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Introduction

The City Pub Group owns and operates an estate of premium pubs across the southern half of England and Wales. The Group’s pub estate comprises 46 free houses located largely in London, Cathedral cities and market towns, each of which is focused on appealing specifically to its local market, and a further 4 sites are in development. The Group’s portfolio consists of predominantly freehold, managed pubs, offering a wide range of high-quality drinks and food tailored to each of its pubs’ customers.

The City Pub Company (East) PLC and The City Pub Company (West) PLC were originally founded by Clive Watson, David Bruce and John Roberts, in late 2011. The first pub began trading in March 2012, with the estate growing rapidly to 34 sites by November 2017 when The City Pub Group was formed through the all share merger of the two original companies. The City Pub Group successfully completed an IPO in November 2017, when the shares were admitted to trading on AIM.

The City Pub Group leverages its sector contacts and experience to ensure it is well placed to acquire, high quality, well-located freehold or leasehold pubs. Following acquisition, it aims to improve profitability through targeted investment in each pub, incentivisation of its key employees, introducing its flexible retail strategy, dedicated marketing and utilising its centralised buying power.

The Directors have considerable experience of acquiring pubs, expanding pub portfolios and creating premium pub companies. This includes leading the Capital Pub Company from start-up through to flotation on AIM and its subsequent acquisition by Greene King for £93 million.

The Group continued to acquire on average six pubs per year. In order to fund the acquisitions, the Companies raised in aggregate £38 million under the Enterprise Investment Scheme and through the issue of convertible preference shares. The Group raised a further £35 million in gross primary proceeds as part of the IPO in November 2017. In October 2018 the Group raised an additional £6.2 million of funds through a share placing, and following a further placing and open offer, raised approximately £22 million in April 2020.

Company History and Development

The companies in the Group were co-founded by Clive Watson, David Bruce and John Roberts in October 2011 with the aim of building a high quality portfolio of premium pub assets located predominantly in London, Cathedral cities and market towns across southern England and Wales. The Companies began trading in March 2012 and, by the end of 2012, had acquired six pubs, including its first sites in Bath, Cambridge, Oxford,

The Group has historically traded as two separate companies, The City Pub Company (East) plc and The City Pub Company (West) plc. In April 2013, CPCW and CPCE appointed Alex Derrick and Rupert Clark, respectively, as its designated Chief Executives. Under their stewardship, both of the Companies expanded their pub portfolios further and by the end of their first full trading year (to 29 December 2013) CPCW had 6 trading outlets and CPCE had 7 trading outlets. The Companies continued to acquire, in aggregate, on average 6 pubs per year, ending 2017 with a total of 34 pubs, including a number of sites in London, Bristol, Brighton, Norwich, Southampton and Winchester.

On 1 November 2017, the Group was formed through the all share merger of CPCE and CPCW by way of a scheme of arrangement of CPCW and the same time changed its name to The City Pubs Group plc. The City Pubs Group plc was admitted to AIM on 23 November 2017 with Alex Derrick and Rupert Clark as joint Managing Directors of the combined Group reporting to Executive Chairman, Clive Watson. At this point, the Group aimed to double the size of its estate over the following three to four years. In November 2020, Alex Derrick stepped down from the Board and left the Company by mutual agreement, and Toby Smith joined the company and the Board as Chief Operating Officer.

Key Strengths

The key strengths of the City Pub Group are:

Premium operator creating individual identity for each pub

The Group’s pub estate and flexible retail strategy addresses the trend away from branded pubs and toward premium individualised pubs, each of which have a product range appropriate for their local market.

Scalable platform with strong pipeline of potential acquisitions

The centralised infrastructure platform, comprising systems and processes as well as head office staff, enables a smooth change of ownership for the pubs which are currently in the acquisition pipeline, as well as those identified through the Group’s appraisal of both individual sites and portfolios of pubs across southern England and Wales.

The Group is asset backed

Prior to the IPO in November 2017, an independent valuation report by CBRE valued the Group’s portfolio of 34 pubs at £73.65 million. At the time the valuation represented a 9% uplift on net book value. In the last 3 years the Group has continued to expand and has added a number of pubs to the portfolio including Aragon House and the Hoste, both are substantial freeholds.

Impressive financial performance and growth

The Group has enjoyed consistently strong sales and EBITDA growth, with steadily increasing operating margins over the last few years. Supplier agreements are expected to further improve operating margins going forward.

Experienced management team, motivated staff and strong culture

The management team of the Group has over 100 years’ experience in the pub industry with an excellent reputation, extensive contact base and proven skill in identifying attractive sites for an attractive price. Staff are incentivised to focus on customer service and are represented at board meetings, giving a high retention rate among key staff and a strong sense of culture.

Management strength and track record provides confidence in the deliverability of a premium hyper-local strategy of refurbishing and repositioning wet-led pubs across UK Cathedral cities and market towns.

The Business Model

What We Do

Established in 2011, The City Pub Group is a managed pub business operating in London and across the South of England and Wales. It has a collection of 46 unbranded free-house pubs currently trading, clustered around affluent Cathedral cities and market towns, with others in development. Its premium, wet-led offer and flexible approach give it broad customer appeal across residents, workers, students, shoppers and tourists.

Product Offering

The Directors believe that in the premium managed pub sector, liquor sales such as craft ales, craft spirits and independent coffee brands offer higher growth potential, higher margins and higher predictability over sales than traditional beers, lagers and spirits. Food menus are also developed individually for each pub and offer high quality, freshly prepared food, providing good value for money and offering a wide range of choice. Increasingly, more healthy and vegan options are being offered in each pub to broaden the appeal to a wider range of customers. In addition bedrooms and function rooms are an increasingly important part of the revenue stream for many of the sites.

The Group has five key target markets;

 

Our Approach

City Pub Group stands out from the crowd with its unique and premium offer. This is embedded in its culture and influences everything from site selection, food and menu design to the quality of its employees.

Importantly its portfolio is built up of unbranded, wet-led pubs in high footfall areas that appeal to a broad range of customers. Each pub is centred on a high calibre level of staff that offers a relaxed, enthusiastic charming environment. The Group has a solid track record of identifying, acquiring, refurbishing and repositioning pubs to drive higher returns. Its approach is highly differentiated and combines the flexibility of the managed pub model with the entrepreneurialism of the tenanted model. This differentiated approach has been honed over management’s 100 or more collective years of pub retail experience.

 

 

Our Strategy

At present, the Group has 46 trading pubs (post Covid) and intends to continue future to acquire new sites once we are through the Coronavirus pandemic. The Group already has extensive relationships with property agents specialising in the licenced trade industry and many of these relationships have been in existence for a number of years.

Acquisition Strategy

The Group’s acquisition strategy is broken down into five key areas and the Directors believe that these areas will provide sufficient acquisition opportunities to support the targeted growth of the Group’s pub estate.

1. Acquisition of existing pubs
Central to the Group’s acquisition strategy is buying existing pubs that are already trading well and are typically sold by private sellers. The main change is to transfer the pub’s supply contracts onto the Group’s centralised platform, quickly improving operating margins. The Group prides itself on the way it works with the existing employees in these pubs and, over a period of time, aims to integrate these employees into the Group’s entrepreneurial culture.

2. Acquisition of trading pubs requiring redirection
The Group also seeks to acquire existing pubs that require modest refurbishment and improved retailing standards. Typically, the Group will target an investment of circa £250,000 to tailor the décor to the pub’s local market and improve the liquor and food offerings, as well as help the existing staff to adopt an entrepreneurial approach in managing the pub.

3. Closed down pubs requiring extensive refurbishment
The Group also looks to acquire sites that are either underperforming or have been closed down and which provide the opportunity for the Group to substantially refurbish and improve the product offer to better serve the tastes of the Group’s target consumers.

4. Unlicensed premises
The Group is able to target sites which are currently unlicensed but which present the opportunity to be transformed into premium trading pubs.

The Group typically targets pubs and sites that produce, or are expected to produce, higher EBITDA per pub than the industry average. The Directors believe that by focusing on sites expected to produce a higher EBITDA, head office costs as a percentage of sales are reduced and this performance also enables the attraction and retention of top performing pub managers.
The Group evaluates new sites by testing them against five key target markets: residents, office workers, students, tourists and shoppers. For a new site to be considered, it must address at least four of the five key target markets.

4. Investment into other EIS companies

The Group will look for opportunities to invest into EIS companies as it has done with Mosaic Pub and Dining Tranche 1 and with Barts Pub LTD.

Refurbishment Strategy

The Group’s strategy is to enhance existing sites rather than redesign to a set formula. The Directors believe that an operation comprising individual quality outlets that are unbranded will trade better over the longer term. When refurbishing a pub, the Group adopts a timeless design style, which is one of high quality but is not fashionable or contemporary. A typical refurbishment is undertaken in a style which the Directors believe is long lasting. With regular maintenance the estate is kept to a high standard, this helps to ensure that future refurbishment costs are reduced and closures of pubs for major refurbishments are minimised.

Acquisition Pipeline

The Group is continually appraising both individual sites and portfolios of pubs across southern England and Wales, and has developed a strong pipeline of potential acquisitions out of the large number of opportunities presented. All acquisitions are subject to approval by the Board and a key consideration, when seeking board approval, is to recommend pubs and sites in areas which are not highly competitive.

The Group has a low annual rent charge compared to its turnover (which was circa 3.4% as at 27th December 2020) based on normalised trading levels. The Group intends to keep it around this level or lower.

The Group also reviews the existing portfolio to see if any of the sites should be considered for disposal.

Our Relationships

 

Our People

Recruitment and retention of high quality staff is key to the Group’s strategy, both at head office and across the estate. The Group’s staff are well trained and appropriately incentivised, given their respective roles, with the focus on attracting the most suitable employees to support the growth of the Group and maintain high levels of consumer satisfaction.

People and culture
The Group’s localised strategy requires a certain standard and quality in its staff. The inherent ability to be engaging, intelligent and motivated are key attributes. The strategy to focus primarily within Cathedral cities means finding the right type of staff should be easier especially as universities are central to all these cities. Finding the right people is followed by training programmes and a highly rewarding incentives package that we feel is unique in the industry. Putting its staff at the heart of the business is also reflected, with two employee representatives included at every board meeting.

Operation structure and staffing
Growth, accompanied with the clustering strategy, means many General Managers are ‘homegrown’. This has allowed for progression to area manager in some cases. Each pub has a General Manager and Head Chef on-site. The pre-Covid average full time equivalent staff per pub ranges from 15-25 depending on size and offer (higher for those with accommodation and greater food offer). The operational structure is highly devolved fostering a more entrepreneurial spirit that is rarely seen in larger groups.

Staff Training
The overarching aim is to offer customers exceptional experiences, while striving to offer employees sufficient development possibilities to build a career within the Group.

Selective trainings offered to employees include:

Management:

  1. Management Development Programme

  2. Senior Chef Development Programme

  3. Leadership & Teambuilding

  4. Wet Stock, GP and Cash Control Masterclass

  5. Devising a Balanced Menu & Managing Kitchen Profits

  6. Grievance and Disciplinary Workshop

  7. Mental Health & Wellbeing for Management

  8. Train the Trainer

Administrative:

  1. Mental Health First Aid

  2. Strategic Social Media Workshop

  3. Events & Inhouse Marketing Masterclass

  4. Fire Marshall

  5. First Aid

  6. FLOW Online Learning

Food & Beverage:

  1. Brewery & Cellar Management

  2. WSET level 2

  3. Personal License

  4. Chef Academy

Incentives
The City Pub Group has developed a comprehensive incentives policy with all employees participating at some level. Importantly bonuses are based on both quantitative and qualitative targets are paid out weekly, monthly, as well as annually.

Our Customers

While value for money is a major component, there is a key focus on a premium offer across the entire estate. Aligned with keeping the values of the pub intact, there is an aim for the pub to become a central part of the local community by incorporating local suppliers, local staff and providing several reasons for people to visit often.

The Group has five target markets:
• Residents
• Tourists
• Office workers
• Students
• Shoppers

Adapting and driving consumer preference
Shifts in consumer preferences combined with the changing profile of the high street, have blurred the lines between pubs, restaurants, cafes and coffee shops. Customers are now able to have a breakfast in a pub or dinner in a coffee shop. Menus are developed individually for each pub and offer good value across a wide range of choice. Increasingly, healthier and vegan options are being offered in each pub to broaden the appeal to a wider range of customers.

Our Suppliers

The Group adopts a long-term approach with its suppliers and has maintained relationships with its major suppliers since inception. This includes contractors, professional advisers, designers and property agents, as well as food and drink suppliers.

The Group has a number of fixed-term supply agreements with its major suppliers. These agreements cover over 80% of the Group’s liquor purchases. Due to Covid 19, we extended a number of these contracts and have agreed a new two year contract from January 2021 with one of the major suppliers. The Group has also recently centralised its food purchasing function and significantly reduced the number of its suppliers. This has resulted in an improvement in its purchasing terms and will enable greater economies of scale to be achieved as the pub estate grows.

Corporate Values

The Group is very conscious of the role its pubs play in the local community, adopting a localised, independent and responsible approach, while adding value by being different and unique. Creating safe and supportive spaces for people and for the planet is central to this. Our aim is to empower our customers, benefit our people, enrich our local communities and protect the world we live in.

Furthermore, charity fundraising events are also often held in the Group’s pubs and we offer discounts to customers who work in the public services. The Group also recognises the importance of maintaining a good relationship with its employees and as such encourages employee participation. To formalise this, from 2016 the Company invites employee representatives to attend all board meetings in order to discuss matters such as staff training, incentive schemes and staff welfare.

The Group adopts a long-term approach with its suppliers and has maintained relationships with its major suppliers since inception. This includes contractors, professional advisers, designers and property agents, as well as drink and food suppliers.

Marketing

Sales and Marketing for the City Pub Group is managed centrally; coordinating online sales, telephone bookings and our customer data base, as well as centrally marketing key events such as Valentine’s Day, Six Nations Rugby, Easter, Christmas and other similar events across our pubs. Each site will be able to streamline both these and others events locally to maintain individuality and focus. Each pub will continue to pro-actively manage its social media with Facebook, Twitter and Instagram being a focus of advertising investment. Each pub has its own website to take on-line bookings, display menus, advertise upcoming events and create an impression of the atmosphere in the pub for our customers.

The successful City Club app has more than 100,000 active members and enables on-line table booking, ordering and payment while reducing our front of house labour costs. The City Club connects all pubs in the company and, among other things, alerts customers to the location of other pubs in the Group’s portfolio and earns customers loyalty rewards as well as offering promotions for selected suppliers. The City Club app is also an important communication platform for our employees, offering incentives as well as information relating to the benefits of employment with The City Pub Group.

Pub Estate

The Group currently has a portfolio of 46 free-of-tie pubs trading in Cathedral cities and market towns across the southern half of England and Wales, including nineteen in London, seven in Cambridge, three in Brighton, and two in each of Oxford, Norwich, Bath, Cardiff, Exeter and Winchester, in addition to sites in Bristol, Exeter, Reading, Southampton, Norfolk, and Hayling Island, near Portsmouth. There are four other sites recently acquired (in Bath, Exeter, Cambridge and Mumbles near Swansea) and currently in development to open during the next year, as well as a strong pipeline for future development with a number of others currently being appraised. Of the total of 50 sites nearly 70% are freehold.

Recent News

Securities Information

The Company’s issued share capital consists of 105,684,425 ordinary shares of 1p each (“Ordinary Shares”) as at 31st March 2021.

The Company does not hold any Ordinary Shares in treasury.

In so far as the Company is aware as at 31st March 2021, the identity and percentage holdings of its significant shareholders are as follows:

Shareholder% Ordinary Shares
BlackRock Investment Management (UK) Limited9.7%
Otus Capital Management Limited10.5%
Canaccord Genuity Wealth Management7.1%
Franklin Templeton Fund Management Limited4.7%
Unicorn Asset Management Limited5.0%
Gresham House plc5.1%
Clive Royston Watson3.2%
Hargreaves Lansdown, stockbrokers (EO)4.7%

In so far as the Company is aware, the percentage of the Company’s issued share capital that is not in public hands is approximately 16.9%

Advisers

Nominated Adviser & Joint Corporate Broker Liberum Capital Limited, 25 Ropemaker Street, London EC2Y 9LY

Joint Broker Peel Hunt LLP, 100 Liverpool Street, London EC2M 2AT

Auditors Haysmacintyre LLP, 10 Queen Street Place, London, EC4R 1AG

Solicitors to the Company Addleshaw Goddard LLP, Exchange Tower, 19 Canning Street, Edinburgh EH3 8EH

Financial Public Relations Adviser to the Company Instinctif Partners, 65 Gresham Street, London EC2V 7NQ

Registrars Equiniti Limited, Aspect House, Spencer Road, Lancing BN99 6DA

The Board

The Board comprises of four highly experienced Executive Directors with over 100 years’ combined experience of developing and operating pub companies. In addition, the three Non-Executive Directors also add many decades of pub and drinks industry expertise.

Executive Directors

Clive Watson ACA (60) – Executive Chairman. Clive qualified as a Chartered Accountant with Price Waterhouse in London in 1986 before joining the investment bank Manufacturers Hanover Limited where he spent three years. He joined Regent Inns PLC as Finance Director and Company Secretary in 1990. Clive left Regent Inns PLC in February 1998 and co-founded Tup Inns Limited, where he was responsible for financial and commercial matters as well as acquisitions, before becoming Chief Executive and Finance Director of Tom Hoskins PLC, an AIM listed company. Clive was founding director of the Capital Pub Company in 2000 where he served as Finance Director until 2007 and then Managing Director before becoming Chief Executive in June 2008. He over-saw the sale of the Capital Pub Company to Greene King in July 2011. Clive was appointed as Chief Executive of The City Pub Company (East) plc in December 2011 before becoming Chairman in September 2014 and served throughout the period.

Toby Smith (51) – Chief Operating Officer Toby is a highly experienced senior operator with over 25 years’ experience in the UK hospitality industry. He has held CEO roles with Stonegate Pub Company, Novus Leisure and Town & City Pub Company, and prior to these held senior roles at Laurel Pub Company, Spirit Group and Scottish & Newcastle Retail. He joined the City Pub Company as Chief Operating Officer in November 2020.

Rupert Clark (49) – Managing Director. Rupert has over 20 years’ experience in the running of high-volume food and liquor-led pubs, both in and outside London. Rupert was previously Operations Manager of the Capital Pub Company and was with Capital for four years. After the sale of Capital to Greene King in 2011, Rupert stayed on to ensure the smooth integration of pubs into the Greene King estate. Prior to Capital, Rupert worked as Operations Manager at The Food and Drink Group, repositioning their city bars, and at Fullers first developing The Fine Line brand and then their unbranded bars and gastro pubs. Rupert was appointed as Joint-Chief Executive of The City Pub Company (East) PLC in April 2013 becoming sole Chief Executive in September 2014 and served throughout the period.

Tarquin Williams ACMA (51) – Chief Financial Officer. Tarquin has considerable experience in the managed and tenanted pub industry. He spent 16 years with Fuller Smith & Turner PLC from 1997; with the last eight years as Chief Accountant for Fullers Inns, which had an estate of circa 400 pubs. Tarquin then spent a short period of time serving as Chief Operating Officer at the Ladies European Tour running their head office based at the Buckinghamshire Golf Club. Tarquin was appointed as Finance Director of The City Pub Company (East) plc in March 2015 and served throughout the period.

Non-Executive Directors

Richard Prickett (70) – Senior Independent Non-Executive Director. Richard has considerable public markets experience, gained through numerous non-executive director roles including acting as Independent Non-Executive Director for Regent Inns Plc and the Capital Pub Company. Richard currently serves as a Non-Executive Director to Pioneer (City) Pub Company, a start-up EIS managed pub company, and Non-Executive Chairman for CQS Natural Resources Growth and Income Plc. Richard is also Finance Director to Landore Resources Limited. Richard qualified as a chartered accountant in 1973 with Coopers & Lybrand and has many years’ experience in corporate finance. Richard is Chairman of both the Remuneration Committee and the Audit & Risk Committee, and sits on the Nominations Committee. Richard was appointed as a Non-Executive Director on 25th October 2017 and served throughout the period.

Neil Griffiths (60) – Independent Non-Executive Director. Neil was appointed as a Non-Executive Director of the Company on 17th January 2018 and served throughout the period. Neil qualified as a Chartered Surveyor in 1987 and has over 30 years of experience in retail, leisure and property sectors. Neil worked at Punch Taverns plc from 2001 to 2017 holding a number of senior management roles including Chief Operating Officer, Chief Strategy Office, and Group Property Director. Neil joined Punch from Time Warner where he was International Property Director for their cinema division. Prior to that he held a number of Senior Management and Divisional Board roles at Bass Plc including Head of Property and Commercial Develop Director. Neil is a Trustee Director for the Prince of Wales initiative ‘Pub is the Hub. He is a former Council member of the British Beer & Pub Association having have sat on panels and committees for both the BBPA and Royal Institution of Chartered surveyors. Neil is Chairman of the Nominations Committee and sits on both the Audit & Risk and Remuneration Committees.

Emma Fox (53) – Independent Non-Executive Director. Emma is an exceptionally experienced director with over 30 years of experience in the retail, leisure, and drinks sectors. Emma is currently CEO of Berry Bros & Rudd, the oldest wine and spirit merchant in the UK. She was appointed as CEO in 2020, having served an Independent Non-Executive Director since 2017, to help guide the business through its next phase of growth. Emma joined Berry Bros & Rudd from The Original Factory Shop where she also held the role of CEO. Previously, Emma held several senior management and divisional board roles at large retailers including Commercial Director at Halfords, Chief Marketing Officer at Walmart Canada and Commercial and Logistics Director roles at ASDA. Emma also has extensive hospitality and leisure experience having worked with Hollywood Bowl as Marketing Director, Bass Brewers and as a Non-Executive Director at Punch Taverns Plc. Emma was appointed as a Non-Executive Director of the Company on 11 March 2021. Emma is chair of the ESG Committee and sits on the Remuneration Committee and the Nominations Committee.

Company Secretary

James Dudgeon (74) – Company Secretary. James has been Company Secretary since 2011. He was previously Company Secretary of the Capital Pub Company. He has an accounting background.

Directors’ duties – S172 Companies Act 2006
Directors’ duties to promote the long-term success of the company The directors behave and carry out their activities to promote long-term success for the benefit of the company’s shareholders, employees, clients and stakeholders. They focus on the company passing on a stronger, better and more sustainable business to those who follow while maintaining intergenerational fairness. They engage with shareholders, employees, clients and stakeholders to reflect their insights and views when making decisions on strategy; delivering operational effectiveness; making plans; driving initiatives; and committing to deliver outcomes that enhance social value. The culture and values promoted by the directors creates a focus across the Group on observing and maintaining the highest standards of business conduct in promoting the long-term success of the company. Directors’ duties – S172 Companies Act 2006 The narratives in the corporate governance report and directors’ report highlight how the directors have observed these principles and engaged with shareholders, employees, clients and stakeholders in decision-making and in promoting the long-term success of the company. As we emerge from the pandemic Environmental, Social and Governance (ESG) agenda has become increasingly important for all businesses. In response we have established an ESG committee, which will be chaired by Emma Fox our recently appointed NED. We have launched a significant and thorough review to ensure that we emerge as a more responsible business, primed to play a positive role in the industry’s recovery. We are taking our responsibilities seriously, want to get it right as we understand that those that succeed in this area will have competitive advantage.

Corporate Governance

(The information was last reviewed on 22nd June 2021)

Introduction

The Directors recognise the importance of sound corporate governance and they comply with the Quoted Companies Alliance Corporate Governance Code / QCA Guidelines.

The Board comprises eight Directors of which four are executives and four are non-executives, reflecting a blend of different experience and backgrounds. The Board considers Richard Prickett, Neil Griffiths and Emma Fox of the non-executive directors to be independent in terms of the QCA Guidelines.

The Board meet regularly to review, formulate and approve the Group’s strategy, budgets, and corporate actions and oversee the Group’s progress towards its goals. In accordance with the best practice, the Group has established Audit and Risk, Remuneration and Nomination committees with formally delegated duties and responsibilities and with written terms of reference. From time to time separate committees may be set up by the Board to consider specific issues when the need arises.

Board of Directors

The Board has overall responsibility for the Group’s system of internal control and reviewing its effectiveness. Key elements of the system of internal control include clearly defined levels of responsibility and delegation, together with well-structured reporting lines up to the Board; the preparation of comprehensive budgets for each pub and head office, approved by the Board; a review of period results against budget, together with commentary on significant variances and updates of both profit and cash flow expectations for the period; Board authorisation of all major purchases and disposals and regular reporting of legal and accounting developments to the Board

Corporate governance principles applicable to CPG

As a result of deciding to apply the QCA Code, the corporate governance principles which now apply to us are those contained in the QCA Code. These are:

Corporate governance principles

  1. Establish a strategy and business model which promote long-term value for shareholders

  2. Seek to understand and meet shareholder needs and expectations

  3. Take into account wider stakeholder and social responsibilities and their implications for long-term success

  4. Embed effective risk management, considering both opportunities and threats, throughout the organisation

  5. Maintain the board as a well-functioning, balanced team led by the chair

  6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

  7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

  8. Promote a corporate culture that is based on ethical values and behaviours

  9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the board

  10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

 

Application of the QCA Code and required disclosures in our annual report or on our website

The correct application of the QCA Code requires us to apply the principles set out above and also to publish certain related disclosures; these can appear in our annual report, be included on our website or we can adopt a combination of the two approaches. Recommended locations for each disclosure are specified in the QCA Code; we have chosen to follow these. An index setting out where each required disclosure can be found appears at the end of this document.

 

Chairman’s corporate governance statement

The City Pub Group is a vibrant, growing business with a clear strategy, a strong and experienced management team and a well-developed pipeline of sites with an exciting market opportunity ahead.

2017 was a pivotal year in the evolution of the City Pub Group. City Pub Company (East) Plc (“CPCE”) combined with City Pub Company (West) Ltd (“CPCW”) to form the City Pub Group plc. The Group was subsequently listed onto AIM in November 2017 raising £35m at 170p.

The AIM listing achieved a liquidity event for existing EIS shareholders and the Group’s financial position was significantly strengthened providing the platform for the Group to acquire further pubs which it has continued to do, ending 2020 with 45 pubs trading and a further 4 in development.

City Pub Group is committed to maintaining the highest standards of corporate governance throughout its operations and to ensuring that all of its practices are conducted transparently, ethically and efficiently. The Company believes that scrutinising all aspects of its business and reflecting, analysing and improving its procedures will result in the continued success of the Company and improve shareholder value. Therefore, and in compliance with the updated AIM Rules for Companies, the Company has chosen to formalise its governance policies by complying with the UK’s Quoted Companies Alliance Corporate Governance Guidelines for Small and Mid-Size Quoted Companies (the “QCA Code“).

We will have to provide details of it on our website and then explain how we comply with that code and include reasons where we have departed from it. This information is to be reviewed annually and the website will need to include the date on which this was last done. This rule took effect from 28 September 2018.

Clive Watson

Chairman

Principle 1

Establish a strategy and business model which promote long-term value for shareholders

Our Business Model (pg. 8 of 2020 annual report)

City Pub Group stands out from the crowd with its unique and premium offer. This is embedded in its culture and influences everything from site selection, food and menu design to the quality of its employees.

Importantly its portfolio is built up of unbranded, wet-led pubs in high footfall areas that appeal to a broad range of customers. Each pub is centred on a high calibre level of staff that offers a relaxed, enthusiastic charming environment. The Group has a solid track record of identifying, acquiring, refurbishing and repositioning pubs to drive higher returns. Its approach is highly differentiated and combines the flexibility of the managed pub model with the entrepreneurialism of the tenanted model. This differentiated approach has been honed over management’s 100 collective years of pub retail experience.

 

 

Our strategy (pg. 11 of report)

At present, the Group has 45 trading pubs (post Covid) and intends to continue acquire new sites once we are through the Coronavirus pandemic. The Group already has extensive relationships with property agents specialising in the licenced trade industry and many of these relationships have been in existence for a number of years.

Acquisition strategy

The Group’s acquisition strategy is broken down into five key areas and the Directors believe that these areas will provide sufficient acquisition opportunities to support the targeted growth of the Group’s pub estate.

1. Acquisition of existing pubs

Central to the Group’s acquisition strategy is buying existing pubs which are already trading well and are typically sold by private sellers. The main change is to transfer the pub’s supply contracts onto the Group’s centralised platform, quickly improving operating margins. The Group prides itself on the way it works with the existing employees in these pubs and, over a period of time, aims to integrate these employees into the Group’s entrepreneurial culture.

2. Acquisition of trading pubs which require redirection

The Group also seeks to acquire existing pubs that require modest refurbishment and improved retailing standards. Typically, the Group will target an investment of circa £250,000 to tailor the décor to the pub’s local market and improve the liquor and food offerings, as well as help the existing staff to adopt an entrepreneurial approach in managing the pub.

3. Closed down pubs requiring extensive refurbishment

The Group also looks to acquire sites that are either underperforming or have been closed down and which provide the opportunity for the Group to substantially refurbish and improve the product offer to better serve the tastes of the Group’s target consumers.

4. Unlicensed premises

The Group is able to target sites which are currently unlicensed but which present the opportunity to be transformed into premium trading pubs.

The Group typically targets pubs and sites which produce, or are expected to produce, higher EBITDA per pub than the industry average. The Directors believe that by focusing on sites expected to produce a higher EBITDA, head office costs as a percentage of sales are reduced and this performance also enables the attraction and retention of top performing pub managers.

The Group evaluates new sites by testing them against five key target markets: residents, office workers, students, tourists and shoppers. For a new site to be considered, it must address at least four of the five key target markets.

5. Investment into other EIS companies

The Group will look for opportunities to invest into EIS companies as it has done with Mosaic Pub and Dining Tranche 1 and with Barts Pub LTD.

Refurbishment strategy

The Group’s strategy is to enhance existing sites rather than redesign to a set formula. The Directors believe that an operation comprising individual quality outlets which are unbranded will trade better over the longer term. When refurbishing a pub, the Group adopts a timeless design style which is one of high quality but is not fashionable or contemporary. A typical refurbishment is undertaken in a style which the Directors believe is long lasting. With regular maintenance the estate is kept to a high standard, this helps to ensure that future refurbishment costs are reduced and closures of pubs for major refurbishments are minimised.

 

Acquisition pipeline

The Group is continually appraising both individual sites and portfolios of pubs across southern England and Wales, and has developed a strong pipeline of potential acquisitions out of the large number of opportunities presented. The Group is targeting the acquisition of 8-10 pubs per annum. All acquisitions are subject to approval by the Board and a key consideration, when seeking board approval, is to recommend pubs and sites in areas which are not highly competitive.

The Group has a low annual rent charge compared to its turnover which was circa 3.4% as at 27th December 2020) based on normalised trading levels. and The Group intends to keep it around this level or lower. The Group intends to keep it around this level or lower. The Group also reviews the existing portfolio to see if any of the sites should be considered for disposal.

Principle 2

Seek to understand and meet shareholder needs and expectations

The Group maintains effective contact with Shareholders and welcomes contact from investors. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website.

Copies of our annual report (which includes the notice of AGM) and the interim report are sent to all shareholders and copies can be downloaded from the investors section of www.citypubcompany.com alternatively, they are available on request by writing to the Company Secretary at Essel House, 2ndFloor, 29 Foley Street, London W1W 7TH. The company secretary can also be contacted by shareholders on matters of governance and investor relations.

Clive Watson (Executive Chairman) and Tarquin Williams (CFO) are the key contacts with shareholders. Twice a year, at the time of the interim and full year results, they will present to analysts and shareholders. These meetings allow the Chairman and the Chief Financial Officer to update shareholders on strategy and the group’s performance and receive feedback.

Additional meetings with institutional investors and / or analysts are arranged from time to time.

The board supports the use of the AGM to communicate with all investors including non-institutional investors. The meeting is generally well attended and all shareholders are given the opportunity to ask questions and raise issues; this can be done formally during the meeting or informally with the directors afterwards.

Principle 3

Take into account wider stakeholder and social responsibilities and their implications for long-term success

 

Our business model which explains how we create value, is set out on page 8 of our 2020 annual report. That model has five principal elements, the broad headings for which are as follows:

Principal elements of our business model

  1. Premium and differentiated product offering

  2. People and culture

  3. Acquisition and transformation of sites

  4. Sourcing

  5. Dedicated marketing

Our key strengths and resources include:

Premium operator creating individual identify for each pub

The Group’s pub estate and flexible retail strategy addresses the trend away from branded pubs and toward premium individualised pubs, each of which have a product range appropriate for their local market.

Scalable platform with strong pipeline of potential acquisitions

The centralised infrastructure platform, comprising systems and processes as well as head office staff, enables a smooth change of ownership for the pubs which are currently in the acquisition pipeline, as well as those identified through the Group’s appraisal of both individual sites and portfolios of pubs across southern England and Wales.

The group is asset backed

Prior to the IPO in November 2017, an independent valuation report by CBRE valued the Group’s portfolio of 34 pubs at £73.65 million. At the time the valuation represented a 9% uplift on net book value. In the last 3 years the Group has continued to expand and has added a number of pubs to the portfolio including Aragon House and the Hoste, both are substantial freeholds.

Impressive financial performance and growth

The Group has enjoyed consistently strong sales and EBITDA growth, with steadily increasing operating margins over the last few years. Supplier agreements are expected to further improve operating margins going forward.

Experienced management team, motivated staff and strong culture

The management team of the Group has over 100 years’ experience in the pub industry with an excellent reputation, extensive contact base and proven skill in identifying attractive sites for an attractive price. Staff are incentivised to focus on customer service and are represented at board meetings, giving a high retention rate among key staff and a strong sense of culture. The introduction of our new weekly bonus scheme means that all employees are now on a bonus scheme with shared goals.

Management strength and track record provides confidence in the deliverability of a premium hyper-local strategy of refurbishing and repositioning wet-led pubs across UK Cathedral cities and market towns.

Our Relationships (pg. 12)

Our People

Recruitment and retention of high quality staff is key to the Group’s strategy, both at head office and across the estate. The Group’s staff are well trained and appropriately incentivised, given their respective roles, with the focus on attracting the most suitable employees to support the growth of the Group and maintain high levels of consumer satisfaction.

Our customers (pg. 13)

While value for money is a major component, there is a key focus on a premium offer across the entire estate. Aligned with keeping the values of the pub intact, there is an aim for the pub to become a central part of the local community by incorporating local suppliers, local staff and providing several reasons for people to visit often. The Group has five key target markets: Shoppers, Tourists, Students, Office Workers, and Residents

 

Adapting and driving consumer preference

Shifts in consumer preferences combined with the changing profile of the high street, have blurred the lines between pubs, restaurants, cafes and coffee shops. Customers are now able to have a breakfast in a pub or dinner in a coffee shop. Menus are developed individually for each pub and offer good value across a wide range of choice. Increasingly, healthier and vegan options are being offered in each pub to broaden the appeal to a wider range of customers.

 

Our Suppliers

The Group adopts a long term approach with its suppliers and has maintained relationships with its major suppliers since inception. This includes contractors, professional advisers, designers and property agents, as well as food and drink suppliers.

The Group has a number of fixed-term supply agreements with its major suppliers. These agreements cover over 80% of the Group’s liquor purchases. Due to Covid 19, we extended a number of these contracts and have agreed a new two year contract from January 2021 with one of the major suppliers. The Group has also recently centralised its food purchasing function and significantly reduced the number of its suppliers. This has resulted in an improvement in its purchasing terms and will enable greater economies of scale to be achieved as the pub estate grows.

Communication

The principal ways in which feedback from the group’s stakeholders is gained is through regular meetings, review of online analytics and weekly communications.

The Managing Directors meet with the Operations Managers on a quarterly basis to review strategy and performance. Feedback is given on staff, customers and suppliers, and any necessary changes to running the pub are implemented.

Area Operations Managers meet quarterly with their group of General Managers. Targets are reviewed to see which sites reached them and feedback is given if any deviation.

The main suppliers are met with usually on a quarterly basis and continuously reviewed to determine if the latest products are being offered to meet the market needs.

Employees are able to provide feedback and raise any suggestions or issues by e-mailing the nominated employee representatives via a designated e-mail address. The representatives then meet with the Board quarterly to relay this information.

Reviews written by customers via Google, TripAdvisor, Facebook are continuously read by the Managing Director’s, Operations Managers and General Managers, and reported on at the quarterly meetings.

The Marketing team provides analytics data on customer satisfaction, website visits, bookings, App sales etc. via a weekly communication to all Head Office and GM’s, and reports on a quarterly basis to the Board.

The Chairman also sends a weekly e-mail reporting on best performers of the week, with rewards to those and suggestions for the weeks ahead on how to maximise sales.

The Group is very conscious of the role its pubs play in the local community and as such certain pubs offer discounts to customers who work in the public services. Charity fundraising events are also often held in the Group’s pubs.

Principle 4

Embed effective risk management, considering both opportunities and threats, throughout the organisation

Principal risks and uncertainties (pg. 20)

Risk Management Overview

The City Pub Group is not alone in facing a range of risks and uncertainties in the course of its business. Our aim is to identify and manage these risks effectively so that we can deliver on our strategy and maximise shareholder returns.

In the course of its normal business, the Group continually assesses and takes action to mitigate the various risks encountered that could impact the achievement of its objectives. As detailed in the Corporate Governance Report, there are systems and processes in place to enable the Board to monitor and control the Group’s management of risk. The Audit Committee regularly reviews the effectiveness of this process and seeks to ensure that management’s response is adapted appropriately to the changing environment.

External Risks

There are a number of external risks over which the Board has no direct control, which are discussed at Board and Audit Committee meetings to ensure that the business can respond effectively to changes in the external environment.

• A decline in the UK economy would reduce consumer disposable income and could see a reduction in revenues across the industry, or a polarisation between cost leaders and premium operators.

• The implications of Brexit are uncertain and will continue to be for the foreseeable future while exit terms are negotiated. The business model is dependent on being able to source skilled labour, much of which comes from the EU.

• The threat of terrorism in the UK has an impact on the way in which we operate and the safety of our customers and employees is of paramount importance. A prolonged terrorist campaign could ultimately reduce consumer spending habits.

• Covid 19 – future pandemics.

The following sets out what the Board considers to be the principal risks which affect the Group at present, although it is not intended to be a comprehensive analysis of all the risks that the business may face.

Legislative Changes

The City Pub Group operates in a highly regulated sector where government legislation impacts much on the way we do business and therefore the business model. This includes increases to the National Living Wage, changes to the sale of alcohol, data protection and changes to planning regulations. Changes in policy can have significant impact on the profitability and operation of our pubs, and we carefully monitor legislative changes and identify ways to spread risk and to mitigate any possible impact these may pose to us.

Health and Safety and Food Safety.

The health and safety of the Group’s employees and customers is a key concern to us. We are required to comply with health and safety legislation, including fire safety, food hygiene and allergens. Given the large number of sites and complexity, this is overseen by a Health and Safety Committee managing legislation, assessing risks and allocating appropriate resource and training.

Business Continuity and Crisis Management.

The impact of COVID-19 has been to close all our pubs for long periods of time since March 2020 and only under restrictions when allowed to open for a few months. As this global pandemic and we hope government restrictions ease, we will cautiously trade our sites where they can operate safely for staff and customers, while generating satisfactory contributions to the Group.

Our Managed Pubs represent our key revenue stream and the impact of a major disaster affecting a number of pubs over a period of time could be significant. We have well-documented disaster recovery plans which are rehearsed regularly throughout the business to ensure that normalisation can occur as swiftly as possible after a serious incident and that any damage is contained.

Information Technology

The Group is increasingly reliant on information systems to operate, including sales and financial reporting, supplier payments, and customer data through our websites and app. A significant IT failure could interrupt the running of the business and we have a range of facilities and controls in place as part or our IT Recovery Plan to resume normal operations quickly.

Data Security – the data held by the Group is a key business asset and personal data protection is key. Deliberate acts of cybercrime are on the increase, targeting all markets and heightening risk exposure. Any significant loss of data could lead to a considerable interruption for the business and reputational damage, as well as fines under GDPR. The IT systems in place follow appropriate data protection guidelines to ensure the risk of both personal and Company data loss is minimal. Our network is protected by firewalls and anti-virus protection systems. Threats to our data security by viruses, hacking or breach of access controls are constantly monitored

Recruitment and Staff Retention.

The Group has a business model built upon recruiting and keeping the best people to support its strategy. There is a risk that people may leave and that we cannot recruit the best people. We perform detailed succession planning and the Directors believe the Group’s culture, training and remuneration packages are attractive, which should assist key staff retention.

Economic and Market Risks

Economic uncertainty and cost inflation – market uncertainty and increasing demand leads to cost pressures in several areas, most significantly food and drink production, utilities and staff costs. We are also facing significant cost head-winds such as business rates. The weaker pound sterling gives risk to increasing food costs, particularly from the Eurozone and reduces profitability. Key suppliers undergo a rigorous procurement process to ensure that we get the best deal and we seek to maintain good relations with suppliers.

Loss of Company values or a failure to adhere to them – CPG is a company based on a strong set of values which are key to its success and future. Should these be undermined or not adhered to, the Company’s unique position and long-term future would be jeopardised. The Group has a culture which ensures that management are encouraged to take business decisions for the long-term benefit of the Group, and this culture also promotes a long term and collaborative approach that does not lead to excessive risk taking and the reward system encourages appropriate behaviour.

Consumer demand shifts – the Group’s success is attributable to its ability to anticipate and react to consumer demand. The way in which the Group responds to market changes is critical to its on-going strategy and has a direct impact on all operational activity. Management monitor and research consumer trends and run trials of new technologies, brands and products and gather consumer feedback through surveys, customer complaints and online and social media reviews. We analyse retail pricing and market share data to ensure we are competitive but still premium. The Board approves all significant new acquisition decisions and therefore controls key changes to the Group

Financial Risks (pg. 24)

We expect the Group to be able to access suitable financial facilities to meet the ongoing requirements of the business and our longer term objectives.

The Group has agreed a new £35m revolving credit facility with Barclays and an accordion option of £15m which is in place until July 2022, but can be extended for an additional two years. We also raised £22m before costs from a placing and open offer in March 2020 to strengthen the balance sheet. We have agreed a new £5m CLBLS facility through Barclays to increase our liquidity until we are through the Covid pandemic.

We expect to be able to meet our covenants under a range of cautious liquidity scenarios. COVID-19 has resulted in the temporary closure of our pubs, which effects our ability to meet banking covenants. Barclays have agreed to waive the existing financial covenant tests until the end of June 2022 and have agreed to replace the existing financial covenants with a Minimum Liquidity Test in the sum of £8m and a Minimum EBITDA Test up to June 2022, after which date the financial covenant tests as currently documented will recommence.

Risk of not complying with plc rules/corporate matters

ESOS (Energy Savings Opportunity Scheme) and Packaging Regulations. We need to meet our reporting deadlines and also understand how we are able to be more energy efficient which is good for the environment and will save us money. An external company is employed as our lead assessor and energy auditor and an advisor appointed to help with collecting of data and the reporting of our obligations.

Principle 5

Maintain the board as a well-functioning, balanced team led by the chair.

The Directors recognise the importance of sound corporate governance and they comply with the Quoted Companies Alliance Corporate Governance Code / QCA Guidelines.

The Board comprises eight Directors of which four are executives and four are non-executives, reflecting a blend of different experience and backgrounds. The Board considers Richard Prickett, Neil Griffiths, and Emma Fox of the non-executive directors to be independent in terms of the QCA Guidelines.

The Board meet regularly to review, formulate and approve the Group’s strategy, budgets, and corporate actions and oversee the Group’s progress towards its goals. In accordance with the best practice, the Group has established Audit and Risk, Remuneration and Nomination committees with formally delegated duties and responsibilities and with written terms of reference. From time to time separate committees may be set up by the Board to consider specific issues when the need arises.

The Board has overall responsibility for the Group’s system of internal control and reviewing its effectiveness. Key elements of the system of internal control include clearly defined levels of responsibility and delegation, together with well-structured reporting lines up to the Board; the preparation of comprehensive budgets for each pub and head office, approved by the Board; a review of period results against budget, together with commentary on significant variances and updates of both profit and cash flow expectations for the period; Board authorisation of all major purchases and disposals and regular reporting of legal and accounting developments to the Board.

Principle 6

Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.

 

The Board comprises seven Directors of which four are executives and three are independent non-executives, reflecting a blend of different experience and backgrounds.

The non-executive directors, with their impartial judgement, bring a different perspective to the Board. Their background and experience covers a wide sector of business and as such provides a well balanced mix of skills to evaluate company strategy and performance.

The Directors ensure that their knowledge is kept up to date on key issues and developments pertaining to the Company, its operational environment and to the Directors’ responsibilities as members of the Board. During the course of the year, Directors may receive or review updates from various external advisers.

EXECUTIVE DIRECTORS (pg. 25)

Clive Watson ACA (60)

Executive Chairman

Clive qualified as a Chartered Accountant with Price Waterhouse in London in 1986 then joined the investment bank Manufacturers Hanover Limited where he spent three years. He joined Regent Inns PLC as Finance Director and Company Secretary in 1990. Clive left Regent Inns PLC in February 1998 and co-founded Tup Inns Limited, where he was responsible for financial and commercial matters as well as acquisitions, before becoming Chief Executive and Finance Director of Tom Hoskins PLC, an AIM listed company. Clive was a founding director of The Capital Pub Company PLC in 2000 and remained on the board until the company’s sale to Greene King in 2011. Clive was appointed as Chief Executive of The City Pub Company (East) PLC in December 2011 before becoming Chairman in September 2014 and served throughout the period.

 

Toby Smith (51)

Chief Operating Officer

Toby is a highly experienced senior operator with over 25 years’ experience in the UK hospitality industry. He has held CEO roles with Stonegate Pub Company, Novus Leisure and Town & City Pub Company, and prior to these held senior roles at Laurel Pub Company, Spirit Group and Scottish & Newcastle Retail. He joined the City Pub Company as Chief Operating Officer in November 2020.

 

Rupert Clark (49)

Managing Director

Rupert has over 20 years’ experience in the running of high-volume food and liquor-led pubs, both in and outside London. Rupert was previously Operations Manager of The Capital Pub Company PLC and was with Capital for four years. After the sale of Capital to Greene King in 2011 Rupert stayed on to ensure the smooth integration of pubs into the Greene King estate. Prior to Capital, Rupert worked as Operations Manager at The Food and Drink Group, repositioning their City bars, and at Fullers first developing The Fine Line brand and then their unbranded bars and gastro pubs. Rupert was appointed as Joint-Chief Executive of the City Pub Company (East) PLC in April 2013 becoming sole Chief Executive in September 2014 and served throughout the period.

 

Tarquin Williams ACMA (51)

Chief Financial Officer

Tarquin has considerable experience in the managed & tenanted pub industry. He spent 16 years with Fuller Smith & Turner PLC from 1997; the last eight years there he was Chief Accountant for Fullers Inns, with an estate of circa 400 pubs. Tarquin then spent a short period of time serving as Chief Operating Officer at the Ladies European Tour running their head office based at the Buckinghamshire Golf Club. Tarquin was appointed as Finance Director of the City Pub Company (East) PLC in March 2015 and served throughout the period.

 

Non-Executive Directors

 

Richard Prickett (70)

Independent Senior Non-Executive Director

Richard was appointed as a Non-Executive Director of the Company on 25 October 2017 and served throughout the period. Richard has considerable public markets experience, gained through numerous non-executive director roles including acting as Independent Non-Executive Director for Regent Inns Plc and the Capital Pub Company. Richard currently serves as a Non-Executive Director to Pioneer (City) Pub Company, a startup EIS managed pub company, Non-Executive Chairman for City Natural Resources High Yield Trust Plc. Richard is also Finance Director to Landore Resources Limited. Richard qualified as a chartered accountant in 1973 with Coopers & Lybrand and has many years’ experience in corporate finance. Richard is Chairman of both the Remuneration Committee and the Audit & Risk Committee, and sits on the Nominations Committee.

 

Neil Griffiths (60)

Independent Non-Executive Director

Neil was appointed as a Non-Executive Director of the Group on 17 January 2018 and served throughout the period. Neil qualified as a Chartered Surveyor in 1987 and has over 30 years of experience in retail, leisure and property sectors. Neil worked at Punch Taverns plc from 2001 to 2017 holding a number of senior management roles including Chief Operating Officer, Chief Strategy Officer and Group Property Director. Neil joined Punch from Time Warner where he was International Property Director for their cinema division. Prior to that he held a number of Senior Management and Divisional Board roles at Bass Plc including Head of Property and Commercial Development Director. Neil is a Trustee Director for the Prince of Wales initiative ‘Pub is the Hub’. He is a former Council member of the British Beer & Pub Association having sat on panels and committees for both the BBPA and Royal Institution of Chartered Surveyors. Neil is Chairman of the Nominations Committee and sits on the Audit & Risk and Remuneration Committees.

 

Emma Fox (53)

Independent Non-Executive Director

Emma is an exceptionally experienced director with over 30 years of experience in the retail, leisure, and drinks sectors. Emma is currently CEO of Berry Bros & Rudd, the oldest wine and spirit merchant in the UK. She was appointed as CEO in 2020, having served an Independent Non-Executive Director since 2017, to help guide the business through its next phase of growth. Emma joined Berry Bros & Rudd from The Original Factory Shop where she also held the role of CEO. Previously, Emma held several senior management and divisional board roles at large retailers including Commercial Director at Halfords, Chief Marketing Officer at Walmart Canada and Commercial and Logistics Director roles at ASDA. Emma also has extensive hospitality and leisure experience having worked with Hollywood Bowl as Marketing Director, Bass Brewers and as a Non-Executive Director at Punch Taverns Plc. Emma was appointed as a Non-Executive Director of the Company on 11 March 2021. Emma is chair of the ESG Committee and sits on the Remuneration Committee, Audit committee and the Nominations Committee.

 

Company secretary

James Dudgeon (74)

James has been Company Secretary since 2011. He was previously Company Secretary of the Capital Pub Company. He has an accounting background. Responsibilities include handling the director’s registrar, taking minutes, filing SHO1’s and dormant companies accounts, application/cancellation of directors, maintaining share dealings code, maintaining the insiders list.

Principle 7

Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

In line with best practice and the newly applicable requirements of the QCA Code, the Board intends to undertake an annual evaluation process of the Board, the Chairman and the individual Committees and Directors. The Board may utilise the results of the evaluation process when considering the adequacy of the composition of the Board and for succession planning. Succession planning is also discussed at the nomination committee.

Principle 8

Promote a corporate culture that is based on ethical values and behaviours

People and Culture (Pg. 12)

The Group’s localised strategy requires a certain standard and quality in its staff. The inherent ability to be engaging, intelligent and motivated are key attributes. The strategy to focus primarily within Cathedral cities means finding the right type of staff should be easier especially as universities are central to all these cities. Finding the right people is followed by training programmes and a highly rewarding incentives package that we feel is unique in the industry. Putting its staff at the heart of the business is also reflected, with two employee representatives included at every board meeting.

Each employee who joins the group is given a company handbook, covering company guidelines and ethics, and undergoes an induction at site.

Growth, accompanied with the clustering strategy, means many General Managers are ‘homegrown’ and hired from within the Group. This has allowed for progression to area manager in some cases. Each pub has a General Manager and head Chef on-site. The average full time equivalent (FTE) staff per pub ranges from 15-20 depending on size and offer (higher for those with accommodation and greater food offer). The operational structure is highly devolved fostering a more entrepreneurial spirit that is rarely seen in larger groups.

Staff training and incentives

 

The overarching aim is to offer customers exceptional experiences, while striving to offer employees sufficient development possibilities to build a career within the Group.

The City Pub Group has developed a comprehensive incentives policy with all employees participating at some level. Importantly bonuses are based on both quantitative and qualitative targets are paid out weekly, monthly, as well as annually.

Customer satisfaction is monitored via analytics from Google, Facebook and TripAdvisor to ensure that the Group’s high standards are being met from a Customer Service and general point of view.

Principle 9

Maintain governance structures and processes that are fit for purpose and support good decision-making by the board

Clive Watson, as Executive Chairman, leads the Group from the front. Clive along with Tarquin Williams, Chief Financial Officer, meet with shareholders and investors on a regular basis. As well as being Chief Financial Officer, Tarquin handles any questions or feedback from shareholders via e-mails or calls. Toby Smith, COO, and Rupert Clark, Managing Director, oversee the running of the pubs, visiting them on a regular basis, meeting with the Operations Managers and Head Office management team, on no less than a quarterly basis.

The acquisition of pubs is reserved for the Board along with the long term strategic plans.

Board of Directors (pg 25)

The Board has overall responsibility for the Group’s system of internal control and reviewing its effectiveness. Key elements of the system of internal control include clearly defined levels of responsibility and delegation, together with well-structured reporting lines up to the Board; the preparation of comprehensive budgets for each pub and head office, approved by the Board; a review of period results against budget, together with commentary on significant variances and updates of both profit and cash flow expectations for the period; Board authorisation of all major purchases and disposals and regular reporting of legal and accounting developments to the Board.

The Board meets at least quarterly to review, formulate and approve the Group’s strategy, budgets, and corporate actions and oversee the Group’s progress towards its goals. In accordance with the best practice, the Group has established Audit and Risk, Remuneration and Nomination committees with formally delegated duties and responsibilities and with written terms of reference. From time to time separate committees may be set up by the Board to consider specific issues when the need arises.

Audit and Risk Committee (pg. 27)

The Audit and Risk Committee will assist the Board in discharging its responsibilities, within agreed terms of reference, with regard to corporate governance, financial reporting and external and internal audits and controls, including, amongst other things, reviewing the Group’s annual financial statements, reviewing and monitoring the extent of the non-audit services undertaken by external auditors, advising on the appointment of external auditors and reviewing the effectiveness of the Group’s internal controls and risk management systems.
The Audit and Risk Committee considered the proposed impairment of property, goodwill and right of use asset for the Annual Report. The Committee was satisfied with the approach presented by the management and the judgements made for those properties at risk of impairment.
The Committee considered the appropriateness of the going concern assessment and the associated judgements around material uncertainties. The Committee reviewed the scenarios and mitigation available to the Group and are satisfied the disclosures are appropriate.
The Group implemented IFRS16 Leases during the year using the modified retrospective method. The Committee reviewed a management paper and challenged the judgements and estimates that were used in the in calculations and they concluded that the adjustment were appropriate.
The ultimate responsibility for reviewing and approving the annual report and accounts and the half yearly reports remains with the Board. Membership of the Audit and Risk Committee compromises Neil Griffiths, Emma Fox and Richard Prickett and it is chaired by Richard Prickett. The Audit and Risk Committee will meet formally not less than twice every year and otherwise as required.
The Audit Committee have reviewed the independence and effectiveness of Haysmacintyre LLP, the Group’s external auditor, and are satisfied in both respects. Haysmacintyre LLP have signified their willingness to continue in office and a resolution to reappoint Haysmacintyre LLP as auditor will be proposed at the AGM.

 

Remuneration Committee

The Remuneration Committee is responsible, within agreed terms of reference, for establishing a formal and transparent procedure for developing policy on executive remuneration and to set the remuneration packages of individual Executive Directors. This includes agreeing with the Board the framework for remuneration of the Executive Directors, the company secretary and such other members of the executive management of the Group as it is designated to consider. It is furthermore responsible for determining the total individual remuneration packages of each Executive Director including, where appropriate, bonuses, incentive payments and share options. No Director may be involved in any decision as to their own remuneration. The membership of the Remuneration Committee comprises Neil Griffiths, Emma Fox and Richard Prickett and the committee is chaired by Richard Prickett. The Remuneration Committee will meet not less than twice a year and at such other times as the chairman of the committee shall require.

 

Nomination Committee

The Nomination Committee will have responsibility for reviewing the structure, size and composition of the Board and recommending to the Board any changes required for succession planning and for identifying and nominating (for approval of the Board) candidates to fill vacancies as and when they arise. The Nomination Committee is also responsible for reviewing the results of the Board performance evaluation process and making recommendations to the Board concerning suitable candidates for the role of senior independent director and the membership of the Board’s committees and the re-election of Directors at the annual general meeting. The membership of the Nomination Committee comprises Neil Griffiths, Emma Fox and Richard Prickett and the committee is chaired by Neil Griffiths. The Nomination Committee will meet not less than once a year and at such other times as the chairman of the committee shall require.

ESG Committee (pg 14-17)

As we emerge from the pandemic Environmental, Social and Governance (ESG) agenda has become increasingly important for all businesses. In response we have established an ESG committee, which will be chaired by Emma Fox our recently appointed NED. We have launched a significant and thorough review to ensure that we emerge as a more responsible business, primed to play a positive role in the industry’s recovery. We are taking our responsibilities seriously, want to get it right as we understand that those that succeed in this area will have competitive advantage.

Principle 10

Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

The Company places a high priority on regular communications with its various stakeholder groups and aims to ensure that all communications concerning the Company’s activities are clear, fair and accurate. The Company’s website is regularly updated.

The Company’s financial reports, including the 2020 Annual Report, can be found in the Shareholder Documents section of the Company’s website.

Notices of General Meetings of the Company can be found in the Shareholder Documents section of the Company’s website.

The results of voting on all resolutions in future general meetings will be posted to the Company’s website, including any actions to be taken as a result of resolutions for which votes against have been received from at least 20 per cent of independent shareholders.

Gender Pay Gap Report

Published on 5 October 2021

Modern Slavery Statement

For the financial year ended 29 December 2019

Introduction

This statement is made pursuant to section 54(1) of the Modern Slavery Act 2015 for the financial year ending 29 December 2019 and sets out The City Pub Groups actions to understand all potential modern slavery risks related to its business and to put in place steps that are aimed at ensuring that there is no slavery or human trafficking in its own business and its supply chains.

Our group structure and activities

The City Pub Group PLC operates a growing portfolio of pubs, hotels and brew houses in the UK. These are run by highly trained managers whose activities are overseen by an experienced operations team and a head office in Central London. The group monitors and audits to ensure best practice in relation to all of its employees.

Our policy and due diligence processes

As part of the pub industry the group recognises that it has a responsibility to take a robust approach to slavery and human trafficking. The group is absolutely committed to preventing slavery and human trafficking in its corporate activities, and ensuring that its supply chains are free from slavery and human trafficking.

The group makes it clear to employees the actions and behaviour expected of them when representing the group. The group strives to maintain the highest standards of employee conduct and ethical behaviour.

The group is committed to ensuring that its suppliers adhere to the highest standards of ethics that they provide safe working conditions where necessary, treat workers with dignity and respect, and act ethically and within the law in their use of labour.

The group uses only specified, reputable employment agencies to source labour and always verifies the practices of any new agency it is using before accepting workers from that agency.

Supply chains

Our supply chains include the sourcing of finished and raw materials, principally related to the provision of food and drink.

Effectiveness

The group’s anti-slavery initiatives to be implemented this year are as follows:

  • • To inform all our staff, workers and suppliers of our policy.
  • • To deliver training to relevant employees and workers within our business via our on-line training tool for Modern Slavery.
  • • To audit the payroll records to ensure our employees’ working hours are consistent with statutory requirements
  • • To distribute this statement to all our suppliers so they are informed of our policy.  To highlight a zero tolerance stance on the discovery of any modern slavery and human trafficking in their supply chains and to advise our expectations of them in this regard.
  • • To request details from our suppliers of any discovery of modern slavery and human trafficking within their supply chain.
  • • Undertake an annual audit to ensure all our related processes are in place and are being adhered to.

To have in place a whistleblowing policy to encourage members of staff to report concerns about wrongdoing and which offers suitable protection for whistle-blowers.

Board Director Approval

This statement was approved on Tuesday 11th June 2020 by the organisation’s Board Director who reviews and updates it annually.

Director’s Name: Alex Derrick

AIM Rule 26

This page includes links to information that is being disclosed for the purpose of Rule 26 of the AIM Rules for Companies – ‘Company Information Disclosure’.

This website is owned and hosted by The City Pub Group plc.

Country of Incorporation and Main Country of Operation

Country of Incorporation: England and Wales
Company Registration Number: 07814568
Country of Operation: Great Britain

Company Information

Business Overview
Board of Directors
Advisers
Corporate Governance

Documentation and Announcements

Articles of Association
Admission Document
Reports and Presentations
Recent News

Securities Information & Share Price

Share Price
Securities Information

Details of any other exchanges or trading platforms

The Company is not listed on any other exchanges or trading platforms.

Details of any restrictions on the transfer of securities

There are no restrictions on the transfer of securities.

City Code on Takeovers and Mergers

The Company is subject to the UK City Code on Takeovers and Mergers.

This information was last updated on the 1st of July 2020.