16th Oct 2008 07:30
16 October 2008
PRESS RELEASE
Regent Inns PLC
Financial results for the 52 weeks ended 28 June 2008
Regent Inns plc ("Regent" or "the Group"), the operator of Entertainment Bars and branded Restaurants in the UK, today announces its results for the 52 weeks ended 28 June 2008.
Key points relating to trading in the period:
Commenting on the results, Jim Glover, Chairman of Regent Inns, said: "Market conditions for high street bars and for late night businesses in particular, have significantly deteriorated in the course of last year. Against this background, the Group has made a small profit in the reporting period on ordinary trading activities before exceptionals. We continue to focus our efforts on revenue maximisation and cost reduction, to enable us to withstand the pressures of the current economic climate and are pleased to have revised our banking facilities accordingly."
- Ends -
Enquiries:
|
Regent Inns plc |
020 8327 2540 |
|
Jim Glover, Non-Executive Chairman |
|
|
John Leslie, CEO |
|
|
Merlin |
020 7653 6620 |
|
Paul Downes |
07900 244 888 |
|
Anja Kharlamova |
07887 884 788 |
Chairman's Statement and Operational Review
Whilst the Group has made a small profit in the reporting period on ordinary trading activities (excluding exceptionals), market conditions for high street bars and for late-night businesses in particular, which have been generally challenging for the last three years, worsened significantly in November 2007 as the impact of the "credit crunch" hit consumer confidence.
From November 2007, Entertainment Bars and, in particular Walkabout, which is by far the largest of the Group's businesses in terms of revenue, profit contribution and cash flow, suffered a major downturn in activity which has continued since that time. This was as a result of a number of market driven factors, notably a reduction in consumer confidence in the UK generally and specifically a reduction in spend in the late-night bar market, exacerbated by the impact of the introduction of the smoking ban in England and Wales.
In January 2008, formal approaches were received from parties who expressed interest in acquiring the Group. Accordingly, the Group announced on 15 January 2008 that it had entered an offer period. Discussions progressed and extensive due diligence was undertaken. Ultimately however, due to the deterioration in the debt markets, it was not possible to reach agreement on the terms of a formal offer and accordingly we announced on 26 June 2008 that discussions relating to an offer had ceased.
At that time, we also announced that the Board's key medium term objectives were (1) to maximise cash flow from existing operations and reduce debt, whilst maintaining the integrity of the Group's brands, and (2) to stabilise sales trends in Walkabout and, that in order to achieve those objectives, a number of measures would be undertaken to reduce borrowings and to ensure that the Group's banking arrangements remained satisfactory. These measures included:
Having reviewed the level of interest received from potential investors with regard to the sale and leaseback, we have concluded, in consultation with our banking group, that a transaction of this nature would not deliver a satisfactory outcome for any of our stakeholders at this time. Progress on the other initiatives is reported under the "Debt reduction and operational restructuring plan" section below.
Our lending banks have been very supportive and our banking facilities have recently been revised in order to ensure they are appropriate for our current circumstances. The covenants relating to these facilities are not dependent on disposals taking place, although the proceeds from any disposals must be used to pay down debt. Further details are given in the "Finance Review".
Results
Sales for the 52 weeks ended 28 June 2008 decreased by 2.0% to £148.1m (2007: £151.1m). Entertainment Bars contributed sales of £116.9m (2007: £126.5m) and Restaurants contributed £31.1m (2007: £24.7m). Like-for-like sales were 7.5% below last year. Like-for-like revenue comprises all but one Entertainment Bar but excludes Restaurants as this business was not part of the Group for the whole of the comparative period.
Exceptionals in the period were £58.1m (2007: £4.1m). These are analysed on the face of the consolidated income statement and further detail is given in note 3 to the financial statements. The most significant items are impairment provisions against the carrying values of property, goodwill, brands and franchises of £44.5m (2007: £1.4m) and an onerous lease provision of £9.6m (2007: £0.4m) neither of which have a cash impact. Other exceptional items includes the cost of amendments to our banking facility, professional fees associated with both the offer process and aborted sale and leaseback, and the head office restructuring announced just prior to the year end.
Loss before tax was £58.1m (2007: profit before tax £4.1m).
Basic loss per share from continuing operations was 45.9p (2007 earnings per share: 4.3p). Excluding exceptional items, basic loss per share was 2.8p (2007 earnings per share: 7.5p).
Financing
Cash flow from operating activities was £15.3m in the year (2007: £24.4m). Net debt at the year end was £78.9m (2007:£74.9m). In the current financial year, any surplus cash which the Company generates after capital expenditure, will be applied to the reduction of bank debt. As a result of revisions to our banking arrangements to ensure that they are appropriate to our current situation, the cost of our borrowing has increased substantially. Following these revisions, total facilities currently available to the Group are £96.5m.
Dividend
The Board is not recommending a dividend (2007: nil pence).
Market conditions for the high street bar market
The year ended 28 June 2008 has been the most challenging in the Group's history.
The smoking ban, which came into force in Wales on 1 April 2007 and in England on 1 July 2007, initially had limited financial impact on our Entertainment Bars due to adequate trading in the summer months and strong sales performance during the Rugby World Cup in September and October 2007. However, from November 2007, the impact has been very significant, particularly for those of our high street venues which where physically unable to provide facilities for smokers (which is the case for over half of our Entertainment Bars).
The Government's imposition of a duty increase mechanism whereby duty on alcohol increases by 2% over the rate of inflation for four years ('the duty escalator') is already inflicting considerable damage on the sector and, in the current economic environment, seems totally inappropriate. We urge the Government to seriously reconsider this mechanism.
The 'on trade' continues to face increased competition from heavily discounted drink prices in the supermarkets, and there is little doubt that pressure on disposable income has contributed a change in consumer behaviour, impacting the "late night" economy.
Finally, we believe the overall decline in consumer spending, which has resulted from the "credit crunch" crisis, has had a major impact on our trading in the late-night bar market which, together with the factors outlined above, have, adversely affected Regent's sales from November 2007 and continues to be a major challenge.
Debt reduction and operational restructuring plan
Since the change in trading conditions experienced from November 2007, the Group has sought to achieve significant reductions in its cost base and also to maximise revenues and cash flow across all its businesses. We have formalised these measures in an overall debt reduction and operational restructuring plan. This plan is the focus of the management team in the short to medium term. Key elements of the plan are set out below:
Revenue maximisation
Measures to maximise Walkabout sales include a revised and refocused beverage pricing policy, improvement of food value and delivery, increased targeting of the student market and a renewed emphasis on late night innovation. In respect of the Jongleurs live comedy business, we are seeking to build on our success at Christmas 2007 by further optimising Christmas ticket sales with more shows, enhancing the customer experience and offering less discounted ticket sales for peak trading days. A new internet booking engine for advance ticket sales is soon to be launched, which will be more customer friendly and significantly speed up the booking process. We are also seeking to increase customer's dwell time by introducing promotional drink offers effective at the end of the show. In Old Orleans, our focus is to further improve both food quality and customer service as well as undertaking promotional activity aimed at increasing footfall and growing bar sales.
Costs
Cost reduction initiatives have included a significant head office restructuring which was implemented in July reducing central costs by 23% (£1.5m), together with activity-based cost reductions in all of our trading businesses. In addition, we are working with a team of specialist retail consultants to realise significant improvements in labour productivity and efficiencies in other operational costs.
Capital expenditure
Capital expenditure in the year under review was £11.2m which principally related to one-off refurbishment costs for 11 Old Orleans restaurants in the first half of the year. For the reporting period ending June 2009, we will restrict our capital expenditure to less than £5m. Our priority will be equipment replacement and 'maintenance-type' spend necessary to ensure that our businesses operate to their full potential rather than seeking to invest in expansionary or development activities.
Site divestments
The sale of a non-core loss-making freehold business, Churchills in Southend, has taken place subsequent to the year end and six Entertainment Bars and six Old Orleans sites have been identified for disposal and are being marketed by agents.
Board changes
A series of board changes were made between June and August as detailed below. The restructured executive team has produced meaningful on-going cost savings and provides stability and a broad range of financial and operational experience to the business.
I would like to thank Bob Ivell on behalf of the Board for his efforts in seeking a sale of the business in a most difficult financial environment, and for his role in initiating the restructuring and cost savings plan, which included his own departure in the Group's financial interests. We welcome John Leslie's appointment as CEO to oversee the implementation of this whilst also providing management continuity, along with the appointments of Simon Kaye as COO and Mike Foster as CFO.
People
Our people are critical to the achievement of our goals, and I would like to offer my thanks to them for having worked extraordinarily hard under such difficult circumstances. We continue to invest in training and we are committed to motivating all of our staff whilst focusing performance based rewards on the best operators who add the most value.
Current trading and prospects
Current trading conditions continue to be very difficult and have clearly been seriously affected by the impact of the financial and economic crises on consumer confidence. In the 15 weeks to 12 October 2008, like for like sales were 13% below last year. The comparable period included some strong trading during the Rugby World Cup, which ran from 7 September 2007 to 20 October 2007.
It is difficult to comment on the timing of any recovery given the very tough on-going trading environment and the wider impact of the economic developments being witnessed globally and which continue to evolve on a daily basis. Whilst we have successfully implemented substantial cost savings and expect to make further progress in this respect, our ability to generate profit and cash flow is ultimately dependent on consumers spending their disposable income in Walkabout, Jongleurs and Old Orleans. Our team is working to ensure our entertainment and food offers are as attractive as possible and that they are well-positioned to benefit from an improvement in consumer demand in due course.
Jim Glover
Chairman
Finance Review
Basis of presentation
The reported statutory results cover the 52 weeks to 28 June 2008 and comparatives for the 52 weeks to 30 June 2007. The financial statements have been prepared on the going concern basis. Note 1 to the financial statements includes a more detailed note on basis of preparation and provides details of the matters considered by the directors in concluding that a going concern basis was appropriate.
Accounting policies and standards
The principal accounting policies of the Group are set out in note 1 to the financial statements and a description of certain key measures and policies are included in the review of the trading results below. The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted in the European Union.
Comparative disclosures have been restated to reflect the fact that the parts of the Group, which have previously been reported as Discontinued, are now reported as part of the continuing operations. Discontinued, as previously reported, comprised the remaining sites of the unbranded estate that was identified for disposal in 2002. These remaining sites, being the least attractive, have proved difficult to dispose and furthermore, several earlier disposals have reverted to the Group under guarantee arrangements. Consequently, we have concluded that these sites are a feature of the ongoing business and therefore they are now reported within continuing operations in both the current and comparative years. This change primarily affects the consolidated income statement.
Overview of performance
|
2008 |
2007 as restated |
Change |
|
|
£m |
£m |
||
|
Continuing operations |
|||
|
Total sales |
148.1 |
151.1 |
-2.0% |
|
Like for like sales |
113.4 |
122.6 |
-7.5% |
|
Operating (loss) / profit |
(52.0) |
9.4 |
n/a |
|
Underlying* operating profit |
6.1 |
13.6 |
-55.1% |
|
Net interest charges |
(6.0) |
(5.3) |
+13.2% |
|
Underlying* profit before tax |
0.1 |
8.3 |
n/a |
|
Exceptionals** |
(58.2) |
(4.2) |
n/a |
|
(Loss) / Profit before tax |
(58.1) |
4.1 |
Na |
* Where the table makes reference to 'underlying' profit, this refers to profit excluding exceptionals.
** Exceptionals includes exceptional items, brand amortisation and loss on sale of property, plant and equipment.
Like-for-like sales are sales in those venues which traded throughout both the whole of the current and comparative financial periods, and which did not receive the benefit of any significant capital investment during either period. It is therefore an uninvested measure and excludes the entire Old Orleans and Brandasia businesses acquired during the comparative period.
Total sales were 2.0% lower than last year but include Old Orleans and Asha's (Brandasia) sales for a full 52 weeks compared with 41 weeks and 30 weeks respectively in the comparative period.
Like for Like sales - comprises all but one of the venues that were open at the beginning of the financial period: Walkabout Jongleurs Leicester, which had been converted from Bar Risa Jongleurs in September 2006. Like-for-like sales were 7.5% lower than last year.
Underlying operating profit at £6.1m was just below half the level of last year due to the decline in like-for-like sales of 7.5%, and also a decline in profitability at Old Orleans due to the trend of the uninvested restaurants and closure periods of several weeks for 10 refurbishments and their re-opening launch costs.
Net Interest charges were £0.7m higher at £6.0m, but 2007 included a £0.4m credit from the reduction in the fair value liability of swaps that had not qualified for hedge accounting on implementation of IAS 32. The underlying increase in interest of £0.3m was primarily attributable to funding the acquisition of Old Orleans for a full year relative to 41 weeks in the comparative period.
After taking account of interest, underlying pre-tax profit was £0.1m (2007: £8.2m).
Exceptionals of £58.2m (2007: £4.2m) were incurred during the period. These comprised:
2008 2007
£m £m
Exceptional Items
Non cash Exceptional items
Impairment provisions 44.5 1.4
Onerous lease provisions 9.6 0.4
------- ------
54.1 1.8
Other Exceptional items
Amendments to bank facility 1.5 -
Professional fees in relation to aborted sale of the Group 0.4 -
Professional fees in relation to aborted sale and leaseback 0.3 -
Head office restructuring 0.8 -
Integration of Old Orleans - 1.2
Corporate restructuring - 0.6
------- -------
Total Exceptional items 57.1 3.6
Other Exceptionals
Loss on sale of property, plant and equipment 0.8 0.4
Brand amortisation 0.3 0.2
------- ------
Total Exceptionals 58.2 4.2
==== ====
The associated tax credit on the exceptional items in the period was £10.2m (2007: £0.6m).
Segmental performance
As the Group operates a central administration and business support function serving all of its businesses, this cost has not been allocated to the Entertainment Bars and Restaurants income generating segments but is shown as a separate segment. Revenue and operating profit, both before and after exceptionals are segmented as follows:
|
52 weeks ended 28 June 2008 |
52 weeks ended 30 June 2007 |
|||||||
|
Entertain- ment Bars |
Restau- rants |
Administ- ration |
Total |
Entertain- ment Bars |
Restau- rants |
Admiinis-ration |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
|
Revenue |
117.0 |
31.1 |
- |
148.1 |
126.5 |
24.6 |
- |
151.1 |
|
Operating profit excluding exceptionals |
13.4 |
(0.3) |
(7.0) |
6.1 |
20.1 |
0.6 |
(7.1) |
13.6 |
|
Exceptionals |
(38.6) |
(16.6) |
(3.0) |
(58.2) |
(2.2) |
(1.4) |
(0.6) |
(4.2) |
|
Operating profit after exceptionals |
(25.2) |
(16.9) |
(10.0) |
(52.1) |
17.9 |
(0.8) |
(7.7) |
9.4 |
Key financial measures
|
2008 |
2007 |
Change |
|
|
Underlying (loss) / earnings per share (p) |
(2.8) |
7.5 |
n/a |
|
Basic earnings per share (p) |
(45.9) |
4.3 |
n/a |
|
EBITDA before exceptional items (£m) |
17.3 |
24.1 |
-28.2% |
|
Operating cash flows (£m) |
15.3 |
24.4 |
-37.3% |
|
Free cash flow (£m) |
(2.8) |
9.3 |
n/a |
|
Net debt (£m) |
(78.9) |
(74.9) |
+5.3% |
|
Net bank debt (£m) |
(78.9) |
(68.8) |
+14.6% |
|
Net assets (£m) |
16.3 |
68.8 |
-76.3% |
|
Net interest cover (times) |
2.8 |
4.2 |
|
|
Fixed charge cover (times) |
1.5 |
1.9 |
|
|
Gearing |
483% |
109% |
|
|
Average debt financing cost |
7.7% |
7.8% |
Underlying (loss) / earnings per share is based on operating (loss) / profit before exceptionals.
EBITDA is earnings before interest, tax, depreciation and amortisation. The derivation of this figure is set out in note 34 of the Accounts.
Free cash flow is derived in the table set out under cash flow later in this review.
Net debt is bank debt plus convertible loan stock less cash and cash equivalents.
Net interest cover is EBITDA before exceptional items, divided by net interest*.
Fixed charge cover is EBITDA before exceptional items plus rent costs, divided by net interest* plus rent costs.
Gearing is closing net debt divided by net assets.
Average debt financing cost is net interest* divided by the weighted average level of net debt in the year.
* the gain arising on the movement in fair value of interest rate swaps has been excluded from the net interest charge for these calculations (affects 2007 only).
Taxation
There was a tax credit for the period of £7.0m (2007: £0.8m). After adding back tax related to exceptionals and adjustments relating to prior years, changes in tax rates and unutilised tax losses carried forward but not recognised as an asset in deferred tax, there was an underlying tax charge of £0.6m (2007: £2.8m) on profits of £0.1m (2007: £8.2m). The disparity between the underlying tax charge and profit in the reporting period is due to the disproportionate effect, at this low level of profit, of expenditure not qualifying for tax relief (mainly accounting depreciation on non-qualifying items of capital expenditure), which is relatively fixed.
There was no cash tax liability in respect of the reporting period and unrecognised carried forward tax losses are £12.2m.
Earnings per share
Basic loss per share was 45.9 pence (2007: earnings per share 4.3 pence). Underlying earnings per share, which is earnings per share from continuing operations before exceptionals is, in the opinion of the Directors, a more representative measure for tracking the Company's trading performance from year to year. Underlying loss per share was 2.8 pence (2007: earnings per share 7.5 pence).
Cash flow and net debt
|
2008 |
2007 |
||
|
£m |
£m |
||
|
Cash generated before exceptional items |
17.9 |
27.3 |
|
|
Cash outflows from exceptional items |
(2.6) |
(2.9) |
|
|
Operating cash flows |
15.3 |
24.4 |
|
|
Net interest paid |
(6.3) |
(3.9) |
|
|
Tax paid |
- |
(0.8) |
|
|
Capital expenditure on existing estate |
(11.8) |
(10.4) |
|
|
Free cash flow |
(2.8) |
9.3 |
|
|
Expansionary capital expenditure |
- |
- |
|
|
Proceeds from disposals of fixed assets |
(0.2) |
1.3 |
|
|
Acquisitions |
- |
(28.0) |
|
|
Purchase of own shares |
(1.0) |
(0.2) |
|
|
Movement in net debt |
(4.0) |
(17.6) |
|
|
Debt taken on with subsidiary acquisition |
- |
(0.3) |
|
|
Opening net debt |
(74.9) |
(57.0) |
|
|
Closing net debt |
(78.9) |
(74.9) |
Operating cash flow before exceptional items was £17.9m, down £9.4m on last year and after exceptional items was £15.3m, down £9.1m on last year.
Net interest paid at £6.3m was £2.4m more than last year because last year was artificially low due to the consolidation during that year of facility draw downs into six month maturities with a payment due shortly after the year end.
There were no tax payments in the year (2007: £0.8m).
Capital expenditure payments amounted to £11.8m (2007: £10.4m) and included £3.1m for the refurbishment of ten Old Orleans restaurants and enhancements to the refit of Old Orleans Epping which re-opened in September 2007 following a major fire (February 2007). Also included were payments of £2.4m relating to works completed at the end of the previous financial period in respect of rebuilding the paddle steamer that is Old Orleans Thurrock, and the provision of facilities for smokers just ahead of the smoking ban. The balance of expenditure, £6.3m, related to minor projects across the estate, equipment replacement, landlord's dilapidations works and health and safety and licensing works. Capital expenditure incurred in the period was in line with the annual depreciation charge of £11.2m (2007: £10.5m).
Resultant free cash flow (after exceptional items) was negative at £2.8m (2007: cash generated £9.3m) represented cost 2.5 pence per share (2007: income 8.3 pence).
Acquisitions in the comparative period comprised Old Orleans Limited for £27.4m and Brandasia Limited for £0.6m.
Current liquidity
At the balance sheet date, the Group had net debt of £78.9m, an increase of £4.0m year-on-year and a reduction of £1.7m on the position reported at the half year. Net debt comprised:
|
2008 |
2007 |
||
|
£m |
£m |
||
|
Bank debt |
83.0 |
73.3 |
|
|
Convertible loan notes |
- |
6.0 |
|
|
Finance leases |
- |
0.1 |
|
|
Cash and cash equivalents |
(4.1) |
(4.5) |
|
|
Net debt |
78.9 |
74.9 |
The convertible loan notes were repaid in January 2008, at the request of the loan note holders in accordance with the terms of the notes.
At the balance sheet date, £110m of bank funding facilities were available to the Group in the form of a term loan of £34m and a revolving credit facility of £76.0m.
Subsequent to the period end, bank funding facilities have been modified such that they are appropriate to the Group's present situation and the trading outlook. Financial covenant tests have been moved from half yearly to quarterly and have been relaxed to reflect the Group's current forecasts adjusted for sensible tolerances. The covenant test measures are all cash-based, comprising interest cover, fixed cover and net debt to EBITDA. The Group is in compliance with these covenants. Total facilities available to the Group have been reduced to £96.5m, comprising a term loan of £29.5m, an 'original' revolving credit facility of £59.0m and an additional revolving credit facility of £8.0m. These facilities expire in September 2010. The net proceeds from any future asset sales must be used to repay debt and will result in the cancellation of an equivalent amount of facility - to be first applied against the additional revolving credit facility. £3m of the term loan is repayable on 30 June each year.
Treasury policy
The Group's treasury policy is to ensure the availability of funds to meet its future requirements and to optimise exposure to fluctuations in interest rates. The Board monitors and approves treasury policy and approves all interest rate hedging transactions. The Group does not engage in speculative derivative transactions. The key financial risks relate to meeting debt repayments as they fall due and interest rate risks. The Group has no outlets overseas and is not dependent on supplies from overseas and therefore has no foreign currency exposure.
To manage the Group's exposure to increases in interest rates, a significant proportion of borrowings are hedged using interest rate swaps. At the balance sheet date, the Group had in place £50m of interest rate swap agreements, equivalent to 60% of its bank debt. All of these swaps qualified for hedge accounting. £10m of swap agreements fixing interest at 5.15%, expired in July 2008, shortly after the end of the reporting period. The remaining £40m comprises four swaps of £10m with maturities between July 2009 and September 2011 at rates varying between 5.15% and 5.25%; these swaps had a gross asset value of £0.9m at the balance sheet date which amount net of tax has been credited directly to shareholders funds.
The Group maintains business and cash flow models that forecast requirements in the short, medium and long term. Cash flow is measured daily and forecasts updated on a weekly basis for review by a sub-committee of the Board.
Mike Foster
Chief Financial Officer
Audited Consolidated Income Statement
for the 52 weeks ended 28 June 2008
|
|
|
|
|
|
Represented
|
|
|
|
Note
|
|
52 weeks
ended
28 June 2008
Total
£’000
|
52 weeks
ended
30 June
2007
Total
£’000
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
Revenue
|
|
2
|
|
148,060
|
151,120
|
|
Cost of sales
|
|
|
|
(34,110)
|
(34,793)
|
|
Gross profit
|
|
|
|
113,950
|
116,327
|
|
|
|
|
|
|
|
|
Operating costs
|
|
5
|
|
(165,959)
|
(106,879)
|
|
|
|
|
|
|
|
|
Operating (loss)/profit
|
|
|
|
(52,009)
|
9,448
|
|
|
|
|
|
|
|
|
Analysed as:
|
|
|
|
|
|
|
Operating profit before exceptional items and brand amortisation
|
|
|
|
6,111
|
13,578
|
|
|
|
|
|
|
|
|
Loss on sale of property, plant and equipment
|
|
|
|
(775)
|
(448)
|
|
Exceptional items
|
|
3
|
|
|
|
|
Impairment provision
|
|
|
|
(44,462)
|
(1,368)
|
|
Provision for onerous leases
|
|
|
|
(9,552)
|
(355)
|
|
Other
|
|
|
|
(3,031)
|
(1,730)
|
|
|
|
|
|
|
|
|
Brand amortisation
|
|
|
|
(300)
|
(229)
|
|
|
|
|
|
|
|
|
Interest payable and similar charges
|
|
4
|
|
(6,151)
|
(5,859)
|
|
Interest receivable
|
|
4
|
|
92
|
521
|
|
|
|
|
|
|
|
|
(Loss)/profit before taxation
|
|
|
|
(58,068)
|
4,110
|
|
Taxation
|
|
6
|
|
6,998
|
772
|
|
|
|
|
|
|
|
|
(Loss)/ profit for the period attributable to shareholders
|
|
|
|
(51,070)
|
4,882
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
- basic
|
|
8
|
|
(45.9)p
|
4.3p
|
|
- diluted
|
|
8
|
|
(45.9)p
|
4.2p
|
|
|
|
|
|
|
|
Audited Consolidated Statement of Changes in Equity
|
Share capital |
Share premium |
Capital reserve own shares |
Convertible bond reserve |
Equity reserve |
Retained earnings |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
At 1 July 2006 |
5,664 |
50,586 |
(322) |
60 |
608 |
6,102 |
62,698 |
|
Ordinary shares issued |
2 |
32 |
- |
- |
- |
- |
34 |
|
Profit for the period |
- |
- |
- |
- |
- |
4,882 |
4,882 |
|
Gains arising on interest rate hedges net of deferred tax |
- |
- |
- |
- |
- |
1,044 |
1,044 |
|
Own shares acquired |
- |
- |
(187) |
- |
- |
- |
(187) |
|
Share-based payments |
- |
- |
- |
- |
294 |
- |
294 |
|
At 30 June 2007 |
5,666 |
50,618 |
(509) |
60 |
902 |
12,028 |
68,765 |
|
Convertible loan note redeemed |
- |
- |
- |
(60) |
- |
- |
(60) |
|
Loss for the period |
- |
- |
- |
- |
- |
(51,070) |
(51,070) |
|
Losses arising on interest rate hedges net of deferred tax |
- |
- |
- |
- |
- |
(408) |
(408) |
|
Own shares acquired |
- |
- |
(1,000) |
- |
- |
- |
(1,000) |
|
Share-based payments |
- |
- |
- |
- |
112 |
- |
112 |
|
At 28 June 2008 |
5,666 |
50,618 |
(1,509) |
- |
1,014 |
(39,450) |
16,339 |
Audited Consolidated Balance Sheet
at 28 June 2008
|
28 June 2008 |
30 June 2007 |
||
|
Note |
£'000 |
£'000 |
|
|
Assets |
|||
|
Non-current assets |
|||
|
Intangible assets |
9 |
8,503 |
24,643 |
|
Property, plant and equipment |
10 |
124,702 |
154,823 |
|
Derivative financial instruments |
919 |
1,450 |
|
|
Other non-current assets |
2,218 |
2,361 |
|
|
136,342 |
183,277 |
||
|
Current assets |
|||
|
Inventories |
2,183 |
1,972 |
|
|
Trade and other receivables |
11 |
7,890 |
8,246 |
|
Assets held for sale |
1,685 |
721 |
|
|
Cash and cash equivalents |
4,053 |
4,463 |
|
|
15,811 |
15,402 |
||
|
Current liabilities |
|||
|
Financial liabilities |
|||
|
Borrowings |
(2,725) |
(2,787) |
|
|
Derivative financial instruments |
(21) |
(41) |
|
|
Unsecured convertible loan notes |
- |
(5,940) |
|
|
Finance leases |
- |
(36) |
|
|
Trade and other payables |
12 |
(23,742) |
(22,571) |
|
Current tax liabilities |
(570) |
(874) |
|
|
Provisions |
13 |
(1,395) |
(1,200) |
|
(28,453) |
(33,449) |
||
|
Net current liabilities |
(12,642) |
(18,047) |
|
|
Total assets less current liabilities |
123,700 |
165,230 |
|
|
Non-current liabilities |
|||
|
Financial liabilities |
|||
|
Borrowings |
(79,945) |
(69,858) |
|
|
Finance leases |
- |
(66) |
|
|
Deferred tax liabilities |
13 |
(14,287) |
(21,125) |
|
Other non-current liabilities |
(1,909) |
(1,991) |
|
|
Provisions |
13 |
(11,220) |
(3,425) |
|
(107,361) |
(96,465) |
||
|
Net assets |
16,339 |
68,765 |
|
|
Capital and reserves |
|||
|
Called up share capital |
5,666 |
5,666 |
|
|
Share premium account |
50,618 |
50,618 |
|
|
Capital reserve - own shares |
(1,509) |
(509) |
|
|
Convertible bond reserve |
- |
60 |
|
|
Equity reserve |
1,014 |
902 |
|
|
Retained earnings |
(39,450) |
12,028 |
|
|
Total equity |
16,339 |
68,765 |
Audited Consolidated Cash Flow Statement
for the 52 weeks ended 28 June 2008
|
52 weeks ended |
52 weeks ended |
||
|
28 June 2008 |
30 June 2007 |
||
|
Note |
£'000 |
£'000 |
|
|
Cash flows from operating activities |
|||
|
Cash generated from operations |
14 |
15,346 |
24,439 |
|
Interest received |
51 |
120 |
|
|
Interest paid |
(6,381) |
(3,990) |
|
|
Tax paid |
- |
(770) |
|
|
Net cash from operating activities |
9,016 |
19,799 |
|
|
Cash flows from investing activities |
|||
|
(Outflow)/proceeds from disposals of property, plant and equipment |
(258) |
1,317 |
|
|
Purchase of property, plant and equipment |
(11,816) |
(10,461) |
|
|
Acquisition of subsidiaries |
- |
(27,997) |
|
|
Net cash (used in) investing activities |
(12,074) |
(37,141) |
|
|
Cash flows from financing activities |
|||
|
Net proceeds from issue of ordinary share capital |
- |
34 |
|
|
Net proceeds from issue of new bank loans |
10,000 |
208,217 |
|
|
Repayment of borrowings |
(6,250) |
(186,217) |
|
|
Finance lease principal payments |
(102) |
(32) |
|
|
Purchase of own shares |
(1,000) |
(187) |
|
|
Net cash generated from financing activities |
2,648 |
21,815 |
|
|
Net (decrease)/increase in cash and cash equivalents |
(410) |
4,473 |
|
|
Cash and cash equivalents at 30 June 2007 and 1 July 2006 |
4,463 |
(10) |
|
|
Cash and cash equivalents at 28 June 2008 and 30 June 2007 |
4,053 |
4,463 |
|
NOTES
for the 52 weeks ended 28 June 2008
1. Accounting policies
Basis of preparation
Authorisation of financial statements and statement of compliance with IFRSs
The preliminary announcement for the 52 week period ended 28 June 2008 has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union at 28 June 2008. Details of the accounting policies adopted in this preliminary announcement are set out within the financial performance section of the Company's website, www.regentinns.co.uk.
These preliminary statements do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. They have, however, been extracted from the statutory accounts for the period ended 28 June 2008 on which an unqualified report has been made by the company's auditors. The auditor's report has been modified by the inclusion of a paragraph drawing attention to the note set out below relating to the Company's ability to continue as a going concern.
Going concern
The preliminary announcement for the 52 week period ended 28 June 2008 has been prepared on the going concern basis, which assumes that the group will continue to be able to meet its liabilities as they fall due for the foreseeable future.
The Group's banking facilities have recently been amended, such that committed borrowing facilities of £96.5m are available until the facility expires in September 2010. Under the terms of the amended facility, any proceeds from asset sales must be used to repay debt. Financial covenant tests which are measured quarterly have been reset. The facility and financial covenant tests allow for sensible tolerances in trading performance relative to the Board's forecast to June 2010. The trading forecasts, which include detailed cash flow calculations, comprise detailed assumptions as to sales performance by month and take account of the normal seasonality profile. The forecasts also include a major cost reduction programme, a significant proportion of which will be delivered by actions that have already been taken, including the major restructure of head office that took place in July 2008.
The Directors are confident that the assumptions underlying their forecasts are reasonable and that the Group will be able to operate within its revised banking terms. However, given the unprecedented external economic environment that has unfolded in recent weeks, there is currently a material uncertainty as to how this may affect consumer confidence and therefore the Group trading forecasts.
Having taken this uncertainty into account, the Board believes that it is appropriate to prepare the financial statements on the going concern basis. The financial statements do not include any adjustment to the value of the balance sheet assets or provisions for further liabilities, which would result should the going concern concept not be valid.
Representation of comparatives
Comparative disclosures have been restated to reflect the fact that parts of the Group, which have previously been reported as Discontinued, are now reported as part of continuing operations. Discontinued, as previously reported, comprised the remaining sites of the unbranded estate that was identified for disposal in 2002. These remaining sites, being the least attractive, have proved difficult to dispose and furthermore several earlier disposals have found their way back to the Group under guarantee arrangements. Consequently, it has become clear that these sites are a feature of the ongoing business and therefore the results of these sites are now reported within continuing operations in both the current and comparative periods. This restatement no effect on the profit for the comparative period but gives rise to some reallocation of items within the consolidated income statement. There is no effect on either the consolidated balance sheet or consolidated cash flow statement.
The 2007 statutory accounts have been filed with Registrar of Companies. The 2008 statutory accounts will be sent to shareholders in November 2008 and will be filed with the Registrar of Companies following their adoption at the forthcoming Annual General Meeting.
2. Segmental information
All revenue arises in the UK.
The Group's income generating operations are organised into two separate business segments, Entertainment Bars and Restaurants. As the Group operates a central administration and business support function servicing both income-generating segments, central costs are shown as a separate segment.
The segment results for the 52 week periods ended 28 June 2008 and 30 June 2007 were as follows:
|
52 weeks ended 28 June 2008 |
52 weeks ended 30 June 2007 |
||||||||
|
Entertainment Bars |
Restaurants |
Central/ unallocated |
Total |
Entertainment Bars |
Restaurants |
Central/ unallocated |
Total |
||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||
|
Revenue |
116,942 |
31,118 |
- |
148,060 |
126,468 |
24,652 |
- |
151,120 |
|
|
Cost of sales |
(25,584) |
(8,526) |
- |
(34,110) |
(28,170) |
(6,623) |
- |
(34,793) |
|
|
Gross profit |
91,358 |
22,592 |
- |
113,950 |
98,298 |
18,029 |
- |
116,327 |
|
|
Operating costs |
(77,968) |
(22,872) |
- |
(100,840) |
(78,205) |
(17,469) |
- |
(95,674) |
|
|
Venue profit |
13,390 |
(280) |
- |
13,110 |
20,093 |
560 |
- |
20,653 |
|
|
Administrative expenses |
- |
- |
(6,999) |
(6,999) |
- |
- |
(7,075) |
(7,075) |
|
|
Operating profit before exceptional items |
13,390 |
(280) |
(6,999) |
6,111 |
20,093 |
560 |
(7,075) |
13,578 |
|
Other segment items included in the income statement are as follows:
|
52 weeks ended 28 June 2008 |
52 weeks ended 30 June 2007 |
|||||||
|
Entertainment Bars |
Restaurants |
Central/ unallocated |
Total |
Entertainment Bars |
Restaurants |
Central/ unallocated |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Depreciation |
9,758 |
1,478 |
- |
11,236 |
9,336 |
1,129 |
- |
10,465 |
|
Amortisation of franchise fees |
- |
- |
- |
- |
- |
8 |
- |
8 |
|
Brand amortisation |
- |
300 |
- |
300 |
- |
237 |
- |
237 |
|
Loss on sale of property, plant and equipment |
775 |
- |
- |
775 |
448 |
- |
- |
448 |
|
Exceptional items |
||||||||
|
-Property, plant and equipment impairment provision |
25,505 |
3,117 |
- |
28,622 |
1,368 |
- |
- |
1,368 |
|
-Goodwill impairment provision |
4,746 |
8,331 |
- |
13,077 |
- |
- |
- |
- |
|
-Brand impairment provision |
- |
2,596 |
- |
2,596 |
- |
- |
- |
- |
|
-Franchise impairment provision |
- |
175 |
- |
175 |
- |
- |
- |
- |
|
-Provision for onerous leases |
7,493 |
2,059 |
- |
9,552 |
355 |
- |
- |
355 |
|
-Bank facility amendment |
- |
- |
1,497 |
1,497 |
- |
- |
- |
- |
|
-Aborted sale and leaseback fees |
- |
- |
296 |
296 |
- |
- |
- |
- |
|
-Aborted sale of Group fees |
- |
- |
388 |
388 |
- |
- |
- |
- |
|
-Head office reorganisation costs |
- |
- |
850 |
850 |
- |
- |
- |
- |
|
-Old Orleans integration costs |
- |
- |
- |
- |
- |
1,175 |
- |
1,175 |
|
-Corporate restructuring fees |
- |
- |
- |
- |
- |
- |
555 |
555 |
The segment assets and liabilities at 28 June 2008 and capital expenditure for the 52 weeks then ended are as follows:
|
Entertainment Bars |
Restaurants |
Central/ unallocated |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Assets |
119,724 |
24,257 |
8,172 |
152,153 |
|
Liabilities |
19,623 |
6,760 |
109,431 |
135,814 |
|
Capital expenditure |
5,338 |
5,188 |
686 |
11,212 |
Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, and trade and other receivables. Unallocated assets comprise property, plant and equipment, trade and other receivables, and cash and cash equivalents.
Segment liabilities comprise operating liabilities. Unallocated liabilities comprise items such as borrowings including interest rate swaps, current tax liabilities, deferred tax liabilities and provisions.
Capital expenditure comprises additions to property, plant and equipment.
The segment assets and liabilities are reconciled to entity assets and liabilities as follows:
|
Assets |
Liabilities |
|
|
£'000 |
£'000 |
|
|
Segment assets/liabilities |
143,981 |
26,383 |
|
Unallocated: |
||
|
Property, plant and equipment |
1,958 |
- |
|
Trade and other receivables |
2,781 |
- |
|
Cash and cash equivalents |
3,433 |
- |
|
Current borrowings |
- |
2,725 |
|
Non-current borrowings |
- |
79,945 |
|
Trade and other liabilities |
- |
14,666 |
|
Current tax liabilities |
- |
570 |
|
Deferred tax liabilities |
- |
11,525 |
|
Total |
152,153 |
135,814 |
The segment assets and liabilities at 30 June 2007 and capital expenditure for the 52 weeks then ended are as follows:
|
Entertainment Bars |
Restaurants |
Central/ unallocated |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Assets |
154,100 |
34,768 |
9,831 |
198,699 |
|
Liabilities |
9,663 |
6,638 |
113,633 |
129,934 |
|
Capital expenditure |
7,408 |
2,133 |
1,777 |
11,318 |
Capital expenditure comprises additions to property, plant and equipment.
The segment assets and liabilities are reconciled to entity assets and liabilities as follows:
|
Assets |
Liabilities |
|
|
£'000 |
£'000 |
|
|
Segment assets/liabilities |
188,868 |
16,301 |
|
Unallocated: |
||
|
Property, plant and equipment |
2,817 |
- |
|
Trade and other receivables |
2,629 |
- |
|
Cash and cash equivalents |
4,385 |
- |
|
Current borrowings |
- |
8,706 |
|
Non-current borrowings |
- |
69,670 |
|
Trade and other liabilities |
- |
16,020 |
|
Current tax liabilities |
- |
874 |
|
Deferred tax liabilities |
- |
18,363 |
|
Total |
198,699 |
129,934 |
3. Exceptionals
|
52 weeks ended |
52 weeks ended |
|
|
28 June 2008 |
30 June 2007 |
|
|
£'000 |
£'000 |
|
|
Exceptional Items |
||
|
Impairment provision |
||
|
- Property, plant and equipment |
(28,622) |
(1,368) |
|
- Goodwill |
(13,077) |
- |
|
- Brands and franchises |
(2,763) |
- |
|
(44,462) |
(1,368) |
|
|
Provision for onerous leases |
(9,552) |
(355) |
|
Bank facility amendment |
(1,497) |
- |
|
Aborted sale and leaseback fees |
(296) |
- |
|
Aborted sale of Group fees |
(388) |
- |
|
Head office reorganisation costs |
(850) |
- |
|
Integration of Old Orleans Limited |
- |
(1,175) |
|
Corporate restructuring fees |
- |
(555) |
|
Other exceptional items |
(3,031) |
(1,730) |
|
Total Exceptional Items |
(57,045) |
(3,453) |
|
Loss on disposal of property, plant and equipment |
(775) |
(448) |
|
Brand amortisation |
(300) |
(229) |
|
Total Exceptionals |
(58,120) |
(4,130) |
Impairment tests were performed as at the end of the reporting period on all of the Group's tangible and intangible assets. The basis of these tests is explained under the accounting policy notes for intangible assets and property, plant and equipment (see website). An analysis of the impairment charge by segment is given in note 2 - segmental information. The impairment of property, plant and equipment is in respect of 30 short leasehold properties and two freehold properties (one subsequently disposed).
Provisions for onerous leases have been made in accordance with the accounting policy for such. These provisions cover 11 properties that are part of the trading segments, and 13 properties that previously were part of the discontinued business but with one exception are now reported as part of Entertainment Bars. All of these sites are either being marketed for disposal or have been sub-let at less than the passing rent. An analysis of the charge against the onerous lease provision by segment is given in note 2 - segmental information.
Fees were payable to lending banks and advisers in respect of amendments to the banking facility as at June 2008 and the subsequent restructuring of that facility .
As referred to in the Chairman's statement, the Group had commenced the process of a sale and lease back on a selection of freehold properties earlier in the reporting period. This was put on hold during the offer period and subsequently aborted when it became clear that offers for the properties were not sufficiently attractive. Fees were incurred with valuers, property agents and professional advisers, including for the preparation of a working capital report as this would have constituted a Class 1 transaction.
As also referred to in the Chairman's statement, the Company was in an offer period between January and June 2008, which ultimately did not result in an offer for the business. Fees were incurred with professional advisers during this period.
The announcement in June 2008 that discussions relating to an offer for the Company had ceased, also notified a restructuring of the Board and that a reorganisation of Head Office were taking place. This reorganisation was duly undertaken in July 2008, the costs of which, including the Board reorganization, has been charged to exceptionals. The annual cost savings resulting from the reorganisation will exceed £1,500,000.
The tax credit relating to exceptional items was £10,195,000 (2007: £625,000).
4. Finance costs
|
52 weeks ended |
52 weeks ended |
|
|
28 June 2008 |
30 June 2007 |
|
|
£'000 |
£'000 |
|
|
Interest payable and similar charges |
||
|
Bank loans and overdraft |
(5,542) |
(5,117) |
|
Amortisation of set-up costs of bank loan |
(275) |
(275) |
|
Convertible loan notes |
(233) |
(422) |
|
Other interest payable |
(101) |
(45) |
|
(6,151) |
(5,859) |
|
|
Interest receivable |
||
|
Short term bank deposits |
51 |
120 |
|
Fair value gains/(losses) on financial instruments |
||
|
- interest rate swaps |
41 |
401 |
|
92 |
521 |
|
5. Profit before taxation
|
52 weeks ended |
52 weeks ended |
|
|
28 June 2008 |
30 June 2007 |
|
|
£'000 |
£'000 |
|
|
The following items have been included in arriving at operating profit: |
||
|
Staff costs |
38,180 |
35,422 |
|
Cost of inventories recognised as an expense (included in cost of sales) |
34,110 |
34,793 |
|
Depreciation of property, plant and equipment |
11,236 |
10,465 |
|
Amortisation of brands and franchises |
300 |
237 |
|
Amortisation of lease premiums |
143 |
143 |
|
Share-based payments |
112 |
294 |
|
Loss on disposals of property, plant and equipment |
775 |
448 |
|
Auditor's remuneration |
||
|
Audit services |
||
|
- Fees payable to the Company auditor's for the audit of parent company and consolidated accounts |
66 |
42 |
|
- The audit of the Company's subsidiaries pursuant to legislation |
16 |
8 |
|
- Half year review fees |
20 |
20 |
|
Non-audit services |
||
|
- Fees payable to the Company's auditor and its associates for other services: |
||
|
- Tax advice relating to corporate restructuring |
6 |
142 |
|
- Working capital report for sale and leaseback transaction (aborted) |
100 |
- |
|
Operating lease rentals: land and buildings |
16,179 |
15,220 |
|
Operating lease rentals: equipment and vehicles |
176 |
118 |
|
Pre-opening costs |
16 |
79 |
6. Taxation
(a) Analysis of tax credit/ (charge) in the period
The charge based on the (loss)/profit for the period comprises:
|
52 weeks ended 28 June 2008 Total |
52 weeks ended 30 June 2007 Total |
|
|
£'000 |
£'000 |
|
|
Current tax |
||
|
- Current year |
- |
(849) |
|
- Adjustment in respect of prior years |
304 |
552 |
|
Total current tax |
304 |
(297) |
|
Deferred tax |
||
|
- Current year |
5,948 |
(1,350) |
|
- Adjustment in respect of changes in tax rate |
(314) |
1,476 |
|
- Adjustment in respect of prior years |
1,060 |
943 |
|
Total deferred tax |
6,694 |
1,069 |
|
Tax credit |
6,998 |
772 |
(b) Factors affecting tax credit for the period
|
52 weeks ended 28 June 2008 Total |
52 weeks ended 30 June 2007 Total |
|
|
£'000 |
£'000 |
|
|
Corporation tax at the statutory rate of 29.5% (2007: 30%) applied to loss/ (profit) before tax |
17,130 |
(1,233) |
|
Effects of: |
||
|
Expenses not deductible for tax purposes |
(134) |
(105) |
|
Accounting depreciation not eligible for tax purposes |
(579) |
(642) |
|
Impairment not eligible for tax purposes |
(6,345) |
(411) |
|
Loss on sale of property, plant and equipment |
(229) |
(134) |
|
Other adjustments |
59 |
210 |
|
Adjustment in respect of changes in tax rates |
(314) |
1,476 |
|
Unutilised tax losses carried forward |
(3,601) |
(10) |
|
(Charge)/deduction in respect of share based payments |
(353) |
126 |
|
Adjustments relating to prior years corporation tax |
304 |
552 |
|
Adjustments relating to prior years deferred tax |
1,060 |
943 |
|
Total tax credit |
6,998 |
772 |
7. Dividends
There were no dividends paid (2007: £nil) by the Group during the period and the Board has not proposed a dividend in respect of the 52 weeks ended 28 June 2008.
8. Earnings per share
Earnings per share have been calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares in issue during the period excluding those held in the ESOT, which have been treated as cancelled.
Diluted earnings per share adjusts for those share options granted to employees and the holders of convertible loan stock where the exercise price was less than the average price of the Company's shares during the period.
The table below shows the basis of calculation of basic earnings per share and diluted earnings per share, and also sets out the steps to exclude exceptional items from the calculations in order to derive adjusted earnings per share. In the opinion of the directors, adjusted earnings per share, being earnings per share before exceptional items, brand amortisation and loss on sale of property, plant and equipment is a more representative indicator of the company's underlying trading performance.
|
52 weeks ended |
52 weeks ended |
|||||
|
28 June 2008 |
30 June 2007 |
|||||
|
Earnings |
Weighted average number of shares |
Earnings per share |
Earnings |
Weighted average number of shares |
Earnings per share |
|
|
£'000 |
000 |
pence |
£'000 |
000 |
pence |
|
|
Total EPS |
||||||
|
Basic |
(51,070) |
111,234 |
(45.9) |
4,882 |
112,512 |
4.3 |
|
Dilution impact of options |
- |
- |
- |
- |
2,532 |
- |
|
Diluted |
(51,070) |
111,234 |
(45.9) |
4,882 |
115,044 |
4.2 |
|
Exclude exceptional items, brand amortisation,and loss on sale of property, plant and equipment (net of taxation) |
47,925 |
- |
- |
3,505 |
- |
- |
|
Adjusted EPS |
||||||
|
Basic |
(3,145) |
111,234 |
(2.8) |
8,387 |
112,512 |
7.5 |
|
Diluted |
(3,145) |
111,234 |
(2.8) |
8,387 |
115,044 |
7.3 |
9. Intangible assets
Group
|
Goodwill |
Brands |
Franchises |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Cost |
||||
|
At 1 July 2007 |
20,466 |
6,012 |
175 |
26,653 |
|
Impairment charge |
(13,077) |
(2,596) |
(167) |
(15,840) |
|
At 28 June 2008 |
7,389 |
3,416 |
8 |
10,813 |
|
Accumulated amortisation |
||||
|
At 1 July 2007 |
1,773 |
229 |
8 |
2,010 |
|
Charge for the period |
- |
300 |
- |
300 |
|
At 28 June 2008 |
1,773 |
529 |
8 |
2,310 |
|
Net book value |
||||
|
At 28 June 2008 |
5,616 |
2,887 |
- |
8,503 |
|
At 30 June 2007 |
18,693 |
5,783 |
167 |
24,643 |
Goodwill
Goodwill brought forward from previous years arose on the acquisition of Jongleurs Comedy Clubs in 2000 and Old Orleans Limited and Brandasia Limited in 2006. For the purposes of the annual impairment review, goodwill has been allocated against all those venues existing at the time of acquisition pro-rata to earnings at that time. Impairment has been tested in accordance with the stated accounting policy (see website). Jongleurs has been impaired by £4,746,000, Old Orleans by £7,668,000 and Brandasia by £663,000.
Brands
Brand value, which arose on the acquisition of Old Orleans Limited is being amortised over 20 years. Brands have been allocated against all Old Orleans venues existing at the time of acquisition pro-rata to sales at that time. Impairment has been tested in accordance with the stated accounting policy (see website).
Franchises
Brandasia Limited has a franchise agreement with Asha's Restaurants International Limited. The business has yet to achieve profits after 18 months trading and therefore the carrying value of the franchise has been fully impaired.
10. Property, plant and equipment
|
Land & buildings |
||||||
|
Freeholds £'000 |
Leaseholds longer than 50 years £'000 |
Leaseholds between 20 and 50 years £'000 |
Leaseholds less than 20 years £'000 |
Equipment, fixtures & fittings £'000 |
Total £'000 |
|
|
Cost |
||||||
|
At 1 July 2007 |
28,628 |
3,013 |
78,825 |
42,138 |
69,446 |
222,050 |
|
Additions |
- |
- |
257 |
- |
10,955 |
11,212 |
|
Impairment charge |
(1,506) |
- |
(15,489) |
(3,300) |
(8,327) |
(28,622) |
|
Transfers to assets held for sale |
(1,724) |
- |
- |
- |
(139) |
(1,863) |
|
At 28 June 2008 |
25,398 |
3,013 |
63,593 |
38,838 |
71,935 |
202,777 |
|
Accumulated depreciation |
||||||
|
At 1 July 2007 |
1,338 |
570 |
12,855 |
14,991 |
37,473 |
67,227 |
|
Charge for the period |
322 |
69 |
2,365 |
1,682 |
6,798 |
11,236 |
|
Transfers to assets held for sale |
(176) |
- |
- |
- |
(210) |
(366) |
|
At 28 June 2008 |
1,482 |
639 |
15,220 |
16,673 |
44,061 |
78,075 |
|
Net book value |
||||||
|
At 28 June 2008 |
23,916 |
2,374 |
48,373 |
22,165 |
27,874 |
124,702 |
|
At 30 June 2007 |
27,290 |
2,443 |
65,970 |
27,147 |
31,973 |
154,823 |
The historical cost of land and buildings for the Group includes capitalised interest of £2,573,000 (2007: £2,573,000) There was £nil (2007: £nil)
interest capitalised in the year.
The Group charge for impairment of £28,622,000 relates to 32 sites
The Group owns assets held under finance leases which have a net book value of £nil (2007: £135,000) and accumulated depreciation of £nil (2007: £11,000).
11. Trade and other receivables
|
28 June 2008 £'000 |
30 June 2007 £'000 |
|
|
Amounts falling due within one year |
||
|
Trade receivables |
1,268 |
1,334 |
|
Other debtors |
533 |
1,318 |
|
Prepayments and accrued income |
6,089 |
5,594 |
|
7,890 |
8,246 |
As of 28 June 2008, trade receivables of £1,268,000 (2007: £1,334,000) were fully performing.
Trade receivables that are less than three months past due are not considered to be impaired. As of 28 June 2008, trade receivables of £nil (2007: £nil) were past due but not impaired.
As of 28 June 2008, trade receivables of £nil (2007: £nil) were impaired and so no impairment exists as is the situation for the other classes within trade and other receivables,
All the Group's trade and other receivables are denominated in sterling.
12. Current trade and other payables
|
28 June 2008 £'000 |
30 June 2007 £'000 |
|
|
Trade payables |
8,406 |
5,831 |
|
Tax and social security |
3,141 |
2,654 |
|
Accruals and deferred income |
11,878 |
13,901 |
|
Other payables |
317 |
185 |
|
23,742 |
22,571 |
13. Provisions
|
Onerous leases |
Deferred taxation |
Total |
|
|
£'000 |
£'000 |
£'000 |
|
|
Group |
|||
|
Cost: |
|||
|
At 1 July 2007 |
4,625 |
21,125 |
25,750 |
|
New provisions charged to the income statement |
9,552 |
(6,694) |
2,858 |
|
Provision arising on gain on derivative financial instrument |
- |
(144) |
(144) |
|
Utilised |
(1,562) |
- |
(1,562) |
|
At 28 June 2008 |
12,615 |
14,287 |
26,902 |
Within onerous leases, £1,395,000 (2007: £1,200,000) is due to be utilised within one year.
14. Cash generated from operations
|
|
52 weeks ended
|
52 weeks ended
|
|
|
28 June 2008
|
30 June 2007
|
|
|
£’000
|
£’000
|
|
Continuing operations
|
|
|
|
Net (loss)/ profit
|
(51,070)
|
4,882
|
|
Adjustments for:
|
|
|
|
Taxation
|
(6,998)
|
(772)
|
|
Depreciation
|
11,236
|
10,465
|
|
Brand and franchise amortisation
|
300
|
237
|
|
Impairment provision
|
44,462
|
1,368
|
|
Loss on disposal of property, plant and equipment
|
775
|
448
|
|
Exceptional items
|
3,031
|
1,730
|
|
Onerous lease provisions - new
|
9,552
|
2,440
|
|
Onerous lease provisions - releases
|
-
|
(2,085)
|
|
Interest income
|
(51)
|
(120)
|
|
Gains arising on interest rate swaps
|
(41)
|
(401)
|
|
Interest expense
|
6,151
|
5,859
|
|
Share-based payments
|
112
|
294
|
|
Lease premiums
|
143
|
143
|
|
|
17,602
|
24,488
|
|
Changes in working capital:
|
|
|
|
(Increase) in inventories
|
(211)
|
(118)
|
|
Decrease/(increase) in trade and other receivables
|
931
|
(507)
|
|
(Decrease)/increase in trade and other payables
|
(360)
|
3,485
|
|
Cash generated from operations before exceptional items
|
17,962
|
27,348
|
|
|
|
|
|
Cash outflows resulting from exceptional items
|
(2,616)
|
(2,909)
|
|
|
|
|
|
Cash generated from operations
|
15,346
|
24,439
|
|
|
|
|
15. Reconciliation of net cash flow to movement in net debt
|
|
52 weeks ended
|
52 weeks ended
|
|
|
28 June 2008
|
30 June 2007
|
|
|
£’000
|
£’000
|
|
(Decrease)/increase in cash in the period
|
(410)
|
4,473
|
|
Cash inflow from increase in loans
|
(3,750)
|
(22,000)
|
|
(Increase) in net debt resulting from cash flows
|
(4,160)
|
(17,527)
|
|
Loans acquired with subsidiary undertakings
|
-
|
(250)
|
|
Finance leases acquired with subsidiary undertakings
|
-
|
(134)
|
|
Repayment of finance leases during the period
|
102
|
32
|
|
Other non cash changes – amortisation of arrangement fees
|
(275)
|
(268)
|
|
|
|
|
|
Net debt at beginning of period
|
(74,284)
|
(56,137)
|
|
|
|
|
|
Net debt at end of period
|
(78,617)
|
(74,284)
|
Prepaid arrangement fees of £330,000 (2007: £605,000) have been set-off against the net debt figures.
16. EBITDA - before Exceptionals
Earnings before interest, Tax, Depreciation and Amortisation (EBITDA) is derived as follows:
|
52 weeks ended |
52 weeks ended |
|
|
28 June 2008 |
30 June 2007 |
|
|
£'000 |
£'000 |
|
|
Operating profit before exceptional items, loss on sale of property, plant and equipment and brand amortisation |
6,111 |
13,578 |
|
Depreciation |
11,236 |
10,465 |
|
Amortisation of franchise fees |
- |
8 |
|
EBITDA |
17,347 |
24,051 |
17. Post balance sheet events
On 31 July 2008, an entertainment bar asset held for resale with a carrying value at 28 June 2008 of £1,475,000 was disposed of for negligible profit
On 7 October 2008, the Group agreed modified bank funding facilities that are appropriate to its present situation and trading forecasts. Following the amendments to the facility;
18. Miscellaneous
The report and financial statements will be available for download on the Company's website www.regentinns.co.uk from no later than 28 October 2008, and will be sent to all shareholders in the week commencing 3 November 2008. Copies will also be available from the Company's registered office at Rowley House, South Herts Office Campus, Elstree Way, Borehamwood, Hertfordshire WD6 1JH.
The Annual General Meeting of the Company will be held at Lawrence Graham LLP, 4 More London Riverside, London SE1 2AU at 11.00am on Wednesday 17 December 2008.
Related Shares:
REG.L