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Wake up and smell the coffee. This pretty much sums up Whitbread’s business model these days – provided the waking up is done on a Premier Inn luxury kingsize Hypnos bed and the aroma is that of a Costa Coffee Rich Cortado “topped off with textured milk” (I think I have some of that at the back of my fridge).
And it seems these two operations are enjoying the sweet smell of success (as I and fellow commuters on the train passing Costa’s south London roastery do every morning).
Today’s full-year results show that group revenues grew 8.2 per cent in the year to March 2, to £3.1bn – caffeinated by a 10.7 per cent rise in Costa Coffee sales and a 9 per cent rise in Premier Inn takings.
Much of this was driven by the rapid expansion of both businesses. Costa opened 255 net new stores worldwide and installed more than 1,500 coffee machines in other outlets. Premier benefited from the 3,816 gross new UK rooms it opened this year and an occupancy rate across its chain of more than 80%.
On a like-for-like basis, Costa sales were up 2 per cent and Premier’s by 2.3 per cent.
However, in the restaurant division – which operates the Beefeater and Brewer’s Fayre chains, like for like sales fell by 0.3 per cent.
As a result, pre-tax profit grew more slowly, up by 5.7 per cent to £515.4m, missing a consensus estimate of £557m among analysts surveyed by FactSet.
Chief executive Alison Brittain is now focusing on organic growth. She said:
In the year ahead we will continue to focus on organic growth and investing in our customer proposition. This, together with our efficiency programme and disciplined capital management gives us confidence in delivering another year of good progress.
Mining group BHP Billiton is hoping that, in the Australian morning, shareholders wake up and smell the gas and oil – or at least news of production thereof – and it is enough to mask the air of disquiet over strategy in recent weeks.
A fortnight ago, the FTSE 100 company was forced to issued a detailed rebuttal of demands from activist investor Elliott Advisors to unify its UK and Australian entities into one business and spin off its US oil business to unlock value.
At the time, BHP chief executive Andrew Mackenzie said Elliott’s proposals had “major flaws” and amounted to little more than “financial engineering”. He has committed to spending more on oil projects, claiming clear “synergies” with the group’s mining operations.
But with four top 20 shareholders in the UK-listed arm also wanting an oil spin off evaluated, BHP needs to show it is fitting in well. Its operational review for the nine months ended March 31 comes out at 0830 Melbourne time.
Wealth manager St James’s Place seems to have found an easier way of amassing riches than digging them out of the ground: it just keeps offering to look after rich people’s money and they hand it over. This morning, it reported yet another record quarter with gross inflows of funds under management up 32 per cent to £3.2bn – compared with £2.4bn a year earlier.
On a net basis, inflows were up 46 per cent to £2bn. Analysts at Barclays had expected these to reach only £1.5bn. As a result, group funds under management are now £79.8bn, up from £62.0bn a year ago.
David Bellamy, the group’s outgoing and outgoing chief executive, who is standing down after 26 years, put it down to demand for advice in uncertain times. He said:
Looking ahead, whilst political and macro uncertainties persist, the more immediate concern for many people relates to personal financial matters, particularly in relation to long term savings, protecting and preserving wealth, tax and intergenerational planning. In this regard, the scale and quality of our relationship-based and advice-led approach to the management of our clients’ financial affairs, together with our investment management proposition, means we are increasingly well placed to meet this growing need for trusted advice.
Meanwhile, at the other end of the wealth scale, challenger bank Virgin Money – tipped as a possible bidder for the troubled Co-op Bank – has reported that gross mortgage lending was £2bn in the last quarter and savings deposits rose £0.9bn. But it said nothing about its closely watched net interest margin – other than it is merely “in line with FY 2016”. Some had hoped for a slight uplift in the margin during the period as lower deposit costs fed through.
And, finally, the miniature fat controllers at Hornby are not happy. Directors of the model trains manufacturer have hit back at proposals from its second-largest shareholder to remove chairman Roger Canham. In a statement today, the directors said the mooted removal of Mr Canham in favour of small shareholder Alexander Anton was “not in the best interests of the company or its shareholders as a whole”. They are calling on investors to vote against the proposal at a general meeting in mid-May. Peep peep!
FT Opening Quote, with commentary by Matthew Vincent, is your early Square Mile briefing. You can sign up for the full newsletter here.