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The Capital Pub Company PLC
("Capital Pub Company" or "the Company")

Interim results for the 26 week period ended 26 September 2009

Capital Growth

Capital Pub Company operates 25 high quality predominantly freehold pubs in London.

Highlights

Financial

• Revenue up 9% to £11.1m (2008: £10.1m)

• Adjusted EBITDA up 21% to £3.0m (2008: £2.5m)

• Adjusted EBITDA margin 26.7% (2008: 24.4%)

• Adjusted pre tax profits up 20% to £1.4m (2008: £1.2m)

• Adjusted basic earnings per share up 23% to 5.15p (2008: 4.20p)

• £1.9m of cash generated (2008: £1.4m)

Operational

• London market remains strong and pubs trading well

• Benefits of previous investment reflected in excellent performance

• Performance driven by better retailing at pub level coupled with effective cost control

• Acquisition of two additional pubs since the period end

• The Company is in excellent shape and will benefit from the Football World Cup in 2010

Clive Watson, Chief Executive of Capital Pub Company Plc, said:

"These are outstanding results in this economic climate. Our focus on well-invested high quality, freehold pubs in London is reaping its rewards. We continue to seek further similar pubs to add to our portfolio. We will continue to benefit from a strong London market and the unique positioning of our estate. We anticipate further progress in 2010."

18 November 2009

Enquiries

Capital Pub Company Plc	Today: 020 7457 2020
Clive Watson, Chief Executive	Thereafter: 020 7589 4888
Nick Collins, Finance Director
Altium	Tel: 020 7484 4040
Ben Thorne
Sam Fuller
College Hill	Tel: 020 7457 2020
Justine Warren
Matthew Smallwood

  Chairman's Statement

I am pleased to report the Interim results of the Company for the 26 week period to 26 September 2009.

The Company now has a fully refurbished estate of 25 high quality, predominantly freehold pubs based entirely in London.  Since the period end contracts have been exchanged to acquire two more pubs which, when completed, will bring the estate to 27 London pubs. 

Financial Results 

The Board is delighted with the performance of the Company over the last six months.

• Revenue increased 9% to £11.1m from £10.1m for the same period last year
• Adjusted EBITDA increased 21% to £3.0m from £2.5m for the same period last year
• Adjusted EBITDA margin increased to 26.7% from 24.4% for the same period last year
• Adjusted pre-tax profits increased 20% to £1.4m from £1.2m for the same period last year
• Adjusted basic earnings per share increased 23% to 5.15p from 4.20p for the same period last year
• Cash generated from operating activities increased 36% to £1.9m from £1.4m for the same period last year
• Operating cash flow per share increased to 9.5p from 6.8p for the same period last year

Adjusted items have been adjusted to exclude share options charges, exceptional operating items and losses on disposal of property. A reconciliation to reported earnings is provided in note 2 of the report.

This improved performance was driven by better retailing at pub level coupled with effective cost control at branch and head office levels. 

Corporate Strategy 

The Company's aim is to continue to increase the size of its estate and at the same time deliver enhanced returns through better retailing and stringent cost reduction at branch and head office levels. Cost savings have already been achieved and the Company continues to look at further economies in its estate and at head office. 

Operations

The Company's focus is wet-led with liquor sales accounting for 80% of total sales. During the period the food offer in some of the pubs has been fine-tuned to drive liquor sales which the Company believes delivers more profit at house level.

Margins on both liquor and food sales remain in-line with March 2009 levels underlining the Company's ability to increase sales without the need to offer discounts or promotional offers. 

The continued operational success is driven by the Company's culture of offering its pub managers a high level of autonomy and encouraging a style of service tailored to the local environment and clientele.  This is evidenced by the widespread inclusion of cask conditioned ales and the use of specialist suppliers local to the pubs.

The Company has focused on spending small amounts of capital in improving ancillary areas of its pubs primarily to increase its function trade. In the period £0.5m was invested.

Small refurbishments have been undertaken at The Alexandra, The Anglesea Arms, The George, The Golden Lion, The Inn at Kew Gardens, The Marquis of Granby, The Square Pig and The Warwick Castle and it is anticipated that the Company will benefit from these in the run up to Christmas. 

More significant refurbishments have recently been undertaken at The Durell Arms and The Teddington Arms and these will lead to further improved performance. 

Acquisitions & Disposal

Acquisitions

In April this year The Bishop in East Dulwich, SE22 was acquired for an initial consideration of £400,000 plus a further earn-out consideration of up to a maximum of £350,000 subject to the pub's profit target being reached during the first year of ownership. This site continues to trade well. Since the period end contracts have been exchanged on two more pubs.

The Wishing Well, SE15:  

A freehold pub with 17 letting bedrooms located in Peckham Rye SE15 for a consideration of £880,000.  This will be funded from existing reserves and a refurbishment will start in January 2010.

The Uplands, SE22:

A free-of-tie, leasehold pub located in East Dulwich acquired for a premium of £50,000. The Company has the benefit of an option to purchase the freehold.

It is anticipated that these acquisitions will enable the Company to grow sales and pub profits significantly.  

Disposals 

The Company has granted a 15 year lease on The Peer, Chelsea SW3, however the Company still retains the freehold investment.  

Balance Sheet and Funding 

The Company remains securely funded with a largely freehold, high quality, asset-backed pub estate. The current level of debt approaching £28m represents gearing of 83%. The average interest rate including bank margin is around 6.1% per annum. The Company has unutilised facilities of around £3.5m and will partly use these to fund the two new acquisitions announced since the period end and any associated refurbishments. Underlying cash flow generated from the estate will be used to repay long-term bank borrowings. Under the terms of the loan agreements capital is repaid at £1.35m per annum, commencing in December 2009 until a final payment becomes due in 2017. The Company remains well within its banking covenants. 

With all large refurbishments across the existing estate now complete there is no significant planned capital expenditure and the Company is strongly cash generative.

Current Trading outlook 

Capital has a high quality pub estate which is securely financed and highly cash generative. This estate has been further improved in the period under review and the Company has already seen the benefits of this coming through.

Trading in London continues to be encouraging. The Company is looking forward to 2010 especially with the Football World Cup commencing next June, when historically our pubs have benefitted from increased trade.

The Company has a strong and highly motivated management team which is concentrating on driving the business forward. I am confident that the company will see further good progress in 2010.

Shareholder Information

Shareholders who wish to keep up to date with news about the Company should visit our website www.capitalpubcompany.com which includes details of our portfolio of pubs, corporate information and promotional activity. 

JAMES BRUXNER CBE

Chairman

18 November 2009

  Condensed consolidated interim income statement

	Period ended 26 September 2009 Unaudited	Period ended 27 September 2008 Unaudited	Year to  28 March  2009 Audited
	£000	£000	£000
Revenue
Ongoing operations	10,409	10,124	19,771
Acquisitions	658	-	-
Revenue	11,067	10,124	19,771
Cost of sales	(3,034)	(2,743)	(5,329)
Gross profit
Ongoing operations	7,615	7,381	14,442
Acquisitions	418	-	-
Gross profit	8,033	7,381	14,442
Administrative expenses	(5,778)	(5,376)	(10,799)
Operating profit
Ongoing operations	2,109	2,005	3,643
Acquisitions	146	-	-
Operating profit	2,255	2,005	3,643
Operating profit	2,255	2,005	3,643
Share options charge	38	32	44
Depreciation	561	437	878
Earnings before financial instruments, share options charge, interest, tax and depreciation	2,854	2,474	4,565
Loss on disposal of properties	(6)	-	-
Impairment of goodwill	-	-	(977)
Finance costs	(1,013)	(885)	(1,913)
Finance income	7	3	5
Movement in fair value of interest rate swaps	-	(309)	(309)
Profit before taxation	1,243	814	449
Taxation	(346)	(323)	91
Profit for the period attributable to equity shareholders	897	491	540

Earnings per share 

	Note
Basic	2	4.43	2.48	2.72
Diluted	2	4.10	2.48	2.72

Condensed consolidated statement of comprehensive income

	26 September 2009 Unaudited	27 September 2008 Unaudited	28  March  2009 Audited
	£ 000	£ 000	£ 000
Profit for the period	897	491	540
Other comprehensive income net of tax			-
Cash flow hedges:	-	-	-
Gains/(losses) arising in the year	946	-	(3,358)
Reclassification adjustments for gains/ (losses) included in profit or loss	618	-	-
Tax relating to components of other comprehensive income	(438)	-	940
Other comprehensive income for the period net of tax	1,126	-	(2,418)
Total comprehensive income for the period attributable to equity shareholders	2,023	491	(1,878)

  

Condensed consolidated interim balance sheet

	26 September 2009 Unaudited		27 September 2008 Unaudited	28 March 2009   Audited
	£ 000		£ 000	£ 000
ASSETS
Non-current assets
Property, plant and equipment	67,984		68,160	68,012
Goodwill	-		977	-
Other non-current assets	1,780		997	1,023
Trade and other receivables	55		279	43
	69,819		70,413	69,078
Current assets
Inventories	283		303	316
Prepayments	558		554	-
Trade and other receivables	217		416	474
Cash and cash equivalents	2,718		510	1,647
	3,776		1,783	2,437
Total assets	73,595		72,196	71,515

  

Condensed consolidated interim balance sheet (continued) 

	26 September 2009 Unaudited		27 September 2008 Unaudited	28 March 2009 Audited
	£ 000		£ 000	£ 000
LIABILITIES
Current liabilities
Bank loans and overdrafts	1,288		72	598
Trade and other payables	2,346		2,021	1,510
Current tax payable	186		295	186
Accruals	735		837	777
Derivative financial instruments	613		1,050	951
	5,168		4,275	4,022
Non-current liabilities
Long-term borrowings	29,587		30,260	30,286
Current tax payable	358		323	-
Deferred tax liabilities	3,638		4,438	3,200
Derivative financial instruments	2,231		-	3,457
	35,814		35,021	36,943
Total liabilities	40,982		39,296	40,965
EQUITY
Issued capital and reserves
Share capital	10,165		9,953	9,953
Share premium	10,621		10,589	10,588
Revaluation reserve	11,045		11,045	11,045
Cash flow hedge reserve	(1,292)		-	(2,418)
Investment in own shares	(244)		-	-
Retained earnings	2,138		1,183	1,240
Share options reserve	180		130	142
Total equity	32,613		32,900	30,550
Total equity and liabilities	73,595		72,196	71,515

  

Condensed consolidated interim statement of changes in equity 

	Share  Capital	Share Premium	Revaluation Reserve	Cash flow Hedge Reserve	Investment in own shares	Retained Earnings	Share Options Reserve	Total Equity
	£ 000	£ 000	£ 000	£ 000	£ 000	£ 000	£ 000	£ 000
At 30 March 2008	9,890	10,548	11,045			1,113	98	32,694
Shares issued in the period	63	41	-	-	-	-	-	104
Dividends paid	-	-	-	-	-	(421)	-	(421)
Net cost of share-based payments	-	-	-	-	-	-	32	32
Total comprehensive income for the period	-	-	-	-	-	491	-	491
At 27 September 2008	9,953	10,589	11,045	-	-	1,183	130	32,900
Shares issued in the period	-	(1)	-	-	-	-	-	(1)
Dividends paid	-	-	-	-	-	8	-	8
Net cost of share-based payments	-	-	-	-	-	-	12	12
Total comprehensive income for the period	-	-	-	(2,418)	-	49	-	(2,369)
At 28 March 2009	9,953	10,588	11,045	(2,418)	-	1,240	142	30,550
Shares issued in the period	212	33	-	-	-	-	-	245
Dividends paid	-	-	-	-	-	1	-	1
Investment in own shares	-	-	-	-	(244)		-	(244)
Net cost of share-based payments	-	-	-	-	-	-	38	38
Total comprehensive income for the period	-	-	-	1,126	-	897	-	2,023
At 26 September 2009	10,165	10,621	11,045	(1,292)	(244)	2,138	180	32,613

  

Condensed consolidated interim cash flow statement

	Period ended 26 September 2009 Unaudited	Period ended 27 September 2008 Unaudited	Year to 28  March 2009 Audited
	£ 000	£ 000	£ 000

Cash flows from operating activities

Profit after taxation	897	491	540
Adjustments for:
Depreciation and amortisation	561	437	878
Share options charge	38	32	44
Finance income	(7)	(3)	(5)
Finance expense	1,013	885	1,913
Movement in fair value of interest rate swaps	-	309	309
Loss on disposal of properties	6	-	-
Impairment of goodwill	-	-	977
Taxation expense	346	323	(91)
Decrease/(increase) in inventories	48	(45)	(58)
(Increase)/decrease in debtors	(289)	(335)	171
Increase/(decrease) in creditors	342	274	(501)
Cash generated from operations	2,955	2,368	4,177
Interest paid	(1,032)	(1,089)	(2,233)
Income taxes rebates/(paid) received	12	89	(208)
Net cash generated by operating activities	1,935	1,368	1,736

Cash flows from investing activities

Purchase of property, plant and equipment	(548)	(1,043)	(893)
Proceeds from sale of property, plant and equipment	11	-	-
Interest received	7	3	5
Acquisition of subsidiary, net of cash acquired	(334)	-	-
Net cash used in investing activities	(864)	(1,040)	(888)

Cash flows from financing activities

Proceeds from issue of share capital	-	120	103
Proceeds from long-term borrowings	-	-	850
Dividends paid	-	(269)	(413)
Net cash generated by financing activities	-	(149)	540

Net increase in cash and cash equivalents	1,071	179	1,388
Cash at beginning of period	1,647	259	259
Cash at end of period	2,718	438	1,647

  

Notes to the interim financial information 

1. Basis of preparation

These condensed consolidated interim financial statements are for the twenty six weeks ended 26 September 2009. They have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and as are effective at 27 March 2010 or are expected to be adopted and effective at 27 March 2010. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Company for the year ended 28 March 2009. 

These condensed consolidated interim financial statements have been approved for issue by the Board of Directors on 17 November 2009.

These financial statements have been prepared under the historical cost convention, except for revaluation of certain properties and financial instruments.

These condensed consolidated interim financial statements have been prepared in accordance with the measurement bases and principal accounting policies set out in the annual financial statements for the year ended 28 March 2009, except for the impact of the adoption of IAS 1 (revised 2007) Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 2009). The revised standard prohibits the presentation of items of income and expense (that is 'non-owner changes in equity') in the statement of changes in equity, requiring 'non-owner changes in equity' to be presented separately from owner changes in equity. All 'non-owner changes in equity' are required to be shown in a performance statement. The Group has elected to present two statements: an income statement and a statement of comprehensive income. These interim unaudited statements have been prepared under the revised presentation requirements for primary statements and the comparative figures have been restated accordingly.

The financial information set out in this condensed interim report does not constitute statutory accounts as defined in Section 434 and Section 435 of the Companies Act 2006. The Group's statutory financial statements for the year ended 28 March 2009, prepared under IFRS, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 237(2) or Section 237(3) of the Companies Act 1985.

  2. Earnings per share

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.

The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares.  

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.

	Period ended 26 September 2009 Unaudited	Period ended 27 September 2008 Unaudited	Year to 28  March 2009 Audited
	£ 000	£ 000	£ 000
Earnings	897	491	540
Movement in fair value of interest rate swaps	-	309	309
Impairment of goodwill	-	-	977
Loss on property disposals	6	-	-
Share options charge	38	32	44
Exceptional operating charges	101	-	305
March 2009 exceptional tax credits	-	-	(568)
Adjusted Earnings	1,042	832	1,607
Number of shares
Weighted average number of shares	20,249,581	19,795,163	19,850,189
Dilutive effect of share options in issue during the period	1,627,575	-	-
Weighted average number of shares	21,877,156	19,795,163	19,850,189
Earnings per share
Basic earnings per share	4.43	2.48	2.72
Fully diluted earnings per share	4.10	2.48	2.72
Adjusted basic earnings per share	5.15	4.20	8.10
Adjusted fully diluted earnings per share	4.76	4.20	8.10

ENDIR ILFFTLVLDLIA