The firm has seen a continuous improvement in business since pubs were allowed to re-open on 12 April, helped initially by the company’s £2 million investment in outdoor trading spaces and latterly by the UK’s staycation boom.
The estate of around 1,500 pubs is comprised mainly of community pubs across the UK with limited exposure to London and city centres.
In addition, the company noted stronger performance in its premium pubs while accommodation sales were said to have been ‘excellent’.
For the period from 12 April to 2 October overall like-for-like trading was at 94% of pre-pandemic levels.
The company understandably prioritised cash preservation during the year when its pubs were closed but ensured required investments were made to maintain the quality of the estate.
With proceeds of £228 million from the divestment of the Carlsberg joint venture and government support schemes, net debt was reduced by £97 million to £1.2 billion.
At the period end the group had £90 million headroom against banking facilities of £280 million. The medium-term financial goal remains to reduce net debt below £1 billion by 2025.
MANAGING COST PRESSURES
The company said it was managing the tight labour market and increased minimum wage alongside supply issues. Meanwhile, its gas costs will stay flat until March 2023 while electricity prices are fixed until the end of March 2022.
Today’s full year trading update was the first under new chief executive and former chief finance officer Andrew Andrea who told Shares he was encouraged by the improved confidence of customers to get back to the pub, especially among the elderly with community activities like darts and dominoes leagues staging a comeback.
Leisure analyst Greg Johnson at Shore Capital noted the resilient performance and improved balance sheet.
Johnson continued, ‘We have set out previously how a reduction in debt to under £1bn, a recovery to pre-Covid trading metrics and realising value in the Carlsberg JV could see the stock worth 170p per share on a three-year view.’
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