Aim listed The Capital Pub Company Plc(LON:CPUB); the London focused pub operator, has released their prelims which show that they have had another strong year, with the chairman James Bruxner CBE stating:
‘I am pleased to report another year of achievement and excellent trading performance. The estate, which is London based, largely freehold and free of tie, has been grown to 28 high quality pubs; the quality of which has been a major factor in driving the continued improved performance.’
Let's look at why the chairman sounds so buoyant. For the year, revenue increased 11% to £22m, with adjusted EBITDA up 19% to £5.8m. However, thanks to some large non-cash impairment costs they made a net loss year of £1.3m, which is against last year’s net profit of £0.5m. But if you take away the £3.8m of impairment charges (of which they had none of last year), they would have achieved a net profit of £2.5m. In terms of the impairment charges, they were mainly in relation to thedecrease in profit multiples applied to pub profits for valuation purposes as a result of the general economic conditions.
Due to this big increase in adjusted profits this year, cash flow has also increased substantially, with it rising 113% to £3.7m. This increase added to a placing in which they raised £1.7m at 100p, and the sale of the Marquis of Granby pub allowed them to reduce net debt to £24m from £28m last year, in the process reducing gearing to 70% from near 100%. In terms of what all of this has done for their NAV, their net asset position is pretty much unchanged with assets over liabilities currently standing at £31m, which is an increase of £0.6m from last year. If this is converted to a price per share NAV, then thanks to the placing there has been a slight deterioration, with the current NAV at 137p per share, which is down slightly from last year’s 144p.
This drop in NAV is not a bad thing as they are now in a much stronger position than last year which, due to the credit crunch, had a large effect on most companies NAV’s (with property and pubs groups’ some of the worst hit). Thus the fact that they have come out of this crisis a more profitable company then they went in, with NAV largely unaffected, arguably…
