UPC outshines all W&D's ventures
Union Pub Company (UPC) was the star performer for Wolverhampton & Dudley (W&D) last year,
driving up operating profits by 23% to £80m on sales of £179m (up 16.6%) and improving margins by 2.4% to 45%.
W&D, which announced its name change to Marston's Beer Company from January in
recognition of its national presence, delivered a 13% rise in total underlying pre-tax profits to £101.5m.
The tenanted/leased division's strong performance was boosted by the transfer of 102 pubs from tenancy to lease. Just under half the 1,893-strong UPC estate is now leased, a figure that will rise to 60% by 2008.
The second-half of the year also saw 93 managed pubs transfer from the Pathfinder division to lease. As they were traded as managed pubs during the transition period, their results were included in Pathfinder's accounts.
Pub EBITDA for the tenanted/leased estate rose 5% to
an average of £57,000, with licensees earning on average £25,000 to £30,000, plus £8,000 accommodation benefits.
Average assignment for the past year was £82,000. The churn rate was below 20%. Bad debts were unchanged at 0.3% of turnover; rent concessions were 0.6% of rent roll; and no rent reviews were taken to arbitration.
UPC managing director Stephen Oliver acknowledged that market conditions are challenging. "Tenants are feeling the increased energy and wage costs and if you add in Sky and the licensing costs, we think the average tenant is paying £5,000 more in costs. So we're looking to up the support we give them."
Over 1,500 UPC licensees have agreed investment schemes to deal with next July's smoking ban, and the division has so far invested £10m in preparation.
"Ninety per cent of our pubs have good outside trading areas so the ban will not im-pact on business," Oliver said.
"A small number of landlocked tenants will notice a difference but for others there will be more business opportunities."
UPC's new intranet service for licensees, which features on-line ordering, promotions, advice and accounting packages, has proved successful and new business-building features are being added.
The internet has boosted licensee recruitment, with 40,000 UPC site visitors registering in September alone.
Wolverhampton & dudley key facts
l Pathfinder 2005-06 (459 pubs)
l Turnover up 4.2% to £330.7m
l Underlying profit margin down from 19.9% to 19.2%
l Total like-for-likes up 2.4% (2nd half: up 3.7%)
l Average pub turnover up 10% to £13,200 per week
l 12 new-build pubs opened; 20 to open this year. At £2m per pub, W&D believes it can create £75m of added value over five years from 20 new build pubs.
l New consumer offers in community pubs: Taverners' Carvery - a value carvery offer, now averaging £18,000 sales in the 12 units; and two for one, an everyday fixed offer averaging £15,000 sales in the
54 units
l New high-street concept: Bluu - four
up-market food/bars, in London, Manchester, Nottingham and Derby, averaging £20,000 per week
l Sky removed from 100 pubs in summer - now only in 135 and falling
l Turnover up 0.7% to £86m in declining market
l Underlying operating margin up 0.1%
l Underlying operating profit up 1.1% to £18m
l Premium ale volume up 3%, and market share up 0.8%
l Draught premium ale volume up 4%, with a market share gain of 1.4%
l Jennings premium ale up 29%
l Old Empire up 9.5%
l Official beer of England Cricket
