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Tue 26th Jan 2021 - City Pub Group – cash burn reduced to £300,000 per month, ample liquidity
City Pub Group – cash burn reduced to £300,000 per month, ample liquidity: The City Pub Group, the owner and operator of 48 premium pubs across southern England and Wales and a further four development sites, has reported its cash burn has been reduced to circa £300,000 per month (excluding all government grants with the exception of furlough). It reported ‘ample liquidity’ into 2022 with £5m of further liquidity credit approved from the group’s bankers under CLBILS. It forecast ‘rapid return to cash generation and profitability expected upon reopening, driven by enhanced operational model’. The group generated revenue of £25.7m in the year to 27 December 2020, compared to £60.0m in 2019, representing a 57% decrease. The company stated: “The reduction was a result of the closures and restrictions on our pub estate for large parts of 2020. Following the most recent lockdown, the primary priorities have been to ensure that cash burn was reduced to the minimum and that the group is well positioned to emerge strongly once restrictions are lifted. The board has been focused on the following key areas: staff costs – With the exception of eight employees, all staff are furloughed; having sacrificed 50% of their salary between March and June, and 25% between July and October, the directors are deferring 25% of their salary from 1 January 2021 until the pubs reopen. This deferral will only be paid once the group is generating consistent levels of positive cashflow. Capex has been effectively suspended, except for minor essential remedial works and a £300,000 upgrade at The Hoste Arms, North Norfolk, to increase the trading area on the ground floor and enhance ten remaining hotel bedrooms. The Hoste Arms performed exceptionally well over the summer and autumn periods and it is important that we improve and invest in the group’s strongest and most valuable assets where appropriate. Considerable progress has been made with our landlords and, on the whole, they have been willing to reach sensible compromises. In a number of cases we now have minimal rents in the event of a continued lockdown and have negotiated rent concessions across a large number of our leasehold properties. The group will continue to consider whether it should permanently surrender its liabilities on certain leases. The ruling by the Supreme Court regarding covid-19 insurance claims for those in the hospitality sector is welcomed by the board. The process for pursuing claims under our policy has been initiated and the board will update shareholders with progress once settlement has been reached. In March 2020, the group raised £22m of gross proceeds from an equity fundraise. Of this amount, £10m was utilised to reduce bank borrowings and the remainder remains on deposit to help maintain liquidity which is sufficient, if necessary, to last well into 2022. Current net debt is £14m. The group has also negotiated a further £5m government-backed loan. This will provide further liquidity and enable the group to be on an even stronger financial footing when pubs are permitted to reopen.” Clive Watson, chairman of City Pub Group said: “2020 has been a very challenging year, but decisions made since March 2020 with regards to the fundraising, cost control, streamlining of the business, and strengthening of the board has resulted in a very strong balance sheet, good levels of liquidity, a strengthening of our business model, a more focussed proposition and most importantly, pure determination to go out there and do the business once the pubs reopen. We have the right people in the key roles, whether in the pubs or head office and a fantastic estate to trade from. I look forward to a time when I can announce to shareholders that we are on the acquisition trail again, but this will only be considered once we are hitting high levels of optimisation from our existing capacity.”

AG Barr – ‘we are pleased with our performance’: AG Barr, which produces and markets brands such as Irn-Bru, Rubicon and Funkin, has reported it expects revenue for the year to 24 January 2021 is expected to be circa £227m (2019/20 : £255.7m), marginally ahead of the revised guidance issued in July 2020 and reconfirmed in the interim results announced in September 2020. It stated: “Operating margin before exceptional items across the full financial year is expected to be in line with the prior year leading to a profit before tax and exceptional items performance ahead of market expectations. In the first four months of the second half trading was at the upper end of our scenario plans. However, covid-19 developments since early December 2020, in particular increased social restrictions across the UK and the entry into full lockdown in January 2021, are now having an impact, most notably in the hospitality and ‘drink now’ categories. Our business has remained strongly cash generative throughout the year and we expect to end the year with c.£50m net cash at bank.” Roger White, chief executive, said: “Within a volatile environment our sites have remained safe and operational and I wish to thank our employees who have worked tirelessly to support our customers and consumers in these testing times. I am pleased with the performance we have delivered against a very difficult backdrop which further demonstrates the underlying resilience of our people, business and brands. We expect the months ahead to be challenging for everyone however I remain confident in our ability to navigate these very uncertain times.” 

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