City Pub Group (The) - Trading Statement
20/01/2022 07:00
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RNS Number : 0197Z City Pub Group PLC (The) 20 January 2022
City Pub Group PLC
("City Pub Group" or "the Group")
Trading Statement
Strong balance sheet providing the platform for growth
The City Pub Group, the owner and operator of 46 premium pubs across Southern
England and Wales and a further 4 development sites, announces its year end
update for the 52-week period to 26 December 2021.
Trading
The Group generated a 38% increase in revenue to £35.4m in 2021, compared to
£25.8m in 2020, as a result of pubs being less affected by closure and
restriction. Since the Group last reported its trading in September, a
restriction free October and November saw trade returning to 2019 levels.
December began well with greater pre-booked business than 2019, however the
emergence and onset of Omicron reduced sales to 85% of 2019 during this
important period as most office party bookings were cancelled. The strong
trading in October and November helped to offset any reduction in December.
Year end results are expected to be in line with management expectations.
Balance Sheet and cost control
Since our last update the Group's financial position has continued to
strengthen with net debt reduced and now under £14m. Our bank facilities have
been further extended to 2024 and the Group has £30m of undrawn facilities
providing financial flexibility to execute the Groups' strategy.
Maintaining tight cost control and continuing to improve the efficiency of the
Group continues to be a focus. Over 70% of our drink products have now been
signed up on a 3-year fixed price term deal, assisting margin improvement and
mitigating against inflation risk in this area. The Group continues to
rationalise its estate and has disposed of 2 underperforming sites during the
year and one freehold investment was sold to the tenant.
The hospitality industry is facing widely publicised challenges from which the
Group is not immune. Like many others the Group's energy costs have and are
expected to continue to rise significantly in the short term, with a material
impact on operating margin. Additionally, over the Christmas period, the Group
has faced staff shortages due to Omicron isolating. Our staff are a key
ingredient of our success therefore for those staff who could not work because
of isolation, their sick pay was topped up and 80% of their salaries paid,
despite no Government support in this area. This situation is now abating with
staff availability improving. For our business and the industry to recover and
thrive again we urge continued Government support through reduced business
rates and VAT.
Maintaining and growing the estate
Our estate will continue to be maintained to the highest levels: The Hoste
Arms will undergo a further £300k refurbishment to ensure all rooms are up to
the highest standards and the Cliftonville, our recent purchase in Cromer,
will also undergo a £300k upgrade to increase the retailing areas and improve
outside seating.
Looking into 2022 our operational estate will be expanded with the following
development sites due to open: Oyster Wharf, Mumbles, Swansea - March ,Tivoli,
Cambridge - April, Bury St Edmunds, Suffolk - April and the The Nest, Bath -
June
Additionally, the Group continues to identify potential new acquisitions which
fit within the Group's investment criteria and is pleased to report that it
has made significant progress in this area. Discussions are advanced on
several new sites which we expect will be signed up during the course of the
year.
The Group is pleased to report that following a valuation by the directors,
the pub portfolio returned equivalent of 150p net asset value per share. A
more formal exercise through independent valuers recognising our 90% of
invested freehold based estate will be reported on at our full year results in
April.
Outlook
Typically, January, the beginning of our financial year, is a slow month and
2022 began that way. In the last 10 days there has been a significant increase
in trade, which we believe is a result of increased consumer confidence. Once
office workers return to work, we believe consumer confidence and consequently
demand, will continue to further build, helping the Group to grow its pub
sales. The pub estate is well balanced, with many of its pubs located in city
centres, but also in residential areas and staycation locations. Once tourism
starts to recover, the Group will be well placed to maximise sales from its
pub estate.
We would like to thank all our stakeholders; staff/suppliers, our bankers
Barclays Plc, our financial advisers and our shareholders for supporting us
over the last 2 years. The Group has strong financial and operational platform
to build from and I look forward to sharing further updates and final results
in April this year.
Clive Watson, Chairman of City Pub Group said:
"With our strong balance sheet and our new, more efficient operational and
management structure, we are taking the opportunity to begin to grow and
enhance our estate again. We have a strong freehold portfolio, located in
great cities of Southern England and Wales and four large new sites to open in
the first half of this year. The market remains highly fragmented - providing
a significant opportunity to continue to grow our estate. As Omicron abates,
we will trade more normally and be more confident to carry out our successful
strategy for which we are fully prepared."
20 January 2022
Enquiries:
City Pub Group Via Instinctif Partners
Clive Watson, Chairman
Holly Elliott, CFO
Instinctif Partners +44 (0) 20 7457 2020
Matthew Smallwood
William Cammegh
Liberum (Nomad & Broker) +44 (0) 20 3100 2000
Chris Clarke
Edward Thomas
Clayton Bush
Peel Hunt (Joint Broker) +44 (0) 20 3128 8789
George Sellar
Andrew Clark
Will Bell
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