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Wed 14th Apr 2021 - Hawthorn looks to IPO as a standalone business
Hawthorn looks to IPO as a standalone business: Community pub company Hawthorn has today unveiled plans to list on the stock market as a standalone quoted business, heralding the return of a tenanted and leased pub group to the London stock market. The parent group NewRiver REIT has announced that it will explore the potential for an IPO of Hawthorn following a strategic review, a process that would see the pub group launched out as a separately-listed company. Such a move would enable Hawthorn to continue to build on its mission of becoming the number one community pub company in the UK, and pave the way for investors to be able to buy and trade shares in the 700-strong pub group in the coming months. The work to explore an IPO comes after an industry-wide independent study of pub licensees found that Hawthorn was both the highest-rated pub company, and the best for providing support during the covid-19 pandemic of any national group. It follows a year of unprecedented and industry-leading support from Hawthorn for its pub partners. Mark Davies, who has been chief executive officer of Hawthorn since 2019 and has been instrumental in driving NewRiver’s pub operations since 2013, will lead the IPO (Initial Public Offering) opportunity. Mark also sits on the board of the BBPA, and has been chief financial officer at NewRiver for 12 years, and in leading this new chapter for Hawthorn, will step down from the NewRiver board in due course. Commenting on the opportunity, he said: “This is a tremendously exciting and important moment for Hawthorn and represents the next phase in the development of the company. NewRiver is, and has been, a strong custodian of this business, helping to build one of the UK’s leading community pub companies, and enabling us in the past 12 months to provide industry-leading support to our pub partners and operators. This is the right time to be exploring the IPO opportunity. After building this business over the course of eight years, the NewRiver board has concluded that Hawthorn can grow faster as an independent company and continue to drive towards our shared ambition of making Hawthorn the number-one community pub company in the UK.” In addition to its tenanted and leased pubs, which account for the majority of the Hawthorn business, the group also has a well-established, successful and scalable Operator-Managed division, which accounts for around 20% of the estate. The news comes as many of Hawthorn’s pub partners and operators reopen after several months of temporary closure. The group estimates that around 60% of its pubs have reopened this week after the easing of restrictions on outside trading, with the balance expected to reopen when indoor trading is permitted. During the period of temporary closure, the focus has been on continuing to protect and support Hawthorn’s pubs. Since March 2020, the business has provided £8m of financial support to pub partners and operators. This represents industry-leading support, which was recently recognised in the results of KAM Media’s ‘Licensee Index’, the leading operator sentiment tracker for the UK licensed and tenanted pub sector. Hawthorn’s overall rating in this index – 8.5 out of ten – was the highest of all national pub companies, and in the area of covid-related support specifically, Hawthorn scored 9.2 out of ten, again the highest amongst the national pub companies. These results demonstrate the significant goodwill and overall strong relationship the group has with its pub partners. With a focus on well-located community and suburban pubs, the Hawthorn estate is well placed to benefit from consumers working from home and using their local services and facilities. Hawthorn expects its pubs to lead a strong bounce back, as seen in the summer of 2020 when on re-opening Hawthorn pubs outperformed the UK pub sector. Davies, a founder-director of both NewRiver and Hawthorn, added: “As many of our pub partners and operators get back to doing what they do best this week – running brilliant community pubs – we are delighted to be sharing this news. We look forward to continuing to build the Hawthorn business, to returning to growth and to exploring opportunities to support more pubs and more pub partners. In many ways nothing will change and it is business as usual, and our focus will continue to be on building the very best community pub company, with industry-leading support and a people-first approach.”

Updated Premium multi-site database boosted by 47 company additions so far in April, operators with big plans lead the way: The updated Propel Premium multi-site database, which will be sent exclusively to subscribers on 30 April at noon, already has an additional 47 companies added to it since its most recent publication at the end of March. Premium subscribers will also receive a report on the additional businesses such as Popeyes Louisiana Kitchen, the US fried chicken quick service restaurant brand, which has announced plans to enter the UK this year with the goal of opening 350 new restaurants in Britain over the next ten years, and Italian restaurant brand Doppio Malto, which has targeted Glasgow for its first opening in the UK and has plans to open 100 UK sites. The database has the most comprehensive multi-site operator information in the sector – it provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different, and what each business specialises in. In a new feature this year, there is a synopsis of what the business does and significant news associated with it. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The regular single subscription rate of £395 plus VAT for operators and £495 plus VAT for suppliers remains the same. Premium subscribers already receive access to Propel’s library of lockdown videos and Friday Wrap interviews and will also receive a curated video library of sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. Propel Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out; regular video content and regular exclusive columns from Propel insights editor Mark Wingett. Email anne.steele@propelinfo.com to sign up.

Sector operators launch “Open For All” campaign against covid passports: More than 60 restaurant owners, nightclub operators and other hospitality figures, including Peter Marks, chief executive of Rekom UK and serial sector investor Luke Johnson, have backed a new campaign against covid status certification. Over 60 promoters, DJs, pub operators, festival directors, casino operators, restaurant owners and nightclubs have written to the prime minister saying that they “do not believe it is right that we as premises and promoters should demand to see proof of medical records or health status”. Signatories also include Dan Davies, chairman of the Institute of Licensing, Roger Wade, chief executive of Boxpark, John James, managing director of Soho Estates, and Aaron Mellor, owner of Tokyo Industries. In the letter the signatories say there are “many practical and logistical issues for us alongside civil liberty and discrimination considerations more broadly for society”. The group has put forward a “Open For All” charter that outlines how they plan to reopen, stating that “we will not be forcing our patrons to show us any documentation referring to health status to gain entry” as “[w]e respect everybody’s personal choices and diversity is one of our pillars.” The letter says: “We are UK licensed premises and event promoters that have struggled at this difficult time for everyone. We have no axe to grind politically and many of us think the vaccine roll out has been tremendous. We also know that for many reasons some will not have a vaccine. Further, we do not believe it is right that we as premises and promoters should demand to see proof of medical records or health status. The majority of people in the UK have chosen to be vaccinated. There are many practical and logistical issues for us alongside civil liberty and discrimination considerations more broadly for society if venues or events insist on seeing health documents.” Alan Miller, co-founder of Recovery, honorary trustee of the Night Time Industries Association, who organised the campaign, said: “The British people have been diligent and remarkable over this last year and we’ve all waited for so long to get back to normal. We were told in January that vaccines were our way out, and that we were on a one-way road to freedom. It is a far cry from freedom if we are put in the position where pubs, clubs, festivals, shows and venues of any kind are forced to demand health papers. We won’t be doing it and that is why we have launched this charter Open For All.” Johnson, chairman of Risk Capital Partners, said: “I do not want any business with which I’m involved demanding ‘papers’ from customers which disclose private health matters. This is a discriminatory, intrusive and impractical policy which I think everyone who believes in a free society should reject. That’s why I’m supporting the new Charter, Open For All.”

Pints ordered in pubs will be slapped with calorie counts: Health chiefs are to slap calorie counts on pints ordered in pubs, leaked plans seen by The Sun reveal. Matt Hancock’s Health department has horrified cabinet colleagues with orders to force bigger pub chains to reveal the amount of calories in all beer, wine and spirit served in their bars. Menus or even pump labels would have to carry the information. The push would also see all alcohol sold in shops have to publish calorie information and a health warning by law. All pre-packaged booze labels would have warnings about drinking from Professor Chris Whitty, as well as the risks of drink-driving and the amount of calories. The report says that rhe government’s own figures say that there will be a £92 million hit to the already covid-ravaged booze industry – but “the benefits to consumers has not been quantified”. Public health minister Jo Churchill has told colleagues she wishes to launch a 12-week consultation on the plans. They would force any business with 250 or more people to publish the calorie information about drinks – meaning the change in the law would hit most major pub chains. Churchill points to the fact that 7-8% of drinkers’ calorie intake come from booze, with lower socio-economic households and those already overweight benefiting the most from the policy. But critics slammed the plans as “madness” saying they would be a hammer blow to an already struggling part of the economy. UKHospitality chief executive Kate Nicholls tweeted: “This needs very careful consideration – potentially dangerous from an eating disorder perspective as well as driving less positive lifestyle decisions. Huge concern.”

Admiral Taverns reports strong performance before arrival of pandemic: Community pub operator Admiral Taverns has reported turnover of £64.7m in the year to 30 May 2020 with underlying operating profit of £11.1m. The company stated: “The period was significantly impacted by the pandemic which resulted in the UK government’s mandated closure of all the group’s pubs on 21 March in response to a rising number of covid-19 infections. This resulted in an almost complete loss of income for the group leading up to the end of the accounting period, with income from sales of beverages falling to zero and rents charged to licensees initially cancelled. Despite these unprecedented challenges, the group achieved an underlying operating profit of £11.1m (2019 – £17.2m) and an underlying profit after tax of £0.4m (2019 profit after tax – £6.2m). Up until the closure of pubs in March, Admiral had made good progress against its strategic targets and traded in line with Management’s expectations. Significant investment was made over the course of the year to expand the group’s estate of community pubs. The group acquired 287 pubs in two transactions, in October and November 2019, for an aggregate consideration of £97.9m and launched a new Operator Managed division, Oasis Pubs. This resulted in the estate growing to 1,032 pubs by the year end. A total of £11m was also spent over the course of the year to refurbish the group’s pubs, improving the customer experience and positioning these individual businesses to thrive. The group also invested in its own people and the facilities and technology used in their roles. The business moved into modern office space in Chester, greatly improving the workspace of the central team, and introduced new technology to enable both efficient home working and to optimise the remote working experience for the field-based teams. The impact of the covid-19 pandemic on the UK hospitality sector has been hugely significant and throughout this incredibly challenging period the group has worked hard to support our licensees and our people. Within 24 hours of the first lockdown, the group acted to reassure licensees by granting a six-week cancellation of rent. In turn, licensees excelled at supporting their communities, despite being unable to trade. The group later provided a runway of support covering each month up to July 2021 and helped licensees to ‘rise out of lockdown’ successfully in July 2020. Admiral’s longstanding strategy to work closely with licensees and to succeed together has never been more appropriate and the group’s investors, Proprium Capital Partners and C&C Group, have been hugely supportive throughout this difficult time. The strong performance from our pubs when they have reopened between lockdowns has demonstrated the resilience of the group’s community wet led model.” Chief executive Chris Jowsey said: “Admiral Taverns made significant strategic progress in the last financial year delivering an underlying profit of £11.1m despite the huge impact of covid-19 pandemic, which fell in the final quarter. As the industry begins to reopen its doors, the role of the community pub has never been more important. An integral part of the UK’s social tapestry, they are vital hubs which bring people together, provide a forum to combat loneliness and raise over £100 million pounds for charity each year. From the onset of the pandemic we have worked hard to ensure our licensees received the support needed to emerge from the crisis energised, motivated, and not weighed down by debt. As consumer macro trends for ‘localism’ and authenticity grow ever stronger, the group remains well placed to succeed with its strategic plans for long-term growth, once the UK’s pathway out of the pandemic is firmly established.”

Research shows good trading on first day of re-opening: Research undertaken by S4labour shows that hospitality sales in the UK were slightly up overall comparing with the same Monday in 2019. However, the figure of 0.5% represents all hospitality sales including sites unable to re-open where revenue was still confined to take-away only. The figures indicate that the cold weather dampened food sales, with a slight decline of 4.75% on the same Monday in 2019, while drinkers were more prepared to brave the inclement weather, with drink sales up 5.37% on the same Monday in 2019. There are a number of other factors that meant food sales were slightly down, including an understandable reluctance from some to sit down for a meal in the cold and that many operators were only able to offer a simplified and reduced food offering in light of operational restrictions. Many operators awoke to a scattering of snow and for most of the country, temperatures that barely broke above 5 degrees. This is in contrast to a bright and sunny Monday in 2019 that the figures are compared against. Despite the weather and operating at significantly reduced capacity, the figures represent a very positive indicator for the future of the industry. Alastair Scott, chief executive of S4labour and Malvern Inns said: “Our pubs experienced unprecedented demand, the next week looks like Christmas trading, however, our sites are fortunate to have outside space. We really feel for City Centre locations, like London, where there is limited outside space to capitalise on the public’s desire meet up with each other.”

Land Securities collects 67% of quarterly rents: Land Securities collected just two-thirds (67%) of rent owed in March as its tenants suffered through repeated closures due to the pandemic. It stated that £110m of rent was due on the 25 March payment date, with 67% of the net rent paid within five working days, compared with 65% for the equivalent period last year. Of the £33m of rent still outstanding, Landsec said £10m related to customers who had withheld payment pending documentation of agreed concessions. Assuming all agreed concessions were completed and the £10m of withheld rent is received, Land Securities said the rent collection rate for the quarter would increase from 67% to around 77%. The landlord set up an £80m customer support fund in April 2020, including rent concessions, of which it said £39m is currently being utilised. It said that it expects that figure to increase as businesses navigate the reopening of their premises.

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