City Pub Group trade better than pre-pandemic
The business, which operates 40 freehold and leasehold pubs from south Wales and the south-west of England across the Cotswolds towards Suffolk and Norfolk, achieved revenue of £26.1m, which was 194% up v the same period in 2021 (£8.9m).
Meanwhile, adjusted group EBITDA (earnings before interest, taxation, depreciation and amortisation) is now £3.4m v £0.0m in 2021 while adjusted group EBITDA before tax is £1.3m v £2.0m in 2021.
The group has opened new sites during the six-month period: New sites opened H1: the Oyster House in Mumbles, Wales; the Tivoli in Cambridge; and Damson & Wilde in Bury St Edmunds, Suffolk, and said “trading is on an upward trajectory” and it has a “strong, freehold asset-backed balance sheet with current net debt of £ 5.5m”. City Pub Group has a RCF of £35m with Barclays, £6m of which was drawn down in [the first half of] 2022 and an additional £2m has been drawn in the second half, which “provides us with the firepower to take on board any new acquisition opportunities that arise”.
Acquisitions possible
It added: “Our short-term focus will be improving the current estate while appraising potential acquisitions.” While it sold six sites during the first half of financial year 2022 with the proceeds used to repay the bank loan – a total repayment of c£19m was made, bringing the debt down to c£6m.
On its gross margins, results showed the business is maintaining wet sales on a percentage par with financial year results in December 2021 and in December 2020 but food sales have taken a hit due to cost inflation. It said: “We are changing our food purchasing consultants and looking at our menu development more closely. We anticipate an increase in this over the coming months.”
Energy prices significant factor
It added: “A focus on rooms is helping to drive improved operating margins, along with higher GPs and reduced costs at site and head office levels.”
On energy costs, City Pub Group said: “Energy prices have seen significant headwinds since we last updated. The war in Ukraine, with Russia limiting gas supplies has had an enormous impact on pricing.
“The government is now stepping in to put a price cap in place (details still to be confirmed), which will hold prices until April 2023 with a possible extension beyond this date if the situation has not improved.”
It added the company has 30% of electricity hedged and that “drastic measures have been put in place in pubs to remove consumption to mitigate the exposure to the cost pressures.”
