London Town: revenues broadly unchanged
London Town, the AIM-listed pub operator, London Town has reported revenues for the six months to 28 June are "broadly unchanged" at £13.6m.
Earnings Before Interest Tax Depreciation and Amoritisation (EBITDA) came in at £1.7m compared with £0.7m last year but the loss for the period was still £2.6m against a larger loss of £5.2m last year.
The group has negative shareholders' funds of £13.2m and discussions are taking place with both banks and shareholders as to how the group should be refinanced.
Current trading is in line with expectations but remains difficult. Adjusted EBITDA for the leased pubs at £2.3m (2008: £2.1m) reflects a reduction in operating expenses principally as a result of the transition to in-house management of this division, reduced closed pub costs and lower bad debt provision.
Rents at £1.7m (2008: £1.7m) are unchanged on the prior year. Wet income at £2.9m (2008: £3.4m) was down 14% reflecting reduced number of pubs as well as a general industry decline in wet sales.
During the period, 18 pubs have moved across to the managed division which has avoided the immediate closure of these pubs. Adjusted EBITDA for the managed pubs, at a loss of £99,000 (2008: £5,000), reflects continuing difficult trading conditions generally across the sector as well as the inclusion of certain loss-making units where the company is the lessee or tenant.
A number of these agreements have been assigned during the course of the year and others have been terminated at the end of the lease or tenancy. The company said it will continue to review all options with regard to these units.
This division also includes an increasing number of pubs managed for other pub owners with income derived from a number of different arrangements including management fees and profit shares.
In the period since 28 December 2008 a further 120 managed pubs have joined this division of which 102 pubs were under management for other pub owners.
The growth of this third party business is expected to continue.
The company added: "During 2008 and 2009 the covenants on the group's bank loans were breached and have therefore been reclassified as current, despite their scheduled repayment date being September 2011.
"The directors' expectations are that negotiations with the bank will be satisfactorily concluded and the facility will be continued. The group financial statements have been prepared on a going concern basis to reflect this."
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