Unlike some pub groups, we could mention, the trading update from The City Pub Group PLC (LON:CPC) was not fixated on Brexit.
Rest assured, however, that the UK's impending departure from the European Union is on management's mind and, much like that other pub group that I could mention (but won't), it sees opportunities ahead.
For that reason, it is pausing its acquisition strategy.
“We've got £20mln of unused borrowing facilities; however, in terms of acquisitions, we're going to have a pause because we think it's sensible,” explained Clive Watson, the executive chairman of City Pub, in an interview with Proactive.
“Who knows what's going to happen with Brexit? We've got lots of work on; we've got some development coming through. We think it is the right time just to have a pause from acquisitions,” he said.
Watson thinks that if Brexit is disorderly, acquisitions will become cheaper. “I think you will see asset prices coming off, he predicted”.
How much cheaper? Possibly by double-digit percentage amounts, he ventured.
Watson acknowledged that asset prices have already been hit by uncertainty over Brexit but he would “rather just wait and be potentially more opportunistic in the next three to six months”.
This pause in acquisitions does not mean that the company is taking its foot off the pedal.
The company has four projects in the development pipeline (in Norwich, Exeter, Cambridge and Bath) so things are looking up – quite literally in the case of two of them, where the group is planning to add roof terraces.
“Big, big, big sites, big developments and great cities,” Parsons enthused.
“That will help to continue our growth into 2020,” Parsons said.
The company also has self-help initiatives that are coming to the boil.
Parsons told Proactive the company has started to see the benefits of the regional management structure it recently instigated.
“There's a bit of upfront cost in getting these positions in place but where it's helping is we're having our own social media done on a localised basis.”
That has to be a good thing because there is a reason why people refer to a pub as their “local”.
“Training is done on a localised basis; recruitment is done on a localised basis and also we have an area chef now to look after the kitchens on a localised basis,” Parsons said.
“It means that people who work in Bath or Cambridge or Exeter who need training or whatever it is aren't needing to come into the office.”
Asked to sum up the company's appeal to investors, Parsons came up with four bullet points.
“Strong sales growth. Low gearing. Strong freehold backing. Dividends increasing in line with earnings.”
“We're in a good place,” Parsons said.
Several good places, actually, such as Bath, Cambridge, Exeter and Norwich.
“We want to take advantage of any disruption in the market,” he concluded.