TIDMCPC
RNS Number : 1978Y
City Pub Group PLC (The)
11 May 2021
The City Pub Group PLC
(the "City Pub Group", the "Company" or the "Group")
FINAL RESULTS FOR THE YEARED 27 DECEMBER 2020
The City Pub Group is pleased to announce its audited results
for the 52 weeks ended 27 December 2020. The Group currently
operates a predominately freehold estate of 45 wet-led pubs and a
further four development sites in London, Southern England and
Wales.
Enhancements made during lockdown
-- Significant investment in our pubs to optimise them for
outdoor trading and take advantage of the strong pent-up demand and
expected boom in staycations
-- Streamlining of operations across the estate to improve the
customer experience and enhance margins
-- Improved City Club app which now has over 100,000 active members
-- Board strengthened by the appointment of Toby Smith as COO and Emma Fox as independent NED
-- Acquisition of a 49% stake in the iconic Kensington Park
Hotel and increased shareholding in Mosaic Pub and Dining Group to
24%
Results impacted by lengthy closure periods
-- Revenue of GBP25.8 million (FY19: GBP60.0 million)
-- Adjusted EBITDA* of GBP(0.8) million (FY19: GBP9.1 million)
-- Adjusted profit / (loss) before tax** of GBP(5.1) million (FY19: GBP5.3 million)
* 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.
Outlook
-- Encouraging trading since outdoor reopening, with the 24 pubs
currently open and trading at 77% of 2019 levels, demonstrating the
high levels of pent-up demand
-- On track to open 45 sites on 17 May with significant number of bookings taken
-- Strong liquidity and asset backed balance sheet, putting the
Group in an excellent position to grow the estate once conditions
normalise
-- Platform in place to expand the estate to over 100 sites
Clive Watson, Executive Chairman of The City Pub Group,
said:
"The business has been significantly improved over the past year
placing us in an excellent position to take advantage of the
pent-up demand as the country reopens.
The early signs since we have been allowed to trade outdoors
have been very heartening and it has been great to bring back our
immensely talented staff and to see our customers enjoying our pubs
once again.
We are a streamlined, well-invested business with a first-rate
customer offer. Our pub estate is unique in terms of quality and,
with the step change in the business, we have an ideal platform to
grow successfully in the future.
11 May 2021
Enquiries:
City Pub Group Today: via Instinctif
Clive Watson, Executive Chairman
Tarquin Williams, CFO
Instinctif Partners
Matthew Smallwood
Jack Devoy +44 (0) 20 7457 2020
Liberum (Nomad & Broker ) Chris
Clarke
Edward Thomas +44 (0) 20 3100 2000
For further information on City Pub Group pubs visit
www.citypubcompany.com
Chairman's Statement
Since my last statement in September 2020, the business has
continued to face significant challenges caused by COVID-19. Our
pub estate was effectively closed for trade from November 2020
until mid-April 2021 because of the second and third
Government-imposed national lockdowns. I believe your Directors
have dealt with this extraordinary and unique situation in a very
professional and commercial fashion.
During the course of the lockdown, much management time was
spent focussing on minimising cost, systems improvement, optimising
marketing activities, building the now very popular City Club app
and, critically, preparing the trading estate for reopening.
Equally as important has been the work to maintain good levels of
staff morale, some of whom have found the pandemic difficult from a
well-being perspective.
Trading Estate
The Group currently operates 45 trading sites and a further 4
development sites.
Despite the pandemic, we have not stood still: we have
undertaken extensive refurbishment at The Hoste Burnham Market on
the ground floor trading areas and refurbished a further ten
bedrooms. Additionally, we are in the process of securing planning
permission for extra outside seating space. The GBP300k capital
spent has significantly upgraded The Hoste, one of our premier
trading pubs, particularly as we approach a summer of staycations.
We also carried out works at Inn on the Beach (Hayling Island),
Brighton Beach Club and Georgian Townhouse (Norwich) expanding and
improving the outside trading areas. Across the estate, we have now
added more than 600 outside covers allowing for outside trading
under Government restrictions in the short term, and moreover for
the long-term as we look to take advantage the forecast trend of
increased domestic holidays. The Group also benefits from 191
bedrooms. The make-up of our estate, combined with the work
undertaken during the lockdown periods places us in a very strong
position to capitalise on opportunities as restrictions ease.
As regards our development sites, we intend to start work on the
Turks Head in Exeter imminently, with a view to opening the site in
early Autumn. We are committed to commence works on the Tivoli in
Cambridge, The Nest in Bath and our new hotel/restaurant/pub in
Mumbles, Swansea, and these projects will start during the course
of the summer.
The Group's estate of predominately freehold high-quality
managed pubs is virtually unique in the pub sector. Our managed
pubs have high levels of weekly sales, many pubs have great outside
trading areas and the number of rooms across the estate has
increased significantly over the last few years. On a normalised
trading basis, the directors' valuation of the Group's portfolio is
approximately GBP150m.
Acquisitions
As we emerge from the pandemic, there will be opportunities that
arise and we are assessing investment opportunities on a very
selective basis. We recently announced that we have acquired a 49%
stake in an EIS-backed business, Barts Pub Ltd, which owns the
iconic Kensington Park Hotel (KPH), based in Ladbroke Grove. The
Group will run this pub under a management contract initially and
has also secured an option to acquire the freehold of KPH to ensure
that this asset comes into our ownership soon. KPH benefits from
ground and first floor bars, as well as 7 boutique hotel rooms, and
further opportunities to develop unutilised space on the top floor
into 4 further bedrooms. KPH typifies the type of acquisition the
Group is looking for - a high quality property in densely
populated, affluent, residential area.
Last year the Group invested in GBP1.2m in Mosaic Pub and Dining
Tranche 1 of companies resulting in the Group taking a 14% equity
stake in a fundraising which was priced at 40p per share. In March
2021, the Group increased its stake to 24% stake at a price of 60p
per share. The pub portfolio is high quality, with 7 of the 9 pubs
being freehold and the majority having outside trading areas close
to prime residential neighbourhoods. The City Pub Group and Mosaic
Pub and Dining negotiate major trading deals for liquor products
together and the Group's equity stake in Mosaic will strengthen
this relationship going forward.
Disposals
The Group has identified four leases we intend to hand back or
dispose of in an outright manner, but currently has no intention to
make further disposals, apart from ancillary areas in certain pubs
which can be sold for alternative use, primarily residential
accommodation, a continuation of our stated strategy. In December
2020, the Group disposed of some cottages near to The Hoste in
Burnham Market, for proceeds of GBP820k. Once COVID-19 is behind
us, we will look for further disposal opportunities of this
type.
Financial Highlights
Summary for the 52 weeks ended 27 December 2020:
-- Revenue down 57% to GBP25.8 million (2019: GBP60.0
million)
-- Adjusted EBITDA* of GBP(0.8) million (2019: GBP9.1
million)
-- Adjusted profit/(loss) before tax** of GBP(5.1) million
(2019: GBP5.3 million)
-- Reported profit/(loss) of GBP(6.5) million (2019: GBP1.3
million)
Key Metrics
------------------------ ---------- --------- --------- ---------
Post IFRS Pre IFRS
16 16
52 weeks 52 weeks 52 weeks
to to to Change
Pre IFRS
27.12.20 27.12.20 29.12.19 16
GBPm GBPm GBPm %
------------------------ ---------- --------- --------- ---------
Revenue 25.8 25.8 60.0 -57%
Adjusted EBITDA 1.2 (0.8) 9.1 N/A
Adjusted Profit/(loss)
before tax (5.4) (5.1) 5.3 N/A
------------------------ ---------- --------- --------- ---------
* Pre-IFRS16 Adjusted earnings before exceptional items, share
option charge, interest, taxation, depreciation and
amortisation.
** Pre-IFRS16 Adjusted profit / (loss) before tax is the profit
/ (loss) before tax, share option charge and exceptional items
.
Included within these results is an impairment charge of GBP933k
for some of our leasehold properties. These valuations are
distorted by the impact of COVID-19, however as the Group starts
trading again, it will focus on generating high levels of turnover
per pub, on higher operating margins due to the streamlining and
operational progress made and, on new investments, higher return on
capital. It is worth noting that except for those assets which have
been subject to the impairment review, values are recorded at
historic cost and in many cases the current pub market value
significantly exceeds this.
Bank Facilities
In March 2021, the Group agreed to a GBP5m, 3-year, CLBILS loan
in addition to its existing GBP35m RCF with Barclays, of which
GBP25m is currently drawn. Barclays have agreed to waive the RCF's
existing financial covenants through to June 2022. They have been
replaced with the Minimum Liquidity Test in the sum of GBP8m plus
an additional Minimum EBITDA Test to be tested on a monthly basis,
after which date the financial covenant tests as currently
documented will recommence.
The Group has a strong liquidity position with GBP15m of
unutilised facilities as a result of the equity fundraising in
March 2020 and tight cash control. This is sufficient liquidity not
only to ride out the COVID-19 storm but also to begin to explore
selective acquisitions. The Board would like to put on record its
thanks to Barclays plc for all its assistance, particularly since
the outbreak of COVID-19, in helping the Group to strengthen its
financial position and be well placed to emerge strongly from the
crisis.
Retail and Operational Improvements
In the last 12 months, the Group has implemented the following
improvements:
1) streamlined supply chain to improve operating margins;
2) reduced complexity of menus resulting in lower labour costs in the kitchen;
3) improved the City Club app (over 100,000 active members)
where customers can now book, order and pay via the app, helping to
reduce FOH labour costs;
4) conducted numerous renegotiations on key central contracts,
reducing variable costs across the pub estate and at head
office;
5) utility costs have been more effectively managed and
behavioural changes made to reduce carbon emissions and costs;
6) marketing and bookings have been centralised to improved pre-booked business; and
7) Head office / Regional posts have been made redundant to
speed up decision making and reduce costs.
These changes have helped to significantly reduce our cost base
and have also lessened the complexity in the operation of our pubs.
The Group wants to quickly return to being a dynamic,
entrepreneurial, operation-focused business where it can improve
the optimisation of existing capacity, as well as increase capacity
by new acquisitions.
COVID-19 gave the Group a one-off opportunity to reset the way
the business was operated and re-calibrate our ambitions to ensure
that we are poised to deliver further growth and build upon what we
have achieved since our IPO in November 2017.
Strengthening the Board
At the beginning of 2020, the Board agreed to strengthen the
Group's senior management team and to dispense with its dual City
Pub Company East & City Pub Company West operating structure.
In November 2020, we appointed Toby Smith to the board in a new
role as Chief Operating Officer. Toby has extensive experience in
the pub market having held senior positions at Stonegate Pub
Company and Novus Leisure. Toby has already implemented changes to
improve the operational management of the business and I am
confident that his experience and style of management will
successfully reopen our estate, but also help accelerate the growth
of the Group.
We also strengthened the independence and diversity of the Board
by appointing Emma Fox in March 2021. Emma is Chief Executive
Officer of Berry Bros. & Rudd Ltd, and has extensive knowledge
of the pub industry, having previously been a Non-Executive
Director of Punch Taverns. Emma will not only help strengthen the
Board from a Corporate Governance perspective, but she will also
bring her knowledge in marketing and technology to the Group as it
commits more resources to these increasingly important areas.
ESG
As we emerge from the pandemic, the Environmental, Social and
Governance (ESG) agenda has become increasingly important for all
businesses. In response, we have established an ESG committee,
which will be chaired by Emma Fox our recently appointed NED. We
have launched a significant and thorough review to ensure that we
emerge as a more responsible business, primed to play a positive
role in the industry's recovery. We are taking our responsibilities
seriously and want to get it right as we understand that those that
succeed in this area will have competitive advantage.
Dividends
The Board has decided to utilise short-term positive cash flow
generated to either invest in new opportunities or reduce its bank
borrowings. However, when there is a return to normal trading
conditions and the balance sheet is even stronger the Board will
consider the resumption of dividend payments. The Board's
recognises that many companies in the pub sector have received
state aid during the COVID pandemic and the Board will only
contemplate payment of dividends when it no longer receives state
aid.
AGM
The AGM this year will be at Aragon House, Parson Green, and
will be held at 12pm on Monday 28 June 2021.
Outlook
Trading has been disrupted dramatically by the pandemic but the
Board believes that due to last year's fundraising, the continued
support of its banks, strengthening of the senior management team,
and changes made at an operational level, the business is in even
better shape than pre Covid-19 to take advantage of pent up
demand.
Naturally, our immediate focus is ensuring our pubs trade well
and profitably in the forthcoming months and making sure that we
are delivering the right service and product to our customers.
Many of the changes we have made in the past year at an
operational level, whether improved cost control or reduced
complexity, will enable the business to be proactive in providing a
first-rate customer offer in these fast-changing times.
We believe we are one of the best employers in the hospitality
industry - many of our employees have share options - and we want
to grow a great nucleus of retail and head office staff so that we
can expand the estate as soon as possible.
Current trading in the 24 pubs that we have re-opened since 12
April has been extremely encouraging, with trading at 77% of 2019
levels, (excluding any benefits from VAT reductions on food and
letting rooms) and, with pubs being allowed to have customers
indoors, we are confident that we will get back to 2019 levels over
the course of the summer, especially due to the sporting programme
which includes the European 2021 football finals, the British and
Irish Lions Tour of South Africa and return of tennis at
Wimbledon.
I look forward to when we can provide firm opening dates for our
development sites and when we can get back to delivering the vision
we set out at the time of the IPO in November 2017. I believe we
have the platform now to grow this business to be more than 100
pubs. The time it takes for us to reach this goal will, to a
certain extent, depend on when certainty and normal trading
conditions resume. The entire management team and I are very
ambitious and are focussed on taking the opportunities which will
arise from the anticipated shake-out across the pub industry.
This has been an extraordinary year and I and the Board
particularly acknowledge the contribution of our staff, suppliers,
shareholders, advisors and bankers. I cannot emphasise enough how
grateful we to these key stakeholders who, as well as assisting us
through unparalleled times, will also help us achieve our ambitions
over the course of the next few years.
Clive Watson
Executive Chairman
11 May 2021
Consolidated statement of comprehensive income
for the 52 week period ended 27 December 2020 (2019: for the 52
week period ended 29 December 2019)
2020 2019
Notes GBP'000 GBP'000
Revenue 4 25,815 60,028
----- -------- --------
Cost of sales (6,280) (15,165)
----- -------- --------
Gross profit 19,535 44,863
----- -------- --------
Other operating income 4a 5,391 -
----- -------- --------
Administrative expenses (31,423) (42,339)
----- -------- --------
Operating (loss)/profit 5 (6,497) 2,524
----- -------- --------
Reconciliation to adjusted EBITDA*
Operating (loss)/profit (6,497) 2,524
Depreciation 5 5,494 3,407
Share option charge 27 397 274
Exceptional items 8 1,814 2,861
* Adjusted earnings before exceptional items,
share option charge,
interest, taxation and depreciation 1,208 9,066
----------------------------------------------------- ----- -------- --------
Finance costs 6 (1,137) (321)
----- -------- --------
(Loss)/profit before tax (7,634) 2,203
----- -------- --------
Tax credit/(expense) 7 1,171 (891)
----- -------- --------
(Loss)/profit for the period and total comprehensive
income (6,463) 1,312
----- -------- --------
Earnings per share
----- -------- --------
Basic earnings per share (p) 10 (7.15) 2.20
----- -------- --------
Diluted earnings per share (p) 10 n/a 2.19
----- -------- --------
All activities comprise continuing operations.
There are no recognised gains or losses other than those passing
through the consolidated statement of comprehensive income. The
notes form part of these financial statements.
Consolidated statement of financial position
as at 27 December 2020 (2019: as at 29 December 2019)
2020 2019
Company No. 07814568 Notes GBP'000 GBP'000
Assets
----- -------- --------
Non-current
----- -------- --------
Intangible assets 11 3,796 4,136
----- -------- --------
Property, plant and equipment 12 108,059 110,914
----- -------- --------
Right-of-use assets 13 19,565 -
----- -------- --------
Deferred tax assets 23 503 -
----- -------- --------
Financial assets at fair value through OCI 14 1,309 -
----- -------- --------
Total non-current assets 133,232 115,050
----- -------- --------
Current
----- -------- --------
Inventories 16 703 1,220
----- -------- --------
Trade and other receivables 17 3,064 3,406
----- -------- --------
Cash and cash equivalents 12,331 2,769
----- -------- --------
Total current assets 16,098 7,395
----- -------- --------
Total assets 149,330 122,445
----- -------- --------
Liabilities
----- -------- --------
Current liabilities
----- -------- --------
Trade and other payables 18 (8,430) (9,027)
----- -------- --------
Financial liabilities - lease liabilities 13 (2,103) -
----- -------- --------
Total current liabilities (10,533) (9,027)
----- -------- --------
Non-current
----- -------- --------
Borrowings 20 (24,801) (32,310)
----- -------- --------
Other payables 19 - (50)
----- -------- --------
Financial liabilities - lease liabilities 13 (17,750)
----- -------- --------
Deferred tax liabilities 23 (2,181) (2,123)
----- -------- --------
Total non-current liabilities (44,732) (34,483)
----- -------- --------
Total liabilities (55,265) (43,510)
----- -------- --------
Net assets 94,065 78,935
----- -------- --------
Equity
----- -------- --------
Share capital 24 31,275 30,812
----- -------- --------
Share premium 24 59,303 38,570
----- -------- --------
Own shares (JSOP) 24 (3,272) (3,272)
----- -------- --------
Other reserve 24 92 92
----- -------- --------
Share-based payment reserve 24 1,374 977
----- -------- --------
Retained earnings 24 5,293 11,756
----- -------- --------
Total equity 94,065 78,935
----- -------- --------
The notes form part of these accounts.
Approved by the Board and authorised for issue on 10 May
2021.
Clive Watson Tarquin Williams
Chairman Chief Financial Officer
Company statement of financial position
as at 27 December 2020 (2019: as at 29 December 2019)
2020 2019
Company No. 07814568 Notes GBP'000 GBP'000
Assets
----- -------- --------
Non-current
----- -------- --------
Intangible assets 11 3,796 4,136
----- -------- --------
Property, plant and equipment 12 108,059 110,914
----- -------- --------
Right-of-use assets 13 19,565 -
----- -------- --------
Deferred tax assets 23 503 -
----- -------- --------
Financial assets at fair value through OCI 14 1,309 -
----- -------- --------
Investments in subsidiaries 15 1,067 12,730
----- -------- --------
Total non-current assets 134,299 127,780
----- -------- --------
Current
----- -------- --------
Inventories 16 703 1,220
----- -------- --------
Trade and other receivables 17 3,064 3,406
----- -------- --------
Cash and cash equivalents 12,331 2,769
----- -------- --------
Total current assets 16,098 7,395
----- -------- --------
Total assets 150,397 135,175
----- -------- --------
Liabilities
----- -------- --------
Current liabilities
----- -------- --------
Trade and other payables 18 (9,497) (24,542)
----- -------- --------
Financial liabilities - lease liabilities 13 (2,103) -
----- -------- --------
Total current liabilities (11,600) (24,542)
----- -------- --------
Non-current
----- -------- --------
Borrowings 20 (24,801) (32,310)
----- -------- --------
Other payables 19 - (50)
----- -------- --------
Financial liabilities - lease liabilities 13 (17,750)
----- -------- --------
Deferred tax liabilities 23 (2,181) (2,123)
----- -------- --------
Total non-current liabilities (44,732) (34,483)
----- -------- --------
Total liabilities (56,332) (59,025)
----- -------- --------
Net assets 94,065 76,150
----- -------- --------
Equity
----- -------- --------
Share capital 24 31,275 30,812
----- -------- --------
Share premium 24 59,303 38,570
----- -------- --------
Own shares (JSOP) 24 (3,272) (3,272)
----- -------- --------
Share-based payment reserve 24 1,374 977
----- -------- --------
Retained earnings 24 5,385 9,063
----- -------- --------
Total equity 94,065 76,150
----- -------- --------
The loss for the financial period of the Parent Company, The
City Pub Group plc was GBP3,678,000 (2019: profit GBP6,921,000).
The notes form part of these accounts. Approved by the Board and
authorised for issue on 10 May 2021.
Clive Watson Tarquin Williams
Chairman Chief Financial Officer
Consolidated statement of changes in equity
for the 52 week period ended 27 December 2020
Share-
Own based
Share Share shares Other payment Retained
Notes capital premium (JSOP) reserve reserve earnings Total
Balance at 30 December
2018 30,651 38,287 (3,272) 92 703 12,077 78,538
----- -------- -------- ------- -------- -------- --------- -------
Employee share-based
compensation 27 - - - - 274 - 274
----- -------- -------- ------- -------- -------- --------- -------
Issue of new shares 24 161 283 - - - - 444
----- -------- -------- ------- -------- -------- --------- -------
Dividends 9 - - - - - (1,633) (1,633)
----- -------- -------- ------- -------- -------- --------- -------
Transactions with owners 161 283 - - 274 (1,633) (915)
----- -------- -------- ------- -------- -------- --------- -------
Profit for the period - - - - - 1,312 1,312
----- -------- -------- ------- -------- -------- --------- -------
Total comprehensive
income for the period - - - - - 1,312 1,312
----- -------- -------- ------- -------- -------- --------- -------
Balance at 29 December
2019 30,812 38,570 (3,272) 92 977 11,756 78,935
----- -------- -------- ------- -------- -------- --------- -------
Employee share-based
compensation 27 - - - - 397 - 397
----- -------- -------- ------- -------- -------- --------- -------
Issue of new shares 24 463 20,733 - - - - 21,196
----- -------- -------- ------- -------- -------- --------- -------
Transactions with owners 463 20,733 - - 397 - 21,593
----- -------- -------- ------- -------- -------- --------- -------
Loss for the period - - - - - (6,463) (6,463)
----- -------- -------- ------- -------- -------- --------- -------
Total comprehensive
income for the period - - - - - (6,463) (6,463)
----- -------- -------- ------- -------- -------- --------- -------
Balance at 27 December
2020 31,275 59,303 (3,272) 92 1,374 5,293 94,065
----- -------- -------- ------- -------- -------- --------- -------
The notes form part of these accounts.
Company statement of changes in equity
for the 52 week period ended 27 December 2020
Share-
Own based
Share Share shares payment Retained
Notes capital premium (JSOP) reserve earnings Total
Balance at 30 December 2018 30,651 38,287 (3,272) 575 3,903 70,144
----- -------- -------- ------- -------- --------- -------
Employee share-based compensation 27 - - - 274 - 274
----- -------- -------- ------- -------- --------- -------
Issue of new shares 24 161 283 - - - 444
----- -------- -------- ------- -------- --------- -------
Transfer of share-based payment
reserve
on hive-up 24 - - - 128 (128) -
----- -------- -------- ------- -------- --------- -------
Dividends 9 - - - - (1,633) (1,633)
----- -------- -------- ------- -------- --------- -------
Transactions with owners 161 283 - 402 (1,761) (915)
----- -------- -------- ------- -------- --------- -------
Profit for the period - - - - 6,921 6,921
----- -------- -------- ------- -------- --------- -------
Total comprehensive income
for the period - - - - 6,921 6,921
----- -------- -------- ------- -------- --------- -------
Balance at 29 December 2019 30,812 38,570 (3,272) 977 9,063 76,150
----- -------- -------- ------- -------- --------- -------
Employee share-based compensation 27 - - - 397 - 397
----- -------- -------- ------- -------- --------- -------
Issue of new shares 24 463 20,733 - - - 21,196
----- -------- -------- ------- -------- --------- -------
Transactions with owners 463 20,733 - 397 - 21,593
----- -------- -------- ------- -------- --------- -------
Loss for the period - - - - (3,678) (3,678)
----- -------- -------- ------- -------- --------- -------
Total comprehensive income
for the period - - - - (3,678) (3,678)
----- -------- -------- ------- -------- --------- -------
Balance at 27 December 2020 31,275 59,303 (3,272) 1,374 5,385 94,065
----- -------- -------- ------- -------- --------- -------
The notes form part of these accounts.
Consolidated statement of cash flows
for the 52 week period ended 27 December 2020 (2019: for the 52
week period ended 29 December 2019)
2020 2019
Notes GBP'000 GBP'000
Cash flows from operating activities
----- -------- --------
(Loss)/profit for the period (6,463) 1,312
----- -------- --------
Taxation 7 (1,171) 891
----- -------- --------
Finance costs 6 1,137 321
----- -------- --------
Operating (loss)/profit (6,497) 2,524
----- -------- --------
Adjustments for:
----- -------- --------
Depreciation 5 5,494 3,407
----- -------- --------
Gain on disposal of property, plant & equipment - (1)
----- -------- --------
Share-based payment charge 27 397 274
----- -------- --------
Impairment 12 933 1,914
----- -------- --------
Change in inventories 517 (260)
----- -------- --------
Change in trade and other receivables 1,055 (778)
----- -------- --------
Change in trade and other payables (258) (43)
----- -------- --------
Cash generated from operations 1,641 7,037
----- -------- --------
Tax paid (341) (601)
----- -------- --------
Net cash from operating activities 1,300 6,436
----- -------- --------
Cash flows from investing activities
----- -------- --------
Purchase of property, plant and equipment 12 (2,304) (14,949)
----- -------- --------
Acquisition of new property sites - (10,532)
----- -------- --------
Purchase of investments 14 (1,309) -
----- -------- --------
Proceeds from disposal of property, plant
and equipment 821 50
----- -------- --------
Net cash used in investing activities (2,792) (25,431)
----- -------- --------
Cash flows from financing activities
----- -------- --------
Proceeds from issue of share capital 24 21,196 218
----- -------- --------
Repayment of borrowings (7,544) -
----- -------- --------
Dividends paid 9 - (1,406)
----- -------- --------
Principal element of lease payments (1,347) -
----- -------- --------
Proceeds from new borrowings 20 - 20,695
----- -------- --------
Interest paid (includes implied interest
under IFRS16) 6 (1,251) (596)
----- -------- --------
Net cash from financing activities 11,054 18,911
----- -------- --------
Net change in cash and cash equivalents 9,562 (84)
----- -------- --------
Cash and cash equivalents at the start of
the period 2,769 2,853
----- -------- --------
Cash and cash equivalents at the end of
the period 12,331 2,769
----- -------- --------
The notes form part of these accounts.
Company statement of cash flows
for the 52 week period ended 27 December 2020 (2019: for the 52
week period ended 29 December 2019)
2020 2019
Notes GBP'000 GBP'000
Cash flows from operating activities
----- -------- --------
(Loss)/profit for the period (3,678) 6,921
----- -------- --------
Taxation (1,171) 669
----- -------- --------
Finance costs 1,137 231
----- -------- --------
Operating (loss)/profit (3,712) 7,821
----- -------- --------
Adjustments for:
----- -------- --------
Depreciation 5 5,494 2,664
----- -------- --------
Realised gain on final hive-up dividend (2,785) -
----- -------- --------
Gain on disposal of property, plant and
equipment - (1)
----- -------- --------
Share-based payment charge 397 274
----- -------- --------
Impairment 933 1,914
----- -------- --------
Change in inventories 517 (339)
----- -------- --------
Change in trade and other receivables 1,055 (2,714)
----- -------- --------
Change in trade and other payables (258) (948)
----- -------- --------
Cash generated from operations 1,641 8,671
----- -------- --------
Tax paid (341) (280)
----- -------- --------
Net cash generated from in operating activities 1,300 8,391
----- -------- --------
Cash flows from investing activities
----- -------- --------
Purchase of property, plant and equipment 12 (2,304) (7,415)
----- -------- --------
Acquisition of new property sites - (10,532)
----- -------- --------
Purchase of investments 14 (1,309) -
----- -------- --------
Proceeds from disposal of property, plant
and equipment 12 821 50
----- -------- --------
Net cash hived up from other Group undertakings - 1,473
----- -------- --------
Net cash used in investing activities (2,792) (16,424)
----- -------- --------
Cash flows from financing activities
----- -------- --------
Proceeds from issue of share capital 21,196 218
----- -------- --------
Repayment of borrowings (7,544) -
----- -------- --------
Dividends paid - (1,406)
----- -------- --------
Principal element of lease payments (1,347) -
----- -------- --------
Proceeds from new borrowings - 10,195
----- -------- --------
Interest paid (1,251) (451)
----- -------- --------
Net cash from financing activities 11,054 8,556
----- -------- --------
Net change in cash and cash equivalents 9,562 523
----- -------- --------
Cash and cash equivalents at the start of
the period 2,769 2,246
----- -------- --------
Cash and cash equivalents at the end of
the period 12,331 2,769
----- -------- --------
The notes form part of these accounts.
Notes to the financial statements
for the 52 week period ended 27 December 2020 (2019: for the 52
week period ended 29 December 2019)
1 Company information
The financial statements of The City Pub Group plc (as
consolidated "the Group") for the 52 week period ended 27 December
2020 were authorised for issue in accordance with a resolution of
the directors on 10 May 2021. The Company is a public limited
company incorporated and domiciled in the UK. The Company number is
07814568 and the registered office is located at Essel House 2nd
Floor, 29 Foley Street, London, England, W1W 7TH.
The Group's principal activity is the management and operation
of public houses. Information on the Company's ultimate controlling
party and other related party relationships is provided in Note
29.
Exemption from audit
For the period ended 27 December 2020 the subsidiaries are
exempt from audit under section 480 of the Companies Act 2006.
2 Significant accounting policies
2.1 Basis of preparation
This preliminary announcement does not constitute the Group's
full financial statements for the 52 week period ended 27 December
2020. The auditors have reported on the Group's statutory accounts
for the 52 week period ended 27 December 2020 under s495 of the
Companies Act 2006, which do not contain statements under s498(2)
or s498(3) of the Companies Act 2006 and are unqualified. The
statutory accounts for the 52 week period ended 27 December 2020
will be filed with the Registrar of companies in due course.
The consolidated financial statements of The City Pub Group Plc
("the Group") have been prepared in accordance with International
Financial Reporting Standards ("IFRSs"), as adopted by the EU,
IFRIC interpretations and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
IFRS is subject to amendment and interpretation by the IASB and
the IFRS Interpretations Committee, and there is an on-going
process of review and endorsement by the European Commission. These
accounting policies comply with each IFRS that is mandatory for
accounting periods ending on 52 week period ended 27 December
2020.
The financial statements have been prepared under the historical
cost convention as modified for financial instruments at fair value
and in accordance with applicable accounting standards.
2.2 Statement of Compliance
The financial statements of the Company and Group are prepared
in accordance with applicable International Financial Reporting
Standards ("IFRS") as adopted by the European Union.
2.3 New and Revised Standards
IFRS applied for the first time in the current financial
statements
This note explains the impact of the adoption of IFRS 16
"Leases" on the Group's financial statements and discloses the new
accounting policy adopted in relation to Government grants, which
have been received for the first time as a result of COVID-19, that
have been applied since 30 December 2019.
IFRS 16, "Leases"
This section explains the impact of the adoption of IFRS 16
"Leases" on the Group's financial statements .
The Group has adopted IFRS 16 "Leases" and has opted to adopt
the standard using the modified retrospective approach as at 30
December 2019 and as a result has not restated comparative for the
2019 report period. The reclassifications and the adjustments
arising from the new leasing rules are therefore recognised in the
opening balance sheet on 30 December 2019. The new accounting
policies are disclosed within the "Leases" policy below.
On adoption of IFRS 16, the Group recognised lease liabilities
in relation to leases which had previously been classified as
'operating leases' under the principles of IAS 17 Leases. These
liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee's incremental borrowing
rate as of 30 December 2019. The weighted average lessee's
incremental borrowing rate applied to the lease liabilities on 30
December 2019 ranged from 3.0% to 3.7% depending on the length of
the lease. There were no leases previously classified as finance
leases and no onerous leases recognised.
(i) Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
-- excluding leases which are considered to be low value leases (<GBP3,000)
-- accounting for operating leases with a remaining lease term
of less than 12 months as at 30 December 2019 as short-term
leases
The Group has also elected not to reassess whether a contract
is, or contains, a lease at the date of initial application.
Instead, for contracts entered into before the transition date the
Group relied on its assessment made applying IAS 17 and
Interpretation 4 Determining whether an Arrangement contains a
Lease.
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. Changes
in leases which do not fulfil the criteria of the practical
expedient have been treated as additions or disposals in line with
normal IFRS 16 accounting.
The treatment of rent concessions granted during the period was
to recognise them immediately within the profit and loss.
(ii) Measurement of lease liabilities Group &
Company
29 Dec
2019
GBP'000
Operating lease commitments disclosed as at 29
December 2019 28,294
---------
Discounted using the lessee's incremental borrowing
rate at the date of initial application 22,021
Less: discounted element on adoption (979)
---------
Lease liability recognised as at 30 December 2019 21,042
=========
Of which are:
Current lease liabilities 2,083
Non-current lease liabilities 18,959
---------
21,042
=========
(iii) Measurement of right-of-use assets
The associated right-of-use assets were measured on a
retrospective basis as if the new rules had always been applied.
The right-of-use assets were measured at the amount equal to the
lease liability, adjusted by the amount of any prepaid or accrued
lease payments relating to that lease recognised in the balance
sheet as at 29 December 2019. There were no onerous lease contracts
that would have required an adjustment to the right-of-use assets
at the date of initial application.
(iv) Adjustments recognised in the statement of financial
position on 30 December 2019
The change in accounting policy affected the following items in
the Group and Company balance sheets on 30 December 2019:
-- Right-of-use assets - increased by GBP21,042,000; and
-- Lease liabilities - increased by GBP21,042,000.
The net impact on retained earnings on 30 December 2019 was
GBPnil (Parent Company: GBPnil).
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 (CJRS) 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.
Total Government grants included as other operating income total
GBP5,391,000 (2019: GBPnil).
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.
-- IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment - Definition of Material)
-- IFRS 3 Business Combinations (Amendment - Definition of Business)
-- Revised Conceptual Framework for Financial Reporting
The Directors are currently evaluating the impact of the
adoption of all other standards, amendments and interpretations but
do not expect them to have a material impact on the Group operation
or results.
2.4 Predecessor value method
During the period ended 31 December 2017 the Company undertook a
common control combination, through the issue of new Ordinary
Shares, B-Ordinary Shares and Convertible Preference Shares in
exchange for 100% of the Ordinary Shares, B Ordinary Shares and
Convertible Preference Shares of The City Pub Company (West)
Limited an entity under common control. The Directors considered
the business combination to be a common control combination, as the
combining entities were ultimately controlled by the same parties
both before and after the combination and the common control was
not transitory. As a common control combination, the transaction
was outside the scope of IFRS 3 ("Business Combinations") and the
Directors therefore considered the nature of the transaction, which
was eligible for Merger Relief under the Companies Act, and decided
that the predecessor value method would be most appropriate for
preparing those and subsequent Group financial statements.
The predecessor value method involves accounting for the assets
and liabilities of the acquired business using existing carrying
values rather than at fair values, as a result no goodwill arose on
the combination. The use of the predecessor value method gave rise
to an "other reserve", which represents the share premium of the
subsidiary entity on consolidation.
The financial results of subsidiaries are included in the
consolidated financial information from the date that control
commences until the date that control ceases. The consolidated
financial information presents the results of the companies within
the same group. Intra-group balances and transactions, and any
unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated
financial information.
2.5 Going concern
The Group agreed a GBP35m revolving credit facility (RCF) with
Barclays Bank plc in July 2019 with an accordion option of another
GBP15m all on improved terms. This was initially a 3-year deal, but
with the options to extend for two additional years, so taking the
facility out to July 2024.
The impact of COVID-19 has had a devastating impact on the pub
sector, with the enforced closure of all pubs on 20 March 2020.
The Board acted decisively to secure the appropriate liquidity
for the business to endure a prolonged period of closure should
that be mandated. GBP15m of new shares were placed with
Institutional Shareholders and a further GBP7m was raised from
existing shareholders in an open offer with total funds raised of
GBP22m pre expenses, which was received in April 2020. This enabled
the business to reduce its net debt by two thirds and as a result
has significantly strengthened the Group's balance sheet. At this
time Barclays agreed to replace The City Pub Group plc's RCF's
existing financial covenants with a Minimum Liquidity Test in the
sum of GBP8m up to 30 June 2021.
During 2020, we reduced Pub and head office costs to the minimum
whilst the pubs were closed. Some 99% of staff have been furloughed
on the governments Job Retention Scheme during certain times of the
year. The Directors took a voluntary 50% pay cut from March 2020
until pubs reopened in July 2020 and other head office salaries
were reduced. We applied for Grants where applicable. The Group
negotiated settlement discounts from some larger suppliers during
the first lockdown, but at the same time ensured that smaller
suppliers are paid in full. We have been in negotiations with
landlords with regards to rent holidays, rent deferrals and changes
in terms of some leases. The Group pursued a claim under our
insurance policies where the Company benefits from a loss of trade
clause in the event of an outbreak of a notifiable disease. This
claim was eventually successful and we received a pay-out of GBP1m
relating to this claim post the year end.
Having successfully opened a large number of our sites through
July and August 2020, it was very disappointing to be faced with
another full closure for 4 weeks of November and then again in
December for a full 4 months through to April 2021.
With the second and third lockdowns and the uncertainty about
any further future lockdowns, we decided to access funds via the
Government's Coronavirus Large Business Interruption Loan Scheme
(CLBILS), via our bankers, Barclays. This was completed in March
2021 and we have an additional GBP5m of funding available to
increase liquidity. Barclays again agreed to waive the RCF's
existing financial covenants through to June 2022. They have been
replaced with the same Minimum Liquidity Test in the sum of GBP8m
plus an additional Minimum EBITDA Test to be tested on a monthly
basis, after which date the financial covenant tests as currently
documented will recommence. We have significant headroom between
our forecasts and the requirements in the Minimum EBITDA Test.
When making our assessment of going concern, our assumptions
have included a reopening of half of the pubs during April 2021
with external trading only followed by more pub openings at the end
of May 2021 with restrictions being relaxed and trading allowed
indoors, but still with social distancing measures in place. We
have assumed that by 2022 trading gets back to pre Covid 19
levels.
Based on the current financial projections to the end of January
2023 and having considered the facilities available, together with
potential sensitivities to changes in levels of trade (including
further possible Covid 19 driven pub closures), 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.
Should there be further prolonged enforced periods of closure
due to Covid that may cast doubt on the Company's ability to pass
the new Minimum EBITDA Test, this gives rise to a possible material
uncertainty that may cast significant doubt over the Group's
ability to continue as a going concern.
COVID-19 has created immense challenges to our sector but as a
result of the Board's quick actions to strengthen the balance sheet
through share placing, decisive actions on cutting costs and the
additional GBP5m CLBLS, the Board believes the Group has
significantly mitigated the devastating effect that COVID-19 has
had on the pub sector and that it has sufficient financial
liquidity to see the Company through to well into 2023.
2.6 Revenue
Revenue represents external sales (excluding taxes) of goods and
services net of discounts. Revenue is recognised to the extent that
it is probable that the economic benefits will flow to the Group
and the revenue can be reliably measured. Revenue is measured at
the fair value of the consideration receivable net of trade
discounts and VAT.
Revenue principally consists of drink, food and accommodation
sales, which are recognised at the point at which goods and
services are provided and rental income which is recognised on a
straight line basis over the lease term. Revenue for bedroom
accommodation is recognised at the point the services are rendered.
Loyalty card revenue is immaterial and therefore no change in
accounting policy is considered necessary.
2.7 Cost of sales
Costs considered to be directly related to revenue are accounted
for as cost of sales. Costs of goods sold are determined on the
basis of the cost of purchase, adjusted for movements of
inventories. Cost of services rendered is recognised at the time
the revenue is recognised.
2.8 Operating profit
Operating profit is revenue less operating costs. Revenue is as
detailed above and as shown in note 4. Operating costs are all
costs excluding finance costs, costs associated with the disposal
of properties and the tax charge.
2.9 Exceptional items
The Group presents as exceptional items those significant items
of income and expense which, because of their size, nature and
infrequency of the events giving rise to them merit separate
presentation to allow Shareholders to understand better the
elements of financial performance in the period, so as to
facilitate comparison with prior periods to assess trends in
financial performance more readily. These items are primarily
pre-opening costs (including acquisition costs) and non-recurring
costs, which are not expected to recur at a particular site.
2.10 Finance income and expense
Finance income is recognised as interest accrues (using the
effective interest method) on funds invested outside the Group.
Finance expense includes the cost of borrowing from third parties
and is recognised on an effective interest rate basis, resulting
from the financial liability being recognised on an amortised cost
basis, including commitment fees. Borrowing costs directly
attributable to the acquisition, construction or production of a
qualifying asset are capitalised during the period of time that is
necessary to complete and prepare the asset for its intended use or
sale.
2.11 Taxation and deferred taxation
The income tax expense or income for the period is the tax
payable on the current period's taxable income. This is based on
the national income tax rate enacted or substantively enacted with
any adjustment relating to tax payable in previous years and
changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases of assets and
liabilities and their carrying amounts in the Financial
Statements.
Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to be applicable when the
asset or liability crystallises based on current tax rates and laws
that have been enacted or substantively enacted by the reporting
date. The relevant tax rates are applied to the cumulative amounts
of deductible and taxable temporary differences to measure the
deferred tax asset or liability.
A deferred tax asset is regarded as recoverable and therefore
recognised only when, on the basis of all available evidence, it
can be regarded as more likely than not that there will be suitable
taxable profits against which to recover carried forward tax losses
and from which the future reversal of temporary differences can be
deducted. The carrying amount of deferred tax assets are reviewed
at each reporting date.
2.12 Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
financial instrument and are measured initially at fair value
adjusted for transaction costs. Subsequent measurement of financial
assets and financial liabilities is described below.
Financial assets are derecognised when the contractual rights to
the cash flows from the financial asset expire, or when the
financial asset and substantially all the risks and rewards are
transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
Classification and subsequent measurement of financial
assets
For the purpose of subsequent measurement the Group classifies
its financial assets into the following categories: those to be
measured subsequently at fair value (either through other
comprehensive income (FVOCI) or through the income statement
(FVPL)) and those to be held at amortised cost.
Classification depends on the business model for managing the
financial assets and the contractual terms of the cash flows.
Management determines the classification of financial assets at
initial recognition. The Group's policy with regard to financial
risk management is set out in note 21. Generally, the Group does
not acquire financial assets for the purpose of selling in the
short term and does not have any financial assets measured at fair
value through the income statement (FVPL) in either the current or
prior year.
The Group's business model is primarily that of "hold to
collect" (where assets are held in order to collect contractual
cash flows).
Financial assets held at amortised cost
This classification applies to the Group's trade & other
receivables which are held under a hold to collect business model
and which have cash flows that meet the solely payments of
principal and interest (SPPI) criteria. At initial recognition,
trade and other receivables that do not have a significant
financing component, are recognised at their transaction price.
Other financial assets are initially recognised at fair value plus
related transaction costs; they are subsequently measured at
amortised cost using the effective interest method. Any gain or
loss on derecognition or modification of a financial asset held at
amortised cost is recognised in the income statement.
Financial assets at fair value through other comprehensive
income (FVOCI)
The Group accounts for financial assets at FVOCI if the assets
meet the following conditions:
-- they are held under a business model whose objective it is
"hold to collect" the associated cash flows and
-- the contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on
the principal amount outstanding.
The Group has opted to classify financial assets which are
investments in equity instruments as financial assets at fair value
through other comprehensive income.
Any gains or losses recognised in other comprehensive income
(OCI) will be recycled upon derecognition of the asset.
Impairment of financial assets
A forward-looking expected credit loss (ECL) review is required
for: debt instruments measured at amortised cost or held at fair
value through other comprehensive income; loan commitments and
financial guarantees not measured at fair value through profit or
loss; lease receivables and trade receivables that give rise to an
unconditional right to consideration.
IFRS 9's impairment requirements use more forward-looking
information to recognise expected credit losses - the "expected
credit loss (ECL) model". This replaces IAS 39's "incurred loss
model". The Group's instruments within the scope of the new
requirements included trade and other receivables.
Recognition of credit losses is no longer dependent on the Group
first identifying a credit loss event. Instead the Group considers
a broader range of information when assessing credit risk and
measuring expected credit losses, including past events, current
conditions, reasonable and supportable forecasts that affect the
expected collectability of the future cash flows of the
instrument.
As permitted by IFRS 9, the Group applies the "simplified
approach" to trade and other receivable balances and the "general
approach" to all other financial assets. The simplified approach in
accounting for trade and other receivables records the loss
allowance as lifetime expected credit losses. These are the
expected shortfalls in contractual cash flows, considering the
potential for default at any point during the life of the financial
instrument. In calculating, the Group uses its historical
experience, external indicators and forward-looking information to
calculate the expected credit losses. The general approach
incorporates a review for any significant increase in counterparty
credit risk since inception. The ECL reviews include assumptions
about the risk of default and expected loss rates.
The nature of the Group's trade and other receivables are such
that the expected credit loss is immaterial in the current and
prior year, therefore no additional disclosures are considered
necessary within the credit risk section of note 21.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and
other short term highly liquid deposits with original maturities of
three months or less.
Classification and subsequent measurement of financial
liabilities
The Group's financial liabilities include trade and certain
other payables. Financial liabilities are measured subsequently at
amortised cost using the effective interest rate.
Trade and other payables
Trade and other payables are recognised initially at fair value
and subsequently measured at amortised cost using the effective
interest method. These amounts represent liabilities for goods and
services provided to the Group prior to the end of the financial
period, which are unpaid.
Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in profit
or loss over the period of the borrowings using the effective
interest method.
Classification of Shares as Debt or Equity
When shares are issued, any component that creates a financial
liability of the Group is presented as a liability in the statement
of financial position; measured initially at fair value net of
transaction costs and thereafter at amortised cost until
extinguished on conversion or redemption. The corresponding
dividends relating to the liability component are charged as
interest expense in the Income Statement. The initial fair value of
the liability component is determined using a market rate for an
equivalent liability without a conversion feature.
The remainder of the proceeds on issue is allocated to the
equity component and included in shareholders' equity, net of
transaction costs.
The carrying amount of the equity component is not remeasured in
subsequent years. The Group's ordinary shares are classified as
equity instruments. For the purposes of the disclosures given in
note 24, the Group considers its capital to comprise its ordinary
share capital, share premium and accumulated retained earnings.
There have been no changes to what the Group considers to be
capital since the prior year.
Share repurchases
Where shares are repurchased wholly out of the proceeds of a
fresh issue of shares made for that purpose, no amount needs to be
transferred to a capital redemption reserve as there is no
reduction in capital as a result of the purchase and issue of
shares.
2.13 Business combinations and goodwill
Other than the group re-organisation that took place prior to
Listing, business combinations, which include sites that are
operating as a going concern at acquisition and where substantive
processes are acquired, are accounted for under IFRS 3 using the
purchase method. Any excess of the consideration of the business
combination over the interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities is
recognised in the statement of financial position as goodwill and
is not amortised. To the extent that the net fair value of the
acquired entity's identifiable assets, liabilities and contingent
liabilities is greater than the cost of the investment, a gain is
recognised immediately in the profit or loss.
Goodwill represents the future economic benefits arising from a
business combination that are not individually identified and
separately recognised. Goodwill is carried at cost less accumulated
impairment losses. Refer to Note 11 for a description of impairment
testing procedures.
2.14 Property, plant and equipment
Property, plant and equipment, other than freehold land, are
stated at cost or deemed cost less accumulated depreciation and any
impairment in value. Depreciation is provided at rates calculated
to write off the cost less estimated residual value of each asset
over its expected useful life, with effect from the first full year
of ownership, as follows:
Freehold properties To residual value over fifty years straight line
Leasehold properties Straight line over the length of the lease
Fixtures, fittings and equipment Between four and ten years straight line
Computer equipment Between two and five years straight line
No depreciation is charged on freehold land. Where there is no
depreciation on historic freehold buildings as a result of a high
residual value/long useful lives, the freehold building is subject
to an impairment review. Residual values and useful lives are
reviewed every year and adjusted if appropriate at each financial
period end.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount. Gains and losses on disposals are
determined by comparing proceeds with carrying amount. These are
included in the profit or loss.
2.15 Investments in subsidiaries
The Company recognises its investments in subsidiaries at cost,
less any provisions for impairment. Income is recognised from these
investments only in relation to distributions receivable basis from
post-acquisition profits. Distributions received in excess of
post-acquisition profits are deducted from the cost of the
investment.
2.16 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.
2.17 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.
2.18 Leases
As described in the "New and Revised Standards" section above,
the Group has applied IFRS 16 using the modified retrospective
approach and therefore comparative information has not been
restated. This means that comparative information is still reported
under IAS 17 and IFRIC 4.
Accounting policy applicable from 30 December 2019
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.
Accounting policy applicable before 30 December 2019
Leases in which a significant portion of the risks and rewards
of ownership are not transferred to the Group as lessee are
classified as operating leases. These are the only types of lease
utilised by the entity. Operating lease payments for assets leased
from third parties are charged to profit or loss on a straight line
basis over the period of the lease, on an accrued basis.
2.19 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.
2.20 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.
2.21 Government grants
The Group has received Government grants for the first time
during the period ended 27 December 2020, mainly in relation to the
Coronavirus Job Retention Scheme provided by the Government in
response to COVID-19's impact on our business. The Group has
elected to account for these grants as other operating income,
rather than to off-set the Government grants within administrative
expenses, so that the gross impact is disclosed on the face of the
Statement of Comprehensive Income.
3 Significant judgements and estimates
The judgements, which are considered to be significant, are as
follows:
Judgement is required when determining if an acquisition is a
business combination or a purchase of an asset. Each acquisition is
assessed individually to determine which is the most appropriate
classification.
Judgement is used to determine those items that should be
separately disclosed to allow a better understanding of the
underlying trading performance of the Group. The judgement includes
assessment of whether an item is of a nature that is not consistent
with normal trading activities or of a sufficient size or
infrequency.
Judgement is required when accounting for hive ups that are
operationally enacted and that determines when control has passed.
See note 15.
The estimates, which are considered to be significant, are as
follows:
The Group determines whether goodwill is impaired on an annual
basis and this requires an estimation of the value in use of the
cash-generating units to which the goodwill is allocated. This
involves estimation of future cash flows, choosing a suitable
discount rate and growth rate. Full details are supplied in note
11, together with an analysis of the key assumptions.
The determination of any impairment of property, plant &
equipment (including the right of use assets) also requires
estimation of fair value and value in use. As with goodwill, this
requires estimation of future cash flows and selection of a
suitable discount rate, together with assessment of the market
values of properties (if applicable). Goodwill was allocated to the
carrying value of property, plant & equipment for the purposes
of the impairment review, with further details around key
assumptions provided in note 11 (such assumptions are also relevant
to the carrying value of property, plant & equipment are
detailed in note 12).
The calculation of lease liabilities requires the Group to
determine an incremental borrowing rate ("IBR") to discount future
minimum lease payments. The IBR is the rate of interest that the
Group would have to pay to borrow over a similar term, and with a
similar security, the funds necessary to obtain an asset of a
similar value to the right-of-use asset in a similar economic
environment. The IBR therefore reflects what the Group 'would have
to pay', which requires estimation when no observable rates are
available or when they need to be adjusted to reflect the terms and
conditions of the lease.
The estimation of share-based payment costs requires the
selection of an appropriate valuation model and consideration as to
the inputs necessary for the valuation model chosen. The Group has
made estimates as to the volatility of its own shares, the probable
life of options granted and the time of exercise of those options.
Expectations around employee retention and meeting of performance
criteria have also been considered. The model used by the Group is
the Black-Scholes valuation model and the inputs are detailed in
note 27.
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.
The estimation of the recoverable value of net realisable value
of inventory (and therefore any corresponding provision) is
estimated based expectations as at 27 December 2020 around the
timing of the recommencement of trade and which inventory will
remain usable on this date and the extent to which it is expected
to be fully realised through sale.
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.
2020 2019
GBP'000 GBP'000
Revenue 25,815 60,028
-------- --------
Cost of sales (6,280) (15,165)
-------- --------
Gross profit 19,535 44,863
-------- --------
Other operating income (note 4(a)) 5,391
-------- --------
Operating expenses:
-------- --------
-- Operating expenses before adjusting items (23,718) (35,663)
--------------------------------------------- -------- --------
Adjusted EBITDA 1,208 9,066
--------------------------------------------- -------- --------
-- Depreciation 5,494 3,407
-------- --------
-- Share option charge 397 274
-------- --------
-- Exceptional items 1,814 2,861
-------- --------
Total operating expenses (31,423) (42,339)
-------- --------
Operating (loss)/profit (6,497) 2,524
-------- --------
(a). Other operating income
During 2020 the Group has received Government grants for the
first time, mainly in relation to the Furlough Scheme provided by
the Government in response to COVID-19's impact on our business.
Further analysis of other operating income is set out below.
2020 2019
GBP'000 GBP'000
Coronavirus Job Retention Scheme 5,141 -
-------- --------
Other government grants 250 -
-------- --------
Total other operating income 5,391 -
-------- --------
5 (Loss)/profit on ordinary activities before taxation
The (loss)/profit on ordinary activities before taxation is
stated after charging/(crediting):
2020 2019
GBP'000 GBP'000
Costs of inventories recognised as an expense 6,376 15,632
-------- --------
Staff costs (note 25) 17,133 22,363
-------- --------
Depreciation 5,494 3,407
-------- --------
Fees payable to the company's auditor for the
audit of the
company's financial statements 60 67
-------- --------
Fees payable to the company's auditor for the
audit of the group financial statements - 11
-------- --------
Fees payable to the company's auditor for tax
compliance - 9
-------- --------
Fees payable to the company's auditor for tax
advisory services - 24
-------- --------
Exceptional costs (note 8) 1,814 2,861
-------- --------
Operating leases - land and buildings* (351) 2,056
-------- --------
* The Group has adopted IFRS 16 in the year ended 27 December
2020 and the disclosure of leases has changed accordingly, see
Accounting Policies and Note 13 for further information. Rent
concessions relating to COVID19 of GBP450,000 have been recognised
within this balance for 2020.
6 Interest payable and similar charges
2020 2019
GBP'000 GBP'000
On bank loans and overdrafts 551 596
-------- --------
Interest and finance charges for lease liabilities 699 -
-------- --------
Interest expense capitalised within property,
plant & equipment (113) (275)
-------- --------
Total finance cost 1,137 321
-------- --------
During the period GBP113,000 of interest was capitalised (2019:
GBP275,000).
7 Tax charge on (loss)/profit on ordinary activities
(a) Analysis of tax charge for the period
The tax charge for the Group is based on the (loss)/profit for
the period and represents:
2020 2019
GBP'000 GBP'000
Current income tax:
-------- --------
Current income tax charge (572) 608
-------- --------
Adjustments in respect of previous period (154) 40
-------- --------
Total current income tax (726) 648
-------- --------
Deferred tax:
-------- --------
Origination and reversal of temporary differences
(note 23) (445) 243
-------- --------
Adjustments in respect of deferred tax of previous
period - -
-------- --------
Total deferred tax (445) 243
-------- --------
Total tax (1,171) 891
-------- --------
(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% (2019: 19.00%). The
differences are explained as follows:
2020 2019
GBP'000 GBP'000
(Loss)/profit on ordinary activities before
tax (7,634) 2,203
-------- --------
(Loss)/profit on ordinary activities multiplied
by standard rate of corporation tax
in the United Kingdom of 19.00% (2019: 19.00%) (1,450) 419
-------- --------
Effect of:
-------- --------
Fixed asset differences 446 415
-------- --------
Items not deductible for tax purposes (5) 61
-------- --------
Adjustment in respect of previous periods (154) 40
-------- --------
Share options tax deduction (8) (44)
-------- --------
Total tax (credit)/charge (1,171) 891
-------- --------
The deferred tax asset included in the balance sheet of
GBP503,000 (2019: GBPnil) relates principally to the carry forward
of tax losses. The Directors have recognised a deferred tax asset
in respect of carried forward trading tax losses as, based on
current estimates, the Group is forecast to make sufficient trading
profit over the next 3 years, against which these losses can be
offset.
8 Exceptional items
2020 2019
GBP'000 GBP'000
Pre opening costs 14 777
-------- --------
Impairment of pub sites 933 1,914
-------- --------
Inventory impairments 662 -
-------- --------
Other non recurring items 205 170
-------- --------
1,814 2,861
-------- --------
Exceptional items for both financial years presented are
included within administrative expenditure in the Statement of
Comprehensive Income.
9 Dividends
Dividends paid during the reporting period
The Board did not declare a dividend due the Covid pandemic
(2019: 2.75p per share)
Dividends not recognised at the end of the reporting period
Since the year end, the Directors are not proposing a dividend
due to the COVID-19 pandemic (2019: nil).
10 (Loss)/earnings per share
2020 2019
GBP'000 GBP'000
(Loss)/earnings for the period attributable
to Shareholders (6,463) 1,312
-------- --------
(Loss)/earnings per share:
-------- --------
Basic (loss)/earnings per share (p) (7.15) 2.20
-------- --------
Diluted earnings per share (p) n/a 2.19
-------- --------
Number of Number of
Weighted average number of shares: shares shares
Weighted average shares for basic EPS 90,451,692 59,523,815
---------- ----------
Effect of share options in issue n/a 456,481
---------- ----------
Weighted average shares for diluted earnings
per share n/a 59,980,296
---------- ----------
Shares held by the City Pub Group plc Joint Share Ownership Plan
("JSOP"), which has waived its entitlement to receive dividends,
are treated as cancelled for the purpose of this calculation.
For the 52 week period ended 27 December 2020, the Group
recorded a loss. As a result, share options in issue for this
period are considered to be antidliutive and therefore no diluted
loss per share has been presented.
11 Goodwill
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Cost brought forward 4,196 3,854 4,196 2,021
-------- -------- -------- --------
Additions - 343 - 343
-------- -------- -------- --------
Disposal - (1) - -
-------- -------- -------- --------
Transfer of business -
hive up - - - 1,832
-------- -------- -------- --------
At end of period 4,196 4,196 4,196 4,196
-------- -------- -------- --------
Amortisation/impairment
brought forward (60) (60) (60) (60)
-------- -------- -------- --------
Provided during the period (340) - (340) -
-------- -------- -------- --------
At end of period (400) (60) (400) (60)
-------- -------- -------- --------
Net book value at end of
period 3,796 4,136 3,796 4,136
-------- -------- -------- --------
Net book value at start
of period 4,136 3,794 4,136 1,961
-------- -------- -------- --------
The carrying value of goodwill included within the Group and
Company statement of financial position is GBP3,796,000 (2019:
GBP4,136,000), which is allocated to the cash-generating unit
("CGU") of groupings of public houses as follows:
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Freehold 2,396 2,396 2,396 2,396
-------- -------- -------- --------
Leasehold 1,400 1,740 1,400 1,740
-------- -------- -------- --------
3,796 4,136 3,796 4,136
-------- -------- -------- --------
The CGU's recoverable amount has been determined as the higher
of its fair value less costs to sell and value in use based on an
internal discounted cash flow evaluation. During the period ended
27 December 2020 an impairment has been made against two sites, as
described further in note 12.
The fair value less costs to sell is calculated based on the
market value of the associated property.
For the 52 week period ended 27 December 2020, the
cash-generating unit recoverable amount was determined based on
value-in-use calculations, using cash flow projections based on one
year budgets, (modified as appropriate for the impact of Covid-19
and the expected return to normal trading conditions), extrapolated
into perpetuity for freehold properties and for the length of the
lease for leasehold properties, with key assumptions for both CGU's
being the long-term growth rate of 2% and pre-tax discount rate of
9%. Cash flows for the businesses are based on management
forecasts, which are approved by the Board and reflect management's
expectations of sales growth, operating costs and margin based on
past experience and anticipated changes in the local market places
and trading following the re-opening of sites during 2021.
Sensitivity to changes in key assumptions: impairment testing is
dependent on management's estimates and judgements, in particular
in relation to the forecasting of future cash flows, the long-term
growth rate and the discount rate applied to the cash flows and
uncertainty of future cash flows related to Covid-19.
Lowering the discount rate by 1% from 9% to 8% would have the
effect of reducing the impairment charge by some GBP303k to
GBP630k. An increase in the discount rate to 10% would result in
the impairment charge increasing by GBP282k to GBP1,215k.
Lowering the long term growth rate used from 2% to 1% would
result in an increase in the impairment charge of GBP214k to
GBP1,147k. A higher growth rate of 3% would result in the
impairment charge reducing by GBP225k to GBP708k.
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
& Fixtures,
leasehold fittings
property and computers Total
Group GBP'000 GBP'000 GBP'000
Cost
---------- -------------- --------
At 30 December 2018 78,687 21,785 100,472
---------- -------------- --------
Additions 8,377 6,998 15,375
---------- -------------- --------
Acquisitions 10,319 638 10,957
---------- -------------- --------
Disposals (91) (64) (155)
---------- -------------- --------
At 29 December 2019 97,292 29,357 126,649
---------- -------------- --------
Additions 311 2,107 2,418
---------- -------------- --------
Disposals (821) - (821)
---------- -------------- --------
At 27 December 2020 96,782 31,464 128,246
---------- -------------- --------
Depreciation
---------- -------------- --------
At 30 December 2018 2,201 8,251 10,452
---------- -------------- --------
Provided during the period 643 2,764 3,407
---------- -------------- --------
Impairment 1,802 112 1,914
---------- -------------- --------
Disposals (19) (19) (38)
---------- -------------- --------
At 29 December 2019 4,627 11,108 15,735
---------- -------------- --------
Provided during the period 747 3,112 3,859
---------- -------------- --------
Impairment - 593 593
---------- -------------- --------
At 27 December 2020 5,374 14,813 20,187
---------- -------------- --------
Net book value
---------- -------------- --------
At 27 December 2020 91,408 16,651 108,059
---------- -------------- --------
At 29 December 2019 92,665 18,249 110,914
---------- -------------- --------
At 30 December 2018 76,486 13,534 90,020
---------- -------------- --------
During the period ended 27 December 2020 the group has made a
provision for impairment against a number of sites totalling
GBP933,000, split GBP340,000 against goodwill and GBP593,000
against fixtures and fittings. . 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 29 December 2019 the group made a
provision for impairment against a number of sites totalling
GBP1,914,000.
During the period ended 27 December 2020 the group capitalised
GBP113,000 (2019: GBP275,000) of interest within the Freehold &
Leasehold property asset.
Freehold
& Fixtures,
leasehold fittings
property and computers Total
Company GBP'000 GBP'000 GBP'000
Cost
---------- -------------- --------
At 30 December 2018 39,726 12,957 52,683
---------- -------------- --------
Additions 2,898 4,887 7,785
---------- -------------- --------
Acquisitions 10,319 638 10,957
---------- -------------- --------
Disposals (91) (64) (155)
---------- -------------- --------
Transferred on hive-up of business 44,440 10,939 55,379
---------- -------------- --------
At 29 December 2019 97,292 29,357 126,649
---------- -------------- --------
Additions 311 2,107 2,418
---------- -------------- --------
Disposals (821) - (821)
---------- -------------- --------
At 27 December 2020 96,782 31,464 128,246
---------- -------------- --------
Depreciation
---------- -------------- --------
At 30 December 2018 1,332 4,963 6,295
---------- -------------- --------
Provided during the period 505 2,159 2,664
---------- -------------- --------
Impairment 1,802 112 1,914
---------- -------------- --------
Disposals (19) (19) (38)
---------- -------------- --------
Transferred on hive-up of business 1,007 3,893 4,900
---------- -------------- --------
At 29 December 2019 4,627 11,108 15,735
---------- -------------- --------
Provided during the period 747 3,112 3,859
---------- -------------- --------
Impairment - 593 593
---------- -------------- --------
At 27 December 2020 5,374 14,813 20,187
---------- -------------- --------
Net book value
---------- -------------- --------
At 27 December 2020 91,408 16,651 108,059
---------- -------------- --------
At 29 December 2019 92,665 18,249 110,914
---------- -------------- --------
At 30 December 2018 38,394 7,994 46,388
---------- -------------- --------
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:
27 December
2020
Group and Company GBP'000
Right-of-use assets
-----------
On adoption 21,042
-----------
Addition 158
-----------
Depreciation (1,635)
-----------
Total 19,565
-----------
Lease liabilities
-----------
Current 2,103
-----------
Non-current 17,750
-----------
Total 19,853
-----------
Additions to the right-of-use assets during the 2020 financial
year were GBP158,000. Following the publication on the amendment to
IFRS 16 in relation to rent concessions, the Group has applied the
practical expedient in all cases where relevant conditions were
met. These concessions totalled a credit to the income statement
for the period of GBP450,000. Changes in leases which do not fulfil
the criteria of the practical expedient have been treated as
additions or disposals in line with normal IFRS 16 accounting.
(ii). amounts recognised in the consolidated statement of
comprehensive income
The consolidated statement of comprehensive income shows the
following amounts relating to leases:
27 December 29 December
2020 2019
Group and Company GBP'000 GBP'000
Depreciation charge
----------- -----------
Leasehold Properties 1,635 -
----------- -----------
Interest expense (included in finance cost) 699 -
----------- -----------
Expense relating to short-term leases (included
in operating expenses) 99 -
----------- -----------
Expenses relating to low value assets that
are not shown above as short-term leases (included
in operating expenses - -
----------- -----------
The total cash outflow for leases in 2020 was GBP 2,046,000
.
14 Financial assets at fair value through Other Comprehensive
income
2020 2019
Group and Company GBP'000 GBP'000
At start of period - -
-------- --------
Additions 1,309 -
-------- --------
Revaluations - -
-------- --------
At end of period 1,309 -
-------- --------
During the year the Group acquired a 14% stake in certain
companies within the Mosaic Pub and Dining Group through a
subscription of new shares issued in connection with a fundraising
by The Galaxy (City) Pub Company Limited, The Pioneer (City) Pub
Company Limited and The Sovereign (City) Pub Company Limited (the
"Companies") for total cash consideration of approximately GBP1.2
million.
The Companies own and operate 9 pubs which are in prime
locations and benefit from strong asset backing, with 7 freehold
and 2 leasehold sites.
The Companies are part of the wider Mosaic Pub and Dining Group
("Mosaic"), which own 26 pubs across England. Mosaic has a similar
ethos and model to the City Pub Group, with each pub having its own
iden ti ty and talented and passionate staff who deliver a
high-quality experience. Investing in Mosaic furthers the City Pubs
Group's existing relationship with Mosaic who already nego ti ate
their largest supply deals together to get the best terms and
extends and strengthens the geographical area to which we have
exposure. With a stronger balance sheet Mosaic will be able to
focus on building shareholder value which will be beneficial to
both parties.
Clive Watson is an investment consultant to Mosaic. Richard
Pricke tt , Non-Execu ti ve Director of the City Pub Group, is a
Non-Executive Director of The Pioneer (City) Pub Company
Limited.
15 Investments in subsidiaries
2020 2019
Company GBP'000 GBP'000
At start of period 12,730 12,063
-------- --------
Additions - 407
-------- --------
Transferred on hive up of business - 263
-------- --------
Disposal on liquidation of subsidiaries - (3)
-------- --------
Write-down of investment (11,663) -
-------- --------
At end of period 1,067 12,730
-------- --------
During the prior year the Company hived up the trade and assets
of its subsidiary The City Pub Company (West) Limited via an
intercompany transfer, which included the transfer of investments
previously held by The City Pub Company (West) Limited. In the
current year there was final dividend from The City Pub Company
(West) Limited, which eliminated the amounts due to group
undertakings balance (note 16) and resulted in a write down of the
investments carrying value of GBP11,663,000.
The Company had the following subsidiary undertakings as at 27
December 2020:
Class of Country of Proportion Nature of
Name of subsidiary share held incorporation held business
The City Pub Company England and
(West) Limited Ordinary Wales 100% Dormant
-------------------- ----------- -------------- ---------- ---------
England and
BNB Leisure Limited Ordinary Wales 100% Dormant
-------------------- ----------- -------------- ---------- ---------
Gresham Collective England and
Ltd Ordinary Wales 100% Dormant
-------------------- ----------- -------------- ---------- ---------
Randall & Zacharia England and
Limited Ordinary Wales 100% Dormant
-------------------- ----------- -------------- ---------- ---------
England and
Chapel 1877 Ltd Ordinary Wales 100% Dormant
-------------------- ----------- -------------- ---------- ---------
England and
Flamequire Limited Ordinary Wales 100% Dormant
==================== =========== ============== ========== =========
The above companies all had the same registered office as the
parent company, being Essel House, 2nd Floor, 29 Foley Street,
London, W1W 7TH.
16 Inventories
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Finished goods and goods
for resale 703 1,220 703 1,220
-------- -------- -------- --------
During the year ended 27 December 2020 the Group (and Company)
had to write off GBP662,000 (2019: GBPnil) of inventory due to the
impact of the COVID-19 lockdowns in England, which has been
recognised within the other non-recurring items line as part of the
exceptional items in note 8.
17 Trade and other receivables
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Trade receivables 235 462 235 462
-------- -------- -------- --------
Government grant receivables 379 - 379 -
-------- -------- -------- --------
Corporation tax receivables 774 - 774 -
-------- -------- -------- --------
Other receivables 664 1,218 664 1,218
-------- -------- -------- --------
Prepayments and accrued
income 1,012 1,726 1,012 1,726
-------- -------- -------- --------
3,064 3,406 3,064 3,406
-------- -------- -------- --------
Rent deposits are included within other receivables, greater
than one year. They are at GBP358k (2019: GBP358k).
18 Current trade and other payables
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 2,641 3,392 2,641 3,392
-------- -------- -------- --------
Corporation taxation - 300 - 300
-------- -------- -------- --------
Other taxation and social
security 2,828 2,406 2,828 2,406
-------- -------- -------- --------
Amounts due to group undertakings - - 1,067 15,515
-------- -------- -------- --------
Accruals 2,190 1,488 2,190 1,488
-------- -------- -------- --------
Other payables 771 1,441 771 1,441
-------- -------- -------- --------
8,430 9,027 9,497 24,542
-------- -------- -------- --------
Included within Other taxation and social security is GBP80k is
due to be repaid greater than one year.
19 Non-current other payables
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Deferred consideration - 50 - 50
-------- -------- -------- --------
In the prior year, deferred consideration arose in relation to
the acquisition of both The Hoste and The Pride of Paddington, of
this deferred consideration GBP50,000 was due after more than one
year and GBP375,000 was due within one year and included within
other payables. There is GBP375,000 of deferred consideration
balance due in one year within other payables as at 27 December
2020.
20 Borrowings and lease liabilities
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Current borrowings and
financial liabilities:
-------- -------- -------- --------
Lease liabilities 2,103 - 2,103 -
-------- -------- -------- --------
Non-current borrowings
and financial liabilities:
-------- -------- -------- --------
Bank loans 24,801 32,310 24,801 32,310
-------- -------- -------- --------
Lease liabilities 17,750 - 17,750 -
-------- -------- -------- --------
42,551 32,310 42,551 32,310
-------- -------- -------- --------
At 27 December 2020 a revolving credit facility of GBP25,000,000
(2019: GBP32,500,000) was outstanding, net of capitalised
arrangement fees, Barclays Bank PLC had a fixed charge over certain
freehold property as security in respect of this loan. Interest was
charged at LIBOR plus a margin, which varied dependent on the ratio
of net debt to EBITDA. The revolving credit facility is repayable
in July 2022, but can be extended for an additional 2 years to July
2024.
Reconciliation of liabilities arising from financing
activities
The changes in the Group's liabilities arising from financing
activities can be classified as follows:
Long-term Short-term
Borrowings Borrowings Total
GBP'000 GBP'000 GBP'000
At 30 December 2019 32,310 - 32,310
----------- ----------- --------
Cash flows:
----------- ----------- --------
Repayment (7,500) - (7,500)
----------- ----------- --------
Non-cash items:
----------- ----------- --------
Amortisation of loan arrangement
fees (9) - (9)
----------- ----------- --------
At 27 December 2020 24,801 - 24,801
----------- ----------- --------
Long-term Short-term
Borrowings Borrowings Total
GBP'000 GBP'000 GBP'000
At 31 December 2018 11,600 - 11,600
----------- ----------- --------
Cash flows:
----------- ----------- --------
Proceeds 20,695 - 20,695
----------- ----------- --------
Non-cash items:
----------- ----------- --------
Amortisation of loan arrangement
fees 15 - 15
----------- ----------- --------
At 29 December 2019 32,310 - 32,310
----------- ----------- --------
The changes in the Company's liabilities arising from borrowings
can be classified as follows:
Long-term Short-term
Borrowings Borrowings Total
GBP'000 GBP'000 GBP'000
At 30 December 2019 32,310 - 32,310
----------- ----------- --------
Cash flows:
----------- ----------- --------
Repayments (7,500) - (7,500)
----------- ----------- --------
Non-cash items:
----------- ----------- --------
Amortisation of loan arrangement
fees (9) - (9)
----------- ----------- --------
At 27 December 2020 24,801 - 24,801
----------- ----------- --------
Long-term Short-term
Borrowings Borrowings Total
GBP'000 GBP'000 GBP'000
At 31 December 2018 7,100 - 7,100
----------- ----------- --------
Cash flows:
----------- ----------- --------
Proceeds 10,298 - 10,298
----------- ----------- --------
Transferred on hive up of business 14,897 - 14,897
----------- ----------- --------
Non-cash items:
----------- ----------- --------
Amortisation of loan arrangement
fees 15 - 15
----------- ----------- --------
At 29 December 2019 32,310 - 32,310
----------- ----------- --------
The changes in the Group's and Company's liabilities arising
from leases can be classified as follows:
Long-term Short-term
Lease liabilities Lease liabilities Total
GBP'000 GBP'000 GBP'000
At 30 December 2019 - - -
------------------ ------------------ --------
Recognised on adoption of IFRS 16 18,959 2,083 21,042
------------------ ------------------ --------
At 30 December 2019 -post adoption
of IFRS 16 18,959 2,083 21,042
------------------ ------------------ --------
Cash flows:
------------------ ------------------ --------
Repayments - (2,046) (2,046)
------------------ ------------------ --------
Accrued interest - 699 699
------------------ ------------------ --------
Non-cash items:
------------------ ------------------ --------
Additions 158 - 158
------------------ ------------------ --------
Reclassification (1,367) 1,367 -
------------------ ------------------ --------
At 27 December 2020 17,750 2,103 19,853
------------------ ------------------ --------
21 Financial instruments and risk management
Financial instruments by category:
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets - loans
and receivables
-------- -------- -------- --------
Trade and other receivables 899 1,680 899 1,680
-------- -------- -------- --------
Cash and cash equivalents 12,331 2,769 12,331 2,769
-------- -------- -------- --------
13,230 4,449 13,230 4,449
-------- -------- -------- --------
Prepayments are excluded, as this analysis is required only for
financial instruments.
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Non-current
-------- -------- -------- --------
Borrowings 24,801 32,310 24,801 32,310
-------- -------- -------- --------
Lease liabilities 17,750 - 17,750 -
-------- -------- -------- --------
Other payables - 50 - 50
-------- -------- -------- --------
42,551 32,360 42,551 32,360
-------- -------- -------- --------
Current
-------- -------- -------- --------
Current borrowings - - - -
-------- -------- -------- --------
Lease liabilities 2,103 - 2,103 -
-------- -------- -------- --------
Trade and other payables 3,412 4,833 3,412 4,833
-------- -------- -------- --------
Amounts due to group undertakings - - 1,067 15,515
-------- -------- -------- --------
5,515 4,833 6,582 20,348
-------- -------- -------- --------
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 Group Company Company
Cash at bank and short-term 2020 2019 2020 2019
deposits GBP'000 GBP'000 GBP'000 GBP'000
A1 12,082 2,637 12,082 2,637
-------- -------- -------- --------
Not rated 249 132 249 132
-------- -------- -------- --------
12,331 2,769 12,331 2,769
-------- -------- -------- --------
A1 rating means that the risk of default for the investors and
the policy holder is deemed to be very low.
Not rated balances relate to petty cash amounts.
Market risk - cash flow interest rate risk
The Group had outstanding borrowing of GBP25,000,000 at year end
as disclosed in note 20. These were loans taken out with Barclays
to facilitate the purchase of public houses.
The Group's policy is to minimise interest rate cash flow risk
exposures on long-term financing. Longer-term borrowings are
therefore usually at fixed rates. At 27 December 2020, the Group is
exposed to changes in market interest rates through bank borrowings
at variable interest rates. Other borrowings are at fixed interest
rates. The exposure to interest rates for the Group's cash at bank
and short-term deposits is considered immaterial.
The following table illustrates the sensitivity of profit and
equity to a reasonably possible change in interest rates of +/- 1%
on borrowings in the period. These changes are considered to be
reasonably possible based on observation of current market
conditions. The calculations are based on a change in the average
market interest rate on borrowings for each period. All other
variables are held constant.
Profit for
the year Equity
+1% -1% +1% -1%
----- ---------- ----- ------
27 December 2020 (317) 317 (317) 317
----- ---------- ----- ------
29 December 2019 (285) 285 (285) 285
----- ---------- ----- ------
Credit risk
The risk of financial loss due to a counter party's failure to
honour its obligations arises principally in relation to
transactions where the Group provides goods and services on
deferred payment terms and deposits surplus cash.
Group policies are aimed at minimising losses and deferred terms
are only granted to customers who demonstrate an appropriate
payment history and satisfy credit worthiness procedures.
Individual customers are subject to credit limits to control debt
exposure. Credit insurance is taken out where appropriate for
wholesale customers and goods may also be sold on a cash with order
basis.
Cash deposits with financial institutions for short periods are
only permitted with financial institutions approved by the Board.
There are no significant concentrations of credit risk within the
Group. The maximum credit risk exposure relating to financial
assets is represented by their carrying value as at the financial
period end.
Liquidity risk
The Group actively maintains cash and banking facilities that
are designed to ensure it has sufficient available funds for
operations and planned expansions. The table below analyses the
Group's financial liabilities into relevant maturity groupings
based on the remaining period at the period end date to the
contractual maturity date. The amounts disclosed in the table are
the contractual undiscounted cash flows.
Less than Between Between
1 year 1 and 2 years 2 and 5 years Over 5 years
Group GBP'000 GBP'000 GBP'000 GBP'000
As at 27 December 2020:
--------- -------------- -------------- ------------
Borrowings - - 24,801 -
--------- -------------- -------------- ------------
Lease liabilities 2,103 2,103 6,119 15,108
--------- -------------- -------------- ------------
Trade and other payables 3,412 - - -
--------- -------------- -------------- ------------
As at 29 December 2019:
--------- -------------- -------------- ------------
Borrowings - - 32,310 -
--------- -------------- -------------- ------------
Trade and other payables 4,833 50 - -
--------- -------------- -------------- ------------
Less than Between Between
1 year 1 and 2 years 2 and 5 years Over 5 years
Company GBP'000 GBP'000 GBP'000 GBP'000
As at 27 December 2020:
--------- -------------- -------------- ------------
Borrowings - - 24,801 -
--------- -------------- -------------- ------------
Lease liabilities 2,103 2,103 6,119 15,108
--------- -------------- -------------- ------------
Trade and other payables 4,479 - - -
--------- -------------- -------------- ------------
As at 29 December 2019:
--------- -------------- -------------- ------------
Borrowings - - 32,310 -
--------- -------------- -------------- ------------
Trade and other payables 20,348 50 - -
--------- -------------- -------------- ------------
Capital risk management
The Group manages its capital to ensure it will be able to
continue as a going concern while maximising the return to
shareholders through optimising the debt and equity balance.
The Group monitors cash balances and prepare regular forecasts,
which are reviewed by the board. In order to maintain or adjust the
capital structure, the Group may, in the future, return capital to
shareholders, issue new shares or sell assets to reduce debt.
22 Fair value measurements of financial instruments
Financial assets and financial liabilities measured at fair
value are required to be grouped into three levels of a fair value
hierarchy. The three levels are defined based on the observability
of significant inputs to the measurement, as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets and liabilities;
Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly or
indirectly; and
Level 3: unobservable inputs for the asset or liability.
There were no financial asset or liabilities measured at fair
value as at 30 December 2018 or 29 December 2019. During the period
ended 27 December 2020 the Group acquired investments in other
companies, which have been recognised at fair value at the
reporting date.
All investments in equity instruments are considered to be level
3 investments.
23 Deferred tax
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Provision for deferred
tax liabilities
-------- -------- -------- --------
Accelerated capital allowances 1,044 986 1,044 986
-------- -------- -------- --------
Arising on acquisition 1,137 1,137 1,137 1,137
-------- -------- -------- --------
2,181 2,123 2,181 2,123
-------- -------- -------- --------
Provision at the start
of the period 2,123 1,537 2,123 667
-------- -------- -------- --------
Arising on acquisition - 343 - 343
-------- -------- -------- --------
Transferred on hive up
of business - - - 870
-------- -------- -------- --------
Deferred tax charge for
the period 58 243 58 243
-------- -------- -------- --------
Provision at the end of
the period 2,181 2,123 2,181 2,123
-------- -------- -------- --------
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Deferred tax asset
-------- -------- -------- --------
Arising on tax losses carried
forward 503 - 503 -
-------- -------- -------- --------
Deferred tax asset at the - -
start of the period - -
-------- -------- -------- --------
Deferred tax credit for
the period 503 - 503 -
-------- -------- -------- --------
Deferred tax asset at the
end of the period 503 - 503 -
-------- -------- -------- --------
24 Share capital
2020 2019
GBP'000 GBP'000
Allotted called up and fully paid
-------- --------
105,684,425 Ordinary shares of 1 pence each:
(2019: 61,623,791 Ordinary share of 50p each) 1,057 30,812
-------- --------
3,021,770,759 Deferred shares of 1 pence each
(2019: nil) 30,218 -
-------- --------
Total 31,275 30,812
-------- --------
In February 2020 the Group issued 45,000 GBP0.50 shares at a
price of GBP1.00 per share in relation to the exercise of share
options. The premium on the shares issued was credited to the share
premium account.
In April 2020 the Group undertook a subdivision of its ordinary
share capital, which resulted in the issued ordinary share capital
of 61,668,791 ordinary GBP0.50 shares being subdivided into
3,083,439,550 ordinary GBP0.01 shares. After the subdivision
3,021,770,759 ordinary GBP0.01 shares were re-designated as
3,021,770,759 deferred GBP0.01 shares, leaving 61,668,791 ordinary
shares of GBP0.01 each.
In April 2020 the Group completed a Placing and Open Offer,
which were fully subscribed and resulted in the issue of 30,000,000
ordinary GBP0.01 shares at a price of GBP0.50 per share and
14,015,634 ordinary GBP0.01 shares at a price of GBP0.50 per share
respectively. The premium on the shares issued as part of the
Placing and Open Offer, less the share issue costs of GBP857,000
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.
The ordinary share capital account represents the amount
subscribed for shares at nominal value.
GBP0.50 Ordinary GBP0.01 Ordinary Deferred
shares shares shares
Number Number Number
At 30 December 2018 61,302,514 - -
---------------- ---------------- -------------
Issue of new ordinary shares for Scrip
dividend 103,777 - -
---------------- ---------------- -------------
Issue of new ordinary shares on exercise
of share options 217,500 - -
---------------- ---------------- -------------
At 29 December 2019 61,623,791 - -
---------------- ---------------- -------------
Issue of new ordinary shares on exercise
of share options 45,000 - -
---------------- ---------------- -------------
Sub-total 61,668,791 - -
---------------- ---------------- -------------
Impact of the subdivision of GBP0.50 ordinary
shares to GBP0.01 ordinary shares (61,668,791) 3,083,439,550 -
---------------- ---------------- -------------
Impact of the re-designation to deferred
shares - (3,021,770,759) 3,021,770,759
---------------- ---------------- -------------
Issue of new ordinary shares on Placing - 30,000,000
---------------- ---------------- -------------
Issue of new ordinary shares on Open Offer - 14,015,634
---------------- ---------------- -------------
At 27 December 2020 - 105,684,425 3,021,770,759
---------------- ---------------- -------------
Own shares held (JSOP)
The Group announced the establishment of a Joint Share Ownership
Plan ("JSOP") in January 2018, as detailed in the Company's AIM
Admission Document, to be used as part of the remuneration
arrangements for employees. This resulted in the purchase of the
Group's own shares and the creation of an Employee Benefit
Trust.
The JSOP purchases shares in the Company to satisfy the
Company's obligations under its JSOP performance share plan. No
shares (2019: no shares) in the Company were purchased during the
period at a cost of GBPnil (2019: GBPnil).
At 27 December 2020 the JSOP held 1,925,000 ordinary shares in
The City Pub Group plc (2019: 1,925,000).
At 27 December 2020 awards over 1,925,000 (2019: 1,925,000)
ordinary shares The City Pub Group plc, made under the terms of the
performance share plan, were outstanding.
Nature and purpose of reserves
The share premium account represents premiums received on the
initial issuing of the share capital. Any transaction costs
associated with the issuing of shares are deducted from share
premium, net of any related income tax benefits.
Own shares (JSOP) represents shares in the Company purchased by
the Group's Employee Benefit Trust as part of a Joint Share
Ownership Plan ("JSOP").
The other reserve has arisen from using the predecessor value
method to combine the results of the Company and its subsidiary The
City Pub Company (West) Limited, which was acquired through a share
for share exchange as part of the reorganisation of two entities
under common control prior to the Company's Listing on AIM. The
reserve represents the share premium that exists within The City
Pub Company (West) Limited.
Share-based payments reserve is used to recognise the grant date
fair value of options issued to employees but not exercised.
Retained earnings include all results as disclosed in the
statement of comprehensive income.
25 Staff costs
Number of employees
The average monthly numbers of employees (including salaried
Directors) during the period was:
2020 2019
Management and Administration 92 98
---- -----
Operation of Public Houses 892 1,111
---- -----
984 1,209
---- -----
Employment costs (including Directors)
2020 2019
GBP'000 GBP'000
Wages and salaries 15,500 20,392
-------- --------
Pension costs 323 380
-------- --------
Social security costs 913 1,318
-------- --------
Share based payments charge 397 273
-------- --------
17,133 22,363
-------- --------
26 Directors' remuneration
Single total figure of remuneration table
The following table shows a breakdown of the remuneration of
individual Directors who served in all or part of the year:
Compensation
for
Salary/Fees Taxable Benefits Pension/Other loss of office Total
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------- ------- -------- -------- ------- ------- -------- ------- ------- -------
Clive Watson 112 145 9 21 7 7 - - 128 173
------- ------- -------- -------- ------- ------- -------- ------- ------- -------
Alex Derrick 101 145 6 13 5 7 166 - 278 165
------- ------- -------- -------- ------- ------- -------- ------- ------- -------
Rupert Clark 112 145 9 9 7 7 - - 128 161
------- ------- -------- -------- ------- ------- -------- ------- ------- -------
Tarquin Williams 104 130 2 2 2 6 - - 108 138
------- ------- -------- -------- ------- ------- -------- ------- ------- -------
Toby Smith 33 - - - - - - - 33 -
------- ------- -------- -------- ------- ------- -------- ------- ------- -------
Richard Prickett 38 47 - - - - - - 38 47
------- ------- -------- -------- ------- ------- -------- ------- ------- -------
John Roberts 26 33 - - 26 50 - - 52 83
------- ------- -------- -------- ------- ------- -------- ------- ------- -------
Neil Griffiths 32 42 - - - - - - 32 42
------- ------- -------- -------- ------- ------- -------- ------- ------- -------
Total 558 687 26 45 47 77 166 - 797 809
------- ------- -------- -------- ------- ------- -------- ------- ------- -------
Emoluments in respect of the Directors are as follows:
2020 2019
GBP'000 GBP'000
Remuneration for qualifying services 797 809
-------- --------
The highest paid Director in the period received remuneration of
GBP278,000; (2019: GBP173,000). Four directors had equity settled
share options in issue at the period end (2019: Four). Additional
information on Directors' remuneration is given within the
Corporate Governance Report.
27 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 27 December 2020 2,515,000 options were
granted under the CSOP scheme (2019: no options granted), 2,100,000
options were granted under the Group's Long Term Incentive Plan
(2019: no options granted); and no awards were made under the JSOP
scheme (2019: no awards). A share-based payment charge of
GBP397,000 (2019: GBP274,000) has been reflected in the
consolidated statement of comprehensive income.
The fair value of options granted in the current period and the
assumptions used in the calculation are shown below:
Year of grant 2020 - CSOP 2020 - LTIP
Exercise price (GBP) 0.60 0.00
--------------------------------- -----------
Number of awards granted 2,515,000 1,900,000
--------------------------------- -----------
Performance based criteria (see Directors No
options for criteria) Yes
--------------------------------- -----------
Vesting period (years) 3 3
--------------------------------- -----------
Expected Life (years) 7 4
--------------------------------- -----------
Contractual life (years) 10 10
--------------------------------- -----------
Risk free rate 0.048% (0.0011)%
--------------------------------- -----------
Expected dividend yield 1.40% 1.00%
--------------------------------- -----------
Volatility 30% 27%
--------------------------------- -----------
Fair value (GBP) 0.15 0.92
--------------------------------- -----------
Movements in share-based payments are summarised in the table
below:
2020 2019
Weighted Weighted
average average
2020 exercise 2019 exercise
Number of price Number of price
Awards GBP Awards GBP
Outstanding at start of
period 3,332,500 1.75 3,785,000 1.69
---------- --------- ---------- ---------
Granted 4,615,000 0.33 - -
---------- --------- ---------- ---------
Exercised (45,000) 1.00 (217,500) 1.00
---------- --------- ---------- ---------
Expired (922,500) 1.11 (235,000) 1.48
---------- --------- ---------- ---------
Outstanding at end of period 6,980,000 0.90 3,332,500 1.75
---------- --------- ---------- ---------
Exercisable at 27 December
2020 405,000 1.00 735,000 1.00
---------- --------- ---------- ---------
The weighted average remaining contractual life of options
outstanding at the end of the period is 6.66 years (2019: 3.58
years).
Previous issues of CSOPs in both 2016 and 2018 had a vesting
period of 3 years, an expected life of 7 years and a contractual
life of 10 years. The exercise price for the 2016 CSOPs was GBP1.00
and the exercise price for the 2018 CSOPs was GBP1.70. The JSOP has
an exercise price of GBP2.05 and contractual life of 10 years.
At the end of the period there were 6,980,000 outstanding
options. The breakdown of these is as follows:
405,000 - 2016 CSOP, 235,000 - 2018 CSOP, 1,925,000 - JSOP,
1,900,000 - LTIP and 2,515,000 - 2020 CSOP.
28 Financial commitments
From 1 October 2019, the Group has recognised right-of-use
assets for these leases, except for short-term and low value
leases, see Accounting Policies and Note 13 for further
information. In the prior year, the Group had commitments under
non-cancellable operating leases in respect of land and buildings.
The Group's future minimum operating lease payments were as
follows:
Group Group Company Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Within one year - 2,061 - 1,508
-------- -------- -------- --------
Between one and five years - 8,242 - 6,031
-------- -------- -------- --------
After five years - 17,991 - 13,923
-------- -------- -------- --------
- 28,294 - 21,462
-------- -------- -------- --------
Commercial operating leases are typically for 15 to 25 years,
although certain leases have lease periods extending up to 99
years.
29 Ultimate controlling party and related party transactions
(i) Ultimate controlling party and related party
transactions
The Directors consider there to be no ultimate controlling
party. The following related party transactions took place during
the period:
GBP1,500 (2019: GBP15,006) was paid to Helen Watson, who is
related to Clive Watson. At the period end Helen Watson was owed
GBPnil (2019: GBPnil). Helen Watson has an existing GBP10,000 float
with the group.
At the end of the prior period an advance of GBP20,000 was paid
to Alex Derrick, which was repaid following his CSOP exercise in
February 2020.
Clive Watson is an investment consultant to Mosaic. Richard
Pricke tt , Non-Execu ti ve 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.
(ii) Remuneration of Key Management Personnel
The Company consider that the Directors are their key management
personnel and further detail of their remuneration is disclosed in
note 26.
No key personnel other than the directors have been identified
in relation to the periods ended 27 December 2020 and 29 December
2019.
30 Post balance sheet events
New GBP5m CLBLS
In March 2021, the Company agreed a new GBP5m CLBLS facility
through our bankers, Barclays over a 3 year period. This is in
addition to our existing GBP35m RCF.
Covid 19 Insurance Payment
In March 2021, the Company also received the GBP1m insurance pay
out from our insurers QBE for our claim relating to Covid.
KPH / Barts Pub Investment
We recently announced that we have acquired a 49% stake in Barts
Pub Ltd, owner of the iconic Kensington Park Hotel (KPH), based in
Ladbroke Grove for GBP750k. We will operate this pub under a
management contract initially and have also secured an option to
acquire the freehold of KPH to ensure that this asset comes into
our ownership soon.
Mosaic Investment
We also recently announced that we increased our investment into
Mosaic Pub and Dining (Tranche 1 of companies) by GBP1.2m in March
2021. Our total stake in Mosaic is now 24% for a total investment
of GBP2.4m.
31 Capital commitments
At the period end the Group and Company has no capital
commitments excluding the financial commitments disclosed in note
28.
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END
FR SFMSIFEFSEEI
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