Premium Bars losses
Premium Bars & Restaurants has this morning posted pre-tax losses of £21.4m, announced the resignation of executive chairman Mark Jones and unveiled a like-for like sales drop in the first quarter of its new financial year of 7.4%.
Announcing full-year results for the period to 30th June, 2008, the group said it had witnessed a significant deterioration in the high street bar and restaurant market since Easter 2008. It said its sales had been hit by the wider economic malaise an expected adverse market conditions to continue for some time to come.
It reported a notable decline in early week footfall at its bars and said that spend per head was down at its restaurants as "customers tailored their spending as the economy faltered".
Group like-for-like sales were down 5% for the year, driven by declining drink sales and door income, but partly offset by a better performance in food and accommodation.
The heavy losses stemmed from a £20.5m one-off impairment charge. Losses before tax before non-recurring items were £0.9m. Underlying profits (ebitda) before non recurring items rose from £4.2m to £5.2m.
Jones also announced his departure. He said: "After over three years with the business, and having overseen the acquisition and integration of The Living Room and Bel and the Dragon, I have tendered my resignation to the board and given 12 months notice of my intention to leave the company.
"The board has accepted my resignation and discussions are underway regarding the timing of my departure from the business."
Following acquisitions, sales rose 79.8% to £66m, with food sales rising to £16.1m, now accounting for 24.4% of group sales. Before the two acquisitions food revenues accounted for less than 5% of sales.
Jones said: "We believe that our decision to broaden our asset base and grow our food sales has been the right long-term strategy for the group and has left us better placed to manage in the current economic climate.
"We believe that the late night drinks market will continue to struggle in the current economic climate and already there have been a significant number of high profile casualties."
The company said it had experienced a significant increase in cost, notably through utility costs. It said steps were being taken to address this issue. PBR said it would slow down capital expenditure as protecting profit margins and "conserving our cash balances is paramount at present".
Despite the pressure on costs, margins for both drink and food had improved during the year due to the increased buying power of the enlarged group. Drink margins increased 0.5% to 74.5% while food margins grew 10.9% to 68.6%.
PBR opened two new sites in the year - a Living Room in Milton Keynes and a Prohibition outlet at London's St Katherine's Dock - at a cost of £2.8m and expects to open a further Living Room in Bristol in November.
It spent a further £3m was spent on refurbishments and improvements in the existing estate.
It sold a further three sites, closed Prohibition in Liverpool and expects to sell a further seven sites this year.
The group now operates 48 sites, including 24 freehold properties. Restaurants account for more than 50% of sales. Its freehold assets after impairment charges are now worth £54.1m and PBR closed the year with £6m in cash in the bank. Net debt stood at £41.0m.
Jones added: "The focus on meeting our customers expectations and efficiently managing our business will continue, but because of the challenging trading conditions, we remain cautious about the prospects for the coming financial year."
