London's economy gives Capital a lift

A resilient London economy helped Capital Pub Company post an 18 per cent rise in first half sales and boost pre-tax profits by more than a third.

The operator, which runs 31 free-of-tie freehold pubs in London, said adjusted pre-tax profits for the 26 weeks to September 25, 2010, rose 45 per cent to £2m, boosted by acquisitions, the capital's economy and the quality of the offer of its pubs.

Turnover rose 18 per cent to £13.1m, and the group said it been able to continue to maintain "exceptionally high operating margins" mainly as a result of what it called "an attractive retail offer in its pubs thereby avoiding the need to discount prices".

Capital said first half margins had also improved as a result of tight cost control at branch and head office level.

Earnings per share rose a third to 6.9p. No dividend was being paid, with chief executive Clive Watson saying it was the board's view that for the time being shareholders would prefer cash to be invested in the business.

The group bought four pubs in the period, and said it envisaged buying a further 15 or so sites between now and 2013.

Watson described the results as a "coming of age" for the group.

"Our cash flow situation means we can fund acquisitions without having to go to the banks or our shareholders for money. We are financially independent and in control of our own destiny."

Meanwhile Capital reported sales growth for the first 33 weeks of the current financial year up 33 per cent.