TIDMCPC
RNS Number : 4478J
City Pub Group PLC (The)
27 April 2022
The City Pub Group PLC
(the "City Pub Group", the "Company" or the "Group")
FINAL RESULTS FOR THE YEARED 26 DECEMBER 2021
The City Pub Group is pleased to announce its audited results
for the 52 weeks ended 26 December 2021. The Group currently
operates a predominately freehold estate of 41 pubs, with the
Oyster House in Mumbles opening this week. We have a further three
development sites in London, Southern England and Wales.
Since the last statement in September 2021, the business has
emerged fully from the COVID-19 lockdowns in 2021 and Omicron over
the 2021 festive season and into 2022. All our 40 pubs have
reopened and most of the estate is now trading normally.
By November last year, following the lifting of restrictions, we
were trading ahead of 2019's level demonstrating demand and the
recovery of our business but that growing momentum reversed with
the outbreak of Omicron in December 2021. Encouragingly, trading
for the last 9 weeks is 98% of 2019, on a like for like basis. We
are now confident that 2022 trading across the portfolio will
exceed 2019 by the end of the second quarter.
Financial highlights
Post IFRS Pre IFRS Post IFRS Pre IFRS
16 16 16 16
52 weeks 52 weeks 52 weeks 52 weeks
to to to to Change
Pre IFRS
26.12.21 26.12.21 27.12.20 27.12.20 16
GBPm GBPm GBPm GBPm %
------------------------ ---------- --------- ---------- -------- ---------
Revenue 35.4 35.4 25.8 25.8 37%
Adjusted EBITDA 5.9 3.8 1.2 (0.8) N/A
Adjusted Profit/(loss)
before tax 0.9 1.0 (5.4) (5.1) N/A
------------------------ ---------- --------- ---------- -------- ---------
* Pre-IFRS16 Adjusted earnings before exceptional items, share
option charge, interest, taxation, depreciation and
amortisation.
** Pre-IFRS16 Adjusted profit / (loss) before tax is the profit
/ (loss) before tax, share option charge and exceptional items
.
-- Intention to recommence dividends in September with the Interim Results
Balance sheet and estate valuation
-- Following the disposal of 6 pubs following the year end the
Company has current net debt of c.GBP2.0m and GBP35m banking
facilities
-- Estate valued at 145p or GBP150 million (excluding lotting premium)
Estate enhancement and development
-- The Hoste, Georgian Townhouse, Bath Brewhouse, and Daly's
have been enhanced with either capacity gains through investment in
outside seating or being refurbished
-- Significant progress on the development sites with Tivoli,
Cliftonville Hotel and the Nest opening during the summer and
planning now received for our new concept Damson and Wilde
Mosaic acquisition
-- Increased stake from 25% to 36% at a total investment of
GBP4.1m. Intention to acquire remaining shares not owned in
2023
-- 10 high quality pubs which will complement existing estate
Outlook
-- Strongest balance sheet since inception
-- Some impact from industry challenges particularly energy and
food costs. Short term effect on margin as decision to hold
prices.
-- Trading in the last 9 weeks of 2022 is 98% of 2019 and we're
confident that trade will revert to 2019 levels in the second
half.
-- Well positioned to take advantage of acquisition opportunities when they arise.
Clive Watson, Chairman of City Pub Group said:
"Following the reversal over the festive season, trading is now
beginning to build in momentum and we look forward to an
uninterrupted summers' trading.
We are emerging from the pandemic in the strongest financial
position that we have ever been in and therefore have signalled our
intention to recommence dividends in the autumn.
We have a very strong platform from which to grow and much to
look forward to despite the inflationary headwinds our development
sites are coming on stream, Mosaic will be fully acquired next year
adding ten high quality pubs, our new concept will begin trading
and we can take full advantage of, adhering to our strict criteria,
freehold acquisition opportunities that arise."
27 April 2022
Enquiries:
City Pub Group Today: via Instinctif
Clive Watson, Executive Chairman
Holly Elliott, CFO
Instinctif Partners
Matthew Smallwood +44 (0) 20 7457 2020
Peel Hunt George Sellar +44 (0)78 9520 5644
Liberum (Nomad & Broker ) Chris
Clarke
Edward Thomas +44 (0) 20 3100 2000
For further information on City Pub Group pubs visit
www.citypubcompany.com
CHAIRMAN'S STATEMENT
Since my last statement in September 2021, the business has
emerged fully from the COVID-19 lockdowns and Omicron over the 2021
festive season and early 2022. All our 40 pubs have reopened and
most of the estate is now trading normally.
Our focus is on growing our premium business of high quality,
predominantly freehold pubs in great cities and market towns of
Southern England and Wales. We will do this by driving sales in our
core estate, as well as continuing our expansion. Our central
marketing structure is giving us better visibility of how to
further build future sales which together with the City Club App
enables us to enhance improved customer loyalty. We are benefitting
from more a streamlined business and the significant savings
achieved.
Staff morale has considerably improved since our last report
helped by increased communication within the Group and the way we
cared for our staff during the pandemic.
By November last year, following the lifting of restrictions, we
were trading ahead of 2019's level demonstrating demand and the
recovery of our business but that growing momentum reversed with
the outbreak of Omicron in December 2021.Encouragingly, trading for
the last 8 weeks of 2022 is at around 98% of 2019. We are now
confident that 2022 trading across the portfolio will exceed 2019
by the end of the second quarter.
Trading Estate
The Group currently operates 41 trading sites and a further 3
development sites. Another 3 are at the heads of agreement
stage.
In order to maintain and continuously improve the quality of our
estate we have made the following investments:
-- The Hoste, Burnham Market, Norfolk - an further 18 rooms are
in the process of being refurbished and an outside seating area for
60 added
-- Georgian Townhouse, Norwich - Further premiumisation of the
site has taken place together with enhancement of the outside
trading area, including the addition of an all-weather terrace with
60 covers and a retractable roof
-- Bath Brew House, Bath - the outside sitting area for over 80
seats has been covered creating extra weather proof trading
space
-- Phene, Chelsea - garden significantly upgraded to take advantage of the summer months
-- Daly's Wine Bar and Temple Brew House on the Strand were our
last pubs to be reopened, fully refurbished after 2 years of
closure
Investments being implemented:
-- Cliftonville Hotel, Cromer, to be reopened having been
refurbished, in time for summer holidays, with potential extra
outside seating of circa 100 covers
-- Most recently, on 25(th) April, the Oyster House, Mumbles,
opened and we are very confident that with a good summer we will
achieve high levels of trade and benefit from the16 luxury hotel
rooms to rival any in the region
-- The Tivoli, Cambridge has taken us over 2 years to develop
due to COVID delays. Following significant investment we anticipate
it becoming one of our trophy sites. This opens in May 22.
-- The Nest, Bath - it has finally been granted planning for its
large outside beer garden and licensed for the extended hours. We
anticipate it opening in early August
-- Planning consent has now been granted for the Café Rouge site
in Bury St Edmunds - our new All-Day Trading concept is being
launched here - it is being named Damson & Wilde. Featuring an
all-day menu, a premium drinks offer, great coffee and high service
levels we expect to develop this to capitalise on the best aspects
of high street offers. Once proven and implemented, we anticipate
replicating the all day format in other pubs which will further
help to premiumise them. If Damson & Wilde proves to be a
success, we will look at expanding this concept but will not be
sucked into paying high rents on the High Street which have
increased considerably in the last few months.
Post balance sheet date events - Disposals/Mosaic
In March this year we announced the disposal of 6 sites
predominantly on the South coast for the consideration of
approximately GBP17m. The board felt that they could reinvest this
money into higher growth assets and also use it to increase our
stake in the Mosaic Pubs, which has 10 high quality pubs of which 8
are freehold. Mosaic has a strong London and Birmingham presence
and we've recently increased our stake from 25% to 36% at a total
cost of c. GBP4.1m. We will make an offer for the outstanding
shares in Mosaic by the middle of next year at which point we will
be able to consolidate their trading estate with our own. The
Mosaic estate will complement our existing pub estate and will help
drive further growth in 2023.
Financial Highlights
Summary for the year ended 26 December 2021:
-- Revenue up 37% to GBP35.4 million (2020: GBP25.8 million)
-- Adjusted EBITDA* of GBP3.8 million (2020: GBP(0.8)
million)
-- Adjusted profit/(loss) before tax** of GBP1.0 million (2020:
GBP(5.1) million)
-- Reported profit/(loss) of GBP(2.9) million (2020: GBP(6.5)
million)
Key Metrics
------------------------ ---------- --------- ---------- -------- ---------
Post IFRS Pre IFRS Post IFRS Pre IFRS
16 16 16 16
52 weeks 52 weeks 52 weeks 52 weeks
to to to to Change
Pre IFRS
26.12.21 26.12.21 27.12.20 27.12.20 16
GBPm GBPm GBPm GBPm %
------------------------ ---------- --------- ---------- -------- ---------
Revenue 35.4 35.4 25.8 25.8 37%
Adjusted EBITDA 5.9 3.8 1.2 (0.8) N/A
Adjusted Profit/(loss)
before tax 0.9 1.0 (5.4) (5.1) N/A
------------------------ ---------- --------- ---------- -------- ---------
* Pre-IFRS16 Adjusted earnings before exceptional items, share
option charge, interest, taxation, depreciation and
amortisation.
** Pre-IFRS16 Adjusted profit / (loss) before tax is the profit
/ (loss) before tax, share option charge and exceptional items
.
Bank Facilities
Currently, we have net debt of circa GBP2m resulting in a very
strong balance sheet. We have credit facilities of GBP35m,
therefore the company is well placed to acquire assets at the right
time, at the right price.
Consequently we have no requirement for the GBP5m CLBLS which we
took out last year and this facility has now been cancelled.
Estate Valuation
The trading portfolio of pubs has been revalued and the total
sum of gross trading assets equates to GBP150m (this excludes the
recent pub disposals). Within the valuation, 17 of the larger pubs
were independently valued, accounting for 65% of the gross trading
value. Net Asset Value, excluding any lotting premium which would
be undoubtedly achieved for an estate of quality premium assets, is
circa 145p per share.
Board Changes
Holly Elliott joined the company on 29 November 2021 as Chief
Financial Officer, having previously worked at Five Guys and Caffé
Nero. Holly has vast experience in the hospitality industry and has
joined to help the Company improve its systems, financial controls,
and to assist with the expansion of the business.
Tarquin Williams left the business at the end of February 2022
after serving as CFO for over 6 years. Tarquin was heavily involved
in the Group's flotation on AIM in November 2017 and assisted in
steering it through difficult COVID period. The board would like to
thank Tarquin for his contribution and wish him all the best for
the future.
ESG
Last year we established an ESG committee chaired by Emma Fox,
an independent Non-Executive Director. Throughout 2021, we have
made progress in developing our strategy to ensure that we operate
as a more responsible business, primed to play a positive role in
society. We have launched a significant and thorough review of our
current operations and introduced robust data collection processes
to fully understand our impact on the environment and the
communities in which we operate. We are taking our responsibilities
seriously and want to get ESG right.
This year we have reported against the recommendations of the
TCFD for the first time and prepared standalone ESG and TCFD
Reports to communicate our ESG journey to our stakeholders. We are
continuously improving and implementing measures and new procedures
across our estate which will help continue reduce our carbon
footprint.
Our policies will be outlined in our published report and
accounts. I would like to thank Emma and the committee for their
immense contribution it's been a challenging and rewarding
year.
Dividends
The Group is now in strong financial position and the Board
believes that shareholders should be rewarded for supporting the
business through the last couple of very challenging years. The
Board therefore plans to reintroduce dividends on a progressive
basis with the current intention being that this will accompany the
interim results in September.
Industry Issues
The Group has come through the challenges of COVID and the
action that it took during the pandemic is seeing it emerge a
better, stronger business albeit facing well publicised
macro-economic challenges including inflation, issues arising from
Brexit and more recently the impact from the war in Ukraine.
The Group benefits from a 3-year supply agreement with our major
beer suppliers agreed in December 2021. This agreement helps
mitigate some of the inflationary pressures that our industry faces
and means that we will in real terms be paying less for larger
parts of our liquor supplies.
Energy costs have soared, and we have hedged our future exposure
but the cost to the business in this financial year is in excess of
GBP1m.
Food price inflation is also high as well as building material
and labour costs.
There is no quick term solution to inflation. The Board feels
it's inappropriate and counterproductive to keep increasing prices
that we charge customers, and therefore margins will be impacted in
the short term. We would rather delight our customers than price
ourselves anti competitively.
Outlook
The Group is in a very strong financial position, and it
continues to review and seek acquisition opportunities to create
value. The Board believes this is the best way to drive shareholder
value. Large parts of our estate are trading well but there are
still some pubs that need focus to re-establish normalised levels
of trading.
We have worked hard to forge a strong culture within the
business which is helping to retain key employees at retail and
head office level. As part of a deliberate plan, many have share
options to incentivise them for the future.
The estate is high quality with 220 letting rooms and we
anticipate benefiting from the continued popularity of staycations.
Room sales are expected to be, this year, over 10% of the overall
sales compared to 6% in 2019. With our coastal investments such as
the Hoste in Burnham Market, Oyster House in Mumbles and
Cliftonville in Cromer we are well positioned to take advantage of
this market.
The board remains ambitious and with the planned Mosaic
acquisition next year and new opportunities arising from the
dislocation in the marketplace, our ambition is to have 65-70
quality pubs open by the end of next year.
There are undoubtedly major challenges such us inflation, but
with a high intensity retailing approach, we believe we can
overcome these challenges over the next 12 months, taking advantage
of our balance sheet, one of the strongest in the hospitality
industry. We have a very strong platform to build on.
I would like to thank all my Directors, all our staff, our
Advisers, our Bankers, Barclays Bank Plc, suppliers and
Shareholders for all their help in in getting us to this stage. I
am confident that the better times will return and that in the
meantime we can continue to weather the storm and continue to
improve on Group's fortunes.
Clive Watson
Executive Chairman
26 April 2022
Consolidated statement of profit or loss
for the 52 week period ended 26 December 2021 (2020: for the 52
week period ended 27 December 2020)
2021 2020
Notes GBP'000 GBP'000
----------------------------------------------- ----- -------- --------
Revenue 4 35,364 25,815
Cost of sales (8,273) (6,280)
----------------------------------------------- ----- -------- --------
Gross profit 27,091 19,535
Other operating income 4a 5,084 5,391
Administrative expenses (35,126) (31,423)
----------------------------------------------- ----- -------- --------
Operating loss 5 (2,951) (6,497)
Reconciliation to adjusted EBITDA*
----------------------------------------------- ----- -------- --------
Operating loss (2,951) (6,497)
----------------------------------------------- ----- -------- --------
Depreciation 5 4,881 5,494
----------------------------------------------- ----- -------- --------
Share option charge 28 703 397
----------------------------------------------- ----- -------- --------
Exceptional items 8 3,288 1,814
----------------------------------------------- ----- -------- --------
* Adjusted earnings before exceptional items,
share option charge, interest, taxation
and depreciation 5,921 1,208
----------------------------------------------- ----- -------- --------
Share of losses of associate 15 (78) -
Other financial items 15 943 -
Finance costs 6 (1,041) (1,137)
----------------------------------------------- ----- -------- --------
Loss before tax (3,127) (7,634)
Tax credit 7 259 1,171
----------------------------------------------- ----- -------- --------
Loss for the period (2,868) (6,463)
----------------------------------------------- ----- -------- --------
Earnings per share
Basic earnings per share (p) 10 (2.76) (7.15)
----------------------------------------------- ----- -------- --------
Diluted earnings per share (p) 10 n/a n/a
----------------------------------------------- ----- -------- --------
All activities comprise continuing operations.
The notes form part of these financial statements.
Consolidated statement of comprehensive income
for the 52 week period ended 26 December 2021 (2020: for the 52
week period ended 27 December 2020)
2021 2020
Notes GBP'000 GBP'000
------------------------------------------------ ----- -------- --------
Loss for the period (2,868) (6,463)
Other Comprehensive income
Items that will not be reclassified to profit
or loss
Changes in the fair value of equity investments
at fair value through other comprehensive
income 14 18 -
Income tax relating to these items (3) -
Other comprehensive income for the period,
net of tax 15 -
------------------------------------------------ ----- -------- --------
Total comprehensive income for the period (2,853) (6,463)
All of the total comprehensive income for the period is
attributable to the owners of The City Pub Group plc and all arise
from continuing operations.
The notes form part of these financial statements.
Consolidated statement of financial position
as at 26 December 2021 (2020: as at 27 December 2020)
Restated
2021 2020
Notes GBP'000 GBP'000
------------------------------------------- ----- -------- --------
Assets
Non-current
Intangible assets 11 2,250 3,282
Property, plant and equipment 12 107,367 108,573
Right-of-use assets 13 17,875 19,565
Deferred tax assets 23 1,018 503
Financial assets at fair value through OCI 14 254 1,309
Investments in associates 15 4,248 -
------------------------------------------- ----- -------- --------
Total non-current assets 133,012 133,232
------------------------------------------- ----- -------- --------
Current
Inventories 17 1,048 703
Trade and other receivables 18 3,331 3,064
Cash and cash equivalents 12,510 12,331
------------------------------------------- ----- -------- --------
Total current assets 16,889 16,098
------------------------------------------- ----- -------- --------
Total assets 149,901 149,330
------------------------------------------- ----- -------- --------
Liabilities
Current liabilities
Trade and other payables 19 (12,214) (8,430)
Financial liabilities - lease liabilities 13 (1,912) (2,103)
------------------------------------------- ----- -------- --------
Total current liabilities (14,126) (10,533)
------------------------------------------- ----- -------- --------
Non-current
Borrowings 20 (24,750) (24,801)
Financial liabilities - lease liabilities 13 (16,473) (17,750)
Deferred tax liabilities 23 (2,464) (2,181)
------------------------------------------- ----- -------- --------
Total non-current liabilities (43,687) (44,732)
------------------------------------------- ----- -------- --------
Total liabilities (57,813) (55,265)
------------------------------------------- ----- -------- --------
Net assets 92,088 94,065
------------------------------------------- ----- -------- --------
Equity
Share capital 24 31,276 31,275
Share premium 24 59,475 59,303
Own shares (JSOP) 24 (3,272) (3,272)
Other reserve 25 2,184 1,466
Retained earnings 24 2,425 5,293
------------------------------------------- ----- -------- --------
Total equity 92,088 94,065
------------------------------------------- ----- -------- --------
The notes form part of these accounts.
Approved by the Board and authorised for issue on 26 April
2022.
Clive Watson Holly Elliott
Chairman Chief Financial Officer
Company No. 07814568
Company statement of financial position
as at 26 December 2021 (2020: as at 27 December 2020)
Restated
2021 2020
Notes GBP'000 GBP'000
------------------------------------------- ----- -------- --------
Assets
Non-current
Intangible assets 11 2,250 3,282
Property, plant and equipment 12 107,367 108,573
Right-of-use assets 13 17,875 19,565
Deferred tax assets 23 1,018 503
Financial assets at fair value through OCI 14 71 1,309
Investments in associates 15 4,248 -
Investments in subsidiaries 16 801 1,067
------------------------------------------- ----- -------- --------
Total non-current assets 133,630 134,299
------------------------------------------- ----- -------- --------
Current
Inventories 17 1,048 703
Trade and other receivables 18 3,496 3,064
Cash and cash equivalents 12,510 12,331
------------------------------------------- ----- -------- --------
Total current assets 17,054 16,098
------------------------------------------- ----- -------- --------
Total assets 150,684 150,397
------------------------------------------- ----- -------- --------
Liabilities
Current liabilities
Trade and other payables 19 (13,015) (9,497)
Financial liabilities - lease liabilities 13 (1,912) (2,103)
------------------------------------------- ----- -------- --------
Total current liabilities (14,927) (11,600)
------------------------------------------- ----- -------- --------
Non-current
Borrowings 20 (24,750) (24,801)
Financial liabilities - lease liabilities 13 (16,473) (17,750)
Deferred tax liabilities 23 (2,461) (2,181)
------------------------------------------- ----- -------- --------
Total non-current liabilities (43,684) (44,732)
------------------------------------------- ----- -------- --------
Total liabilities (58,611) (56,332)
------------------------------------------- ----- -------- --------
Net assets 92,073 94,065
------------------------------------------- ----- -------- --------
Equity
Share capital 24 31,276 31,275
Share premium 24 59,475 59,303
Own shares (JSOP) 24 (3,272) (3,272)
Share-based payment reserve 24 2,077 1,374
Retained earnings 24 2,517 5,385
------------------------------------------- ----- -------- --------
Total equity 92,073 94,065
------------------------------------------- ----- -------- --------
The loss for the financial period of the Parent Company, The
City Pub Group plc was GBP2,868,000 (2020: loss GBP3,678,000). The
notes form part of these accounts. Approved by the Board and
authorised for issue on 26 April 2022.
Clive Watson Holly Elliott
Chairman Chief Financial Officer
Company No. 07814568
Consolidated statement of changes in equity
for the 52 week period ended 26 December 2021
Other
Own Reserves
Share Share shares (note Retained
Notes capital premium (JSOP) 25) earnings Total
---------------------------------- ----- -------- -------- ------- --------- --------- -------
Balance at 29 December 2019 30,812 38,570 (3,272) 1,069 11,756 78,935
Employee share-based compensation 28 - - - 397 - 397
Issue of new shares 24 463 20,733 - - - 21,196
Transactions with owners 463 20,733 - 397 - 21,593
---------------------------------- ----- -------- -------- ------- --------- --------- -------
Loss for the period - - - - (6,463) (6,463)
---------------------------------- ----- -------- -------- ------- --------- --------- -------
Total comprehensive income
for the period - - - - (6,463) (6,463)
---------------------------------- ----- -------- -------- ------- --------- --------- -------
Balance at 27 December 2020 31,275 59,303 (3,272) 1,466 5,293 94,065
---------------------------------- ----- -------- -------- ------- --------- --------- -------
Employee share-based compensation 28 - - - 703 - 703
Issue of new shares 24 1 172 - - - 173
---------------------------------- ----- -------- -------- ------- --------- --------- -------
Transactions with owners 1 172 - 703 - 876
---------------------------------- ----- -------- -------- ------- --------- --------- -------
Loss for the period - - - - (2,868) (2,868)
Other comprehensive income - - - 15 - 15
---------------------------------- ----- -------- -------- ------- --------- --------- -------
Total comprehensive income
for the period - - - 15 (2,868) (2,853)
---------------------------------- ----- -------- -------- ------- --------- --------- -------
Balance at 26 December 2021 31,276 59,475 (3,272) 2,184 2,425 92,088
---------------------------------- ----- -------- -------- ------- --------- --------- -------
The notes form part of these accounts.
Company statement of changes in equity
for the 52 week period ended 26 December 2021
Own Share-based
Share Share shares payment Retained
Notes capital premium (JSOP) reserve earnings Total
---------------------------------- ----- -------- -------- ------- ----------- --------- -------
Balance at 29 December 2019 30,812 38,570 (3,272) 977 9,063 76,150
---------------------------------- ----- -------- -------- ------- ----------- --------- -------
Employee share-based compensation 28 - - - 397 - 397
Issue of new shares 24 463 20,733 - - - 21,196
Transactions with owners 463 20,733 - 397 - 21,593
---------------------------------- ----- -------- -------- ------- ----------- --------- -------
Loss for the period - - - - (3,678) (3,678)
---------------------------------- ----- -------- -------- ------- ----------- --------- -------
Total comprehensive income
for the period - - - - (3,678) (3,678)
---------------------------------- ----- -------- -------- ------- ----------- --------- -------
Balance at 27 December 2020 31,275 59,303 (3,272) 1,374 5,385 94,065
---------------------------------- ----- -------- -------- ------- ----------- --------- -------
Employee share-based compensation 28 - - - 703 - 703
Issue of new shares 24 1 172 - - - 173
---------------------------------- ----- -------- -------- ------- ----------- --------- -------
Transactions with owners 1 172 - 703 - 876
---------------------------------- ----- -------- -------- ------- ----------- --------- -------
Loss for the period - - - - (2,868) (2,868)
Total comprehensive income
for the period - - - - (2,868) (2,868)
---------------------------------- ----- -------- -------- ------- ----------- --------- -------
Balance at 26 December 2021 31,276 59,475 (3,272) 2,077 2,517 92,073
---------------------------------- ----- -------- -------- ------- ----------- --------- -------
The notes form part of these accounts.
Consolidated statement of cash flows
for the 52 week period ended 26 December 2021 (2020: for the 52
week period ended 27 December 2020)
2021 2020
Notes GBP'000 GBP'000
------------------------------------------------ ----- -------- --------
Cash flows from operating activities
Loss for the period (2,868) (6,463)
Taxation 7 (259) (1,171)
Finance costs 6 1,041 1,137
Result from equity accounted investment 15 78 -
Other financial items 15 (943) -
------------------------------------------------ ----- -------- --------
Operating loss (2,951) (6,497)
Adjustments for:
Depreciation 5 4,881 5,494
Gain on disposal of property, plant & equipment 125 -
Share-based payment charge 28 703 397
Impairment 12 3,690 933
Change in inventories (345) 517
Change in trade and other receivables (571) 1,055
Change in trade and other payables 3,800 (258)
------------------------------------------------ ----- -------- --------
Cash generated from operations 9,332 1,641
Tax (paid) received 651 (341)
------------------------------------------------ ----- -------- --------
Net cash generated from operating activities 9,983 1,300
------------------------------------------------ ----- -------- --------
Cash flows from investing activities
Purchase of property, plant and equipment 12 (5,493) (2,304)
Acquisition of new property sites (1,600) -
Purchase of investments and associates 14&15 (2,309) (1,309)
Proceeds from disposal of property, plant
and equipment 2,163 821
------------------------------------------------ ----- -------- --------
Net cash used in investing activities (7,239) (2,792)
------------------------------------------------ ----- -------- --------
Cash flows from financing activities
Proceeds from issue of share capital 24 73 21,196
Repayment of borrowings (91) (7,544)
Principal element of lease payments (1,416) (1,347)
Interest paid (includes implied interest
under IFRS16) 6 (1,131) (1,251)
------------------------------------------------ ----- -------- --------
Net cash used in/from financing activities (2,565) 11,054
------------------------------------------------ ----- -------- --------
Net change in cash and cash equivalents 179 9,562
Cash and cash equivalents at the start of
the period 12,331 2,769
------------------------------------------------ ----- -------- --------
Cash and cash equivalents at the end of
the period 12,510 12,331
------------------------------------------------ ----- -------- --------
The notes form part of these accounts.
Company statement of cash flows
for the 52 week period ended 26 December 2021 (2020: for the 52
week period ended 27 December 2020)
2021 2020
Notes GBP'000 GBP'000
--------------------------------------------- ----- -------- --------
Cash flows from operating activities
Loss for the period (2,868) (3,678)
Taxation (259) (1,171)
Finance costs 1,041 1,137
Result from equity accounted investment 15 78 -
Other financial items 15 (943) -
--------------------------------------------- ----- -------- --------
Operating loss (2,951) (3,712)
Adjustments for:
Depreciation 5 4,881 5,494
Realised gain on final hive-up dividend - (2,785)
Gain on disposal of property, plant and
equipment 125 -
Share-based payment charge 28 703 397
Impairment 3,690 933
Change in inventories (345) 517
Change in trade and other receivables (735) 1,055
Change in trade and other payables 3,800 (258)
--------------------------------------------- ----- -------- --------
Cash generated from operations 9,168 1,641
Tax paid 651 (341)
--------------------------------------------- ----- -------- --------
Net cash generated from operating activities 9,819 1,300
--------------------------------------------- ----- -------- --------
Cash flows from investing activities
Purchase of property, plant and equipment 12 (5,493) (2,304)
Acquisition of new property sites (1,600) -
Purchase of investments and associates 14&15 (2,145) (1,309)
Proceeds from disposal of property, plant
and equipment 12 2,163 821
Net cash used in investing activities (7,075) (2,792)
--------------------------------------------- ----- -------- --------
Cash flows from financing activities
Proceeds from issue of share capital 73 21,196
Repayment of borrowings (91) (7,544)
Principal element of lease payments (1,416) (1,347)
Interest paid (1,131) (1,251)
--------------------------------------------- ----- -------- --------
Net cash used in/from financing activities (2,565) 11,054
--------------------------------------------- ----- -------- --------
Net change in cash and cash equivalents 179 9,562
Cash and cash equivalents at the start of
the period 12,331 2,769
--------------------------------------------- ----- -------- --------
Cash and cash equivalents at the end of
the period 12,510 12,331
--------------------------------------------- ----- -------- --------
The notes form part of these accounts.
Notes to the financial statements
for the 52 week period ended 26 December 2021 (2020: for the 52
week period ended 27 December 2020)
1 Company information
The financial statements of The City Pub Group plc (as
consolidated "the Group") for the 52 week period ended 26 December
2021 were authorised for issue in accordance with a resolution of
the directors on 26 April 2022. 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
29.
Exemption from audit
For the period ended 26 December 2021 the subsidiaries (see note
16) are exempt from audit under section 480 of the Companies Act
2006.
2 Significant accounting policies
2.1 Basis of preparation
This preliminary announcement does not constitute the Group's
full financial statements for the 52 week period ended 26 December
2021. The auditors have reported on the Group's statutory accounts
for the 52 week period ended 26 December 2021 under s495 of the
Companies Act 2006, which do not contain statements under s498(2)
or s498(3) of the Companies Act 2006 and are unqualified. The
statutory accounts for the 52 week period ended 26 December 2021
will be filed with the Registrar of companies in due course.
The consolidated financial statements of The City Pub Group Plc
("the Group") have been prepared in accordance with International
Financial Reporting Standards ("IFRSs"), as adopted by the EU,
IFRIC interpretations and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
IFRS is subject to amendment and interpretation by the IASB and
the IFRS Interpretations Committee, and there is an on-going
process of review and endorsement by the European Commission. These
accounting policies comply with each IFRS that is mandatory for
accounting periods ending on 52 week period ended 26 December
2021.
The financial statements have been prepared under the historical
cost convention as modified for financial instruments at fair value
and in accordance with applicable accounting standards.
2.2 Statement of Compliance
The financial statements of the Company and Group are prepared
in accordance with applicable International Financial Reporting
Standards ("IFRS") as adopted by the European Union.
2.3 New and Revised Standards
IFRS applied for the first time in the current financial
statements
The Group has applied the following Standards and Amendments for
the first time for their annual reporting period commencing 28
December 2020:
-- IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment - Definition of Material)
-- IFRS 3 Business Combinations (Amendment - Definition of
Business)
-- Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39
and IFRS 8; and
-- Revised Conceptual Framework for Financial Reporting.
The Amendments listed above did not have any impact on the
amounts recognised in prior periods and are not expected to
significantly affect the current or future periods.
IFRS in issue but not applied in the current financial
statements
The following IFRS and IFRIC Interpretations have been issued
but have not been applied by the Group in preparing these 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.
-- Interest Rate Benchmark Reform Phase 2 - Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
-- Property, Plant and Equipment: Proceeds before intended use -
Amendments to IAS 16
-- Reference to the Conceptual Framework - Amendments to IFRS
3
-- Onerous Contracts - Cost of Fulfilling a Contract -
Amendments to IAS 37
-- Annual Improvements to IFRS Standards 2018-2020
-- Classification of Liabilities as Current or Non-current -
Amendments to IAS 1
-- Disclosure of Accounting Policies - Amendments to IAS 1 and
IFRS Practice Statement 2
-- Definition of Accounting Estimates - Amendments to IAS 8
-- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - Amendments to IAS 12
The Directors are currently evaluating the impact of the
adoption of all other standards, amendments and interpretations but
do not expect them to have a material impact on the Group operation
or results.
2.4 Predecessor value method
During the period ended 31 December 2017 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. As a common control combination, the transaction
was outside the scope of IFRS 3 ("Business Combinations") and the
Directors therefore considered the nature of the transaction, which
was eligible for Merger Relief under the Companies Act, and decided
that the predecessor value method would be most appropriate for
preparing those and subsequent Group 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 arose on
the combination. The use of the predecessor value method gave 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.
2.5 Going concern
The Group agreed a GBP35m revolving credit facility (RCF) with
Barclays Bank plc in July 2019 with an accordion option of another
GBP15m. This facility has been extended to July 2024. There is also
an undrawn GBP5m CLBILS facility available. At year end we had
GBP25m of debt, and GBP15m of net debt, with GBP10m undrawn on our
RCF, GBP15m of accordion and GBP5m of CLBILS available. We have
since cancelled the CIBLS facility.
Barclays replaced The City Pub Group plc's RCF's existing
financial covenants with a Minimum Liquidity Test in the sum of
GBP8m plus an additional Minimum EBITDA Test to be tested on a
monthly basis. We have significant headroom between our forecasts
and the requirements in the Minimum EBITDA Test. After June 2022
the financial covenant tests as currently documented will
recommence. The forecasts for the business show substantial
headroom.
Post year end, the group has recently sold six pubs for
GBP17.1m. This effectively reduces debt to zero. The Group is now
EBITDA and cashflow generative, with funding only required for new
acquisitions.
During 2020, we reduced Pub and head office costs to the minimum
and have kept a tight grip on these costs post reopening. We
applied for Grants where applicable. We have been in negotiations
with landlords with regards to rent holidays, rent deferrals and
changes in terms of some leases.
Although there are cost pressures with wage inflation, rising
energy prices and upward pressure on commodities, we've taken the
time during covid to renegotiate and lock in procurement contracts,
streamlining staffing and implementing energy reducing
initiatives.
When making our assessment of going concern, our assumptions
have assumed all covid restrictions continue to be removed. We have
assumed that trading reverts to pre COVID-19 levels. While trading
restrictions remain a risk, it is considered that the likelihood of
them returning is now considered remote and so is not considered to
present a material going concern risk to the group at the date of
approval of the financial statements.
Based on the current financial projections to the end of
December 2023 and having considered the facilities available,
together with potential sensitivities to changes in levels of trade
the Board is confident that the Group have adequate resources to
continue in operational existence for the foreseeable future, while
also meeting its loan covenant requirements as they presently
stand. For this reason, the Board consider it appropriate for the
Group to adopt the going concern basis in preparing its financial
statements.
2.6 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.
Loyalty card revenue is immaterial and therefore no change in
accounting policy is considered necessary.
2.7 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.
2.8 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.
2.9 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 (including acquisition costs) and non-recurring
costs, which are not expected to recur at a particular site.
2.10 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 is recognised on an effective interest rate basis, resulting
from the financial liability being recognised on an amortised cost
basis, including commitment fees. Borrowing costs directly
attributable to the acquisition, construction or production of a
qualifying asset are capitalised during the period of time that is
necessary to complete and prepare the asset for its intended use or
sale.
2.11 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 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.
2.12 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 the Group classifies
its financial assets into the following categories: those to be
measured subsequently at fair value (either through other
comprehensive income (FVOCI) or through the income statement
(FVPL)) and those to be held at amortised cost.
Classification depends on the business model for managing the
financial assets and the contractual terms of the cash flows.
Management determines the classification of financial assets at
initial recognition. The Group's policy with regard to financial
risk management is set out in note 21. Generally, the Group does
not acquire financial assets for the purpose of selling in the
short term and does not have any financial assets measured at fair
value through the income statement (FVPL) in either the current or
prior year.
The Group's business model is primarily that of "hold to
collect" (where assets are held in order to collect contractual
cash flows).
Financial assets held at amortised cost
This classification applies to the Group's trade & other
receivables which are held under a hold to collect business model
and which have cash flows that meet the solely payments of
principal and interest (SPPI) criteria. At initial recognition,
trade and other receivables that do not have a significant
financing component, are recognised at their transaction price.
Other financial assets are initially recognised at fair value plus
related transaction costs; they are subsequently measured at
amortised cost using the effective interest method. Any gain or
loss on derecognition or modification of a financial asset held at
amortised cost is recognised in the income statement.
Financial assets at fair value through other comprehensive
income (FVOCI)
The Group accounts for financial assets at FVOCI if the assets
meet the following conditions:
-- they are held under a business model whose objective it is
"hold to collect" the associated cash flows and
-- the contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on
the principal amount outstanding.
The Group has opted to classify financial assets which are
investments in equity instruments as financial assets at fair value
through other comprehensive income.
Any gains or losses recognised in other comprehensive income
(OCI) will be recycled upon derecognition of the asset.
Impairment of financial assets
A forward-looking expected credit loss (ECL) review is required
for: debt instruments measured at amortised cost or held at fair
value through other comprehensive income; loan commitments and
financial guarantees not measured at fair value through profit or
loss; lease receivables and trade receivables that give rise to an
unconditional right to consideration.
IFRS 9's impairment requirements use more forward-looking
information to recognise expected credit losses - the "expected
credit loss (ECL) model". This replaces IAS 39's "incurred loss
model". The Group's instruments within the scope of the new
requirements included trade and other receivables.
Recognition of credit losses is no longer dependent on the Group
first identifying a credit loss event. Instead the Group considers
a broader range of information when assessing credit risk and
measuring expected credit losses, including past events, current
conditions, reasonable and supportable forecasts that affect the
expected collectability of the future cash flows of the
instrument.
As permitted by IFRS 9, the Group applies the "simplified
approach" to trade and other receivable balances and the "general
approach" to all other financial assets. The simplified approach in
accounting for trade and other receivables records the loss
allowance as lifetime expected credit losses. These are the
expected shortfalls in contractual cash flows, considering the
potential for default at any point during the life of the financial
instrument. In calculating, the Group uses its historical
experience, external indicators and forward-looking information to
calculate the expected credit losses. The general approach
incorporates a review for any significant increase in counterparty
credit risk since inception. The ECL reviews include assumptions
about the risk of default and expected loss rates.
The nature of the Group's trade and other receivables are such
that the expected credit loss is immaterial in the current and
prior year, therefore no additional disclosures are considered
necessary within the credit risk section of note 21.
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 24, the Group considers its capital to comprise its ordinary
share capital, share premium and accumulated retained earnings.
There have been no changes to what the Group considers to be
capital since the prior year.
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.
2.13 Business combinations and goodwill
Other than the group re-organisation that took place prior to
Listing, business combinations, which include sites that are
operating as a going concern at acquisition and where substantive
processes are acquired, 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 position as 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.
2.14 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.
2.15 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 receivable basis from
post-acquisition profits. Distributions received in excess of
post-acquisition profits are deducted from the cost of the
investment.
2.16Investments in associates
Investments in associates are accounted for using the equity
method, unless associates are held indirectly through a venture
capital organization (or similar entity), in which case they are
measured at fair value through profit or loss.
The carrying amount of the investment in associates is increased
or decreased to recognise the Group's share of the profit or loss
and other comprehensive income of the associate, adjusted where
necessary to ensure consistency with the accounting policies of the
Group.
Unrealised gains and losses on transactions between the Group
and its associates are eliminated to the extent of the Group's
interest in those entities. Where unrealised losses are eliminated,
the underlying asset is also tested for impairment. When an
investment in an associate is held indirectly via an investment
manager it is measured at fair value through profit or loss.
2.17 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.
2.18 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.
2.19 Leases
For any new contracts entered into on or after 30 December 2019,
the Group considers whether a contract is, or contains a lease. A
lease is defined as 'a contract, or part of a contract, that
conveys the right to use an asset (the underlying asset) for a
period of time in exchange for consideration'. To apply this
definition the Group assesses whether the contract meets three key
evaluations which are whether:
-- the contract contains an identified asset, which is either
explicitly identified in the contract or implicitly specified by
being identified at the time the asset is made available to the
Group
-- the Group has the right to obtain substantially all of the
economic benefits from use of the identified asset throughout the
period of use, considering its rights within the defined scope of
the contract
-- the Group has the right to direct the use of the identified
asset throughout the period of use. The Group assess whether it has
the right to direct 'how and for what purpose' the asset is used
throughout the period of use.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use
asset and a lease liability on the balance sheet. The right-of-use
asset is measured at cost, which is made up of the initial
measurement of the lease liability, any initial direct costs
incurred by the Group, an estimate of any costs to dismantle and
remove the asset at the end of the lease, and any lease payments
made in advance of the lease commencement date (net of any
incentives received).
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
-- variable lease payments that are based on an index or a
rate;
-- amounts expected to be payable by the lessee under residual
value guarantees;
-- the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option; and
-- payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
At the commencement date, the Group measures the lease liability
at the present value of the lease payments unpaid at that date,
discounted using the interest rate implicit in the lease if that
rate is readily available. If that rate cannot be readily
determined, which is generally the case for leases in the Group,
the Group's incremental borrowing rate is used, being the rate that
the individual lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment with similar terms,
security and conditions.
To determine the incremental borrowing rate, the Group:
-- where possible, uses recent third-party financing received by
the individual lessee as a starting point, adjusted to reflect
changes in financing conditions since third-party financing was
received
-- uses a build-up approach that starts with a risk-free
interest rate adjusted for credit risk for leases held by the
Group, which does not have recent third-party financing, and
-- makes adjustments specific to the lease, e.g. term, country,
currency and security.
Where the Group is exposed to potential future increases in
variable lease payments based on an index or rate, these are not
included in the lease liability until they take effect. When
adjustments to lease payments based on an index or rate take
effect, the lease liability is reassessed and adjusted against the
right-of-use asset.
Subsequent to initial measurement, lease payments are allocated
between principal, which reduces the liability, and finance cost.
The finance cost is charged to the statement of comprehensive
income over the lease period so as to produce a constant periodic
rate of interest on the remaining balance of the liability for each
period.
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability;
-- any lease payments made at or before the commencement date
less any lease incentives received;
-- any initial direct costs; and
-- restoration costs.
Right-of-use assets are generally depreciated over the shorter
of the asset's useful life and the lease term on a straight-line
basis. If the Group is reasonably certain to exercise a purchase
option, the right-of-use asset is depreciated over the underlying
asset's useful life. The Group also assesses the right-of-use asset
for impairment when such indicators exist.
The Group has elected to account for short-term leases and
leases of low value assets using the practical expedients. Instead
of recognising a right-of-use asset and lease liability, the
payments in relation to these are recognised as an expense in
profit or loss on a straight-line basis over the lease term.
The right-of-use assets and lease liabilities have been
disclosed separately on the face of the Statement of Financial
Position, within Non-current assets and across Current &
Non-current liabilities respectively.
2.20 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.
2.21 Investment in own shares (JSOP)
Shares held in the City Pub Group Joint Share Ownership Plan
("JSOP") are shown as a deduction in arriving at equity funds on
consolidation. Assets, liabilities and reserves of the JSOP are
included in the statutory headings to which they relate. Purchases
and sales of own shares increase or decrease the book value of "Own
shares" in the statement of financial position. At each period end
the Group assess and recognises the value of "Own shares" held with
reference to the expected cash proceeds and accounts for any
difference as a reserves transfer.
2.22 Government grants
The Group has received Government grants for the first time
during the period ended 27 December 2020, mainly in relation to the
Coronavirus Job Retention Scheme provided by the Government in
response to COVID-19's impact on our business. The Group has
elected to account for these grants as other operating income,
rather than to off-set the Government grants within administrative
expenses, so that the gross impact is disclosed on the face of the
Statement of Comprehensive Income.
3 Significant judgements and estimates
The judgements, which are considered to be significant, are as
follows:
Judgement is required when determining if an acquisition is a
business combination or a purchase of an asset. Each acquisition is
assessed individually to determine which is the most appropriate
classification.
Judgement is used to determine those items that should be
separately disclosed to allow a better understanding of the
underlying trading performance of the Group. The judgement includes
assessment of whether an item is of a nature that is not consistent
with normal trading activities or of a sufficient size or
infrequency.
Judgement is required when accounting for hive ups that are
operationally enacted and that determines when control has passed.
See
note 16.
The estimates, which are considered to be significant, are as
follows:
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, choosing a suitable
discount rate and growth rate. Full details are supplied in note
11, together with an analysis of the key assumptions.
The determination of any impairment of property, plant &
equipment (including the right of use assets) also requires
estimation of fair value and value in use. As with goodwill, this
requires estimation of future cash flows and selection of a
suitable discount rate, together with assessment of the market
values of properties (if applicable). Goodwill was allocated to the
carrying value of property, plant & equipment for the purposes
of the impairment review, with further details around key
assumptions provided in note 11 (such assumptions are also relevant
to the carrying value of property, plant & equipment are
detailed in note 12).
The calculation of lease liabilities requires the Group to
determine an incremental borrowing rate ("IBR") to discount future
minimum lease payments. The IBR is the rate of interest that the
Group would have to pay to borrow over a similar term, and with a
similar security, the funds necessary to obtain an asset of a
similar value to the right-of-use asset in a similar economic
environment. The IBR therefore reflects what the Group 'would have
to pay', which requires estimation when no observable rates are
available or when they need to be adjusted to reflect the terms and
conditions of the lease.
The estimation of share-based payment costs requires the
selection of an appropriate valuation model and consideration as to
the inputs necessary for the valuation model chosen. The Group has
made estimates as to the volatility of its own shares, the probable
life of options granted and the time of exercise of those options.
Expectations around employee retention and meeting of performance
criteria have also been considered. The model used by the Group is
the Black-Scholes valuation model and the inputs are detailed in
note 28.
The assessment of the probability of future taxable profits on
which deferred tax assets can be utilised is based on the Group's
latest approved budget forecasts, which is adjustment for
significant non-taxable income and expenditure. If a positive
forecast of taxable income indicates the probable use of a deferred
tax asset, especially when it can be utilised without a time limit,
that deferred tax asset is usually recognised in respect of the
period for which future profits can be confidently foreseen.
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 and
depreciation) 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.
2021 2020
GBP'000 GBP'000
---------------------------------------------- -------- --------
Revenue 35,364 25,815
Cost of sales (8,273) (6,280)
---------------------------------------------- -------- --------
Gross profit 27,091 19,535
---------------------------------------------- -------- --------
Other operating income before adjusting items
(note 4(a)) 4,084 5,391
Operating expenses:
Operating expenses before adjusting items (25,254) (23,718)
---------------------------------------------- -------- --------
Adjusted EBITDA 5,921 1,208
---------------------------------------------- -------- --------
Depreciation (4,881) (5,494)
Share option charge (703) (397)
Exceptional items - operating expenses (4,288) (1,814)
---------------------------------------------- -------- --------
Total operating expenses (35,126) (31,423)
---------------------------------------------- -------- --------
Exceptional items - other operating income
(note 4(a)) 1,000 -
---------------------------------------------- -------- --------
Operating loss (2,951) (6,497)
---------------------------------------------- -------- --------
(a) Other operating income
During 2020 the Group has received Government grants for the
first time, mainly in relation to the Furlough Scheme provided by
the Government in response to COVID-19's impact on our business.
Further analysis of other operating income is set out below.
2021 2020
GBP'000 GBP'000
------------------------------------------ -------- --------
Coronavirus Job Retention Scheme 2,972 5,141
Other government grants 1,112 250
Insurance claim (exceptional item note 8) 1,000 -
------------------------------------------ -------- --------
Total other operating income 5,084 5,391
------------------------------------------ -------- --------
5 Loss on ordinary activities before taxation
The loss on ordinary activities before taxation is stated after
charging/(crediting):
2021 2020
GBP'000 GBP'000
---------------------------------------------- -------- --------
Costs of inventories recognised as an expense 5,502 6,376
Staff costs (note 26) 18,691 17,133
Depreciation 4,881 5,494
Fees payable to the company's auditor for the
audit of the company's
financial statements 65 60
Exceptional items (note 8) 3,288 1,814
Operating leases - land and buildings (266) (351)
---------------------------------------------- -------- --------
Rent concessions relating to COVID-19 of GBP178,000 (2020:
GBP450,000) have been recognised within this balance for 2021.
6 Interest payable and similar charges
2021 2020
GBP'000 GBP'000
--------------------------------------------------- -------- --------
On bank loans and overdrafts 475 551
Interest and finance charges for lease liabilities 656 699
Interest expense capitalised within property,
plant & equipment (90) (113)
--------------------------------------------------- -------- --------
Total finance cost 1,041 1,137
--------------------------------------------------- -------- --------
During the period GBP90,000 of interest was capitalised (2020:
GBP113,000).
7 Tax charge on loss on ordinary activities
(a) Analysis of tax charge for the period
The tax charge for the Group is based on the loss for the period
and represents:
2021 2020
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Current income tax:
Current income tax charge - (572)
Adjustments in respect of previous period (24) (154)
-------------------------------------------------- -------- --------
Total current income tax (24) (726)
-------------------------------------------------- -------- --------
Deferred tax:
Origination and reversal of temporary differences
(note 23) 280 58
Adjustment to deferred tax asset on tax losses
(note 23) (515) (503)
-------------------------------------------------- -------- --------
Total deferred tax (235) (445)
-------------------------------------------------- -------- --------
Total tax (259) (1,171)
-------------------------------------------------- -------- --------
(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 19.00% (2020: 19.00%). The
differences are explained as follows:
2021 2020
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Loss on ordinary activities before tax (3,127) (7,634)
--------------------------------------------------- -------- --------
Loss on ordinary activities multiplied by standard
rate of corporation tax in the United Kingdom
of 19.00% (2020: 19.00%) (594) (1,450)
Effect of:
Temporary differences 265 446
Items not deductible for tax purposes 95 (5)
Adjustment in respect of previous periods (24) (154)
Share options tax deduction (1) (8)
--------------------------------------------------- -------- --------
Total tax credit (259) (1,171)
--------------------------------------------------- -------- --------
The deferred tax asset included in the balance sheet of
GBP1,018,000 (2020: GBP503,000) relates principally to the carry
forward of tax losses. The Directors have recognised a deferred tax
asset in respect of carried forward trading tax losses as, based on
current estimates, the Group is forecast to make sufficient trading
profit over the next 3 years, against which these losses can be
offset.
8 Exceptional items
2021 2020
GBP'000 GBP'000
-------------------------- -------- --------
Pre opening costs 37 14
Impairment of pub sites 3,690 933
Inventory impairments - 662
Insurance claim (1,000) -
Other non recurring items 561 205
-------------------------- -------- --------
3,288 1,814
-------------------------- -------- --------
Exceptional items for both financial years presented are
included within administrative expenditure in the Statement of
Comprehensive Income.
9 Dividends
Dividends paid during the reporting period
The Board did not declare a dividend due the Covid pandemic
(2020: GBPnil)
Dividends not recognised at the end of the reporting period
Since the year end, the Directors are not proposing a dividend
due to the COVID-19 pandemic (2020: nil).
10 Loss per share
2021 2020
GBP'000 GBP'000
------------------------------------------------- ----------- ----------
Loss for the period attributable to Shareholders (2,868) (6,463)
------------------------------------------------- ----------- ----------
Loss per share:
Basic loss per share (p) (2.76) (7.15)
Diluted earnings per share (p) n/a n/a
------------------------------------------------- ----------- ----------
Number of Number of
Weighted average number of shares: shares shares
------------------------------------------------- ----------- ----------
Weighted average shares for basic EPS 103,795,354 90,451,692
Effect of share options in issue n/a n/a
------------------------------------------------- ----------- ----------
Weighted average shares for diluted earnings n/a n/a
per share
------------------------------------------------- ----------- ----------
Shares held by the City Pub Group plc Joint Share Ownership Plan
("JSOP"), which has waived its entitlement to receive dividends,
are treated as cancelled for the purpose of this calculation.
For the 52 week period ended 26 December 2021 and 27 December
2020, the Group recorded a loss. As a result, share options in
issue for this period are considered to be antidliutive and
therefore no diluted loss per share has been presented.
11 Goodwill
Restated
2021 2020
Group and Company GBP'000 GBP'000
--------------------------- -------- ----------
Cost brought forward 4,196 4,196
Additions 50 -
At end of period 4,246 4,196
----------------------------- -------- ----------
Amortisation/impairment
brought forward (914) (60)
Impairment provided during
the period (1,082) (854)
----------------------------- -------- ----------
At end of period (1,996) (914)
----------------------------- -------- ----------
Net book value at end of
period 2,250 3,282
----------------------------- -------- ----------
Net book value at start
of period 3,282 4,136
----------------------------- -------- ----------
The carrying value of goodwill included within the Group and
Company statement of financial position is GBP2,250,000 (2020
restated: GBP3,282,000), which is allocated to the cash-generating
unit ("CGU") of groupings of public houses as follows:
Restated
2021 2020
GBP'000 GBP'000
---------- -------- --------
Freehold 1,374 2,396
Leasehold 876 886
------------ -------- --------
2,250 3,282
---------- -------- --------
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. During the period ended
26 December 2021 impairments have been made against a number of
sites, as described further in note 12, with impairments at three
sites resulting in reductions to goodwill.
The fair value less costs to sell is calculated based on the
market value of the associated property.
For the 52 week period ended 26 December 2021, the
cash-generating unit recoverable amount was determined based on
value-in-use calculations, using cash flow projections based on one
year budgets, (modified as appropriate for the impact of COVID-19
and the expected return to normal trading conditions), 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
and trading following the re-opening of sites during 2021.
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 and
uncertainty of future cash flows related to COVID-19.
Lowering the discount rate by 1% from 10% to 9% would have the
effect of reducing the impairment charge by GBP78k to GBP3,612k. An
increase in the discount rate to 11% would result in the impairment
charge increasing by GBP170k to GBP3,860k.
Lowering the long term growth rate used from 2% to 1% would
result in an increase in the impairment charge of GBP69k to
GBP3,759k. A higher growth rate of 3% would result in the
impairment charge reducing by an immaterial amount.
The assumptions and outlined changes in impairment charge noted
in the above sensitivities are relevant to the combined carrying
value of goodwill and property plant & equipment, and are
stated before any allocation between the two asset classes.
As outlined further in note 33, a prior period restatement has
been made to the 2020 comparatives to transfer GBP514,000 of
impairment from property, plant and equipment (the fixtures,
fittings and computers category) to goodwill.
12 Property, plant and equipment
Freehold Fixtures,
& fittings
leasehold and
property computers Total
Group and Company GBP'000 GBP'000 GBP'000
------------------------------- ---------- ---------- --------
Cost
At 29 December 2019 97,292 29,357 126,649
Additions 311 2,107 2,418
Disposals (821) - (821)
------------------------------- ---------- ---------- --------
At 27 December 2020 96,782 31,464 128,246
Additions 1,405 4,178 5,583
Acquisitions 1,600 50 1,650
Disposals (3,175) (745) (3,920)
------------------------------- ---------- ---------- --------
At 26 December 2021 96,612 34,947 131,559
------------------------------- ---------- ---------- --------
Depreciation
At 29 December 2019 4,627 11,108 15,735
Provided during the period 747 3,112 3,859
Impairment (restated) - 79 79
At 27 December 2020 (restated) 5,374 14,299 19,673
Provided during the period 587 2,703 3,290
Impairment 967 1,582 2,549
Disposals (921) (399) (1,320)
------------------------------- ---------- ---------- --------
At 26 December 2021 6,007 18,185 24,192
------------------------------- ---------- ---------- --------
Net book value
At 26 December 2021 90,605 16,762 107,367
------------------------------- ---------- ---------- --------
At 27 December 2020 (restated) 91,408 17,165 108,573
------------------------------- ---------- ---------- --------
At 29 December 2019 92,665 18,249 110,914
------------------------------- ---------- ---------- --------
During the period ended 26 December 2021 the group made a
provision for impairment against a number of sites totalling
GBP3,690,000, split GBP1,082,000 against goodwill, GBP967,000
against freehold & leasehold property, GBP1,582,000 against
fixtures and fittings and GBP59,000 against right of use
assets.
The assumptions and sensitivities relating to the Group's
impairment review laid out in note 11 are also relevant to this
note.
During the period ended 27 December 2020 the group made a
provision for impairment against a number of sites totalling
GBP933,000, split GBP340,000 against goodwill and GBP593,000
against fixtures and fittings. During the period ended 26 December
2021 management identified that GBP514,000 of the prior year
impairment of fixtures and fittings should have been made against
goodwill and therefore a prior year adjustment has been made to
restate the amounts of goodwill and fixtures and fittings
accordingly.
During the period ended 26 December 2021 the group capitalised
GBP90,000 (2020: GBP113,000) of interest within the Freehold &
Leasehold property asset.
13 Leases
Group and Company
This note provides information for leases where the Group is a
lessee. The Group enters into property leases for certain of its
pub sites. The lease terms are negotiated on an individual basis
and contain a wide range of different terms and conditions. The
lease agreements do not impose any covenants, but leased assets may
not be used as security for borrowing purposes.
(i) amounts recognised in the consolidated statement of financial position
The consolidated statement of financial position shows the
following amounts relating to leases:
2021 2020
Group and Company GBP'000 GBP'000
---------------------------------- -------- --------
Right-of-use assets
Net book value at start of period 19,565 21,042
Additions 1,192 158
Disposals (1,232) -
Impairment (59) -
Depreciation (1,591) (1,635)
---------------------------------- -------- --------
Total 17,875 19,565
---------------------------------- -------- --------
Lease liabilities
Current 1,912 2,103
Non-current 16,473 17,750
---------------------------------- -------- --------
Total 18,385 19,853
---------------------------------- -------- --------
Additions to the right-of-use assets during the 2020 financial
year were GBP1,192,000 (2020: GBP158,000). Following the
publication on the amendment to IFRS 16 in relation to rent
concessions, the Group has applied the practical expedient in all
cases where relevant conditions were met. These concessions
totalled a credit to the income statement for the period of
GBP178,000 (2020: GBP450,000). Changes in leases which do not
fulfil the criteria of the practical expedient have been treated as
additions or disposals in line with normal IFRS 16 accounting.
The assumptions and sensitivities relating to the Group's
impairment review laid out in note 11 are also relevant to this
note. The impairment review resulted in the impairment of the
right-of-use assets relating to one site.
(ii) amounts recognised in the consolidated statement of
comprehensive income
The consolidated statement of comprehensive income shows the
following amounts relating to leases:
2021 2020
Group and Company GBP'000 GBP'000
-------------------------------------------- -------- --------
Depreciation charge
Leasehold Properties 1,591 1,635
Interest expense (included in finance cost) 656 699
-------------------------------------------- -------- --------
The total cash outflow for leases in 2021 was GBP2,071,000
(2020: GBP2,046,000), see note 21.
14 Financial assets at fair value through Other Comprehensive
income
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- -------- --------
At start of period 1,309 - 1,309 -
Additions 916 1,309 751 1,309
Transfer to Associates (note
15) (1,239) - (1,239) -
Disposals/repayments (750) - (750) -
Revaluations 18 - - -
----------------------------- -------- -------- -------- --------
At end of period 254 1,309 71 1,309
----------------------------- -------- -------- -------- --------
The Company acquired an initial 14% stake in the Mosaic
Companies in September 2020 for GBP1.2m. During the year ended 26
December 2021 the group increased its stake to 24% in certain
companies within the Mosaic Pub and Dining Group, through the
acquisition of existing shares in The Galaxy (City) Pub Company
Limited, The Pioneer (City) Pub Company Limited and The Sovereign
(City) Pub Company Limited (the "Mosaic Companies") for a total
cash consideration of approximately GBP1.2m. This additional
investment resulted in the Mosaic companies becoming Associate
investments and therefore the original stake acquired in the prior
period was transferred to Associates - see note 15.
During the year the group made additional smaller strategic
equity investments, which have been designated as fair value
through other comprehensive income. Investments, totalling GBP165k,
were made through a subsidiary company rather than being held
directly by the parent company.
15 Investments in associates
2021 2020
Group and Company GBP'000 GBP'000
---------------------------------------------- -------- --------
Additions in the period 2,144 -
Transfer from financial assets at fair value
through other comprehensive income (note 14) 1,239 -
Revaluations through profit and loss 943 -
Aggregate amounts of the group's share of:
Loss from continuing operations (78) -
Other comprehensive income - -
---------------------------------------------- -------- --------
Total comprehensive income (78) -
---------------------------------------------- -------- --------
Aggregate carrying amount of associates 4,248 -
---------------------------------------------- -------- --------
During the year ended 26 December 2021 the Group announced that
it had acquired a 49% stake in Barts Pub Ltd, owner of the iconic
Kensington Park Hotel ("KPH") in Ladbroke Grove, for GBP0.75m. The
Group also acquired a 25% stake in Bupp Ltd for GBP0.2m.
The KPH is a leasehold pub located 200 metres from Ladbroke
Grove tube station. It has large trading areas on the ground and
first floors, benefits from seven hotel letting rooms and has
potential for a further four letting rooms on the top floor.
Ladbroke Grove is a prime residential area in London and the
Company trades very successfully at the Cock & Bottle, Notting
Hill, which is located close by. The Group has recognised its share
of the associates operating losses during the period since
ownership.
As noted in note 15, during the period the Group's interest in
the Mosaic Companies exceeded 20% and is therefore deemed to give
rise to the power to the Group to exert significant influence. As
such, the Directors consider the Mosaic Companies to have become
associates and the investment has been reclassified as such.
The Mosaic Companies own ten prominent pubs, predominantly in
London and Birmingham, of which eight are freehold. Mosaic has a
strong balance sheet with over GBP3m in cash deposits and a very
strong freehold asset-backing.
The City Pub Group and Mosaic jointly negotiate their major
liquor supply deals (draught beer, spirits, wines, soft drinks) and
the Company's investment will help to cement this relationship. It
is the intention of both the Company and Mosaic to assist each
other in advancements in technology, especially in areas such as
the City Club app.
Clive Watson is an investment consultant to Mosaic. Richard
Prickett, Non-Executive Director of the City Pub Group, is a
Non-Executive Director of The Pioneer (City) Pub Company
Limited.
For the majority of the year, the Group held its interest in
Mosaic through an independently managed investment fund and
therefore, in reflection in the Group's assessment of its valuation
and in accordance with IAS 28, it has been measured at a fair value
through profit and loss. Prior to the period end, the Group took
direct control of the investment, meaning that prospectively the
investment in Mosaic will be accounted for in accordance with the
equity method. The Group's share of Mosaic's profits and losses for
the period after it took direct ownership is not considered
material.
16 Investments in subsidiaries
2021 2020
Company GBP'000 GBP'000
------------------------- -------- --------
At start of period 1,067 12,730
Write-down of investment (266) (11,663)
------------------------- -------- --------
At end of period 801 1,067
------------------------- -------- --------
The investment in Flamequire was written down in the current
period as an application to strike off the entity was made in
December 2021, which was concluded in March 2022. During 2019 the
Company hived up the trade and assets of its subsidiary The City
Pub Company (West) Limited via an intercompany transfer, which
included the transfer of investments previously held by The City
Pub Company (West) Limited. In 2020 there was a final dividend from
The City Pub Company (West) Limited, which eliminated the amounts
due to group undertakings balance (note 16) and resulted in a write
down of the investments carrying value of GBP11,663,000.
The Company had the following subsidiary undertakings as at 26
December 2021:
Nature
Class of Country of Proportion of
Name of subsidiary share held incorporation held business
----------------------------------- ----------- -------------- ---------- ---------
England and
The City Pub Company (West) Limited Ordinary Wales 100% Dormant
England and
BNB Leisure Limited Ordinary Wales 100% Dormant
England and
Gresham Collective Ltd Ordinary Wales 100% Dormant
England and
Randall & Zacharia Limited Ordinary Wales 100% Dormant
England and
Chapel 1877 Ltd Ordinary Wales 100% Dormant
England and
Flamequire Limited Ordinary Wales 100% Dormant
----------------------------------- ----------- -------------- ---------- ---------
The above companies all had the same registered office as the
parent company, being Essel House, 2nd Floor, 29 Foley Street,
London, W1W 7TH.
17 Inventories
2021 2020
Group and Company GBP'000 GBP'000
------------------------- --------- ---------
Finished goods and goods
for resale 1,048 703
--------------------------- --------- ---------
During the year ended 27 December 2020 the Group (and Company)
had to write off GBP662,000 of inventory due to the impact of the
COVID-19 lockdowns in England, which has been recognised within the
other non-recurring items line as part of the exceptional items in
note 8. There were no such impairments required in the year ended
26 December 2021, as sites remained open.
18 Trade and other receivables
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- -------- --------
Trade receivables 674 235 674 235
Government grant receivables - 379 - 379
Corporation tax receivables 170 774 170 774
Other receivables 1,216 664 1,216 664
Amounts due from group
undertakings - - 165 -
Prepayments and accrued
income 1,271 1,012 1,271 1,012
----------------------------- -------- -------- -------- --------
3,331 3,064 3,496 3,064
----------------------------- -------- -------- -------- --------
Rent deposits are included within other receivables, greater
than one year. They are at GBP319k (2020: GBP358k). In addition the
other receivables in 2021 include GBP300k of deferred consideration
relating to the disposal of The Island, Kensal Rise, which is
payable over 4 years.
19 Current trade and other payables
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- -------- -------- --------
Trade payables 4,188 2,641 4,188 2,641
Corporation taxation - - - -
Other taxation and social
security 1,498 2,828 1,498 2,828
Amounts due to group undertakings - - 801 1,067
Accruals 5,062 2,190 5,062 2,190
Other payables 1,466 771 1,466 771
---------------------------------- -------- -------- -------- --------
12,214 8,430 13,015 9,497
---------------------------------- -------- -------- -------- --------
Included within Other taxation and social security is GBPnil
(2020: GBP80,000), which is due to be repaid greater than one
year.
20 Borrowings and lease liabilities
2021 2020
Group and Company GBP'000 GBP'000
---------------------------- --------- ---------
Current borrowings and
financial liabilities:
Lease liabilities 1,912 2,103
Non-current borrowings
and financial liabilities:
Bank loans 24,750 24,801
Lease liabilities 16,473 17,750
------------------------------ --------- ---------
41,223 42,551
---------------------------- --------- ---------
At 26 December 2021 a revolving credit facility of GBP25,000,000
(2020: GBP25,000,000) was outstanding, net of capitalised
arrangement fees, 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. During the year the revolving credit
facility was extended for an additional 2 years to July 2024.
Reconciliation of liabilities arising from financing
activities
The changes in the Group's and Company's liabilities arising
from financing activities can be classified as follows:
Long-term Short-term
Borrowings Borrowings Total
GBP'000 GBP'000 GBP'000
--------------------------------- ----------- ----------- --------
At 28 December 2020 24,801 - 24,801
Cash flows:
Repayment - - -
Non-cash items:
Amortisation of loan arrangement
fees (51) - (51)
--------------------------------- ----------- ----------- --------
At 26 December 2021 24,750 - 24,750
--------------------------------- ----------- ----------- --------
Long-term Short-term
Borrowings Borrowings Total
GBP'000 GBP'000 GBP'000
--------------------------------- ----------- ----------- --------
At 30 December 2019 32,310 - 32,310
Cash flows:
Repayment (7,500) - (7,500)
Non-cash items:
Amortisation of loan arrangement
fees (9) - (9)
--------------------------------- ----------- ----------- --------
At 27 December 2020 24,801 - 24,801
--------------------------------- ----------- ----------- --------
The changes in the Group's and Company's liabilities arising
from leases can be classified as follows:
Long-term Short-term
Lease liabilities Lease liabilities Total
GBP'000 GBP'000 GBP'000
-------------------- ------------------ ------------------ --------
At 28 December 2020 17,750 2,103 19,853
Cash flows:
Repayments - (2,071) (2,071)
Accrued interest - 656 656
Non-cash items:
Additions 1,192 - 1,192
Disposals (1,245) - (1,245)
Reclassification (1,224) 1,224 -
-------------------- ------------------ ------------------ --------
At 26 December 2021 16,473 1,912 18,385
-------------------- ------------------ ------------------ --------
Long-term Short-term
Lease liabilities Lease liabilities Total
GBP'000 GBP'000 GBP'000
-------------------- ------------------ ------------------ --------
At 30 December 2019 18,959 2,083 21,042
Cash flows:
Repayments - (2,046) (2,046)
Accrued interest - 699 699
Non-cash items:
Additions 158 - 158
Reclassification (1,367) 1,367 -
-------------------- ------------------ ------------------ --------
At 27 December 2020 17,750 2,103 19,853
-------------------- ------------------ ------------------ --------
21 Financial instruments and risk management
Financial instruments by category:
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------- --------
Financial assets - loans
and receivables
Trade and other receivables 1,890 899 1,890 899
Amounts owed by group undertakings - - 165 -
Cash and cash equivalents 12,510 12,331 12,510 12,331
----------------------------------- -------- -------- -------- --------
14,400 13,230 14,565 13,230
----------------------------------- -------- -------- -------- --------
Prepayments are excluded, as this analysis is required only for
financial instruments.
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- -------- -------- --------
Non-current
Borrowings 24,750 24,801 24,750 24,801
Lease liabilities 16,473 17,750 16,473 17,750
41,223 42,551 41,223 42,551
---------------------------------- -------- -------- -------- --------
Current
Current borrowings - - - -
Lease liabilities 1,912 2,103 1,912 2,103
Trade and other payables 5,654 3,412 5,654 3,412
Amounts due to group undertakings - - 801 1,067
---------------------------------- -------- -------- -------- --------
7,566 5,515 8,367 6,582
---------------------------------- -------- -------- -------- --------
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 Group'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 and Company
Cash at bank and short-term 2021 2020
deposits GBP'000 GBP'000
----------------------------- --------- ---------
A1 12,210 12,082
Not rated 300 249
------------------------------- --------- ---------
12,510 12,331
----------------------------- --------- ---------
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 outstanding borrowing of GBP25,000,000 at year end
as disclosed in note 20. These were loans taken out with Barclays
to facilitate the purchase of 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 26 December 2021, 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.
The following table illustrates the sensitivity of profit and
equity to a reasonably possible change in interest rates of +/- 1%
on borrowings in the period. These changes are considered to be
reasonably possible based on observation of current market
conditions. The calculations are based on a change in the average
market interest rate on borrowings for each period. All other
variables are held constant.
Profit for the year Equity
----------------- --------------------- ----------
+1% -1% +1% -1%
26 December 2021 (250) 250 (250) 250
----------------- ------------ ------- ----- ---
27 December 2020 (317) 317 (317) 317
----------------- ------------ ------- ----- ---
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.
Less than Between Between Over
1 year 1 and 2 years 2 and 5 years 5 years
Group GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- -------------- -------------- --------
As at 26 December 2021:
Borrowings - - 24,750
Lease liabilities 1,912 1,912 5,613 14,312
Trade and other payables 5,654 - - -
------------------------- --------- -------------- -------------- --------
As at 27 December 2020:
Borrowings - - 24,801 -
Lease liabilities 2,103 2,103 6,119 15,108
Trade and other payables 3,412 - - -
------------------------- --------- -------------- -------------- --------
Less than Between Between Over
1 year 1 and 2 years 2 and 5 years 5 years
Company GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- -------------- -------------- --------
As at 26 December 2020:
Borrowings - - 24,750
Lease liabilities 1,912 1,912 5,613 14,312
Trade and other payables 6,455 - - -
------------------------- --------- -------------- -------------- --------
As at 27 December 2020:
Borrowings - - 24,801 -
Lease liabilities 2,103 2,103 6,119 15,108
Trade and other payables 4,479 - - -
------------------------- --------- -------------- -------------- --------
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.
22 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 material financial asset or liabilities measured
at fair value as at 29 December 2019. During the period ended 27
December 2020 the Group acquired investments in other companies,
which have been recognised at fair value in the prior year and at
the current reporting date.
23 Deferred tax
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- -------- --------- ---------
Provision for deferred
tax liabilities
Accelerated capital allowances 1,324 1,044 1,324 1,044
Arising on revaluations 3 - - -
Arising on acquisition 1,137 1,137 1,137 1,137
------------------------------- -------- -------- --------- ---------
2,464 2,181 2,461 2,181
------------------------------- -------- -------- --------- ---------
Provision at the start
of the period 2,181 2,123 2,181 2,123
Deferred tax charge through
OCI 3 - - -
Deferred tax charge through
profit or loss 280 58 280 58
------------------------------- -------- -------- --------- ---------
Provision at the end of
the period 2,464 2,181 2,461 2,181
------------------------------- -------- -------- --------- ---------
2021 2020
Group and Company GBP'000 GBP'000
------------------------------- -------- -------- --------- ---------
Deferred tax asset
Arising on tax losses carried
forward 1,018 503
Deferred tax asset at the
start of the period 503 -
Deferred tax credit for
the period 515 503
------------------------------- -------- -------- --------- ---------
Deferred tax asset at the
end of the period 1,018 503
------------------------------- -------- -------- --------- ---------
24 Share capital
2021 2020
GBP'000 GBP'000
---------------------------------------------- -------- --------
Allotted called up and fully paid
105,793,430 Ordinary shares of 1 pence each
(2020: 105,684,425) 1,058 1,057
3,021,770,759 Deferred shares of 1 pence each
(2020: 3,021,770,759) 30,218 30,218
---------------------------------------------- -------- --------
Total 31,276 31,275
---------------------------------------------- -------- --------
In May 2021 the Group issued 22,500 GBP0.01 shares at a price of
GBP1.00 per share in relation to the exercise of share options. The
premium on the shares issued was credited to the share premium
account.
In September 2021 the Group issued 86,505 GBP0.01 shares at a
price of GBP1.156 per share in relation to the acquisition of The
Cliftonville Hotel in Cromer, Norfolk. The premium on the shares
issued was credited to the share premium account.
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 deferred shareholders are not entitled to be paid a dividend
out of any surplus profits and only participate in surplus assets
on winding up after certain conditions. The deferred shares do not
entitle the holder to vote at a General Meeting.
In the prior year (April 2020) the Group undertook a subdivision
of its ordinary share capital, which resulted in the issued
ordinary share capital of 61,668,791 ordinary GBP0.50 shares being
subdivided into 3,083,439,550 ordinary GBP0.01 shares. After the
subdivision 3,021,770,759 ordinary GBP0.01 shares were
re-designated as 3,021,770,759 deferred GBP0.01 shares, leaving
61,668,791 ordinary shares of GBP0.01 each.
The ordinary share capital account represents the amount
subscribed for shares at nominal value.
GBP0.50 Ordinary GBP0.01 Ordinary Deferred
shares Number shares Number shares Number
----------------------------------------- ---------------- ---------------- --------------
At 29 December 2019 61,623,791 - -
Issue of new ordinary shares on exercise
of share options 45,000 - -
Sub-total 61,668,791 - -
Impact of the subdivision of GBP0.50
ordinary shares to GBP0.01
ordinary shares (61,668,791) 3,083,439,550 -
Impact of the re-designation to deferred
shares - (3,021,770,759) 3,021,770,759
Issue of new ordinary shares on Placing - 30,000,000
Issue of new ordinary shares on Open
Offer - 14,015,634
----------------------------------------- ---------------- ---------------- --------------
At 27 December 2020 - 105,684,425 3,021,770,759
----------------------------------------- ---------------- ---------------- --------------
Issue of new ordinary shares on exercise
of share options - 22,500 -
Issue of new ordinary shares - 86,505 -
----------------------------------------- ---------------- ---------------- --------------
At 26 December 2021 - 105,793,430 3,021,770,759
----------------------------------------- ---------------- ---------------- --------------
Own shares held (JSOP)
The Group announced the establishment of a Joint Share Ownership
Plan ("JSOP") in January 2018, as detailed in the Company's AIM
Admission Document, to be used as part of the remuneration
arrangements for employees. This resulted in the purchase of the
Group's own shares and the creation of an Employee Benefit
Trust.
The JSOP purchases shares in the Company to satisfy the
Company's obligations under its JSOP performance share plan. No
shares (2019: no shares) in the Company were purchased during the
period at a cost of GBPnil (2020: GBPnil).
At 26 December 2021 the JSOP held 1,925,000 ordinary shares in
The City Pub Group plc (2020: 1,925,000).
At 26 December 2021 awards over 675,000 (2020: 1,925,000)
ordinary shares The City Pub Group plc, made under the terms of the
performance share plan, were outstanding.
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.
Own shares (JSOP) represents shares in the Company purchased by
the Group's Employee Benefit Trust as part of a Joint Share
Ownership Plan ("JSOP").
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.
25 Other reserves
Share-
based
Other payment Revaluation
Group reserve reserve reserve Total
------------------------------------------ -------- -------- ----------- -----
Balance at 29 December 2019 92 977 - 1,069
Employee share-based compensation - 397 - 397
Transactions with owners - 397 - 397
------------------------------------------ -------- -------- ----------- -----
Balance at 27 December 2020 92 1,374 - 1,466
------------------------------------------ -------- -------- ----------- -----
Employee share-based compensation - 703 - 703
Transactions with owners - 703 - 703
------------------------------------------ -------- -------- ----------- -----
Revaluation - gross - - 18 18
Deferred tax on revaluation - - (3) (3)
------------------------------------------ -------- -------- ----------- -----
Total comprehensive income for the period - - 15 15
------------------------------------------ -------- -------- ----------- -----
Balance at 26 December 2021 92 2,077 15 2,184
------------------------------------------ -------- -------- ----------- -----
26 Staff costs
Number of employees
The average monthly numbers of employees (including salaried
Directors) during the period was:
2021 2020
------------------------------ ---- ----
Management and Administration 83 92
Operation of Public Houses 879 892
------------------------------ ---- ----
962 984
------------------------------ ---- ----
Employment costs (including Directors)
2021 2020
GBP'000 GBP'000
---------------------------- -------- --------
Wages and salaries 16,701 15,500
Pension costs 336 323
Social security costs 951 913
Share based payments charge 703 397
---------------------------- -------- --------
18,691 17,133
---------------------------- -------- --------
27 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:
Compensation
for loss
Salary/Fees Taxable Benefits Pension/Other of office Total
------------------ ------------------------ ------------------ ------------------ ------------------
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ -------- -------- -------- -------------- -------- -------- -------- -------- -------- --------
Clive Watson 153 112 5 9 20 7 - - 178 128
Alex Derrick - 101 - 6 - 5 - 166 - 278
Rupert Clark 153 112 9 9 21 7 - - 183 128
Tarquin
Williams 135 104 2 2 23 2 - - 160 108
Toby Smith 253 33 10 - - - - - 263 33
Holly
Elliott 18 - - - - - - - 18 -
Richard
Prickett 48 38 - - - - - - 48 38
John
Roberts* 33 26 - - 34 26 - - 67 52
Neil
Griffiths 42 32 - - - - - - 42 32
Emma Fox 30 - - - - - - - 30 -
------------ -------- -------- -------- -------------- -------- -------- -------- -------- -------- --------
Total 865 558 26 26 98 47 - 166 989 797
------------ -------- -------- -------- -------------- -------- -------- -------- -------- -------- --------
* John Roberts provides brewery consultancy services to the
Group in relation to our seven microbreweries. The fees for these
consultancy services are included within the Other column.
Emoluments in respect of the Directors are as follows:
2021 2020
GBP'000 GBP'000
------------------------------------- -------- --------
Remuneration for qualifying services 989 797
------------------------------------- -------- --------
The highest paid Director in the period received remuneration of
GBP263,000; (2020: GBP278,000). Four directors had equity settled
share options in issue at the period end (2020: Four). Additional
information on Directors' remuneration is given within the
Corporate Governance Report.
28 Share-based payments
The Group provides share-based payments to employees, which are
all equity settled, in the form of a Company Share Ownership Plan
(CSOP), started in 2016, a Joint Share Ownership Plan ("JSOP")
started in 2018 and the Group's Long Term Incentive Plan ("LTIP")
started in 2020. The Company uses the Black-Scholes valuation model
to value these types of share-based payment plan and the resulting
value is amortised through the consolidated income statement over
the vesting period of the share-based payments.
In prior periods the Group also operated an equity settled share
option plan known as the Enterprise Management Incentive Share
Option Plan. The Group was 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 was 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. In the
prior period a transfer was made between the share-based payment
reserve and the retained earnings in respect of the EMI share
options that were all exercised during the prior period.
During the period ended 26 December 2021 175,000 options were
granted under the CSOP scheme (2020: 2,515,000 options granted),
2,950,000 options were granted under the Group's Long Term
Incentive Plan (2020: 2,100,000 options granted); and no awards
were made under the JSOP scheme (2020: no awards). A share-based
payment charge of GBP703,000 (2020: GBP397,000) has been reflected
in the consolidated statement of comprehensive income.
The fair value of options granted in the current period and the
assumptions used in the calculation are shown below:
Year of grant 2021 - CSOP 2021 - LTIP
-------------------------------------------------- ----------- -----------
Exercise price (GBP) 1.20 0.00
Number of awards granted 175,000 2,950,000
Performance based criteria (see Directors options
for criteria) No Yes
Vesting period (years) 3 3
Expected Life (years) 7 4
Contractual life (years) 10 10
Risk free rate 0.048% (0.011)%
Expected dividend yield 1.40% 1.00%
Volatility 30% 27%
Fair value (GBP) 0.15 0.92
-------------------------------------------------- ----------- -----------
Movements in share-based payments are summarised in the table
below:
2021 2020
Weighted Weighted
average average
2021 exercise 2020 exercise
Number of price Number of price
Awards GBP Awards GBP
----------------------------- ----------- --------- ---------- ---------
Outstanding at start of
period 6,980,000 0.90 3,332,500 1.75
Granted 3,125,000 0.07 4,615,000 0.33
Exercised (22,500) 1.00 (45,000) 1.00
Expired (2,122,500) 1.73 (922,500) 1.11
----------------------------- ----------- --------- ---------- ---------
Outstanding at end of period 7,960,000 0.44 6,980,000 0.90
----------------------------- ----------- --------- ---------- ---------
Exercisable at 26 December
2021 1,165,000 1.68 405,000 1.00
----------------------------- ----------- --------- ---------- ---------
The weighted average remaining contractual life of options
outstanding at the end of the period is 8.42 years (2020: 6.66
years).
Previous issues of CSOPs in both 2016 and 2018 had a vesting
period of 3 years, an expected life of 7 years and a contractual
life of 10 years. The exercise price for the 2016 CSOPs was GBP1.00
and the exercise price for the 2018 CSOPs was GBP1.70. The JSOP has
an exercise price of GBP2.05 and contractual life of 10 years.
At the end of the period there were 7,960,000 outstanding
options (2020: 6,980,000). The breakdown of these is as
follows:
367,500 - 2016 CSOP; 112,500 - 2018 CSOP; 675,000 - JSOP;
1,900,000 - 2020 LTIP; 2,170,000 - 2020 CSOP; 175,000 - 2021 CSOP;
and 2,550,000 - 2021 LTIP.
29 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:
GBP3,500 (2020: GBP1,500) was paid to Helen Watson, who is
related to Clive Watson. At the period end Helen Watson was owed
GBPnil (2020: GBPnil). Helen Watson has an existing GBP10,000 float
with the group.
During the year ended 31 December 2021 the Group acquired an
additional 10% in the Mosaic entities for a total cash
consideration of approximately GBP1.2m, on an arm's length basis,
giving a total investment of GBP2.4m at the year end. As at 26
December 2021 the Group had an investment in an Associate, being a
24% in certain companies within the Mosaic Pub and Dining Group,
through the acquisition of existing shares in The Galaxy (City) Pub
Company Limited, The Pioneer (City) Pub Company Limited and The
Sovereign (City) Pub Company Limited (the "Mosaic Companies").
There were no transactions between the Group and the Mosaic
entities. Clive Watson is an investment consultant to Mosaic.
Richard Prickett, Non-Executive Director of the City Pub Group, is
a Non-Executive Director of The Pioneer (City) Pub Company Limited,
a company which forms part of the Mosaic Pub and Dining Group.
James Watson, CEO of Mosaic, is related to Clive Watson.
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 27.
No key personnel other than the directors have been identified
in relation to the periods ended 26 December 2021
and 27 December 2020.
30 Post balance sheet events
Pub disposals
In March 2022 the group announced the disposal of six public
houses (the "Disposal Pubs") in two separate transactions for a
total cash consideration of approximately GBP17.1 million. These
transactions have resulted in impairment write-downs during the
period ended 26 December 2021.
The Group has agreed terms and exchanged contracts for the
disposal of five of the six Disposal Pubs on the South Coast of
England, which include three pubs in Brighton (Walrus, Brighton
Beach Club, and Lion and Lobster), The Inn on the Beach on Hayling
Island and The Travellers Friend in Woodford Green, Essex. All are
freehold pubs, with the exception of Brighton Beach Club which is
leasehold. These five pubs, which had a net book value of
approximately GBP17.1 million as at April 2022 and recorded
unaudited aggregate site EBITDA of GBP0.7 million for the year
ended 26 December 2021, are being acquired by Portobello Starboard
Limited for cash consideration of GBP16.2 million. This transaction
is expected to complete on or around 11 April 2022, subject to
successful lease assignment of the Brighton Beach Club.
Separately, the Company has sold The London Road Brewhouse, a
freehold pub in Southampton for GBP0.9m. This sale completed on 18
March 2022.
The proceeds from the Disposal Pubs will be used to invest and
expand the Group in other geographies across the UK.
Mosaic Investment
We also recently announced that we increased our investment into
Mosaic Pub and Dining (Tranche 1 of companies) by GBP1.7m in April
2022. Our total stake in Mosaic is now 36% for a total investment
of GBP4.1m.
31 Capital commitments
At the period end the Group and Company has no capital
commitments.
32 Business combinations
During the period the Group acquired The Cliftonville Hotel in
Cromer, Norfolk through a business combination, the fair values of
the assets and liabilities acquired, and the nature of the
consideration, are outlined within the table below. The acquisition
was part of the Group's continuing strategy to expand its pub
portfolio via selective quality acquisitions.
2019
Group & Company GBP'000
--------------------------------------- ---------
Provisional fair value:
Property, plant and equipment acquired 1,650
Goodwill 50
--------------------------------------- ---------
Total 1,700
--------------------------------------- ---------
Satisfied by:
Cash 1,600
Shares 100
--------------------------------------- ---------
Total 1,700
--------------------------------------- ---------
All other pub acquisitions have been accounted for as property
acquisitions.
33 Prior year adjustment
During the period ended 27 December 2020 the group made a
provision for impairment against a number of sites totalling
GBP933,000, split GBP340,000 against goodwill and GBP593,000
against fixtures and fittings.
During the period ended 26 December 2021 management identified
that GBP514,000 of the prior year impairment of fixtures and
fittings should have been made against goodwill and therefore a
prior year adjustment has been made to restate the amounts of
goodwill and fixtures and fittings accordingly.
As the prior year adjustment was between two categories of
non-current assets there was no impact on the total non-current
assets or other totals within the Consolidated or Company
statements of financial position and there was no impact on the
prior year consolidated statement of profit or loss.
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END
FR EANLKADKAEFA
(END) Dow Jones Newswires
April 27, 2022 02:01 ET (06:01 GMT)
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