Spirit Pub Company reports 1.4% rise in like-for-like sales in managed division
The company this morning said it was on-track to meet full year expectations, with pre-tax profits up 3% to £20m, EBITDA up marginally from £69.8m to £70.1m. Revenue fell from £393.6m to £391.2m (all figures are pre-exceptionals).
Spirit said that the exceptionally cold weather in March had continued to make trading conditions very challenging. Across its managed pubs like for like net sales were down 4.1% in the four weeks to 30 March 2013, taking the year to date like for like net sales growth to 0.6%.
In its leased pubs beer volumes were similarly impacted leading to like for like net turnover decline of 3.6% and like for like net income decline of 4.8% in the four weeks to 30th March. The year to date position now stands at a like for like net turnover decline of 2.0% and a like-for-like net income decline of 3.1%.
In the half-year, earnings per share grew 5% and an interim dividend of 0.68p per share was declared.
Spirit said its managed pubs continue to outperform the market, with EBITDA in the division up 8% to £53m and EBITDAR margin up 130 basis points.
EBITDA in the leased arm fell from £21, to £17m, although average net income per pub was up 8% to £98,000.
The group said it continued to make good progress in improving the quality of its leased estate and that this was reflected in an 8% rise in average net income per pub, up to £98k. It invested £4m in 38 refurbishments in the first half of the year including £1.5m on nine innovation trials, six of which carry the John Barras branding.
It said that results from these trials remained encouraging is confident that the franchise style agreement stimulates "growth and development in the business and allows both ourselves and our licensees to share the upside". It plans to expand the trial group to sixteen pubs in the second half of the year.
In the first half, Spirit had sold a further 20 leased pubs, achieving average proceeds of c£230,000 per pub. Proceeds were in line with book value and represented an average EBITDA multiple of 11 times. It has now disposed of 72 pubs since gaining full operational control of the estate twelve months ago, with the expectation remaining that it will dispose of 100 in total.
The percentage of pubs on substantive agreements fell slightly over the period to 89% which it said reflected its "pro-active approach to obtaining vacant possession in order create a pipeline for innovation and disposal". Adjusting for the pubs the group plans to dispose of this figure rises to 92% and Spirit has set a longer term target of 95% once estate churn is complete.
Mike Tye, chief executive, said: "It has been a challenging first half of the year as we have traded into the dual headwinds of a tough consumer environment and the worst of the British weather.
"Despite these pressures, we continue to improve the business and strengthen the foundations for long term sustainable growth.
"We are well placed to perform strongly during our key summer trading period and we remain confident of delivering our full year expectations. In our managed pubs we continue to invest in our people, brands, estate and infrastructure to improve the experience for our guests whilst also operating more efficiently. The leased estate is stabilising and the focus will remain on improving the quality and innovation of the business."
