RNS Number:6683W
Pubs 'n' Bars PLC
16 May 2007
Pubs 'n' Bars plc
("Pubs 'n' Bars") or ("the Company")
Preliminary Announcement of Results for the year ended 31 December 2006
Chairman's Statement
I am pleased to present the Report and Accounts for the year ended 31 December
2006. The operating profit of #2,330,127 (2005: #2,091,459) was an increase of
11.4% and the pre-tax profit for the year was #1,068,113 (2005: #1,094,387).
Adjusted for profits on disposals of tangible fixed assets of #58,265 (2005:
#195,485) the comparable figures are #1,009,848 (2005: #898,902) a year on year
increase in trading profits of #110,946 (12.3%).
Earnings per share of 3.25p (2005:3.5p) are 7.1% lower but the Board is
recommending a final dividend of 1p per Ordinary share which, together with the
interim dividend of 0.75p per share already paid, makes a total dividend of
1.75p per share for the year, which is the same as the previous year. The
dividend will be paid on 29 June 2007 to shareholders on the register on 1 June
2007. The ex-dividend date will be 30 May 2007.
The Pub Estate
During the year we sold two pubs and examined a large number of possible
acquisitions, most of which did not fit our criteria. However, since the
year-end we have completed the purchase of Moorgate London Limited, which has an
estate of seven freehold pubs leased to individual operators, for a total
consideration of #6,639,500 including the assumption of #4.3 million of bank
indebtedness. The consideration was satisfied by the issue of 5,440,698 new
ordinary shares priced at 43 pence per share. Of those shares, 1,511,628 were
placed, on behalf of the vendors, with institutional and other investors at a
price of 43 pence per share. The vendors have agreed to retain the balance of
3,929,070 ordinary shares for at least 12 months from completion. In addition, a
further 813,953 ordinary shares were placed at a price of 43 pence per share to
cover the expenses of the transaction.
We have now also completed the acquisition of Community Taverns Limited
("Community") for a cash consideration of #2,450,000 to be satisfied by bank
borrowings. Community was formed in 2003 as a joint venture between Bank of
Scotland Integrated Finance and your company. We invested #750,000 and became a
15% shareholder whilst managing the 25 pub estate for an annual fee of #480,000.
The acquisition of the Community estate which comprises one freehold and 24
leasehold pubs will safeguard the annual management revenue of #480,000 and
contribute positively to group revenues.
As a result, we now have 98 pubs in our enlarged estate consisting of:
38 Freeholds
6 Virtual Freeholds (local authority long leases)
54 Leaseholds
The estate comprises 33 tenanted houses and 65 managed houses.
As a result of the acquisitions above, our borrowings increased to #27m
representing a gearing level of 138% but the board is comfortable with this and
we continue to trade within our banking covenants.
Current Trading and Prospects
I am pleased to report that trading in the first four months of the year has
been up to expectations and like-for-like pub sales are in line with the
comparable period of 2006.
As is well known, the ban on smoking in pubs will take effect from 1 July and
there is little doubt that, initially, we and our competitors will be badly
affected by loss of both bar sales and machine income. To alleviate the
situation we have initiated a programme of creating attractive covered areas
with lights and heaters outside every pub in the estate where space is
available. So far, we have installed 30 smoking areas and will have completed
our installation programme in good time for the start of the smoking ban. We
will only have 9 pubs without a dedicated outside smoking area. The cost,
however, has not been insignificant and we estimate that we will spend a total
of #300,000 on the shelters and ancillary equipment. As this expenditure may be
considered freehold and leasehold improvement we have arranged suitable bank
finance. Hopefully, in the longer term, the ban may help improve pub attendances
by encouraging non-smokers and their families to visit pubs.
Even though all licensed premises are equally affected, our biggest competition
remains drinking at home and drinking in the streets, fuelled by the
availability of illegally imported alcohol and cut price beer and other
alcoholic drinks in supermarkets.
However, we remain optimistic in the longer-term. Community pubs have
traditionally provided a convivial neighbourhood meeting place and we expect
this to continue once our customers have adjusted to the ban. Indeed, once the
situation has clarified we expect to continue with our policy of acquiring
freehold community pubs.
Finally, I extend my thanks to my colleagues and all our staff for their
continued hard work and dedication to Pubs 'n' Bars Plc.
S Murphy
Chairman
Date: 15 May 2007
Consolidated Profit and Loss Account
For the year ended 31st December 2006
Note 2006 2005
# #
Turnover 2 15,329,204 14,651,074
Cost of sales (4,842,006) (4,493,858)
-------- ---------
Gross Profit 10,487,198 10,157,216
Administrative expenses (8,157,071) (8,065,757)
-------- ---------
Operating Profit 3 2,330,127 2,091,459
Profit on disposal of
tangible fixed assets 58,265 195,485
Interest receivable and
similar income 106,957 1,029
Interest payable and
similar charges 4 (1,427,236) (1,193,586)
-------- ---------
Profit on Ordinary
Activities 1,068,113 1,094,387
before Taxation
Taxation 5 (239,386) (250,907)
-------- ---------
Profit for the Financial
Year 6 828,727 843,480
======== =========
Basic earnings per share 7 3.25p 3.50p
Diluted earnings per share 7 3.12p 3.23p
The profit and loss account has been prepared on the basis that all operations
are continuing operations
Consolidated Balance Sheet at 31st December 2006
Note 2006 2006 2005 2005
# # # #
Fixed Assets
Tangible assets 8 34,850,749 33,714,475
Intangible assets 9 1,344,070 1,445,624
Investments 10 729,522 722,559
-------- --------
36,924,341 35,882,658
Current Assets
Stocks 11 582,938 687,898
Debtors 12 2,034,950 2,463,402
Cash at bank and in hand 53,092 48,956
-------- --------
2,670,980 3,200,256
Creditors: Amounts falling due
within one year 13 (2,507,797) (2,115,478)
-------- --------
Net Current Assets 163,183 1,084,778
-------- --------
Total Assets less Current Liabilities 37,087,524 36,967,436
Creditors: Amounts falling due
after more than one year 14 (19,840,468) (20,496,309)
Provisions for Liabilities and
Charges 15 (200,371) (217,285)
-------- --------
Net Assets 17,046,685 16,253,842
======== ========
Capital and Reserves
Called up share capital - equity
interests 6 5,099,442 5,099,442
Share premium account 6 5,131,869 5,131,869
Revaluation reserve 6 2,728,551 2,318,234
Profit and loss account 6 4,086,823 3,704,297
-------- --------
Shareholders' Funds 17,046,685 16,253,842
======== ========
Approved by the Board on
and signed on its behalf by:
....................................................... Director
S. Murphy
Consolidated Cash Flow Statement
For the year ended 31st December 2006
Note 2006 2006 2005 2005
# # # #
Net Cash Inflow from Operating
Activities (i) 3,314,014 1,230,337
Returns on Investments and
Servicing of Finance
Interest received 106,957 1,029
Interest paid (1,427,236) (1,193,586)
-------- ---------
Net Cash Outflow for Returns on
Investments and Servicing of
Finance (1,320,279) (1,192,557)
Taxation (258,375) (205,334)
Capital Expenditure and
Financial Investment
Purchase of tangible fixed
assets (1,043,081) (9,270,483)
Sale of tangible fixed assets 83,265 1,049,985
Purchase of fixed asset
investments (6,963) (120,658)
--------- ---------
Net Cash (Outflow) for Capital
Expenditure and Financial
Investment (966,779) (8,341,156)
Acquisitions
Purchase of subsidiary
undertakings - (1,887,600)
--------- ---------
Net Cash Outflow for
Acquisitions - (1,887,600)
Equity Dividends Paid (446,201) (427,651)
-------- --------
Cash Inflow/(Outflow) before
Financing 322,380 (10,823,961)
Financing
Issue of ordinary share
capital - 1,421,660
Repayment of existing loans
and overdrafts (374,995) (82,995)
Debt due beyond a year: new
secured bank loans - 10,657,190
Capital element of finance lease rental
Payments (3,085) (64,974)
--------- ---------
Net Cash (Outflow)Inflow from
Financing (378,080) 11,930,881
-------- --------
(Decrease)/Increase in Cash (ii) (55,700) 1,106,920
======== ========
Notes to the Consolidated Cash Flow Statement
For the year ended 31st December 2006
(i) Reconciliation of Operating Profit to Net 2006 2005
Cash Inflow from Operating Activities # #
Operating profit 2,330,127 2,091,459
Depreciation 292,124 272,873
Amortisation of goodwill 101,554 101,553
Decrease in stock 104,960 (188,802)
Decrease/(increase) in debtors 428,452 (778,616)
(Increase/(decrease) in creditors 56,797 (268,130)
-------- --------
Net cash inflow from operating activities 3,314,014 1,230,337
======== ========
(ii) Reconciliation of Net Cash Flow
to Movement in Net Debt (Note (iii))
(Decrease)/increase in cash in the year (55,700) 1,106,920
Cash outflow/(inflow) from change in debt and lease financing 378,080 (11,930,881)
Issue of ordinary share capital - 1,421,660
-------- ---------
Movement in net debt in the year resulting from cash flows 322,380 (9,402,301)
New loans - -
-------- ---------
Movement in net debt in the year 322,380 (9,402,301)
Net debt at 1st January 2006 (20,562,927) (11,160,626)
-------- ---------
Net debt at 31st December 2006 (20,240,547) (20,562,927)
======== =========
(iii) Analysis of Changes in Net Debt
At Other At
1st January Cash Non-Cash 31st December
2006 Flow Changes 2006
# # # #
Cash in hand, at bank 48,956 4,136 - 53,092
Overdrafts (109,875) (59,835) - (169,710)
--------- -------- -------- ---------
(60,919) (55,699) - (116,618)
Debt due after one year (20,484,347) 654,291 - (19,830,056)
Debt due within one year - (279,297) - (279,297)
Finance leases (17,661) 3,085 - (14,576)
--------- -------- -------- ---------
Total (20,562,927) (322,380) - (20,240,547)
========= ======== ======== =========
Notes to the Financial Statements
For the year ended 31st December 2006
1 Accounting Policies
Accounting Basis and Standards
The financial statements have been prepared under the historical cost convention and in accordance with applicable
accounting standards.
The preparation of financial statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the
financial statements and the reported amounts of income and expenditure during the reporting period. Actual results
could differ from those estimates. Estimates are used principally when accounting for provisions for doubtful debts,
depreciation, amortisation and taxes.
Basis of Consolidation
The group financial statements incorporate a consolidation of the financial statements of the company and its
subsidiary undertakings.
The following principal accounting policies have been applied and remain unchanged from the previous year.
Goodwill
On the acquisition of a subsidiary undertaking fair values are attributed to the group's share of net assets.
Where the cost of acquisition exceeds the values attributable to such net assets the difference is treated as purchased
goodwill. This is capitalised and amortised over a period of 20 years.
Depreciation
Depreciation on fixed assets is provided at rates estimated to write off the cost or revalued amounts, less
estimated residual value, of each asset over its expected useful life as follows:
Fixtures and fittings 10% straight line
Computers and EPOS 20% straight line
Motor vehicles 25% straight line
Public Houses
The public houses, which are freehold and leasehold, are included at market valuation.
Stocks
Stocks are stated at the lower of cost and net realisable value.
Turnover
Turnover represents the value of goods sold and services provided net of value added tax. All turnover arises
solely in the UK.
Taxation
The charge for taxation is based on the result for the year and takes into account deferred taxation. Provision is
made for material deferred taxation, in respect of all timing differences that have originated but not reversed at the
balance sheet date. Deferred tax assets are recognised only to the extent that the Directors consider that it is more
likely than not, that there will be suitable taxable profits from which the future reversal of the underlying timing
differences can be deducted.
Deferred Taxation
Provision is made for deferred taxation on all reversible timing differences but deferred tax assets are only
recognised where recoverability is anticipated.
Pensions
The pension costs charged in the financial statements represent the contributions payable by the company during
the year in accordance with FRS 17.
Notes to the Financial Statements
For the year ended 31st December 2006 (Continued)
1 Accounting Policies (Continued)
Share based Payments
Certain employees and directors of the group receive equity settled remuneration in the form of company share
options. The cost to employees that take the form of shares or rights to shares is charged to the profit and loss
account on a straight line basis over the vesting period and a corresponding amount is reflected in the profit and loss
reserves in shareholder's equity adjusted at each balance sheet date to take into account actual and expected level of
vesting. The charge is calculated as being the fair value of the shares or the right to the shares at the date of
grant, reduced by any consideration payable by the employee. Fair value is measured using a modified Black-Scholes
option pricing model and is based on a reasonable expectation of the extent to which performance criteria will be met.
Leasing and Hire Purchase Commitments
Assets held under finance leases and hire purchase contracts are capitalised in the balance sheet and are
depreciated over their useful lives. The interest element of the rental obligations is charged to the profit and loss
account over the period of the lease on a straight line basis.
All other leases are regarded as operating leases and the payments made under them are charged to the profit and
loss account on a straight line basis over the lease term.
Rental income received under operating leases is credited to the profit and loss account on a straight line basis
over the lease term.
Financial Instruments
The group's financing strategy, which is approved at Board level is to raise finance for the group's operations
and acquisitions.
The debt is currently at floating rates and the resulting interest rate exposure is kept under review by the Board.
2 Turnover
Turnover is attributable to the one principal activity of the company which arose wholly in the United Kingdom.
3 Operating Profit
2006 2005
# #
The operating profit is stated after charging:
Auditors' remuneration 22,000 19,950
Auditors' remuneration for non audit services 20,500 25,108
Auditors' remuneration for: tax 3,000 -
Corporate finance 5,000 -
Depreciation - owned tangible fixed assets 279,624 260,375
- assets held under finance leases 12,500 12,500
Amortisation of goodwill 101,554 101,553
Operating lease rentals - land and buildings 1,569,792 1,629,916
======== ========
and after crediting:
Rental income 726,591 762,618
======== ========
4 Interest Payable and Similar Charges
2006 2004
# #
Bank loans and overdrafts 1,306,838 1,075,109
Interest rate hedging 120,398 118,477
-------- --------
1,427,236 1,193,586
======== ========
Notes to the Financial Statements
For the year ended 31st December 2006 (Continued)
5 Taxation 2006 2006 2005 2005
# # # #
(a) Analysis of charge in period
Current tax:
UK Corporation tax charge on profit
for the period 343,868 243,282
Adjustments relating to previous periods (87,565) (5,535)
-------- ---------
Total current tax 256,303 237,747
Deferred tax:
Origination and reversal of timing differences (16,917) 13,160
------- --------
Tax charge on profit on ordinary activities 239,386 250,907
======= ========
(b) Factors affecting the tax charge for the period
The tax assessed for the period is lower than the standard rate of corporation tax in the UK (30%).
The
differences are explained below:
2006 2005
# #
Profit on ordinary activities before tax 1,068,113 1,094,387
========= ========
Tax on profit at 30% (2005 - 30%) 320,434 328,316
Effect of:
Small companies rate relief (8,912) (17,357)
Expenses not deductible for tax purposes
(primarily entertaining, legal and professional
fees and write off of goodwill) 5,471 (941)
Accelerated capital allowances (3,100) (8,090)
Group tax adjustments 29,975 -
Rollover relief on profit on disposal of property - (58,646)
Adjustment to tax charge in respect of previous periods (87,565) (5,835)
---------- --------
256,303 237,747
========== ========
(c) Factors that may affect future tax charges
No provision has been made for deferred tax on gains recognised on revaluing the properties to market
value or on the sale of properties where potentially taxable gains have been rolled over into
replacement assets. Such tax would become payable only if properties were sold without it being possible
to claim rollover relief. At present it is not envisaged that any tax will become payable in the
foreseeable future in respect of these properties.
6 Shareholders' Funds 2006 2005
# #
(a) Company share capital
The authorised share capital comprises:
Authorised:
37,500,000 (2005 - 37,500,000) Ordinary shares of 20p each 7,500,000 7,500,000
========== ========
Called up, allotted and fully paid:
25,497,207 (2005 - 25,497,207) Ordinary shares of 20p each 5,099,442 5,099,442
========== ========
Notes to the Financial Statements
For the year ended 31st December 2006 (Continued)
6 Shareholders' Funds (Continued)
(b) Movements on capital and reserves - group
Called Up Share Profit
Share Premium Revaluation and Loss
Capital Account Reserve Account Total
# # # # #
Balance at 1st January 2006 5,099,442 5,131,869 2,318,234 3,704,297 16,253,842
Profit for the year - - - 828,727 828,727
Dividends paid - - - (446,201) (446,201)
Surplus on property revaluations - - 410,317 - 410,317
-------- -------- -------- -------- --------
Balance at 31st December 2006 5,099,442 5,131,869 2,728,551 4,086,823 17,046,685
======== ======== ======== ======== ========
7 Earnings per share
The figures for earnings per share are calculated on a profit of #828,727 (2005 -#843,480). The basic earnings
per share calculation is based on a weighted average number of ordinary shares of 20p each in issue during the
year of 25,497,207. The diluted profit per share calculation is based on a weighted average number of ordinary
shares of 20p each of 26,534,867 (2005 - 26,423,604), which accounts additionally for the various share options.
(see note 9).
8 Tangible Assets
Freehold Long Short Fixtures
Group Land and Leasehold Leasehold and Motor
Buildings Property Property Fittings Vehicles Total
Cost or Valuation # # # # # #
At 1st January 2006 23,615,381 1,050,296 7,671,297 2,627,826 18,380 34,983,180
Additions 441,774 - 384,610 216,697 - 1,043,081
Surplus/(deficit) on revaluation 3,596,723 180,870 (3,367,276) - - 410,317
Disposals (16,039) (14,916) (7,380) (38,335)
-------- -------- -------- ------- ------- -------
At 31st December 2006 27,653,878 1,231,166 4,672,592 2,829,607 11,000 36,398,243
-------- -------- -------- ------- ------- -------
Depreciation
At 1st January 2006 - - - 1,250,951 17,754 1,268,705
Charge for the year - - - 291,498 626 292,124
Eliminated on disposals - - - (5,955) (7,380) (13,335)
-------- -------- -------- ------- ------- -------
At 31st December 2006 - - - 1,536,494 11,000 1,547,494
-------- -------- -------- ------- ------- -------
Net Book Value
At 31st December 2006 27,653,878 1,231,166 4,672,592 1,293,113 - 34,850,749
======== ======== ======== ======= ======= =======
At 31st December 2005 23,615,381 1,050,296 7,671,297 1,376,875 626 33,714,475
======== ======== ======== ======= ======= =======
Notes to the Financial Statements
For the year ended 31st December 2006 (Continued)
9 Intangible Assets Group
Goodwill
Cost #
At 1st January 2006 2,031,071
Additions -
--------
At 31st December 2006 2,031,071
--------
Amortisation
At 1st January 2006 585,447
Charge for the year 101,554
--------
At 31st December 2006 687,001
--------
Net Book Value
At 31st December 2006 1,344,070
========
At 31st December 2005 1,445,624
========
10 Investments Group
2006 2005
Fixed asset investments # #
Other investments other than loans 150 150
Other Loans 729,372 722,409
Shares in group undertakings - -
-------- ---------
729,522 722,559
======== =========
11 Stocks Group
2006 2005
# #
Goods for resale 582,938 687,898
======== ========
12 Debtors Group
2006 2005
# #
Trade debtors 372,445 374,646
Amounts owed by group undertakings - - -
Other debtors 1,075,662 1,486,760
Prepayments and accrued income 586,843 601,996
-------- --------
2,034,950 2,463,402
======== ========
Notes to the Financial Statements
For the year ended 31st December 2006 (Continued)
13 Creditors: Amounts falling due Group
within one year 2006 2005
# #
Bank loans and overdrafts 449,007 109,875
Trade creditors 620,220 991,685
Amounts owed to group undertakings - -
Corporation tax 241,206 243,282
Social security and other taxes 418,997 314,310
Other creditors 191,903 167,851
Obligations under finance leases 4,164 5,699
Accruals and deferred income 582,300 282,776
-------- --------
2,507,797 2,115,478
======== ========
The bank loans and overdrafts are secured by a fixed and floating charge over all the assets of the group.
14 Creditors: Amounts falling due Group
after more than one year 2006 2005
# #
Bank loans 19,830,056 20,484,347
Obligations under finance leases 10,412 11,962
-------- --------
19,840,468 20,496,309
======== ========
Bank loans are repayable by instalments:
In more than one year but not more
than two years 1,117,186 284,505
In more than two years but not more
than five years 3,351,559 3,414,058
In more than five years 15,361,311 16,785,784
-------- --------
19,830,056 20,484,347
======== ========
The bank loans are repayable over a 20 year term with a capital repayment holiday applying
to the first two years, commencing October 2005. They carry interest at various rates up to
2.00% above base rate and are secured by fixed and floating charges over all the assets of
the group.
15 Provisions for Liabilities and
Charges
Group
2006 2005
# #
Deferred taxation - accelerated
capital allowances at 1st January
2006 217,285 204,125
Deferred tax charge/(credit) in
profit and loss account for the year (16,914) 13,160
(note 6) -------- --------
At 31st December 2006 200,371 217,285
======== ========
This information is provided by RNS
The company news service from the London Stock Exchange
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