Spirit Pub Company reports healthy full-year sales
The company said that the “underlying health of our brands and the strength of our estate” helped increase average weekly sales by a further 5% to £18,100 across its managed estate, while EBITDA increased by 8.1%.
The group said that its leased division was stabilised and in growth, with like for like net income up 4.2% and average EBITDA per pub up 10.0%. It has reported four consecutive quarters of like for like net income growth across its leased estate.
FY EBITDA stood at £159m up 7% on the previous 52 week period, while pre-tax profit was up 11% to £60m. Revenue stood at £800.9m, up from £758.2m the year before.
Encouraging
The company, which earlier this week recommended a c£723m takeover bid from Greene King, said that in the six weeks to 4 October 2014, managed like for like sales were up by 2.6%, and leased like for like net income was up at 4.6% with the “cold and wet August bank holiday weekend being offset by more favourable weather in September”.
The group said that although there are some encouraging lead indicators regarding the consumer environment, it expects it to remain challenging.
The company said it had developed a new quality local offer, Golden Oak Inns, which it has successfully trialled in seven pubs in the year.
It said: “Golden Oak Inns is well suited to smaller but demographically well sited pubs and offers excellent food, drink and service in a contemporary environment. We see a significant roll-out opportunity for this concept across our Locals estate.”
Capex
Capital expenditure for the year was £44m, of which £24m was invested in its managed estate, £6m in its leased estate, with £3m on the acquisition and investment in three freehold pubs and £3m on the purchase of the freehold interest of pubs already operated by Spirit.
In the managed estate, 55 refurbishments were completed at an average cost of £166,000 which the group said was significantly lower than prior years, reflecting both the smaller average footprint of the pubs and also cost efficiencies achieved.
The company said that the success of trials of the Flaming Grill brand in smaller footprint pubs and the resultant lower capital spend per pub led to the acceleration of the roll out of this brand in the second half of the year.
It said that the proportion of its estate invested and branded is now 89% and it continues to achieve an average return on investment in excess of 25%.
Its leased estate benefited from £6m spend on 43 projects and it said there is a strong pipeline of sites for investment in 2014/15.
The company acquired 22 pubs into its managed division which it said was well positioned for further growth. It said it had £75m cash available to fund estate expansion.
The group also updated the market valuation of its estate to £1,513m at the year end, representing an increase in the value of the Managed estate of 12% and an increase in the value of the Leased estate of 2%.
Well positioned
Mike Tye, chief executive, said: “It’s been a strong year for Spirit, driven by effective execution of our clear and consistent strategy. Our Managed division continues to outperform the market with its strong portfolio of brands, while our Leased division is delivering market-leading performance and is in growth. We ended the year with a healthy balance sheet and strong earnings and dividend growth, underpinned by good cash generation.
“Looking to the future, the business is well positioned for further progressive growth, both organically from our existing portfolio and through acquisitions. We see significant opportunity to roll out our successful brands and currently have £75m to fund expansion.
“While the consumer environment remains volatile, we are confident that our customer proposition and sustained focus on delivering hospitality excellence for our guests will provide the necessary firepower to grow market share and continue to deliver value for all our stakeholders.”
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