Final Results for the year ended 25 December 2022
The City Pub Group PLC
(the "City Pub Group", the "Company" or the "Group")
FINAL RESULTS FOR THE YEAR ENDED 25 DECEMBER 2022
The City Pub Group is pleased to announce its audited results for the 52 weeks ended 25 December 2022.
The Group currently operates a predominately freehold estate of 43 premium pubs across Southern England and Wales. The Group has made good progress in a challenging year for both the industry and consumers. Sales, pleasingly, have returned to pre Covid levels and the Group now has fully refurbished, very well invested estate from which to move forward with a strong financial base with historically low levels of debt and an efficient operational platform combining to give the flexibility to take advantage of opportunities as they arise and drive continued growth.
Financial and trading highlights
|
|
Post IFRS 16 52 weeks to |
Pre IFRS 16 52 weeks to |
Post IFRS 16 52 weeks to |
Pre IFRS 16 52 weeks to |
Change |
|
|
25.12.22 £m |
25.12.22 £m |
26.12.21 £m |
26.12.21 £m |
Pre IFRS 16 % |
|
Revenue |
57.8 |
57.8 |
35.4 |
35.4 |
63% |
|
Adjusted EBITDA |
10.1 |
8.0 |
5.9 |
3.8 |
111% |
|
Adjusted Profit/(loss) before tax |
3.6 |
3.8 |
0.9 |
1.0 |
280% |
* 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.
· Current valuation of the estate of £160 million equating to NAV of 150p per share
Highlights
· Completed the estate refurbishment programme and acquired two pubs since the interim results announcement in September 2022
· Balance sheet strengthened with historic lows of £4m of net debt at year end, following the £16 million sale of 6 pubs in June 2022. Estate further fine-tuned through disposal of three non-core leaseholds
· Launched share buyback programme in October 2022, acquiring c.1m shares to date (representing 0.95% of the issued share capital) at a cost of c. £830,000
· Strengthened management team to drive premiumisation of estate
o Rupert Clark appointed Chief Operating Officer in January 2023;
o Richard Myers appointed Chief Marketing Officer in February 2023 to drive commercial and digital marketing activities
Outlook
· Encouraging trading performance in first 3 months of 2023, with like-for-like sales versus 2022 in excess of 13% and ahead of expectations which, whilst early in the year provides confidence in the outlook
· Increased investment in Mosaic Pub & Dining Group to 48% in April 2023, with the intention to take operational control in the next 2 months
· Performance underpinned by increasing our pubs' retail intensity as a result of the operational improvements implemented over recent years
· Inflationary pressures in some areas beginning to abate
· Continuing to drive our optimisation of capacity.
Clive Watson, Chairman of City Pub Group said:
"The Group has achieved a pleasing performance through 2022, demonstrating the strength of our adaptable model and ability to recover following covid and through the challenging conditions of the last year. Our premium estate is now fully refurbished creating, together with the strengthened management team, a platform for expansion when the time is right.
"Our near term ambition is to continue to premiumise the pub estate to deliver additional organic sales and profit growth. We have seen an encouraging start to the year, with trading ahead of expectations which, whilst still early in the year, provides confidence for the coming year."
18 April 2023
|
Enquiries: |
|
|
|
|
|
City Pub Group
|
Today: via Instinctif |
|
Instinctif Partners
|
+44 (0) 20 7457 2020 |
|
Peel Hunt (Joint Broker) George Sellar
|
+44 (0)78 9520 5644 |
|
Liberum (Nomad & Joint Broker)
Chris Clarke
|
+44 (0) 20 3100 2000 |
For further information on City Pub Group pubs visit www.citypubcompany.com
CHAIRMAN'S STATEMENT
I am pleased to report that we have made good progress throughout the year consolidating, strengthening and improving the Group. This year, sales have returned to pre-COVID-19 levels, the pub estate is fully refurbished, there have been significant improvements at the operating level and net debt has been maintained at a low level.
Sales performance of our pubs in 2022 was encouraging. We put a lot of effort in making sure we optimised our capacity at site level and we believe there is further organic growth from the existing pub estate. The Company continues to be primarily focused on organic growth rather than acquiring additional pubs, however, should an outstanding opportunity arise we have the flexibility to act quickly and decisively. Despite the impact of Omicron, like for like gross sales for FY2022 were up by 3%, improving to 7.8% in Q4. 2023 is trading 13% ahead of 2022 on a like for like basis.
2022 was a challenging year with inflationary headwinds, especially on energy and food, and the shortage of labour throughout the year creating challenges relating to opening times and operational effectiveness when the pubs were busy.
For the year ended 25 December 2022 revenue rose 63% to £57.8m (2021 35.4m) reflecting a year without disruption from the pandemic. Pre IFRS 16 adjusted EBIDTA was up 111% to £8m (2021 £3.8m), adjusted profit before tax was up 280% to £3.8m (2021 £1m) and reported profit/(loss) at £1.1m (2021 (£2.9m)).
The Company's portfolio is 61% freehold and these pubs account for over 90% of our investment. This gives us strong asset backing and helps protect our margins as we do not have large rent liabilities.
The Trading Estate
The Group currently operates 43 trading pubs which has increased by three since reporting the interim results in September 2022: the Bath Cider House opened in October 2022, Potters in Newport was acquired in November 2022, and the Bridge, Barnes, SW London was purchased in January 2023 this year. These follow the three openings in the first half of 2022:
- Oyster House, Mumbles - May 2022
- Tivoli, Cambridge - May 2022
- Damson & Wilde, Bury St Edmunds - June 2022
A number of sites also completed their refurbishments programmes (with dates completed):
- The Althorp, Wandsworth, SW London - November 2022
- Roundhouse, Wandsworth, SW London - November 2022
- Belle Vue, Clapham, SW London - February 2023
- Lighthouse, Battersea, SW London - February 2023
- Pride of Paddington, Paddington, West London - February 2023
- Cliftonville, Cromer, Norfolk - April 2023
This completes the refurbishment program although we are looking to get planning approval to create outside covered trading spaces and if successful, a further 2 sites will benefit from a combined investment of c£250k.
Disposals
A small number of our pubs for various differing reasons have not fully recovered from COVID-19 and we have worked hard at disposing of these units. As a result of a review of the estate, the following leases have been fully disposed of:
- Prince Street Social, Bristol - July 2022
- Bicycle Shed, Oxford - November 2022
- The Yard - March 2023
The operating loss of these pubs throughout 2022 amounted to circa £500k and their disposal has helped us to improve our operating margins and profitability going forwards.
In April 2022, we rationalised the estate by selling off 6 sites primarily on the South Coast for net proceeds of £16.1m This disposal significantly reduced our bank debt leaving the Company in a very strong financial position to take advantage of growth opportunities which closer align with the Company's strategy.
Mosaic Investment
Following the acquisition of a further 13% share in Mosaic Investments in April 2023, we now have a stake of 48% at an additional cost of c.£2.2m. We will now integrate the Mosaic estate into our own estate over the course of the next two to three months. The Mosaic estate comprises of 9 pubs situated in London and Birmingham, of which 7 are freehold. We welcome the Mosaic employees to our Group. There are many cultural similarities between the two companies and we anticipate a smooth, effective and efficient integration process. This is a great step forward for the Group - now with 52 operational sites located in great cities or fantastic destination locations.
Financial Highlights
Summary for the Period ended 25 December 2022:
- Revenue up 63% to £57.8m (2021 35.4m)
- Pre IFRS 16 adjusted EBIDTA up 111% to £8m (2021 £3.8m)
- Adjusted profit (loss) before Tax up 280% to £3.8 (2021 £1m)
- Reported profit/(loss) at £1.1m (2021 (£2.9m))
|
Key Metrics |
|
||||
|
|
Post IFRS 16 52 weeks to |
Pre IFRS 16 52 weeks to |
Post IFRS 16 52 weeks to |
Pre IFRS 16 52 weeks to |
Change |
|
|
25.12.22 £m |
25.12.22 £m |
2 6.12.21 £m |
26.12.21 £m |
Pre IFRS 16 % |
|
Revenue |
57.8 |
57.8 |
35.4 |
35.4 |
63% |
|
Adjusted EBITDA * |
10.0 |
8.0 |
5.9 |
3.8 |
111% |
|
Adjusted Profit/(loss) before tax * * |
3.6 |
3.8 |
0.9 |
1.0 |
280% |
* P r e - IF R S 1 6 A dju s t e d e ar ni n g s b e f o r e e x c e p ti o n a l i t e m s , s har e o p ti o n c har g e , i n t e r e s t , t a xa ti o n, d e p r e c i a ti o n an d am o r ti s a ti o n .
* * P r e - I F R S 1 6 A d j u s t e d p r o f i t / ( l o s s ) b e f o r e t a x is the profit / (loss) before tax, share option charge and exceptional items.
Despite unprecedented challenges faced by the industry, including inflation, staff shortages, Omicron at the start of 2022, transport strikes and weakening consumer confidence, the Board is pleased with the trading performance for the last year. To be in such a position with sales today above pre COVID-19 levels is a reflection of the determination, innovation, loyalty and resilience of our people to provide true hospitality to our customers.
Bank Facilities
As of today's date, net debt is £8m, a modest increase on the position at the end of the first half mainly as a result of acquiring a controlling interest in Mosaic Pub Co at a cost of c.£2.2m. The Group is conservatively financed and has undrawn credit facilities of £23m. We are operating comfortably within our banking covenants, and we will be renewing our bank facilities on a longer term basis in the near future.
The Group's estate value based primarily on an independent valuation of the estate in Mar 2022 is c.£160m equating to NAV of circa 150p per share.
Environmental, Social and Governance (ESG)
The Company's ESG committee, established in 2021 and chaired by Emma Fox, an independent Non-Executive Director, is tasked with developing the Group's ESG strategy to ensure that we operate as a responsible and sustainable business, primed to play a positive role in society. Following a significant and thorough review of operational practices and wider supply chain ESG policies, the Group established a robust data collection process across all aspects of ESG, from carbon emissions and energy use through to social impact, and is in the process of defining short and long-term targets to further improve best practice and efficiencies in achieving Net-Zero target and creating positive social impact. We are taking our responsibilities seriously and want to make a positive impact, not just because it is the right thing to do for our business but also because we believe it results in a competitive advantage for us.
Share Buybacks
The Board commenced a share buyback programme in September 2022 and has to date bought c.1m shares (representing 0.95% of the issued share capital) at a cost of c. £0.83m. With the continued discount between our current share price and NAV per share of around 45%, the Board believes it should keep open the option of further share buybacks to deliver value, but is also conscious of maintaining prudent gearing levels. The Board believes share buybacks are an efficient way of creating shareholder value, rather than dividends and as a result, no dividends are proposed on the back of these results.
Industry Issues
The hospitality industry is facing many challenges hampering its ability to move on from COVID-19. Generally, the pressures from these issues are beginning to abate with energy prices, whilst still much higher than before the start of the Ukrainian conflict, significantly reduced since we last reported in September 2022. With around 35% of our energy hedged over the next two years, the Company will benefit from these falling prices. In addition, the Company as a whole is focused on reducing energy usage as much as possible through installing energy saving equipment and encouraging best practice, especially in the pubs.
Food inflation has spiralled over the least 12 months eroding our food margins. We have tried to curtail price rises to remain competitive and deliver good value to our customers because we believe food is an integral part of our retail offer.
Labour costs have continually risen over recent years, with the minimum wage again increasing by 10% in April of this year. Staff shortages have been alleviated to a certain extent and we have benefitted from our weekly staff bonus which has been key in retaining and attracting staff. Hospitality needs constant access to a flexible, vibrant diverse workforce and we continue to urge and call upon the Government to grant 2- year work visas to Europeans. This access would enable businesses like ours to grow with more confidence in the future.
Our estate has now been re-valued, as of April 2023, for business rates purposes with the quantum payable remaining about the same. However, the Group firmly believes that business rates should be more focused on what the businesses generate in terms of sales, and not where it's located. Pubs are important part of the community and should not be taxed unfairly just because they provide a service to our loyal local customers in our cities.
Outlook
Overall, the Board is pleased with the progress the business has made in the last 12 months. The Group has weathered the storm and it is for the first time in 3 years that we are able to adopt a more ambitious approach. Like for like sales for FY2023 to date are up by 13%.
The Group remains in a very strong financial position - its bank borrowings are historically low and because of the freehold nature of the estate, its operational gearing remains low too.
Following significant change over the last three years, Head Office has been revitalised with an enthusiastic and ambitious team who will drive future growth. The Mosaic acquisition gives us further scale with more than 50 sites trading, the highest number the Group has ever had.
The platform has been created for expansion when the time is right. The pub estate is now fully refurbished - the focus can now be on primarily organic growth as we continue to increase our optimisation of capacity. There are a number of further acquisition opportunities which we are evaluating and should they meet our strict criteria, price expectations and maintenance of a strong balance sheet, we will continue growing our estate.
I would like to thank everyone - our pub employees, our head office team, our customers, our shareholders, Barclays Bank, our advisors, and everyone else who has played their part in helping City Pub Group become a premium pub retailer with ambition and a positive approach to the future. I would also like to thank my Board of Directors who have been incredibly supportive in very challenging circumstances in which the whole pub industry has been facing.
If we can achieve the organic growth and acquire new pubs at the right price, I am confident of strong progress in both the short and medium term. For the first time in 3 years, I am confident about crystallising enhancement of shareholder value. The Company is now in the best shape it's ever been in.
Clive Watson
Executive Chairman
17 April 2023
Consolidated statement of profit or loss
for the 52 week period ended 25 December 2022 (2021: for the 52 week period ended 26 December 2021)
|
|
|
2022 |
2021 |
|
|
Notes |
£'000 |
£'000 |
|
Revenue |
4 |
57,793 |
35,364 |
|
Cost of sales |
|
(14,063) |
(8,273) |
|
Gross profit |
|
43,730 |
27,091 |
|
Other operating income |
4a |
239 |
5,084 |
|
Administrative expenses |
|
(42,542) |
(35,126) |
|
Operating profit/(loss) |
5 |
1,427 |
(2,951) |
|
|
|
|
|
|
Reconciliation to adjusted EBITDA* |
|
|
|
|
Operating profit/(loss) |
|
1,427 |
(2,951) |
|
|
|
|
|
|
Depreciation |
5 |
5,174 |
4,881 |
|
Share option charge |
28 |
1,042 |
703 |
|
Exceptional items |
8 |
2,439 |
3,288 |
|
* Adjusted earnings before exceptional items, share option charge, interest, taxation and depreciation |
|
10,082 |
5,921 |
|
|
|
|
|
|
Share of losses of associates and joint ventures |
15 |
(157) |
(78) |
|
Other financial items |
15 |
- |
943 |
|
Finance costs |
6 |
(1,054) |
(1,041) |
|
Profit/(loss) before tax |
|
216 |
(3,127) |
|
Tax credit |
7 |
735 |
259 |
|
Profit/(loss) for the period |
|
951 |
(2,868) |
|
|
|
|
|
|
Earnings per share |
|
|
|
|
Basic earnings per share (p) |
10 |
0.92 |
(2.76) |
|
Diluted earnings per share (p) |
10 |
0.89 |
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 25 December 2022 (2021: for the 52 week period ended 26 December 2021)
|
|
|
2022 |
2021 |
|
|
Notes |
£'000 |
£'000 |
|
Profit/(loss) for the period |
|
951 |
(2,868) |
|
|
|
|
|
|
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 |
(494) |
18 |
|
Income tax relating to these items |
|
123 |
(3) |
|
Other comprehensive income for the period, net of tax |
|
(371) |
15 |
|
|
|
|
|
|
Total comprehensive income for the period |
|
580 |
(2,853) |
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 25 December 2022 (2021: as at 26 December 2021)
|
|
|
2022 |
2021 |
|
|
Notes |
£'000 |
£'000 |
|
Assets |
|
|
|
|
Non-current |
|
|
|
|
Intangible assets |
11 |
2,450 |
2,250 |
|
Property, plant and equipment |
12 |
99,065 |
107,367 |
|
Right-of-use assets |
13 |
17,565 |
17,875 |
|
Deferred tax assets |
23 |
1,843 |
1,018 |
|
Financial assets at fair value through OCI |
14 |
386 |
254 |
|
Investments in associates & joint ventures |
15 |
6,004 |
4,248 |
|
Total non-current assets |
|
127,313 |
133,012 |
|
Current |
|
|
|
|
Inventories |
17 |
1,152 |
1,048 |
|
Trade and other receivables |
18 |
3,659 |
3,331 |
|
Cash and cash equivalents |
|
4,121 |
12,510 |
|
Total current assets |
|
8,932 |
16,889 |
|
Total assets |
|
136,245 |
149,901 |
|
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
19 |
(13,931) |
(12,214) |
|
Financial liabilities - lease liabilities |
13 |
(1,915) |
(1,912) |
|
Total current liabilities |
|
(15,846) |
(14,126) |
|
Non-current |
|
|
|
|
Borrowings |
20 |
(7,657) |
(24,750) |
|
Financial liabilities - lease liabilities |
13 |
(16,674) |
(16,473) |
|
Deferred tax liabilities |
23 |
(2,445) |
(2,464) |
|
Total non-current liabilities |
|
(26,776) |
(43,687) |
|
Total liabilities |
|
(42,622) |
(57,813) |
|
Net assets |
|
93,623 |
92,088 |
|
Equity |
|
|
|
|
Share capital |
24 |
31,276 |
31,276 |
|
Share premium |
24 |
59,475 |
59,475 |
|
Own shares |
24 |
(3,359) |
(3,272) |
|
Other reserve |
25 |
2,855 |
2,184 |
|
Retained earnings |
24 |
3,376 |
2,425 |
|
Total equity |
|
93,623 |
92,088 |
The notes form part of these financial statements.
Approved by the Board and authorised for issue on 17 April 2023.
Clive Watson Holly Elliott
Chairman Chief Financial Officer
Company No. 07814568
Company statement of financial position
as at 25 December 2022 (2021: as at 26 December 2021)
|
|
|
2022 |
2021 |
|
|
Notes |
£'000 |
£'000 |
|
Assets |
|
|
|
|
Non-current |
|
|
|
|
Intangible assets |
11 |
2,450 |
2,250 |
|
Property, plant and equipment |
12 |
99,065 |
107,367 |
|
Right-of-use assets |
13 |
17,565 |
17,875 |
|
Deferred tax assets |
23 |
1,723 |
1,018 |
|
Financial assets at fair value through OCI |
14 |
71 |
71 |
|
Investments in associates & joint ventures |
15 |
6,004 |
4,248 |
|
Investments in subsidiaries |
16 |
801 |
801 |
|
Total non-current assets |
|
127,679 |
133,630 |
|
Current |
|
|
|
|
Inventories |
17 |
1,152 |
1,048 |
|
Trade and other receivables |
18 |
4,045 |
3,496 |
|
Cash and cash equivalents |
|
4,121 |
12,510 |
|
Total current assets |
|
9,318 |
17,054 |
|
Total assets |
|
136,997 |
150,684 |
|
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
19 |
(14,732) |
(13,015) |
|
Financial liabilities - lease liabilities |
13 |
(1,915) |
(1,912) |
|
Total current liabilities |
|
(16,647) |
(14,927) |
|
Non-current |
|
|
|
|
Borrowings |
20 |
(7,657) |
(24,750) |
|
Financial liabilities - lease liabilities |
13 |
(16,674) |
(16,473) |
|
Deferred tax liabilities |
23 |
(2,445) |
(2,461) |
|
Total non-current liabilities |
|
(26,776) |
(43,684) |
|
Total liabilities |
|
(43,423) |
(58,611) |
|
Net assets |
|
93,574 |
92,073 |
|
Equity |
|
|
|
|
Share capital |
24 |
31,276 |
31,276 |
|
Share premium |
24 |
59,475 |
59,475 |
|
Own shares |
24 |
(3,359) |
(3,272) |
|
Share-based payment reserve |
24 |
3,119 |
2,077 |
|
Retained earnings |
24 |
3,063 |
2,517 |
|
Total equity |
|
93,574 |
92,073 |
The profit for the financial period of the Parent Company, The City Pub Group plc was £546,000 (2021: loss £2,868,000). The notes form part of these financial statements. Approved by the Board and authorised for issue on 17 April 2023.
Clive Watson Holly Elliott
Chairman Chief Financial Officer
Company No. 07814568
Consolidated statement of changes in equity
for the 52 week period ended 25 December 2022
|
|
Notes |
Share capital |
Share premium |
Own Shares (note 24) |
Other Reserves (note 25) |
Retained earnings |
Total |
|
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 |
|
|
|
|
|
|
|
|
|
|
Employee share-based compensation |
28 |
- |
- |
- |
1,042 |
- |
1,042 |
|
Purchase of own shares |
24 |
- |
- |
(87) |
- |
- |
(87) |
|
Transactions with owners |
|
- |
- |
(87) |
1,042 |
- |
955 |
|
|
|
|
|
|
|
|
|
|
Profit for the period |
|
- |
- |
- |
- |
951 |
951 |
|
Other comprehensive income |
|
- |
- |
- |
(371) |
- |
(371) |
|
Total comprehensive income for the period |
|
- |
- |
- |
(371) |
951 |
580 |
|
|
|
|
|
|
|
|
|
|
Balance at 25 December 2022 |
|
31,276 |
59,475 |
(3,359) |
2,855 |
3,376 |
93,623 |
The notes form part of these financial statements.
Company statement of changes in equity
for the 52 week period ended 25 December 2022
|
|
Notes |
Share capital |
Share premium |
Own shares (note 24) |
Other Reserves (note 25) |
Retained earnings |
Total |
|
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 |
|
|
|
|
|
|
|
|
|
|
Employee share-based compensation |
28 |
- |
- |
- |
1,042 |
- |
1,042 |
|
Purchase of own shares |
24 |
- |
- |
(87) |
- |
- |
(87) |
|
Transactions with owners |
|
- |
- |
(87) |
1,042 |
- |
955 |
|
|
|
|
|
|
|
|
|
|
Profit for the period |
|
- |
- |
- |
- |
546 |
546 |
|
Total comprehensive income for the period |
|
- |
- |
- |
- |
546 |
546 |
|
|
|
|
|
|
|
|
|
|
Balance at 25 December 2022 |
|
31,276 |
59,475 |
(3,359) |
3,119 |
3,403 |
93,574 |
The notes form part of these financial statements
Consolidated statement of cash flows
for the 52 week period ended 25 December 2022 (2021: for the 52 week period ended 26 December 2021)
|
|
|
2022 |
2021 |
|
|
Notes |
£'000 |
£'000 |
|
Cash flows from operating activities |
|
|
|
|
Profit/(loss) for the period |
|
951 |
(2,868) |
|
Taxation |
7 |
(735) |
(259) |
|
Finance costs |
6 |
1,054 |
1,041 |
|
Result from equity accounted investment |
15 |
157 |
78 |
|
Other financial items |
15 |
- |
(943) |
|
Operating profit/(loss) |
|
1,427 |
(2,951) |
|
Adjustments for: |
|
|
|
|
Depreciation |
5 |
5,174 |
4,881 |
|
(Gain)/loss on disposal of property, plant & equipment |
|
(58) |
125 |
|
Share-based payment charge |
28 |
1,042 |
703 |
|
Impairment |
12 |
627 |
3,690 |
|
Change in inventories |
|
(104) |
(345) |
|
Change in trade and other receivables |
|
(668) |
(571) |
|
Change in trade and other payables |
|
1,723 |
3,800 |
|
Cash generated from operations |
|
9,163 |
9,332 |
|
Tax (paid) received |
|
53 |
651 |
|
Net cash generated from operating activities |
|
9,216 |
9,983 |
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Purchase of property, plant and equipment |
12 |
(10,262) |
(5,493) |
|
Acquisition of new property sites |
|
(2,045) |
(1,600) |
|
Purchase of investments and associates |
14&15 |
(2,539) |
(2,309) |
|
Proceeds from disposal of property, plant and equipment |
|
16,977 |
2,163 |
|
Net cash generated from/used in investing activities |
|
2,131 |
(7,239) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Proceeds from issue of share capital |
24 |
- |
73 |
|
Purchase of own shares |
|
(87) |
- |
|
Repayment of borrowings |
|
(17,169) |
(91) |
|
Principal element of lease payments |
|
(1,362) |
(1,416) |
|
Interest paid (includes implied interest under IFRS16) |
6 |
(1,118) |
(1,131) |
|
Net cash used in financing activities |
|
(19,736) |
(2,565) |
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
(8,389) |
179 |
|
Cash and cash equivalents at the start of the period |
|
12,510 |
12,331 |
|
Cash and cash equivalents at the end of the period |
|
4,121 |
12,510 |
The notes form part of these financial statements
Company statement of cash flows
for the 52 week period ended 25 December 2022 (2021: for the 52 week period ended 26 December 2021)
|
|
|
2022 |
2021 |
|
|
Notes |
£'000 |
£'000 |
|
Cash flows from operating activities |
|
|
|
|
Profit/(loss) for the period |
|
546 |
(2,868) |
|
Taxation |
|
(735) |
(259) |
|
Finance costs |
|
1,054 |
1,041 |
|
Result from equity accounted investment |
15 |
157 |
78 |
|
Other financial items |
15 |
- |
(943) |
|
Operating profit/(loss) |
|
1,022 |
(2,951) |
|
Adjustments for: |
|
|
|
|
Depreciation |
5 |
5,174 |
4,881 |
|
(Gain)/loss on disposal of property, plant and equipment |
|
(58) |
125 |
|
Share-based payment charge |
28 |
1,042 |
703 |
|
Impairment |
|
627 |
3,690 |
|
Change in inventories |
|
(104) |
(345) |
|
Change in trade and other receivables |
|
(889) |
(735) |
|
Change in trade and other payables |
|
1,723 |
3,800 |
|
Cash generated from operations |
|
8,537 |
9,168 |
|
Tax paid |
|
53 |
651 |
|
Net cash generated from operating activities |
|
8,590 |
9,819 |
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Purchase of property, plant and equipment |
12 |
(10,262) |
(5,493) |
|
Acquisition of new property sites |
|
(2,045) |
(1,600) |
|
Purchase of investments and associates |
14&15 |
(1,913) |
(2,145) |
|
Proceeds from disposal of property, plant and equipment |
|
16,977 |
2,163 |
|
Net cash generated from/used in investing activities |
|
2,757 |
(7,075) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Proceeds from issue of share capital |
|
- |
73 |
|
Purchase of own shares |
|
(87) |
- |
|
Repayment of borrowings |
|
(17,169) |
(91) |
|
Principal element of lease payments |
|
(1,362) |
(1,416) |
|
Interest paid |
|
(1,118) |
(1,131) |
|
Net cash used in financing activities |
|
(19,736) |
(2,565) |
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
(8,389) |
179 |
|
Cash and cash equivalents at the start of the period |
|
12,510 |
12,331 |
|
Cash and cash equivalents at the end of the period |
|
4,121 |
12,510 |
The notes form part of these financial statements.
Notes to the financial statements
for the 52 week period ended 25 December 2022 (2021: for the 52 week period ended 26 December 2021)
1 Company information
The financial statements of The City Pub Group plc (as consolidated "the Group") for the 52 week period ended 25 December 2022 were authorised for issue in accordance with a resolution of the directors on 17 April 2023. 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. Judgements made by the directors in the application of these accounting policies have been discussed in note 3.
Exemption from audit
For the period ended 25 December 2022 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
The financial statements have been prepared on an accruals basis and under the historical cost convention, unless otherwise stated. There is no material difference between the fair value of financial assets and liabilities and their carrying amount.
The Company undertook a common control combination before listing on AIM. These consolidated financial statements have been prepared using the predecessor value method, which is described in 2.4 below.
The financial statements are presented in Great British Pounds and all values are rounded to the nearest thousand pounds except when otherwise indicated.
As permitted by section 408 of the Companies Act 2006, no separate income statement is presented in respect of the Parent Company.
2.2 Statement of Compliance
The financial statements of the Company and Group are prepared in accordance with applicable International Accounting Standards in conformity with the requirements of the Companies Act 2006 and in accordance with International Financial Reporting Standards as adopted by the United Kingdom ("Adopted IFRS").
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 27 December 2021:
· COVID-19-related Rent Concessions beyond 30 June 2021 (Amendments to IFRS 16); and
· Interest Rate Benchmark Reform Phase 2 - Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.
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.
· 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
· Sale or contribution of assets between an investor and its associate or joint venture - Amendments to IFRS 10 and IAS 28.
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 has a £35m revolving credit facility (RCF) with Barclays Bank plc with an accordion option of another £15m. This facility matures in July 2024. The Group is operating comfortably within their banking covenants and we will be renewing our bank facilities on a longer term basis in the near future. At period end we had £8m of debt, and £4m of net debt, with £27m undrawn on our RCF and £15m of accordion.
Barclays replaced The City Pub Group plc's RCF's existing financial covenants with a Minimum Liquidity Test plus an additional Minimum EBITDA Test to be tested on a monthly basis. After June 2022 the original financial covenants recommenced. The Group has been operating within the covenants comfortably and the forecasts for the business show substantial headroom.
The Group continues to be EBITDA and cashflow generative, with funding only required for new acquisitions.
Although there are cost pressures with wage inflation, rising energy prices and upward pressure on commodities, we continue to lock in procurement contracts, optimise staffing and implement energy reducing initiatives. Energy prices have softened into 2023 and by flexibly trading we've avoided being impacted by spiking prices over 2022.
When making our assessment of going concern, we have assumed that trading reverts to pre COVID-19 levels.
Based on the current financial projections extended to 12 months from the date of approval of the financial statements and having considered the facilities available, together with potential sensitivities to changes in levels of trade based on current economic factors e.g. energy costs and inflation 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 has identified certain measures that it believes will assist the understanding of the performance of the business. These APMs are not defined or specified under the requirements of IFRS. The Group believes that these APMs, which are not considered to be a substitute for, or superior to, IFRS measures, provide stakeholders with additional useful information on the underlying trends, performance and position of the Group and are consistent with how business performance is measured internally.
The Group's APMs are: like for like revenue growth/(decline), Adjusted EBITDA (Pre-IFRS) and net cash/(debt).
The Directors use Adjusted EBITDA as a primary KPI in managing the business. This measure excludes exceptional items, share option expenses and site pre-opening costs and applies pre-IFRS 16 treatment of leases. The Directors believe this measure gives a more relevant indication of underlying trading performance of the Group.
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 periods 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.
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 period, 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 periods. 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 period.
Share repurchases
Where shares are repurchased wholly out of the proceeds of a fresh issue of shares made for that purpose, no amount needs to be transferred to a capital redemption reserve as there is no reduction in capital as a result of the purchase and issue of shares.
2.13 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 period 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 period 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.
2.16 Investments in associates and joint ventures
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.
Investments in joint ventures are accounted for using the equity method, after initially being recognised at cost in the consolidated statement of financial position. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the group's share of the post-acquisition profits or losses of the investee in profit or loss, and the group's share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from joint ventures are recognised as a reduction in the carrying amount of the investment.
Where the group's share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.
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. These are recognised on an accruals basis and there were no unfulfilled conditions attached to the grants.
2.23 Treasury shares
Where the Company purchases the Company's own equity instruments, for example as the result of a share buy-back or a share-based payment plan, the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the owners of The City Pub Group plc, as treasury shares until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transactions costs and the related income tax effects, is included in equity attributable to the owners of The City Pub Group plc.
3 Significant judgements and estimates
The judgements, which are considered to be significant, are as follows:
Acquisitions
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.
Performance review
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.
Structure
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:
Impairment
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. Goodwill as at 25 December 2022 was £2,450,000 (2021: £2,250,000).
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). As at 25 December 2022, the carrying value of property, plant and equipment and right of use assets were £99,065,000 (2021: £107,367,000) and £17,565,000 (2021: £17,875,000) respectively. The pre-tax weighted average cost of capital, used as the discount rate, was 10% (2021: 10%).
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 IBR used to discount the future minimum lease payments, during the period ended 25 December 2022, ranged from 3.0% to 3.7% (2021: 3.0% to 3.7%).
Share-based payment
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.
Deferred tax asset
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.
Useful economic lives of property, plant and equipment
The depreciation charge is dependent on the assumptions used regarding the useful economic lives of assets.
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.
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
Revenue |
57,793 |
35,364 |
|
Cost of sales |
(14,063) |
(8,273) |
|
Gross profit |
43,730 |
27,091 |
|
Other operating income before adjusting items (note 4(a)) |
239 |
4,084 |
|
Operating expenses: |
|
|
|
Operating expenses before adjusting items |
(33,887) |
(25,254) |
|
Adjusted non-GAAP EBITDA |
10,082 |
5,921 |
|
Depreciation |
(5,174) |
(4,881) |
|
Share option charge |
(1,042) |
(703) |
|
Exceptional items - operating expenses |
(2,439) |
(4,288) |
|
Total operating expenses |
(42,542) |
(35,126) |
|
Exceptional items - other operating income (note 4(a)) |
- |
1,000 |
|
Operating profit/(loss) |
1,427 |
(2,951) |
(a) Other operating income
During 2020 the Group 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.
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
Coronavirus Job Retention Scheme |
- |
2,972 |
|
Other government grants |
239 |
1,112 |
|
Insurance claim (exceptional item note 8) |
- |
1,000 |
|
Total other operating income |
239 |
5,084 |
5 Profit/(loss) on ordinary activities before taxation
The profit/(loss) on ordinary activities before taxation is stated after charging/(crediting):
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
Costs of inventories recognised as an expense |
14,063 |
5,502 |
|
Staff costs (note 26) |
21,461 |
18,691 |
|
Depreciation |
5,174 |
4,881 |
|
Fees payable to the company's auditor for the audit of the company's financial statements |
72 |
65 |
|
Exceptional items - non-GAAP (note 8) |
2,439 |
3,288 |
|
Operating leases - land and buildings |
(97) |
(266) |
Rent concessions relating to COVID-19 of £nil (2021: £178,000) have been recognised within this balance for 2022.
6 Interest payable and similar charges
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
On bank loans and overdrafts |
481 |
475 |
|
Interest and finance charges for lease liabilities |
637 |
656 |
|
Interest expense capitalised within property, plant & equipment |
(64) |
(90) |
|
Total finance cost |
1,054 |
1,041 |
During the period £64,000 of interest was capitalised (2021: £90,000).
7 Tax charge on profit/(loss) on ordinary activities
(a) Analysis of tax charge for the period
The tax charge for the Group is based on the profit/(loss) for the period and represents:
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
Current income tax: |
|
|
|
Current income tax charge |
- |
- |
|
Adjustments in respect of previous period |
(14) |
(24) |
|
Total current income tax |
(14) |
(24) |
|
Deferred tax: |
|
|
|
Origination and reversal of temporary differences (note 23) |
(16) |
280 |
|
Adjustment to deferred tax asset on tax losses (note 23) |
(705) |
(515) |
|
Total deferred tax |
(721) |
(235) |
|
Total tax |
(735) |
(259) |
(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% (2021: 19.00%). The differences are explained as follows:
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
Profit/(loss) on ordinary activities before tax |
216 |
(3,127) |
|
|
|
|
|
Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the United Kingdom of 19.00% (2021: 19.00%) |
41 |
(594) |
|
Effect of: |
|
|
|
Temporary differences |
(317) |
265 |
|
Items not deductible for tax purposes |
400 |
95 |
|
Adjustment in respect of previous periods |
(274) |
(24) |
|
Previously unrecognised tax losses |
(474) |
- |
|
Change in corporation tax rate |
(111) |
- |
|
Share options tax deduction |
- |
(1) |
|
Total tax credit |
(735) |
(259) |
The deferred tax asset included in the balance sheet of £1,843,000 (2021: £1,018,000) 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. In March 2021 a change to the future corporation tax rate was substantively enacted to increase from 19% to 25% from 1 April 2023. Accordingly, the rate used to calculate the deferred tax balances at 25 December 2022 is 25% (2021: 25%) as the timing of the release of this asset is materially expected to be after this date.
8 Exceptional items (non-GAAP)
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
Pre opening costs |
575 |
37 |
|
Impairment of pub sites |
627 |
3,690 |
|
Insurance claim |
- |
(1,000) |
|
Site disposals |
962 |
- |
|
Other non recurring items |
275 |
561 |
|
|
2,439 |
3,288 |
The non-GAAP Exceptional items for both financial periods 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 as the Directors believe share buybacks are an efficient way of creating shareholder value (2021: £nil)
Dividends not recognised at the end of the reporting period
Since the period end, the Directors are not proposing a dividend and have continued with the share buyback programme post period end (2021: nil).
10 Earnings/(loss) per share
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
Earnings/(loss) for the period attributable to Shareholders |
951 |
(2,868) |
|
|
|
|
|
Earnings/(loss) per share: |
|
|
|
Basic earnings/loss per share (p) |
0.92 |
(2.76) |
|
Diluted earnings per share (p) |
0.89 |
n/a |
|
|
|
|
|
Weighted average number of shares: |
Number of shares |
Number of shares |
|
Weighted average shares for basic EPS |
103,845,560 |
103,795,354 |
|
Effect of share options in issue |
3,524,886 |
n/a |
|
Weighted average shares for diluted earnings per share |
107,370,446 |
n/a |
Own shares held by the City Pub Group plc Joint Share Ownership Plan ("JSOP") or held in Treasury, which have waived their entitlement to receive dividends, are treated as cancelled for the purpose of this calculation.
For the 52 week period ended 26 December 2021, 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
|
|
2022 |
2021 |
|
Group and Company |
£'000 |
£'000 |
|
Cost brought forward |
4,246 |
4,196 |
|
Additions |
200 |
50 |
|
Disposal |
(1,224) |
- |
|
At end of period |
3,222 |
4,246 |
|
Amortisation/impairment brought forward |
(1,996) |
(914) |
|
Impairment provided during the period |
- |
(1,082) |
|
Disposal |
1,224 |
- |
|
At end of period |
(772) |
(1,996) |
|
|
|
|
|
Net book value at end of period |
2,450 |
2,250 |
|
Net book value at start of period |
2,250 |
3,282 |
The carrying value of goodwill included within the Group and Company statement of financial position is £2,450,000 (2021: £2,250,000), which is allocated to the cash-generating unit ("CGU") of groupings of public houses as follows:
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
Freehold |
1,574 |
1,374 |
|
Leasehold |
876 |
876 |
|
|
2,450 |
2,250 |
The CGU 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 25 December 2022 impairments have been made against one site, as described further in note 12, with no 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 25 December 2022, the cash-generating unit recoverable amount was determined based on value-in-use calculations, using cash flow projections based on one year budgets, extrapolated into perpetuity for freehold properties and for the length of the lease for leasehold properties, with key assumptions for both CGU's being the long-term growth rate of 2% and pre-tax discount rate of 10%. Cash flows for the businesses are based on management forecasts, which are approved by the Board and reflect management's expectations of sales growth, operating costs and margin based on past experience and anticipated changes in the local market places.
Sensitivity to changes in key assumptions: impairment testing is dependent on management's estimates and judgements, in particular in relation to the forecasting of future cash flows, the long-term growth rate and the discount rate applied to the cash flows.
Lowering the discount rate by 1% from 10% to 9% would have the effect of reducing the impairment charge by £10k to £617k. An increase in the discount rate to 11% would result in the impairment charge increasing by £10k to £637k.
Lowering the long term growth rate used from 2% to 1% would result in an increase in the impairment charge of £6k to £633k. A higher growth rate of 3% would result in the impairment charge reducing by £7k to £620k.
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.
12 Property, plant and equipment
|
|
Freehold & leasehold property |
Fixtures fittings and computers |
Total |
|
Group and Company |
£'000 |
£'000 |
£'000 |
|
Cost |
|
|
|
|
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 |
|
Additions |
1,527 |
8,799 |
10,326 |
|
Acquisitions |
1,395 |
450 |
1,845 |
|
Disposals |
(17,705) |
(3,785) |
(21,490) |
|
At 25 December 2022 |
81,829 |
40,411 |
122,240 |
|
|
|
|
|
|
Depreciation |
|
|
|
|
At 27 December 2020 |
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 |
|
Provided during the period |
735 |
2,896 |
3,631 |
|
Impairment |
189 |
47 |
236 |
|
Disposals |
(2,107) |
(2,777) |
(4,884) |
|
At 25 December 2022 |
4,824 |
18,351 |
23,175 |
|
|
|
|
|
|
Net book value |
|
|
|
|
At 25 December 2022 |
77,005 |
22,060 |
99,065 |
|
At 26 December 2021 |
90,605 |
16,762 |
107,367 |
|
At 27 December 2020 |
91,408 |
17,165 |
108,573 |
During the period ended 25 December 2022 the group made a provision for impairment against one site totalling £627,000, split £189,000 against freehold & leasehold property, £47,000 against fixtures and fittings and £391,000 against right of use assets. During the period ended 26 December 2021 the group made a provision for impairment against a number of sites totaling £3,690,000, split £1,082,000 against goodwill, £967,000 against freehold & leasehold property, £1,582,000 against fixtures and fittings and £59,000 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 25 December 2022 the group capitalised £64,000 (2021: £90,000) 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:
|
|
2022 |
2021 |
|
Group and Company |
£'000 |
£'000 |
|
Right-of-use assets |
|
|
|
Net book value at start of period |
17,875 |
19,565 |
|
Additions |
3,568 |
1,192 |
|
Disposals |
(1,944) |
(1,232) |
|
Impairment |
(391) |
(59) |
|
Depreciation |
(1,543) |
(1,591) |
|
Total |
17,565 |
17,875 |
|
|
|
|
|
Lease liabilities - see note 20 |
|
|
|
Current |
1,915 |
1,912 |
|
Non-current |
16,674 |
16,473 |
|
Total |
18,589 |
18,385 |
Additions to the right-of-use assets during the 2022 financial period were £3,568,000 (2021: £1,192,000). 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 £nil (2021: £178,000). 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.
Details of the maturity analysis of the leases is provided in note 21 and reconciliation of the lease liabilities from prior period is provided within note 20.
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:
|
|
2022 |
2021 |
|
Group and Company |
£'000 |
£'000 |
|
Depreciation charge |
|
|
|
Leasehold Properties |
1,543 |
1,591 |
|
|
|
|
|
Interest expense (included in finance cost) |
637 |
656 |
The total cash outflow for leases in 2022 was £1,999,000 (2021: £2,071,000), see note 20.
14 Financial assets at fair value through Other Comprehensive income
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
At start of period |
254 |
1,309 |
71 |
1,309 |
|
Additions |
626 |
916 |
- |
751 |
|
Transfer to Associates (note 15) |
- |
(1,239) |
- |
(1,239) |
|
Disposals/repayments |
- |
(750) |
- |
(750) |
|
Revaluations |
(494) |
18 |
- |
- |
|
At end of period |
386 |
254 |
71 |
71 |
During the period the group made additional smaller strategic equity investments, which have been designated as fair value through other comprehensive income. Investments, totalling £627,000 (2021: £165,000), were made through a subsidiary company rather than being held directly by the parent company.
The Company acquired an initial 14% stake in the Mosaic Companies in September 2020 for £1.2m. During the period 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 £1.2m. 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.
15 Investments in associates and joint ventures
|
|
2022 |
2021 |
|
Associates - Group and Company |
£'000 |
£'000 |
|
|
|
|
|
Aggregate carrying amount of associated at the start of the period |
4,248 |
- |
|
|
|
|
|
Additions in the period |
1,763 |
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 associates |
(114) |
(78) |
|
Total comprehensive income |
(114) |
(78) |
|
|
|
|
|
Aggregate carrying amount of associates at the end of the period |
5,897 |
4,248 |
The Group has recognised its share of the Associate's operating losses during the period since ownership.
As noted in note 15, during the prior 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. During the period ended 25 December 2022 the Group participated in additional fund raisings, totalling £1,738,000, resulting in a stake of 35.9% at the period end.
The Mosaic Companies own nine prominent pubs, predominantly in London and Birmingham, of which seven are freehold.
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.
All of the investments in associates were equity accounted for during the year ended 25 December 2022 and relate to companies incorporated within the United Kingdom. The investments at cost in each Associate, as at 25 December 2022, is as follows: The Galaxy (City) Pub Company Limited £1,683,400; The Pioneer (City) Pub Company Limited £1,683,300; The Sovereign (City) Pub Company Limited £1,683,300, Barts Pub Ltd £683,000; and Bupp Ltd £163,000.
For the majority of the prior period, 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.
During the period ended 25 December 2022 the Group invested £150,000 in a joint venture.
|
|
2022 |
2021 |
|
Joint Ventures - Group and Company |
£'000 |
£'000 |
|
|
|
|
|
Additions in the period |
150 |
- |
|
|
|
|
|
Aggregate amounts of the group's share of: |
|
|
|
Loss from continuing operations |
(43) |
- |
|
Total comprehensive income |
(43) |
- |
|
|
|
|
|
Aggregate carrying amount of joint ventures at the end of the period |
107 |
- |
|
|
|
|
|
Aggregate carrying amount of associates and joint ventures at the end of the period |
6,004 |
4,248 |
16 Investments in subsidiaries
|
|
2022 |
2021 |
|
Company |
£'000 |
£'000 |
|
At start of period |
801 |
1,067 |
|
Write-down of investment |
- |
(266) |
|
At end of period |
801 |
801 |
The investment in Flamequire was written down in the prior period as an application to strike off the entity was made in December 2021, which was concluded in March 2022.
The Company had the following subsidiary undertakings as at 25 December 2022:
|
Name of subsidiary |
Class of share held |
Country of incorporation |
Proportion held |
Nature of business |
|
The City Pub Company (West) Limited |
Ordinary |
England and Wales |
100% |
Dormant |
|
BNB Leisure Limited |
Ordinary |
England and Wales |
100% |
Dormant |
|
Gresham Collective Ltd |
Ordinary |
England and Wales |
100% |
Dormant |
|
Randall & Zacharia Limited |
Ordinary |
England and 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
|
|
2022 |
2021 |
|
Group and Company |
£'000 |
£'000 |
|
Finished goods and goods for resale |
1,152 |
1,048 |
There were no inventory write offs during the period ended 25 December 2022 nor in the period ended 26 December 2021.
18 Trade and other receivables
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Trade receivables |
163 |
674 |
163 |
674 |
|
Government grant receivables |
- |
- |
- |
- |
|
Corporation tax receivables |
130 |
170 |
130 |
170 |
|
Other receivables |
1,688 |
1,216 |
1,688 |
1,216 |
|
Amounts due from group undertakings |
- |
- |
386 |
165 |
|
Prepayments and accrued income |
1,678 |
1,271 |
1,678 |
1,271 |
|
|
3,659 |
3,331 |
4,045 |
3,496 |
Rent deposits are included within other receivables, greater than one year. They are at £319,000 (2021: £319,000). In addition the other receivables in 2021 include £300k of deferred consideration relating to the disposal of The Island, Kensal Rise, which is payable over 4 years. The Group held no collateral against these receivables at the balance sheet dates. The Directors consider that the carrying value of receivables are recoverable in full and that any expected credit losses are immaterial.
19 Current trade and other payables
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Trade payables |
5,870 |
4,188 |
5,870 |
4,188 |
|
Corporation taxation |
- |
- |
- |
- |
|
Other taxation and social security |
2,664 |
1,498 |
2,664 |
1,498 |
|
Amounts due to group undertakings |
- |
- |
801 |
801 |
|
Accruals |
3,072 |
5,062 |
3,072 |
5,062 |
|
Other payables |
2,325 |
1,466 |
2,325 |
1,466 |
|
|
13,931 |
12,214 |
14,732 |
13,015 |
Included within Other taxation and social security is £nil (2021: £nil), which is due to be repaid greater than one year.
20 Borrowings and lease liabilities
|
|
2022 |
2021 |
|
Group and Company |
£'000 |
£'000 |
|
Current borrowings and financial liabilities: |
|
|
|
Lease liabilities |
1,915 |
1,912 |
|
|
|
|
|
Non-current borrowings and financial liabilities: |
|
|
|
Bank loans |
7,657 |
24,750 |
|
Lease liabilities |
16,674 |
16,473 |
|
|
24,331 |
41,223 |
At 25 December 2022 a revolving credit facility of £35,000,000 with £7,657,000 drawn (2021: £35,000,000 with £24,750,000 drawn) 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 prior period 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 |
|
|
£'000 |
£'000 |
£'000 |
|
At 26 December 2021 |
24,750 |
- |
24,750 |
|
Cash flows: |
|
|
|
|
Repayment |
(17,000) |
- |
(17,000) |
|
Non-cash items: |
|
|
|
|
Amortisation of loan arrangement fees |
(93) |
- |
(93) |
|
At 25 December 2022 |
7,657 |
- |
7,657 |
|
|
Long-term |
Short-term |
|
|
|
Borrowings |
Borrowings |
Total |
|
|
£'000 |
£'000 |
£'000 |
|
At 27 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 |
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 |
|
|
£'000 |
£'000 |
£'000 |
|
At 26 December 2021 |
16,473 |
1,912 |
18,385 |
|
Cash flows: |
|
|
|
|
Repayments |
- |
(1,999) |
(1,999) |
|
Accrued interest |
- |
637 |
637 |
|
Non-cash items: |
|
|
|
|
Additions |
3,568 |
- |
3,568 |
|
Disposals |
(2,002) |
- |
(2,002) |
|
Reclassification |
(1,365) |
1,365 |
- |
|
At 25 December 2022 |
16,674 |
1,915 |
18,589 |
|
|
Long-term |
Short-term |
|
|
|
Lease liabilities |
Lease liabilities |
Total |
|
|
£'000 |
£'000 |
£'000 |
|
At 27 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 |
21 Financial instruments and risk management
Financial instruments by category:
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Financial assets - loans and receivables |
|
|
|
|
|
Trade and other receivables |
1,851 |
1,890 |
1,851 |
1,890 |
|
Amounts owed by group undertakings |
- |
- |
386 |
165 |
|
Cash and cash equivalents |
4,121 |
12,510 |
4,121 |
12,510 |
|
|
5,972 |
14,400 |
6,358 |
14,565 |
Prepayments are excluded, as this analysis is required only for financial instruments.
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Non-current |
|
|
|
|
|
Borrowings |
7,657 |
24,750 |
7,657 |
24,750 |
|
Lease liabilities |
16,674 |
16,473 |
16,674 |
16,473 |
|
|
24,331 |
41,223 |
24,331 |
41,223 |
|
Current |
|
|
|
|
|
Current borrowings |
- |
- |
- |
- |
|
Lease liabilities |
1,915 |
1,912 |
1,915 |
1,912 |
|
Trade and other payables |
8,195 |
5,654 |
8,195 |
5,654 |
|
Amounts due to group undertakings |
- |
- |
801 |
801 |
|
|
10,110 |
7,566 |
10,911 |
8,367 |
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
|
|
2022 |
2021 |
|
Cash at bank and short-term deposits |
£'000 |
£'000 |
|
A1 |
4,091 |
12,210 |
|
Not rated |
30 |
300 |
|
|
4,121 |
12,510 |
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 £8,000,000 at period end (2021: £25,000,000) 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 25 December 2022, 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 period |
Equity |
||
|
|
+2% (2021: +1%) |
-2% (2021: -1%) |
+2% (2021: +1%) |
-2% (2021: -1%) |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
25 December 2022 |
(160) |
160 |
(160) |
160 |
|
26 December 2021 |
(250) |
250 |
(250) |
250 |
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.
|
|
|
Between |
Between |
|
|
|
Less than |
1 and 2 |
2 and 5 |
Over |
|
|
1 year |
years |
years |
5 years |
|
Group |
£'000 |
£'000 |
£'000 |
£'000 |
|
As at 25 December 2022: |
|
|
|
|
|
Borrowings |
- |
- |
7,657 |
- |
|
Lease liabilities |
1,915 |
1,930 |
5,498 |
14,833 |
|
Trade and other payables |
8,195 |
- |
- |
- |
|
|
|
|
|
|
|
As at 26 December 2021: |
|
|
|
|
|
Borrowings |
- |
- |
24,750 |
- |
|
Lease liabilities |
1,912 |
1,912 |
5,613 |
14,312 |
|
Trade and other payables |
5,654 |
- |
- |
- |
21 Financial instruments and risk management continued
|
|
|
Between |
Between |
|
|
|
Less than |
1 and 2 |
2 and 5 |
Over |
|
|
1 year |
years |
years |
5 years |
|
Company |
£'000 |
£'000 |
£'000 |
£'000 |
|
As at 25 December 2022: |
|
|
|
|
|
Borrowings |
- |
- |
7,657 |
- |
|
Lease liabilities |
1,915 |
1,930 |
5,498 |
14,833 |
|
Trade and other payables |
8,996 |
- |
- |
- |
|
|
|
|
|
|
|
As at 26 December 2021: |
|
|
|
|
|
Borrowings |
- |
- |
24,750 |
- |
|
Lease liabilities |
1,912 |
1,912 |
5,613 |
14,312 |
|
Trade and other payables |
6,455 |
- |
- |
- |
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.
During the period ended 27 December 2020 the Group acquired investments in other companies, which have been recognised at fair value in the prior period and at the current reporting date.
23 Deferred tax
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Provision for deferred tax liabilities |
|
|
|
|
|
Accelerated capital allowances |
1,308 |
1,324 |
1,308 |
1,324 |
|
Arising on revaluations |
- |
3 |
- |
- |
|
Arising on acquisition |
1,137 |
1,137 |
1,137 |
1,137 |
|
|
2,445 |
2,464 |
2,445 |
2,461 |
|
|
|
|
|
|
|
Provision at the start of the period |
2,464 |
2,181 |
2,461 |
2,181 |
|
Deferred tax charge through OCI |
(3) |
3 |
- |
- |
|
Deferred tax charge through profit or loss |
(16) |
280 |
(16) |
280 |
|
Provision at the end of the period |
2,445 |
2,464 |
2,445 |
2,461 |
|
|
|
|
|
|
|
|
Group |
Group |
Company |
Company |
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Deferred tax asset |
|
|
|
|
|
Arising on tax losses carried forward |
1,723 |
1,018 |
1,723 |
1,018 |
|
Arising on revaluations |
120 |
- |
- |
- |
|
|
1,843 |
1,018 |
1,723 |
1,018 |
|
|
|
|
|
|
|
Deferred tax asset at the start of the period |
1,018 |
503 |
1,018 |
503 |
|
Deferred tax credit through OCI |
120 |
- |
- |
- |
|
Deferred tax credit through profit or loss |
705 |
515 |
705 |
515 |
|
Deferred tax asset at the end of the period |
1,843 |
1,018 |
1,723 |
1,018 |
24 Share capital
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
Allotted called up and fully paid |
|
|
|
105,793,430 Ordinary shares of 1 pence each (2021: 105,793,430) |
1,058 |
1,058 |
|
3,021,770,759 Deferred shares of 1 pence each (2021: 3,021,770,759) |
30,218 |
30,218 |
|
Total |
31,276 |
31,276 |
There were no shares issued during the period ended 25 December 2022.
In the prior period the following share issues took place. In May 2021 the Group issued 22,500 £0.01 shares at a price of £1.00 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 £0.01 shares at a price of £1.156 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.
24 Share capital continued
The ordinary share capital account represents the amount subscribed for shares at nominal value.
|
|
£0.01 Ordinary shares Number |
£0.50 Ordinary shares Number |
Deferred shares Number |
|
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 and 25 December 2022 |
- |
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 (2021: no shares) in the Company were purchased during the period at a cost of £nil (2021: £nil).
At 25 December 2022 the JSOP held 1,925,000 ordinary shares in The City Pub Group plc (2021: 1,925,000).
At 25 December 2022 awards over 675,000 (2021: 675,000) ordinary shares The City Pub Group plc, made under the terms of the performance share plan, were outstanding.
Own shares held - Treasury shares
During the period ended 25 December 2022 the Group announced the launch of a share buyback programme of its ordinary shares of 1p each ("Ordinary Shares") up to an initial maximum value of £2 million worth of Ordinary Shares from the date of the announcement, on 5 October 2022, with the option to extend the Share Buyback Programme by an additional £1 million. The purchased Ordinary Shares will be held in Treasury. As at 25 December 2022 the Group held 128,365 shares in Treasury (2021: nil).
|
Group |
JSOP £'000 |
Treasury |
Total £'000 |
|
Balance at 27 December 2020 and 26 December 2021 |
(3,272) |
- |
(3,272) |
|
Additions in the period |
- |
(87) |
(87) |
|
Balance at 25 December 2022 |
(3,272) |
(87) |
(3,359) |
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").
Own shares (Treasury) represents shares in the Company purchased as part of the Group's share buyback programme.
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
|
Group |
Other reserve £'000 |
Share- payment based reserve £'000 |
Revaluation reserve £'000 |
Total £'000 |
|
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 |
|
Employee share-based compensation |
- |
1,042 |
- |
1,042 |
|
Transactions with owners |
- |
1,042 |
- |
1,042 |
|
Revaluation - gross |
- |
- |
(494) |
(494) |
|
Deferred tax on revaluation |
- |
- |
123 |
123 |
|
Total comprehensive income for the period |
- |
- |
(371) |
(371) |
|
Balance at 25 December 2022 |
92 |
3,119 |
(356) |
2,855 |
26 Staff costs
Number of employees
The average monthly numbers of employees (including salaried Directors) during the period were:
|
|
2022 |
2021 |
|
Management and Administration |
90 |
83 |
|
Operation of Public Houses |
963 |
879 |
|
|
1,053 |
962 |
|
|
|
|
|
Employment costs (including Directors) |
|
|
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
Wages and salaries |
18,803 |
16,701 |
|
Pension costs |
364 |
336 |
|
Social security costs |
1,450 |
951 |
|
Share based payments charge |
844 |
703 |
|
|
21,461 |
18,691 |
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 period (the Company consider that the Directors are their key management personnel):
|
|
Salary/Fees |
Taxable Benefits |
Pension/Other |
Compensation
for |
Total |
|||||||
|
|
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Clive Watson |
180 |
153 |
5 |
5 |
18 |
20 |
- |
- |
203 |
178 |
|
|
|
Rupert Clark |
180 |
153 |
9 |
9 |
19 |
21 |
- |
- |
208 |
183 |
|
|
|
Tarquin Williams |
23 |
135 |
1 |
2 |
15 |
23 |
144 |
- |
183 |
160 |
|
|
|
Toby Smith |
280 |
253 |
2 |
10 |
- |
- |
- |
- |
282 |
263 |
|
|
|
Holly Elliott |
220 |
18 |
- |
- |
3 |
- |
- |
- |
223 |
18 |
|
|
|
Richard Prickett |
55 |
48 |
- |
- |
- |
- |
- |
- |
55 |
48 |
|
|
|
John Roberts* |
- |
33 |
- |
- |
- |
34 |
- |
- |
- |
67 |
|
|
|
Neil Griffiths |
48 |
42 |
- |
- |
- |
- |
- |
- |
48 |
42 |
|
|
|
Emma Fox |
48 |
30 |
- |
- |
- |
- |
- |
- |
48 |
30 |
|
|
|
Total |
1,034 |
865 |
17 |
26 |
55 |
98 |
144 |
- |
1,250 |
989 |
|
|
*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:
|
|
2022 |
2021 |
|
|
£'000 |
£'000 |
|
Remuneration for qualifying services |
1,250 |
989 |
The highest paid Director in the period received remuneration of £282,000; (2021: £263,000). Four directors had equity settled share options in issue at the period end (2021: 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 25 December 2022 953,892 options were granted under the CSOP scheme (2021: 175,000 options granted), 1,000,000 options were granted under the Group's Long Term Incentive Plan (2021: 2,950,000 options granted); and no awards were made under the JSOP scheme (2021: no awards). A share-based payment charge of £1,042,000 (2021: £703,000) 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:
|
Period of grant |
2022 - CSOP |
2022 - LTIP |
|
Exercise price (£) |
0.90 |
- |
|
Number of awards granted |
953,892 |
1,000,000 |
|
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 |
2.216% |
2.239% |
|
Expected dividend yield |
1.40% |
1.00% |
|
Volatility |
30% |
27% |
|
Fair value (£) |
0.31 |
0.93 |
The volatility assumption above has been calculated based on the historical volatility of the Company's share price, over the relevant period.
Movements in share-based payments are summarised in the table below:
|
|
2022 Number of Awards |
2022 Weighted average exercise price £ |
2021 Number of Awards |
2021 Weighted average exercise price £ |
|
Outstanding at start of period |
7,960,000 |
0.44 |
6,980,000 |
0.90 |
|
Granted |
1,953,892 |
0.44 |
3,125,000 |
0.07 |
|
Exercised |
- |
- |
(22,500) |
1.00 |
|
Expired |
(379,723) |
0.94 |
(2,122,500) |
1.73 |
|
Outstanding at end of period |
9,534,169 |
0.41 |
7,960,000 |
0.44 |
|
|
|
|
|
|
|
Exercisable at end of period |
1,132,500 |
1.70 |
1,165,000 |
1.68 |
The weighted average remaining contractual life of options outstanding at the end of the period is 7.82 years (2021: 8.42 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 £1.00 and the exercise price for the 2018 CSOPs was £1.70. The JSOP has an exercise price of £2.05 and contractual life of 10 years.
At the end of the period there were 9,534,169 outstanding options (2021: 7,960,000). The breakdown of these is as follows:
345,000 - 2016 CSOP; 112,500 - 2018 CSOP; 675,000 - JSOP; 1,900,000 - 2020 LTIP; 2,035,000 - 2020 CSOP; 25,000 - 2021 CSOP; 2,550,000 - 2021 LTIP; 891,669 - 2022 CSOP; and 1,000,000 - 2022 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:
£5,000 (2021: £3,500) was paid to Helen Watson, who is related to Clive Watson. At the period end Helen Watson was owed £nil (2021: £nil).
During the period ended 25 December 2022 the Group acquired an additional 12% in the Mosaic entities for a total cash consideration of approximately £1.7m, on an arm's length basis, giving a total investment of £4.2m at the year end. As at 25 December 2022 the Group had an investment in an Associate, being a 36% 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 25 December 2022 and 26 December 2021.
30 Post balance sheet events
Pub acquisitions
The Group acquired a new pub, The Bridge located in Barnes. The purchase completed post period end on 9 January 2023 and the consideration was not material.
Pub disposals
The Group disposed of The Yard surrendering the lease and the sale completed on 24 March 2023 and the proceeds were not material.
Barts Pub Limited Investment
We increased our investment in Barts Pub Limited by £851,000 in March 2023. Our total stake in Barts Pub Limited is now 99% for a total investment of £1.6m. Barts Pub Limited ceased trading during 2022, and therefore will not be accounted as a business combination.
Share Buyback Programme
The share buyback programme was announced during the period and continued post period end. The purchased Ordinary Shares will be held in Treasury. As at 17 April 2023, the Group held 1,028,212 shares in Treasury (2021: nil).
Mosaic Investment
We also recently announced that we increased our investment in Mosaic Pub and Dining (Tranche one of companies) by £2.2m in April 2023. Our total stake in Mosaic is now 48%.
31 Capital commitments
At the period end the Group and Company has no capital commitments.
32 Business combinations
During the period the Group acquired Potters in Newport 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, which was a trade and assets deal, was part of the Group's continuing strategy to expand its pub portfolio via selective quality acquisitions.
|
Group & Company |
£'000 |
|
Provisional fair value: |
|
|
Property, plant and equipment acquired |
1,845 |
|
Goodwill |
200 |
|
Total |
2,045 |
|
|
|
|
Satisfied by: |
|
|
Cash |
2,045 |
|
Shares |
- |
|
Total |
2,045 |
All other pub acquisitions have been accounted for as property acquisitions.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
COMPANIES COVERED:
Latest directors dealings
- 6 minutes ago Boohoo Group
- 16 minutes ago Tritax Big Box Reit
- 1 hour ago Standard Chartered
- 1 hour ago Coca-Cola HBC AG (CDI)
- 1 hour ago Airtel Africa