Premium Bars & Restaurants' profits down

The smoking ban, pressure on consumer spending and a depressed property market will result in Premium Bars & Restaurants' (PBR) annual profits being "slightly below expectations".

The Living Room and Bel & The Dragon operator said overall group like-for-like sales for the period to June 9, 2008, were down five per cent, as food sales growth failed to compensate sufficiently for high, single digit drinks declines and rising costs.

"Food sales are not high enough in a market which has seen the sort of cost rises we've been witnessing," said PBR's executive chairman Mark Jones.

While the smoking ban had hit the group's wet-led, late night businesses, Jones said there had also been a "noticeable tightening" of consumer spending across PBR's food-focused operations.

"And we haven't been able to sell four non-core businesses in a timely fashion. It's difficult to sell such sites in this market," he added.

Jones said the failure to sell the properties would have a "material impact" on the group's full-year profit numbers, in the region of £1m.

Despite trading "very comfortably" up to last December, Jones said he couldn't be "wildly optimistic" regarding the market's fortunes for the next 12 months.

The group would be looking very closely at capital expenditure levels and reducing debt, he added.

"We have £5m in cash at the bank, and we will defend the refurbishment budget to the hilt," said Jones. "But the discretionary stuff will be deferred for the time being."

Jones said a hotel and a bar expansion project, likely to cost around £2m, would be put on hold.

As part of what he described as an "inexorable rise in costs", Jones said PBR would fork out an additional £1m across the board over the year.

However Jones said he was confident the strength of the group's brands and its strong balance sheet would see it through the tough market.

PBR will report its results for the year to June 30, 2008, on September 24.

Its shares were down 23p at 104.5p.