6th Feb 2007 07:01
Regent Inns PLC06 February 2007 Tuesday, 6 February 2007 Regent Inns PLC Half yearly results for the 26 weeks ended 30 December 2006 Regent Inns plc ("Regent" or "the Group"), the operator of UK late-night,entertainment-led venues and restaurants, today announces its results for the 26weeks ended 30 December 2006. Regent's core brands are Walkabout, Jongleurs, BarRisa and Old Orleans. The results include 15 weeks' trade for Old Orleans restaurants which wereacquired by the Group on 17 September 2006, positioning the Group in thefast-growing casual dining market. This year's first half did not include New Year's Eve, unlike the comparativeperiod which ended 31 December 2005. Financial highlights: Continuing operations • Turnover up 10.9% to £73.0m (2005: £65.8m) of which £10.2m relates to Old Orleans • Operating profit before exceptional items £6.7m (2005: £8.5m) • Non-comparable New Year's Eve reduces first half profit by £0.5m • Operating profit from continuing operations £6.1m (2005: £8.5m) • EBITDA before exceptional items £12.3m (2005: £13.5m) • Basic earnings per share from continuing operations 2.0p (2005: 3.7p) and excluding exceptionals 2.4p (2005: 3.7p) • No interim dividend as focus on capital expenditure programme for Old Orleans and reduction of net debt • Like-for-like sales up 3.4% for the six weeks to 6 January 2007 following anniversary of licensing changes on 25 November 2006 and strong trading over festive period Corporate progress: • Acquisition of Old Orleans from Punch Taverns plc for consideration of £26.0m; integration and plans to enhance performance at advanced stages • Appointment of Russell Scott as Managing Director - Operations • Senior operational management team strengthened to support enlarged business • Investment in Brandasia Limited, the franchisee of Asha's, an upmarket Indian restaurant concept, in December 2006 Commenting on the results, Bob Ivell, Executive Chairman, said: "We are pleased that our high profile brands have been steered successfullythrough the most significant licensing changes for over 100 years. Whilst the 12months following these changes have presented significant challenges, our brandsare well-positioned to continue providing a safe and fun environment forcustomers, and to deliver good returns for shareholders. "During the first half, we placed particular focus on improving all aspects ofour food offer. The customer response has been excellent, with food sales inlike-for-like venues up 18.1%, and we believe that there is significantpotential for further growth. "Since the anniversary of the licensing changes, we have achieved growth; in thesix weeks to 6 January (which includes New Year's Eve on a comparable basis)like-for-like sales were 3.4% above last year. This six week period has beenpositive for both brands with Walkabout up 3.1% and Bar Risa Jongleurs up 4.9%. "Good progress has been made to date with Old Orleans and we are looking forwardto implementing many initiatives in the coming months which should significantlyimprove performance." - Ends - Enquiries: Regent Inns plc 020 8327 2540Bob Ivell, Executive ChairmanJohn Leslie, Chief Financial Officer Merlin 020 7653 6620Vanessa Maydon 07802 961 902Rebecca Penney 07795 108 178 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 I am pleased to report the results for the 26 weeks ended 30 December 2006. In the Annual Report, I explained in some depth our risk minimisation approachto regulatory change and particularly its effects on our late-night business. Asanticipated, this continued to impact the business up to the anniversary of thechange, being 25 November 2006. Sales and operating profit for the fullreporting period were below last year on a like-for-like basis, but returned togrowth over the important December and New Year period. Significant progress has been achieved in the first half of the year that shouldimprove the future prospects of the Group: • Old Orleans was acquired on 17 September 2006, establishing us in the fast growing casual dining market. We are well advanced with integrating Old Orleans into the Group and in developing our plans for improving its performance. • Russell Scott was recruited as our new Managing Director - Operations. • Our senior operational management team has been strengthened to support the enlarged business. • Following the anniversary of the licensing change and over the important festive trading period, the business has returned to underlying sales growth. This year's first half, which closed on 30 December 2006, did not include NewYear's Eve, unlike the comparative period which ended 31 December 2005. Results The results for the 26 weeks ended 30 December 2006 include 15 weeks trade ofOld Orleans Limited, which was acquired on 17 September 2006. Continuing operations Turnover increased by 10.9% to £73.0m (2005: £65.8m) of which £10.2m related toOld Orleans. Operating profit from continuing operations was £6.1m (2005: £8.5m). Afteradding back exceptional items, operating profit was £6.7m, down £1.8m on lastyear, approximately £0.5m of the decrease being attributable to New Year's Evefalling outside the reporting period. Pre-exceptional earnings before interest, tax and depreciation (EBITDA) were£12.3m (2005: £13.5m). Exceptional items of £0.3m related to expenditure, to the end of the period,associated with integrating Old Orleans into the Group's administrativeprocesses and organisational structure. The loss on sale of fixed assets of£0.2m related to the sale of Bar Risa Jongleurs in Manchester. This venue, whichhad been struggling to achieve break-even for a number of years, realised netdisposal proceeds of £1.6m. Net Interest payable was £2.5m, up 21% on last year due to funding theacquisition of Old Orleans for 15 weeks of the period. Profit from continuing operations was £2.2m (2005: £4.2m). Basic earnings per share from continuing operations was 2.0 pence (2005: 3.7pence) and excluding exceptional items was 2.4 pence (2005: 3.7 pence). Cash generated from continuing operations before exceptional items was £9.2m(2005: £12.2m). The reduction was due in part to the difficult tradingconditions in the first five months of the period, and in part to our notreceiving the full benefit of Old Orleans cash flow whilst that business wasoperating under the transitional service arrangements provided by the vendor,which we were able to terminate in January ahead of plan. In line with our plans for the first half, capital expenditure in the period was£3.2m, less than half of the level incurred last year (2005: £6.6m). Our mostsignificant project was the conversion of Bar Risa in Leicester to Walkabout,completed at the end of September at a cost of £0.5m. Since re-opening, thisvenue's trading performance has been consistently ahead of our targets. Thebalance of capital expenditure related to minor refurbishment and maintenanceworks on existing sites. Discontinued operations The total loss from discontinued operations was £0.2m (2005: £1.0m). Operational Review Entertainment Bars As previously reported, our strong trading during the FIFA World Cup wasfollowed in July by a slowdown. This was exacerbated by the extremely hotweather and therefore the new financial year started slowly. In addition,comparisons against the Ashes cricket in August and early September 2005, andEngland's performance in the latest series have been unhelpful. We maintained our cautious and extremely responsible stance to licensingthroughout the period and were delighted to collect two prestigious industryawards: Responsible Drinks Retailing 2006 (Managed Chain) and BEDA's SmirnoffShine Award for Social Responsibility. We have also been short-listed as afinalist for the Publican Awards - Pub Company of the Year (Managed). As anticipated, like-for-like sales continued to trend below last year throughto the anniversary of licensing deregulation. Most of the sales decline isattributable to liquor during early evening hours because customers are laterarriving on the high street following licensing deregulation. Late nightadmissions have continued to hold up well, evidencing that customers remainhungry for top entertainment and a party atmosphere. Since the anniversary of the licensing changes, we have achieved growth; in thesix weeks to 6 January 2007 (which includes New Year's Eve on a comparablebasis) like-for-like sales were 3.4% above last year. This six week period hasbeen positive for both brands with Walkabout up 3.1% and Bar Risa Jongleurs up4.9%. Christmas and New Year's trading was particularly successful in Jongleurs.This year we introduced a food-inclusive offer and although we reduced showcapacities to serve customers more comfortably, ticket income was significantlyup on last year and customer feedback scores were consistently ahead of lastyear. The all-inclusive show format has been a successful development on whichwe intend to build in the future. During the first half, we placed particular focus on improving all aspects ofour food offer. We regard food as a major growth opportunity, particularly giventhe evolution of our market through licensing deregulation and the imposition ofthe smoking ban to be implemented during 2007. During the reporting period, wehave introduced value offers and daytime table service across both Walkabout andBar Risa. The customer response has been excellent; food sales in like-for-likevenues were up 18.1% and represented 8.2% of total sales compared with 6.6% lastyear. We believe that there is significant potential for further growth. Our cost base has been well controlled during the period despite the continuedupward pressure from the minimum wage, which increased by 5.9% at the beginningof October, and sharp increases in utility costs. A two year supply agreementfor electricity expired in September and consequently we have suffered a unitprice increase of 38%. Strenuous efforts are underway to reduce energy usage; inthe first half we achieved a reduction of 6.6% and in the second half we intendto invest £0.4m that will deliver further significant reductions. Excludingproperty overheads, like-for-like venue operating costs reduced by 3.2%. Acquisition of Old Orleans Limited The acquisition of 29 Old Orleans and 2 Quincey's venues from Punch Taverns plc("Punch") was completed on 17 September 2006. Although the venues have beenunder the control of our own operational management since completion, Punch wereobliged to provide transitional services in a number of areas, including productand services supply and back office administration including accounting, for aperiod of up to six months. During this period we have been planning theintegration of the venues with our core systems and business processes. Wesuccessfully piloted new EPOS and back office systems in four venues in Novemberand rolled-out to the remaining venues in January allowing us to exit thetransitional services on 20 January 2007, well ahead of the deadline. Detailedplanning has progressed on a number of fronts to develop and improve thebusiness but getting the venues on to our own systems is our first key priority,allowing us to fully control all aspects of operational performance. The second priority is securing food distribution and the supply of new productsto facilitate the launch of a new menu. The new menu is fundamental to our plansfor rejuvenating the brand and is a key element in providing customers with anauthentic southern American dining experience. All of the distribution, supply,staff training and marketing elements are in place for the new menu whichcommences on 5 March 2007. Our third priority is capital investment in the venues. Most have received onlyminimal capital investment for several years and therefore we believe that thereare many good opportunities to improve trading through careful targeting ofcapital schemes. However, such investment in any given property will not becommitted until the lease assignment or sub-let has been properly completed. Weare pleased to report that of 27 short leaseholds, the transfers of all butthree have been agreed in principal with landlords. Despite not having Old Orleans fully under our control in the period, we havebeen pleased with performance. In 15 weeks under our ownership, sales of £10.2mwere slightly ahead of our expectations and also were achieved on a reducedlevel of customer discounts. In the run up to Christmas, certain venuesperformed exceptionally well, including Manchester which set a new brand recordfor a week's sales. The wide disparity in performance between venues impliesthat there is significant upside in a number of the poorer performers. Operatingprofit before exceptional items (which is after an allocation of central costs)was £0.6m. 'One-off' costs, incurred to 30 December 2006, of £0.3m associatedwith the integration of Old Orleans into the Group's normal administrativeprocesses and organisation structures, including recruitment and restructuringcosts, have been classified as exceptional. Work is currently being undertaken with professional valuation experts to fairvalue both the tangible fixed assets and intangible assets acquired, includingthe brand itself, in order to allocate the final purchase price including costsof £27.4m. This work is not yet complete and therefore, as required under IFRS 3"Business Combinations", we are providing provisional fair values in note 8 ofthe interim statement. These provisional values will be subject to adjustment inthe annual accounts. The provisional value of fixed assets is £14.2m, whichincludes three freehold properties and one long leasehold property. Theprovisional value for intangibles, which will comprise the brand and goodwillonly, is £15.6m. The balance of the acquisition price includes working capitaland provisions. Investment in Brandasia Limited In December 2006, the Company invested £500k in Brandasia Limited through aconvertible loan. Brandasia owns the exclusive franchise in the UK and theRepublic of Ireland for 'Asha's', an upmarket Indian restaurant concept. AsRegent has the ability to control the operations of Brandasia, its results havebeen consolidated into the Group. The interest in Brandasia reflects the Group's increasing focus on authenticfood-led venues and the Board's confidence in the demand for and growthprospects of an upmarket branded Indian restaurant concept. The interest inBrandasia was for just over two weeks of the reporting period during which timethe operation broke-even. The first Asha's in the UK, in Birmingham, was openedofficially by Asha Bhosle, the Bollywood singing legend and founder of thefranchise, on 25 January 2007. Preparations for smoking ban Preparations are advanced for the ban on smoking in enclosed public places,effective in Wales in early April 2007 and in England from the beginning of July2007. Valuable knowledge has been gained from our experiences in Scotland, wherethree venues were subject to the ban from late March 2006, particularly withregard to the most appropriate external structures and operating procedures toaccommodate customers wishing to smoke outside. Over half of our estate benefitsfrom some form of external area capable of accommodating smokers. The Group iscurrently seeking approvals from local planning and licensing authorities andlandlords for our proposed works that will optimise facilities for smokers andalso broaden the appeal of our external areas for those wishing to eat or drinkoutside. Dividend The Board has decided not to recommend an interim dividend as it continues tobelieve that there are a number of important opportunities which will createbetter returns for shareholders. These include the capital expenditure programmefor Old Orleans and reduction in debt, both of which will improve the scope forfurther corporate activity. Board changes On 1 September 2006 and as previously announced, we welcomed Russell Scott tothe Board as Managing Director - Operations. His previous experience in senioroperational positions within the leisure sector at Capital Radio RestaurantsPLC, Harry Ramsden's PLC, Whitbread, and Scottish & Newcastle Retail will be abig asset to the Group, particularly in the rejuvenation of the Old Orleansbrand and improving operational standards in our existing brands. Jim Glover, who joined the Board in April 2005 as a Non-Executive Director hasbeen appointed Chairman of the Remuneration & Appointments Committee with effectfrom 1 February 2007. This position was previously held by Alan Jackson whostepped down from the Board as a Non-Executive Director following ouracquisition of Old Orleans so as to avoid any conflict of interest given hisposition as Chairman of the Restaurant Group plc. Our search for a replacement Non-Executive Director continues and we will makean announcement in due course. Our people Many of our staff have been directly involved in the planning and implementingthe integration of Old Orleans into the Group. For many, this has createdadditional challenges, responsibility and commitment. We are very grateful fortheir considerable efforts which have enabled this activity to completesuccessfully and well ahead of the deadlines. Our front-line staff have also faced additional challenges as a result oflicensing deregulation and the accompanying enforcement regime. The recognitionand awards received by the Group for its responsible stance on licensing are dueentirely to their hard work and diligence. We are grateful to all of them. Current trading and prospects We are pleased that our high profile brands have been steered successfullythrough the most significant licensing changes for over 100 years. Whilst the 12months following these changes have presented significant challenges, our brandsare well positioned to continue providing a safe and fun environment forcustomers and to deliver good returns for shareholders. Walkabout comparables in the second half will clearly be affected by the FIFAWorld Cup in 2006, but this aside, the sporting calendar for 2007 lookspromising, with the RBS Six Nations Rugby off to a good start, a morecompetitive football Premiership title race this year, football Euro 2008qualifiers and, later in the year, the Rugby World Cup. Good progress has been made to date with Old Orleans and we are looking forwardto implementing many initiatives in the coming months which should significantlyimprove performance. Bob IvellExecutive Chairman5 February 2007 CONSOLIDATED INCOME STATEMENTfor the twenty six weeks ended 30 December 2006 Unaudited Unaudited Unaudited Unaudited Audited 26 weeks 26 weeks 26 weeks 26 weeks 52 weeks ended ended ended ended ended 30 Dec 30 Dec 30 Dec 31 Dec 1 July 2006 2006 2006 2005 2006 Note £'000 £'000 £'000 £'000 £'000 Continuing Acquisition Total Total Total ContinuingoperationsRevenue 62,764 10,221 72,985 65,816 127,641Cost of sales (14,815) (2,721) (17,536) (14,579) (28,662)--------------------------------------------------------------------------------Gross profit 47,949 7,500 55,449 51,237 98,979Operating costs (42,069) (7,236) (49,305) (42,737) (90,028) Operatingprofit beforeexceptionalitems 6,077 607 6,684 8,500 14,553Loss on saleof fixedassets (197) - (197) - (28) Exceptionalitems 2 - (343) (343) - (5,574)-------------------------------------------------------------------------------- Operatingprofit 5,880 264 6,144 8,500 8,951 Interestpayable andsimilarcharges 3 (2,812) (2,592) (5,030)Interestreceivable 3 316 525 1,056--------------------------------------------------------------------------------Profit beforetaxation 3,648 6,433 4,977 Taxation 4 (1,418) (2,225) (887)--------------------------------------------------------------------------------Profit fromcontinuingoperations 2,230 4,208 4,090 Discontinuedoperations Loss ontradingactivities 5 (19) (210) (205)Provision foronerous leases 5 (49) - (1,779)Loss on saleof fixedassets 5 (106) (760) (367) Loss fromdiscontinuedoperations 5 (174) (970) (2,351)--------------------------------------------------------------------------------Profit for theperiodattributableto equityshareholders 2,056 3,238 1,739================================================================================ Earnings pershare - basic 7 1.8p 2.9p 1.5p ------------------------------ - diluted 7 1.8p 2.8p 1.5p ------------------------------ Earnings per share from continuing operations - basic 7 2.0p 3.7p 3.6p ------------------------------ - diluted 7 1.9p 3.7p 3.6p ------------------------------ STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITYfor the twenty six weeks ended 30 December 2006 Con- Profit Un- Share Share Capital vertable Equity & Loss Minority audited Capital Premium Reserve Bond Reserve account Interest Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 3 July 05 5,625 50,080 (322) 60 308 4,363 - 60,114Ordinaryshares issued 39 496 - - - - - 535Profit for the period - - - - - 3,238 - 3,238Share-basedpaymentexpense - - - - 133 - - 133--------------------------------------------------------------------------------At 31 December2005 5,664 50,576 (322) 60 441 7,601 - 64,020Ordinaryshares issued - 10 - - - - - 10Loss for theperiod - - - - - (1,499) - (1,499) Share-basedpaymentexpense - - - - 167 - - 167--------------------------------------------------------------------------------At 1 July 2006 5,664 50,586 (322) 60 608 6,102 - 62,698Ordinaryshares issued 1 9 - - - - - 10Purchase ofown shares - - (187) - - - - (187)Profit for theperiod - - - - - 2,056 - 2,056Share-basedpaymentexpense - - - - 170 - - 170Investment inBrandasiaLimited - - - - - - (50) (50)-------------------------------------------------------------------------------- At 30 December2006 5,665 50,595 (509) 60 778 8,158 (50) 64,697================================================================================ CONSOLIDATED BALANCE SHEET as at 30 December 2006 Unaudited Unaudited Audited 30 December 31 December 1 July 2006 2005 2006 £'000 £'000 £'000Assets Non-current assets Intangibles 22,356 6,776 6,776Property, plant and equipment 155,068 151,211 143,980Other non-current assets 2,432 2,576 2,504-------------------------------------------------------------------------------- 179,856 160,563 153,260Current assetsInventories 2,641 2,267 1,839Trade and other receivables 10,895 7,408 6,870Cash and cash equivalents 4,056 2,608 --------------------------------------------------------------------------------- 17,592 12,283 8,709Assets held for sale 210 210 210-------------------------------------------------------------------------------- 17,802 12,493 8,919Current liabilitiesFinancial liabilitiesBorrowings (2,787) (2,725) (2,735)Interest rate swaps (165) (304) (95)Unsecured convertible loan notes (5,940) - -Finance leases (36) - -Trade and other payables (18,889) (16,097) (15,614)Current tax liabilities (2,296) (1,797) (1,347)Provisions for liabilities and charges (800) (580) (800)-------------------------------------------------------------------------------- (30,913) (21,503) (20,591)-------------------------------------------------------------------------------- Net current liabilities (13,111) (9,010) (11,672)-------------------------------------------------------------------------------- Total assets less current liabilities 166,745 151,553 141,588 Non-current liabilitiesFinancial liabilitiesBorrowings (74,728) (56,265) (47,402)Interest rate swaps - (569) (347)Unsecured convertible loan notes - (5,940) (5,940)Finance leases (110) - -Deferred tax liabilities (21,078) (20,070) (19,026)Other non-current liabilities (2,051) (2,140) (2,095)Provisions (4,081) (2,549) (4,080)-------------------------------------------------------------------------------- (102,048) (87,533) (78,890)-------------------------------------------------------------------------------- Net assets 64,697 64,020 62,698================================================================================ Capital and reservesCalled up share capital 5,665 5,664 5,664Share premium account 50,595 50,576 50,586Capital reserve - own shares (509) (322) (322)Convertible bond reserve 60 60 60Equity reserve 778 441 608Profit and loss account 8,158 7,601 6,102--------------------------------------------------------------------------------Minority interest 64,747 64,020 62,698 (50) - --------------------------------------------------------------------------------- Total equity 64,697 64,020 62,698================================================================================ CONSOLIDATED CASH FLOW STATEMENTfor the twenty six weeks ended 30 December 2006 Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ended ended ended 30 December 31 December 1 July 2006 2005 2006 Notes £'000 £'000 £'000 Cash flows from operatingactivities Cash generated from operations 9 8,069 11,641 23,100 Interest received 39 106 206Interest paid (1,697) (3,710) (5,610)-------------------------------------------------------------------------------- Net cash from operating activities 6,411 8,037 17,696-------------------------------------------------------------------------------- Cash flows from investingactivitiesProceeds from sale of property,plant 1,462 326 208and equipmentPurchase of property, plant andequipment (3,222) (6,648) (9,817)Acquisition of subsidiaries, net ofcash acquired (27,408) - ---------------------------------------------------------------------------------Net cash used in investing (29,168) (6,322) (9,609)activities -------------------------------------------------------------------------------- Cash flows from financingactivities Net proceeds from issue of ordinaryshare capital 10 535 545Net proceeds from issue of new bankloan 27,000 60,000 51,000Repayment of borrowings - (63,196) (63,196)New bank facility fees - (1,100) (1,100)Purchase of own shares (187) - --------------------------------------------------------------------------------- Net cash used in/(generated from)financing activities 26,823 (3,761) (12,751)-------------------------------------------------------------------------------- Net increase/(decrease) in cash andcash equivalents 10 4,066 (2,046) (4,664)--------------------------------------------------------------------------------Opening cash and cash equivalents (10) 4,654 4,654--------------------------------------------------------------------------------Closing cash and cash equivalents 4,056 2,608 (10)================================================================================ Notes TO the financial statementS for the twenty six weeks ended 30 December 2006 1. Basis of Preparation This interim report has been prepared on the basis of the accounting policiesset out in the Group's statutory accounts for the 52 weeks ended 1 July 2006. The taxation charge for the period is based on the directors' best estimate ofthe annual effective rate of taxation for the continuing business and thenadjusted as appropriate for the specific exceptional items falling within theinterim reporting period. The interim report has been prepared in accordance with the Listing Rules of theFinancial Services Authority. The interim report for the twenty-six weeks ended 30 December 2006 does notconstitute statutory financial statements as defined in section 240 of theCompanies Act 2005 and has not been delivered to the Registrar of Companies.Comparative figures for the 52 weeks ended 1 July 2006 set out within thisreport have been extracted from the Group's statutory consolidated financialstatements for that period, as filed with the Registrar of Companies and onwhich the auditors gave an unqualified opinion. 2. Exceptional items Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ended ended ended 30 December 31 December 1 July 2006 2005 2006 £'000 £'000 £'000 Integration of Old Orleans Limited (343) - -Impairment provision - - (4,995)Fees in respect of aborted corporatetransactions - - (379)Head office relocation - - (200)-------------------------------------------------------------------------------- (343) - (5,574)================================================================================ 'One-off' items of expenditure associated with integrating the acquired OldOrleans business in to the Group's normal administrative processes and neworganisation structures have been categorised as exceptional. 3. Finance costs Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ended ended ended 30 December 31 December 1 July 2006 2005 2006 £'000 £'000 £'000 Interest payable and similar chargesInterest payable on bank borrowings (2,410) (2,252) (4,283)Amortisation of issue costs of bank loan (138) (90) (227)Interest payable on loan notes (207) (209) (417)Other interest payable (57) (41) (103)-------------------------------------------------------------------------------- (2,812) (2,592) (5,030)--------------------------------------------------------------------------------Interest receivableInterest income 39 106 49Gains arising on interest rate swaps 277 419 850Other interest payable - - 157-------------------------------------------------------------------------------- 316 525 1,056-------------------------------------------------------------------------------- 4. Taxation The continuing operations pre-exceptional taxation charge for the twenty-sixweeks ended 30 December 2006 has been calculated by applying the estimatedeffective rate of taxation for the year ended 30 June 2007, and then adjustingfor the specific exceptional items falling within the interim period. Thetaxation charge/credits applied to discontinued operations reflects theappropriate treatment of the specific items arising in the interim period. Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ended ended ended 30 December 31 December 1 July 2006 2005 2006 Total Total Total £'000 £'000 £'000 Current tax - continuing operations- Current year (978) (1,572) (1,693)- Adjustment in respect of prior years - - 415--------------------------------------------------------------------------------Total current tax (978) (1,572) (1,278)--------------------------------------------------------------------------------Deferred tax - continuing operations - Current year (440) (653) (939)- Adjustment in respect of prior years - - 1,330--------------------------------------------------------------------------------Total deferred tax (440) (653) 391-------------------------------------------------------------------------------- Taxation (1,418) (2,225) (887)================================================================================ 5. Discontinued operations Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ended ended ended 30 December 31 December 1 July 2006 2005 2006 £'000 £'000 £'000 Revenue 1,089 1,052 2,055Expenses (1,116) (1,352) (2,348)--------------------------------------------------------------------------------Loss before tax (27) (300) (293)Attributable tax credits 8 90 88--------------------------------------------------------------------------------Post tax results from trading activities (19) (210) (205) ----------- ----------- ----------New provision for onerous leases (70) - (2,065)Attributable tax credits 21 - 286 ----------- ----------- ----------Post tax loss on onerous leases (49) - (1,779) ----------- ----------- ----------Loss on sale of fixed assets (106) (888) (367)Attributable tax credits - 128 - ----------- ----------- ----------Post tax loss on sale of fixed assets (106) (760) (367)======================= =========== =========== ==========Net loss attributable to discontinuedoperations (174) (970) (2,351)======================= =========== =========== ========== 6. Dividends The directors do not propose an interim dividend (2006 - nil pence per share). 7. Earnings per share Earnings per share have been calculated using the weighted average number ofshares in issue during the relevant financial periods excluding those held inthe ESOT which have been treated as cancelled. The weighted average number ofshares in issue was 112,491,097 (2006: 112,508,870) and the earnings, beingprofit on ordinary activities after taxation, were £2,056,000 (2006:£3,238,000). Diluted earnings per share adjust for those share options granted to employeesand the holders of convertible loan stock where the exercise price is less thanthe average price of the Company's shares during the period. The dilutedweighted average number of shares was 114,397,729 (2005: 114,419,145). 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 30 Dec 31 Dec 1 July 30 Dec 31 Dec 1 July 2006 2005 2006 2006 2005 2006Total EPS Basic 2,056 3,238 1,739 1.8 2.9 1.5 Dilutionimpact ofoptions - - - - (0.1) --------------------------------------------------------------------------------- Diluted 2,056 3,238 1,739 1.8 2.8 1.5 Excludediscontinuedoperations 174 970 2,351 - --------------------------------------------------------------------------------- EPS fromcontinuingoperations Basic 2,230 4,208 4,090 2.0 3.7 3.6Diluted 2,230 4,208 4,090 1.9 3.7 3.6--------------------------------------------------------------------------------Excludeexceptionalitems and losson sale offixed assetsnet oftaxation 437 - 4,560 - - --------------------------------------------------------------------------------- Adjusted EPS Basic 2,667 4,208 8,650 2.4 3.7 7.7 Diluted 2,667 4,208 8,650 2.3 3.7 7.5-------------------------------------------------------------------------------- EPS fromdiscontinuedoperations Basic (174) (970) (2,351) (0.2) (0.9) (2.1)-------------------------------------------------------------------------------- 8. Acquisitions Old Orleans Limited On 17 September 2006 the Company acquired the entire share capital of OldOrleans Limited. In the 15 weeks between the Company's investment and the periodend, Old Orleans Limited achieved operating profit of £264k. Estimated fair value of assets acquired Old Orleans Limited £'000Property, plant and equipment 14,222Net current liabilities (227)Deferred tax (1,612)Provisions (540)--------------------------------------------------------------------------------Fair value of net assets 11,843Intangibles 15,580-------------------------------------------------------------------------------- 27,423================================================================================ Satisfied by:Cash 25,773Fees 1,650------------------------------------------------------------------------------- 27,423================================================================================ The Directors are undertaking a fair value exercise of the assets acquired whichwill be complete by the year end. In accordance with IFRS 3 "Businesscombinations", the assets have been included in the balance sheet as at 30December 2006 at provisional values. Brandasia Limited On 14 December 2006, the Company invested in Brandasia Limited through aconvertible loan of £500,000. The Company may exercise its option to convert theloan into ordinary shares at any time, which would result in a controllinginterest. As the Company has the ability to control Brandasia, its results havebeen consolidated into the Group. In the 2 weeks between the Company'sinvestment and the period end, Brandasia achieved break-even. At the balancesheet date, Brandasia had net liabilities of £30,000, which together with theCompany's costs associated with the investment of £20,000 give rise to aminority interest of £50,000. Russell Scott, the Group's new Managing Director - Operations, is the principalshareholder and managing director of Brandasia and accordingly the transactionis a 'related party transaction' for the purposes of the Listing Rules of the UKListing Authority. Further disclosures will be included in the Company's nextAnnual Report and Accounts pursuant to the Listing Rules 9. Cash generated from operations Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ended ended ended 30 December 31 December 1 July 2006 2005 2006 £'000 £'000 £'000 Continuing operationsNet profit 2,230 4,208 4,090Adjustments for:Tax 1,418 2,225 887Depreciation 5,589 5,039 10,279Impairment provision - - 4,995Loss on disposal of property, plant andequipment 197 - 28Other exceptional items - - 579Integration costs 343 - -Interest income (316) (525) (1,056)Interest expense 2,812 2,592 5,030Share-based payment expense 170 133 300Lease premiums 72 71 143-------------------------------------------------------------------------------- 12,515 13,743 25,275Changes in working capital(Increase) in inventories (784) (716) (293)(Increase) in trade and other receivables (3,804) (1,544) (1,012)Increase in trade and other payables 1,237 687 299--------------------------------------------------------------------------------Cash generated from continued operationsbefore exceptionals 9,164 12,170 24,269 Cash flows resulting from exceptionals (546) (72) (378)-------------------------------------------------------------------------------- Cash generated from continuing operations 8,618 12,098 23,891-------------------------------------------------------------------------------- Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ended ended ended 30 December 31 December 1 July 2006 2005 2006 £'000 £'000 £'000 Discontinued operationsNet loss (174) (970) (2,351)Adjustments for:Taxation (29) (218) (374)Loss on disposal of property, plant andequipment 106 888 367Provision for onerous leases 70 - 2,065-------------------------------------------------------------------------------- (27) (300) (293)Changes in working capital(Increase)/ decrease in inventories (3) (3) 2Decrease in trade and other receivables 20 51 57Increase/(decrease) in trade and otherpayables 12 (14) (47)--------------------------------------------------------------------------------Cash generated from discontinuedoperations before exceptionals 2 (266) (281)Cash flows resulting from exceptionals (551) (191) (510)--------------------------------------------------------------------------------Cash flow from discontinued operations (549) (457) (791)-------------------------------------------------------------------------------- Cash generated from operations 8,069 11,641 23,100================================================================================ 10. Reconciliation of net cash flow to movement in net debt Unaudited Unaudited Audited 26 weeks 26 weeks 52 weeks ended ended ended 30 December 31 December 1 July 2006 2005 2006 £'000 £'000 £'000 Increase/(decrease) in cash in the period 4,066 (2,046) (4,664)Cash (inflow)/outflow from(increase)/decrease in loans (27,000) 3,196 12,196-------------------------------------------------------------------------------- (Increase)/decrease in net debt resultingfrom cash flows (22,934) 1,150 7,532Loans acquired with subsidiaryundertakings (250) - -Finance leases acquired with subsidiaryundertakings (146) - -Other non-cash changes (138) 1,010 873Net debt at beginning of period (56,137) (64,542) (64,542)-------------------------------------------------------------------------------- Net debt at end of period (79,605) (62,382) (56,137)================================================================================ Other non-cash changes represent the prepayment of arrangement fees for debtfacilities and their subsequent amortisation over the expected useful life ofthe facilities. 11. Interim report It is intended to post the interim report to shareholders by no later than 16February 2007. Copies will be available from this date at the Company's headoffice: Rowley House, South Herts Office Campus, Elstree Way, Borehamwood,Herts, WD6 1JH. Independent review report to Regent Inns plc Introduction We have been instructed by the company to review the financial information forthe 26 weeks ended 30 December 2006 which comprises the consolidated incomestatement, the consolidated balance sheet, the statement of changes inshareholders equity, the consolidated cash flow statement and the related notes.We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The Listing Rulesof the London Stock Exchange require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. This interim report has been prepared in accordance with the basis set out inNote 1. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the disclosed accounting policies havebeen applied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for thecompany for the purpose of the Listing Rules of the Financial Services Authorityand for no other purpose. We do not, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by ourprior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the 26 weeks ended30 December 2006. PricewaterhouseCoopers LLPChartered AccountantsLondon5 February 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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