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Morning Briefing for pub, restaurant and food wervice operators

Sat 7th May 2016 - City Pub Company eyes ‘independent future’ after IPO with 50 sites by end of 2019
City Pub Company eyes ‘independent future’ after IPO with 50 sites by end of 2019: City Pub Company founder and chairman Clive Watson has told Propel the company hopes to operate an estate of 50 pubs by the end of 2019 in the wake of an IPO planned for the end of 2017. The IPO is expected to raise between £10m and £15m to fuel the next stage of acquisitions. Stressing the long-term commitment to the company of its current shareholder base, Watson said: “Our strategy is to remain an independent, high quality pub company. A lot of our EIS shareholders are investors because we provide roll-over relief and inheritance tax relief as well as growth. All their gains are capital gains tax exempt – there are a lot of tax benefits from continuing to hold our stock. The plan isn’t to buy, build and sell – it’s buy, build and build.” City Pub Company, comprising City Pub Company East and City Pub Company West, has reported substantial progress generating significant growth in revenue and Ebitda, as well as moving into profit for the first time, in the year to 27 December 2015. The portfolio has grown to 28 pubs and the company anticipates operating at least 30 pubs by the end of 2016 – it has four pubs in legals. Turnover increased substantially to £20.3m, up 33% compared with 2014. Ebitda increased significantly to £2.9m, up 36% compared with 2014. The company made a maiden profit of £0.37m and completed a £10m convertible preference share fund-raise in February 2016. It reported combined Net Asset Value increased to £1.50 following directors’ valuation of all trading sites. City Pub Company West has grown to 13 sites following the acquisition of four pubs during the period with a further three sites acquired post year-end – The Althorp in Wandsworth Common, London; The Inn on the Beach in Hayling Island, Hampshire; and The Varsity in Southampton. City Pub Company East has grown to 13 pubs following the acquisition of two pubs during the period including The Java Coffee House in Oxford, which has now relaunched as The George Street Social. The company also achieved the profitable disposal of the Church Street Townhouse in Stratford-upon-Avon and has acquired the Cat & Mutton in Broadway Market, Hackney. Watson said: “This has been a landmark year for City Pub Company with excellent growth in revenue and Ebitda together with our maiden profit. Throughout the year we have completed a number of exciting refurbishments and openings as we continue to build an outstanding portfolio of high quality pubs. Our new openings are all performing well and the company has achieved an improved trading performance for each quarter to date. We continue to build a strong trading platform with further acquisitions in the pipeline in anticipation of an AIM listing at the end of 2017, and look forward to the future with confidence.” City Pub Company currently operates five brewpubs. Watson said: “If I’m honest, the brewing side probably breaks even and does create operational challenges. But brewpubs are such a great extra dimension to what we’re already offering. They offer a competitive edge against the big boys’ pubs. I say to our managers – ‘I’m not after winning awards, just be the best pub in your area’.” On the current property market, he added: “After the General Election the market was awful with vendors’ expectations massively up. But the market has been really good since the start of this year. But I think we have a good reputation for playing fair by vendors, not messing them about and being a good home for their staff. That’s quite a good USP for us.”

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