Spirit Pub Company has reported unaudited Interim Results for the 28 weeks to 1 March 2014 showing like for like sales up 4.8% for its managed division and profit before tax up 11%. It believes it is well placed to benefit from the recovery in consumer spending.
Douglas Jack of Numis Securities issued a ‘buy’ note with a target price of 110p after examining the figures, commenting: “We are holding our full year forecasts (£57.9m PBT; consensus £56.2m) which assume 2.5% managed LFL sales (vs. 5.2% after 32 weeks), the acquisition of five freehold pubs in H2 (vs. two completed) and 0.4% leased LFL net income. Although this allows for tough comps in Q4, we believe forecast risk is on the upside and that the 7.8.x EV/EBITDA rating does not properly reflect Spirit’s management and brand quality, earnings growth, progressive dividend (up 6%) and de-gearing.”
Mike Tye, Chief Executive Officer, commented:
“We are pleased with our performance in the first half of the year and the continuing momentum across the business, which reflects the benefits of investment in our estate, infrastructure and people. In our Managed division, we believe that our brands and high quality estate provide the basis for sustainable growth in earnings and size of the branded estate. The Leased division is now stable and in growth, and we continue to invest and innovate to improve the quality of the business going forward.
“We remain cautious, but are starting to see tentative signs of recovery in consumer spending, from which we should be well placed to benefit. We are confident that our customer proposition and sustained focus on delivering hospitality excellence to our guests mean that we can continue to deliver value for all our stakeholders.”
Strategic Highlights
- Managed division performing strongly
- Like for like sales up 4.8%; continuing to outperform the market
- EBITDAR margin up 30 basis points
- Leased division stabilised and now in growth
- Like for like net income up 2.6%
- Focus remains on improving the quality of the estate and earnings
- Interim dividend increased by 6%
- Debt re-profiling completed in the period reducing near-term amortisation
- Well positioned across the estate for growth and improvement in consumer environment
Group Financial Performance
£m unless stated otherwise | 28 weeks to1 March 2014 | 28 weeks to 2 March 2013 | Change |
EBITDA | 74 | 70 | +5% |
Profit before tax | 22 | 20 | +11% |
Earnings per share | 2.6p | 2.3p | +13% |
Dividend per share | 0.72p | 0.68p | +6% |
Nominal value of net debt | 726 | 741 | – 2% |
Net debt to EBITDA | 4.7 times | 5.1 times | 0.4 times |
Statutory Results (including exceptional items)
- EBITDA of £60m (2013: £67m)
- Profit before tax of £1m (2013: £12m)
- Net exceptional pre-tax costs of £21m (2013: £8m)
- Basic earnings per share of 0.2p (2013: 1.3p)