Capital Pub Company, the London-based pub group, has reported a 24% increase in revenue to £27.2m for the year to 26 March, with like-for-like growth in excess of 7%, driven by organic growth in its existing estate and new openings.
The 34-strong group, led by Clive Watson, which recently rebuffed two takeover approaches from Fuller’s, reported a 48% increase in pre-tax profit for the year to £4.1m, with Ebitda up 18% to £6.8m.
Unadjusted pre-tax profit stood at £3.4m against a loss of £1.5m in the previous 12 months.
The company said that its strategy of owning “high quality units, with a strong local offer”, had enabled it to increase its like-for-like Ebitda at unit level by 9.7% over the last year.
Net debt was reduced by £7.1m during the year and correspondingly gearing has dropped to around 50%.
Capital said its had agreed a new £5m debt facility in principle on favourable terms with its bankers to fund further acquisitions.
The group believes it will be able to fund further selective acquisitions “from internally generated cash flow and our new banking facilities whilst maintaining a conservative level of gearing”.
It said that there is also the potential for strong Ebitda growth from recent additions to the group's portfolio and that it had recently exchanged contracts to acquire the Priory in Clerkenwell.
The company said that current trading remained “very strong with sales up 20% in the first 10 weeks of FY12”.
The group also announced the resumption of dividend payments to shareholders of 2.25p (2010: 0p) per share, which will be paid in August soon after its AGM, subject to shareholder approval. It said it was also its intention to recommend the resumption of an interim dividend payable in November after the interim results are announced and to pursue a progressive dividend policy.
Watson said: “This is another exceptional performance resulting from a focussed and successful strategy. Capital is a high quality business and is the only freehold backed, very well invested pub company trading solely in the London area. The UK has a two-speed economy with London a very buoyant market place from which Capital, with its larger estate, will benefit further in the future particularly coming into an Olympic year.
“We have a strong pipeline of acquisitions and with our new banking facilities are well positioned to execute our strategy to continue to generate excellent value for shareholders.”
Fuller’s approach
The company said that Fuller's offer proposal of 200p, which valued the company at close to £54m, was considered carefully by the full board, taking advice from PricewaterhouseCoopers (PwC), and rejected unanimously.
Highlighting the recent acquisitions of Geronimo Inns and Realpubs by Young’s and Greene King, respectively, the group’s board said that it believed it should demand a substantial premium over these two recent deals as Capital’s estate contains a larger proportion of freehold assets (85%) than the Geronimo estate (38% freehold) and more than twice the number of freehold assets than the entire Realpubs estate (14 sites).
It said: “As Fuller's are themselves a London pub operator and brewer, the board believes they would be able to extract significant synergies from beer supply and cost savings. The board believes these synergy benefits are not reflected in the 200p indicative offer proposal.
“The board have not approached any other potential buyers.”
