The City Pub Group – which currently has four development sites on top of its near 50-strong stable – attributed the sharp drop in revenue to Covid enforced closures and restrictions throughout 2020.
What’s more, in light of the most recent lockdown measures, the Group announced that cash burn had reduced to in the region of £300,000 per month – excluding Government grants with the exception of the Coronavirus Job Retention Scheme.
With the exception of eight members of staff, all of the company’s employees had been placed on furlough while the Group’s directors have deferred 25% of their salary from 1 January until pubs reopen – having already sacrificed 50% of their salary between March and June, and 25% between July and October.
Other cost cutting measures employed by the Group included the suspension of capex barring minor essential remedial works and a £300k upgrade at the Hoste Arms in North Norfolk – which City Pub Group acquired for close to £9m in April 2019 – to increase the trading area on the ground floor and enhance 10 remaining hotel bedrooms.
The Group also claims to have made “considerable progress” with its landlords who, on the whole, have agreed to “sensible compromises” and “minimal rents”.
‘Very challenging year’
According to its most recent statement, the Group raised £22m of gross proceeds from an equity fundraise in March 2020, £10m of which was used to reduce bank borrowings with the remainder on deposit to help maintain liquidity – which will stretch into 2022 if need be. The Group has also negotiated a further £5m government-backed loan.
The operator’s net debt is currently £14m.
Clive Watson, chairman of City Pub Group said: “2020 has been a very challenging year, but decisions made since March 2020 with regards to the fundraising, cost control, streamlining of the business, and strengthening of the board has resulted in a very strong balance sheet, good levels of liquidity, a strengthening of our business model, a more focussed proposition and most importantly, pure determination to go out there and do the business once the pubs reopen.”
The Group also strengthened its management team towards the end of 2020 with the appointment of Toby Smith as chief operating officer.
“We have the right people in the key roles, whether in the pubs or head office and a fantastic estate to trade from.
“I look forward to a time when I can announce to shareholders that we are on the acquisition trail again, but this will only be considered once we are hitting high levels of optimisation from our existing capacity.”