Capital Pub Share Discussion Threads

[nurdin] 14/2/2011 08:56

Capital rise :o)

[shanklin] 13/2/2011 08:11

Went to The George yesterday,

14 different beers/lagers on tap. Excellent beer, food, welcome (we were the first in there at about 11:30 a.m) and ambience.

Oh and United were even 1-0 up, and the pub was pretty busy in preparation for the rugby, when we left for the theatre :-) All in all, very impressed.

Hopefully will get to the Marquis of Granby next month.

[davidosh] 01/2/2011 10:22

Plus another placing at nil discount to the closing price yesterday when it was set. These placings at ever increasing prices are getting gobbled up.


Conditional Placing of 1,796,875 New Ordinary Shares

The Company announces that the Company's nominated adviser and broker, Panmure Gordon, has, in response to investor demand and pursuant to the terms of a Placing Agreement dated 1 February 2011 entered into between the Company and Panmure Gordon, conditionally placed an aggregate of 1 796,875 new ordinary shares in the Company (the "Placing Shares") at a price of 128 pence per share (the "Placing Price"), to raise GBP2.3 million (gross) for the Company (the "Cash Placing"). The Placing Price is the closing middle market quotation of an ordinary share in the Company on 31 January 2011 (as derived from the Daily Official List of the London Stock Exchange).

The Cash Placing will further broaden the institutional investor base of the Company and the net proceeds from the Cash Placing will be used, alongside internally generated cash flow, to finance future earnings-enhancing acquisitions. The proceeds from the Cash Placing will reduce gearing to 57% and further strengthen the Company's balance sheet.

[gingerplant] 01/2/2011 08:22

Indeed - a fine update.

At the increased price of 134p CPUB is valued at £33.7m.

Brokers' forecasts put the shares on a P/E of 11.5 (though these will surely be upgraded now).

The good bit, though, is the net value of the freehold in the pubs (all London area) which is 140p per share and rising as more pubs are added from cash generated.

If they pay down the debt as stated, they're worth £3 a share on freeholds alone - leaving no value in for the actual business - over the next 6 years.

In practice, of course, they'll do a lot better than this IMO - as they continue to make wise acquisitions - or get taken out first!

[nurdin] 01/2/2011 07:31

A cracking trading update..:o)

[nurdin] 24/1/2011 13:28

been ticking up for a number of sessions now.Hope it explodes soon...:o)

[timbo003] 29/12/2010 18:42

>>>Sleepy

I suspect that if Convivial and CPUB merged, it would be done at parity with respect to the two respective NAVs.

Convivial is only traded (very infrequently) through JP Jenkins and the last few trades went through at huge discounts to NAV (50p ish), so you could argue that Convivial trade at a bigger discount to NAV than CPUB. If they were to merge, I suspect the most equitable way to do it would be a nil premium merger with CPUB issuing new shares to Convivial shareholders. Needless to say, I would much rather Fullers or Youngs took them out individually, at a big premium to NAV.


>>>David

Yes indeed, the Geronimo deal seems to have been at a decent premium to NAV. This bodes well for Albion VCT and Crown Place VCT, both of which held major equity stakes in Geronimo. I hold shares in both of those VCTs, hence my initial interest.

[davidosh] 29/12/2010 18:39

Sleepy....it all depends on how many and what for I guess ? If the assets to be acquired are undervalued or a company trading well below its NAV then a mix of debt and new shares does it fine for me. CPUB is now trading closer to its NAV so one could argue that we should not have issued any at £1.03 six months ago. We then acquired the Tomahawk pubs....The price of 120 pence for each Tomahawk Share was slightly below the net asset value per share of Tomahawk as stated in the audited accounts of Tomahawk for the year ended 30 June 2009. So probably neutral in that respect but with banks keeping hold of cash that is the best way to do it.

[davidosh] 29/12/2010 18:14

It must be much more efficient to have central overhead covered by more profit generating pubs. The Geronimo deal seems to have been done well above the NAV which also bodes well for CPUB should anyone come knocking and would presumably also make CPUB paper reasonably attractive as an alternative for Convivial holders.

[timbo003] 29/12/2010 16:47

Hi David

Yes, they do have some director links I believe, although they did break off a joint management contract a few years ago (I do not know whether that was acrimonious or not), and I agree, they would would make a good combination, although Convivial seem to have more of a food focus than Capital Pub.

I would personally prefer a cash exit (at a nice premium to NAV) for Convivial, rather than a takeover/merger (probably at NAV) paid for with CPUB shares, which I suspect would be the case should the two get together.

[davidosh] 29/12/2010 16:35

Surely Convivial would be a good addition for CPUB at the right price and they do have director links from memory ?

[timbo003] 29/12/2010 16:19

Hi folks

I held this one briefly about a year ago (I wish I had held on, but I needed to deploy the funds elsewhere (annual ISA subscription, CBUB does not qualify).

Just to highlight (in case you missed it) the recent acquisition of Geronimo (London based pub company) by Youngs.



They seem to have got a good price, although I haven't yet read across yet to what CPUB may be worth based on that deal.

Who knows, if Youngs are in acquisitive mode (or an other cash rich London based pub co such as Fullers for that matter), CPUB could be the next one to get taken out, although I woould prefer if it was the Convivial Pub company (which I do own shares in, purchased under EIS).



They are unquoted, but you can buy shares through JP Jenkins.

[davidosh] 27/12/2010 11:32

CPUB has been tipped as one of 12 stocks to perform ahead of the market in 2011



Buy Capital Pub Company at 118p says Scarlett Moore of ShareCrazy.com

Capital Pub Company (CPUB), which listed on AIM in June 2007, has a rather unique business model compared to competitors such as JD Wetherspoon, Punch Taverns and Mitchells & Butlers. Unlike its larger rivals it believes that pubs should each have their own individual brand, in recognition of the areas in which they are located. The firm currently owns 31 free house located in and around the London area, each of which caters for its local market. Also unique about the business model is that recent growth has been led by sales of drinks rather than food based offerings which rivals have focused on expanding.

The company's strategy has worked very well. It recently posted a very positive set of results for the six months to 25th September 2010, which showed revenues up 18% to £13.1 million and an adjusted pre-tax profit of £2 million, up 45%. The net cash generated form operations was up by 42% at £2.7 million and the gearing was modest for a pub firm at 67%. Capital put the performance down to the London market remaining strong, its unique business model and as landlords are able to run their pubs with minimal head office interference. Encouragingly, sales growth for the first 33 weeks of the financial year has advanced to 22%.

The aim is now to increase the portfolio to between 45 and 50 pubs within the next three years or so. With adequate banking facilities and a favourable environment for buying pub assets I believe that the company is well placed to do this.

Current capitalised at £29.7 million Capital Pub Company trades at a 18% discount to net assets of £36.14 million as at 25th September - which were mostly made up of freehold pubs. What's more the shares trade on a multiple of just over 11 times forecast 2011 earnings and broker Panmure Gordon has a 151p price target for March next year. While there is no dividend on offer, the shares look undervalued on all other fronts. BUY.

[davidosh] 10/12/2010 21:35

An interview with Clive Watson ...



Interesting stuff

I will be arranging an evening with Clive and Nick the FD early in 2011 for those interested in a presentation and dinner.

[ferrism] 02/12/2010 20:39

Thanks for that jeffian. You have confirmed my own feelings about this. I like the honest statement contained in the document ..... .'I put my all into these ventures for up to 5 years and then I have to do something else'.
You have to admire his candid approach!
It's often the case that very talented people, such as David Bruce, need a change of direction on a regular basis. Unfortunately whoever follows may not have the same talent. The moral of the lesson, I guess, is that a "buy and hold" strategy investing in a David Bruce enterprise is fraught with problems!
Davidosh, I take your point about the co-founder still being involved.

[jeffian] 02/12/2010 19:51

ferrism,
I wasn't sure about all of them - the following CV suggests a Brakspear's JV went wrong - but his MO has been to build a brand and move it on to someone else. If they make a mess of it afterwards, that's up to them (which is, I think, what happened to S&L). Whilst Bruce is directly involved, I think you're fine; when he gets bored and moves on, maybe time to follow!

[davidosh] 02/12/2010 18:13

David Bruce, the entrepreneur behind the Firkin and Slug and Lettuce pubs, and investment manager Smith & Williamson hope to raise £2 million to fund his fifth farmers' market and restaurant. He is now almost entirely out of the pub trade and his new company is Country Food & Dining. The first four are in Hungerford, where he lives, Bath, Winchester and Donnington.

Not too many in South London, then, home of some early Firkins? Bruce laughs. He commissioned a study that analysed postcodes, to identify where the idea
might work. "If you're within ten miles of a Waitrose, you're doing the right thing." Of the switch from pubs to catering, he adds: "It's the same kind of thing, except I don't have to get the train into London every day."

I think David is only playing a minor part these days but was certainly at the AGM. He is only a non exec after all. Clive Watson is the driving force and the FD is a good guy.

Here is the wikipedia info on DB..

[ferrism] 02/12/2010 17:56

Didn't Slug & Lettuce go wrong? That was one of David Bruce's incarnations. It was a great success until, as I remember it, he lost interest. Apologies to Mr. Bruce if that was not the case but that was how it appeared from the outside.
I invested in CPUB right at the start but I will be keeping a watchful eye on DB's interest level!

[jeffian] 02/12/2010 17:30

SFI?! The ghastly Tony Hill hadn't got a clue! He wasn't a pubs man and it turned out he wasn't much of a finance man either when an enormous black hole appeared in the accounts.

This is a David Bruce company. He's quality, with a terrific track record in pubs and in setting up, growing and selling on profitable pubco's. I've lost track of how many times he's done it and I don't think he's had one go wrong on him. There's nothing wrong with pubs; it's all a matter of the Management.

[davidosh] 02/12/2010 16:49

EssentialInvestor....I fully understand your caution and not just SFI where a mate got badly burnt but I also remember the Jamies Bars company (forgotten the name ?). I have attended an AGM here and met all the team. They seem very solid and I am staying close and watching for weakness in the figures but must say they are doing a first rate job here.

[essentialinvestor] 02/12/2010 16:40

david, I tend to be ultra cautious, overly so if I am being honest.
It does look a nice little company, and I can relate to the strategy,
the Black Swan is in my area, lovely pub.

I am aware that you have been investing for sometime, so you will be
aware of what happened with SFI.. etc, it's a long list.

Not making any direct comparisons with CPUB.

However, for some reason this sector has seen many repeat the same mistakes,
time and time again.

Hopefully this will not be the case here and holders will be rewarded.

Good fortune, and all imv, as always.

[davidosh] 02/12/2010 01:09

It does not look too worrying considering the cash generation...

Balance Sheet and Funding

The Company strategy is to continue to expand the business using the benefit of its favourable banking facilities which extend until December 2017. It has modest annual capital repayments until that date (GBP1.1m in the current financial year) and this allows the free cash flow of the business to be invested in new acquisitions.

The purchase of Tomahawk Pubs Limited was part-financed with a placing of GBP2.9m and as a result of this placing the profitability and cash flow of the Company have increased.

Since the year end gearing has dropped to 67%, the Company remains well within its banking covenants and has good banking relationships which give the Board confidence to seek further acquisitions.