W&D plans spending spree on back of solid interim results

Brewer and pub operator Wolverhampton and Dudley plans to build on solid growth in its financial half-year to 27 March 2004 by buying new pubs and development sites.

Although turnover dipped slightly to £233.9m, from £239.2m last year, pre-tax profits grew by 5.3% to £31.7m. After subtracting goodwill and exceptional items, pre-tax profits grew by 10.3% to £28.9m.

Chairman David Thompson attributed the growth to the stable nature of the group's
community pubs, which are mostly freeholds, to refurbishments and to the extension of long 21-year leases to 420 tenants.

The popular long leases will form part of the group's submission to the government inquiry into the relationship between pub groups and their tenants. The company will stress that it was the first tenanted operator to set up independent rent panels and that it offers one of the highest discount levels in the market.

The group's Union Pub Company, which consisted of 1,132 tenanted and leased pubs by 27 March, boosted like-for-like sales by 5.2% and operating profit by 6.6% to £24.3m. Average annual earnings before interest, tax, depreciation and amortization (Ebitda) increased by 8.1% per pub.

Ten pubs were sold for £2.6m, while 24 have transferred across from the managed division since the end of the half-year. W&D says it is on track to add 30 pubs a year to the estate, with 11 deals completed or exchanged and another nine under negotiation.

Pathfinder Pubs, its 473-strong managed division of freehold community pubs and Pitcher and Piano bars, increased like-for-like sales by 2.8%. Operating profit grew by 0.4% to £23.5m and average Ebitda per pub grew by 5.1%.

W&D aims to open 20 new sites this year and to complete 40 major refurbishments. It current has five community pubs in development and 30 more under negotiation.

Turnover at refurbished Pitcher and Piano bars has soared by more than 30% on reopening.

by Angela Frewin

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