Maclay Group, the Scottish pub and bar operator, is honing in on three more acquisitions as it looks to have a rolling programme of five or more each year, managing director Steve Mallon has told M&C Report.
The company reported a full-year pre-tax loss of £737,379 against a pre-tax profit of £75,891 in the previous year, after downgrading the value of its 27-strong estate by £0.7m to £14.2m “in line with market conditions”. Sales fell 0.1% to £10.4m in the 12 months to 29 September 2012 and operating profits declined 3.7% to £718,302, which includes one-off costs relating to the introduction of additional equity during the year.
Mallon said: “It felt like a bit of a repeat of the previous year, which was a case of running hard to stand still.”
The value of its net assets fell from £5.5m to £3.6m primarily due to the property revaluation.
However, average profit per Maclay-owned pub grew 3.1% in the year and the gross profit percentage grew from 17.7% to 18%.
Mallon highlighted the combined effects of more promotional activity, negotiating better rates with suppliers and keeping staff costs down through effective labour scheduling, which he called the “holy grail”. He said the company must be “smarter” to make money from its assets and said Maclay is “starting to get a bit of upside through”.
Mallon expects 2013 to be “significantly better” than 2012 due to the improvements and other factors such as lower interest payments due to historic hedging costs coming to an end.
Maclay recently acquired Munro’s in Glasgow’s west end, its first craft beer bar. Mallon said trading is “already in line with the level of business we planned for”. “That makes me feel pretty positive that there’s more growth to be had out of it.”
He said that uniquely for the region, Munro’s offers craft, cask and mainstream beers in one place. “I think in selected locations this is a format we would like to use again,” he added, highlighting Edinburgh as a target.
In terms of acquisitions, Mallon said: “We’ve got another three in legals at the moment. We’re looking to get a rollout pattern of five per year or more if we can.” Funding will be primarily through bank financing, Mallon said, with the option to use funds from Tennent’s Caledonian Brewery, which has an equity stake in the business. Its heartland of Scotland’s central belt would still be the target,
Maclay’s Tullie Inn at Balloch recently reopened after a £700,000 investment. Mallon said two or three major investments are due this year, with the West Port in Linlithgow next.
Mallon said Q1 2013 has been “quite tough”, although sales were up over the Easter weekend. Like-for-like sales over the festive period (16 December to 5 January) grew 4%; total sales in that period increased £45,000 to £1.1m.
