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Tue 21st Mar 2023 - Stonegate trading above pre-pandemic levels as it reports strong recovery with turnover hitting £1.6bn
Stonegate trading above pre-pandemic levels as it reports strong recovery with turnover hitting £1.6bn: Stonegate Group has said it is trading above pre-pandemic levels in its current financial year as it reported a strong recovery for the business. For the 52 weeks ended 25 September 2022, the group achieved like-for-like sales growth within the managed estate, and reported particularly strong trading from its Craft Union division and is “building momentum” within the leased and tenanted estate. Revenue increased to £1.611bn (2021: £707m). Ebitda was £465m (2021: £151m) and statutory loss before tax was £130m (2021: loss of £233m), reflecting £196m of exceptional items driven by property impairment charges. Adjusted profit before tax (pre-exceptional items) was £66m (2021: loss of £320m). Stonegate ended the financial year with a “robust” liquidity position of £189m, “enabling management to continue to pursue its strategy to invest in its pub portfolio to further unlock value”. The company stated: “Despite the effect of Omicron disruption, which materially impacted the 2021-2022 Christmas trading period, Stonegate saw a strong recovery in sales for the 52 weeks ended 25 September 2022. The cost-of-living crisis and the war in Ukraine have driven up energy and food prices and increased pressure on consumers. Additional costs continue to be offset as much as possible through a variety of initiatives including price rises, menu engineering and operational productivity such as efficient labour scheduling. The announcements of domestic and business energy price caps are welcomed both due to the impact on guest disposable income and the reduction of cost downside to the business from potential further adverse market price increases. While it is anticipated the group’s total energy and utility costs will increase significantly in the current year, the group has a number of energy initiatives underway to reduce energy consumption where possible. Following the acquisition of Ei Group in 2020, our strategy was to review every site and determine the optimum operating model for each pub. Since acquisition, 24 former Ei sites have been converted to managed and have now traded for more than 12 months. These are delivering a return on investment (ROI) of 62%. A total of 79 former leased and tenanted sites and nine former managed sites have been converted to Craft Union and are achieving ROIs of more than 30%. Our substantial expansionary capex programme continues to deliver more than 40% ROI.” Stonegate said it plans to invest £140m on conversion and expansionary projects in FY23. During the period, the group invested £140m on expansionary and maintenance capital (2021: £53m). The group disposed of 69 pubs in the period for net proceeds of £46m at a multiple of 14.8 times. At the year end, the group had 4,516 pubs (2021: 4,580). The group is financed by predominantly long-term debt in the form of securitised debt and bank borrowings. On 13 July 2022, the group extended £23m of its revolving facility agreement that was due to expire, for a further year to maturity in July 2023. David McDowall, previously chief operating officer of Scottish brewer and retailer BrewDog, joined Stonegate as chief executive in February 2023, following Simon Longbottom’s decision to step down after eight years in the role to pursue interests abroad. McDowall said: “As the year progressed, sales momentum grew across our different pub formats to deliver a creditable performance despite the well-publicised headwinds that we have largely managed well. This momentum has continued into the current financial year with trading above pre-pandemic levels, confirming the enduring appeal of our pubs and customers’ desire to continue to go out. While the geopolitical and economic situation continues to be uncertain, we are encouraged both by continuing consumer demand and early signs that inflationary pressures are beginning to abate. The investments we have made, and conversions to managed and operator-led formats, have shown strong returns, endorsing our pub optimisation strategy. Stonegate has great people and great people make a great business. We have a solid financial platform, backed by a high quality, 81% freehold pub portfolio, and are investing £140m to further enhance our estate in FY23. Our ambition and confidence in the group’s future potential remains undiminished.” Stonegate features in the Propel Turnover & Profits Blue Book. Its turnover of £1.611bn is the fourth highest in the database. The Blue Book ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. 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 single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email to upgrade your subscription.

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