Spirit Pub Company leased estate remains weak

Spirit Pub Company, which was spun off from Punch Taverns last August, boosted profit and started dividend payments but its leased estate division remained a weak spot.

The group, which operates chain pubs including Fayre & Square, Chef & Brewer and Taylor Walker, said pre-tax profit rose 16% to £51m for the 52 weeks to August 18th 2012 while EBITDA for the period climbed 5% to £146m. Earnings per share rose 21% to 5.8p.

At its managed estate like-for-like sales were up by 4.8% in the first four weeks of the new financial year.

However lfl net income in the leased business was down by 4.9% after rent rebasing and falling beer volumes. EBITDA for the leased business declined 10% to £38m after a 5% reduction in average pub numbers.

Spirit, which operates 1,278 leased and managed pubs in the UK, said overall it expects the consumer environment to remain tough but stable.

"While general cost pressures are easing slightly the tax burden on our input costs continues to be a headwind, primarily through the beer duty escalator and the expected impact of the CRC Energy Efficiency scheme," Spirit added.

Despite ongoing challenges the group said it believes its strategy will allow the group to make further progress in the year ahead.

Chief Executive Officer Mike Tye commented: "We have delivered further strong growth in Managed sales through continued investment in our brands, estate, infrastructure and people while cost control has been robust in the face of inflationary pressures, enabling continued expansion of Managed margin."

"Our Leased pubs have performed in line with our expectations this year and we have now laid the foundations from which to drive performance improvement."

A net cash outflow of £42m was used to repurchase £28m of bonds and extend the capital expenditure programme following strong returns. Nominal value of net debt stood at £710m compared to £704m in 2011.

CJ