Half Yearly Report

27th Feb 2009 08:00



Friday, 27 February 2009

Regent Inns PLC

Half Year results for the 26 weeks ended 27 December 2008

Regent Inns plc ("Regent" or "the Company"), the operator of UK late-night, entertainment-led venues and restaurants, today announced its results for the 26 weeks ended 27 December 2008. Regent's core brands are Walkabout, Jongleurs and Old Orleans. 

Summary:

Sales £67.6m (2007: £77.1m).

Like-for-like sales declined by 12.2% against last year.

Operating profit: £1.3m (2007: £4.0m).

Operating profit before exceptionals: £1.8m (2007: £4.3m).

Loss before tax: £2.3m (2007 Profit before tax: £1.0m).

Basic loss per share: 3.0p (2007: Earnings per share: 0.5p).

Operating cash flow: £2.4m (2007: £6.8m).

Reduction in net debt by £0.5m to £78.4m. 

Forward focus on maximising cash flow and further reducing debt. 

Disposal of certain non-core and other assets in process.

Jim Glover, Non-Executive Chairman, commented:

"Market conditions facing the sector have been very challenging. However, we have successfully managed cash flow, made progress with operational restructuring and, despite very difficult circumstances, reduced net debt during the period."

- Ends -

Enquiries:
Merlin PR	020 7653 6620
Paul Downes
Rachel Thomas

Attached:		Chairman's Statement
		Consolidated Income Statement, Statement of Changes in Shareholders' Funds, Balance Sheet, Cash Flow Statement
		Notes to the Financial Statements

  CHAIRMAN'S STATEMENT

This statement reports the results for the 26 weeks ended 27 December 2008.

Market conditions for high street bars and particularly for late-night businesses have continued to be extremely difficult throughout the period. The Board's medium term objectives remain the maximisation of cash flow from existing operations and the reduction of debt, whilst maintaining the integrity of the Group's brands, and the stabilisation of sales in Walkabout. Our debt reduction and operational restructuring plan established last year details the measures we have implemented to achieve these objectives. We have made substantial progress in all areas where factors are within our control. However, like-for-like sales trends are largely unchanged.

Whilst we have seen some improvement in the Walkabout trends towards the end of the period, Jongleurs has suffered a significant decline. The Jongleurs business relies heavily on advance ticket sales and Christmas, in particular, is the major opportunity to capitalise on the very profitable corporate market for parties. Although the outbound box office sales team had its best year ever in terms of ticket sales, interest from corporate clients was down substantially. Exceptionally, there were also many late cancellations from companies who were not prepared to proceed with parties at a time when they were making staff redundant.

Comparatively, Old Orleans sales held up well although a greater reliance on discounts has been necessary in order to compete effectively and we have successfully protected market share in this way. Inevitably, this has impacted margins but puts us in a good position in the market going forward.

Our lending banks continue to be supportive of the business and, as I set out in my statement in the annual accounts published in October 2008, our banking facilities were revised in order to ensure they are appropriate for our current circumstances.

In summary, a £9.5m sales decline has resulted in a £2.4m decline in operating profit before exceptionals (exceptional items, brand amortisation and loss on sale of property). Given our relatively high fixed costs, reducing the impact of market conditions on our profits to this level has taken enormous and praiseworthy effort throughout the whole business. However, the powerful and negative factors which have taken hold of the economy mean that cost reduction alone will clearly not suffice on a long term basis and ultimately future success will depend on rebuilding sales.

Results

Sales for the 26 week period ended 27 December 2008 decreased by 12.3% to £67.6m (2007: £77.1m). Entertainment Bars sales were down by 14.3% to £52.6m (2007: £61.4m) and Dining sales were down by 1.3% to £15.5m (2007: £15.7m).

Like-for-like sales were 12.2% below last year. Our definition of like-for-like sales was set out on page 6 of the Annual report and remains unchanged. Like-for-like venues comprise all but four Entertainment Bars (all closures or disposals during the half year), 18 Old Orleans sites and Ashas.

Operating profit was £1.3m (2007: £4.0m). After adding back 'exceptionals', operating profit was £1.8m (2007: £4.3m).

Exceptional items of £0.3m comprised additional advisor fees associated with amendments to the Group's banking facility as reported in the Annual Report. 

Net finance costs was £3.7m (2007: £3.0m), up 24% due principally to increased margins following amendments to the Group's banking facility and also the repayment of the lower rate loan notes immediately after the end of the comparative interim period. The average level of net debt in the period was £1.2m higher than the comparative period.

Loss before tax was £2.3m (2007: profit before tax £1.0m). Additionally, losses of £1.9m arising on the fair valuation of interest rate hedges net of deferred tax have been charged directly to reserves through the Statement of Changes in Equity.

Basic loss per share was 3.0p (2007: earnings per share 0.5p). Excluding exceptionals, loss per share was 2.5p (2007: earnings per share 0.8p).

Cash flow and financing

Cash flow generated from operating activities was £2.4m (2007: £6.8m). After adjustments for interest and tax, net cash from operating activities was £0.6m (2007: £3.9m). Capital expenditure in the period of £1.5m was substantially lower than last year (2007: £9.0m). Sales proceeds of £1.4m from the disposal of Churchills Southend were used to pay down debt resulting in a cancellation of facilities of the same amount. Net debt at the end of the period was £78.4m, a reduction of £0.5m over the period and £2.1m lower than at the end of the comparative period. Total bank facilities at the end of the period amounted to £96.5m.

Dividend

The Board is not recommending a dividend (2007: nil pence)

Site divestments

The sale of a loss-making freehold site, Churchills in Southend was completed in July 2008. Six Entertainment Bars and six Old Orleans sites have been actively marketed by agents since October. In early January, Old Orleans Ealing, a loss-making site, was surrendered to the landlord for redevelopment and the loss-making Cathedral Hotel in Salisbury was sublet. Substantive negotiations to dispose of a further three of the marketed sites have moved to legal documentation with every expectation that completion will be achieved within the coming weeks.

Our staff

We recognise that the achievement of business objectives is dependent on having fully motivated, committed and enthusiastic staff. Towards the beginning of the reporting period, we challenged staff throughout the business to make every person count, to make every customer count, to make every penny count, and to take responsibility; their response has been impressive with many contributing great initiatives and most performing to the highest standards in this very difficult trading environment. One area in which we have continued to invest is training so that we are making the most from every customer visit and are well prepared to take advantage of improving trading conditions in due course. I am very grateful for the continued commitment of staff and I continue to be impressed by their levels of passion for each of our businesses that I witness on my site visits.

Principal risks and uncertainties

The principal risks and uncertainties facing the Group were outlined in the Director's report on page 14 of the Group's Annual Report for the 52 weeks ended 28 June 2008, which is also available on the Group's website www.regentinns.co.uk. These risks, which remain relevant for the remainder of the current financial period and the foreseeable future, comprise: Exposure to economic downturn and the credit crunch; Fiscal related matters; Increases in operating costs; Declining sales of beer in pubs and increased competition; Regulation; Effects of terrorism; Debt, liquidity and revenue risks; and Property liabilities.

Three specific risk areas have seen significant developments since the publication of the Annual Report.

 

Exposure to economic downturn and the credit crunch. The fact that the UK is now firmly in the grip of a serious recession which is causing widespread business failures and consequently increased unemployment have resulted in a further downward shift in consumer confidence. This has impacted demand for the Group's products and also makes forecasting for the coming months more difficult. The Group's current trading forecast indicates that the Group can operate within the terms of its committed banking facilities and accordingly the financial statements have been prepared on a going concern basis. However, reporting formalities demand that we must point out that the fragility of consumer confidence is potentially such that there is an associated material uncertainty over the Group's future performance, which may impact the Group's ability to operate within the terms of its committed bank borrowing facility and therefore continue as a going concern. Further information is given in note 1 to the Interim financial statements under 'Basis of preparation'.

 

Fiscal related matters. In addition to the Government's previously announced intention to increase the duty on alcoholic beverages by 2% more than the rate of inflation in the next three years, a further increase in duty of 8% on most alcoholic beverages was imposed on 1 December 2008 broadly equivalent to the 2.5% reduction in the rate of VAT. The VAT reduction is due to be reversed on 1 January 2010 but currently, there is no plan to reverse the duty increase.

 

Property liabilities. In the current economic climate, there is an increased risk that rental defaults may occur; this risk applies to both sublet and assigned properties. The Group has, during the course of its 28 year history, assigned 63 leasehold properties and has sub-let another 19 properties. During the reporting period, two previously assigned leases and one sub-let property reverted to the Group. Two of these reversions were as a result of Food and Drink Group going into administration. All three of these properties are in London, and in two cases negotiations are well progressed for new assignments or sublets.

Current trading and prospects

Like-for-like sales in the first 8 weeks of the second half were 11.7% below last year continuing recent trends despite the very difficult weather conditions experienced across the country in the first half of February. We remain cautious about the future and continue to find current market conditions very challenging. 

Jim Glover

Non-Executive Chairman

27 February 2009

consolidated income statement

for the 26 weeks ended 27 December 2008

			Unaudited	Unaudited	Audited
			26 weeks ended	26 weeks ended	52 weeks ended
			27 December	29 December	28 June
			2008	2007	2008
	Note		£'000	£'000	£'000
			Total	Total	Total
Continuing operations
Revenue	4		67,640	77,136	148,060
Cost of sales	4		(17,542)	(18,569)	(34,110)
Gross profit	4		50,098	58,567	113,950
Operating costs	4		(48,725)	(54,596)	(165,959)
Operating profit/(loss)			1,373	3,971	(52,009)
Analysed as:
Operating profit before exceptional items, loss on sale of property, plant and equipment and brand amortisation			1,828	4,267	6,111
Exceptional items	5
Impairment provision			-	-	(44,462)
Provision for onerous leases			-	-	(9,552)
Other			(302)	-	(3,031)
Loss on sale of property, plant and equipment			(68)	(146)	(775)
Brand amortisation			(85)	(150)	(300)
Finance costs	6		(3,823)	(3,067)	(6,151)
Finance income	6		89	62	92
(Loss)/profit before taxation			(2,361)	966	(58,068)
Taxation	7		(931)	(367)	6,998
(Loss)/profit for the period			(3,292)	599	(51,070)
Earnings per share
- basic	9		(3.0)p	0.5p	(45.9)p
- diluted	9		(3.0)p	0.5p	(45.9)p

  

Statement of changes in equity

for the 26 weeks ended 27 December 2008

							Unaudited
	Share	Share	Capital	Convertible	Equity	Profit & loss
	Capital	Premium	Reserve	Bond reserve	Reserve	account	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 July 2007	5,666	50,618	(509)	60	902	12,028	68,765
Profit for the period	-	-	-	-	-	599	599
Losses arising on interest rate hedges net of deferred tax	-	-	-	-	-	(872)	(872)
Own shares acquired	-	-	(1,000)	-	-	-	(1,000)
Share-based payments	-	-	-	-	134	-	134
At 29 December 2007	5,666	50,618	(1,509)	60	1,036	11,755	67,626
Convertible loan note redeemed	-	-	-	(60)	-	-	(60)
Loss for the period	-	-	-	-	-	(51,669)	(51,669)
Gains arising on interest rate hedges net of deferred tax	-	-	-	-	-	464	464
Share-based payment credit	-	-	-	-	(22)	-	(22)
At 28 June 2008	5,666	50,618	(1,509)	-	1,014	(39,450)	16,339
Loss for the period	-	-	-	-	-	(3,292)	(3,292)
Losses arising on interest rate hedges net of deferred tax	-	-	-	-	-	(1,898)	(1,898)
Share-based payment credit	-	-	-	-	(109)	-	(109)
At 27 December 2008	5,666	50,618	(1,509)	-	905	(44,640)	11,040

  consolidated balance sheet 

as at 27 December 2008

		Unaudited	Unaudited	Audited
		27 December	29 December	28 June
		2008	2007	2008
		£'000	£'000	£'000
Assets
Non-current assets
Intangible assets	10	8,418	24,485	8,503
Property, plant and equipment	11	121,944	157,865	124,702
Derivative financial instruments		-	158	919
Other non-current assets		2,147	2,290	2,218
		132,509	184,798	136,342
Current assets
Inventories		2,209	2,578	2,183
Trade and other receivables		8,671	9,362	7,890
Derivative financial instruments		-	80	-
Assets held for sale		210	210	1,685
Cash and cash equivalents		6,092	6,738	4,053
		17,182	18,968	15,811
Current liabilities
Financial liabilities
Borrowings	12	(2,808)	(2,787)	(2,725)
Derivative financial instruments		(104)	-	(21)
Unsecured convertible loan notes		-	(5,940)	-
Finance leases		-	(36)	-
Trade and other payables		(23,851)	(21,348)	(23,742)
Current tax liabilities		(1,161)	(784)	(570)
Provisions	13	(3,800)	(1,910)	(1,395)
		(31,724)	(32,805)	(28,453)
Net current liabilities		(14,542)	(13,837)	(12,642)
Total assets less current liabilities		117,967	170,961	123,700
Non-current liabilities
Financial liabilities
Borrowings	12	(81,524)	(77,996)	(79,945)
Derivative financial instruments		(1,633)	-	-
Finance leases		-	(30)	-
Deferred tax liabilities		(14,481)	(21,243)	(14,287)
Other non-current liabilities		(1,867)	(1,948)	(1,909)
Provisions	13	(7,422)	(2,118)	(11,220)
		(106,927)	(103,335)	(107,361)
Net assets		11,040	67,626	16,339
Capital and reserves
Called up share capital		5,666	5,666	5,666
Share premium account		50,618	50,618	50,618
Capital reserve - own shares		(1,509)	(1,509)	(1,509)
Convertible bond reserve		-	60	-
Equity reserve		905	1,036	1,014
Retained earnings		(44,640)	11,755	(39,450)
Total equity		11,040	67,626	16,339

 

  consolidated cash flow statement

for the 26 weeks ended 27 December 2008

		Unaudited	Unaudited	Audited
		26 weeks	26 weeks	52 weeks
		ended	ended	ended
		27 December	29 December	28 June
		2008	2007	2008
	Notes	£'000	£'000	£'000
Cash flows from operating activities
Cash generated from operations	14	2,421	6,835	15,346
Interest received		89	21	51
Interest paid		(2,458)	(2,988)	(6,381)
Tax received		591	-	-
Net cash from operating activities		643	3,868	9,016
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		1,409	426	(258)
Purchase of property, plant and equipment		(1,537)	(8,983)	(11,816)
Net cash used in investing activities		(128)	(8,557)	(12,074)
Cash flows from financing activities
Net proceeds from issue of new bank loan		3,000	8,000	10,000
Repayment of borrowings		(1,476)	-	(6,250)
Finance lease principal payments		-	(36)	(102)
Purchase of own shares		-	(1,000)	(1,000)
Net cash generated from financing activities		1,524	6,964	2,648
Net increase/ (decrease) in cash and cash equivalents	15	2,039	2,275	(410)
Opening cash and cash equivalents		4,053	4,463	4,463
Closing cash and cash equivalents		6,092	6,738	4,053

  Notes TO the condensed financial information 

for the 26 weeks ended 27 December 2008

 

1. General information

The Company is a limited liability company incorporated and domiciled in the United Kingdom. The address of its registered office is Rowley House, South Herts Office Campus, Elstree Way, Borehamwood, Hertfordshire WD6 1JH.

The Company is listed on the London Stock Exchange.

This half-yearly financial report for the 26 weeks ended 27 December 2008 was approved for issue on 26 February 2009.

These half-yearly financial results do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the 52 weeks ended 28 June 2008 were approved by the Board of Directors on 16 October 2008 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, but did contain an emphasis of matter paragraph; it did not contain any statement under Section 498 of the Companies Act 2006.

 

2. Basis of Preparation

This half-yearly financial report for the 26 weeks ended 27 December 2008 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union. The report should be read in conjunction with the Group's statutory consolidated financial statements for the 52 weeks ended 28 June 2008 which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

Going concern

The Group currently has committed borrowing facilities of £96.5m until September 2010. Under the terms of these facilities, any proceeds from asset sales must be used to repay debt and financial covenants are tested quarterly. The Group has complied fully with the financial covenant tests. The Group updates trading forecasts covering a forward 12 month period on a regular basis, which together with the supporting assumptions is reviewed by the Board. The Group's forecasts anticipate a slowing down in the rate of sales decline towards the end of 2009 and very modest recovery towards the middle of 2010. The current forecast shows that the Group is able to operate within both its committed banking facilities and related financial covenants during this period and the Directors believe that the assumptions underpinning this forecast are both prudent and reasonable. However, as was noted in the consolidated financial statements for the 52 weeks ended 28 June 2008 and continues to be the case, given the prevailing difficult economic conditions and the level of uncertainty regarding their duration and severity, there is an associated material uncertainty over the Group's future performance which may impact its ability to remain within the terms of its committed borrowing facilities. This may cast significant doubt about the Group's ability to continue as a going concern. Notwithstanding the above, the Board believes that it is appropriate to prepare the condensed consolidated financial report on the going concern basis.

Taxation

The taxation charge for the period is based on the directors' best estimate of the annual effective rate of taxation for the continuing business and then adjusted as appropriate for the specific exceptional items falling within the interim reporting period.

 

3. Accounting policies

The accounting policies adopted are consistent with those of the Group's statutory consolidated financial statements for the 52 weeks ended 28 June 2008, as described in those financial statements.

The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial period ending 27 June 2009. None of them had a material impact on the reported results.

IAS 23, 'Amendments: borrowing costs' - requires an entity to capitalise borrowing costs directly attributable to the production of a qualifying asset', effective for annual periods beginning on or after 1 January 2008. 

IFRIC 12 'Service concession arrangements', IFRIC 14 'The limit on a defined benefit asset, minimum funding requirements and their interaction', IFRIC 15 'Arrangements for the construction of real estate' and IFRIC 16 'Hedges of a net investment in a foreign operation' became mandatory for accounting periods beginning on or after 1 January 2008, but are not relevant to the Group's operations.

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial period ending 27June 2009 and have not been adopted early:

IFRS 2 'Share-based payments' - an amendment relating to vesting conditions and cancellations, effective for annual periods beginning on or after 1 January 2009.

IFRS 3 'Business combinations' - a comprehensive revision on applying the acquisition method, effective for annual periods beginning on or after 1 July 2009.

IFRS 5 'Non-current assets held for sale and discontinued operations' - amendments in the section 'presenting discontinued operations' that would require the parent to disclose information for discontinued operations when the subsidiary to be disposed of meets the definition of a discontinued operation in accordance with IFRS 5; to clarify the criteria for classification as held for sale and to align the effective date of the amendment to IFRS 5 with that of the January 2008 amendment to IAS 27, effective for annual periods beginning on or after 1 July 2009.

IFRS 8, 'Operating segments', effective for annual periods beginning on or after 1 January 2009.

IAS 1 'Presentation of financial statements' - a comprehensive revision including requiring a statement of comprehensive income and additional amendments, effective for annual periods beginning on or after 1 January 2009.

IAS 16 'Property, plant and equipment' - an amendment to clarify that IFRS 5 does not apply when assets are transferred to inventories which are held for sale in the ordinary course of business, effective for annual periods beginning on or after 1 January 2009.

IAS 19 'Employee benefits' - amendments relating to curtailments and negative past service costs, effective for annual periods beginning on or after 1 January 2009.

IAS 20 'Government grants and disclosure of government assistance' - a proposed amendment which requires government loans to be recognised and measured in accordance with IAS 39 reflecting a market interest rate; a government grant would be recognised as equal to the difference as equal to the difference between the cash received and the recognised amount of the loan and would be accounted for using IAS 20; with the amendment applying prospectively to loans received after the effective date of the amendment, effective for annual periods beginning on or after 1 January 2009.

IAS 23 'Borrowing costs' - a revision to prohibit immediate expensing and additional amendments, effective for annual periods beginning on or after 1 January 2009.

IAS 27 'Consolidated and separate financial statements' - amendments effective for annual periods beginning on or after 1 July 2009.

IAS 28 'Investments in associates' - amendments effective for annual periods beginning on or after 1 July 2009.

IAS 31 'Investments in Joint Ventures - amendments effective for annual periods beginning on or after 1 July 2009.

IAS 32 'Financial instruments' - amendments to presentation, effective for annual periods beginning on or after 1 January 2009.

IAS 36 'Impairment of assets' - amendments, effective for annual periods beginning on or after 1 January 2009.

IAS 38 'Intangible assets' - amendments, effective for annual periods beginning on or after 1 January 2009.

IAS 39 'Financial instruments: recognition and measurement' - amendments, effective for annual periods beginning on or after 1 July 2009.

IAS 40 'Investment property' - amendments, effective for annual periods beginning on or after 1 January 2009.

IFRIC 17 'Distributions of non-cash assets to owners' - effective for annual periods beginning on or after 1 July 2009.

 

4. Segmental information

The segment results for the 26 week periods ended 27 December 2008 and 29 December 2007 were as follows:

26 weeks ended 27 December 2008				26 weeks ended 29 December 2007
	Entertainment Bars	Restaurants	Central/ unallocated	Group	Entertainment Bars	Restaurants	Central/ unallocated	Group
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Revenue	52,599	15,041	-	67,640	61,412	15,724	-	77,136
Cost of sales	(13,016)	(4,526)	-	(17,542)	(14,459)	(4,110)	-	(18,569)
Gross profit	39,583	10,515	-	50,098	46,953	11,614	-	58,567
Operating costs	(34,911)	(10,392)	-	(45,303)	(38,618)	(11,646)	-	(50,264)
Venue profit	4,672	123	-	4,795	8,335	(32)	-	8,303
Administrative expenses	-	-	(2,967)	(2,967)	-	-	(4,036)	(4,036)
Operating profit/(loss) before exceptional items, loss on property, plant and equipment and brand amortisation	4,672	123	(2,967)	1,828	8,335	(32)	(4,036)	4,267

Other segment items included in the income statement are as follows:

26 weeks ended 27 December 2008				26 weeks ended 29 December 2007
	Entertainment Bars	Restaurants	Central/ unallocated	Group	Entertainment Bars	Restaurants	Central/ unallocated	Group
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Depreciation*	3,644	555	297	4,496	4,389	755	371	5,515
Amortisation of franchise fees*	-	-	-	-	-	8	-	8
Amortisation of brands	-	85	-	85	-	150	-	150
Loss on sale of property, plant and equipment	68	-	-	68	146	-	-	146
Exceptional items
- Bank facility amendment	-	-	302	302	-	-	-	-

*Charged to operating costs

The segment results for the 52 week period ended 28 June 2008 were as follows:

52 weeks ended 28 June 2008
	Entertainment Bars	Restaurants	Central/ unallocated	Group
	£'000	£'000	£'000	£'000
Revenue	116,942	31,118	-	148,060
Cost of sales	(25,584)	(8,526)	-	(34,110)
Gross profit	91,358	22,592	-	113,950
Operating costs	(77,968)	(22,872)	-	(100,840)
Venue profit	13,390	(280)	-	13,110
Administrative expenses	-	-	(6,999)	(6,999)
Operating profit/ (loss) before exceptional items, loss on property, plant and equipment and brand amortisation	13,390	(280)	(6,999)	6,111

  Other segment items included in the income statement are as follows:

52 weeks ended 28 June 2008
	Entertainment Bars	Restaurants	Central/ unallocated	Group
	£'000	£'000	£'000	£'000
Depreciation*	9,758	1,478	-	11,236
Amortisation of brands	-	300	-	300
Loss on sale of property, plant and equipment	775	-	-	775
Exceptional items
- Property, plant and equipment impairment	25,505	3,117	-	28,622
- Goodwill impairment	4,746	8,331	-	13,077
- Brand impairment	-	2,596	-	2,596
- Franchise impairment	-	175	-	175
- Provision for onerous leases	7,493	2,059	-	9,552
- Bank facility amendment	-	-	1,497	1,497
- Aborted sale and leaseback fees	-	-	296	296
- Aborted sale of Group fees	-	-	388	388
- Head office reorganisation	-	-	850	850

*Charged to operating costs

The segment assets and liabilities at 27 December 2008 and 29 December 2007 and capital expenditure for the 26 weeks then ended are as follows:

	26 weeks ended 27 December 2008				26 weeks ended 29 December 2007
	Entertainment Bars	Restaurants	Central/ unallocated	Group	Entertainment Bars	Restaurants	Central/ unallocated	Group
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Assets	115,953	23,397	10,341	149,691	154,758	36,341	12,667	203,766
Liabilities	20,575	7,277	110,799	138,651	12,813	5,373	117,954	136,140
Capital expenditure	1,018	242	478	1,738	3,587	4,601	406	8,594

 

The segment assets and liabilities at 28 June 2008 and capital expenditure for the 52 weeks then ended are as follows:

52 weeks ended 28 June 2008
	Entertainment Bars	Restaurants	Central/ unallocated	Group
	£'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 cash and cash equivalents and assets held-for-resale.

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:

	26 weeks ended 27 December 2008		26 weeks ended 29 December 2007
	Assets	Liabilities	Assets	Liabilities
	£’000	£’000	£’000	£’000
Segment assets/liabilities	139,350	27,852	191,099	18,186
Central/unallocated:
Property, plant and equipment	2,433	-	2,852	-
Trade and other receivables	2,295	-	3,103	-
Cash and cash equivalents	5,613	-	6,712	-
Current borrowings	-	2,808	-	8,665
Non-current borrowings	-	81,524	-	77,808
Trade and other liabilities	-	13,587	-	12,216
Current tax liabilities	-	1,161	-	784
Deferred tax liabilities	-	11,719	-	18,481
	149,691	138,651	203,766	136,140

 

 

	52 weeks ended 28 June 2008
	Assets	Liabilities
	£’000	£’000
Segment assets/liabilities	143,981	26,383
Central/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
	152,153	135,814

 

5. Exceptional items

	Unaudited	Unaudited	Audited
	26 weeks	26 weeks	52 weeks
	ended	ended	ended
	27 December	29 December	28 June
	2008	2007	2008
	£'000	£'000	£'000
Impairment provisions
Property, plant and equipment	-	-	(28,622)
Goodwill	-	-	(13,077)
Brands and franchises	-	-	(2,763)
	-	-	(44,462)
Provision for onerous leases	-	-	(9,552)
Bank facility amendment	(302)	-	(1,497)
Aborted sale and leaseback fees	-	-	(296)
Aborted sale of Group fees	-	-	(388)
Head office reorganisation costs	-		(850)
Other exceptional items	(302)	-	(3,031)
Total exceptional items	(302)	-	(57,045)
Loss on sale of property, plant and equipment	(68)	(146)	(775)
Brand amortisation	(85)	(150)	(300)
Total exceptionals	(455)	(296)	(58,120)

 

6. Finance costs and finance income

	Unaudited	Unaudited	Audited
	26 weeks	26 weeks	52 weeks
	ended	ended	ended
	27 December	29 December	28 June
	2008	2007	2008
	£'000	£'000	£'000
Finance costs
Bank loans and overdraft	(3,650)	(2,637)	(5,542)
Amortisation of set-up costs of bank loan	(138)	(138)	(275)
Convertible loan notes	-	(227)	(233)
Other finance costs	(35)	(65)	(101)
	(3,823)	(3,067)	(6,151)
Finance income
Short term bank deposits	89	21	51
Fair value gains/(losses) on financial instruments - interest rate swaps	-	41	41
	89	62	92

 

7. Taxation

The (charge)/ credit is based on the (loss)/ profit for the period.

	Unaudited	Unaudited	Audited
	26 weeks	26 weeks	52 weeks
	ended	ended	ended
	27 December	29 December	28 June
	2008	2007	2008
	Total	Total	Total
	£'000	£'000	£'000
Current tax
- Current year	-	-	-
- Adjustment in respect of prior years	-	90	304
Total current tax	-	90	304
Deferred tax
- Current year	(931)	(521)	5,948
- Adjustment in respect of changes in tax rate	-	-	(314)
- Adjustment in respect of prior years	-	64	1,060
Total deferred tax	(931)	(457)	6,694
Taxation	(931)	(367)	6,998

 

8. Dividends

The directors do not propose an interim dividend (2007 - nil pence per share).

 

9. Earnings per share

Earnings per share has been calculated using the weighted average number of shares in issue during the relevant financial periods excluding those held in the Employee Share Ownership Trust which have been treated as cancelled. The weighted average number of shares in issue was 111,233,799 (2007: 111,233,799) and the earnings, being loss on ordinary activities after taxation, were £3,292,000 (2007: profit £599,000).

Diluted earnings per share adjusts for those share options granted to employees and the holders of convertible loan stock where the exercise price is less than the average price of the Company's shares during the period. The diluted weighted average number of shares was 113,553,636

(2007: 113,685,384).

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 exceptionals 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.

	Earnings			Earnings per share
	Unaudited	Unaudited	Audited	Unaudited	Unaudited	Audited
	26 weeks	26 weeks	52 weeks	26 weeks	26 weeks	52 weeks
	ended	ended	ended	ended	ended	ended
	27 December	29 December	28 June	27 December	29 December	28 June
	2008	2007	2008	2008	2007	2008
	£'000	£'000	£'000	pence	pence	pence
Total EPS
Basic	(3,292)	599	(51,070)	(3.0)	0.5	(45.9)
Dilution impact of options	-	-	-	-	-	-
Diluted	(3,292)	599	(51,070)	(3.0)	0.5	(45.9)
Exclude exceptional items, brand amortisation and loss on sale of property, plant and equipment, net of taxation	455	296	47,925	0.5	0.3	43.1
Adjusted EPS
Basic	(2,837)	895	(3,145)	(2.5)	0.8	(2.8)
Diluted	(2,837)	895	(3,145)	(2.5)	0.8	(2.8)

 

10. Intangible assets

	Unaudited	Unaudited	Audited
	26 weeks	26 weeks	52 weeks
	ended	ended	ended
	27 December	29 December	28 June
	2008	2007	2008
	£'000	£'000	£'000
Opening book amount	8,503	24,643	24,643
Impairment charge	-	-	(15,840)
Brand amortisation	(85)	(150)	(300)
Franchise amortisation	-	(8)	-
Closing book amount	8,418	24,485	8,503

 

11. Property, plant and equipment

	Unaudited	Unaudited	Audited
	26 weeks	26 weeks	52 weeks
	ended	ended	ended
	27 December	29 December	28 June
	2008	2007	2008
	£'000	£'000	£'000
Opening book amount	124,702	154,823	154,823
Additions	1,738	8,594	11,212
Depreciation	(4,496)	(5,515)	(11,236)
Impairment charge	-	-	(28,622)
Transfers to assets held-for-sale	-	-	(1,475)
Disposals	-	(37)	-
Closing book amount	121,944	157,865	124,702

12. Borrowings 

	Unaudited	Unaudited	Audited
	26 weeks	26 weeks	52 weeks
	ended	ended	ended
	27 December	29 December	28 June
	2008	2007	2008
	£'000	£'000	£'000
Non-current	81,524	77,996	79,945
Current	2,808	2,787	2,725
	84,332	80,783	82,670
Opening amount	82,670	72,645	72,645
New bank loans	3,000	8,000	10,000
Repayment of bank loans	(1,476)	-	(250)
Other non cash changes - amortisation of arrangement fees	138	138	275
Closing amount	84,332	80,783	82,670

 

13. Provisions

	Unaudited	Unaudited	Audited
	26 weeks	26 weeks	52 weeks
	ended	ended	ended
	27 December	29 December	28 June
	2008	2007	2008
	£'000	£'000	£'000
Non-current	7,422	2,118	11,220
Current	3,800	1,910	1,395
	11,222	4,028	12,615
Opening amount	12,615	4,625	4,625
New provisions charged to the income statement	-	-	9,552
Provisions released to the income statement	-	-	-
Utilised	(1,393)	(597)	(1,562)
Closing amount	11,222	4,028	12,615

 

14. Cash generated from operations

	Unaudited	Unaudited	Audited
	26 weeks	26 weeks	52 weeks
	ended	ended	ended
	27 December	29 December	28 June
	2008	2007	2008
	£'000	£'000	£'000
Net (loss)/ profit	(3,292)	599	(51,070)
Adjustment for:
Taxation	931	367	(6,998)
Depreciation	4,496	5,515	11,236
Brand and franchise amortisation	85	158	300
Impairment provision	-	-	44,462
Loss on disposal of property, plant and equipment	68	146	775
Exceptional items	302	-	3,031
Onerous lease provisions	-	-	9,552
Finance income	(89)	(21)	(51)
Gains arising on interest rate swaps	-	(41)	(41)
Finance costs	3,823	3,067	6,151
Share-based payments	(109)	134	112
Lease premiums	71	71	143
	6,286	9,995	17,602
Changes in working capital
Increase in inventories	(26)	(606)	(211)
(Increase)/ decrease in trade and other receivables	(781)	(1,116)	931
Increase/ (decrease) in trade and other payables	118	(442)	(360)
Cash generated from continuing operations before exceptionals	5,597	7,831	17,962
Cashflows resulting from exceptionals	(3,176)	(996)	(2,616)
Cash generated from operations	2,421	6,835	15,346

15. Reconciliation of net cash flow to movement in net debt

	Unaudited	Unaudited	Audited
	26 weeks	26 weeks	52 weeks
	ended	ended	ended
	27 December	29 December	28 June
	2008	2007	2008
	£'000	£'000	£'000
Increase in cash in the period	2,039	2,275	(410)
Cash inflow from increase in loans	(1,524)	(8,000)	(3,750)
Decrease/ (increase) in net debt resulting from cashflows	515	(5,725)	(4,160)
Repayment of finance leases during the period	-	36	102
Other non cash changes	(138)	(138)	(275)
Net debt at beginning of period	(78,617)	(74,284)	(74,284)
Net debt at end of period	(78,240)	(80,111)	(78,617)
Unamortised bank loan facility arrangement fees	(192)	(467)	(330)
	(78,432)	(80,578)	(78,947)

 

16. Related party transactions

Key management personnel, other than executive and non-executive directors, comprises heads of department and operational area managers. Their aggregate remuneration amounted to:

	Unaudited	Unaudited	Audited
	26 weeks	26 weeks	52 weeks
	ended	ended	ended
	27 December	29 December	28 June
	2008	2007	2008
	£'000	£'000	£'000
Salaries and other short-term benefits	382	663	1,284
Pensions	17	34	65
Share-based payments	(15)	28	22
	384	725	1,371

 

17. Half-yearly financial report

A letter has been sent to shareholders explaining that, in accordance with the European Union transparency directive, the half-yearly financial report is not being mailed to shareholders and that it can be downloaded from the Company's website www.regentinns.co.uk. Alternatively, shareholders may contact the Company to request a hard copy of this report.

 

18. Statement of directors' responsibilities

The Directors of Regent Inns plc, together with their functions, are as follows:

Jim Glover	Non - Executive Chairman
John Leslie	Chief Executive Officer
Simon Kaye	Chief Operating Officer
Mike Foster	Chief Financial Officer
John Laurie	Non - Executive Director
Tanith Dodge	Non - Executive Director

Each of the Directors of Regent Inns plc confirms that, to the best of their knowledge, this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the half-yearly financial report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency Rules (DTRs) of the Financial Services Authority.

By order of the Board

Claire Yarlett

26 February 2009

Secretary

  Independent review report to Regent Inns 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 26 weeks ended 27 December 2008, which comprises the consolidated income statement, the consolidated balance sheet, statement of changes in equity, the consolidated cash flow statement and the 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.

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 Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs 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 financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

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 26 weeks ended 27 December 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Emphasis of matter - going concern

In forming our conclusion on the condensed set of financial statements, which is not qualified, we have considered the adequacy of the disclosure made in note 2 to the condensed set of financial statements concerning the Group's ability to continue as a going concern. That note discloses that given the prevailing difficult economic conditions and the level of uncertainty regarding their duration and severity, there is an associated material uncertainty over the Group's future performance which may impact its ability to remain within the terms of its committed borrowing facilities. This indicates the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.

PricewaterhouseCoopers LLP

Chartered Accountants

London

26 February 2009

ENDIR SEIFUMSUSESE

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