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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Pubs'n'bars | LSE:PNB | London | Ordinary Share | GB0002934460 | ORD 20P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.875 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
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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