Finance

Pub firm The Liberation Group reports post-pandemic recovery

The Liberation Group, the parent company of West Country brewery and pub brand Butcombe, has reported a sales recovery for both its pub and drinks divisions following the easing of national lockdown, but warned of “additional costs and lost opportunity” due to recruitment and supply chain issues.

The Jersey-based independent brewer, which has a portfolio of 55 managed and 66 tenanted pubs across the South West and Channel Islands, saw like-for-like sales growth across its estate in the 13-week period ending August 28 (compared to the same period in 2019), as restrictions were eased on the hospitality sector.

In the trading update, the company said growth in its Butcombe pubs was generated from sales of food (up 52%) and rooms (up 83%) as they benefited from post-reopening consumer trends towards local food and drink and staycations.

Like for like, managed pubs across the group overall achieved sales growth of 2%, with growth of 26% in its mainland pubs offset by declines in the Channel Islands.

The business said that all of its tenants’ rents were moved back to 100% of contracted levels in June after being supported with rent discounts during lockdowns and re-openings to ease their recovery.

It added that 21 pubs it had bought off Wiltshire brewer Wadworth in December 2020 had performed “ahead of expectations” since reopening, with the addition of 143 rooms to its estate contributing to accommodation revenue growth of 14% of managed pubs total revenue.

The firm reported a “strong bounce back” for its drinks division. Sales of the Liberation Quality Drinks business in the Channel Islands were up 14%, with the company anticipating future growth to be accelerated by a contract secured with multinational alcohol company Diageo to distribute its products across the Channel Islands.

The Langford Inn, North Somerset

It said its Butcombe drinks business had achieved a record number of recurring free trade customers per month at a record average spend per customer. Overall volumes in Butcombe were up 11% led by OBV keg volumes up 84% and OBV Bottled volumes up 41%.

Liberation Group chief executive Jonathan Lawson commented: “These 13 weeks see our largest sales volumes over the whole year so it is great to be delighting so many customers over such a critical period for us, with the quality of our food offer, our accommodation and our OBV keg products making huge contributions to our growth.

“But in the longer term there are still many challenges for the sector and for us specifically, with recruitment and supply chain issues causing additional costs and lost opportunity.

“There are also headwinds to come in the future UK tax regime – we continue to lobby the government to convert the temporary VAT reliefs into a permanent reduction and to abolish the inequitable system of business rates.”

The group said it had over 30 development projects planned for the next 12 months across the business, with the most significant investments seeing development into food-led pubs and inns, including into the estate of 250 rooms.

The group also released its audited financial statements covering the year ending January 30 2021. In these, the pubs and inns and brewing and distribution arms of the business achieved positive pre-tax earnings of £0.7m and £1.7m respectively. This was despite the impact of the pandemic reducing turnover by 23% to £68.3m.

It added that the funding of the acquisition of the Wadworth pubs by its owner Caledonia Investments, had increased the strength of its balance sheet.

Net external debt was at £38.5m in January 2021 with the value of freehold assets increased from £27.3m to £128.1m.

Liberation Group chief financial officer Simon Hope commented: “The focus of everyone in the Group on the importance of cash yielded obvious results in the year to January 2021 and this has continued during the first half of the current financial year.

“We enter the second half with stronger liquidity than at the end of January and we are well placed to fund our ambitious development plans and M&A strategy when the opportunities arise.”

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