City Pub Company aims for seven new sites after £10m fundraising drive

21-Nov-2013 - Last updated on 21-Nov-2013 at 16:29 GMT

Clive Watson said he was confident about the next round of fundraising

City Pub Company, the Enterprise Investment Scheme (EIS)-funded pub operator, expects turnover to reach £7m in 2013 and is targeting seven acquisitions under its new £10m fundraising drive, co-founder Clive Watson has said.

EBITDA in 2013 is expected to reach £1.4m, against £100,000 in 2012. Turnover for City Pub Company, which recently secured sites in Winchester and Norwich, was £2.4m last year, in which it operated an average of three units, compared to eight on average in 2013, and also incurred start-up costs.

Firepower

Watson said the company will have total “firepower” of £13m to £14m for acquisitions assuming it reaches the £10m target under the latest fundraising, to launch next week. He’s aiming for seven acquisitions, taking the estate to 20 across its two EIS companies, City Pub Company East and City Pub Company West.

Watson, who co-founded the EIS-funded Capital Pub Company with David Bruce that was sold to Greene King in 2011, said: “I think we’re probably 18 months ahead of where Capital was at this stage our life cycle.”

He added: “I’m really confident about the next fundraising.

“This will be well received. It’s the early shareholders who took the risk. We’ve now got a good platform of acquisitions lined up; a lot of the risk has been taken out.”

New pubs

The group, which has 11 sites trading at present, is due to complete on a venue called Alfie’s in Winchester next year with an opening expected in September. City Pub Company is also planning major work at the Georgian Hotel in Norwich, which it recently acquired.

The venue has an 80-seater restaurant on the ground floor and a bar for about 60. “We are going to knock the two together to create a pub and dining room area that will probably have seating for about 150 people. Then we are going for a new conservatory that will add about 40 coves. We are going to landscape the garden that in summer will have approximately 150 covers.

“The F&B side is going to massively increase. We will have a really nice pub.”

The Georgian Hotel has 30 bedrooms but Watson said these won’t be opened until “much further down the line”. “It’s a huge footprint,” he added. “We’ll make it a pub that appeals to as wide an age group and demographic as possible. For us that’s the most important thing.”

Asked if he expected to open more Brewhouse brewpubs, Watson said: “Yes. It’s working well as it’s a good string to our bow. It’s not just what we are about, but if we are going to cities and towns where there’s a brewing history and there’s no longer a brewery there it’s good to try to restore something of that heritage, albeit in a small way.

“But at the end of the day our primary function is retailing food and drink.”

Regarding locations, Watson said the general rule is to look for sites within two hours of its office in London SW3 or from the houses of its new chief executives Alex Derrick (West) and Rupert Clark (East) in Morden and Sussex.

Fundraising

The £10m raised is expected to be split equally between the two companies. In a document for the launch of its new fundraising, the seven-strong City Pub Company East revealed that it generated turnover of £3.1m in the eight months to 25 August, up from £2.6m in the year before.

Pre-tax profit was £462,000 against £29,000 in the same period last year.

In City Pub Company West, which has five sites, turnover grew by £988,000 to £1.6m and pre-tax profit doubled to £102,000.