The business, which said the rise in lfl sales would have been even higher if it were not for recent train strikes, also announced it has secured 52% of the shares in Mosaic Pub & Dining Group.
City Pub Group, the operator of a predominately freehold estate of 43 premium pubs, increasing to 52 pubs including Mosaic, across southern England and Wales, said the strong lfl performance is driven by its strategy to further premiumise the estate and a continued focus on customer service. It expects this trend to continue through the second half of its financial year and will also benefit from new openings in 2022 that have performed well to date.
Costs have remained in line with expectations with clear evidence of abatement in some areas but food inflation remains high. It added it is benefiting from the disposal of the lower margin pubs sold in 2022.
No rush to acquire
With net debt at £8m and £25m undrawn on its existing RCF (revolving credit facility), the group is looking at acquisition opportunities and said it believes pub prices will fall in the short term and is “in no rush to go out and acquire”.
The majority acquisition of Mosaic Pub & Dining Group was achieved through the acquisition of existing shares in The Galaxy (City) Pub Company, The Pioneer (City) Pub Company and The Sovereign (City) Pub Company (the ‘Mosaic Companies’) for a total cash consideration of approximately £0.7m. This transaction took its total investment to £7m. For the year ended 27 March 2022, the Mosaic Companies recorded an audited aggregate loss before tax of £110,000, with aggregated net assets as at 27 March 2022 of approximately £10m.
From 26 June 2023, City Pub Group will assume operational control of the pubs in the Mosaic estate, which consists of nine pubs (seven freehold, two leasehold) in London and Birmingham.
The group said: “We are very excited about adding these quality pubs to our existing estate. The integration should be smooth, given our existing supplier crossover and synergies.”
City Pub group chairman Clive Watson said: “The strategy we have pursued over the past couple of years is now manifesting itself in our outperformance. We have an excellent estate of high-quality premium pubs, well invested, located well and trading strongly. We also have a more efficient business having streamlined the operating structure to meet our existing needs.
“Our estate is growing through cost effective acquisitions and we have reached a landmark moment for the City Pub Group as we now own and operate more than 50 premium – predominantly freehold – pubs in the south of England and Wales.
“City Pub Group is in good shape and we remain optimistic about the prospects of the company for the remainder of 2023 and beyond.”