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City Pub Group (The) (CPC)

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Thursday 20 January, 2022

City Pub Group (The)

Trading Statement

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
Clive Watson, Chairman
Holly Elliott, CFO

Via Instinctif Partners

Instinctif Partners
Matthew Smallwood
William Cammegh

+44 (0) 20 7457 2020

Liberum (Nomad & Broker)
Chris Clarke
Edward Thomas
Clayton Bush

+44 (0) 20 3100 2000

Peel Hunt (Joint Broker)
George Sellar

Andrew Clark

Will Bell

 

+44 (0) 20 3128 8789

 

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