Capital Pub Co(the) (LON:CPUB) , the London based pub operating group have today released their trading statement along with a rights issue. So was the trading statement good reading? Well it certainly had a number of good factors in there, to run through the statement, to start they state:
‘The Company benefits from having an excellent team of employees and managers whose achievements were recently recognised in being awarded "Managed Pub Company of the Year" (below 100 outlets) at The Publican industry awards.’
This is good as for a start it helps to boost their name and profile, but also it means that the group has good working relationships with its pub managers. This in itself is a great benefit as a happy management team who feels the company is working with them is proven to yield better returns. Next they state:
‘the Company has exchanged contracts on the sale of the freehold of the Marquis of Granby for a consideration of £3.49 million. The Company will continue to manage the pub on a short term lease. The Marquis of Granby contributed EBITDA of £280,000 to the Company in the year ended 27 March 2010. The proceeds from the transaction will be used to reduce borrowings.’
This looks to be a very good deal, as selling the pub on an EBITDA P/E ratio of 12.5 looks to be a pretty good price, as it would put the EBITDA interest rate return at 8%, which likely means that the actual cash return is approximately 5%, which is about the going rate.
‘In accordance with accounting policies the Company has also had the majority of the estate re-valued resulting in a book value of the Company's entire freehold and leasehold estate of £64 million (excluding the Marquis of Granby).’
The previous value which was three years ago (February 2007) put the book value at £67m, thus this is a £3m drop, which is not bad really considering how property prices have fallen so much. But then again London properties have been doing well again this year, so this figure might have disappointed some, but should it have? Well for a start if you add the price they just got for their sold pub the Marquis of Granby, the book value…
