‘Stand-out’ performance from Craft Union arm of Stonegate

18-Jul-2023 - Last updated on 18-Jul-2023 at 12:17 GMT

Resilient performance: Stonegate CEO David McDowall says some costs are abating

Craft Union, Stonegate Group’s operator-led pub model has delivered a “stand-out” performance as like-for-like (lfl) sales rose by 14.7% for the 28-week period to 9 April 2022.

Lfls for the managed division of the business increased by 6.1% for the same reporting period versus 2022.

The leased & tenanted division also traded well, demonstrating consistent growth with lfls up by 5.3%. Total revenue for the period was £904m compared to £827m in the prior year and £1.6bn in the 52 weeks ended 25 September 2022.

Of the £904m, the managed segment contributed £545m (£504m for the 28 weeks in 2022 and £976m for the 52 weeks 2022) while the leased & tenanted pubs – Pub Partners and Commercial Property – together contributed £215m (28 weeks 2022: £214m, 52 weeks 2022: £416m) and the operator-led segment, contributed £144m (28 weeks 2022: £109m, 52 weeks 2022: £219m).

Stonegate said while the macroeconomic environment continues to have an impact on the group and the cost-of-living crisis has led to lower profit and operating cashflows, overall, the group has delivered a “highly respectable performance”.

Lfl EBITDA down

Group adjusted EBITDA (earnings before interest, taxation, depreciation and amortisation) was £182m (28 weeks 2022: £195m, 52 weeks 2022: £400m) and operating profit of £139m (28 weeks 2022: £152m, 52 weeks 2022: £118m). The loss before taxation for the 28-week period of £30m was a loss of £1m in the 28-week period in 2022 and was a loss of £130m for the 52 weeks of 2022.

The group spent £86m on capital expenditure (28 weeks 2022: £49m, 52 weeks 2022: £140m), which included expansions, conversions and maintenance.

Stonegate has disposed of 29 trading sites, six non-trading sites and two non-licensed properties for net proceeds of £18m during the period, which also included the sale of fixtures and fittings to publicans. The picture for the 28-week period is 2022 was disposals of 37 trading sites and two non-trading properties for net proceeds of £27m while in the 52 weeks of 2022, it exited 63 trading sites, two non-trading sites and four non-licensed properties for net proceeds of £46m.

Stonegate Group chief executive David McDowall said: “Our pubs continue to demonstrate their resilience in the current economic environment, achieving good levels of like-for-like revenue growth across all of our trading formats.

“We continue to see attractive returns from our capital investment programme within our organic estate and the pub disposals we have undertaken have achieved strong multiples ahead of expectation.”

Inflation abating

McDowall continued: “The cost inflation experienced over the past 12 months is beginning to abate, particularly energy, and we are seeing improving momentum in group profit performance.

“In addition, we have identified opportunities to deliver further EBITDA growth and have a number of initiatives underway to deliver this over the coming months.

“Overall, the group is trading well and continues to grow market share. We have a great business with the scale and operational excellence to succeed, sufficient liquidity and one of the most capable teams of talented, driven and passionate people in the sector to deliver on our objectives.

“We have made good progress in [the first half of the year] and remain confident of delivering future growth and excited about the opportunities ahead for Stonegate Group.”