Spirit Pub Company issued its trading update for the final quarter (to 18th August) of the current financial year, reporting that the Managed pubs division delivered another quarter of solid growth, notwithstanding volatile trading conditions and the adverse impact of both the wet summer and the Olympics.
Highlights
- Strong final quarter for Managed estate, with continued market outperformance
- Implementing measures to improve performance in Leased estate
- Decision taken to move to a market valuation of estate
Managed
- Like-for-like sales +4.1% (+4.8% 52 weeks)
- Food Sales +4.5% (+6.4% 52 weeks)
- Drink Sales +3.3% (+3.8% 52 weeks)
Further improvements in people, brands, properties and infrastructure continue to deliver significant outperformance of the market and to deliver good growth in both drink and food sales, reflecting the broad portfolio of high-quality Managed brands.
Leased
- Like-for-like net income –5.4% (-4.9% 52 weeks)
Another challenging quarter for the Leased estate as performance continued to be impacted by current year rent rebasing. Prime focus remains on improving performance in the division and creating shareholder value. As part of delivering these objectives, the framework for alternative operating models continues to be developed.
Estate valuation
The Board has decided to change the Company’s accounting policy to move to an open market valuation basis which will give greater transparency on the underlying value of property assets.
As the majority of properties are held at historic acquisition cost, this will result in properties being valued at c. £1.3bn, a net downward accounting adjustment of c.£0.5bn versus the previous book value of £1.8bn. This will consist of a c.£0.6bn exceptional, non-cash charge in the income statement and c.£0.1bn balance sheet valuation credit.
Mike Tye, Chief Executive, commented:
“We have finished the year strongly despite challenging trading conditions created by the poor summer weather and the disruption caused by the Olympic Games. Our Managed estate performance remains significantly ahead of the market and we continue to implement measures in our Leased estate to improve performance. Whilst the consumer environment remains tough, we continue to perform in line with expectations and are making good progress towards realising the full potential of our business.”