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30 September 2008

LONDON TOWN PLC

('London Town' or 'the Company')

Interim Results for the six months ended 30 June 2008

The Board of London Town announces the results of the Company for the six months ended 30 June 2008 and confirms that its Interim Results are available on its website, at www.londontownplc.co.uk. 

 

 

Enquiries: 

 

Nicholas Wells/Max Hartley 

Cenkos Securities plc                         0207 397 8900

Business Review

Principal activities

The principal activities of London Town plc ('the Company') and its subsidiaries ('the Group') comprise the operation of pubs either under lease and tenancy agreements or through the direct management of pubs. The Group's agreements with tenants in the leased estate comprise both tied and free of tie arrangements and generate income from rents, sales of beer and other drinks, and through profit share arrangements for income from leisure machines. The direct management of pubs generates income directly from pub customers from beer and other drink sales as well as food sales. The Group receives all revenues generated by the pubs and is responsible for costs. At 30 June 2008 the Group operated 266 pubs of which the leased estate comprised 205 mostly freehold pubs and the managed estate comprised 52leased and tenanted pubs and 9 freehold pubs.

Overview of the six months ended 30 June 2008

The six months ended 30 June 2008 is the first period of trading since the Company acquired GRS Inns Limited ('GRS') on 28 December 2007. This acquisition brought in the business of direct pub management to complement the Group's existing leased estate business. Additionally it enabled the Group to bring all operational and back office support services in house and this transition from the previously outsourced arrangements was completed at the beginning of April 2008. The leased estate has benefited from this transition in terms of improved wet income margins and from the reopening of previously closed houses. At 30 June 2008 some 15 pubs have been reopened of which 5 have reopened under the Group's own management. Additionally the Group has managed to avoid the closure of 4 other pubs by taking over direct management of them. The Group has also disposed of 9leased estate properties surplus to requirements for a net consideration of £2.4 million broadly in line with book values at the end of December 2007. Since the end of June the number of closed properties in the leased estate has reduced by a further 3 units through disposal and 7 units through reopenings. A disposal programme is also under way in respect of the managed estate and 8 pubs in this estate were disposed of in the first half of 2008.

Change of accounting policy

Following the changes in the nature of the business during the course of 2007 and the increasingly direct operational focus of the management team the Directors reclassified the pub assets of the leased estate as trading assets of the business rather than as investment property and accordingly the accounting policy was changed last year to reflect that. Accordingly the pub assets treated as investment property at 30 June 2007 have been reclassified and restated as land and buildings under property, plant and equipment. The resulting effect of the reclassification on the loss shown in the prior six month period was an increase in the loss of £181,000.

Results for the six months ended 30 June 2008

The consolidated income statement for the six months ended 30 June 2008 is set out below. Revenues amounted to £13.3 million (2007 - £5.6 million), the increase reflecting the acquisition of the managed estate of GRS. EBITDA amounted to £0.7 million (2007 - £1.9 million). The loss for the period of £5.2 million (2007 - £1.9 million) reflects continuingly difficult trading conditions, the provision of a further £2.5 million against the carrying value of properties held for sale as well as costs of transition from outsourced management to in-house management of the leased estate. An increasing number of closed properties during the course of 2007 has also adversely affected results for the first half of 2008 although good progress has been made since January in reopenings and disposals. The leased estate has contributed an EBITDA of £2.1 million for the six months ended 30 June 2008 (2007 - £2.5 million). This reduction in EBITDA is a result of the reduced number of units through closure, disposal or transfer to the managed estate. A reduction in barrelage per pub has also been a factor. The managed estate has broken even at EBITDA level for the first half in difficult trading conditions. Unallocated overheads for the first half amounted to £ 1.4 million (2007 - £0.6 million), the increase against 2007 reflecting the operational and back office support staff costs which are now in house and which will provide a platform to support further business growth.

Pub assets Pub numbers: The movements in pub numbers are as follows:	Leased	Managed	Held for sale	Total
At 31 December 2007	188	60	35	283
Disposals	-	(8)	(9)	(17)
Transfers	(17)	9	8	-
At 30 June 2008	171	61	34	266
Geographic location: The regional distribution of the pubs at 30 June 2008 was as follows:			Total
Leased Location	Estate	Managed Estate		Percentage
Scotland	1	3	4	2%
North East	4	1	5	2%
North West	76	6	82	31%
York/Humber	17	5	22	8%
East Midlands	4	3	7	3%
West Midlands	27	8	35	13%
Wales	4	1	5	2%
East of England	20	24	44	16%
South East	14	8	22	8%
South West	38	1	39	15%
London	-	1	1	0%
Total	205	61	266	100%

Financing

The Group's pub assets are financed by a combination of bank debt, deep discount bonds, short term loans and shareholders' equity.

Non-current bank debt at 30 June 2008 amounted to £85.6 million (2007 - £87.5 million). At 30 June 2008, 99% (2007 - 50%) of the interest rate risk of this debt was hedged with derivative financial instruments.

The deep discount bonds amounted to £ 16.2 million at 30 June 2008 (2007 - £ 14.8 million). The discount rate is 10% per annum which is accrued in the consolidated income statement and not paid until the bond is redeemed. The Group has the option to redeem these bonds with discount accrued to date at any time and without penalty. The bonds are held by the three principal shareholders of the Group.

On 27 March 2008 the Company obtained a short term unsecured loan ('the Loan') of £2.5 million from Burac Invest & Trade Corp ('Burac') for general working capital purposes. The Loan is repayable with interest at 10%, calculated at quarterly rests, no later than 20 March 2009. There is no penalty for early repayment. Burac is a substantial shareholder of the Company for the purposes of the AIM rules and, under the AIM rules, the Loan is a related party transaction. Having consulted with Cenkos Securities PLC, the Company's nominated adviser, the Directors of the Company consider that the terms of the Loans are fair and reasonable in so far as its shareholders are concerned.

On 27 September 2008 the Company obtained a short term unsecured loan of £1.4 million from Burac and a further £0.6 million from Robar Limited ('Robar'), together ('the Loans'). The Loans are to be used for general working capital purposes. The Loans are repayable with interest at 15%, calculated at quarterly rests, no later than 26 March 2009. There is no penalty for early repayment. Burac and Robar, being substantial shareholders of the Company, are related parties for the purposes of the AIM rules and, under the AIM rules, the Loans are related party transactions. Having consulted with Cenkos Securities PLC, the Company's nominated adviser, the Directors of the Company consider that the terms of the Loans are fair and reasonable in so far as its shareholders are concerned.

The Directors are currently renegotiating the terms and covenants on the Group's bank loans to reflect the acquisition of GRS. Further details relating to this are included in note 7.

Board and senior management

The following board changes have taken place:

On 13 June 2008 David Beech was appointed as a non-executive Director of the Company in place of Andrew Jurenko who resigned from the board on the same date.

On 10 July 2008 John Sands resigned as non-executive Chairman and Director of the Company. Ian Robinson was appointed as executive Chairman on the same date.

On 9 September 2008 Billy Buchanan was appointed to the board in the combined roles as Chief Executive Officer and Chief Financial Officer. Richard Gundry, previously Chief Executive Officer, was appointed Development Director of the Company and will support the Group in developing new business opportunities. On the same date, Ian Robinson, previously Executive Chairman and Finance Director, became non-executive Chairman and additionally Nigel Le Quesne was appointed as a non-executive Director in place of David Beech who resigned from the board on the same date.

Principal risks and uncertainties 

Smoking ban

The Group's pubs operate principally in England where a smoking ban was introduced in July 2007. The Group continues to work with lessees and tenants to ensure that they are able both to minimise any adverse trading impact resulting from the ban as well as take advantage of new trading opportunities such as food sales that may arise from a smoke free environment.

Recruitment and retention of lessees and tenants

The recruitment and retention of managers, lessees and tenants continues to be a principal focus of the Group's management team since this will be a key driver for the overall improvement in the quality and profitability of the pub assets. The market for good people remains competitive and the Group will work closely with current and prospective managers, lessees and tenants to ensure that the Group offers the right physical and business environment for both parties to prosper.

Interest rate risk

The Group borrows at a floating rate of interest at a margin above LIBOR and uses derivative financial instruments principally comprising interest rate caps for 99% of its outstanding borrowing to limit the Group's exposure to increasing interest rates.

Current trading and outlook

Current trading remains in line with expectations in what is a challenging market place for the pub industry. The Group continues to focus on its operational strengths and with a scaleable business platform will consider new business opportunities which can leverage off this base, particularly in the area of direct pub management services. The Group is committed to a number of capital expenditure projects at its pubs and intends to consider selective acquisitions at the appropriate time.

CONSOLIDATED INCOME STATEMENT For the six months ended 30 June 2008
	Notes	Unaudited 30 June 2008	Unaudited 30 June 2007 Restated	Audited 31 December 2007
		£'000	£'000	£'000
Revenue	2	13,360	5,621	11,424
Cost of sales		(5,809)	(2,228)	(4,519)
Gross profit		7,551	3,393	6,905
Operating expenses		(9,569)	(1,632)	(10,027)
Operating (loss)/profit		(2,018)	1,761	(3,122)
Add back Depreciation and amortisation		307	184	388
Profit on disposal of property, plant and equipment		(75)	-	-
Provision for loss on disposal of properties held for sale		2,458	-	5,849
EBITDA1		672	1,945	3,115
Operating (loss)/profit		(2,018)	1,761	(3,122)
Finance income	3	1,276	118	112
Finance expense	3	(4,417)	(3,755)	(8,631)
Loss before tax		(5,159)	(1,876)	(11,641)
Tax expense		-	-	-
Loss for the period attributable to equity holders of the parent company		(5,159)	(1,876)	(11,641)
Loss per share:
Basic	4	(17.55p)	(8.98p)	(48.96p)
Diluted	4	(17.55p)	(8.98p)	(48.96p)

1 Earnings before interest, tax, depreciation and amortisation and provision for loss on disposal of properties held for sale ('EBITDA')

  

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

For the six months ended 30 June 2008

		Notes	Unaudited Six months to 30 June 2008		Unaudited Six months to 30 June 2007 Restated	Audited Year to 31 December 2007
			£'000			£'000	£'000
Loss for the period			(5,159)			(1,876)	(11,641)
Total recognised income and expense attributable to equity holders of the parent company			(5,159)			(1,876)	(11,641)

CONSOLIDATED BALANCE SHEET At 30 June 2008
	Notes	Unaudited 30 June 2008	Unaudited 30 June 2007 Restated	Audited 31 December 2007
		£'000	£'000	£'000
Assets Non-current assets Property, plant and equipment	5	103,500	112,978	105,926
Goodwill		3,228	-	2,932
Intangible assets		2,309	386	2,431
Derivative financial assets		1,536	264	300
		110,573	113,628	111,589
Current assets Inventories		382	-	574
Trade and other receivables		1,872	1,366	1,733
Cash and cash equivalents		1,074	3,280	2,942
		3,328	4,646	5,249
Non-current assets classified as held for sale	6	8,736	7,409	10,759
Total assets		122,637	125,683	127,597
Liabilities Current liabilities Trade and other payables		5,046	2,190	5,350
Corporation tax payable		14	-	41
Loans and borrowings	7	5,569	-	3,536
Provisions		62	-	87
		10,691	2,190	9,014
Non-current liabilities Derivative financial liabilities		-	-	11
Loans and borrowings	7	101,826	102,278	103,293
Deferred tax liabilities		373	-	373
		102,199	102,278	103,677
Total liabilities		112,890	104,468	112,691
Net assets		9,747	21,215	14,906
Equity Called up share capital		1,469	1,319	1,469
Share premium reserve		22,505	22,387	22,505
Merger reserve		2,282	-	2,282
Shares to be issued		875	-	875
Retained earnings		(17,384)	(2,491)	(12,225)
Total equity attributable to equity holders of the parent company		9,747	21,215	14,906

CONSOLIDATED CASH FLOW For the six months ended 30 June 2008
	Notes	Unaudited Six months to 30 June 2008	Unaudited Six months to 30 June 2007 Restated	Audited Year to 31 December 2007
		£'000	£'000	£'000
Operating activities Loss for the year		(5,159)	(1,876)	(11,641)
Provision for loss on disposal of properties held for sale		2,458	-	5,849
Profit on disposal of property, plant and equipment		(75)	-	-
Depreciation and amortisation		307	184	388
Finance income		(1,276)	(118)	(112)
Finance expense		4,417	3,755	8,632
Share based payment charge		-	-	31
Cash inflow before changes in working capital		672	1,945	3,147
(Increase)/decrease in trade and other receivables		(253)	1,395	1,793
(Decrease)/increase in trade and other payables		(621)	(226)	45
Decrease in inventories		192	-	-
Cash (outflow)/inflow from operating activities		(10)	3,114	4,985
Investing activities Acquisition of subsidiary, net of cash acquired		-	-	(431)
Purchase of property, plant and equipment		(607)	(19,066)	(19,885)
Purchase of intangible assets: operating leases		(22)	(108)	(129)
Proceeds from sale of property, plant and equipment		73	-	-
Proceeds from sale of non current assets classified as held for sale		2,368	-	-
Cash inflow/(outflow) from investing activities		1,812	(19,174)	(20,445)
Financing activities Issue of ordinary shares		-	9,937	9,937
Share issue expense paid		-	(130)	(131)
Proceeds from bank borrowings		-	11,583	11,779
Proceeds from short term loan		2,500	-	2,500
Repayment of bank borrowings		(2,360)	-	-
Repayment of deep discount bonds		-	(1,831)	(1,831)
Purchase of interest rate hedge		-	(47)	(717)
Interest paid		(3,387)	(2,917)	(6,380)
Interest received		30	63	110
Cash (outflow)/inflow from financing activities		(3,217)	16,658	15,267
(Decrease)/increase in cash and cash equivalents		(1,415)	598	(193)
Cash and cash equivalents at beginning of period		2,489	2,682	2,682
Cash and cash equivalents at end of period		1,074	3,280	2,489
Cash and cash equivalents comprise: Cash at bank and in hand		1,074	3,280	2,942
Bank overdrafts		-	-	(453)
Cash and cash equivalents at end of period		1,074	3,280	2,489

Notes to the Financial Statements

For the six months ended 30 June 2008

1    Accounting policies

Basis of preparation

These interim financial statements have been prepared using, on a consistent basis, the accounting policies set out in the Group's Annual Report and Financial Statements for the year ended 31 December 2007, and which are expected to apply at 31 December 2008 which is consistent with International Financial Reporting Standards endorsed for use in the European Union and which are expected to apply here. The comparative figures for the period ended 30 June 2007 have been restated following the changes in the nature of the business during 2007. Further details can be found in the Group's annual report for the year ended 31 December 2007.

In the year ending 31 December 2008, the Group will be adopting IFRS 7 'Financial instruments: disclosures'. The impact of the new standard will be to expand the disclosures provided in the financial statements for the year ending 31 December 2008 regarding the Group's financial instruments.

These interim financial statements are unaudited. The figures for the year ended 31 December 2007 have been extracted from the Annual Report and Financial Statements for the year ended 31 December 2007, which have been reported on by the Group's auditors and filed with the Registrar of Companies. The report of the auditors was unqualified, did not include references to any matter to which the auditors drew attention by way of emphasis without qualifying their report, and did not make any statement under sections 237 (2) or (3) of the Companies Act 1985. 

The financial information in this document does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985 and has neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board.

  2    Segment information

The Group operates in two business segments: a leased estate and a managed estate. There is only one geographic segment as all activities are conducted in the United Kingdom.

	30 June 2008 (Unaudited)
	Leased	Managed	Unallocated	Total
	£'000	£'000	£'000	£'000
Revenue:
Rent	1,696	-	-	1,696
Sale of beer and other drinks1	3,412	7,234	-	10,646
Income from leisure machines	169	250	-	419
Food income	-	431	-	431
Accommodation income	-	168	-	168
Total revenue	5,277	8,083	-	13,360
Cost of sales	(2,157)	(3,652)	-	(5,809)
Gross profit	3,120	4,431	-	7,551
Operating expenses	(3,418)	(4,716)	(1,435)	(9,569)
Segment result	(298)	(285)	(1,435)	(2,018)
Add back:
Depreciation and amortisation	36	271	-	307
(Profit)/loss on disposal of property,
plant and equipment	(84)	9	-	(75)
Provision for loss on disposal of
properties held for resale	2,458	-	-	2,458
EBITDA2	2,112	(5)	(1,435)	672
Segment result	(298)	(285)	(1,435)	(2,018)
Finance income	-	-	1,276	1,276
Finance expense	-	-	(4,417)	(4,417)
Loss before taxation	(298)	(285)	(4,576)	(5,159)
Taxation	-	-	-	-
Loss for year	(298)	(285)	(4,576)	(5,159)
Assets and liabilities
Total assets	111,905	4,351	6,591	122,847
Total liabilities	(1,841)	(2,387)	(108,872)	(113,100)
Net assets	110,064	1,964	(102,281)	9,747
Other information
Capital expenditure	277	194	136	607

1 Sales of beer and other drinks represent sales to lessees and tenants in the leased estate and sales directly to pub customers in the managed estate.

2 Earnings before interest, tax, depreciation and amortisation and provision for loss on disposal of properties held for sale ('EBITDA')

  2    Segment information (continued)

	30 June 2007 Restated (Unaudited)
	Leased	Managed	Unallocated	Total
	£'000	£'000	£'000	£'000
Revenue:
Rent	1,846	-	-	1,846
Sale of beer and other drinks1	3,577	-	-	3,577
Income from leisure machines	198	-	-	198
Food income	-	-	-	-
Accommodation income	-	-	-	-
Total revenue	5,621	-	-	5,621
Cost of sales	(2,228)	-	-	(2,228)
Gross profit	3,393	-	-	3,393
Operating expenses	(1,036)	-	(596)	(1,632)
Segment result	2,357	-	(596)	1,761
Add back::
Depreciation and amortisation	184	-	-	184
(Profit)/loss on disposal of property,
plant and equipment	-	-	-	-
Provision for loss on disposal of
properties held for resale	-	-	-	-
EBITDA2	2,541	-	(596)	1,945
Segment result	2,357	-	(596)	1,761
Finance income	-	-	118	118
Finance expense	-	-	(3,755)	(3,755)
Loss before taxation	2,357	-	(4,233)	(1,876)
Taxation	-	-	-	-
Loss for year	2,357	-	(4,233)	(1,876)
Assets and liabilities
Total assets	121,839	-	3,630	125,469
Total liabilities	(1,638)	-	(102,616)	(104,254)
Net assets	120,201	-	(98,986)	21,215
Other information
Capital expenditure	19,005	-	-	19,005

1 Sales of beer and other drinks represent sales to lessees and tenants in the leased estate and sales directly to pub customers in the managed estate.

2 Earnings before interest, tax, depreciation and amortisation and provision for loss on disposal of properties held for sale ('EBITDA')

  2    Segment information (continued)

	31 December 2007 Restated (Audited)
	Leased	Managed	Unallocated	Total
	£'000	£'000	£'000	£'000
Revenue:
Rent	3,789	-	-	3,789
Sale of beer and other drinks1	7,248	-	-	7,248
Income from leisure machines	387	-	-	387
Food income	-	-	-	-
Accommodation income	-	-	-	-
Total revenue	11,424	-	-	11,424
Cost of sales	(4,519)	-	-	(4,519)
Gross profit	6,905	-	-	6,905
Operating expenses	(8,425)	-	(1,602)	(10,027)
Segment result	(1,520)	-	(1,602)	(3,122)
Add back::
Depreciation and amortisation	362	-	26	388
(Profit)/loss on disposal of property,
plant and equipment	-	-	-	-
Provision for loss on disposal of
properties held for resale	5,849	-	-	5,849
EBITDA2	4,691	-	(1,576)	3,115
Segment result	(1,520)	-	(1,602)	(3,122)
Finance income	-	-	112	112
Finance expense	-	-	(8,631)	(8,631)
Loss before taxation	(1,520)	-	(10,121)	(11,641)
Taxation	-	-	-	-
Loss for year	(1,520)	-	(10,121)	(11,641)
Assets and liabilities
Total assets	116,194	5,540	6,073	127,807
Total liabilities	(2,168)	(3,396)	(107,337)	(112,901)
Net assets	114,026	2,144	(101,264)	(14,906)
Other information
Capital expenditure	19,918	-	-	19,918
Share based payment charge	31	-	-	31

1 Sales of beer and other drinks represent sales to lessees and tenants in the leased estate and sales directly to pub customers in the managed estate.

2 Earnings before interest, tax, depreciation and amortisation and provision for loss on disposal of properties held for sale ('EBITDA')

3    Net finance income/(cost)
	Unaudited 30 June 2008	Unaudited 30 June 2007 Restated	Audited 31 December 2007
	£'000	£'000	£'000
Finance income Interest receivable on bank deposits	24	63	110
Other interest receivable	6	-	2
	30	63	112
Profit on derivatives used to manage fair value interest rate risk	1,246	55	-
	1,276	118	112
Finance expense Interest payable on bank loans	3,343	2,917	6,380
Amortisation of debt issue costs	107	95	203
Interest payable on short term loans	190	-	4
Discount on deep discount bonds	772	743	1,455
Hire purchase interest	5	-	-
	4,417	3,755	8,042
Loss on derivatives used to manage fair value interest rate risk	-	-	589
	4,417	3,755	8,631

4    Loss per share 

The basic loss per share is calculated in accordance with International Accounting Standard 33 on the loss for the period of £5,159,000 (December 2007 - £11,641,000; June 2007 - £1,876,000) and 29,383,368 (December 2007 - 23,772,415; June 2007 - 20,901,318) being the weighted average number of shares in issue. Share options in place during the period are deemed to be anti-dilutive as the Group has reported a loss for the year. Shareholders' funds per share are 33.1 pence (December 2007 - 50.7 pence; June 2007 - 81.1 pence). The calculation is based on the shareholders' funds at the period end of £9,747,000 (December 2007 - £14,906,000; June 2007 - £21,413,000) divided by the number of shares in issue at the period end amounting to 29,383,368 shares (December 2007 - 29,383,368; June 2007 - 26,383,368).

5    Property, plant and equipment

	Unaudited 30 June 2008	Unaudited 30 June 2007 Restated	Audited 31 December 2007
	£'000	£'000	£'000
Land and buildings	102,005	112,966	104,326
Public house fixtures and fittings	1,308	-	1,465
Motor vehicles	91	-	15
Office equipment	96	12	120
	103,500	112,978	105,926

6    Non-current assets classified as held for sale
	Unaudited 30 June 2008	Unaudited 30 June 2007 Restated	Audited 31 December 2007
	£'000	£'000	£'000
Non current assets classified as held for sale	16,077	7,409	16,608
Provision for loss on properties held for sale	(7,341)	-	(5,849)
	8,736	7,409	10,759

The movement in non-current assets held for sale in the 6 months ended 30 June 2008 represents net transfers from land and buildings of £2,718,000 less disposals in the period of £2,283,000 and a further provision of £2,458,000.

7    Loans and borrowings - current

	Unaudited 30 June 2008	Unaudited 30 June 2007 Restated	Audited 31 December 2007
	£'000	£'000	£'000
Bank loan (secured)	569	-	583
Bank overdraft (secured)	-	-	453
Unsecured loans	5,000	-	2,500
	5,569	-	3,536

The bank loan of £569,000 is owed by GRS Inns Limited ('GRS') and is secured by way of a fixed charge over certain operating leases of GRS and a floating charge over the assets and liabilities of GRS. The loan is repayable with interest at 1.95% above the bank's base rate.

The unsecured loans represent £2,500,000 from Anne Street Partners Limited and £2,500,000 from Burac Trade and Invest Corp. Both loans are repayable with interest at 10%, calculated at quarterly rests, at the end of 360 days. There is no penalty for early repayment.

Loans and borrowings - non-current

	Unaudited 30 June 2008	Unaudited 30 June 2007 Restated	Audited 31 December 2007
	£'000	£'000	£'000
Secured bank loans	85,574	87,509	87,812
Deep discount bonds	16,252	14,769	15,481
	101,826	102,278	103,293

The bank loans are secured by a fixed charge over the Group's freehold property and bear interest at floating rates of three month LIBOR plus 1.65%. The bank loans are for a 5 year term ending on 26 September 2011.

The secured bank loans include the balance of unamortised debt issue costs of £698,000 (December 2007 - £805,000; June 2007 - £911,000).

Following the acquisition of GRS the Directors are in the process of renegotiating the terms and covenants on the secured bank loans. The new agreement is not expected to result in a change in the bank loan amount and is expected to enable the Group to meet its loan covenant requirements at future dates and accordingly the Directors are confident that the Group will continue to have sufficient loan facilities. Waivers for bank covenant tests were in place at 30 June 2008 in relation to secured bank loans totalling £85,574,000 at that date. Therefore these loans have been presented in the balance sheet as falling due for payment under their original terms rather than on demand.

7    Loans and borrowings - non-current (continued)

The deep discount bonds are secured by a fixed and floating charge over the assets and liabilities of the Company, subject to the priority of the secured bank loans. The deep discount bonds are redeemable at the option of the Company at any time subject to the priority and consent of the bank. The deep discount bonds accrue discount at 10% per annum on a compound basis. Details of the bonds issued are summarised below:

Issue date	Redemption date	Subscription price	Redemption price
		£'000	£'000
20 December 2006	20 December 2011	14,030	22,597

8    Dividends

The directors do not propose to pay an interim dividend.

ENDIR LMMITMMMJBPP