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Spirit announces rise in profits as business transformation continues

By Peter Ruddick , 19-Apr-2012
Last updated the 19-Apr-2012 at 12:46 GMT

Related topics: Business, Venues, Trends & Reports, Pubs & Bars

Spirit Pub Company has announced it is continuing to transform the business as pre-tax profits for the 28 weeks to 3 March 2012 rose 7 per cent to £20m driven by a strategy for the managed site portion of the business.

Spirit Pub Company chief executive Mike Tye has said transformation of the business remains on track as pre-tax profits for the 28 weeks to 3 March rise 7 per cent

Spirit Pub Company chief executive Mike Tye has said transformation of the business remains on track as pre-tax profits for the 28 weeks to 3 March rise 7 per cent

Spirit is currently accelerating an investment programme in its managed sites which it said was achieving an average return on the investment of 25 per cent. 156 pubs received refurbishments in the first half of the year. The company is also investing in new EPOS systems across the estate to help earnings margins.

In the first half of the year Spirit invested £64m in the company, £56m of which was invested in the managed brands.

The company announced almost 80 per cent of the estate had now received investment and focus would now be switching to the Flaming Grill, John Barras and Original Pub Company brands. 

Business transformation

EBITDA earnings also rose in the period by 3 per cent to £70m with like-for-like sales in the managed venues the Staffordshire-based company operates jumping by 5.6 per cent. However the leased venues experienced a drop in like-for-like net income of 4.5 per cent.

Mike Tye, chief executive officer of Spirit Pub Company, said the company was pleased with the progress in the strategy for the managed business and was satisfied with the profit rise despite economic and consumer uncertainty and the continued capital spend in investment.

"Spirit continues to make good progress in transforming and revitalising the business. We have delivered further strong growth in managed sales and margins through continued investment in our brands, our estate and our people supported by strong cost control. The leased business has performed in line with our expectations and we have built a strong management team to drive performance improvement," he said.

Leased business

Spirit, which was formed in August 2011 following a demerger from Punch Taverns , said its current focus within the leased business was to stabilise income. Although income fell in the period Spirit said this was as anticipated.

The company also announced it will assume full control of the leased estate in the second half of the year following the end of a transitional management services agreement with Punch Taverns. 80 underperforming leased pubs are to be disposed of and conversions of some of the stronger sites to the managed estate may continue. Seven leased pubs have been converted so far and profit is being monitored in the venues in question.

Last month Spirit revealed food sales were becoming more important to several of the venues including some traditionally wet-led pubs . The Flaming Grill brand has seen its food mix jump to 50 per cent of sales.

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