City Pub Group expects ‘rapid' return to profitability on reopening
The City Pub Group, the owner and operator of 48 pubs across southern England and Wales and a further four development sites, has said it expects a "rapid return" to profitability on reopening, despite reporting a 57% decrease in revenue last year.
The group generated revenue of £25.7m in 2020, compared to £60m in 2019, as a result of the closures and restrictions on its estate for large parts of the year.
In its year end update for the 52-week period to 27 December 2020, City Pub Group reported that it has ample liquidity to last it into 2022 after reducing its cash burn to around £300,000 per month and having raised £22m from an equity fundraise in March last year, of which £10m was used to reduce bank borrowings and the remainder remains on deposit to help maintain liquidity. Current net debt is £14m.
In the report it said "considerable progress" had been made with landlords who, "on the whole… have been willing to reach sensible compromises", with rent concessions agreed across a large number of its leasehold properties, although it did add that the group would "continue to consider whether it should permanently surrender its liabilities on certain leases".
Meanwhile, it welcomed the recent ruling by the Supreme Court regarding Covid-19 insurance claims for those in the hospitality sector, and said it is pursuing its own claims.
The group appointed Toby Smith as chief operating officer at the end of 2020 and remains committed in the long-term to expanding its estate.
City Pub Group also said it has established a new committee which will oversee its Environmental, Social, and Corporate Governance (ESG) policy, which will be chaired by executive chairman Clive Watson (pictured), and that it is looking to strengthen the independence and diversity of its board.
Watson 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."
