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Wed 23rd Jan 2019 - Young’s buys Redcomb Pubs for £34m
Young’s buys Redcomb Pubs for £34m: Multi-site operator Redcomb Pubs, founded by managing directors Dan Shotton and Mark Draper, has sold the group to Young & Co’s for £34 million on a cash-free and debt-free basis, representing a multiple of 8.5 x Ebitda. The 15-strong portfolio of pubs and bars situated within prime locations across London, the home counties and the South West will be transferred to Young’s managed estate division, bringing their total number of managed houses to 200. Launching in 2010, Redcomb Pubs has become a major player within the independent pub company sector, diversifying and expanding its portfolio through strategic acquisition, the incorporation of a number of sites with rooms and more recently, launches within the London bar and restaurant scene. Figures posted in October 2018 show turnover for the group reached £16.7m for the year ending 30 June 2018, representing an increase of 10.6% year-on-year, with profits over the same period rising by 11.9%. Dan Shotton said: “Our journey from single site in 2010 to the 15 pubs and bars you see today has been an incredibly exciting and rewarding one. We’ve always had a real passion for creating great pubs and have been lucky enough to have built an amazing team around us who share our passion and have helped us grow. Through this acquisition we are confident that the estate will continue to go from strength to strength, benefitting from its alignment and synergy with the ethos at Young’s.” Patrick Dardis, chief executive of Young’s, added: “The team at Redcomb has created an outstanding, well-invested estate of pubs, which we are delighted to add to the Young’s fold. The acquisition of these pubs represents an excellent opportunity to continue the growth of the Young’s managed estate. They fit very well with our expansion strategy which is focussed on high quality managed houses.” Mark Draper added: “We’ve always challenged ourselves to create premium pubs that we’d be proud to visit ourselves, it has been the very bedrock of our business. Our thanks go to the entire team and all our suppliers in helping us make Redcomb such a success. In our opinion, the pub sector remains a vibrant and exciting space to conduct business, and still, if done correctly, has a valued place in the hearts and minds of the great British public. Both Dan and I have ‘pubs’ in our blood. Where that takes us next marks an exciting new chapter that we can’t wait to build upon.” The company has six freehold sites and nine leaseholds. Young’s added: “The business currently generates run-rate Ebitda of approximately £4 million. Investment in the pubs is planned over the next two years which will naturally have a short-term impact on profitability but should have a positive impact thereafter. Therefore, in the first full year of ownership, the pubs are expected to trade at the current run-rate, subject to the impact of any investments undertaken. The pubs will complement the Young’s managed house estate both in and around London, build upon a growing presence in the south west and further enhance the Young’s brand. Each of the pubs has a premium offering and distinctive personality that differentiates it in its local market. As a result of the transaction, the Young’s managed estate has increased by 8% from 185 to 200. With 70 tenanted pubs in its Ram Pub Company, the total Young’s pub estate will increase to 270 pubs.”

JD Wetherspoon reports like-for-likes up 7.2% in Quarter Two: JD Wetherspoon has reported that for the first 12 weeks of the second quarter (to 20 January 2019), like-for-like sales increased by 7.2% and total sales by 8.3%. In the year to date (25 weeks to 20 January 2019), like-for-like sales increased by 6.3% and total sales by 7.2%. The company added: “Since the start of the financial year, the company has opened two new pubs and sold six. We intend to open between five and ten pubs in the current financial year. The company has spent £56m in the year to date on buying the freeholds of pubs of which we were previously tenants. The company remains in a sound financial position. Net debt at the end of this financial year is currently expected to be around £10m higher than the level at the last financial year end. The company has agreed a new five year revolving credit facility of £875 million (previous £820 million) on attractive financial terms. The new facility matures in January 2024. The chairman of JD Wetherspoon, Tim Martin, said: “The most frequently asked question, regarding the future, relates to the impact of leaving the EU. I have argued that the UK – and therefore Wetherspoon – will benefit from a free-trade approach, by avoiding a ‘deal’ which involves the payment of £39 billion to the EU, for which the House of Lords has confirmed there is no legal liability. This approach also means that the UK, without the agreement of the EU, can end some or all of the protectionist tariffs and quotas that apply on non-EU imports, including rice, oranges, bananas, coffee, wine, children’s clothes and over 12,000 other products – many of which are not produced in this country. Ending tariffs reduces prices for consumers, without loss of government income, since the proceeds are currently remitted to Brussels. A good example of the EU’s protectionism, which is denied by many people, is the recent imposition of tariffs on Cambodian rice, which will inevitably increase prices for businesses and consumers. Sales growth has been strong since our last update. Costs, as previously indicated, are considerably higher than the previous year, especially labour, which has increased by about £30m in the period, but also in other areas, including interest, utilities, repairs and depreciation. Profit before tax in the first half is expected to be lower than the same period last year. Our expectations for the full year are unchanged.”

Marston’s reports like-for-likes up 1.4%: Marston’s has reported total pub like-for-like sales growth for the 16 week period to 19 January was 1.4% including strong trading over the Christmas fortnight, with like-for-like sales growth of 5.7%. Total pub margins were broadly in line with last year. The company stated: “In Destination and Premium, like-for-like sales increased by 0.5% in the 16 week period, including like-for-like sales growth of 4.5% in the Christmas fortnight. In Taverns, trading has continued to be strong with managed and franchised like-for-like sales growth of 3.2% including growth of 8.1% in the Christmas fortnight. The performance of our tenanted and leased estate was robust, with earnings up 1% in the 16 week period. We continue to make good progress in Beer Company with total volumes up 3.5% and own brewed and licensed volumes up 2.5% with particularly strong performances in both the Free Trade and Off-Trade channels. Following the guidance on cash flow improvements provided in November 2018, the board have further reviewed capital allocation plans going forward. As a result of this review we are now committed to targeting a £0.2bn reduction in net debt to £1.2bn by 2023. This will be achieved as follows: A reduction in new-build investment to around £25 million per annum from 2020 onwards, with investment weighted towards pubs with accommodation, where we are seeing the strongest returns; the disposal of £80-90 million of certain non-core assets in 2020-23; through the improvements in free cash flow set out in November 2018 relating to the final salary pension scheme (which has a modest deficit that is expected to be eliminated within three years), the securitisation, and reduced organic capital expenditure. Although new-build investment is being scaled back, new-build pubs and accommodation deliver strong returns and will continue to contribute to growth in group earnings. In addition, the reduced level of estate expansion will facilitate increased focus on generating like-for-like profit growth from the core pub estate. In light of the actions described above the board are committed to maintain the dividend at the current level during this period of debt reduction focus.” Chief executive Ralph Findlay said: “Marston’s continues to perform well and this is a creditable performance in a challenging market. Taverns and the Beer Company both delivered strong trading over the core festive period in particular, continuing the trajectory of recent months, and our managed food-led pubs also returned to growth. We operate in increasingly uncertain times from a political and macro-economic perspective and, as such, we remain cautious about the potential consumer outlook until there is more clarity. However, we are confident of delivering further profitable growth this year, whilst focussing on our strategic priorities of generating cash and delivering our stated £0.2bn debt reduction target between 2020 and 2023. In addition, we are committed to maintaining the dividend at the current level during this period and believe that the combination of these actions will drive long term value for shareholders.”

Escape Hunt reports strong trading: Escape Hunt, the escape rooms operator, has reported that in respect of the company’s eight owner-operated sites opened in FY18, the board is pleased with their early performance, with sales in line and Ebitda slightly ahead of board expectations. The company stated: “For the group overall, the board confirms that the full year group results for FY18 are expected to be in line with board expectations. Three owner-operated sites opened in March 2018 continue their strong progress. Five new owner-operated sites which opened in the last quarter of the year are showing positive early signs, with both sales and Ebitda well ahead of board expectations. The first four owner-operated sites opened have achieved #1 rating on TripAdvisor in “Fun & Games” in respective cities, with the remaining four sites quickly moving up the rankings. There were 38 rooms across all of the group’s owner-operated sites were open by the end of the year and a further 15 rooms are due to open in these sites throughout the first half of FY2019. The first Doctor Who themed escape room opened post year-end in the Bristol site, with a high level of pre-bookings recorded, boding well for the progressive roll-out of these rooms. The board is pleased with these results and believes that, alongside the customer rankings, they are validating the company’s business model and strategy. As referenced in the FY18 interim results, the board continues to assimilate and analyse all the information from the owner-operated sites to shape its roll-out strategy for the year. However, in the meantime the company will aim to continue this strong performance and develop a pipeline of good sites. Net cash position was £2.6m at 31 December 2018.” Richard Harpham, Escape Hunt chief executive officer, said: “We are delighted with the inaugural performance of our owner-operated sites, and especially over the Christmas period, which provides further evidence that experiential leisure is a bright spot on the high street as consumers seek out experiences. The strong pre-bookings for Doctor Who themed escape games also demonstrates the appeal of Escape Hunt’s IP strategy.”

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