We also have four Employee-Led
Inclusion Groups at Greene King,
led by people from all kinds of jobs,
from all parts of the business and
from all different backgrounds.
Each of the groups has a sponsor
from our executive board. All the
groups are safe spaces focused
on making a difference.
Everyone is welcome to join,
even those who may not identify
with the community the group
represents, but who have an
interest and a desire to be an
ally, learn more, and support
the group’s goals:
• Unity
Our Black, Asian and minority
ethnic focused community
group where ‘diversity is our
identity’ and the focus is on
true inclusion for all.
• Greene Sky
Our female community group
focuses on developing great
females and highlighting the
impact they have across
Greene King.
• Village Greene
Our LGBTQ+ focused
community group which
helps make Greene King
a great place for LGBT+
team members to work.
• Ability
Our disability focused
community group aimed
at supporting Greene King
to truly be a Disability
Confident Employer.
Inclusive Leadership Training
To bring our inclusion and diversity goals
to life, we need our people to be living and
breathing them. We worked with external
provider Involve to design workshops as
part of our Unleashed programme to give
our leaders the tools to help activate a
culture change in their areas of the business.
More than 300 people from our
leadership team were invited to take part
in a face-to-face workshop this year looking
at biases, privilege and influence so we
could begin to step-change our culture.
We are taking our words and intent
and making it a reality by helping our
leaders realise the role they play in
bringing everyday inclusion to life.
There will be a programme for senior
managers in 2023 as we work towards
getting every one of our pub teams and
managers to be trained and have the
tools to embrace everyday inclusion
across our company and in our pubs.
Calling Time on Racism
In 2021 we launched our Calling Time on
Racism manifesto, where we pledged four
commitments to help achieve our ambition
to embrace and value our Black, Asian and
minority ethnic colleagues, and the wider
community, and increase their representation
within the hospitality sector as a leading
and truly anti-racist organisation. These
four commitments are: Leadership,
Culture, Customer and Community.
• Leadership
Our Leadership commitment is to
empower leaders to own the journey
of racial inclusion and representation,
while embedding anti-racism across
Greene King.
• Culture
Our Culture commitment is to
establish and embed a culture of
inclusion and a celebration of
difference across the business.
• Customer
Our Customer commitment is to
enhance the customer experience
and use Greene King’s brand and
assets to promote racial inclusion and
drive entrepreneurial opportunities
for those who experience racism.
• Community
Our Community commitment is
all about making sure that our
activity reflects the diversity of the
communities we serve. It’s also about
making Greene King a driver for
change on race diversity locally.
16 Greene King Limited | The Year in Review - 2022
17
Chef & Brewer:
Red Lion, Todwick
As part of our work to grow reach through compelling,
profitable brands, we have undertaken a number of major
investments in our Chef & Brewer Collection this year,
with a particular focus on pubs with accommodation.
The Red Lion in Todwick transferred brands to Chef & Brewer
in 2022 and underwent a seven-figure investment, reopening in
December after a full revamp, which included a top-to-bottom
makeover of all 30 of its hotel bedrooms. This included new
bathroom suites, furniture, wallpaper and carpets which were
all designed to link with the look and feel of the pub.
Set just a few miles from Rother Valley Country Park, but with
easy access to the M1, this 19th century pub and hotel is a
popular destination for tourists and has performed strongly
since reopening. With many more refurbishments for pubs
with rooms planned for 2023, this is planned to be a
key area of focus for the coming year.
Destination Food Brands
REVENUE
£757.9M
ADJUSTED EBITDA
£87.3M
ADJUSTED
OPERATING PROFIT
£46.8M
WE’RE PROUD TO HAVE FINISHED 2022 AHEAD OF BOTH THE WIDER MARKET AND OUR
2019 SALES PERFORMANCE. DESPITE A YEAR OF GLOBAL PRESSURES, WE’VE BEEN AT THE
HEART OF COMMUNITIES, EMBRACING OUR NEW CULTURE, RAISING MORE THAN £1M
FOR MACMILLAN AND SEEN GREAT RETURNS ON OUR CAPEX INVESTMENTS.
Our Destination Food Brands division
places a strong focus on running brands
that bring family and friends together.
It consists of seven key brands
and formats: Hungry Horse, Wacky
Warehouse, Chef & Brewer, Farmhouse
Inns, Pub & Carvery, Pub & Dining
and Pub & Grill.
Measuring our performance
In 2022 our total sales increased by
£230.8m compared with 2021, thanks to our
dedicated teams delivering great customer
service as well as no Covid restrictions and
the benefit of a reduced rate of VAT on
food up until 31 March 2022.
However, a combination of the Omicron
variant, significant food and labour inflation,
as well as reduced customer demand,
meant the wider trading environment
was particularly challenging for food-led
businesses in 2022.
Nevertheless, our like-for-like sales were
ahead of both 2019 and the market (Coffer
Peach Pub Restaurants), however volumes
remain below 2019 levels. This was a
fantastic achievement ensuring we had
the right balance on price and customer
experience. Our adjusted operating profit
was £46.8m, more than double that of 2021.
Investing for future growth
We remain confident about the long-term
future of our food-led brands and invested
£31.3m in capital developments in our
estate throughout the year, including £25m
on core schemes and £2.3m on gardens
as consumer demand for high-quality
outside space continued post-Covid.
We have invested in our customer journeys
in all of our brands which has resulted in
better customer service. In total 80 sites
benefited from capital investment in the year.
Accommodation focus
Accommodation remains a key revenue
stream for Destination Food Brands, with
our pubs with rooms receiving £9.2m of
investment this year as part of the wider
£25m investment referenced above.
Returns on these investments have been
ahead of the market. We plan to continue
investing in 2023 in this space as people
continue to holiday in the UK.
In February, 39 hotels were transferred out
of the division to create a separate Hotels
business as part of our Ventures division.
Putting our customers first
We are prioritising our customers’
experience in our pubs, which has
contributed to our customer metrics
continuing to move forwards, with
Reputation.com scores improving by
eight points from 2021 and complaints
per 1,000 covers ratios improving by 0.03.
Our safety scores also improved with
our average Environmental Health (EHO)
rating at the year end at 4.93 out of a
maximum of 5 – increasing from 4.86 last
year. This is our highest score to date.
Engaging our people
We ran our annual engagement survey
in October, with 13,614 team members
taking part in the survey. Our two key
measures improved from 2021, with
sustainable engagement going from
79% to 84%, and business pride increasing
from 81% to 85%. Both of these are in
line with the average across Greene King.
Looking forward
We remain cautious in our outlook for
the current year, with a number of external
factors continuing to impact trade. We have
a strong investment programme planned,
particularly around our Chef & Brewer
brand and for pubs with rooms. We believe
our brands are well-placed this year to
deliver a strong performance on all people
and customer metrics against a challenging
macroeconomic backdrop.
18 Greene King Limited | The Year in Review - 2022
19
Local Pubs
REVENUE
£535.6M
ADJUSTED EBITDA
£84.4M
ADJUSTED
OPERATING PROFIT
£57.2M
LOCAL PUBS HAVE PERFORMED STRONGLY THIS YEAR, WITH A REAL FOCUS ON
ATTRACTING NEW CUSTOMERS FOR DIFFERENT OCCASIONS. WE’RE DELIGHTED
THAT OUR NEWLY DESIGNED PUB & SOCIAL FORMAT IS LANDING WELL WITH
CUSTOMERS AND WE WILL CONTINUE TO ROLL THIS OUT. OUR TEAMS HAVE BEEN
FANTASTIC THROUGHOUT THE YEAR, SUPPORTING THEIR CUSTOMERS, THEIR
COMMUNITIES AND RAISING AN INCREDIBLE £1M FOR MACMILLAN.
Local Pubs lie at the heart of
communities up and down the UK
with 615 pubs offering a unique
place for customers.
The division is split into four distinct
formats: Pub & Social, Pub & Kitchen,
Proper Locals and Flaming Grill.
Looking after our customers
We were pleased to see positive
progress with our customer scores
this year, measured by Reputation.com.
We saw a 22-point increase on 2021
and a 22% drop in complaints this year
when measured as ratio of complaints
to number of covers.
Engaging our people
Our engagement survey was completed
across all Local Pubs and support centre
teams in September with 8,542 participants
taking part. Our sustainable engagement
result was 84% and improved by 4% pts.
against 2021’s survey and business pride
of 86% also saw an improvement of
4% pts. on 2021.
Looking ahead
We have been carrying out an extensive
analysis of our new Pub & Social and Pub
& Kitchen formats so we can test and learn
and after completing 14 core investments in
these formats during 2022 this has provided
a platform for further investments across
2023 and beyond.
Measuring our performance
Our revenue was up 69.5% against 2021
performance, when pubs were closed at
the start of the year under Covid-19
restrictions. However, the start of this
year was still affected by the spread of
the Omicron variant.
Like-for-like sales were slightly up
compared with 2019 and traded ahead
of the comparable market over 2022
(Coffer Peach Pub Restaurants).
We made an adjusted operating profit of
£57.2m, which was £54.6m ahead of 2021.
Several challenges were navigated in the
year with the higher than anticipated levels
of inflation impacting almost everything,
from food prices to energy.
Investing in communities
With Local Pubs sitting at the heart of
communities across the UK, we were
pleased to be able to invest £24.9m in
our pubs this year. We spent £16m on 14
core investments to establish the platform
for scale investments across 2023 and
beyond. The majority of spend was seen
in Pub & Social and Pub & Kitchen sites
as part of our test & learn programme, as
well as £4.7m spent on garden schemes
following on from the success of our 2021
programme. In total 105 sites benefited
from capital investment in the year.
Pub & Social:
The Mulberry Tree
We invested a six-figure sum in The Mulberry Tree
in Stockton Heath, Cheshire this year as part of our
Pub & Social rollout plans.
The refurbishment created distinct areas for different social
and eating-out occasions, including a Treehouse cocktail bar,
and a fantastic garden with heaters. We also introduced new
brunch and cocktail menus.
The Mulberry Tree is surrounded by pubs and restaurants and
we wanted to attract a wider range of customers in order to
grow sales by focusing on different occasions throughout the day.
The pub now attracts customers across all age ranges and has
consistently exceeded our expectations, increasing sales by an
average of 71% compared with 2019. Market share has also
increased from 7% to 10%.
One of our goals for Pub & Social was to create occasions to
attract new customers, especially those aged under 35 and
we are pleased to have seen a 5% increase in market share for
customers in this age bracket. Pub & Social has surpassed our
targets and expectations and we plan to continue to reflect
the new template across our portfolio of pubs in the future.
20 Greene King Limited | The Year in Review - 2022
21
Premium, Urban & Venture
REVENUE
£502M
ADJUSTED EBITDA
£112.1M
ADJUSTED
OPERATING PROFIT
£80.6M
A YEAR OF SALES AND PROFIT GROWTH ACROSS OUR URBAN ESTATE WAS ABLY SUPPORTED
BY AN AHEAD-OF-ANTICIPATED RECOVERY IN LONDON. THE VENTURE GROUP TRIPLED
WITH THE ADDITION OF A HOTELS DIVISION AND THE HICKORY’S SMOKEHOUSE BRAND,
AS METROPOLITAN PUB COMPANY CONTINUED ITS TARGETED EXPANSION. THE CRAFTED
PUBS PROJECT FURTHER SUPPORTED THE DIVISION’S PREMIUMISATION AND
OPTIMISATION OF GREENE KING’S PORTFOLIO.
This division comprises a collection
of more than 400 pubs, restaurants
and hotels that celebrate their unique
identity. From a new premium pubs
concept, to iconic city centre pubs and
entrepreneurial venture businesses,
we have a range of offerings for
our customers.
Urban
Urban Pubs, the largest element of the
division at just under 300 sites, continued
its sales-led recovery in 2022, despite the
impact on city centres of rail strikes and
people working from home. Additionally,
Urban Pubs successfully launched Greene
King’s new premium beers Level Head
and Flint Eye across its estate.
Premium
Our premium pub concept, Crafted Pubs,
doubled in size in 2022 with the opening of
two new sites, showcasing growth through
compelling brands and asset optimisation.
Focusing on industry-leading outdoor space
and known for their gastro dining and social
pub food, plus premium wines, cocktails and
coffee, the new sites have outperformed
their previous trading records under other
brands or formats.
Venture
The division made progress with ventures
this year, with the investment in Hickory’s
Smokehouse, a leading barbecue smokehouse
restaurant operator. It also created a new
hotels venture segment with the transfer of
39 hotel businesses out of the Destination
Food Brands division to create a new
standalone venture.
Giving our customers a great experience
We were delighted to see a fantastic
improvement in our guest metrics. Our
Reputation.com scores improved by 13
points in 2022, complaints per 1,000
covers ratio also improved by 0.03 and
Environmental Health ratings improved
by 0.06 to an average of 4.93 out of a
maximum of 5.
Listening to our people
We conducted a full engagement survey
in September, which involved 11,141 team
members. Our sustainable engagement
result was 86%, which was a 6% pts. increase
on 2021, and our business pride score
also increased by 7% pts. to 85%.
Looking ahead
In 2023, we expect a continued recovery
in sales volumes as the market continues
its post-Covid recovery, alongside continued
investment in asset optimisation and
expansion for our portfolio of venture
brands. This includes the continued
rollout of the Hickory’s format into
further locations.
Metropolitan Pub Company also forms
part of the ventures programme and
continued to go from strength to strength
this year, with continued expansion and
acquisition of some key sites, such as the
Ubiquitous Chip in Glasgow.
Assessing our performance
Revenue grew by 112.9% compared to
2021, principally driven by recovery in trade
from Covid, but also though investment and
acquisition. Like-for-like sales were in line
with 2019.
The division made an adjusted operating
profit of £80.6m, which was £73.8m
ahead of 2021.
Spreading our investment
As well as the investment in Hickory’s and
other targeted acquisitions, we spent £17.5m
of development capital expenditure across
the division as we continue to invest to take
full advantage of market opportunities and
to optimise our estate.
Urban:
Deansgate
The iconic Deansgate in Manchester opened in November,
increasing Greene King’s footprint in a thriving city and
expanding our reach in a previously under-served location.
The pub was acquired in August 2021 and has benefited
from a million-pound refurbishment to unlock value and
maximise trading space in a prime central city location.
We retained the ground-floor character, while the first floor had
new loose furniture and a premium bar installed. The second floor
was transformed from living quarters to a third trading area with
an accompanying bar. A second-floor terrace was also built to
expand the outdoor seating. The pub was famous in Manchester
for its outdoor festoon lighting, and these were replaced with
energy saving bulbs, making it now an Instagrammable feature
that lights up the Deansgate area. To celebrate the relaunch,
there was a launch night attended by more than 400 people.
Since opening, Deansgate has consistently enjoyed
above-target trading weeks and continues to be
a popular watering hole for Mancunians.
22 Greene King Limited | The Year in Review - 2022
23
Premium:
Crafted Pubs
We have now grown our Crafted Pubs concept to include
four pubs. Following the transformation of The Boat in
Catherine-de-Barnes and The Watermill in Dorking,
2022 saw the completion of The Four Oaks in Sutton
Coldfield and The Foundry Bell in Wokingham.
The Four Oaks opened in April, following a refurbishment
of over £1m. Having previously traded in our Chef & Brewer
brand, its average weekly turnover has now nearly doubled
and it set a daily sales record on Christmas Eve.
The Foundry Bell in Wokingham opened in December, having
previously operated as a Loch Fyne Restaurant + Bar, and
underwent a similarly transformational investment. Although
only starting to trade a few weeks before the end of the year,
its performance over Christmas was already significantly
increased, with a near trebling of drinks spending.
Ventures:
Metropolitan Pub Company
As part of our strategy to expand through targeted acquisitions,
we acquired three iconic venues in Glasgow for Metropolitan Pub
Company, including the Ubiquitous Chip. This was a landmark
acquisition for Metro, taking it to more than 70 sites nationwide,
and helped diversity its portfolio into delivering restaurant
hospitality and fine dining.
With the legacy of the sites’ previous owner stretching back
more than 50 years, we brought the 150 team members over
to Metro and will work with the teams on an investment plan
for 2023 that delivers improvements while continuing the great
restaurant experiences customers have come to know and love.
Venture Hotels
We saw two new ventures join the fold this year, with the first
being created out of our existing estate. We identified 39 hotels
which were previously part of the Destination Food Brands
division and transferred them into Venture Hotels in February,
with experienced hotel operator Vincent Madden joining us
as Managing Director in March.
With a newly formed leadership team there are extensive plans
for the division including exciting new brand development and big
investment plans. We aim to maximise the potential of our hotel
assets and create new markets for Greene King accommodation –
as is laid out in the asset optimisation pillar of our strategy.
Hickory’s Smokehouse
The second of our new ventures this year was our investment in
Hickory’s Smokehouse, the leading and family-friendly barbecue
smokehouse restaurant operator, which currently operates 17
restaurants across the Midlands and north-west of England.
We plan to leverage our scale and expertise to accelerate the
national roll out of the Hickory’s brand, underpinning our strategy
of growing our reach through compelling brands and unlocking
value by making the most of each site.
Hickory’s is an award-winning brand and we are excited to
work with the team.
24 Greene King Limited | The Year in Review - 2022
25
Pub Partners
REVENUE
£172.6M
ADJUSTED EBITDA
£81.3M
ADJUSTED
OPERATING PROFIT
£68.9M
THIS WAS A STRONG YEAR WITH OUR PERFORMANCE UP YEAR ON YEAR THANKS
TO SIGNIFICANT INVESTMENTS IN OUR PUBS, OUR PEOPLE AND OUR PARTNERS.
WE WOULD LIKE TO THANK OUR TEAMS AND OUR PARTNERS, WHO CHAMPION
ALL THAT IS GREAT ABOUT THE LEASED AND TENANTED SECTOR. WE’RE PROUD
OF THE COLLECTIVE PROGRESS WE MADE IN 2022.
In Pub Partners, we have a high-quality
portfolio of 990 tenanted, leased and
franchise pubs. At the end of the year,
949 of these were leased or tenanted
and 41 were on franchise agreements.
The division generates significant
and stable cash flow for the group,
adds purchasing scale, enhances the
Greene King brand and provides
flexibility in our estate planning.
The support we provided during the
period impacted by Covid-19 helped
us to be in a strong position to bounce-
back and deliver strong financial
results for the 2022 financial year.
Assessing our performance
The support we provided during the
period impacted by Covid helped us to
be in a strong position to deliver robust
financial results in 2022. Revenue of
£172.6m was up 57.5% compared
with the previous year and adjusted
EBITDA of £81.3m was up 74.1%.
Our partners faced increasing pressure
on their financial stability driven by two
key external factors: beer volumes not yet
returning to pre-Covid levels, coupled with
inflationary pressure on their cost base,
most significantly from staff costs, food
inflation and rising energy costs.
Despite this pressure our tenants have
shown strong resilience.
Building our franchise estate
This year we grew the number of franchise
pubs from 17 at the end of 2021 to 41 at
the end of 2022. Of these 41 pubs, 28 are
branded under our Hive umbrella and these
Hive pubs benefited from a total £8.8m
of development capital and they are now
showing a strong return on the investments.
Our franchise pubs have come from within
our own leased and tenanted estate, where
we’ve been able to give them a new lease
of life, as well as pubs from our other pub
divisions that we believe can return better
value as a franchise.
The franchise estate is making a strong
contribution to the Pub Partners division
and we will continue to invest and grow
the estate of franchise pubs in 2023.
Investing in leased and tenanted pubs
Investing in our leased and tenanted pubs
continues to be a critical part of our strategy.
In 2022 we invested £17.4m in our leased
and tenanted estate, with £8.9m of this
focused around maintenance & IT spend
and the remaining £8.5m on development
capital. The development capital was spent
across 113 leased and tenanted pubs.
Our programme of investment continues
to deliver strong returns.
Industry-leading relationships
The strength of relationships is crucial to
building successful partnerships and we
are pleased to continue receiving strong
feedback in this respect from both our
internal teams and our partners.
Our internal staff survey delivered a
sustainable engagement score of 92%
and a business pride score of 93%. In the
annual industry-wide tenant survey carried
out by KAM media, we were rated best
overall by tenants against the other five
regulated pub-owning businesses.
Our own internal measures for the
Dartboard also produced a high score
of 78% for partner satisfaction.
Taking our responsibilities seriously
We continue to fulfil our obligations under
the England and Wales Pubs Code, which
regulates the relationship between us and
our tied partners. In 2022, we adapted
our ways of working to ensure compliance
with the changes introduced to the Pubs
Code in April 2022 following its first
statutory review. We also participated
in the second statutory review launched
by the Government in May 2022 and
await the outcome of this.
Hive Pub:
The Victoria
In 2022 we opened our biggest and most significant
Hive Pubs transformation yet, The Victoria in Thurston,
Suffolk. Just a few miles down the road from the Greene
King Brewery in Bury St Edmunds, The Victoria re-opened
as a Hive Pub following an investment of almost £1m by
Greene King Pub Partners.
The site had previously been closed for three years, but thanks
to the Hive Pubs franchise agreement model, we were able to
transform the site ready for a franchisee to reopen it and operate
it as a successful business once more. David and Natasha Riggs,
former pub managers at JD Wetherspoon, became franchisees
for the site which opened in December.
A perfect example of our asset optimisation programme,
The Victoria has been completely transformed both inside
and out, with an extension added, a large garden upgraded with
beach huts, and covered outdoor seating with wooden furniture.
The interior has new lighting, furniture, decorations, flooring, and
a dedicated sports area. This once-closed pub is now back open
and serving a growing community in Thurston where new building
developments are seeing the village continue to expand.
26 Greene King Limited | The Year in Review - 2022
27
Launch of Premium Beers
We launched our premium portfolio of beers designed
for the modern-day drinker, inspired by historical myths
and legends from our hometown of Bury St Edmunds.
Level Head, a session IPA, and Flint Eye, a dry hopped
lager, are being rolled out nationwide. A west coast IPA,
Western Zeph, and oatmeal stout, Subterranea, were
also created as limited-edition brews.
A new advertising campaign for Level Head and Flint Eye
ran throughout December 2022, which delivered over 100m
impressions. They are now available in over 500 venues across
the UK and over 750 supermarkets. We have forecast significant
further growth in 2023 in premium independent pubs, pub
chains, and other major supermarket chains across the UK.
Brewing & Brands
REVENUE
£208.3M
ADJUSTED EBITDA
£29.7M
ADJUSTED
OPERATING PROFIT
£20.6M
IT’S BEEN AN EXCITING AND INNOVATIVE YEAR AS WE’VE EVOLVED OUR CENTURIES
OF KNOWHOW TO CRAFT A NEW BEER RANGE, ALIGNING WITH OUR STRATEGY DRIVER
OF BUILDING COMPELLING BRANDS. OUR NEW BEERS ARE A RESPONSE TO CHANGING
TASTES AND WE’RE PUTTING OUR CUSTOMERS’ ADVOCACY AND HAPPINESS AT THE
HEART OF OUR BRILLIANT BREWING BUSINESS.
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. This year, we increased
our intent to expand by releasing
two new premium beers: a session
IPA called Level Head and a modern
dry-hopped lager called Flint Eye.
Monitoring our progress
Revenue was £208.3m which is 36% higher
than 2021 with adjusted operating profit
at £20.6m, which is up £19.7m compared
with the same period.
Total on-trade beer volumes grew 51%
year-on-year, however remained below
2019. This is down to multiple factors,
including a continued reluctance of older
drinkers to return to pubs, and pressure
on people’s disposable incomes. While this
has seen the UK-wide cask market continue
to face a challenging trading environment
and declining market, we grew our share
of the market consistently across the year
from 8% in January to 8.8% in December.
In the off-trade, a combination of improved
supply and strong underlying rate of sale
allowed us to outperform the market this
year, with our share in the total off-trade
growing to 17.1%.
Increasing investments
We sustained our commitment to invest
in brewing brilliant beers and building
brilliant brands throughout the year.
Our core investments in our property,
plant and equipment was increased this
year to £10.3m, as we continue to invest
in onboarding new assets, bringing our
existing assets up to a higher quality and
ensuring our compliance to high safety
standards. This has already seen us
achieve a historically-strong safety
record across the year.
In November, we also entered a 20-year
lease agreement for a new purpose-built
distribution centre based on Suffolk Park,
Bury St Edmunds (less than three miles
from our existing operation). Moving to
a newer facility will allow us to maintain
our high levels of operational excellence.
Coping with challenges
Despite a notable reduction in the impact
of Covid, supply chain disruption continued
this year. Rising commodity and energy
prices, plus a strong recovery in demand
across a range of goods and services, led
to unprecedented inflationary pressures.
We absorbed significant cost increases in
raw materials, canning, packaging materials,
fuel and third-party distribution contracts,
which increased our operating cost base.
However, we have been able to mitigate
this impact across the broad portfolio
with levied price increases.
Launching new brands
The launch of our new premium beers is
a key element of our future strategy and
a key driver of future growth. These beers
were launched successfully in the spring,
initially they were placed in a select group
of our Urban pub sites, primarily in London,
and later were rolled out more widely into
further Greene King pubs, as well as to our
free-trade customers. There are ambitious
growth plans in place for further on-trade
distribution in 2023, as well as new listings
secured in various retailers in the off-trade.
Engaging our people
A full engagement survey was completed
in September with over 600 participants
taking part in the survey. Our sustainable
engagement result was 72%, an increase
of 3% pts. on last year, with Business
Pride scoring 82%, also representing
a 3% pts. improvement.
Looking ahead
We no doubt face another challenging
year in 2023, but we are energised by our
forward ambition and strong momentum
brought forward from 2022, particularly
in growing our premium beer portfolio,
expanding our footprint in the national
accounts arena, growing share in the
declining market of traditional ale,
and developing our people through
enhancing engagement and pride.
28 Greene King Limited | The Year in Review - 2022
29
Greene King for Good
WHILE EMOTIONAL CONNECTION IS THE BINDING
THREAD THROUGH OUR ENVIRONMENT AND SOCIAL
STRATEGY DRIVER AND ITS RELATED PROGRAMMES,
IT IS THE SCIENTIFIC DATA-LED APPROACH THAT
UNDERPINS OUR STRATEGIC PLANNING AND WILL
DRIVE THE CHANGE NEEDED TO DELIVER OUR
AMBITIOUS TARGETS.
Our vision ‘to pour happiness into
lives’ has a powerful social and
environmental purpose at its heart.
We’ve brought people together for
generations, our pubs providing a sanctuary
to communities - to share good times, laugh,
to be themselves, to relax, recharge or to
simply reflect. We bring people together
with warm welcome to connect and build
a sense of belonging, who care about
others and the environment around them.
In our annual report of 2021, we
referred to 2022 being the year of laying
the foundations for our environmental
social governance (ESG) programme.
This followed a year of discovery where
we shifted our approach from corporate
social responsibility to environmental
social governance in 2021, completed
the mapping of our carbon footprint and
set our carbon net zero target – 2040.
During the course of 2022, we…
• committed to set a near term target
of 50% reduction of greenhouse gas
emissions across scopes 1, 2 and
3 (direct and indirect emissions)
by 2030 and net zero target of
2040 through Science Based Target
Initiative (SBTi)
• established an ESG board
• added ‘Environment & Social’ as a
new strategy driver
• started our work on Task Force
on Climate-related Financial
Disclosures assessment
• retained zero waste to landfill
accreditation
• hit a record breaking £3m fundraising
in our 10th year in partnership with
Macmillan Cancer Support reaching
£14m in total since the start of
the partnership
• committed to new social mobility
targets in the launch of our
Untapping Potential report
• expanded our prison leaver
programme, Releasing Potential,
by opening a training kitchen
and academy in HMP Thameside
• launched our No One Alone
Christmas community tables
initiative to support those who
would otherwise spend Christmas
Day on their own. We trialled
this across 73 pubs and gave
away 1,006 meals
• made progress against the
commitments in our ‘Calling Time
on Racism’ manifesto, with reverse
mentoring, inclusive leadership
training and using insight to help
us build pubs and experiences
that welcome all
Our ESG strategy
ENVIRONMENT
SOCIAL
GOVERNANCE
While emotional connection is the binding
thread through our environment and social
strategy driver and its related programmes,
it is the scientific data-led approach that
underpins our strategic planning and will
drive the change needed to deliver our
clear targets.
We made the decision in early 2022 to
put climate science at the heart of our
environment strategy by committing to
set near-term and net zero targets through
the Science Based Targets initiative, reporting
our progress to reducing our greenhouse
gas (GHG) emissions across scopes 1, 2
and 3 through our annual report.
In addition to committing to these targets
and reporting against them, we report ESG
data via our parent company CK Assets,
listed on the Hong Kong stock exchange.
In late 2022, we embarked on a
detailed analysis of climate risks and
opportunities in line with the Task Force
on Climate-Related Financial Disclosures
(TCFD) and will report findings and
mitigation progress from 2023.
The two key focus areas of our net
zero strategy are:
Our vision has a powerful social purpose
at its heart. Our social ambition is to:
• give millions of people better lives, and
• provide good work and opportunities
for everyone
We believe in challenging social barriers,
creating opportunities for many by
welcoming anyone to build a career with
us regardless of education or background.
We care and it’s what makes us proud.
Despite the continued uncertainty at
the beginning of 2022 due to Covid
restrictions we made significant progress
across our social pillars of charity,
community, social mobility, inclusion and
diversity and wellbeing.
We raised millions for charity, started
1,173 new apprenticeships across the
business, and made further steps on
our journey to everyday inclusion.
• helping our customers to make
more sustainable choices, and
• improve our own operations and
value chain through net zero targets
We see our role as supporting our
customers to reduce their environmental
footprint. We can do this in a number
of ways:
• Through adapting our pub environment
so that sustainability is its heart, through
innovation across our menus and lower
carbon dishes and by providing solutions
for customers to reduce food waste at
the point of serve.
• We can also provide them with
community assets such as EV chargers
in our car parks, enhanced bio-diversity
in our gardens, which in turn supports
individual wellbeing.
• Sourcing responsibly so customers visit
our pubs in the knowledge our products
are of the high standard they expect and
we have low carbon packaging solutions.
• By committing to near term and net zero
targets through the Science Based Targets
initiative, we will drive down our carbon
footprint through the procurement of
renewable energy and introduction of
energy efficiency measures and solutions,
as well as working with our suppliers
on their emission hotspots and
introducing new and innovative
circular business solutions.
2 JANUARY
2
0
2
Complete carbon
footprinting and
feasibility study
MARCH
Board & CK Assets
approve carbon net
zero target
APRIL
Commit to carbon
targets through SBTi
MAY
Governance structure
work commences
JUNE
Launch of Untapping
Potential social
mobility report
JULY
Greene King academy training
kitchen opens in HMP
Thameside with
first candidates
OCTOBER
Environment & Social
becomes a strategy driver and
inclusion and diversity reverse
mentoring programme starts
DECEMBER
Greene King fundraises
£3m for Macmillan
Cancer Support
in 2022
30 Greene King Limited | The Year in Review - 2022
31
Environmental commitments and 2022 projects
Social commitments and 2022 projects
S
T
N
E
M
T
I
M
M
O
C
R
U
O
• Reduce absolute scope 1 and 2 GHG
emissions 50% by 2030 from a 2019 base year
• Reduce absolute scope 3 GHG emissions
50% by 2030 from a 2019 base year
• Reduce food waste by 50% by 2030
from a 2019 base year
• Carbon net zero year 2040
Tub2Pub
We expanded our Tub2Pub circular recycling scheme, in
which members of the community are encouraged to drop
empty sweet and chocolate tubs after Christmas to our pubs.
24,000 containers were collected in January 2022 and processed
by recycling specialists co-crea8, saving over three tonnes of
plastic from going to landfill. The granulated plastic is repurposed
into garden furniture and monies from the plastic sale were
donated to our charity partner, Macmillan Cancer Support.
Lighting
Across our property estate in 2022 we launched the final
stage of our LED lighting roll out, with completion of all car
park lighting expected by March 2023. We also installed EV
charging in 31 locations providing 71 charge points.
Too Good To Go
Our partnership with food waste app Too Good to Go
continues to expand providing both a solution to food waste
towards the end of trading periods but also freshly cooked
food at discounted prices for those in need in the community.
Over 180,000 meals were provided through the app from our
pubs in the year.
Biodiversity
During the year the first 45 bio-diversity pub garden projects
were completed across the estate, which included bulb, tree
and sedum roof planting alongside living walls in urban
locations and bird boxes and insect hotels.
Brewing efficiency
In our brewing division, progress was made in improving
water efficiency with the installation of a loopilator and new
centrifuges at Westgate Brewery and work to switch our
forklift truck fleet to all electric commenced.
S
T
N
E
M
T
I
M
M
O
C
R
U
O
• Raising £18m for charity by 2025 from 2012
• Adding 5,000 new apprentices by 2025,
taking us to a total of 20,000
• Support 300 more prison leavers by 2025
• Support 100 interns with Special Educational
Needs or Educational Health Care Plans into
work experience or employment 2025
• Help 1,000 young people from underprivileged
backgrounds through The Prince’s Trust and
other partnership programmes
• Increase Black, Asian and minority ethnic
representation in the business - by 10% by
2030 including leadership from 6% to 12%,
senior managers from 3% to 10% and
managers from 4% to 10% by 2030
Despite the continued uncertainty at the beginning of 2022 due to Covid restrictions, we made significant progress across our
social pillars of charity, community, social mobility, inclusion and diversity and wellbeing.
Modern slavery
Providing good and safe work is a priority at Greene King
and in 2022 we began to put the building blocks in place to
enhance our team members understanding and awareness
of modern slavery.
We embarked on extensive learning for our supply chain and
procurement teams with support from the Slave-Free Alliance.
We welcomed the SFA to showcase the challenges and risks
of modern slavery to our executive board, leadership and senior
management team members at our conference to launch our
new strategy driver. Online training for modern slavery was
rolled out to all new team members and is available as a
webinar on our training platform to all.
No One Alone
Our pubs, breweries, depots and support centres lie in the
heart of their communities and provide an important role
in bringing people to together around a collective sense
of belonging.
No One Alone is our initiative which brings people together,
who may be experiencing loneliness or isolation, through
group activities at our pubs.
These activities are run by our team members in the
community, for their community. This year we launched
a successful trial of community Christmas day tables at
73 pubs, serving 1,006 complimentary Christmas lunches
to those who would otherwise be alone.
Proud to Pitch In
We provided £340,000 in cash grants through our Proud to Pitch
In scheme to more than 120 grassroots and community sports
clubs across the UK, benefiting around 19,000 people. The scheme
provides essential sporting equipment for vital community sports
teams, and clubs, funding everything from new lawn mowers for
cricket and bowls clubs, wheelchairs for wheelchair rugby, a
boxing ring, and refurbished toilets for a football club.
Donations
During the year we donated £275,000 of food direct from depots
to foodbanks including Bread & Butter Thing, Fareshare and
The Felix project.
We also donated £50,000 to the Disasters Emergency Committee’s
Ukraine appeal with a further £10,000 as match funding from team
member donations. Like many throughout the UK, Greene King
employees hosted Ukrainian families via the Homes for Ukraine
scheme, while Greene King provided employment to an additional
113 Ukrainian nationals during 2022. Donations were also given
to PubAid, Best Bar None, Only a Pavement Away, Pub is the
Hub, Merlin Magic Fund and Switchboard.
32 Greene King Limited | The Year in Review - 2022
33
Macmillan Cancer Support
Untapping Potential
During 2022 we celebrated our 10th year in partnership
with Macmillan Cancer Support. Fundraising took place
throughout the year, through everyday donations via ‘Pennies’
at the till, our Greene King app and Macmillan menu items.
Two key fundraising periods take place in May and during
September and October. In May under our theme of ‘10 years
of love for Macmillan’, our teams celebrated our milestone year
with community fundays.
‘Go Big for Macmillan’ was the theme throughout September and
October when coffee mornings, quizzes, challenges and events
were held in our pubs, support centres, breweries and depots.
An extraordinary £3m was raised across the year, enough to fund
42 Macmillan professionals. This was a huge increase on the £2.2m
raised in 2021 and is the equivalent of £342 raised every hour of 2022,
enough each hour to fund a Macmillan nurse for a day (10 hours).
During the year we rolled out Pennies contactless payment
method across the business and introduced Cancer in the
Workplace training for line managers to support team members
living with cancer or those who are caring for someone who is.
Our 10-year fundraising total stood at just over £14m at the end
of 2022. In recognition of this PubAid and All-Party Parliamentary
Beer Group hosted a reception in House of Commons presenting
Greene King and Macmillan Cancer Support with an award.
We’re all now turning our attention to 2023 as we aim to hit our
target of £18m raised for Macmillan Cancer Support by 2025.
In June 2022, we launched our Untapping Potential Report
to highlight the important role that pubs play in creating job
opportunities, setting people up for rewarding careers, and
allowing them to succeed within their local community.
Launched in Parliament by the then Education Secretary Nadhim
Zahawi MP and the then Education Committee Chair Rob Halfon
MP, the report set out how pubs are particularly well placed to
support the economic recovery and deliver on levelling up due
to their presence in communities all across the UK.
Our report highlighted how the hospitality industry faces a
perception problem - three in five young people say they see
hospitality jobs as short term, with few realising the opportunities
available. Many young people also feel like they have to move to
big cities to progress in their careers, with 60% of young people
thinking there are few opportunities locally for good jobs, even
though almost 90% would be interested in a career or training
opportunities that would allow them to stay locally.
We believe pubs can play an important part in reversing these
worries about a lack of opportunities, by offering people the chance
of finding long-term, rewarding careers in their local communities.
We therefore set out a series of new commitments in our Untapping
Potential Report of how we will continue to create job and skills
development opportunities for people from all backgrounds.
The Travellers Rest
The Travellers Rest in Leeds, part of our Locals
division, was our top fundraising pub of 2022,
raising a staggering £22,532.
The pub is one of 300 which makes up our Locals
North team, and this group was also the highest
fundraising team in 2022, contributing an amazing
£580,000 to Greene King’s overall £3m total.
MBE for Macmillan
fundraising
Our Destination Food Brands managing director
Andy Wilson received an MBE in the New Year’s Honours
list for services to Business and Charity during Covid-19.
Andy received the honour for his work in driving millions
of pounds of fundraising across Greene King pubs, and
he led from the front by running the London Marathon.
Our new commitments include:
• Expanding our apprenticeship offer to support 5,000
new apprentices by 2025 and offering even more
apprenticeship routes
• Recruiting 300 more prison leavers into roles by 2025
through our successful Releasing Potential programme
• Supporting 100 interns with Special Educational Needs
and an Education and Health Care Plan by 2025 through
our Supported Internship Programme with Landmarks
Specialist College and Mencap
• Establishing our first Greene King training kitchen
within HMP Thameside – working with the prison to
develop a bespoke programme for inmates to train in
the kitchen, receive qualifications and be ready to
work in hospitality on their release
• Continuing to partner with The Prince’s Trust to
provide the support that 1,000 people need to help
them secure a job
The report received widespread media coverage and we
continue to push ahead to change perceptions of hospitality
and ensure our pubs help to deliver social mobility in
communities across the UK.
34 Greene King Limited | The Year in Review - 2022
35
Financial Review
THE GROUP’S CASHFLOW FOR THE YEAR REFLECTS THE CONTINUED STRONG
RECOVERY FROM THE COVID-19 PANDEMIC. THE FULL YEAR ADJUSTED CASH INFLOW
FROM OPERATIONS WAS £229.4M DEMONSTRATING THE STRENGTH OF THE GROUP’S
TRADING PERFORMANCE DESPITE A RANGE OF ONGOING COST HEADWINDS.
Income statement
Revenue
Operating profit
Net finance costs
Profit/(loss)
before tax
Statutory
Adjusted
52 weeks
1 January 2023
52 weeks
2 January 2022
YoY change
52 weeks
1 January 2023
52 weeks
2 January 2022
YoY change
£m
2,176.4
249.2
(150.8)
98.4
£m
1,341.6
63.8
(134.2)
(70.4)
%
62.2
290.6
12.4
239.8
£m
2,176.4
192.6
(125.7)
66.9
£m
1,341.6
18.6
(132.4)
(113.8)
%
62.2
935.5
(5.1)
158.8
Revenue was £2,176.4m, an increase of 62.2% compared to the 52 weeks ending 2 January 2022, with increases in all five revenue generating
segments versus the prior period due to increased levels of trading in the period as a result of fewer restrictions. Destination Food Brands
revenue was up 43.8% to £757.9m, Local Pubs revenue was up 69.5% to £535.6m, and Premium, Urban and Venture revenue was up
112.9% to £502.0m. Pub Partners revenue was £172.6m, up 57.5% and Brewing & Brands revenue increased 36.0% to £208.3m.
Group adjusted operating profit by segment
52 weeks
1 January 2023
52 weeks
2 January 2022
Destination Food Brands
Local Pubs
Premium, Urban and Venture
Pub Partners
Brewing & Brands
Corporate
Group adjusted
operating profit
£m
46.8
57.2
80.6
68.9
20.6
(81.5)
192.6
£m
20.9
2.6
6.8
35.1
0.9
(47.7)
18.6
YoY
Change
%
123.9
2,100.0
1,085.3
96.3
2,188.9
70.9
935.5
Net finance costs before adjusting items were down 5.1% to £125.7m, primarily due to the partial repayment of £915m of the group’s
revolving loan facility with CKA Holdings UK Limited, see further details in the cash flow section below.
Profit before tax and adjusting items was £66.9m, a significant improvement on the loss before tax and adjusting items of £113.8m in
the prior period. The group made a statutory profit before tax of £98.4m (prior period: £70.4m loss), after an adjusting credit of £56.6m
(prior period: £45.2m) and an adjusting finance cost of £25.1m (prior period: £1.8m).
Adjusted corporate costs increased £33.8m to £81.5m compared to the prior period primarily due to increased investment in central
functions as well as an increase in net payroll costs following the launch of a long-term incentive plan and increase in bonus
as a result of improved trading performance in the period.
Tax
The effective rate of corporation tax (before adjusting items) is 16.2% (prior period: 19.0%) compared with the UK corporation tax rate of
19.0%. Adjustments to the rate include non-deductible interest under UK Transfer Pricing rules (+5.3%), the effect of Capital Allowances Super
Deductions (-2.4%) and non-adjusting accounting movements on Property, Plant and Equipment (-5.7%). This resulted in a tax charge against
operating profits (before adjusting items) of £10.8m (prior period: £55.5m credit). The adjusting tax charge of £19.7m (prior period: £16.9m
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, employment taxes and corporation tax. In the year, total tax revenues paid by the group were c.£517m (prior period: c.£298m). The
increase in tax payments in the year reflects the trading performance of the group and the expiry of reduced rate of VAT on hospitality at the
beginning of the period. 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 £11.8m (prior period: £26.5m credit), consisting of a £56.6m (prior period: £45.2m) credit to operating profit,
a £25.1m (prior period: £1.8m) charge to finance costs and a net adjusting tax charge of £19.7m (prior period: £16.9m). Items recognised in
the year included the following:
1. A net impairment reversal of £29.9m (prior period: reversal £8.2m),
in relation to property, plant and equipment, and right-of-use asset
comprising £0.9m net charge (prior period: £nil).
2. £18.0m (prior period £3.3m) net profit on disposal of property,
plant and equipment and leases.
3. A net credit of £6.8m (prior period: £5.4m) in relation to Covid.
This includes a credit of £7.3m (prior period £5.0m) on bad debt
provision reversals on both free trade loans and trade debt, a
£2.1m charge in respect of personal protective equipment written
off and a £1.6m credit (prior period: £2.9m) relating to Covid rent
concessions (net of fees).
4. A net £3.3m charge (prior period: £29.2m credit) in respect
of Indirect Tax claims.
5. £4.2m charge (prior period: £nil) in respect of professional fees
on corporate transactions and projects.
6. £6.1m credit (prior period: £nil) in respect of items relating to
matters in the prior periods across a number of areas
including depreciation, legal and HR.
7. A loss of £0.1m (prior period: £nil) in respect of the revaluation
of investment property.
8. £4.3m credit in respect of insurance proceeds relating to
damaged assets.
9. The £25.1m (prior period: £1.8m) charge for adjusting finance
costs includes a £17.3m charge (prior period: £7.3m charge)
recycled from the hedging reserve in respect of settled interest
rate swap liabilities, £12.4m loss (prior period: £nil) on settlement
of financial liabilities, £4.4m gain (prior period: £1.3m gain) in
respect of market-to market movements in the fair value of
interest rate swaps not qualifying for hedge accounting, £0.5m
charge (prior period: £4.2m credit) in respect of interest on
indirect tax claims and £0.7m interest income (prior period: £nil)
in respect of tax positions and adjustments.
10. The adjusting tax charge of £19.7m (prior period: £16.9m)
represents an effective rate of corporation tax on adjusting items
of 62% after tax adjustments of £13.7m. The adjusting tax charge
includes adjustments in respect of prior years totalling £11.7m,
which includes adjustments for: resubmissions of prior year
returns £3.0m credit, recognition of an intercompany receipt for
group relief £0.4m credit, and deferred tax prior year adjustments
of £15.1m. Current year adjustments to adjusting tax items
include adjusting accounting movements on property, plant and
equipment of £1.3m credit, use of capital losses resulting in a
£1.9m charge and disallowable expenditure £0.9m charge.
P&L rate change adjustments on deferred tax totalled £0.5m
in the period.
36 Greene King Limited | The Year in Review - 2022
37
Cashflow
Balance sheet
Adjusted EBITDA1
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
Repayment of lease liabilities
Free cash flow
Business acquisitions
Investment property expenditure
Net disposal proceeds
New build capital expenditure & freehold purchase
Receipt from a settlement of derivative financial liabilities
Adjusting items
Advance of borrowings
Net decrease in cash and cash equivalents
1. EBITDA represents earnings before interest, tax, depreciation, amortisation and adjusting items.
The group’s cashflow for the year reflects the continued strong
recovery from the Covid-19 pandemic. The full year adjusted cash
inflow from operations was £229.4m (prior period: inflow of £142.7m)
demonstrating the strength of the group’s trading performance
despite a range of ongoing cost headwinds. Overall the cash
outflow for the period was £7.0m (prior period: outflow of £51.0m)
predominantly due to investment in capital expenditure including
acquisitions of £216.3m (prior period: £182.7m) and rent payments
of £52.4m (prior period: £70.3m), offset by disposal proceeds of
£19.9m (prior period: £0.6m) and a net cash inflow on settlement
of derivative financial instruments of £8.6m (prior period: £nil).
There was a net cash advancement of borrowings during the year
of £7.7m (prior period: £63.9m). In total there was a repayment of
borrowings of £907.3m (prior period: net advancement £63.9m)
principally funded by a share issue which generated proceeds of
£915.0m as detailed below. The rationale for this was to strengthen
the group’s balance sheet and improve the group’s financial gearing
and leverage following the impact of the Covid-19 pandemic.
The £915.0m repayment of debt and proceeds generated
from the share issue are not presented in the cash flow as
the transactions were not cash settled.
The group returned to a full programme of both maintenance
and development capital expenditure including investment in IT
infrastructure as well as a range of transformation projects. Net
disposal proceeds of £19.9m were principally generated from
6 non-core pubs as well as one high alternative use value site.
An aggregate net cash outflow of £34.7m arose on two business
acquisitions which together added 20 restaurants to the group’s estate,
including 17 which operate under the Hickory’s Smokehouse brand.
52 weeks
1 January 2023
£m
52 weeks ended
2 January 2022
£m
321.1
25.6
(113.8)
(3.5)
229.4
(164.1)
0.2
(52.4)
13.1
(34.7)
(0.2)
19.9
(17.4)
8.6
(4.0)
7.7
(7.0)
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)
In addition, £17.4m was spent on 4 single site acquisitions including
subsequent development spend on these sites and the freehold
reversion of 4 further sites which had previously been owned on
a leasehold basis.
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
£900m bank facilities, which were £820m drawn at the year end,
£1,500m revolving loan facility with CKA Holdings UK Limited,
which was £311m drawn at the year end, and a long-term
asset-backed financing vehicle.
In April 2022 the revolving loan facility with CKA Holdings UK
Limited was extended to November 2024.
In September 2022 the group redeemed in full the Spirit debenture
A5 bond at a clean price of 115% of par (net of a gilt lock hedge)
and terminated the corresponding interest rate swap. The total cash
cost of the redemption, which was funded via existing bank facilities,
was £113.9m, comprising the net redemption amount across the
bond and gilt lock hedge of £111.3m and the settlement amount
on the swap of £2.6m. The Spirit A5 bond was the final bond in the
Spirit debenture structure and accordingly its redemption resulted
in the termination of the debenture structure and the release of
security over the charged assets. The Spirit debenture has now been
fully eliminated from the group’s capital structure, increasing the
flexibility of the group’s assets by releasing 506 pubs from security.
Goodwill and other intangibles
Property, plant and equipment (inc. investment property and 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
1 January 2023
£m
2 January 2022
£m
941.6
3,896.8
55.2
912.6
3,723.5
136.8
(2,115.0)
(2,994.3)
(24.4)
(412.4)
(37.4)
147.0
2,451.4
1,223.4
1,228.0
2,451.4
(112.8)
(353.1)
(63.6)
195.4
1,444.5
308.4
1,136.1
1,444.5
In October 2022 the group’s immediate parent, CK Noble (UK)
Limited, subscribed for 915 ordinary shares in the company for an
aggregate subscription price of £915m. These funds were applied to
a partial repayment under the group’s revolving loan facility with
CKA Holdings UK Limited, increasing headroom under that facility
to £1,189m and bringing the drawn position down to £311m.
In November 2022 the group executed a new three-year £300m
revolving loan facility with DBS Bank. The purpose of the facility
was to restore bank headroom following the redemption of the
Spirit debenture A5 bond in September and to provide additional
funding for further refinancing activity.
In December 2022 the group redeemed in full the Greene King
securitisation A5 bond at par and terminated the corresponding
interest rate swap. The net cash cost of the redemption, which
was funded by the new DBS Bank facility, was £160.0m, comprising
the redemption amount on the bond of £179.9m partially offset
by a cash inflow on the settlement of the swap of £19.9m.
At the year end, the Greene King securitisation had secured
bonds with a group carrying value of £1,073.7m (prior period:
£1,314.6m) and an average life of seven years (prior period: eight
years), secured against 1,473 pubs (prior period: 1,481 pubs) with
a group property, plant and equipment carrying value of
£1,995.0m (prior period: £1,945.7m).
The group returned to covenant compliance in the Greene King
securitisation throughout 2022, with all financial covenants being
passed in respect of each of the April 2022, July 2022, October 2022
and January 2023 test dates. The group’s financial covenant waivers,
which had been granted in 2021, covered the period up to and
including the April 2022 test date. The group believes that the
return to covenant compliance is sustainable and that accordingly
no further waivers are expected to be required.
The group’s liquidity position remains strong reflecting the
resilience of the group’s capital structure.
The group’s average cash cost of debt increased to 4.8% from
3.5% last period, and at the year end 65.5% of the group’s net
debt was at a fixed rate. The Greene King secured vehicle had
a four-quarter lookback FCF DSCR of 1.2x at the year end,
giving 16% headroom to the covenant limit of 1.1x.
Overall, the group’s net debt excluding lease liabilities reduced
in the year by £879.3m to £2,115.0m.
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.
On 19 January 2022 the Spirit Pension scheme entered into a
second buy-in policy for c.£110m that provides insurance for a
proportion of its members. This takes the total insured value
to c.£160m.
At 1 January 2023, there was an IAS 19 net pension
asset of £55.2m representing a decrease of £81.6m since
2 January 2022. The closing assets of the group’s two pension
schemes totalled £633.0m and closing liabilities were £577.8m
compared to £1,002.6m and £865.8m respectively at the
previous period end. In the current year, the membership data
and demographic assumptions have been updated to reflect the
latest triennial valuations completed for both schemes in 2022.
Also included in the remeasurement are key assumptions relating
to the discount rate of 4.8% (prior period: 1.9%), RPI inflation of
3.3% (prior period: 3.3%) and CPI inflation of 2.7% (prior period: 2.6%).
Total cash contributions in the period were £4.1m (prior period:
£4.5m), following the funding valuation it was agreed company
contributions would be made into escrow, of the £4.1m paid
in the year £1.5m was paid into escrow.
Dividend
No dividend has been proposed by the board in the current
or prior period.
38 Greene King Limited | The Year in Review - 2022
39
Executive Board
Andy Wilson MBE,
Managing Director of
Destination Brands
Richard Smothers,
Chief Financial
Officer
Clair Preston-Beer,
Managing Director
of Greene King Pubs
Oversees our market-
leading brands that
sit separately from
Greene King Pubs,
including: Chef &
Brewer, Farmhouse
Inns, Hungry Horse,
Wacky Warehouse.
Accountable for
finance, group
procurement
and supply chain,
technology, and risk
and assurance.
Leads all our Greene
King-branded managed
pubs, building and
developing the Greene
King pub chain brand
and putting it at the
heart of communities
across the country.
Nick Mackenzie,
Chief Executive
Officer
Responsible for leading
the strategic direction
and overall operation
of the business and
its people.
Wayne Shurvinton,
Managing Director
of Partnerships
and Ventures
Runs our leased and
tenanted, franchise
and venture managed
businesses including:
Pub Partners,
Metropolitan Pub
Company, Crafted
Pubs, Hickory’s,
Venture Hotels.
Maria Sebastian,
Chief Marketing
Officer
Looks at things
from our customers’
perspective, driving
our central group
marketing and digital
initiatives that unite
our divisions, while also
building compelling and
sustainable brands.
Andrew Bush,
Chief People &
Transformation
Officer
Transforming Greene
King as a place to
work and ensuring
we have a culture and
environment where
everyone has the
freedom to succeed.
Assad Malic,
Chief Communications
and Sustainability
Officer
Responsible for our
environmental and
social targets, group
strategy, internal
communications,
press and other
external stakeholder
communications.
Matt Starbuck,
Managing Director of
Brewing and Brands
Nick Elliot,
Group Property
Director
Protects and enhances
our quality estate
of over 2,600 pubs
to ensure we are
optimising all of
our assets.
Leads our brewing
and distribution
business, brewing
beers in Bury St
Edmunds and Dunbar
for sale in the on-trade
and off-trade as well
overseeing a UK-wide
distribution network.
40 Greene King Limited | The Year in Review - 2022
41
Setting ourselves up for Success
Realignment of Business
We started the year with an announcement about changes to our
business to set ourselves up for success in 2023 and beyond. Since
2021, we’ve been looking in detail at the role of our Greene King
brands, and identified an opportunity to strengthen our brand as a
pub chain and undertake a realignment of our group divisional
structure to support this, moving from five divisions to four.
Following our strategy
These changes are in-line with our strategy to grow sales through
compelling brands and unlock value from our existing assets. It will
enable us to build a balanced portfolio across market segments
including value, mainstream and premium, as well as continuing
to build our ventures and franchise business while operating
through a simplified structure.
New structure
For 2023, Premium, Urban & Venture will no longer be a
standalone division, and we will move from five divisions to four:
• Greene King pubs
• Partnerships & Ventures
• Destination Brands
• Brewing & Brands
As a customer first business, strengthening our Greene King
brand as a pub chain alongside the strategic realignment of
our structure is a natural next step for us as we continue to
grow our business and improve our customer and
team experience.
Building the Greene King brand
As a company with heritage stretching back over 200 years,
Greene King has built up a strong brand that today spans a
range of businesses.
We believe while this has helped with reach and recognition of the
brand, it has made it less clear about what the brand represents.
All our work and customer insights have shown there is a compelling
case for us to strengthen the potential of the Greene King brand
as a pub chain alongside our other brands.
We are tapping into this by creating a new structure where all our
managed Greene King pubs sit together to build the Greene King
pub chain brand into a balanced and quality portfolio of pubs, that
sits as a standalone pub brand. This in turn will give our other brands
the freedom to continue developing and building their own unique
identity, with Chef & Brewer already a clear example where this is
beginning to take effect. This is the next phase of us becoming a
brand-led business and the whole process from start to finish will
take a number of years. Our goal is for all Greene King-branded
businesses to be part of Greene King pubs and for any other
branded business to be part of Destination Brands.
Customer First
Fundamentally we want to become a Customer First organisation.
We believe that the choices we have made will give us the best
business benefit, and position us well against our competitors – all
while significantly improving our customer and teams’ experience.
Operational Excellence
We are also adding a new Operational Excellence function which
will play a critical role in ensuring that the structure operates
effectively to support our pubs and drive consistency in execution.
This function will play a critical role in ensuring that the new
structure operates effectively, and that change is implemented
well in our pubs. It will be accountable for deployment,
coordination and support of the operational excellence
programme to support our pubs and drive consistency
in execution.
Greene King
GREENE KING
PUBS
A portfolio of
Greene King pub formats
DESTINATION
BRANDS
Hungry Horse
Chef & Brewer
Farmhouse Inns
Wacky Warehouse
Flaming Grill
PARTNERSHIPS
& VENTURES
Metropolitan Pub Company
Hickory’s
Hotels
Pub Partners
Hive Pubs
Crafted Pubs
BREWING
& BRANDS
Greene King IPA
Old Speckled Hen
Abbot Ale
Belhaven Best
Ice Breaker
Level Head
Flint Eye
Belhaven Black
GREENE KING PUBS, led by Clair Preston-Beer
PARTNERSHIPS & VENTURES, led by Wayne Shurvinton
The Greene King brand will now represent the group’s mainstream
pub chain and will have a clear and significant customer-facing role,
building on our rich heritage and further unlocking the potential
of the brand. The division comprises our Urban, Heritage and
Chameleon pubs from the previous Premium, Urban & Venture
division, as well as the former Local Pubs estate and totals
around 900 pubs.
Over 1,100 pubs and restaurants, comprising Pub Partners, including
our Hive sites, as well as our Venture businesses: Metropolitan Pub
Company, Venture Hotels, Hickory’s and Crafted Pubs. This division
can operate slightly more independently and pull on the wider
business for support.
DESTINATION BRANDS, led by Andy Wilson
BREWING & BRANDS, led by Matt Starbuck
Around 600 pubs, comprising recognised and leading brands
including Hungry Horse, Farmhouse Inns and Chef & Brewer.
Our Brewing & Brands division is unaffected by these changes
and will continue to focus on growing our premium beer portfolio,
expanding our footprint in the national accounts arena, growing
share in the declining market of traditional ale and delivering
great beers into our pubs.
42 Greene King Limited | The Year in Review - 2022
43
Registered office
Westgate Brewery, Bury St Edmunds, Suffolk, IP33 1QT