City Pub Group posts strong results to weather coronavirus
City Pub Group saw a strong increase in revenue in 2019, it revealed this morning, but suspended its dividend as the company bolsters itself against the potential impact of the coronavirus crisis.
The figures
The pub operator’s revenue surged 31 per cent to £60m in the year ended 29 December 2019, up from £45.7m the previous year.
Adjusted profit before tax grew four per cent from £5.1m to £5.3m.
Like-for-like sales increased 1.7 per cent over the period, despite a strong year in 2018 which included the World Cup and an exceptionally hot summer.
The pub group, which owns London stalwarts The Nell Gwynne in Covent Garden, Temple Brew House and The Yard in Clapham, saw a 15.4 per cent increase in adjusted earnings before interest taxation, depreciation and amortisation (Ebitda) to £9.1m.
Net debt for the year swelled to £31m from £8.7m, and reported profit fell from £2m in 2018 to £1.3m in 2019.
The board suspended its dividend for the year and said it is unlikely to resume payments until trading has recovered to “optimum levels”.
Why it’s interesting
City Pub Group underwent significant expansion in 2019, focusing on acquiring high turnover pubs such as The Pride of Paddington and the Island in Kensal Green.
The firm pointed to growth in accommodation capacity in sites in the south of England for its increased debt pile. The company opened 118 rooms over the year, up from 54 the previous year.
The company, which had just 34 pubs when it floated on Aim at the end of 2017, now operates 48 pubs in cities such as London, Cambridge and Brighton.
But business this year has been halted by the closure of its sites due to the coronavirus crisis. The group raised £22m of equity in an emergency bid to bolster its balance sheet when pubs were forced to close at the end of March. This was supported by a £35m rolling credit facility and £15m accordion option.
The group said it has “streamlined” its business to weather the storm, and now is now in “excellent shape to reopen estate and take advantage of growth opportunities that present themselves in the Covid-19 era”, meaning more acquisitions are likely to be on the horizon.
The group already has four more pubs under development, and has signed a contract to build a 16-bedroom inn in Wales.
Staff have been furloughed and senior figures have taken pay cuts, as the hospitality industry — the third biggest employer in the UK — continues to feel the weight of the pandemic.
Last month the group outlined measures it will implement to safely reopen pubs, including installing outside cashless bars. Watson said the City Pub Group will initially focus on outside service, and use plastic cups instead of glassware.
What City Pub Group said
“We are excited about the prospect of reopening, not least because we have an excellent team who are keen to get back to work and keen to show hospitality to customers again,” said executive chairman Clive Watson. “However, we will do it cautiously and above all safely.”
“We will reopen with a reset, more efficient, streamlined business, reduced capital expenditure and our focus on the existing estate. We have a strong balance sheet not only to endure and prosper again, but also to take advantage of opportunities that arise.”
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