Q4 and FY Trading Update and re Directorate
City Pub Group PLC
("City Pub Group", "CPG", the "Company" or the "Group")
Q4 and Full Year Trading Update
City Pub Group, the owner and operator of 44 premium pubs across Southern England and Wales, today announces a trading update for Q4 and for the full year ended 25 December 2022.
Trading in Q4 delivered accelerated LFL sales growth compared with 2019 of 7.8% as a result of improved planning to maximise revenues from events such as the World Cup and Christmas. The performance would have been even better, had it not been for the rail strikes, especially those towards the end of the year, where we estimate lost revenue to be in the region £0.75m (c. 3.5% of revenue for Q4).
Overall, we are pleased that the performance of the core estate for 2022 was in line with market expectations. Annual turnover increased from £35.4m (2021) to £57.6m (2022), an increase of 63% from prior year, a reflection of a mostly normalised trading environment and a largely restriction free year. LFL sales compared to 2019 were 3% up.
Whilst the comparative period in 2022 was impacted by Omicron, trading in the first 4 weeks of 2023 has begun well with LFL sales against 2022 up 25% and above expectations.
Board Changes and other Senior Management Appointments
Toby Smith, Chief Operating Officer, has notified the Board of his intention to resign and steps down from the Board and will leave the business on 27 January. The Board would like to thank Toby for his hard work and contribution to the business over the last two years, particularly in the preparation of the estate as the business emerged from the Covid lockdowns.
The Board are delighted to announce that Rupert Clark, currently Group Managing Director and a member of the Board, will take on the role. Rupert has been an Executive Director of CPG for nearly 10 years and previously for the Group's forerunner; Capital Pub Company. He has a vast industry operational experience and a real passion for the City Pub Group. Rupert has been instrumental in overseeing some of our most complex projects and successes including the major refurbishments of the Tivoli in Cambridge and Aragon House in Parsons Green. Rupert has a keen desire to further premiumise the offer across all our pubs.
The Board is also pleased to appoint Chris Merriman, Group Financial Controller, as Company Secretary, with immediate effect. He follows Jimmy Dudgeon who served the Board extremely diligently for the last 10 years. The Board wishes to thank Jimmy for all his hard work in helping the Group develop from a start-up to an AIM quoted company and to the Company it is today.
The Company has also strengthened the senior management team with the appointment of Richard Myers as a Chief Marketing Officer. Richard joins us from Urban Pub Company, a similar sized company to the City Pub Group, and has great experience in the hospitality industry. His previous roles include being Head of Marketing at the Meantime Brewery. Richard will report directly to Clive Watson, the Executive Chairman, and will be part of the Senior Leadership Team. The ambition is to further premiumise the pub estate to deliver additional organic sales and profit growth.
Whilst CPG has been offered a number of acquisition opportunities over the past three months, the Company has, particularly at this stage in the cycle, very strict criteria for acquiring pubs as we expect pub prices to continue to soften. However, since the interim trading statement on 21 September 2022, the Group has acquired two excellent pubs: Potters, Newport (freehold), and The Bridge, Barnes, SW13 (leasehold). Potters further cements our foothold in South Wales, and the Bridge benefits from 8 letting rooms increasing total number of letting rooms across the estate to 225, now an important revenue stream for the Group.
Net debt has been reduced to £5m at the end of 2022 (2021 - £13.8m) as a result of rationalisation of the pub estate announced in March 2022 and careful cash management. The Board intends to maintain its low level of debt given the risk factors facing our industry currently. The Company continues to have one of the strongest balance sheets in the sector, with £35m total borrowing facilities until June 2024 and £152m of net assets as of 25 December 2022, predominantly based on an external valuation at March 22.
In 2022, and in common with many pub operators, our energy costs rose substantially. However, since the start of this year, these costs have started to reduce, although they are still high by historical standards. Following various mitigating strategies including hedging up to 40% of our energy cost from April 2023 until March 2025, coupled with ongoing energy reduction initiatives, we expect to achieve in excess of a 10% saving on the Company's 2022 energy bill in this financial year.
The Group has confronted and weathered the challenges of the last three years and has emerged in good shape to take advantage of future opportunities. The Group has a low-geared balance sheet, a high quality and well invested premium pub estate which will benefit from the sales momentum experienced in Q4 of last year. In addition, CPG has a Senior Management team in place to drive growth in 2023 and a strong culture within the Group, at both head office and in the pubs, which is entrepreneurial, determined and innovative. City Pub Group remains ambitious for the future and is well placed to take advantage of opportunities as they present themselves. The Board is confident of further progress in 2023.
Clive Watson, Chairman of CPG said:
"Despite challenges that our industry faces, CPG has always been flexible and adaptable and ready to take advantage of change. We have emerged from the pandemic in a position of strength. We are ready both financially with a very strong balance sheet and operationally with a team that is experienced yet ambitious to take advantage of both organic opportunities as we further premiumise and on building the estate through acquisition, albeit only at the right valuations which we expect to continue to soften.
Trading has begun better than expected in 2023 and we look forward to an improving economic outlook as the year progresses."
24 January 2023
City Pub Group
Today: via Instinctif
Clive Watson, Executive Chairman
Holly Elliot, CFO
+44 (0) 20 7457 2020
Liberum (Nomad & Joint Broker)
+44 (0) 20 3100 2000
Peel Hunt (Joint Broker)
+44 (0)78 9520 5644