Pubs ‘n' Bars breaches banking covenants as it slides into the red

Pubs ‘n' Bars made a loss of nearly £9m last year and breached it banking covenants as a fall in the property market led to the re-evaluation of the value of its pubs.

In the year ended 31 December 2008, the company made a loss of £8.9m compared with restated profit of £341,960 in 2007. This was despite turnover increasing 11% to £22.3m (2008: £20m).

The loss was caused by a significant fall in property values recognised in the company's income statement, along with other accounting charges and a tough trading environment due to falling consumer confidence.

Pubs ‘n' Bars said it was in talks with its bankers to restructure its bank facilities, which will likely lead to an increase in interest rate charges.

The company's financial figures for 2007 have also been restated as part of the adoption of the International Financial Reporting Standards (IFRS).

Keith Chapman, chairman of Pubs ‘n' Bars, said: "This has been a particularly challenging period. Although revenues for the year have increased by 11%, tough trading conditions and IFRS accounting polices have contributed to the company generating a pre-tax loss.

"As consumer confidence remains fragile the company approaches the future with cost-consciousness and caution".

Like-for-like sales at the 100-plus pub estate are currently running 3% below last year.

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By Chris Druce

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