TIDMCPC
RNS Number : 6472K
City Pub Group PLC (The)
12 April 2018
The City Pub Group PLC
(the "City Pub Group", the "Company" or the "Group")
Final Results for the 53 weeks ended 31 December 2017
Pivotal year in the evolution of the business with AIM listing,
significant sales and EBITDA growth, strategic expansion and maiden
PLC dividend.
The City Pub Group is pleased to announce its audited results
for the 53 weeks ended 31 December 2017. The Group operates a
predominately freehold estate of 34 wet-led pubs in Southern
England and Wales. 5 additional sites acquired and a further 2 are
to be completed imminently, bringing the size of the estate to
41.
Highlights:
-- Revenue up 35% to GBP37.4 million (2016: GBP27.8 million)
-- Strong performance with like for like sales growth of 3.8%,
driven by good growth in drink and accommodation
-- Adjusted EBITDA* up 51% to GBP6.1 million (2016: GBP4.1 million)
-- Adjusted profit before tax** up 102% to GBP3.2 million (2016: GBP1.6 million)
-- Total annual dividend up 50% to 2.25p (2016: 1.50p)
-- Net debt to EBITDA of nil (2016: 3.3 times)
-- Reported (loss)/profit after tax including IPO and other
exceptional items of (GBP0.7) million (2016: GBP0.4 million)
2017 2016
(Loss)/profit Profit
Operating before Operating before
Revenue profit EBITDA tax Revenue profit EBITDA tax
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Reported 37.4 0.7 2.7 (0.2) 27.8 1.6 3.1 0.6
Share option
charge - 0.2 0.2 0.2 - 0.3 0.3 0.3
Exceptional
items - 3.2 3.2 3.2 - 0.7 0.7 0.7
Adjusted 37.4 4.1 6.1 3.2 27.8 2.6 4.1 1.6
============= ============= =========== ============== ========== ============== ============== ========
* Adjusted earnings before exceptional items, share option
charge, interest, taxation, depreciation and amortisation.
** Adjusted profit before tax is the profit before tax, share
option charge and exceptional items.
A number of the financial measures, including Adjusted Profit
before tax and Adjusted EBITDA are not defined under IFRS, so they
are termed 'Alternative Performance Measures' (APMs). Management
use these measures to monitor the Group's financial performance
alongside IFRS measures because they help illustrate the underlying
performance and position of the Group.
-- Continued significant progress throughout the year including
the combination of City Pub Company East and City Pub Company West
to form the City Pub Group and admission to AIM - raising a total
of GBP35m of new equity to fund future growth.
-- Strategic expansion with 8 pubs opened in 2017. This
increased number of sites and wet-led focus of the business
resulted in substantial EBITDA and sales growth.
-- A further 7 openings have already been earmarked for 2018 -
additional sites have been identified and are in legals.
-- Dividends increased by 50% on 2016 to 2.25p per share and the
Group's innovative Profit Share Scheme saw eligible Employees
rewarded with a payment of GBP750 each as a result of the Group's
strong financial performance.
Clive Watson, Executive Chairman of The City Pub Group,
said:
"2017 was a pivotal year in the evolution of the business. Not
only did we combine the two divisions under one roof, but we made
the important step of listing on AIM. We have also continued to
expand our high-quality drink-led estate which has significantly
increased revenue and Group EBITDA. Our increased dividend signals
the progress made, our strong financial performance and our
confidence for the future.
The momentum from 2017 has continued into the current financial
year and we have already earmarked 7 new pub openings for this
year. We are on course to meet our target of doubling the size of
the estate to around 65 pubs by mid-2021. We have a great head
office team in place to deliver on this goal.
The sector continues to experience a number of well-trailed
headwinds but we are positioned to meet these challenges and with
our robust balance sheet, well invested estate and strong cash
generation, we are confident of delivering continued strong
progress and meeting our expectations for the year as a whole."
12 April 2018
Enquiries:
City Pub Group Clive
Watson, Chairman
Tarquin Williams, CFO
Instinctif Partners
Matthew Smallwood
Andy Low +44(0)20 7457 2020
Liberum (Nomad & Joint
Broker)
Chris Clarke
Jill Li
Clayton Bush +44(0)20 3100 2222
Berenberg (Joint Broker)
Chris Bowman
Toby Flaux
Marie Stolberg +44 (0)20 3207 7800
For further information on City Pub Company pubs visit
www.citypubcompany.com
CHAIRMAN'S STATEMENT
2017 was a pivotal year in the evolution of the City Pub Group.
At the end of last October, the City Pub Company (East) Plc
("CPCE") combined with City Pub Company (West) Ltd ("CPCW") to form
the City Pub Group plc. The Group was subsequently listed onto AIM
on 23 November 2017 raising GBP35m at 170p. EIS shareholders also
placed GBP11.6m of shares with new institutional shareholders.
The AIM listing achieved a liquidity event for existing EIS
shareholders and the Group's statement of financial position has
been significantly strengthened providing the platform for the
Group to acquire further pubs and double the size of its estate to
around 65 pubs by mid-2021.
2017 was a strong year financially with sales up 35% to
GBP37.4m, adjusted EBITDA up 51% to GBP6.1m and adjusted EBITDA
margin increased from 14.7% to 16.4%.
The Board recommends a final dividend of 2.25p per share (2016
1.5p) representing a 50% increase on the prior year.
Trading Estate
The Group is made up of 39 high quality local pubs that are
predominately drink led. The Group has grown steadily by selective
acquisitions to build the Group as it is today (34 trading & 5
completed acquisitions to open).
2017 was a year of significant growth and development driven by
acquisitions and good performance. The Group began the year trading
with 25 pubs and 3 newly acquired sites that had yet to trade.
At the end of January, the Group opened its first pub in
Southampton, the London Road Brew House (previously Varsity). It
had a very encouraging start and has continued to improve
performance in the early stages of 2018.
A busy February saw the Group increase its presence in Oxford
through the acquisition of Beerd on George Street. This pub traded
as Beerd until August before being closed for refurbishment and
reopening as The Grapes. At the end of this month we also opened
The Petersfield in Cambridge (previously called Backstreet Bistro).
During February the Group also acquired its tenth London pub, The
Three Crowns in Shoreditch, which was closed for a minor
refurbishment before reopening at the end of March. Performance of
the Three Crowns has been encouraging to date and with significant
development of the local area in progress, we see further potential
for growth.
After significant investment, May saw the highly anticipated
opening of our largest pub, The Walrus in Brighton. The pub,
previously named Smugglers, was purchased in 2015 and it has traded
well under our ownership, building on its strong start with an
excellent Christmas performance.
In June, the Group added another two well-established freeholds
to its estate: the Old Fire House in Exeter and The Red Lion in
Histon, Cambridge. The Group also added The Waterman in Cambridge,
in July, building on its existing presence in the area. The
Waterman has had a major refurbishment.
In September 2017, the Group acquired Aragon House, a freehold
pub on the New Kings Road in London, which is due to open in
September 2018. The acquisition of the long-leasehold interest of
the King Street Brew House in Bristol towards the end of the year
further strengthened the balance sheet.
The momentum since IPO in November 2017 has continued with the
Group acquiring five further pubs to date and exchanging contracts
on another 2 pubs.
-- The Belle Vue in Clapham, a freehold asset, was acquired in
January and re-opened at the end of February following a minor
refurbishment.
-- An all-vegan pub in Parsons Green in London will open in April 2018
-- The acquisition of two further freehold pubs in Reading and
Cardiff allowed the Group to expand its geographic footprint
-- The completion of the acquisition of the Old Ticket Office in
Cambridge has seen the Group further grow its existing hub
there
-- Most recently, contracts have been exchanged on two new sites
with completion expected at the end of April.
Once the development pubs are opened and contracts for the new
pubs completed, the Group will have 41 sites of which 56% are
freehold.
Market
While the wider UK pub sector has experienced contraction, the
managed pub sub-sector in which the Group operates is forecast to
grow in value by 11% from GBP9.9 billion in 2016 to GBP11.1 billion
in 2019 (Source: MCA UK Pub Market Report).
The Directors believe this growth is driven by consumer
preferences moving away from chain and branded pubs and towards
pubs with an individual identity and an ambience which reflects the
local market. Together with the move toward individual pubs,
consumer tastes have continued to evolve, trending towards craft
ales and lagers, premium spirits and wines and good quality food
which incorporate local produce. The Directors therefore believe
that a managed pub with an entrepreneurial tenant or owner, who is
able to tailor both the ambience and product range of a pub to its
local target market, can retain the flexibility required to respond
to evolving consumer trends.
Financial Highlights
As the number of pubs has increased the Group has benefitted
from economies of scale which has assisted the financial
performance of the Group.
Summary for the year ended 31 December 2017:
- Revenue up 35% to GBP37.4 million (2016: GBP27.8 million)
- Adjusted EBITDA* up 51% to GBP6.1 million (2016: GBP4.1 million)
- Adjusted profit before tax** up 102% to GBP3.2 million (2016: GBP1.6 million)
- Reported (loss) / profit of (GBP0.7) million (2016: GBP0.4 million)
- Total annual dividend up 50% to 2.25p (2016: 1.50p)
- Net debt to EBITDA ratio of nil (2016: 3.3 times).
*Adjusted Earnings before exceptional items, share option
charge, interest, taxation, depreciation and amortisation.
** Adjusted profit before tax is the profit before tax, share
option charge and exceptional items.
The reported loss has been adversely affected by a number of one
off costs largely relating to the flotation (see Note 8 for further
explanation).
The Board is pleased with the significant increase in the
Group's adjusted EBITDA performance
and the improvements in its operating (EBITDA) margins which
have increased from 14.7% to 16.4% and should increase further as
the central overhead base becomes more efficient.
Statement of Financial Position and Bank Borrowings
As a result of the equity fundraising the statement of financial
position has been significantly strengthened. Using the net
proceeds of the IPO, the Group repaid its revolving credit facility
and ended the year without any borrowings and subsequent to the
recent pub purchases bank debt remains low at approximately
GBP3m.
The Group has in place a GBP30m revolving credit facility with
Barclays expiring in July 2021. At the appropriate time it is the
Board's intention to renegotiate these facilities, increase their
quantum extend the length. The Board has adopted a conservative
gearing policy of approximately 30% of asset value and will also
utilise cash generated from the existing estate to fund
acquisitions.
Board
With the amalgamation of CPCE and CPCW, Rupert Clark and Alex
Derrick were appointed Joint Group Managing Directors responsible
for the day-to-day operations of the Group.
As Executive Chairman I am responsible for managing the Board,
the growth of the Group and exploring further acquisition
opportunities.
On listing, Richard Prickett was appointed Senior Independent
Director with James Watson stepping down after 5 years as a Board
member. We thank James for his contribution to the success of the
business.
In January this year Neil Griffiths became our second
independent Director. Neil, formerly Chief
Operations Officer of Punch Plc, replaced David Bruce who was
one of the Co-Founders of the Group. The Board is immensely
grateful to David for his energy, insight and guidance as we went
from start up to trading on AIM.
Dividend
The Board's intention is to have a progressive dividend policy
increasing future dividends in line with underlying performance of
the Group.
The Board recommends a final dividend of 2.25p per share (2016
1.50p) representing a 50% increase on the prior year. If approved,
at the Company's AGM, the dividend will be paid on 30 June to
shareholders on the share register as of 31 May 2018. As
previously, a scrip dividend alternative will be available to those
shareholders who wish to receive their dividends in shares. I will
be electing to subscribe for the scrip dividend for the entirety of
my holding.
Employee Profit Share
With retention of staff becoming increasingly important, the
Board believes that the Group is at the forefront of the industry
in rewarding its employees. In 2015 the Board put in place an
innovative Profit Share Scheme so that all employees could share in
the Company's success.
As a result of the Employee Profit Share Scheme, employees who
had been with the Group since 1 January 2017 were each paid GBP750
representing an increase of over 30% on last year's payment. By
sharing up to 3% of the Group's EBITDA less bank interest we
continue to build and retain a motivated and incentivised
workforce.
Annual General Meeting
The AGM will be held at Temple Brew House at 11am on Monday 14
May 2018.
Current Trading & Outlook
For the first 14 weeks of the year, total sales were up 22% on
prior year with 34 sites open and trading. The snow in the first
quarter adversely impacted trading for a short period, however with
key sporting events, particularly the World Cup football tournament
in June, the opening of the pubs already earmarked for 2018 and a
strong acquisition pipeline, we are confident of delivering
continued strong progress and meeting expectations for the year as
a whole.
The last six months have seen us complete the initial part of
our journey and start our second stage. In common with all in the
hospitality industry, there are challenges such as rising employee
costs, business rates increase and uncertainty around Brexit.
Increasing sales, scale and efficiency will mitigate the bulk of
these.
The Board is confident that with its strong trading estate and
balance sheet we are well placed to take advantage and will benefit
from weakening acquisition prices as we expand our portfolio.
I would like to take this opportunity to thank everyone:
employees, advisors, suppliers, banks and my co-directors for their
contributions in enabling this Group to thrive thus far. The City
Pub Group has the opportunity to continue to grow and prosper and
build on the solid foundations already in place.
Clive Watson
Chairman
The City Pub Group plc
BUSINESS REVIEW
Financial Performance
2017 2016
(Loss)/profit Profit
Operating before Operating before
Revenue profit EBITDA tax Revenue profit EBITDA tax
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Reported 37.4 0.7 2.7 (0.2) 27.8 1.6 3.1 0.6
Share option
charge - 0.2 0.2 0.2 - 0.3 0.3 0.3
Exceptional
items - 3.2 3.2 3.2 - 0.7 0.7 0.7
Adjusted 37.4 4.1 6.1 3.2 27.8 2.6 4.1 1.6
============= ============= =========== ============== ========== ============== ============== ========
The Group has a strong financial position as a cash generative
business with a high quality, mainly freehold asset base. The bank
debt has been repaid leaving the ratio of net debt to pro forma
EBITDA of nil (2016: 3.3 times).
We have grown our revenue by 35% on the prior year with the
majority of growth coming from the eight new pubs opened in the
year along with the strong like for like trading of the existing
estate. Our adjusted operating profit before separately disclosed
exceptional items grew by 62% to GBP4.1 million (2016: GBP2.6
million).
Adjusted EBITDA increased by 51% to GBP6.1 million (2016: GBP4.1
million) reflecting the performance of the larger estate. There was
an increase in depreciation of 28% on the prior period. Net finance
costs before separately disclosed exceptional items are in line
with prior year at GBP1.0 million.
The Group generated cash from operating activities of GBP4.0
million (2016: GBP4.2 million). In line with our acquisition
strategy, we invested GBP17.3 million on the acquisition and
opening of eight pubs during the year, including the subsequent
refurbishments. The new sites were - The Grapes in Oxford, The
Petersfield in Cambridge, The Three Crowns in Shoreditch, The Old
Fire House in Exeter, The Red Lion in Histon, The Waterman in
Cambridge, Aragon House in Parson's Green and what will be a vegan
pub also in Parson's Green.
The Group has GBP30 million of available long term facilities,
available until June 2021. The Group had repaid all the bank debt
following the equity raise at the time of the IPO. There is a
further GBP6.4 million of cash held on the statement of financial
position at year end.
Separately disclosed exceptional items before tax of GBP3.2
million comprised GBP0.45 million impairment provision on a Bristol
site, GBP0.9 million of pre-opening costs expensed and GBP1.8
million of costs related to the IPO. Before separately disclosed
exceptional items and share option charge, adjusted profit before
tax was therefore GBP3.2 million (2016: GBP1.6 million).
Tax has been provided for at a rate of 19.25% (2016: 20.0%) on
adjusted profits. A full analysis of the tax charge for the year is
set out in note 7.
THE CITY PUB GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 53 WEEK PERIOD TO 31 December 2017
2017 2016
Notes GBP GBP
Revenue 4 37,403,515 27,762,513
Costs of sales (9,657,731) (7,529,656)
Gross profit 27,745,784 20,232,857
Administrative expenses (27,019,242) (18,680,490)
Operating profit 726,542 1,552,367
Reconciliation to adjusted
EBITDA*
Operating profit 726,542 1,552,367
Depreciation and amortisation 5 1,963,891 1,528,660
Share option charge 25 258,195 310,479
Exceptional items 8 3,200,643 691,185
* Adjusted earnings before
exceptional items, share
option charge, interest,
taxation, depreciation and
amortisation 6,149,271 4,082,691
---------------------------------
Finance costs 6 (986,560) (971,415)
(Loss)/profit before tax 5 (260,018) 580,952
Tax expense 7 (456,423) (196,680)
(Loss)/profit for the period
and total comprehensive income (716,441) 384,272
============== ==============
Earnings per share
Basic (loss)/earnings per
share (p) 10 (2.45) 1.49
============== ==============
Diluted (loss)/earnings per
share (p) 10 (2.45) 1.44
============== ==============
THE CITY PUB GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE 53 WEEK PERIOD TO 31 December 2017
2017 2016
Assets Notes GBP GBP
Non-current
Intangible assets 11 2,524,681 1,359,713
Property, plant and
equipment 12 67,947,419 50,426,116
Total non-current
assets 70,472,100 51,785,829
---------------- -------------
Current
Inventories 14 553,909 466,319
Trade and other receivables 15 1,652,888 1,182,942
Cash and cash equivalents 6,414,854 1,264,586
Total current assets 8,621,651 2,913,847
---------------- -------------
Total assets 79,093,751 54,699,676
---------------- -------------
Liabilities
Current liabilities
Trade and other payables 16 (6,147,068) (4,633,119)
Borrowings 18 (244,707) (294,396)
Total current liabilities (6,391,775) (4,927,515)
---------------- -------------
Non-current
Borrowings 18 - (18,004,917)
Other payables 17 (310,000) (24,978)
Deferred tax liabilities 21 (1,081,823) (534,097)
Total non-current
liabilities (1,391,823) (18,563,992)
---------------- -------------
Total liabilities (7,783,598) (23,491,507)
---------------- -------------
Net assets 71,310,153 31,208,169
================ =============
Equity
Share capital 22 28,233,667 12,934,904
Share premium 22 31,276,189 97,000
Convertible preference
share (CPS) 22 - 5,532,076
Other reserve 22 92,042 90,000
Share-based payment
reserve 22 326,364 798,079
Retained earnings 22 11,381,891 11,756,110
Total equity 71,310,153 31,208,169
================ =============
THE CITY PUB GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 53 WEEK PERIODED 31 December 2017
Convertible
preference Share-based
Share Share share Other payment Retained
Notes capital premium ("CPS") reserve reserve earnings Total
Balance
at 28 December
2015 12,910,404 - 4,188,716 - 487,600 11,371,838 28,958,558
Employee
share-based
compensation 25 - - - - 310,479 - 310,479
Issue of
convertible
preference
shares treated
as equity 22 - - 1,343,360 - - - 1,343,360
Issue of
share capital
on private
placement 22 24,500 97,000 - 90,000 - - 211,500
Transactions
with owners 24,500 97,000 1,343,360 90,000 310,479 - 1,865,339
------------------ --------------- ------------------- --------------- ------------ --------------- --------------
Profit for
the period - - - - - 384,272 384,272
Total
comprehensive
income for
the period - - - - - 384,272 384,272
------------------ --------------- ------------------- --------------- ------------ --------------- --------------
Balance
at 25 December
2016 12,934,904 97,000 5,532,076 90,000 798,079 11,756,110 31,208,169
================== =============== =================== =============== ============ =============== ==============
Employee
share-based
compensation 25 - - - - 258,195 - 258,195
Issue of
new shares
prior to
exchange
for shares
in subsidiary 22 69,114 - - 146,948 - - 216,062
Reclassification
of CPS debt
on conversion
of equity 22 - (144,906) 4,734,378 (144,906) - - 4,444,566
Re-designation
of CPS into
ordinary
shares 22 3,208,268 7,058,186 (10,266,454) - - - -
Issue of
new shares 22 11,455,256 24,904,784 - - - - 36,360,040
Bonus issue
of B Shares 22 588,000 (588,000) - - - - -
Purchase
of own shares 22 (21,875) (50,875) - - - - (72,750)
Share options
exercised 25 - - - - (729,910) 729,910 -
Dividends 9 - - - - - (387,688) (387,688)
Transactions
with owners 15,298,763 31,179,189 (5,532,076) 2,042 (471,715) 342,222 40,818,425
------------------ --------------- ------------------- --------------- ------------ --------------- --------------
Loss for
the period - - - - - (716,441) (716,441)
Total
comprehensive
income for
the period - - - - - (716,441) (716,441)
------------------ --------------- ------------------- --------------- ------------ --------------- --------------
Balance
at 31 December
2017 28,233,667 31,276,189 - 92,042 326,364 11,381,891 71,310,153
================== =============== =================== =============== ============ =============== ==============
THE CITY PUB GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 53 WEEK PERIODED 31 December 2017
2017 2016
Notes GBP GBP
Cash flows from operating
activities
(Loss)/profit for the period (716,441) 384,272
Taxation 7 456,423 196,680
Finance costs 6 986,560 971,415
-------------- --------------
Operating profit 726,542 1,552,367
Adjustments for:
Depreciation and amortisation 5 1,963,891 1,528,660
Share-based payment charge 25 258,195 310,479
Impairment 12 450,000 -
Change in inventories (87,590) (132,209)
Change in trade and other
receivables (366,233) (358,361)
Change in trade and other
payables 1,252,254 1,287,921
-------------- --------------
Cash generated from operations 4,197,059 4,188,857
Tax paid (150,832) 21,843
Net cash from operating activities 4,046,227 4,210,700
-------------- --------------
Cash flows from investing
activities
Purchase of property, plant
and equipment 12 (7,610,731) (10,306,748)
Acquisition of new property
sites 26 (11,454,000) (8,800,000)
Net cash used in investing
activities (19,064,731) (19,106,748)
-------------- --------------
Cash flows from financing
activities
Proceeds from issue of share
capital 34,678,775 2,447,030
Repayment of borrowings (13,610,040) (1,100,000)
Dividends paid 9 (227,092) -
Purchase of own shares (72,750) -
Proceeds from new borrowings - 13,560,351
Interest paid 6 (600,121) (677,021)
Net cash from financing activities 20,168,772 14,230,360
-------------- --------------
Net change in cash and cash
equivalents 5,150,268 (665,688)
Cash and cash equivalents
at the start of the period 1,264,586 1,930,274
Cash and cash equivalents
at the end of the period 6,414,854 1,264,586
============== ==============
THE CITY PUB GROUP PLC
NOTES
FOR THE 53 WEEK PERIODED 31 December 2017
1 Company information
The Company is a public limited company incorporated and
domiciled in the UK. The Company number is 07814568 and the
registered office is located at Essel House 2nd Floor, 29 Foley
Street, London, England, W1W 7TH.
The Group's principal activity is the management and operation
of public houses. Information on the Company's ultimate controlling
party and other related party relationships is provided in Note
28.
Exemption from audit
For the period ended 31 December 2017 The City Pub Group plc has
provided a guarantee in respect of all liabilities due by its
subsidiary The City Pub (West) Limited (Company No. 07814571) and
Flamequire Limited (Company No. 01834157) thus entitling them to
exemption from audit under section 479A of the Companies Act 2006
relating to subsidiary companies.
2 Basis of preparation
2.1 Basis of preparation
The figures for the 53 week period ended 31 December 2017 have
been extracted from the audited statutory financial statements for
the period on which the auditors have issued an unqualified
opinion. The financial information attached has been prepared in
accordance with the recognition and measurement requirements of
international financial reporting standards (IFRS) as adopted by
the EU and international financial reporting interpretations
committee (IFRIC) interpretations issued and effective at the time
of preparing those financial statements. The accounting policies
applied in the period ended 31 December 2017 are consistent with
those applied in the financial statements for the period ended 25
December 2016 having noted the predecessor value method of
accounting has been adopted to account for the business combination
of the Group.
The financial information for the period ended 31 December 2017
does not constitute statutory financial information as defined in
Section 434 of the Companies Act
2006 and does not contain all of the information required to be
disclosed in a full set of IFRS financial statements. This
announcement was approved by the Board of Directors and authorised
for issue on 12 April 2018. The auditor's report on the financial
statements for 31 December 2017 was unqualified, and did not
include reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their reports and
did not contain a statement under either Section 498 (2) or 498 (3)
of the Companies Act 2006.
2.2 New and Revised Standards
IFRS in issue but not applied in the annual financial
statements
The following IFRS and IFRIC Interpretations have been issued
but have not been applied by the Group in preparing the annual
financial statements, as they are not as yet effective. The Group
intends to adopt these Standards and Interpretations when they
become effective, rather than adopt them early.
-- IFRS 9, 'Financial instruments', effective date 1 January 2018
-- IFRS 15, 'Revenue from Contracts with Customers', effective date 1 January 2018
-- IFRS 16, 'Leases', effective date 1 January 2019
-- Disclosure Initiative: Amendments to IAS 7: Statement of Cash
Flows (effective: 1 January 2017)
-- Amendments to IAS 12: Recognition of Deferred Tax Assets for
Unrealised Losses (effective: 1 January 2017).
-- IFRIC 22, 'Foreign Currency Transactions and Advance
Consideration (effective: 1 January 2018 and not yet endorsed by
the EU).
-- "Amendments to IFRS 2 Classification and Measurement of Share
Based Payment Transactions", "Amendments to IAS 40 Investment
Property and Annual Improvements to IFRS Standards 2014 -2016
Cycle" (Mandatory in 2018 and not endorsed by the EU)
-- "Amendments to IFRS 4 Applying IFRS 9 Financial Instruments
with IFRS 4 Insurance Contracts" (Endorsed by the EU and mandatory
in 2018)
-- IFRIC 23 "Uncertainty over Income Tax Treatments" (Mandatory
in 2019 and not yet endorsed by the EU)
-- "Amendments to IFRS 9: Prepayment Features with Negative
Compensation", "Amendments to IAS 28: Long-term Interests in
Associates and Joint Ventures", "Annual Improvements to IFRS
Standards 2015-2017 Cycle" and "Amendments to IAS19 - Plan
Amendment, Curtailment or Settlement" (Mandatory in 2019 and not
yet endorsed by the EU)
-- IFRS 17 "Insurance Contracts" (Mandatory in 2021 and not yet endorsed by the EU)
The above standards are yet to be subject to a detailed review.
IFRS 9 will impact both the measurement and disclosure of financial
instruments, IFRS 15 is not considered to have a material impact on
revenue recognition and related disclosures, given the nature of
retail pub sales to the public. IFRS 16 will impact the treatment
of leases currently treated as operating leases, but beyond this,
it is not practicable to provide a reasonable estimate of the
effect of IFRS 16 until a detailed review has been completed.
2.3 Predecessor value method
During the period the Company undertook a common control
combination, through the issue of new Ordinary Shares, B-Ordinary
Shares and Convertible Preference Shares in exchange for 100% of
the Ordinary Shares, B Ordinary Shares and Convertible Preference
Shares of The City Pub Company (West) Limited an entity under
common control. The Directors considered the business combination
to be a common control combination, as the combining entities were
ultimately controlled by the same parties both before and after the
combination and the common control was not transitory.
The share capital and convertible preference shares issued to
effect the merger (accounted for under the predecessor value
method) had a nominal value of GBP6,530,316 and GBP5,133,227
respectively (representing GBP6,455,202 in respect of shares as at
28 December 2015 and GBP75,144 subsequent to that date;
representing GBP2,094,358 in respect of the equity element of the
CPS as at 28 December 2015 and GBP3,038,869 subsequent to that
date). This results in enlarged share capital and convertible
preference share balances for the group of GBP12,910,404 and
GBP4,188,716 as at 28 December 2015. Replacement share options
issued have also been accounted for under the predecessor value
method.
As a common control combination, the transaction is outside the
scope of IFRS 3 ('Business Combinations') and the Directors have
therefore considered the nature of the transaction, which is
eligible for Merger Relief under the Companies Act and decided that
the predecessor value method would be most appropriate for
preparing the annual financial statements.
The predecessor value method involves accounting for the assets
and liabilities of the acquired business using existing carrying
values rather than at fair values, as a result no goodwill has
arisen on the combination. The comparative period has been restated
as if the combination had taken place at the beginning of the
comparative period, as the Directors consider this to give the user
the most meaningful information to assess the performance of the
Group.
The use of the predecessor value method has given rise to an
"other reserve", which represents the share premium of the
subsidiary entity on consolidation.
The financial results of subsidiaries are included in the
consolidated financial information from the date that control
commences until the date that control ceases. The consolidated
financial information presents the results of the companies within
the same group. Intra-group balances and transactions, and any
unrealised
income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial information.
2.4 Going concern
The Directors consider it appropriate to prepare the annual
financial statements on a going concern basis. Cash flow forecasts
have been produced to June 2019 that indicate the Company has
sufficient headroom to meet its liabilities as they fall due for
the foreseeable future. The Company has repaid its borrowings with
its bankers, Barclays Bank during the year.
2.5 Revenue
Revenue represents external sales (excluding taxes) of goods and
services net of discounts. Revenue is recognised to the extent that
it is probable that the economic benefits will flow to the Group
and the revenue can be reliably measured. Revenue is measured at
the fair value of the consideration receivable net of trade
discounts and VAT.
Revenue principally consists of drink, food and accommodation
sales, which are recognised at the point at which goods and
services are provided and rental income which is recognised on a
straight line basis over the lease term. Revenue for bedroom
accommodation is recognised at the point the services are
rendered.
2.6 Cost of sales
Costs considered to be directly related to revenue are accounted
for as cost of sales. Costs of goods sold are determined on the
basis of the cost of purchase, adjusted for movements of
inventories. Cost of services rendered is recognised at the time
the revenue is recognised.
2.7 Operating profit
Operating profit is revenue less operating costs. Revenue is as
detailed above and as shown in note 4. Operating costs are all
costs excluding finance costs, costs associated with the disposal
of properties and the tax charge.
2.8 Exceptional items
The Group presents as exceptional items those significant items
of income and expense which, because of their size, nature and
infrequency of the events giving rise to them merit separate
presentation to allow Shareholders to understand better the
elements of financial performance in the period, so as to
facilitate comparison with prior periods to assess trends in
financial performance more readily. These items are primarily
pre-opening costs and non-recurring costs, which are not expected
to recur. Costs associated with the IPO have been recorded within
non-recurring costs.
2.9 Finance income and expense
Finance income is recognised as interest accrues (using the
effective interest method) on funds invested outside the Group.
Finance expense includes the cost of borrowing from third parties
and recognised on an effective interest rate basis, resulting from
the financial liability being recognised on an amortised cost
basis, including commitment fees. Finance expense also includes the
accrued dividends on the convertible preference shares ("CPS").
2.10 Taxation and deferred taxation
The income tax expense or income for the period is the tax
payable on the current period's taxable income. This is based on
the national income tax rate enacted or substantively enacted with
any adjustment relating to tax payable in previous years and
changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases of assets and
liabilities and their carrying amounts in the annual Financial
Statements.
Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to be applicable when the
asset or liability crystallises based on current tax rates and laws
that have been enacted or substantively enacted by the reporting
date. The relevant tax rates are applied to the cumulative
amounts
of deductible and taxable temporary differences to measure the
deferred tax asset or liability.
A deferred tax asset is regarded as recoverable and therefore
recognised only when, on the basis of all available evidence, it
can be regarded as more likely than not that there will be suitable
taxable profits against which to recover carried forward tax losses
and from which the future reversal of temporary differences can be
deducted. The carrying amount of deferred tax assets are reviewed
at each reporting date.
2.11 Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
financial instrument and are measured initially at fair value
adjusted for transaction costs. Subsequent measurement of financial
assets and financial liabilities is described below.
Financial assets are derecognised when the contractual rights to
the cash flows from the financial asset expire, or when the
financial asset and substantially all the risks and rewards are
transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
Classification and subsequent measurement of financial
assets
For the purpose of subsequent measurement financial assets are
classified into the following categories upon initial
recognition:
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. After initial recognition, these are measured at amortised
cost using the effective interest method, less provision for
impairment. Discounting is omitted where the effect of discounting
is immaterial. The Group's cash and cash equivalents, trade and
most other receivables fall into this category of financial
instruments.
Trade and other receivables
Trade and other receivables do not carry any interest and are
recognised at their original invoiced amounts, less an allowance
for any amounts that are not considered collectible. The carrying
amount of the asset is reduced through the use of an allowance
account, and the amount of the loss is recognised in the profit or
loss within 'cost of sales'. When a trade or other receivable is
uncollectible, it is written off against the allowance account for
trade and other receivables. Subsequent recoveries of amounts
previously written off are credited against 'cost of sales' in the
profit or loss.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and
other short term highly liquid deposits with original maturities of
three months or less.
Classification and subsequent measurement of financial
liabilities
The Group's financial liabilities include trade and certain
other payables. Financial liabilities are measured subsequently at
amortised cost using the effective interest rate.
Trade and other payables
Trade and other payables are recognised initially at fair value
and subsequently measured at amortised cost using the effective
interest method. These amounts represent liabilities for goods and
services provided to the Group prior to the end of the financial
period, which are unpaid.
Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in profit
or loss over the period of the borrowings using the effective
interest method.
Classification of Shares as Debt or Equity
When shares are issued, any component that creates a financial
liability of the Group is presented as a liability in the statement
of financial position; measured initially at fair value net of
transaction costs and thereafter at amortised cost until
extinguished on conversion or redemption. The corresponding
dividends relating to the liability component are charged as
interest expense in the Income Statement. The initial fair value of
the liability component is determined using a market rate for an
equivalent liability without a conversion feature.
The remainder of the proceeds on issue is allocated to the
equity component and included in shareholders' equity, net of
transaction costs.
The carrying amount of the equity component is not remeasured in
subsequent years. The Group's ordinary shares are classified as
equity instruments. For the purposes of the disclosures given in
note 22, the Group considers its capital to comprise its ordinary
share capital, share premium and accumulated retained earnings plus
its preference shares which are classified as a financial liability
in the statement of financial position. There have been no changes
to what the Group considers to be capital since the prior year.
Convertible Preference Shares
The Group's convertible preference shares are reported under
equity and non-current liabilities, as apportioned on recognition.
The corresponding dividends on preference shares are charged as
interest in the Income Statement, with any accrued interest
recorded as a current liability. Preference shares carry interest
at fixed rates. On conversion the equity and non-current
liabilities are extinguished in exchange for ordinary shares, with
the initial costs of raising the capital incurred on issue being
off-set against the share premium. The preference shares have all
been converted in the current period.
Share repurchases
Where shares are repurchased wholly out of the proceeds of a
fresh issue of shares made for that purpose, no amount needs to be
transferred to a capital redemption reserve as there is no
reduction in capital as a result of the purchase and issue of
shares.
2.12 Business combinations and goodwill
Other than the group reorganisation that took place prior to
Listing, business combinations, which include sites that are
operating as a going concern at acquisition, are accounted for
under IFRS 3 using the purchase method. Any excess of the
consideration of the business combination over the interest in the
net fair value of the identifiable assets, liabilities and
contingent liabilities is recognised in the statement of financial
positionas goodwill and is not amortised. To the extent that the
net fair value of the acquired entity's identifiable assets,
liabilities and contingent liabilities is greater than the cost of
the investment, a gain is recognised immediately in the profit or
loss.
Goodwill represents the future economic benefits arising from a
business combination that are not individually identified and
separately recognised. Goodwill is carried at cost less accumulated
impairment losses. Refer to Note 11 for a description of impairment
testing procedures.
2.13 Property, plant and equipment
Property, plant and equipment, other than freehold land, are
stated at cost or deemed cost less accumulated depreciation and any
impairment in value. Depreciation is provided at rates calculated
to write off the cost less estimated residual value of each asset
over its expected useful life, with effect from the first full year
of ownership, as follows:
Freehold properties To residual value over fifty years straight
line
Leasehold properties Straight line over the length of the
lease
Fixtures, fittings and equipment Between four and ten years
straight line
Computer equipment Between two and five years straight line
No depreciation is charged on freehold land. Where there is no
depreciation on historic freehold buildings as a result of a high
residual value / long useful lives, the freehold building is
subject to an impairment review.
Residual values and useful lives are reviewed every year and
adjusted if appropriate at each financial period end.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount. Gains and losses on disposals are
determined by comparing proceeds with carrying amount. These are
included in the profit or loss.
2.14 Investments in subsidiaries
The Company recognises its investments in subsidiaries at cost,
less any provisions for impairment. Income is recognised from these
investments only in relation to distributions received from
post-acquisition profits. Distributions received in excess of
post-acquisition profits are deducted from the cost of the
investment.
2.15 Impairment of goodwill, property, plant and equipment and investments in subsidiaries
For impairment assessment purposes, assets are grouped at the
lowest levels for which there are largely independent cash inflows
(cash-generating units). As a result, some assets are tested
individually for impairment and some are tested at cash-generating
unit level. Goodwill is allocated to those cash-generating units
that are expected to benefit from synergies of a related business
combination and represent the lowest level within the Group at
which management monitors goodwill.
Cash-generating units to which goodwill has been allocated
(determined by the Group's management as equivalent to its
operating segments) are tested for impairment at least annually.
All other individual assets or cash-generating units are tested for
impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the
asset's (or cash-generating unit's) carrying amount exceeds its
recoverable amount, which is the higher of fair value less costs of
disposal and value-in-use. To determine the value-in-use,
management estimates expected future cash flows from each
cash-generating unit and determines a suitable discount rate in
order to calculate the present value of those cash flows. The data
used for impairment testing procedures are directly linked to the
Group's latest approved budget, adjusted as necessary to exclude
the effects of future reorganisations and asset enhancements.
Discount factors are determined individually for each
cash-generating unit and reflect current market assessments of the
time value of money and asset-specific risk factors.
Impairment losses for cash-generating units reduce first the
carrying amount of any goodwill allocated to that cash-generating
unit. Any remaining impairment loss is charged pro rata to the
other assets in the cash-generating unit. With the exception of
goodwill, all assets are subsequently reassessed for indications
that an impairment loss previously recognised may no longer exist.
An impairment loss is reversed if the asset's or cash-generating
unit's recoverable amount exceeds its carrying amount.
2.16 Inventories
Inventories are counted independently and stated at the lower of
cost and net realisable value. Cost is calculated using the First
In First Out method. Net realisable value is the estimated selling
price in the ordinary course of business, less estimated costs of
completion and the estimated costs to sell.
2.17 Leasing
Leases in which a significant portion of the risks and rewards
of ownership are not transferred to the
Group as lessee are classified as operating leases. These are
the only types of lease utilised by the entity. Operating lease
payments for assets leased from third parties are charged to profit
or loss on a straight line basis over the period of the lease, on
an accrued basis.
2.18 Share-based employee remuneration
The Company operates equity-settled share-based remuneration
plans for its employees. None of the Company's plans are
cash-settled.
All goods and services received in exchange for the grant of any
share-based payment are measured at their fair values.
Where employees are rewarded using share-based payments, the
fair value of employees' services is determined indirectly by
reference to the fair value of the equity instruments granted. This
fair value is appraised at the grant date and excludes the impact
of non-market vesting conditions (for example profitability and
sales growth targets and performance conditions). The fair value is
determined by using the Black-Scholes method.
All share-based remuneration is ultimately recognised as an
expense in profit or loss with a corresponding credit to share
based payments reserve. If vesting periods or other vesting
conditions apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options
expected to vest.
Non-market vesting conditions are included in assumptions about
the number of options that are expected to become exercisable.
Estimates are subsequently revised if there is any indication that
the number of share options expected to vest differs from previous
estimates. Any adjustment to cumulative share-based compensation
resulting from a revision is recognised in the current period. The
number of vested options ultimately exercised by holders does not
impact the expense recorded in any period.
Upon exercise of share options, the proceeds received, net of
any directly attributable transaction costs, are allocated to share
capital up to the nominal (or par) value of the shares issued with
any excess being recorded as share premium.
3 Significant estimates and judgements
The judgements, estimates and assumptions, which are considered
to be significant, are as follows:
The selection of the predecessor value method, rather than the
acquisition method, for accounting for the common control
combination was a significant judgement for the directors. The
predecessor value method was considered to better reflect the
nature of the common control combination, which met the
requirements for Merger Relief under the Companies Act 2006, and is
considered to give users of the annual financial statements better
comparability for assessing the performance of the combined
businesses.
The Group determines whether goodwill is impaired on an annual
basis and this requires an estimation of the value in use of the
cash-generating units to which the goodwill is allocated. This
involves estimation of future cash flows and choosing a suitable
discount rate. Full details are supplied in note 11, together with
an analysis of the key assumptions.
The assessment of fair values for the assets and liabilities
recognised in the annual financial statements on the acquisition of
a business and additional consideration, and the date that control
is obtained, require significant judgement and estimate. Management
assess fair values, particularly for property, plant and equipment,
with reference to current market prices. See note 26 for business
combinations and property purchases made in the year.
4 Segmental analysis
The Group focuses its internal management reporting
predominantly on revenue, adjusted EBITDA (being earnings before
exceptional items, share option charge, interest, taxation,
depreciation and amortisation) and operating profit.
The Chief Operating Decision Maker ("CODM") receives information
on each pub and each pub is considered to be an individual
operating segment. In line with IFRS 8, each operating segment has
the same characteristics and therefore the pubs are aggregated to
form the reportable segment below.
Revenue, and all the Group's activities, arise wholly from the
sale of goods and services within the United Kingdom. All the
Group's non-current assets are located in the United Kingdom.
Revenue arises wholly from the sale of goods and services within
the United Kingdom.
2017 2016
GBP GBP
Revenue 37,403,515 27,762,513
Cost of sales (9,657,731) (7,529,656)
Gross profit 27,745,784 20,232,857
------------------ -------------------
Operating expenses:
- operating expenses before adjusting
items (21,596,513) (16,150,166)
Adjusted EBITDA 6,149,271 4,082,691
-------------------------------------------- ------------------ -------------------
- Depreciation and amortisation (1,963,891) (1,528,660)
- Share option charge (258,195) (310,479)
- exceptional items (3,200,643) (691,185)
Total operating expenses (27,019,242) (18,680,490)
------------------ -------------------
Operating profit 726,542 1,552,367
================== ===================
5 (Loss)/profit on ordinary activities before taxation
The (loss)/profit on ordinary activities before taxation is
stated after charging/(crediting):
2017 2016
GBP GBP
Costs of inventories recognised
as an expense 10,412,084 7,963,682
Staff costs (note 23) 14,003,402 10,848,862
Depreciation 1,963,891 1,528,660
Fees payable to the company's
auditor for the audit of the
company's financial statements 52,500 65,000
Fees payable to the company's 10,000 -
auditor for the audit of the
group financial statement
Tax compliance 15,661 10,225
Tax advisory services 56,948 27,302
Corporate finance services 185,988 -
Exceptional costs (note 8) 3,200,643 691,185
Operating leases - land and buildings 1,256,182 962,350
6 Interest payable and similar charges
2017 2016
GBP GBP
On bank loans and overdrafts 417,952 380,067
On CPS and other loans 323,901 296,952
Accrued dividend on CPS 244,707 294,396
986,560 971,415
============= =============
During the period, no interest was capitalised; (2016:
GBPnil).
The accrued dividend on the CPS was paid in January 2018.
7 Tax charge on (loss)/profit on ordinary activities
(a) Analysis of tax charge for the period
The tax charge for the Group is based on the profit for the
period and represents:
2017 2016
Current income tax: GBP GBP
Current income tax charge 335,014 35,498
Adjustments in respect of previous
period 44,114 (21,843)
Total current income tax 379,128 13,655
-------- ---------
Deferred tax:
Origination and reversal of temporary
differences 85,229 192,364
Adjustments in respect of deferred
tax of previous period (7,934) (400)
Change in corporation tax rate - (8,939)
Total deferred tax 77,295 183,025
-------- ---------
Total tax 456,423 196,680
======== =========
(b) Factors affecting total tax for the period
The tax assessed for the period differs from the standard rate
of corporation tax in the United Kingdom 19.25% (2016: 20.00%). The
differences are explained as follows:
2017 2016
GBP GBP
(Loss)/profit on ordinary activities
before tax (260,018) 580,952
============ ==========
(Loss)/profit on ordinary activities
multiplied by standard rate of corporation
tax in the United Kingdom of 19.25%
(2016: 20.0%) (50,054) 116,190
============ ==========
Effect of:
Fixed asset differences 53,187 (26,732)
Items not deductible for tax purposes 598,830 184,754
Adjustment in respect of previous
periods 44,114 (21,843)
Adjustment in respect of previous
periods - deferred tax (7,934) (400)
Share options tax deduction (181,720) -
Change in corporation tax rate - (55,289)
Total tax charge 456,423 196,680
============ ==========
8 Exceptional items
2017 2016
GBP GBP
Pre opening costs 852,718 574,688
Impairment of a pub site 450,000 -
Other non recurring items 1,897,925 116,497
3,200,643 691,185
=========== ==========
Other non-recurring items include IPO costs expensed totalling
GBP1,841,190 for the period ended 31 December 2017.
9 Dividends
Dividends paid during the reporting period
The Board declared its maiden dividend of 1.5p per share 50p
Ordinary share for shareholders on the share register as at 31 May
2017, which was approved at the Annual General Meeting and paid on
30 June 2017. The dividend per share was the same for The City Pub
Company (West) Limited and in total the dividend was
GBP387,688.
Dividends not recognised at the end of the reporting period
Since the year end, the Directors have proposed the payment of a
dividend in respect of the full financial year of 2.25p per fully
paid Ordinary share (2016: 1.5p). The aggregate amount of the
proposed dividend expected to be paid out of retained earnings at
30 June 2018, but not recognised as a liability at the year end, is
GBP1,270,515 (2016: GBP387,688).
10 Earnings per share
2017 2016
GBP GBP
(Loss)/earnings for the period
attributable to Shareholders (716,441) 384,272
============== ===============
(Loss)/earnings per share:
Basic (loss)/earnings per share
(p) (2.45) 1.49
Diluted (loss)/earnings per
share (p) (2.45) 1.44
Weighted average number of Number Number
shares: of shares of shares
Weighted average shares for
basic EPS 29,189,803 25,820,809
Effect of share options in
issue n/a 886,428
Weighted average shares for
diluted earnings per share n/a 26,707,237
============== ===============
11 Goodwill
Group Group
2017 2016
GBP GBP
Cost brought forward 1,359,713 1,359,713
Additions 1,164,968 -
At end of period 2,524,681 1,359,713
---------------- -----------
Amortisation/impairment - -
brought forward
Provided during - -
the period
Disposal - -
At end of period - -
---------------- -----------
Net book value
at end of period 2,524,681 1,359,713
================ ===========
Net book value
at start of period 1,359,713 1,359,713
================ ===========
The carrying value of goodwill included within the Group
statement of financial position is GBP2,524,681 (Company:
GBP1,102,295), which is allocated to the cash-generating unit
("CGU") of groupings of public houses as follows:
Group Group
2017 2016
GBP GBP
Freehold 2,072,198 1,037,231
Leasehold 452,483 322,482
2,524,681 1,359,713
----------- ------------
The CGU's recoverable amount has been determined as the higher
of its fair value less costs to sell and value in use based on an
internal discounted cash flow evaluation.
The fair value less costs to sell is calculated based on the
market value of the associated property and the discounted
operating cash flows based on management's forecasts.
For the 53 week period ended 31 December 2017, the
cash-generating unit recoverable amount was determined based on
value-in-use calculations, using cash flow projections based on one
year budgets, extrapolated into perpetuity for freehold properties
and for the length of the lease for leasehold properties (with key
assumptions for both CGU's being the long-term growth rate of 2%
and pre-tax discount rate of 10%). Cash flows for the businesses
are based on management forecasts, which are approved by the Board
and reflect management's expectations of sales growth, operating
costs and margin based on past experience and anticipated changes
in the local market places.
Sensitivity to changes in key assumptions: impairment testing is
dependent on management's estimates and judgements, in particular
in relation to the forecasting of future cash flows, the long-term
growth rate and the discount rate applied to the cash flows.
The calculations show that a reasonably possible change, as
assessed by the directors, would not cause the carrying amount of
the CGU to exceed its recoverable amount.
12 Property, plant and equipment
Group
Freehold Fixtures,
& leasehold fittings
property and computers Total
Cost GBP GBP GBP
At 28 December 2015 28,302,765 8,085,317 36,388,082
Additions 6,521,782 3,782,292 10,304,074
Acquisitions 8,800,000 - 8,800,000
------------- --------------- --------------
At 25 December 2016 43,624,547 11,867,609 55,492,156
Additions 4,654,086 2,956,645 7,610,731
Acquisitions (Note
26) 11,309,465 1,014,998 12,324,463
At 31 December 2017 59,588,098 15,839,252 75,427,350
------------- --------------- --------------
Depreciation
At 28 December 2015 1,052,447 2,484,933 3,537,380
Provided during the
period 205,275 1,323,385 1,528,660
Reclassification (338,937) 338,937 -
------------- --------------- --------------
At 25 December 2016 918,785 4,147,255 5,066,040
Provided during the
period 276,296 1,687,595 1,963,891
Impairment 237,000 213,000 450,000
At 31 December 2017 1,432,081 6,047,850 7,479,931
------------- --------------- --------------
Net book value
At 31 December 2017 58,156,017 9,791,402 67,947,419
============= =============== ==============
At 25 December 2016 42,705,762 7,720,354 50,426,116
============= =============== ==============
At 28 December 2015 27,250,318 5,600,384 32,850,702
============= =============== ==============
During the period ended 31 December 2017 the group has made a
provision for impairment against a Pub Site in Bristol, due to poor
performance and it has been reduced to its fair value less costs to
sell. The fair value less costs to sell represents a Level 3 fair
value measurement, with the asset being held at its recoverable
amount of GBP200,000.
13 Investments in subsidiaries
2017 2016
Company GBP GBP
At start of period 250,153 250,153
Additions 11,663,543 -
At 31 December 2017 11,913,696 250,153
========== =======
During the year the Company entered into a Scheme of Arrangement
to acquire 100% of the Ordinary Shares, 100% of the Ordinary B
Shares and 100% of the Convertible Preference Shares of The City
Pub Company (West) Limited in exchange for the issue of the same
number and type of new shares by the Company, see note 22 for
further information.
The Company had the following subsidiary undertakings as at 31
December 2017:
Class
of
share Country of Proportion
Name of subsidiary held incorporation held Nature of business
The City Pub Company Ordinary England and 100% Management and
(West) Limited Wales operation
of public houses
The Fat Pheasant Pub Ordinary England and 100% Dormant
Company Limited Wales
Ace High Enterprises Ordinary England and 100% Dormant
Limited Wales
Flamequire Limited* Ordinary England and 100% Dormant
Wales
Inn on the Beach Limited* Ordinary England and 100% Dormant
Wales
The above companies all had the same registered office as the
parent company, being Essel House, 2(nd) Floor, 29 Foley Street,
London, W1W 7TH.
* These companies are held indirectly through the Company's 100%
subsidiary The City Pub Company (West) Limited.
14 Inventories
Group Group
2017 2016
GBP GBP
Finished goods and
goods for resale 553,909 466,319
=============== ===============
15 Trade and other receivables
Group Group
2017 2016
GBP GBP
Trade receivables 133,520 106,057
Other receivables 510,946 406,160
Amounts due from group - -
undertakings
Prepayments and accrued
income 1,008,422 670,725
1,652,888 1,182,942
=========== ===========
16 Current trade and other payables
Group Group
2017 2016
GBP GBP
Trade payables 2,216,492 2,541,494
Corporation taxation 367,506 35,498
Other taxation and
social security 1,563,842 914,719
Amounts due to group - -
undertakings
Accruals 1,441,726 918,607
Other payables (note
17) 557,502 222,801
6,147,068 4,633,119
============ ============
17 Non-current other payables
Group Group
2017 2016
GBP GBP
Trail commissions - 24,978
Deferred consideration 310,000 -
310,000 24,978
============ ==============
Deferred consideration has arisen in relation to the acquisition
of the Old Fire House, see note 26, with the GBP155,000 due within
one year included within other payables.
18 Borrowings and financial liabilities
Group Group
2017 2016
GBP GBP
Current borrowings
and financial liabilities:
CPS dividend payable 244,707 294,396
244,707 294,396
============== ============
Non-current borrowings
and financial liabilities:
Bank loans - 13,560,351
Debt element of
the CPS - 4,444,566
- 18,004,917
============== ============
At 31 December 2017 a bank loan of GBPnil (2016: GBP13,700,000)
was outstanding, as the loans were repaid during the year. In 2016
Barclays Bank PLC had a fixed charge over certain freehold property
as security in respect of this loan. Interest was charged at LIBOR
plus a margin, which varied dependent on the ratio of net debt to
EBITDA. The loan was repayable in June 2021. More details of the
terms of the Convertible Preference Shares are disclosed in note
22.
The accrued dividend on the CPS was paid in January 2018.
19 Financial instruments and risk management
Financial instruments by category:
Group Group
2017 2016
GBP GBP
Financial assets
- loans and receivables
Trade and other
receivables 644,466 512,217
Amounts due from - -
group undertakings
Cash and cash equivalents 6,414,854 1,264,586
7,059,320 1,776,803
=========== ==============
Prepayments are excluded, as this analysis is required only for
financial instruments.
Group Group
2017 2016
Financial liabilities GBP GBP
- held at amortised
cost
Non-current
Borrowings - 18,004,917
Other payables 310,000 24,978
310,000 18,029,895
============= =============
Current
Current borrowings 244,707 294,396
Trade and other
payables 2,773,994 2,764,295
Amounts due to - -
group undertakings
3,018,701 3,058,691
============= =============
Statutory liabilities and deferred income are excluded from the
trade payables balance, as this analysis is required only for
financial instruments.
There is no material difference between the book value and the
fair value of the financial assets and financial liabilities
disclosed above.
The Groups's operations expose it to financial risks that
include market risk and liquidity risk. The Directors review and
agree policies for managing each of these risks and they are
summarised below. These policies have remained unchanged from
previous periods.
Group Group
2017 2016
GBP GBP
Cash at bank and
short-term deposits
A1 6,336,686 1,203,698
Not rated 78,168 60,888
6,414,854 1,264,586
=========== ============
A1 rating means that the risk of default for the investors and
the policy holder is deemed to be very low.
Not rated balances relate to petty cash amounts.
Market Risk - cash flow interest rate risk
The Group had no outstanding borrowing at year end as disclosed
in note 18. These were loans taken out with Barclays to facilitate
the purchase of additional public houses.
The Group's policy is to minimise interest rate cash flow risk
exposures on long-term financing. Longer-term borrowings are
therefore usually at fixed rates. At 31 December 2017, the Group is
exposed to changes in market interest rates through bank borrowings
at variable interest rates. Other borrowings are at fixed interest
rates. The exposure to interest rates for the Group's cash at bank
and short-term deposits is considered immaterial.
Credit risk
The risk of financial loss due to a counter party's failure to
honour its obligations arises principally in relation to
transactions where the Group provides goods and services on
deferred payment terms and deposits surplus cash.
Group policies are aimed at minimising losses and deferred terms
are only granted to customers who demonstrate an appropriate
payment history and satisfy credit worthiness procedures.
Individual customers are subject to credit limits to control debt
exposure. Credit insurance is taken out where appropriate for
wholesale customers and goods may also be sold on a cash with order
basis.
Cash deposits with financial institutions for short periods are
only permitted with financial institutions approved by the Board.
There are no significant concentrations of credit risk within the
Group. The maximum credit risk exposure relating to financial
assets is represented by their carrying value as at the financial
period end.
Liquidity risk
The Group actively maintains cash and banking facilities that
are designed to ensure it has sufficient available funds for
operations and planned expansions. The table below analyses the
Group's financial liabilities into relevant maturity groupings
based on the remaining period at the period end date to the
contractual maturity date. The amounts disclosed in the table are
the contractual undiscounted cash flows.
Group Less Between Between Over
than 1 and 2 and 5 years
1 year 2 years 5 years
As at 31 December
2017:
Borrowings 244,707 - - -
Trade and other
payables 2,773,994 310,000 - -
========== ============= ============== ==============
As at 25 December
2016:
Borrowings 294,396 - 13,560,351 4,444,566
Trade and other
payables 2,764,295 24,978 - -
========== ============= ============== ==============
Capital risk management
The Group manages its capital to ensure it will be able to
continue as a going concern while maximising the return to
shareholders through optimising the debt and equity balance.
The Group monitors cash balances and prepare regular forecasts,
which are reviewed by the board. In order to maintain or adjust the
capital structure, the Group may, in the future, return capital to
shareholders, issue new shares or sell assets to reduce debt.
20 Fair value measurements of financial instruments
Financial assets and financial liabilities measured at fair
value are required to be grouped into three Levels of a fair value
hierarchy. The three Levels are defined based on the observability
of significant inputs to the measurement, as follows:
- Level 1: quoted prices (unadjusted) in active markets for
identical assets and liabilities;
- Level 2: inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly
or indirectly; and
- Level 3: unobservable inputs for the asset or liability.
There were no financial asset or liabilities measured at fair
value as at 29 December 2015, 25 December 2016 or 31 December
2017.
21 Deferred tax
Group Group
2017 2016
Provision for deferred GBP GBP
tax
Accelerated capital
allowances 611,392 534,097
Arising on acquisition 470,431 -
1,081,823 534,097
=========== ============
Provision at the
start of the period 534,097 351,072
Arising on acquisition 470,431 -
Deferred tax charge
for the period 77,295 183,025
Provision at 25
December 2017 1,081,823 534,097
=========== ============
22 Share capital
2017 2016
GBP GBP
Allotted called up and fully
paid
56,467,333 Ordinary shares
of 50 pence each: (2016:
25,845,809) 28,233,667 12,922,904
Nil Ordinary B shares of
1 pence each:
(2016: 1,200,000) - 12,000
Nil CPS of 50 pence each:
(2016: 20,532,906) - 10,266,453
=========== ============
The prior period share capital is equal to the enlarged share
capital, in accordance with accounting for the common control
combination using the predecessor value method.
During the period from the beginning of the year to 25 October
2017 the Company issued 156,977 ordinary shares of GBP0.50 at
GBP1.60 per share, with the premium credited to the share premium
account. During which time The City Pub Company (West) Limited
issued 138,227 Ordinary shares of GBP0.50 each.at GBP1.60 per share
net of trail commissions of GBP5,102. The Company then purchased
back 12,500 shares for GBP1.82 and 31,250 shares for GBP1.60, in
order to ensure that the issued share capital of the Company
matched that of The City Pub Company (West) Limited, which was a
company under common control.
As at 1 November 2017 the Company then entered into a Scheme of
Arrangement whereby it issued: 13,048,632 new Ordinary shares of
GBP0.50 each; 600,000 new Ordinary B Shares of GBP0.01 each and
10,266,453 convertible preference shares of GBP0.50 each, all
issued at their nominal value with no premium, in exchange for
ownership of the same number and profile of shares in The City Pub
Company (West) Limited. This resulted in the Company owning 100% of
the Ordinary shares, Ordinary B shares and CPS of The City Pub
Company (West) Limited.
On 7 November 2017 the Company issued 644,123 new Ordinary
shares of GBP0.50 each at a price of GBP1.5525 per share, with the
premium credited to the share premium account, as part of the
consideration of the acquisition of Aragon House - see note 26.
As part of the Listing on 23 November 2017 the following share
transactions occurred:
- 291,176 Ordinary shares of GBP0.50 were issued at a price of
GBP1.70 per share to certain Directors in lieu of bonuses, with the
premium credited to the share premium account.
- A bonus issue of 58,800,000 new Ordinary B shares were issued
to the existing holders of the Ordinary B shares, with the debit
made to the share premium account.
- 1,230,000 Ordinary shares of GBP0.50 were issued at their
exercise prices ranging from GBP0.50 to GBP1.20 - resulting in a
premium of GBP539,000 being credited to the share premium
account.
- The 60,000,000 Ordinary B shares of GBP0.01 were then divided
into 1,200,000 Ordinary B shares of GBP0.50 per share and
re-designated as Ordinary Shares of GBP0.50.
- the Company re-designated 20,532,906 preference shares of
GBP0.50 each fully paid in the capital of the Company into
6,416,534 ordinary shares of GBP0.50 each and 705,818,600 Deferred
Shares of GBP0.01 each on the basis of 1 ordinary share of GBP0.50
each with the balance remaining into deferred shares of GBP0.01
each for every 3.2 preference shares of GBP0.50 each held.
- The Company purchased the 705,818,600 deferred shares of
GBP0.01 each arising on the redesignation of the preference shares
referred to above for an aggregate consideration of GBP0.01.
- 20,588,236 new Ordinary shares of GBP0.50 per share were
issued as part of the IPO at a price of GBP1.70 per share. The
premium, less the share issue costs totalling GBP1,540,124, was
credited to the share premium account.
Share capital, net of issue costs has been split between equity
and debt as follows:
2017 2016
Equity Shares GBP GBP
Ordinary shares of 50 pence
each 28,233,667 12,922,904
Ordinary B shares of 1 pence
each - 12,000
Total share capital 28,233,667 12,934,904
======================= ============
Convertible preference shares - 5,532,076
======================= ============
Shares classified as financial
liabilities
Debt element of CPS - 4,444,566
======================= ============
The ordinary shareholders are entitled to be paid a dividend out
of any surplus profits and to participate in surplus assets on
winding up in proportion to the nominal value of each class of
share. All equity shares in the Company carry one vote per
share.
The B Ordinary shareholders were not entitled to any rights in
relation to any dividend, but were entitled to vote upon any
resolution at general meetings.
The ordinary share capital account represents the amount
subscribed for shares at nominal value.
Convertible
Ordinary Ordinary preference
shares B shares shares
Number Number Number
At 28 December 2015 25,820,809 - 15,846,906
Issue of share capital -
CPS - - 4,686,000
Issue of share capital - Ordinary - 1,200,000 -
B shares
Issue of share capital - share 25,000 - -
options exercised
------------ ------------ -------------
At 25 December 2016 25,845,809 1,200,000 20,532,906
------------ ------------ -------------
Issue of new ordinary shares 295,205 - -
prior to scheme of arrangement
Purchase of ordinary shares (43,750) - -
prior to scheme of arrangement
Issue of new ordinary shares 644,123 - -
as part of consideration for
Aragon House
Issue of new ordinary shares 291,176 - -
in lieu of Directors' bonuses
Issue of new ordinary shares 1,230,000 - -
on conditional exercise of
share options
Net impact of bonus issue
of 58,800,000 GBP0.01 ordinary
B shares, followed by subdivision
to GBP0.50 shares and re-designation
to ordinary shares 1,200,000 (1,200,000) -
Net impact of re-designation
of 6,416,534 CPS as Ordinary
Shares and subdivision of
remaining 14,116,372 CPS into
705,818,600 GBP0.01 deferred
shares and subsequent buy
back of the deferred GBP0.01
shares 6,416,534 - (20,532,906)
Issue of new ordinary shares 20,588,236 - -
on IPO
At 31 December 2017 56,467,333 - -
============ ============ =============
Nature and purpose of reserves
The share premium account represents premiums received on the
initial issuing of the share capital. Any transaction costs
associated with the issuing of shares are deducted from share
premium, net of any related income tax benefits.
Convertible Preference Shares represents the element of the
financial instruments treated as equity.
The other reserve has arisen from using the predecessor value
method to combine the results of the Company and its subsidiary The
City Pub Company (West) Limited, which was acquired through a share
for share exchange as part of the reorganisation of two entities
under common control prior to the Company's Listing on AIM. The
reserve represents the share premium that exists within The City
Pub Company (West) Limited.
Share-based payments reserve is used to recognise the grant date
fair value of options issued to employees but not exercised.
Retained earnings include all results as disclosed in the
statement of comprehensive income.
23 Staff costs
Number of employees
The average monthly numbers of employees (including salaried
Directors) during the period was:
2017 2016
Management and Administration 61 48
Operation of Public Houses 462 344
---- ----
523 392
==== ====
Employment costs (including Directors)
2017 2016
GBP GBP
Wages and salaries 12,882,845 9,853,586
Social security costs 862,362 684,797
Share options 258,195 310,479
13,889,801
14,003,402 10,848,862
============= ===========
24 Directors' remuneration
Single total figure
of remuneration table
The following table shows a breakdown of the remuneration
of individual Directors who served in all or part of
the year:
Annual Taxable
Salary/Fees Bonus IPO Bonus** Benefits Other*/Pension Total
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Clive
Watson 101 95 136 103 254 - 3 3 271 - 765 201
Alex
Derrick 101 95 147 92 180 - 5 - 209 - 642 187
Rupert
Clark 101 95 155 113 240 - 4 1 209 - 709 209
Tarquin
Williams 86 80 71 21 128 - 2 1 1 - 288 102
David
Bruce 43 42 41 35 56 - - - - - 140 77
John
Roberts 28 27 30 35 42 - - - 41 41 141 103
James
Watson 17 23 - 7 - - - - - - 17 30
Richard
Prickett 8 - - - - - - - - - 8 -
Total 485 457 580 406 900 - 14 5 731 41 2,710 909
---------- ------- ------- ------- ------- ------- ------- ------- ------- -------- ------- ------- -------
** The IPO bonus was paid out 45% in cash and 55% in
shares at the time of the IPO at the placing price of
GBP1.70
* Other includes the gain on the exercise of
the EMI share options at the time of the IPO.
Emoluments in respect of the Directors are as follows:
2017 2016
GBP GBP
Remuneration for qualifying
services 2,710,080 909,675
========== ========
The highest paid Director in the period received remuneration of
GBP765,414; (2016: GBP208,792). Four directors had equity settled
share options in issue at the period end (2016: Four). Additional
information on Directors' remuneration is given within the
Corporate Governance Report.
25 Share-based payments
The Group operates an equity settled share option plan known as
the Enterprise Management Incentive Share Option Plan. The Group is
required to reflect the effects of share-based payment transactions
in profit or loss and in its statement of financial position. For
the purposes of calculating the fair value of share options
granted, the Black Scholes Pricing Model has been used by the
Group. Fair values have been calculated on the date of grant. A key
input into the model is the share price, on the date of grant of
the options. The share price has been estimated based on the most
recent subscription for shares.
There were no new share options granted in 2017. A charge of
GBP258,195 (2016: GBP310,479) has been reflected in the
consolidated statement of comprehensive income. A transfer has been
made between the share based payment reserve and the retained
earnings in respect of the EMI share options that have been
exercised during the year.
There were no options granted in 2017. The fair value of options
granted in the prior year and the assumptions used in the
calculation are shown below:
Year of grant 2016
Exercise price (GBP) 1.00
Number of options granted 1,230,000
Vesting period (years) 3
Option life (years) 10
Risk free rate 4%
Volatility 50%
Fair value (GBP) 0.75
During the period no options were granted as summarised in the
table below:
2017 2016
2017 2016
Weighted Weighted
Number average Number average
of exercise of exercise
Options price Options price
GBP GBP
Outstanding at start
of period 2,447,500 0.97 2,555,000 0.98
Granted - - - -
Exercised (1,230,000) 0.95 (25,000) 0.78
Expired (175,000) 0.99 (82,500) 1.01
Outstanding at 31 December
2017 1,042,500 1.00 2,447,500 0.97
=========== ========= ========= =========
Exercisable at 31 December
2017 - - 760,000 0.78
=========== ========= ========= =========
26 Business combinations
In February 2017, the Group (through CPCE) completed on the
leasehold of Grapes in Oxford for the amount of GBP150,000 and the
leasehold of the Three Crowns, Shoreditch for GBP569,000.
In June the Group (through CPCE) acquired Red Lion in Cambridge
for GBP1,450,000, comprising GBP1,350,000 in cash and GBP100,000 in
shares.
The Group (through CPCW) also acquired Old Fire House in Exeter
in July 2017, which started trading straight away, for
consideration of GBP3,100,000. GBP2,635,000 was paid on completion,
with GBP155,000 payable on the first anniversary of completion and
the final GBP310,000 payable on the second anniversary.
The Group (through CPCE) completed on the acquisition of Aragon
House which is a freehold pub for GBP7,750,000,comprising
GBP4,750,000 in cash and deferred consideration of GBP3,000,000 of
which GBP2,000,000 was paid in cash during the period and
GBP1,000,000 issued in shares on 7 November 2017 (see note 22).
All of the above acquisitions were part of the Group's
continuing strategy to expand its pub
portfolio via selective quality acquisitions. Material
acquisitions are disclosed below.
Group
2017
Provisional fair value: GBP
Property, plant and
equipment acquired 12,324,463
Deferred tax liability (470,431)
Goodwill 1,164,968
------------
Total 13,019,000
============
Satisfied by:
Cash 11,454,000
Shares 1,100,000
Deferred consideration 465,000
------------
Total 13,019,000
============
Red Aragon Old
Lion House Fire
House
Provisional fair value:
Property, plant and
equipment acquired 1,225,000 7,410,464 3,100,000
Deferred tax liability - - (470,431)
Goodwill 225,000 339,536 470,431
------------- ----------- ------------
Total 1,450,000 7,750,000 3,100,000
============= ============
Satisfied by:
Cash 1,350,000 6,750,000 2,635,000
Shares 100,000 1,000,000 -
Deferred consideration - - 465,000
------------- ----------- ------------
Total 1,450,000 7,750,000 3,100,000
============= ============
All other pub acquisitions have been accounted for as property
acquisitions.
27 Financial commitments
The Group had commitments under non-cancellable operating leases
in respect of land and buildings. The Group's future minimum
operating lease payments are as follows:
Group Group
2017 2016
GBP GBP
Within one year 1,167,053 987,053
Between one and five years 4,668,212 3,948,212
After five years 12,816,510 12,161,995
18,651,775 17,097,260
=============
Commercial operating leases are typically for 15 to 25 years,
although certain leases have lease periods extending up to 99
years.
28 Ultimate controlling party and related party transactions
(i) Ultimate controlling party and related party
transactions
The Directors consider there to be no ultimate controlling
party. The following related party transactions took place during
the period:
GBP10,400; 2016: GBP6,602 was paid to Helen Watson, who is
related to Clive Watson. At the period end Helen Watson was owed
GBPnil (2016: GBPnil).
During the period the Group made a contribution of GBP10,000 to
Alex Derrick in relation to office support.
As disclosed in note 15 the Company is owed GBP10,687,384 (2016:
GBP113,618 included in other receivables) by its subsidiary
undertaking CPCW.
(ii) Remuneration of Key Management Personnel
The Company consider that the Directors are their key management
personnel and further detail of their remuneration is disclosed in
note 24.
No key personnel other than the directors have been identified
in relation to the periods ended 31 December 2017 and 25 December
2016.
29 Post balance sheet events
In January 2018 the Group completed on a former Lloyds bank site
in Reading for the consideration of GBP2,720,000. The site will
require significant investment and will start trading toward the
end of 2018.
Also in January the Group completed on the Belle Vue, a freehold
pub in Clapham for the consideration of GBP2,875,000. Following a
minor refurbishment the site reopened for trading towards the end
of February.
In February 2018 the Group completed on the leasehold of a site
at Cambridge station. The site will be fitted out and will open as
the Old Ticket Office in May 2018.
Post balance sheet events (continued)
In March 2018 the Group also exchanged and completed on a
freehold site in Cardiff for the consideration of GBP1,075,000.
This site will undergo a major refurbishment and will start trading
in June 2018.
In April 2018 the Group exchanged on a freehold site in
Cambridge. The consideration will be GBP1,400,000 and should
complete towards the end of the month. The site will require
significant investment before opening for trade in 2019.
30 Capital commitments
At the period end the Group and Company has no capital
commitments excluding the financial commitments disclosed in note
27.
The company news service from the London Stock Exchange
END
FR SFMFUFFASEDL
(END) Dow Jones Newswires
April 12, 2018 02:00 ET (06:00 GMT)
City Pub (LSE:CPC)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
City Pub (LSE:CPC)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024
