Punch reports strong current trading including record sales day for management partnership division: Punch Pubs, the Clive Chesser-led business, has reported strong current trading, including a record sales day for its management partnership division, and said the boost from Euro 2024 game days helped offset weaker trading from poor weather. In its trading update for the 40 weeks to 10 May 2024, the company said that trading to date in the following quarter has been “encouraging, with profitability ahead of the prior year”. “The quarter four period includes the benefit of the UEFA European Football Championships,” it said. “Trading has been very strong on England game days, with the Punch MP business recording its highest ever sales day on Sunday 14 June (Spain versus England final). Strong trading during the Euros helped offset weaker trading from negative weather comparatives versus last year. The group expects to continue to benefit from inflation positively impacting leased and tenanted net income, together with the improving margins and benefit of maturing sales and profitability in the pubs converted to the management partnership estate since August 2021.” It comes as the circa 1,250-strong business reported total revenue of £241.5m for the period compared to £233.9m in the prior year period of 40 weeks to 21 May 2023. All three divisions (leased and tenanted, management partnership and Laine) delivered like-for-like sales growth compared to the prior year. It reported a pre-tax profit for the period of £14.2m, compared to £7.3m in the 40 weeks to 21 May 2023. Underlying Ebitda for the pub estates before central costs increased by £7.4m to £86.3m, up 9%. Ebitda for the period was £63.2m (prior year 40 weeks: £57.6m) of which £65m was classed as underlying (Ebitda prior year 40 weeks: £59.2m). The company said underlying Ebitda for the 52 weeks to 19 May 2024 of £87.1m compares positively to the £76m of adjusted underlying Ebitda from the wider Punch group in the pre-covid year to August 2019. The group spent £20.6m (prior year 40 weeks: £23.6m) on expansionary and maintenance capital. The period included April’s circa £17m acquisition of 24 former Wear Inns managed pubs, funded from available cash resources and drawing on the group’s revolving credit facility (RCF). The pubs have all been converted to the leased and tenanted operating format, with the expectation of converting approximately a third of the sites to the management partnerships division over the next 12 months. The portfolio is expected to positively contribute to Ebitda from acquisition and is forecast to enhance net leverage following the first full year of trading. “As noted in previous reports, we have identified the next tranche of pubs to convert to the management partnership model, having identified an additional population of up to 70 pubs that would be suitable for conversion, with conversion phased progressively over a three year period,” the group said. “We are pleased with the strong returns on investment that we are seeing from past conversions and would expect to achieve similar returns on future conversions of between 20% and 30%.” Net proceeds from the sale of properties in the period was £11m (prior year 40 weeks: £8.4m), at £2.1m above book value (prior year 40 weeks: £1m). Property assets increased by £17.3m in the period to £910.3m (13 August 2023: £893m). This compares favourably to the full estate property valuation undertaken in May 2021 at £849.7m. The group said the increase in values largely reflects the purchase of the Milton Three Pub Group portfolio in the quarter, the leased and tenanted pub estate from Youngs Pub Company in 2021, continued investment in the estate, and a small number of other pub acquisitions and disposals. It generated a net cash inflow from operating activities for the period of £62.3m (prior year 40 weeks: £58.2m). An interim dividend of £20.6m for the current financial year ending 11 August 2024 was paid in the period. This represents the first such payment since the launch of the bond in May 2021. No further dividend payments are proposed for this financial year. At the period end date, the group had £56.9m of available financial resources (13 August 2023: £60.3m), represented by £1m of cash and cash equivalents and £41.5m undrawn against the RCF and £14.4m from 21 RCF funded freehold pub acquisitions. In addition, £2.6m of cash held in deposit accounts is classified within pre-payments (13 August 2023: £2.6m).

Premium Club members to receive new searchable and segmented New Openings Database next week: The next Propel New Openings Database will be sent to Premium Club members on Wednesday (7 August), at noon. The database will show the details of 268 site openings, including which company has opened a site or its plans to open one in the future. It will have details on what type of site it is and its location, and there will also be a website link to the businesses. The database is published on a monthly basis and Premium Club members will also receive a 11,881-word report on the 268 new additions to the database. The database includes new openings in the quick service restaurant sector such as Korean concept CheeMC opening in London’s Elephant & Castle, Wingstop UK with its multiple openings and Burger Drop with an opening in Edinburgh. Premium Club members also receive access to five other databases: the Multi-Site Database, in association with Virgate; the Turnover & Profits Blue Book; the UK Food and Beverage Franchisor Database; the UK Food and Beverage Franchisee Database and the Who’s Who of UK Hospitality. All Premium Clubs members will be offered a 20% discount on tickets to Propel paid-for events including the Talent and Training Conference (1 October), Restaurant Marketer and Innovator (two days in January 2025) and Excellence in Pub Retail (May 2025). Operators that are Premium Club members are also able to send up to four members of staff to each of our four Multi-Club Conferences for free. Premium Club members receive their daily Propel Info newsletter 11 hours earlier than standard subscribers, at 7pm the evening before. They also receive videos of presentations at eight Propel conference events two weeks after they are held. This represents around 100 videos of industry insight over the course of the year. Premium Club members will be sent a dedicated monthly newsletter that will highlight key updates in the sector and direct subscribers to all the vital content their membership offers. Premium Club members also receive exclusive opinion columns every Friday at 5pm, which include the thoughts of Propel group editor Mark Wingett and a host of industry leaders from across the sector. A Premium Club subscription costs an annual sum of £495 plus VAT for operators and £595 plus VAT for suppliers. Companies can now have an unlimited number of people receive access to Premium Club for a year for £995 plus VAT – whether they are an operator or supplier. Email kai.kirkman@propelinfo.com today to sign up.

XP Factory trading in line with expectations with volume-driven lfl growth across both brands: XP Factory, which operates the Escape Hunt and Boom Battle Bar brands, has said trading in line with expectations, with volume-driven like-for-like growth across both brands. The company said it will release its results for the 15 months ended 31 March 2024 on 2 September 2024, when it will give a comprehensive update on current trading and outlook. “The group has traded in line with the board’s expectations in the first quarter of the financial year to March 2025, with continued positive, volume-driven like for like growth across both brands,” it said.

Pound falls sharply but economy poised to grow quicker than expected this year: The pound and the FTSE 100 fell ­sharply after the Bank of England ­lowered interest rates for the first time in more than four years, reports The Times. The economy, however, is poised to grow this year much more quickly than previously thought, although the rate of expansion over the long term is significantly below the target set by the new Labour government, according to the central bank’s forecasts. Sterling fell by 0.77% against the US dollar to $1.275, its lowest point in just under a month. The pound also lost ground against the euro, easing by 0.37% to €1.182. The decline partially reversed the pound’s strong rally so far this year, driven recently by greater political ­stability after Labour’s general election victory and by signs of stronger ­economic growth than had been ­anticipated. Sterling has been one of the fastest-rising developed economy currencies in 2024. Downward pressure on the pound was fuelled by the Bank of England’s monetary policy committee voting 5-4 in favour of reducing the UK base rate by 0.25 percentage points to 5% from 5.25%. The central bank said Britain’s gross domestic product would expand by 1.25% in 2024, a sharp upgrade from its previous projection of 0.5% in May. Then growth will ease to 1% in 2025 before rising to 1.25% in 2026, both of which were unchanged from its expectations in May. The effect of external supply shocks on the economy, such as Russia’s invasion of Ukraine, had waned, the Bank said, and had been the main factor dragging down inflation to 2% for the past two months. “The impact from past external shocks has abated and there has been some progress in moderating risks of persistence in inflation,” it said. Unemployment is projected to remain at its present level of 4.4% for the rest of the year thanks to robust economic activity, and the Bank believes joblessness will peak at 4.8% in 2026. Underpinning its stronger growth assumption is a fast recovery in household living standards from the cost of living crisis. Real post-tax labour income is set to expand by 3.5% this year and by 1.5% in 2025, fuelling household spending.

Bailey – era of ultra low interest rates won’t return: Andrew Bailey believes that Britain and other developed economies are not re-entering a world of ultra-low interest rates after the Bank of England lowered its borrowing costs for the first time in more than four years, reports The Times. Bailey, the governor of the Bank, said “it’s unlikely that we are going back to the world that we were in between 2009, post-financial crisis, and the point at which we started raising rates”. He also suggested that the long-run level of interest rates in the UK was “lower than we are at the moment” but was higher than the period of ultra-stimulative policy that characterised the global economy after the financial crisis in 2008. In its latest Monetary Policy Report, the Bank said: “There is some evidence that the impact of increases in bank rate on UK GDP has peaked a little earlier and at a smaller level than in the estimates underpinning the committee’s August central projection. It is also possible that the equilibrium real interest rate has risen somewhat, such that the stance of monetary policy is less restrictive than assumed.”