REG - City Pub Group (The) - Q4 and FY Trading Update and re Directorate

Peel HuntAnnouncement

24/01/2023 08:15

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230124:nRSX6108Na&default-theme=true

RNS Number : 6108N  City Pub Group PLC (The)  24 January 2023

City Pub Group PLC

("City Pub Group", "CPG", the "Company" or the "Group")

Q4 and Full Year Trading Update

Directorate change

City Pub Group, the owner and operator of 44 premium pubs across Southern
England and Wales, today announces a trading update for Q4 and for the full
year ended 25 December 2022.

Trading in Q4 delivered accelerated LFL sales growth compared with 2019 of
7.8% as a result of improved planning to maximise revenues from events such as
the World Cup and Christmas. The performance would have been even better, had
it not been for the rail strikes, especially those towards the end of the
year, where we estimate lost revenue to be in the region £0.75m (c. 3.5% of
revenue for Q4).

Overall, we are pleased that the performance of the core estate for 2022 was
in line with market expectations. Annual turnover increased from £35.4m
(2021) to £57.6m (2022), an increase of 63% from prior year, a reflection of
a mostly normalised trading environment and a largely restriction free year.
LFL sales compared to 2019 were 3% up.

Whilst the comparative period in 2022 was impacted by Omicron, trading in the
first 4 weeks of 2023 has begun well with LFL sales against 2022 up 25% and
above expectations.

Board Changes and other Senior Management Appointments

Toby Smith, Chief Operating Officer, has notified the Board of his intention
to resign and steps down from the Board and will leave the business on 27
January. The Board would like to thank Toby for his hard work and contribution
to the business over the last two years, particularly in the preparation of
the estate as the business emerged from the Covid lockdowns.

The Board are delighted to announce that Rupert Clark, currently Group
Managing Director and a member of the Board, will take on the role. Rupert has
been an Executive Director of CPG for nearly 10 years and previously for the
Group's forerunner; Capital Pub Company. He has a vast industry operational
experience and a real passion for the City Pub Group. Rupert has been
instrumental in overseeing some of our most complex projects and successes
including the major refurbishments of the Tivoli in Cambridge and Aragon House
in Parsons Green. Rupert has a keen desire to further premiumise the offer
across all our pubs.

The Board is also pleased to appoint Chris Merriman, Group Financial
Controller, as Company Secretary, with immediate effect. He follows Jimmy
Dudgeon who served the Board extremely diligently for the last 10 years. The
Board wishes to thank Jimmy for all his hard work in helping the Group develop
from a start-up to an AIM quoted company and to the Company it is today.

The Company has also strengthened the senior management team with the
appointment of Richard Myers as a Chief Marketing Officer. Richard joins us
from Urban Pub Company, a similar sized company to the City Pub Group, and has
great experience in the hospitality industry. His previous roles include being
Head of Marketing at the Meantime Brewery. Richard will report directly to
Clive Watson, the Executive Chairman, and will be part of the Senior
Leadership Team. The ambition is to further premiumise the pub estate to
deliver additional organic sales and profit growth.

Acquisitions

Whilst CPG has been offered a number of acquisition opportunities over the
past three months, the Company has, particularly at this stage in the cycle,
very strict criteria for acquiring pubs as we expect pub prices to continue to
soften. However, since the interim trading statement on 21 September 2022, the
Group has acquired two excellent pubs: Potters, Newport (freehold), and The
Bridge, Barnes, SW13 (leasehold). Potters further cements our foothold in
South Wales, and the Bridge benefits from 8 letting rooms increasing total
number of letting rooms across the estate to 225, now an important revenue
stream for the Group.

Net debt has been reduced to £5m at the end of 2022 (2021 - £13.8m) as a
result of rationalisation of the pub estate announced in March 2022 and
careful cash management. The Board intends to maintain its low level of debt
given the risk factors facing our industry currently. The Company continues to
have one of the strongest balance sheets in the sector, with £35m total
borrowing facilities until June 2024 and £152m of net assets as of 25
December 2022, predominantly based on an external valuation at March 22.
 

Energy Costs

In 2022, and in common with many pub operators, our energy costs rose
substantially. However, since the start of this year, these costs have started
to reduce, although they are still high by historical standards. Following
various mitigating strategies including hedging up to 40% of our energy cost
from April 2023 until March 2025, coupled with ongoing energy reduction
initiatives, we expect to achieve in excess of a 10% saving on the Company's
2022 energy bill in this financial year.

Looking forward

The Group has confronted and weathered the challenges of the last three years
and has emerged in good shape to take advantage of future opportunities. The
Group has a low-geared balance sheet, a high quality and well invested premium
pub estate which will benefit from the sales momentum experienced in Q4 of
last year. In addition, CPG has a Senior Management team in place to drive
growth in 2023 and a strong culture within the Group, at both head office and
in the pubs, which is entrepreneurial, determined and innovative. City Pub
Group remains ambitious for the future and is well placed to take advantage of
opportunities as they present themselves. The Board is confident of further
progress in 2023.

Clive Watson, Chairman of CPG said:

"Despite challenges that our industry faces, CPG has always been flexible and
adaptable and ready to take advantage of change. We have emerged from the
pandemic in a position of strength. We are ready both financially with a very
strong balance sheet and operationally with a team that is experienced yet
ambitious to take advantage of both organic opportunities as we further
premiumise and on building the estate through acquisition, albeit only at the
right valuations which we expect to continue to soften.

Trading has begun better than expected in 2023 and we look forward to an
improving economic outlook as the year progresses."

 
24 January 2023

 Enquiries:
 City Pub Group                      Today: via Instinctif
 Clive Watson, Executive Chairman
 Holly Elliot, CFO

 Instinctif Partners                 +44 (0) 20 7457 2020
 Matthew Smallwood

 Liberum (Nomad & Joint Broker)      +44 (0) 20 3100 2000
 Chris Clarke
 Edward Thomas

 Peel Hunt (Joint Broker)            +44 (0)78 9520 5644
 George Sellar
 Andrew Clark

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTSESFUDEDSESF