TIDMCPC
RNS Number : 8669M
City Pub Group PLC (The)
19 September 2019
The City Pub Group PLC
(the "City Pub Group", the "Company" or the "Group")
INTERIM RESULTS FOR THE 26 WEEK PERIODING 30 JUNE 2019
Strategic expansion drives sales and EBITDA growth
The City Pub Group is pleased to announce its unaudited results
for the 26 weeks ended 30 June 2019. The Group operates a
predominately freehold estate of 47 wet-led pubs in London,
Southern England and Wales.
Highlights:
-- Revenue up 36% to GBP27.1 million (2018: GBP20.0 million)
-- Like for like sales increased by 2.6% year on year
-- Adjusted EBITDA* up 20% to GBP3.6 million (2018: GBP3.0 million)
-- Adjusted profit before tax** up 19% to GBP1.9 million (2018: GBP1.6 million)
* Adjusted earnings before exceptional items, share option
charge, interest, taxation, depreciation and amortisation.
** Adjusted profit before tax is the profit before tax, share
option charge and exceptional items.
-- Strategic expansion continued with four pubs opened in 2019.
The expanded estate and our wet-led focus resulted in substantial
EBITDA and sales growth. Progress has continued into the second
half with sales up by 35% over the last eleven weeks.
-- With a further four projects in development and a continued
focus on the existing estate, the Board expects the Group to
continue to deliver significant growth for the foreseeable
future.
-- The Group is beginning to see the benefits of the new
regional management structure and the new Weekly Employee Bonus
Scheme, both of which will drive growth and further incentivise the
Group's employees.
-- Due to political and economic uncertainty the Group will take
a much more prudent and even more selective approach to
acquisitions and focus instead on completing the development sites
for trading, reducing debt and improving the dividend for
shareholders as cash generated increases, until a time where there
is more certainty.
Clive Watson, Executive Chairman of The City Pub Group,
said:
"Our targeted expansion of high-quality larger pubs with letting
rooms has delivered strong progress for the Group in the first
half. In the face of robust comparatives, we have delivered good
like for like growth too. As our development sites begin trading
during 2020, they will drive our performance onward. Our momentum
has continued into the second half with strong sales growth.
"We cannot ignore the uncertainty in the market due primarily to
Brexit and the potential impact of a No Deal. We are a management
team that is focused on the long-term and as such we believe it is
prudent for us to rein in our expansion programme until there is
more certainty. Instead we will focus on getting our development
sites trading, developing our existing estate, reducing our debt
and improving our dividends for shareholders. This will further
strengthen our position and minimise the impact of any headwinds
whilst continuing to deliver significant growth into the
future."
19 September 2019
This announcement contains inside information for the purposes
of EU Regulation 596/2014.
Enquiries:
City Pub Group
Clive Watson, Chairman
Tarquin Williams, CFO
Instinctif Partners
Matthew Smallwood
Andy Low +44 (0) 20 7457 2020
Liberum (Nomad & Joint Broker)
Chris Clarke
Edward Thomas
Clayton Bush +44 (0) 20 3100 2000
Berenberg (Joint Broker)
Chris Bowman
Toby Flaux
Marie Stolberg +44 (0) 20 3207 7800
For further information on City Pub Group pubs visit
www.citypubcompany.com
CHAIRMAN'S STATEMENT
The Group has continued its expansion in the first half of the
2019. We now have 47 pubs trading, a further 3 sites in the
development stage and a project to add additional bedrooms to an
existing site. The Board's ambition of having an estate of around
65 pubs is well within our reach. As the Group expands, we are
continuing to build our expertise and local knowledge in the areas
we already trade in, thereby driving further growth and improving
our overall performance.
Financial Highlights
The Board is pleased with the financial performance of the Group
over the period. Highlights include:
- Revenue growth of 36% to GBP27.1 million (2018: GBP20.0 million)
- Adjusted EBITDA* increased by 20% to GBP3.6 million (2018: GBP3.0 million)
- Adjusted Profit before tax** up 19% to GBP1.9 million (2018: GBP1.6 million)
These results have been achieved through our strategy of
increasing the number of pubs we operate as well as delivering
organic growth from the existing estate.
Like-for-like sales increased by 2.6% in the first six months.
We are pleased with this result as it is against strong
comparatives and a period which benefitted from the FIFA World Cup
and hot weather.
Operating margins were lower in the period primarily due to
one-off investments to build infrastructure for future growth,
including establishing a new regional management structure and the
overlapping of the new Weekly Employee Bonus Scheme which replaced
the Annual Employee Profit share. These projects will ensure that
we have an optimal structure and rewards programme in place to
provide a platform for us to grow. The Board is confident that
operating margin will return to its growth trajectory. A target of
20% has been set by the end of 2021.
Trading Estate
The Group operates 47 high-quality predominantly drink-led pubs.
It also acquired a freehold pub in London in July 2019, which is
leased to another operator.
Since the start of the year the Group has opened the following
pubs:
February: Pride of Paddington, a landmark pub opposite
Paddington Station which benefits from letting accommodation.
April: The Hoste, an iconic site located in Burnham Market,
North Norfolk, benefitting from 53 bedrooms as well as a lovely pub
and dining area.
June: Aragon House, a landmark site located in London's Parsons
Green with three trading floors, a large garden and 15
bedrooms.
July: Market House, a former Lloyd's Bank building located in
Market Square, Reading, now operating as a large pub with 24
letting rooms and a rooftop garden.
The Board is satisfied with the performance of these new
openings.
In addition, there are 4 projects in the development
pipeline:
Norwich - Land and building adjacent to our city centre site,
the Georgian Town House. Works are ongoing and should be completed
by end of the year, delivering a further 12 letting rooms, which
will enhance the existing operation.
Exeter - Former Turks Head Pub. As part of our refurbishment
programme we will be adding 6 letting rooms and a roof garden. It
is expected to open in the second quarter of 2020.
Cambridge - Former Tivoli Pub. Planning permission has been
received to redevelop the site with a roof garden. It is expected
to open in the third quarter of 2020 and adds to our growing
presence in Cambridge.
Bath - Former Nest Pub. This site is currently going through the
planning process. We are targeting an opening date in the third
quarter of 2020.
In addition to the sites acquired, we have a further site which
we are in the process of completing the legal documentation for and
we continue to appraise other opportunities.
During the period we sold The Grapes in Oxford for
GBP120,000.
The Group's acquisition strategy is focused on developing large,
prominent sites in our target cities which ideally have existing
letting rooms or at least space for us to develop some. These types
of pubs are attractive to us as, whilst obtaining the necessary
consents can take time, they perform well and deliver strong
returns.
Market / Brexit
We have been pleased with our trading performance to date. We
operate in a market that is benefitting from full employment and
low interest rates. Our focus continues to be building local custom
in our pubs to ensure a sustainable pattern of trade. To assist
this, we continue to evolve our retailing offer through innovation,
better customer service and driving trade through the City Club
App.
For us it is important to take into account both the long-term
view of the future of the business and short term macro-economic
factors. The uncertainty caused by Brexit hangs over the pub
industry and the UK economy as a whole. The Board believes that
given this, it is prudent at this time to be more discerning on our
acquisition strategy. The reason behind our decision is primarily
opportunism - prices of pubs should fall in a No Deal Brexit
scenario.
The Group has grown rapidly in recent years and we have a number
of development sites with significant potential to concentrate on
in the short term, which together with additional management
attention on the entire existing and development estate, there are
considerable gains to be made providing substantial growth for some
time to come.
The Group will continue to look at acquisitions of sites on a
selective basis and take advantage of our ability to move quickly
and decisively.
Regional Structure / Weekly Employee Bonus Scheme
The introduction of the Regional structure and the Weekly
Employment Bonus Scheme have had an upfront cost, but have created
a structure for further growth and provided additional motivation
for our employees. The Board believes decentralisation of our head
office functions will maintain our cutting edge as we go forward by
empowering our management team further and enabling them to focus
on the opportunity in their local markets. As part of this
activity, we have appointed our first Regional Director, Jim
Charlton, in our Western region and will make more appointments in
our other divisions later this year.
The Weekly Employee Bonus Scheme has encouraged the overall
entrepreneurial culture of the business with very tangible benefits
of staff retention and improved productivity now coming
through.
Banking Facilities / Borrowings
The Group entered into a new 5 year, GBP50 million banking
facility (GBP35m facility with GBP15m accordion option) with
Barclays Bank plc in July on more favourable terms than our
previous facility. This renewed facility ensures that we are fully
funded to make acquisitions at the appropriate time.
Current net debt is c. GBP30 million and it is the Board's
intention to maintain this level, or even reduce it, until there is
more clarity.
Dividend
It is currently Group policy not to declare interim dividends.
The Board is committed to increasing dividends in line with
earnings and will finalise the intended dividend payment when we
announce our full year results in April 2020.
Current Trading
Sales in the 11 weeks since the period end have increased 35%
driven by our strategy of opening larger sites and capitalising on
local trading opportunities. The quality of our trading estate is
continually improving and has been enhanced by the recent openings.
The increased number of letting bedrooms across the estate will
drive future operational efficiencies.
The Group's focus is now on raising the quality of the estate,
completing our development programme, acquiring new sites on an
opportunistic basis, reducing our debt and growing dividend
payments for shareholders as cash generation increases.
Clive Watson
Chairman
19 September 2019
* Adjusted Earnings before exceptional items, share option
charge, interest, taxation, depreciation and amortisation.
** Adjusted profit before tax is the profit before tax, share
option charge and exceptional items
Consolidated Statement of Comprehensive Income
For the 26 weeks ended 30 June 2019
Unaudited Unaudited Audited
26 weeks 26 weeks
ended ended 52 weeks ended
30 June 30 December
2019 1 July 2018 2018
Notes GBP'000 GBP'000 GBP'000
Revenue 27,107 19,965 45,674
Costs of sales (6,824) (5,017) (11,621)
---------- ------------ ---------------
Gross profit 20,283 14,948 34,053
Administrative expenses (19,251) (13,842) (31,244)
---------- ------------ ---------------
Operating profit 1,032 1,106 2,809
Reconciliation to adjusted
EBITDA*
Operating profit 1,032 1,106 2,809
Depreciation 6 1,594 1,207 2,552
Share option charge 180 181 377
Exceptional items 2 803 514 2,121
*Adjusted earnings before
exceptional items, share
option charge, interest,
taxation and depreciation 3,609 3,008 7,859
------------------------------
Finance costs (86) (174) (189)
---------- ------------ ---------------
Profit before tax 946 932 2,620
Tax expense 3 (436) (176) (654)
Profit for the period and
total comprehensive income 510 756 1,966
========== ============ ===============
Earnings per share
Basic earnings per share
(p) 4 0.86 1.34 3.44
========== ============ ===============
Diluted earnings per share
(p) 4 0.85 1.33 3.41
========== ============ ===============
All activities comprise continuing operations. There are no
recognised gains or losses other than those passing through the
statement of comprehensive income.
The accompanying notes are an integral part of these interim
financial statements.
Consolidated Statement of Financial Position
As at 30 June 2019
Unaudited Unaudited Audited
26 weeks
26 weeks ended ended 52 weeks ended
30 December
30 June 2019 1 July 2018 2018
Assets Notes GBP'000 GBP'000 GBP'000
Non-current
Intangible assets 4,136 3,090 3,794
Property, plant and equipment 6 107,770 78,590 90,020
Total non-current assets 111,906 81,680 93,814
--------------- ------------ ---------------
Current
Inventories 880 580 960
Trade and other receivables 2,885 1,995 2,542
Cash and cash equivalents 3,114 2,842 2,853
Total current assets 6,879 5,417 6,355
--------------- ------------ ---------------
Total assets 118,785 87,097 100,169
--------------- ------------ ---------------
Liabilities
Current liabilities
Trade and other payables (9,178) (7,715) (8,494)
Total current liabilities (9,178) (7,715) (8,494)
--------------- ------------ ---------------
Non-current
Borrowings (30,000) (7,000) (11,600)
Other payables (50) (310) -
Deferred tax liabilities (1,879) (1,096) (1,537)
Total non-current liabilities (31,929) (8,406) (13,137)
--------------- ------------ ---------------
Total liabilities (41,107) (16,121) (21,631)
--------------- ------------ ---------------
Net assets 77,678 70,976 78,538
=============== ============ ===============
Equity
Share capital 30,692 29,196 30,651
Share premium 38,328 33,586 38,287
Own shares (JSOP) (3,272) (3,272) (3,272)
Other reserve 92 92 92
Share-based payment reserve 883 507 703
Retained earnings 10,955 10,867 12,077
Total equity 77,678 70,976 78,538
=============== ============ ===============
The accompanying notes are an integral part of these interim
financial statements.
Consolidated Statement of Changes in Equity
For the 26 weeks ended 30 June 2019
Share-based
Share Share Own shares Other payment Retained
capital premium (JSOP) reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
31 December
2017 (Audited) 28,234 31,276 - 92 326 11,382 71,310
Employee share-based
compensation - - - - 181 - 181
Dividends - - - - - (1,271) (1,271)
Purchase of
JSOP shares 962 2,310 (3,272) - - - -
Transactions
with owners 962 2,310 (3,272) - 181 (1,271) (1,089)
--------- --------- ----------- --------- ------------ ---------- ---------
Profit for
the period - - - - - 756 756
Total comprehensive
income for
the period - - - - - 756 756
--------- --------- ----------- --------- ------------ ---------- ---------
Balance at
1 July 2018
(Unaudited) 29,196 33,586 (3,272) 92 507 10,867 70,976
========= ========= =========== ========= ============ ========== =========
Employee share-based
compensation - - - - 196 - 196
Issue of new
shares 1,455 4,701 - - - - 6,156
Transactions
with owners 1,455 4,701 - - 196 - 6,352
--------- --------- ----------- --------- ------------ ---------- ---------
Profit for
the period - - - - - 1,210 1,210
Total comprehensive
income for
the period - - - - - 1,210 1,210
--------- --------- ----------- --------- ------------ ---------- ---------
Balance at
30 December
2018 (Audited) 30,651 38,287 (3,272) 92 703 12,077 78,538
========= ========= =========== ========= ============ ========== =========
Employee share-based
compensation - - - - 180 - 180
Dividends - - - - - (1,632) (1,632)
Issue of new
shares 41 41 - - - - 82
Transactions
with owners 41 41 - - 180 (1,632) (1,370)
--------- --------- ----------- --------- ------------ ---------- ---------
Profit for
the period - - - - - 510 510
Total comprehensive
income for
the period - - - - - 510 510
--------- --------- ----------- --------- ------------ ---------- ---------
Balance at
30 June 2019
(Unaudited) 30,692 38,328 (3,272) 92 883 10,955 77,678
========= ========= =========== ========= ============ ========== =========
The accompanying notes are an integral part of these interim
financial statements.
Consolidated Statement of Cashflows
For the 26 weeks ended 30 June 2019
Unaudited Unaudited Audited
26 weeks
26 weeks ended ended 52 weeks ended
30 December
30 June 2019 1 July 2018 2018
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit for the period 510 756 1,966
Taxation 436 176 654
Finance costs 86 174 189
--------------- ------------ ---------------
Operating profit 1,032 1,106 2,809
Adjustments for:
Depreciation 1,594 1,207 2,552
Gain on disposal of property, (1) - -
plant and equipment
Share-based payment charge 180 181 377
Impairment 160 - 480
Change in inventories 80 (26) (406)
Change in trade and other receivables (273) (343) (992)
Change in trade and other payables (2,112) 239 2,152
--------------- ------------ ---------------
Cash generated from operations 660 2,364 6,972
Tax paid (15) (104) (535)
Net cash from operating activities 645 2,260 6,437
--------------- ------------ ---------------
Cash flows from investing activities
Purchase of property, plant and
equipment (8,787) (7,083) (11,430)
Proceeds from disposal of property, 50 - -
plant and equipment
Acquisition of new property sites (9,840) (5,332) (14,361)
Net cash used in investing activities (18,577) (12,415) (25,791)
--------------- ------------ ---------------
Cash flows from financing activities
Proceeds from issue of share capital 82 - 5,973
Repayment of borrowings - - (245)
Dividends paid - - (1,087)
Proceeds from new borrowings 18,400 7,000 11,600
Interest paid (289) (418) (449)
Net cash from financing activities 18,193 6,582 15,792
--------------- ------------ ---------------
Net change in cash and cash equivalents 261 (3,573) (3,562)
Cash and cash equivalents at the
start of the period 2,853 6,415 6,415
Cash and cash equivalents at the
end of the period 3,114 2,842 2,853
=============== ============ ===============
The accompanying notes are an integral part of these interim
financial statements.
Notes to the Financial Statements
For the 26 weeks ended 30 June 2019
1 Basis of preparation
This interim report was approved by the board on 19 September
2019. The interim financial statements are unaudited and are not
the Group's statutory accounts as defined in section 434 of the
Companies Act 2006.
The consolidated interim financial statements have been prepared
under IFRS as adopted by the European Union and on the basis of the
accounting policies set out in the statutory accounts of The City
Pub Group plc, for the period ended 30 December 2018. The financial
statements have not been prepared (and are not required to be
prepared) in accordance with IAS 34: 'Interim Financial Reporting'.
They do not include any of the information required for full annual
financial statements and should be read in conjunction with the
consolidated financial statements of the Group for the period ended
30 December 2018.
Statutory accounts for the period ended 30 December 2018 have
been delivered to the Registrar of Companies. These accounts
contain an unqualified audit report under Section 495 of the
Companies Act 2006, which did not make any statements under Section
498 of the Companies Act 2006.
The interim report is presented in Great British Pounds and all
values are rounded to the nearest thousand pounds, except where
otherwise indicated.
This interim report has been prepared in accordance with the AIM
Rules issued by the London Stock Exchange.
2 Exceptional items
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
30 June 30 December
2019 1 July 2018 2018
GBP'000 GBP'000 GBP'000
Pre opening costs 506 450 1,455
Impairment of a pub site
(note 6) 160 - 480
Other non recurring items 137 64 186
803 514 2,121
========== ============ ============
3 Tax charge on profit on ordinary activities
The taxation charge is calculated by applying the Directors'
best estimate of the annual effective tax rate to the profit for
the period. All items of taxation are reflected through the
Statement of Comprehensive Income.
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
30 June 1 July 30 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Current income tax:
Current income tax charge 436 162 604
Adjustments in respect of previous
period - - (81)
Total current income tax 436 162 523
---------- ---------- ------------
Deferred tax:
Origination and reversal of
temporary differences - 14 131
Adjustments in respect of previous - - -
period
Total deferred tax - 14 131
---------- ---------- ------------
Total tax 436 176 654
========== ========== ============
4 Earnings per share
Unaudited Unaudited Audited
26 weeks ended 26 weeks ended 52 weeks ended
30 December
30 June 2019 1 July 2018 2018
GBP'000 GBP'000 GBP'000
Earnings for the period
attributable to Shareholders 510 756 1,966
=============== =============== ===============
Earnings per share:
Basic earnings per
share (p) 0.86 1.34 3.44
Diluted earnings per
share (p) 0.85 1.33 3.41
Weighted average number Number of Number of Number of
of shares: shares shares shares
Weighted average shares
for basic EPS 59,378,421 56,467,333 57,216,344
Effect of share options
in issue 644,168 374,862 476,688
Weighted average shares
for diluted earnings
per share 60,022,589 56,842,195 57,693,032
=============== =============== ===============
5 Dividends
The Company declared a dividend of 2.75p per ordinary share
during the year ended 30 December 2018, which was approved at the
Annual General Meeting on 20(th) May 2019. The dividend payable of
GBP1,632,820 has been accrued as at 30 June 2019 and deducted from
retained earnings.
After the period end GBP1,405,798 of the dividend was paid in
cash and GBP227,022 was distributed as a scrip dividend.
6 Property, plant and equipment
Group
Freehold Fixtures,
& leasehold fittings
property and computers Total
Cost GBP'000 GBP'000 GBP'000
At 31 December 2017 (Audited) 59,588 15,839 75,427
Additions 5,794 1,289 7,083
Acquisitions 4,473 294 4,767
------------- --------------- ---------
At 1 July 2018 (Unaudited) 69,855 17,422 87,277
Additions 1,587 3,019 4,606
Acquisitions 7,245 1,344 4,469
At 30 December 2018 (Audited) 78,687 21,785 100,472
------------- --------------- ---------
Additions 5,988 3,001 8,989
Acquisitions (Note 8) 10,344 288 10,632
Disposals (91) (64) (155)
------------- --------------- ---------
At 30 June 2019 (Unaudited) 94,928 25,010 119,938
------------- --------------- ---------
Depreciation
At 31 December 2017 (Audited) 1,432 6,048 7,480
Provided during the period 149 1,058 1,207
At 1 July 2018 (Unaudited) 1,581 7,106 8,687
Provided during the period 200 1,145 1,345
Impairment 420 - 420
At 30 December 2018 (Audited) 2,201 8,251 10,452
------------- --------------- ---------
Provided during the period 330 1,264 1,594
Impairment 48 112 160
Disposals (19) (19) (38)
At 30 June 2019 (Unaudited) 2,560 9,608 12,168
------------- --------------- ---------
Net book value
At 30 June 2019 (Unaudited) 92,368 15,402 107,770
============= =============== =========
At 30 December 2018 (Audited) 76,486 13,534 90,020
============= =============== =========
At 1 July 2018 (Unaudited) 68,274 10,316 78,590
============= =============== =========
At 31 December 2017 (Audited) 58,156 9,791 67,947
============= =============== =========
During the period ended 30 December 2018 the group made a
provision for impairment against a Pub Site in Cambridge, due to
poor performance and it has been reduced to its value in use, with
the asset being held at its recoverable amount of GBP340,000. In
addition, the group made a provision for impairment against the
Grapes in Oxford, which was written down to its recoverable amount,
with its disposal completed on 25th February 2019.
During the period ended 30 June 2019 the group made an
additional provision for impairment against the Pub site in
Cambridge, due to poor performance and it has been reduced to its
value in use, with the asset being held at its recoverable amount
of GBP150,000.
7 Business combinations
During the period ended 30 June 2019 the Group has acquired 2
new sites through business combinations, the fair values of the
assets and liabilities acquired, and the nature of the
consideration, are outlined within the table below.
All of the above acquisitions were part of the Group's
continuing strategy to expand its pub portfolio via selective
quality acquisitions. All other pub acquisitions have been
accounted for as property acquisitions.
Unaudited
26 weeks
ended
30 June
2019
Fair value: GBP'000
Property, plant and equipment
acquired 10,632
Deferred tax liability (343)
Goodwill 343
Total 10,632
==========
Satisfied by:
Cash 9,840
Deferred consideration 792
Total 10,632
==========
8 Events after the reporting period
The Group settled the final dividend, which was approved at the
AGM in May 2019, on 1 July 2019.
In July 2019 the Company agreed a new GBP35 million revolving
credit facility, with a GBP15 million accordion option, with
Barclays Bank PLC.
On 12 July 2019, the Company purchased The Island, a freehold
site in Kensal Green.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
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END
IR BLGDCLGBBGCI
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September 19, 2019 02:00 ET (06:00 GMT)
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