RNS Number : 6167E
Pubs 'n' Bars PLC
30 September 2008
Pubs 'n' Bars Plc
(AIM: PNB)
("Pubs 'n' Bars" or "the Company")
INTERIM RESULTS FOR THE PERIOD ENDED 30 JUNE 2008
Pubs 'n' Bars, the AIM quoted community pub owner and operator, announces its unaudited interim results for the period ended 30 June
2008.
Highlights:
� Revenues increased 26% to �11.2m (2007:�8.9m)
� Operating profits rose 38% to �1.8m (2007: �1.3m)
� Profits before tax rose 7% to �0.58m (2007:�0.54m)
� Operating profits boosted by a gain of �323,200; an upward movement on derivatives following the revaluation of interest rate
swaps
� Total assets increased 24% to �63.4m (2007:�51.1m)
� EPS (basic) of 1.07p (2007:1.35p)
� Dividend Nil (2007:0.75p)
Seamus Murphy, Chairman of Pubs 'n' Bars, commented:
"We are pleased that revenues and operating profits have continued to grow following the acquisitions made last year. Our operating
profits are higher, boosted by a gain of �323,200; an upward movement on derivatives following the revaluation of interest rate swaps.
However, the wet and cool summer, the smoking ban, continued competition from cut price supermarket sales of alcoholic beverages and steeply
rising gas and electricity prices, have had a considerable impact on our underlying first half performance and will continue to have an
impact in the second half of the year. The Directors are unable to recommend an interim dividend.
"In view of the many difficulties facing the on-trade, I would strongly urge the Chancellor of the Exchequer to consider abolishing the
beer duty escalator. As it stands, at a time of persistent inflation and possible recession, the duty is set to rise by 2% above inflation
in each of the next four years. The effect of this is expected to make trading conditions more challenging.
"More positively, trade in our London establishments, our largest market, is showing a strong degree of resilience in the face of the
many factors affecting our industry. We have, additionally, been able to improve our gross profit margins due to improved trading terms."
These interim results are available to be downloaded from the Company's website at www.pubsnbars.co.uk.
Enquiries:
Pubs 'n' Bars Plc Tel: 020 8228 4800
Mel Belligero, Chief Executive
Daniel Stewart & Company Plc Tel: 020 7776 6550
Paul Shackleton / Simon Starr
Bishopsgate Communications Ltd Tel: 020 7562 3350
Maxine Barnes /Nick Farmer
pubsnbars@bishopsgatecommunications.com
CHAIRMAN'S STATEMENT
I am reporting our financial results for the half-year ended 30 June 2008. We are pleased to report an increase in revenues, in spite of
the slowing economy, a cold and early Easter, a full-year of the indoor smoking ban in England and Wales, and continued competition from
heavily-promoted cheap supermarket alcohol.
We are pleased that revenues and operating profits have continued to grow following the acquisitions made last year. Our operating
profits are higher, boosted by a gain of �323,200; an upward movement on derivatives following the revaluation of interest rate swaps.
However, the wet and cool summer, the smoking ban, continued competition from cut price supermarket sales of alcoholic beverages and steeply
rising gas and electricity prices, have had a considerable impact on our underlying first half performance and will continue to have an
impact in the second half of the year. The Directors are unable to recommend an interim dividend.
In view of the many difficulties facing the on-trade, I would strongly urge the Chancellor of the Exchequer to consider abolishing the
beer duty escalator. As it stands, at a time of persistent inflation and possible recession, the duty is set to rise by 2% above inflation
in each of the next four years. The effect of this is expected to make trading conditions more challenging.
Our business is based on operating community pubs. Except for the Hobgoblin Pubs, the vast majority of our estate consists of unbranded
local pubs which are not subject to passing fashions. Our establishments offer an attractive and friendly environment for customers to enjoy
a large selection of popular beers, wines and spirits. Importantly, we attract regular and loyal customers for whom the pub is a major part
of their social lives.
More positively, trade in our London establishments, our largest market, is showing a strong degree of resilience in the face of the
many factors affecting our industry. We have, additionally, been able to improve our gross profit margins due to improved trading terms.
Financials
The period under review delivered a 26% increase in revenues to �11,217,196 (2007: �8,868,088). Operating profits were also 38% higher
at �1,851,532 which includes �323,200 relating to the revaluation of derivative financial instruments. (2007: �1,327,835) Taking this into
account and despite increased finance and utility costs, pre tax profits rose by 7% to �581,813 (2007:�541,819).
Pubs 'n' Bars is a highly cost-conscious business. We run our estate of over 100 pubs with a small but highly focused team of just 18
central staff, with everyone performing a vital role.
The composition of the estate remains largely unchanged since the last year end. We continue to look for good value pubs to add to the
estate and seek to dispose of underperforming assets.
Despite the large choice of new premises coming onto the market, many are inferior, loss making establishments that would not be
appropriate for our estate nor, in our opinion, could they be turned into profitable businesses. However, good pubs continue to hold their
value.
S. MURPHY
Chairman
29 September 2008
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2008
6 Mths 6 Mths Year
Ended30.06.2008( Ended30.06.2007( Ended31.12.2007(
unaudited) unaudited) audited)
Notes � � �
REVENUE 11,217,196 8,868,088 19,996,881
Cost of sales (3,478,542) (2,799,863) (6,547,720)
GROSS PROFIT 7,738,654 6,068,225 13,449,161
Administrative expenses (5,887,122) (4,740,390) (10,694,368)
OPERATING PROFIT 1,851,532 1,327,835 2,754,793
Other operating income - - 56,218
Finance cost (1,273,283) (807,614) (1,820,100)
Investment income 3,564 21,598 34,197
PROFIT BEFORE TAXATION 581,813 541,819 1,025,108
Taxation 3 (157,593) (158,102) 594,221
PROFIT FOR THE PERIOD 424,220 383,717 1,619,329
EARNINGS PER SHARE * from continuing and total operations
Basic 4 1.07p 1.35p 5.30p
Diluted 4 1.00p 1.29p 5.06p
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2008
6 Mths 6 Mths Year
Ended30.06.2008( Ended30.06.2007( Ended31.12.2007(
unaudited) unaudited)Restated audited)
(note 9)
Notes � � �
ASSETS
Non-current assets
Property, plant and equipment 6 56,228,421 45,709,727 55,867,000
Intangible fixed assets 7 1,638,816 1,592,817 1,638,816
Derivative financial 65,200 - -
instruments
Deferred tax assets 1,596,482 - 1,668,894
59,528,919 47,302,544 59,174,710
Current assets
Inventories 837,909 683,513 751,617
Trade receivables 2,914,089 2,824,109 2,157,544
Cash and cash equivalents 99,783 254,874 136,923
3,851,781 3,762,496 3,046,084
TOTAL ASSETS 63,380,700 51,065,040 62,220,794
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital 8 7,965,671 6,350,371 7,934,671
Share premium account 7,192,665 6,506,607 7,192,665
Revaluation reserve 4,550,775 4,460,560 4,550,775
Retained earnings 2,932,097 1,704,001 2,507,877
TOTAL EQUITY 22,641,208 19,021,539 22,185,988
Non-current liabilities
Long-term borrowings 34,226,393 26,117,167 34,244,410
Finance lease liabilities 4,152 4,646 6,040
Derivative financial - - 258,000
instruments
Deferred tax liabilities 2,197,225 1,014,038 2,112,044
36,427,770 27,135,851 36,620,494
Current liabilities
Trade and other payables 3,463,570 3,272,594 3,019,403
Short-term borrowings 823,881 1,117,186 370,638
Current tax payable 20,511 513,021 20,511
Finance lease liabilities 3,760 4,849 3,760
4,311,722 4,907,650 3,414,312
TOTAL EQUITY AND LIABILITIES 63,380,700 51,065,040 62,220,794
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2008
6 Mths Ended 6 Mths Ended
30.06.2008 30.06.2007 Year Ended
(unaudited) (unaudited) 31.12.2007
Restated (audited)
(note 9)
Notes � � �
Cash flows from operating activities
Profit before taxation 581,813 541,819 1,025,108
Adjustments for:
Investment income (3,564) (21,598) (34,197)
Interest expense 1,273,283 807,614 1,820,100
Profit on disposal of fixed assets - - (56,218)
Decrease in value of leasehold properties - - 549,002
Derivative financial instrument fair value adjustment (323,200) - 45,000
Depreciation 191,980 154,590 360,629
Discount on acquisition of Moorgate Taverns Ltd - - (725,254)
Recognition of loan to Community Taverns Ltd - 729,522 729,522
(Increase)/Decrease in inventories (86,292) 122,143 54,039
(Increase)/Decrease in trade & other receivables (725,545) 74,709 786,763
(Decrease)/Increase in trade 404,890 (942,508) (1,662,026)
payables
Cash generated from operations 1,313,365 1,466,291 2,892,468
Interest paid (1,234,006) (807,614) (1,610,451)
Tax (received)/paid - 108,816 (237,345)
NET CASH FROM OPERATING ACTIVITIES 79,359 767,493 1,044,672
Cash flows from investing activities
Purchase of tangible fixed assets (553,401) (462,966) (865,352)
Acquisition of subsidiary net of cash - (3,393,199) (3,949,246)
acquired
Proceeds of sale of tangible fixed assets - - 114,394
Interest received 3,564 21,598 34,197
NET CASH FROM INVESTING ACTIVITIES (549,837) (3,834,567) (4,666,007)
Cash flows from financing activities
Proceeds from issue of shares - 936,167 1,309,525
Net drawdown/(repayment) of borrowings 23,119 2,825,000 2,770,929
Payment of finance lease liabilities (1,888) (5,081) (4,776)
Dividends paid 5 - (317,519) (555,568)
NET CASH FROM FINANCING ACTIVITIES 21,231 3,438,567 3,520,110
NET INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS (449,247) 371,493 (101,225)
Cash and cash equivalents at beginning of period (217,844) (116,619) (116,619)
CASH AND CASH EQUIVALENTS AT (667,091) 254,874 (217,844)
END OF PERIOD
REPRESENTED BY:
Cash at bank and in hand 99,783 254,874 136,923
Bank overdrafts (766,874) - (354,767)
(667,091) 254,874 (217,844)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2008
OrdinaryShare SharePremium RevaluationReserve RetainedEarnings TotalEquity
Capital
� � � � �
Balances at 31 December 2007 7,934,671 7,192,665 4,550,775 2,507,877 22,185,988
Changes in equity:
Issues of share capital 31,000 - - - 31,000
Profit for the period - - - 424,220 424,220
Balances at 30June 2008 7,965,671 7,192,665 4,550,775 2,932,097 22,641,208
OrdinaryShare SharePremium RevaluationReserve RetainedEarnings TotalEquity
Capital
� � � � �
Balances at 1 January 2007 5,099,442 5,131,869 4,460,560 1,424,803 16,116,674
Changes in equity:
Gain on property revaluation - - 125,297 - 125,297
Issues of share capital 2,835,229 2,151,538 - - 4,986,767
Costs of issue of share - (90,742) - - (90,742)
capital
Share options issued - - - 19,403 19,403
Profit for the period - - - 1,619,329 1,619,329
Deferred tax arising on - - (35,082) - (35,082)
revaluation
Dividends paid - - - (555,658) (555,658)
Balances at 31 December 2007 7,934,671 7,192,665 4,550,775 2,507,877 22,185,988
OrdinaryShare SharePremium RevaluationReserve RetainedEarnings TotalEquity
Capital
� � � � �
Balances at 31 December 2006 5,099,442 5,131,869 2,728,551 3,369,812 16,329,674
Changes in equity:
Issues of share capital 1,250,929 1,438,570 - - 2,689,499
Costs of issue of share - (63,832) - - (63,832)
capital
Profit for the period - - - 383,717 383,717
Dividends paid - - - (317,519) (317,519)
Prior period adjustment (Note 1,732,009 (1,732,009) -
9)
Balances at 30 June 2007 6,350,371 6,506,607 4,406,560 1,704,001 19,021,539
(Restated)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30TH JUNE 2008
1. ACCOUNTING POLICIES
The interim financial information in this report has been prepared using accounting policies consistent with International Financial
Reporting Standards (IFRS), as adopted for use in the EU, applied in accordance with the provisions of the Companies Act 1985. IFRS is
subject to amendment and interpretation by the International Accounting Standards Board (IASB) and the International Financial Reporting
Interpretations Committee (IFRIC) and there is an ongoing process of review and endorsement by the European Commission. The financial
information has been prepared on the basis of IFRS that the directors expect to be applicable as at 31 December 2008.
Basis of Preparation
The financial information has been prepared under the historical cost convention, as modified by the revaluation of land and buildings.
The principal accounting policies set out below have been consistently applied to all periods presented.
Non-Statutory Accounts
The financial information for the year ended 31 December 2007 set out in this interim report does not comprise the Group's statutory
accounts as defined in Section 240 of the Companies Act 1985.
The statutory accounts for the year ended 31st December 2007, which were prepared under IFRS, have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either Section 237(2)
or Section 237(3) of the Companies Act 1985.
These accounts have been prepared in accordance with IAS 34 'Interim Financial Statements'.
The financial information for the six months ended 30 June 2008 and 30th June 2007 is unaudited.
IFRS effective in 2007/8 but not relevant
The following interpretations were mandatory for the Group's accounting period, but are not relevant to the operations of the Group.
* IFRIC 7 Applying the restatement approach under IAS 29 Financial reporting in hyperinflationary economies;
* IFRIC 9 Reassessment of embedded derivatives.
* IFRIC 12 Service Concession Arrangements
* IFRIC 14 (IAS 19) The limit on a defined benefit funding asset minimum requirement and their interaction.
EU adopted IFRS not yet applied
The following standards and interpretations were issued and available for early application but have not yet been applied by the Group
in these financial statements.
The Group intends to apply these standards and interpretations when they become effective:
* IFRS 8 Operating segments;
* IAS 23 (Amendment) Borrowing costs.
* IFRS 3 (Revised) Business Combinations
NOTES TO THE INTERIM FINANCIAL STATEMENTS
- continued
1. ACCOUNTING POLICIES - continued
EU adopted IFRS not yet applied - continued
IFRS 8 replaces IAS 14 'Segment Reporting' and requires the Group to adopt the 'management approach' to reporting on the financial
performance of its operating segments. Generally, the information to be reported would be what management uses internally for evaluating
segment performance and deciding how to allocate resources to operating segments.
The new standard will significantly change the way segmental information is currently reported. Goodwill, which is presently allocated
to cash-generating units based on reportable segments, will also need to be reallocated based on the new reportable segments. It is
managements' opinion that the reallocation will not result in any further impairment charges against goodwill.
The amendment to IAS 23 changes the previous version of the standard by removing the option to expense borrowing costs that relate to
assets that take a substantial period of time to get ready for use or sale. Such borrowing costs will in future be required to be included
in the cost of the fixed asset or inventory item to which they relate. The amendment will not affect the Group's results as the Group
currently adopts a policy of capitalising borrowing costs on qualifying assets.
As with the existing version of IFRS 3, consideration in a business combination is measured at fair value at the acquisition date.
However, the revised version concentrates on what the vendor receives rather than what the acquisition costs the acquirer. Acquisition
costs, such as legal and advisory fees, which have historically been included as part of the purchase consideration and, therefore, within
the calculation of goodwill, will, in future, be recognised in the income statement in the period they are incurred.
Contingent consideration arrangements, such as earn-outs, are common to many acquisition agreements. While the fair value of such
arrangements will continue to be included as part of the cost of the business combination, subsequent adjustments will be accounted for very
differently. Adjustments are currently applied by amending the goodwill figure but, in future, they will need to be dealt with in the income
statement.
Companies need to assess the fair value of the assets and liabilities acquired. Where it is not possible to make a definite assessment,
companies can attribute provisional values and agree final figures within 12 months from the date of acquisition. None of this is new.
However, whereas previously any adjustments to fair values were accounted for as adjustments in the period in which they were identified,
under the revised IFRS 3, they will have to be treated as prior period adjustments and comparatives restated.
The adoption of IFRS 3 (revised) will significantly change the recognition of goodwill, acquisition costs and contingent consideration
relating to acquisitions. However, it applies only to acquisitions made after it has been adopted, which will minimise any restatements
required.
Basis of Consolidation
The financial information incorporates the results of the Company and entities controlled by the Company (its subsidiaries). Control is
achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from
its activities.
The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of disposal, as appropriate. Financial statements of the subsidiaries are prepared
to the same year end, 31 December, except for Moorgate Taverns Limited.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
- continued
1. ACCOUNTING POLICIES - continued
Basis of Consolidation - continued
Where necessary, adjustments are made to the results of subsidiaries to bring the accounting policies used into line with those used by
the Group.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
Business Combinations and Goodwill
Goodwill on acquisitions comprises the excess of the fair value of the consideration plus any associated costs for investments in
subsidiary undertakings over the fair value of the net identifiable assets acquired. Adjustments are made to fair values to bring the
accounting policies of acquired businesses into alignment with those of the Group. The costs of integrating and reorganising acquired
businesses are charged to the post acquisition income statement.
Goodwill is carried at cost less accumulated impairment losses. Goodwill is tested for impairment annually. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the entity sold. Negative goodwill is recognised immediately in
the income statement.
Revenue Recognition
Revenue is the value of goods and services sold to third parties as part of the Group's trading activities, after deducting sales based
taxes, coupons and staff discounts. The majority of revenue comprises beverages as well as food sold in the Group's outlets. This revenue is
recognised at the point of sale to the customer. Revenue arising from the sale of property is recognised on unconditional exchange of
contracts. Investment income is recognised upon a receivable basis.
Taxation
The tax expense represents the sum of the tax currently payable and any deferred tax. The tax currently payable is based on the
estimated taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items
of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet date.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. The deferred tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or
substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries, joint ventures and associates, except where
the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not
reverse in the foreseeable future.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
- continued
1. ACCOUNTING POLICIES - continued
Share-based Payments
The cost of share-based payment arrangements, whereby employees receive remuneration in the form of shares or share options, is
recognised as an employee benefit expense in the income statement.
The total expense to be apportioned over the vesting period of the benefit is determined by reference to the fair value at the date of
grant. The assumptions underlying the number of awards expected to vest are subsequently adjusted for the effects of non market-based
vesting conditions prevailing at the balance sheet date. Fair value is measured by the use of Black-Scholes option pricing model and is
based on a reasonable expectation of the extent to which performance criteria will be met.
Property, Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is charged so as
to write off the costs of assets, over their estimated useful lives, using the straight-line method, on the following bases:
Fixtures and fittings 10% straight line
Computers and EPOS 20% straight line
Motor vehicles 25% straight line
The property assets of the Group are stated at revalued amounts, being fair value at the date of revaluation less accumulated impairment
losses. Increases in the value of revalued assets are recognised in the revaluation reserve except to the extent they relate to a previous
decrease in value which had been charged to the income statement. Decreases in value are taken to the revaluation reserve to the extent of
any pre-existing surplus on that individual asset; decreases in excess of any pre-existing surplus are taken to the income statement.
Impairment
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment and if events or
changes in circumstances indicate that the carrying amount may not be recoverable. Assets that are subject to depreciation or amortisation
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. A review
for indicators of impairment is performed annually. An impairment loss is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. Any
impairment charge is recognised in the income statement in the year in which it occurs. When an impairment loss, other than an impairment
loss on goodwill, subsequently reverses due to a change in the original estimate, the carrying amount of the asset is increased to the
revised estimate of its recoverable amount, up to the carrying amount that would have resulted, net of depreciation, had no impairment loss been recognised for the asset in prior years.
Trade and other receivables
Trade receivables are stated at their original invoiced value, as the interest that would be recognised from discounting future cash
receipts over the short credit period is not considered to be material. Trade receivables are reduced by appropriate allowances for
estimated irrecoverable amounts. Interest on overdue trade receivables is recognised as it accrues.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
- continued
1. ACCOUNTING POLICIES - continued
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and other short-term highly liquid deposits with an original maturity at
acquisition of three months or less. Cash held on deposit with an original maturity at acquisition of more than three months is disclosed as
current asset investments. For the purposes of the cash flow statement, cash and cash equivalents consists of cash and cash equivalents as
defined above, net of bank overdrafts that are repayable on demand and that are integral to the Group's cash management.
Trade payables
Trade payables are stated at their original invoiced value, as the interest that would be recognised from discounting future cash
payments over the short payment period is not considered to be material.
Derivative financial instruments
The Group's policy is to hedge a proportion of its variable rate borrowings at fixed rates of interest. To achieve this, the Group
enters into interest rate swap contracts in which the Group agrees to exchange its variable rate obligations for fixed rate obligations.
Although not accounted for as being hedge effective, the swaps are held for risk management purposes and not for trading purposes. These
swaps are defined as cash flow hedges and the fair values are determined by discounting the future cash flows using the mid point of the
sterling yield curve prevailing at the year end.
Interest-bearing borrowings
Interest-bearing borrowings are stated at amortised cost using the effective interest method. The effective interest method is a method
of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability.
Provisions
Provisions are recognised in the balance sheet when there is a present legal or constructive obligation as a result of a past event, and
it is probable that an outflow of economic benefits will be required to settle the obligation.
Leases
Leases of property, plant and equipment, where the Group has substantially all the risks and rewards of ownership, are classified as
finance leases. Finance leases are capitalised at the lease's inception at the lower of the fair value of the leased property and the
present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a
constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other
long-term payables. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired
under finance leases is depreciated over the shorter of the asset's useful life and the lease term.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
- continued
1. ACCOUNTING POLICIES - continued
Leases - continued
Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Payments made
under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over
the period of the lease.
Rental income received under operating leases is credited to the income statement on a straight line basis over the lease term.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. It
excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable
selling expenses.
Pensions
The Group operates a defined contribution pension plan. The scheme is funded through payments to insurance companies.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity.
The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all
employees the benefits relating to employee service in the current and prior periods.
For a defined contribution plan, the Group pays contributions to publicly or privately administered pension insurance plans on a
contractual basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as
employee benefit expense when they are due.
Segmental Reporting
The Directors consider that there are two main classes of business; managed house income and tenanted house income.
Managed house income comprises the sale of liquor, catering services, vending machine income, and cigarette commission. This class of
business accounts for 85% of reported turnover. Therefore the Directors do not consider it necessary to produce a segmental report.
All income is derived from the within United Kingdom.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
- continued
2. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of financial information in conformity with generally accepted accounting practice requires management to make estimates
and judgments that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at
the balance sheet date and the reported amounts of revenues and expenses during the reporting period.
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances. The significant judgments made by management in applying the
Group's accounting policies and the key sources of estimation were:
� Impairment of goodwill. Determining whether goodwill is impaired requires an estimation of the value in use of the
cash-generating units to which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash
flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value.
� Non-depreciation of assets. The Directors believe that the following factors are relevant to the Group*s public house estates,
which mitigate the need to apply depreciation to these assets:
� The Company has a policy of regular maintenance and repair such that the properties are retained at the previously assessed
standard of performance;
� The properties are unlikely to suffer from technical or commercial obsolescence;
� The Company, as a commercial enterprise, has historically recognised disposal proceeds of similar assets which have not been
materially less than their carrying value.
Therefore the directors consider that it is not necessary to depreciate the property assets owned.
3. TAXATION 6 Mths 6 Mths Year Ended31.12.2007
Ended30.06.2008 Ended30.06.2007
� � �
Current tax charge - 163,000 16,648
Deferred tax 67,097 (4,898) (14,699)
Recognition of - - (422,070)
deferred tax asset
Deferred tax 90,496 - (153,721)
charge/(credit) on
revaluations
Deferred tax - - (20,379)
released on change
in rate
Total tax 157,593 158,102 (594,221)
(credit)/expense for
the periods
Tax has been calculated using an estimated annual effective rate of 28% (2007 interim: 30%) on profit before tax.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
- continued
4. EARNINGS PER SHARE 6 Mths 6 Mths Year Ended31.12.2007
Ended30.06.2008 Ended30.06.2007
� � �
Earnings from Continuing and Total
Operations
Earnings for the 424,220 383,717 1,619,329
purpose of basic and
diluted earnings per
share being net
profit attributable
to equity
shareholders
Number of Shares
Weighted average 39,724,739 28,503,587 30,575,127
number of ordinary
shares for the
purpose of basic
earnings per share
Weighted average 42,622,425 29,780,973 31,978,267
number of ordinary
shares for the
purpose of dilutive
earnings per share
The calculation of diluted earnings per share assumes conversion of all potentially dilutive ordinary shares, all of which arise from
share options. A calculation is performed to determine the number of shares that could have been acquired at fair value, based upon the
monetary value of the subscription rights attached to outstanding share options.
5. DIVIDENDS 6 Mths Ended 6 Mths Ended Year Ended
30.06.2008 30.06.2007 31.12.2007
� � �
Dividends paid during the - 317,519 555,658
period
Proposed interim dividend - 238,139 -
for the year ended
31.12.2008 of 0p (2007:
0.75p) per share
The final dividend for the year ended 31 December 2007 of �199,142 was paid on 31 July 2008.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
- continued
6. PROPERTY, PLANT AND FreeholdLand LongLeaseholdPropert ShortLeaseholdProper FixturesandFittings MotorVehicles Total
EQUIPMENT andBuildings y ty
GROUP � � � � � �
COST/VALUATION
At 1 January 2008 45,558,435 1,123,692 7,578,632 3,501,579 11,000 57,773,338
Additions 290,907 2,694 152,623 104,677 2,500 553,401
At 30 June 2008 45,849,342 1,126,386 7,731,255 3,606,256 13,500 58,326,739
DEPRECIATION
At 1 January 2008 - - - 1,895,338 11,000 1,906,338
Charge for the - - - 191,980 - 191,980
period
At 30 June 2008 - - - 2,087,318 11,000 2,098,318
NET BOOK VALUE
At 30 June 2008 45,849,342 1,126,386 7,731,255 1,518,938 2,500 56,228,421
At 1 January 2008 45,558,435 1,123,692 7,578,632 1,606,241 - 55,867,000
COST/VALUATION
At 1 January 2007 27,653,878 1,231,166 4,672,592 2,829,607 11,000 36,398,243
Additions 266,950 2,607 371,110 224,685 - 865,352
Surplus/(deficit) (304,043) (110,081) (9,581) - - (423,705)
onRevaluation
Acquired through 17,941,650 - 2,564,859 467,587 - 20,974,096
business combination
Disposals - - (20,348) (20,300) - (40,648)
At 31 December 2007 45,558,435 1,123,692 7,578,632 3,501,579 11,000 57,773,338
DEPRECIATION
At 1 January 2007 - - - 1,536,494 11,000 1,547,494
Charge for the - - - 360,629 - 360,629
period
Released on disposal - - - (1,785) - (1,785)
At 31 December 2007 - - - 1,895,338 11,000 1,906,338
NET BOOK VALUE
At 31 December 2007 45,558,435 1,123,692 7,578,632 1,606,241 - 55,867,000
At 1 January 2007 27,653,878 1,231,166 4,672,592 1,293,113 - 34,850,749
7. INTANGIBLE FIXED ASSETS Goodwill
�
COST
At 1 January 2007 2,031,071
Additions 193,192
At 1 January 2008 and 30 June 2008 2,224,263
AMORTISATION AND IMPAIRMENT LOSSES
At 1 January and 30 June 2008 585,447
NET BOOK VALUE
At 30 June 2008 1,638,816
At 1 January 2008 1,638,816
NOTES TO THE INTERIM FINANCIAL STATEMENTS
- continued
8. SHARE CAPITAL 6 Mths Ended 6 Mths Ended Year Ended
30.06.2008 30.06.2007 31.12.2007
� � �
Authorised:
Number of shares 50,000,000 50,000,000 50,000,000
Ordinary shares of 20p each 10,000,000 10,000,000 10,000,000
Called up, allotted and
fully paid:
Number of shares 39,828,358 31,751,859 39,673,358
Ordinary shares of 20p each 7,965,671 6,350,371 7,934,671
During the period 155,000 shares were issued at 20p per share.
9. PRIOR PERIOD ADJUSTMENTS
Following on from an enquiry from the FRRP (Financial Reporting Review Panel) the following adjustments have been made for the six
months ended 30 June 2007. The enquiry is still on-going and there are unresolved issues which the directors are unable to quantify.
For the six months ended 30 June 2007 several balance sheet and cash flow figures have been restated, with no impact on the income
statement and profit for the period. The nature and amount of the adjustments have been disclosed below.
Balance sheet
In accordance with IAS 16, downward revaluations that do not reverse a previous upward revaluation should be taken directly to the
income statement. As a result �1,732,009 of previous downward revaluations net of deferred tax up to 31 December 2006, were transferred from
the revaluation reserve to retained earnings.
The restated retained earnings as at 30 June 2007 were �1,704,001 and restated revaluation reserves �4,460,560.
In accordance with IAS 1 Presentation of Financial Statements, �1,455,021 has been re-classified from short-term provisions to trade and
other payables.
Cash flow statement
In accordance with IAS 7, the aggregate cash flows arising from acquisitions of subsidiaries should be presented separately and
classified as investing activities.
Assets and liabilities acquired through the purchase of Moorgate London Limited and Community Taverns Limited have been removed from the
separate line items below. Following these adjustments, the restated cash flow arising from the acquisition of subsidiaries net of cash
acquired is �3,393,199. The net cash position as at 30 June 2007 remains unchanged.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
- continued
9. PRIOR PERIOD ADJUSTMENTS - continued
6 Mths Ended 6 Mths Ended
30.06.2007 30.06.2007
Published Adjustments Restated
� � �
Cash flows from operating activities
(Increase)/Decrease in inventories (100,575) 222,718 122,143
(Increase)/Decrease in trade & other (789,159) 863,868 74,709
receivables
Increase in trade payables 1,459,174 (2,401,682) (942,508)
Cash flows from investing activities
Purchase of tangible fixed assets (11,013,568) 10,550,602 (462,966)
Acquisition of subsidiaries net of (147,193) (3,246,006) (3,393,199)
cash acquired
Cash flows from financing activities
Proceeds from issue of shares 2,625,667 (1,689,500) 936,167
Net drawdown/(repayment) of 7,125,000 (4,300,000) 2,825,000
borrowings
Net effect of adjustments -
10. CONTINGENT LIABILITIES
The company has provided a cross guarantee to other members of the Group in respect of Group bank borrowings.
The company's nominated supplier of beers, wines, spirits and soft drinks is Standwood Taverns Limited. The company has provided
guarantees to three suppliers of Standwood Taverns Limited in respect of liabilities incurred by Standwood Taverns Limited on the company's
behalf.
INDEPENDENT REVIEW REPORT TO PUBS 'N' BARS PLC
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six
months ended 30 June 2008 which comprises Consolidated Income Statement, Consolidated Balance Sheet, Consolidated Cash Flow Statement,
Consolidated Changes in Equity and related notes. We have read the other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review
of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the
United Kingdom. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for
preparing the half-yearly financial report in accordance with the Rules of the Alternative Investment Market.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRS as adopted by the European
Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with
International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly report
based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim
Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United
Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European Union and the Rules of the Alternative Investment Market.
Kingston Smith LLP
Chartered Accountants and Registered Auditors
Devonshire House
60 Goswell Road
29 September 2008
London EC1M 7AD
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FKCKNABKDACB
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