Final Results

RNS Number : 5084V

City Pub Group PLC (The)

09 April 2019

The City Pub Group PLC

(the "City Pub Group", the "Company" or the "Group")

Final Results for the 52 weeks ended 30 December 2018

Significant progress in developing the Group and profits** up 60%

The City Pub Group is pleased to announce its audited results for the 52 weeks ended 30 December 2018. The Group operates a predominately freehold estate of 44 wet-led pubs in Southern England and Wales. Four further sites are currently in development and two exchanged sites are due to complete imminently, which will bring the size of the total estate to 50.

Financial Highlights:

· Revenue up 22% to £45.7 million (2017: £37.4 million)

· Like for like sales growth of 1.6%

· Adjusted EBITDA* up 28% to £7.9 million (2017: £6.1 million)

· Operating EBITDA margins increased to 17.2% (2017: 16.4%)

· Adjusted profit before tax** up 60% to £5.1 million (2017: £3.2 million)

· Total dividend up 22% to 2.75p (2017: 2.25p)

· Reported profit / (loss) of £2.0 million (2017: (£0.7) million)

· Net debt to EBITDA 1.1 times (2017: 0 times)

	2018				2017
	Revenue £m	Operating profit £m	EBITDA £m	Profit before tax £m	Revenue £m	Operating profit £m	EBITDA £m	(Loss)/profit before tax £m
Reported	45.7	2.8	5.4	2.6	37.4	0.7	2.7	(0.2)
Share option charge	-	0.4	0.4	0.4	-	0.2	0.2	0.2
Exceptional items	-	2.1	2.1	2.1	-	3.2	3.2	3.2
Adjusted	45.7	5.3	7.9	5.1	37.4	4.1	6.1	3.2

* Adjusted earnings before exceptional items, share option charge, interest, taxation, depreciation and amortisation.

** Adjusted profit before tax is the profit before tax, share option charge and exceptional items.

A number of the financial measures, including Adjusted Profit before tax and Adjusted EBITDA are not defined under IFRS, so they are termed 'Alternative Performance Measures' (APMs). Management use these measures to monitor the Group's financial performance alongside IFRS measures because they help illustrate the underlying performance and position of the Group.

Operational Highlights:

· Substantial progress with 11 pubs opened in 2018 and on track for an estate of 65-70 pubs by mid-2021

· Developed and expanded clusters of sites in London, Cardiff, Brighton and Cambridge

· Investment for our next phase of growth through strengthening both our retail and head office teams and a new organisational structure to manage regional hubs

· To incentivise, retain and recruit staff, the Group's innovative Profit Share Scheme will now to be paid on a weekly, rather than annual basis, for all non-managerial team members

· The four development sites acquired previously will come on stream in 2019 and two additional sites are in the purchase process. These new openings are large, high quality, pubs which will help drive the Group's growth

· Well-funded for further expansion and to take advantage of softening pub values. £6.2m of new equity raised in October 2018. Low gearing brings flexibility and the ability to act quickly when opportunities arise

Clive Watson, Executive Chairman of The City Pub Group, said:

"Our strategic expansion has continued at pace with the opening of eleven new pubs in 2018 bringing the total to 44. Our performance has been driven by both organic growth and the new pubs coming on stream. Considering the continued strong performance we are delighted to increase our dividend, by 22% for shareholders.

We continue to seek new sites to add to our portfolio and we have already earmarked six new pub openings for this year and are on course to meet our target of doubling the size of the estate to around 65-70 pubs by mid-2021. We believe the combination of further acquisitions, fine tuning the management of our existing estate and the benefits of our new divisional structure will enhance our performance further.

We are positioned to meet the number of well-trailed headwinds, not least the challenges brought through Brexit, and to take advantage of the softening market for acquisitions with our robust balance sheet and strong cash generation."

This announcement contains inside information for the purposes of EU Regulation 596/2014.

Enquiries:	9 April 2019
City Pub Group Clive Watson, Chairman Tarquin Williams, CFO
Instinctif Partners Matthew Smallwood Andy Low	+44(0)20 7457 2020
Liberum (Nomad & Joint Broker) Chris Clarke Clayton Bush Trystan Cullen	+44(0)20 3100 2000
Berenberg (Joint Broker) Chris Bowman Toby Flaux Marie Stolberg	+44 (0)20 3207 7800

For further information on City Pub Company pubs visit www.citypubcompany.com

Chairman's statement

2018 was another year of significant development for the Group. We continued to progress our strategy and made significant headway in our stated intention to double the size of our pub estate since IPO. Our acquisitions predominantly comprised high quality, freehold pubs in affluent cities across England and Wales. We continued to target areas where we already have a presence, developing clusters of sites and enabling us to capture market share and benefit from economies of scale. We also established our presence in Cardiff, a city in which we now have two sites and will seek to acquire further pubs.

We developed and invested in our business for our next phase of growth through strengthening both our retail and head office teams to ensure we have the operational skills and capacity required as we grow. Despite the tough trading conditions in the first half impacted by the Beast from East, the Group ended the year well having capitalised on the opportunities resulting from the FIFA World Cup, excellent summer weather and the festive season.

Sales rose 22% to £45.7m, LFL sales were +1.6%, adjusted EBITDA* increased 28% to £7.9m and adjusted EBITDA* margins improved from 16.4% to 17.2%.

A share placing in October raised a further £6.2m which was applied to reducing the Group's borrowing. At the year-end net debt was £8.7m placing the Company in a strong position to expand its estate in a market where prices are softening.

In light of this strong performance, the Board recommends a final dividend of 2.75p per share (2017 2.25p) representing a 22% increase on the prior year.

* Adjusted earnings before exceptional items, share option charge, interest, taxation, depreciation and amortisation.

Trading estate

The Group began 2018 with 33 trading pubs and four development sites. With 11 openings during the year, another acquisition and a single disposal post year end, we now own and operate 44 pubs with a further four sites in development. In addition, since the year end the number of bedrooms, an area of opportunity delivering incremental and high margin income, has risen to 66 and as our development sites open we anticipate operating over 150 rooms by the end of 2019.

Recently, contracts have been exchanged on two further freehold pubs which are expected to complete in April 2019 and add to our growing portfolio in Bath and expand our presence into Norfolk. Once the two exchanged sites have completed, the Group will comprise 50 sites.

Our pub clusters enable us to gain exceptional local expertise and retain staff by providing improved career prospects and additional focus on operational performance.

Our pubs are largely located in cathedral cities and we now have 20 trading sites in London, three in Brighton, nine in Cambridge and other clusters in cities such as Bristol, Winchester, Exeter and Oxford. We will seek to acquire pubs in those areas where we are already trading, as well as identifying additional cathedral cities across the southern half of England where we can build our presence.

We are also evaluating expanding our geographical footprint to cities located further north. With an estate which will shortly comprise 50 pubs, the future focus is to acquire and develop larger pubs in or close to prominent cities and by mid-2021 we target an estate of 65-70 pubs.

Openings in 2018:

· Belle Vue, Clapham: a freehold property which opened in February following a minor refurbishment. The refreshed frontage and new interior is improving sales and has attracted more customers into the business.

· Bow Street Tavern, Covent Garden: we acquired this leasehold site in April as The Covent Garden Pub, which was subsequently closed and refurbished. It reopened its doors to customers in November.

· Tell Your Friend, Parsons Green: our first all-vegan concept which opened in April. It enjoys a strong media and social media presence, which drives footfall to the site. Many items on the menu have also been rolled-out to other pubs in the estate.

· Old Ticket Office, Cambridge: a prime location in the heart of Cambridge's bustling railway station, this leasehold site opened in early June. Trading has been encouraging since then.

· Pontcanna Inn, Cardiff: a freehold asset, formerly known as the Cayo Arms. It is within close proximity to the cricket stadium and a short walk from the city centre. Trading was strong in the summer benefitting from the World Cup and it has since traded in line with our expectations.

· Travellers Friend, Woodford Green: a further freehold acquisition in July. This is a well-known community pub.

· Jam Tree, Clapham and Chelsea: two sister leasehold sites that were purchased at the end of July.

· Brighton Beach Club, Brighton: previously an Italian restaurant, Alfresco, it has since been re-opened following refurbishment works and an offering change, with a more liquor-led focus. A prime location of the seafront in Brighton, we anticipate further growth here.

· Old Bicycle Shed, Oxford: this leasehold site is similar to the Old Bicycle Shop in Cambridge and opened its doors to customers in October.

· Chapel 1877, Cardiff: our second freehold site in Cardiff added to the portfolio at the beginning of December, in time to take advantage of Christmas trading.

Openings in 2019:

· Pride of Paddington, Paddington: added to the Group's portfolio in February 2019, this leasehold site offers accommodation as well as a prime location next to Paddington train station.

Development sites:

· Aragon House, Parsons Green: Planning has now been granted on this site. It is a substantial new pub located on the edge of Parsons Green. The pub will open in May and has a large beer garden and 15 bedrooms.

· Reading (name TBC): a former bank that is being transformed into a pub with 24 bedrooms. The business will trade across four floors when open and offer customers a beer garden and roof terrace. Opening is targeted for Q3 2019.

· Tivoli, Cambridge: reopening a former pub which was shut after extensive fire damage. When complete it will have a new bar, crazy golf, street food kitchens, shuffleboard, and a space for yoga. In addition, the site overlooks the River Cam. Opening is targeted for Q4 2019.

· The Turks Head, Exeter: a freehold pub site in the heart of Exeter that became a Prezzo we are converting back to its original use. Acquired in January 2019 and opening is targeted for late 2019 or early 2020.

Sites exchanged on:

· Bath (name TBC): formerly known as the Nest. This is a prominent freehold site that will be redeveloped and is expected to be opened in Q4 2019. It has a large outside space overlooking the centre of the city.

· The Hoste, Burnham Market: a 53 bedroom site with spa, cinema and gym was last year named in the top 10 country hotels in the UK by the Guardian. This will be the largest number of bedrooms in any City Pub Group outlet. It is a prominent and popular location only a 45 minute drive from Norwich where the business' operates the Georgian Town House which currently has 22 bedrooms and is due to open another ten in 2019. These two sites should complement each other in terms of marketing, suppliers, staff and other operational activity. This site will be acquired for a cash consideration of £8.65m at the end of April 2019 plus further additional significant consideration subject to a sales performance incentive over the next 2 month period. The site generated an EBITDA of approximately £0.7m for the year ended April 2018.

Disposals:

· The Grapes, Oxford: this site was sold post year end in February 2019.

Financial highlights

Summary for the year ended 30 December 2018:

· Revenue up 22% to £45.7 million (2017: £37.4 million)

· Like for like sales were up 1.6%

· Adjusted EBITDA* up 28% to £7.9 million (2017: £6.1 million)

· Adjusted profit before tax** up 60% to £5.1 million (2017: £3.2 million)

· Reported profit/(loss) of £2.0 million (2017: (£0.7) million)

· Total annual dividend up 22% to 2.75p (2017: 2.25p)

· Net debt to EBITDA 1.1 times (2017: 0 times)

The Board is pleased with the significant increase in the Group's adjusted EBITDA and the improvements in its operating (EBITDA) margins which have increased from 16.4% to 17.2%. The EBITDA margin improvements were driven principally by better purchasing. Margins are anticipated to increase further as the central overhead base and procurement becomes more efficient. We are now profitable at the statutory reporting level with a reported profit of £2 million.

During the year, capex of £5.8 million was invested into refurbishing new sites and maintaining the existing estate.

* Adjusted earnings before exceptional items, share option charge, interest, taxation, depreciation and amortisation.

** Adjusted profit before tax is the profit before tax, share option charge and exceptional items.

Statement of financial position and bank borrowings

The Company has a £30m revolving credit facility in place with Barclays expiring in July 2021. It is the Board's intention to increase these facilities. The Company is currently in negotiation to increase and extend these facilities on improved terms and it is anticipated that renewed facilities will be in place in Q3 2019. This will give us additional capacity to acquire new sites and take advantage of other opportunities in the coming years.

The Board continues to adopt a prudent policy towards its gearing of around 30% of asset value and will utilise cash generated from the existing estate to fund acquisitions and dividends.

Organisation

As the Group's estate expands, it is vital that it retains its retail entrepreneurialism. During the period the Board reviewed the business' organisational structure and decided the best way forward is to create regional hubs operated by key Regional Directors and overseen by the Group's Managing Directors, Alex Derrick and Rupert Clark.

We have already established a Western Division, East Anglian and London Division. Each Regional Division will have its own training, recruitment and social media resources. The aim is to accelerate the decision-making process whilst at the same time maintaining the local integrity and individuality of our pubs. We are in the process of setting up an Oxford/Winchester Division, as well as the South Coast Division.

Whilst this new structure has required additional resource, the Group believes this provides an optimal framework for the future allowing faster and more focused expansion. By creating this structure, the Group expects to be able to retain and attract the best operators in the market.

Board

There have been no changes to the Board structure since our last report.

Dividend

The Board's intention is to have a progressive dividend policy and increase future dividends in line with underlying performance of the Group.

The Board recommends a final dividend of 2.75p per share (2017 2.25p) representing a 22% increase on the prior year. If approved, at the Company's AGM, the dividend will be paid on 1 July 2019 to shareholders on the share register as of 31 May 2019. As in the prior year, a scrip dividend alternative will be available to those shareholders who wish to receive their dividends in shares. I will be electing to subscribe for the scrip dividend representing 60% of my holding.

Annual General Meeting

The AGM will be held at Aragon House at 12pm on Monday 20 May 2019.

People

Retaining and rewarding talented staff is a priority for the business. The Board believes that the Group is at the forefront of the industry in rewarding its employees. The Board operates a profit share scheme that enables all employees to share in the Group's success. However, the rewards of this scheme were previously allocated on an annual basis. Consequently, the Board has reviewed this scheme and intends to replace it with a weekly profit share system for all non-managerial staff. The Board believes that by giving weekly bonuses to hourly paid staff, productivity, retention and recruitment will improve significantly. The scheme is already being trialed across the pub estate and the initial response from staff has been very positive.

Employees are represented at Board meetings by two representatives. At Board level, dedicated time is spent discussing employee matters. As a result of their inclusion at these meetings, we gain invaluable insight into staff priorities and their advice has ensured that the terms and conditions for employees have improved.

The Group seeks to ensure in relation to recruitment and employee relations, it is one of the best companies to work for in the hospitality industry.

Current trading & outlook

For the first 14 weeks of the year, total sales were up 36% on prior year with 44 sites open and trading.

We have some important and high profile openings in the near future which are as follows:

· Aragon House, Parsons Green - May 2019

· Reading, Market Place (name TBC) - Q3 2019

· Cambridge, formerly Tivoli - Q4 2019

In addition to these, the Group is opening in Exeter and Bath. These new sites will help drive our sales.

I am pleased with the Group's progress in the last 12 months and excited about our prospects for the next few years. We have created a platform for growth which is well-controlled and very focused. We have a great set of advisers, suppliers and a good banking relationship that will assist in growing our business further.

I am fortunate to have a very supportive Board to help grow the business. Just as importantly, we have a high quality head office team and talented and diligent retail employees who are great ambassadors for the Group. We remain confident for further strong progress in the years ahead.

Clive Watson

Chairman, The City Pub Group plc,

9 April 2019

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the 52 week period ended 30 December 2018

	Notes	2018 £	2017 £
Revenue	4	45,674,016	37,403,515
Cost of sales		(11,620,737)	(9,657,731)
Gross profit		34,053,279	27,745,784
Administrative expenses		(31,243,933)	(27,019,242)
Operating profit		2,809,346	726,542
Reconciliation to adjusted EBITDA*
Operating profit		2,809,346	726,542
Depreciation	5	2,552,296	1,963,891
Share option charge	25	377,188	258,195
Exceptional items	8	2,120,456	3,200,643
* Adjusted earnings before exceptional items, share option charge, interest, taxation and depreciation		7,859,286	6,149,271
Finance costs	6	(189,685)	(986,560)
Profit/(loss) before tax		2,619,661	(260,018)
Tax expense	7	(654,011)	(456,423)
Profit/(loss) for the period and total comprehensive income		1,965,650	(716,441)

Earnings per share
Basic earnings/(loss) per share (p)	10	3.23	(2.45)
Diluted earnings/(loss) per share (p)	10	3.05	(2.45)

All activities comprise continuing operations.

There are no recognised gains or losses other than those passing through the consolidated statement of comprehensive income. The notes form part of the financial information.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 December 2018

	Notes	2018 £	2017 £
Assets
Non-current
Intangible assets	11	3,793,524	2,524,681
Property, plant and equipment	12	90,020,348	67,947,419
Total non-current assets		93,813,872	70,472,100
Current
Inventories	14	959,680	553,909
Trade and other receivables	15	2,542,060	1,652,888
Cash and cash equivalents		2,853,292	6,414,854
Total current assets		6,355,032	8,621,651
Total assets		100,168,904	79,093,751
Liabilities
Current liabilities
Trade and other payables	16	(8,493,990)	(6,147,068)
Borrowings	18	-	(244,707)
Total current liabilities		(8,493,990)	(6,391,775)
Non-current
Borrowings	18	(11,600,000)	-
Other payables	17	-	(310,000)
Deferred tax liabilities	21	(1,536,615)	(1,081,823)
Total non-current liabilities		(13,136,615)	(1,391,823)
Total liabilities		(21,630,605)	(7,783,598)
Net assets		78,538,299	71,310,153
Equity
Share capital	22	30,651,257	28,233,667
Share premium	22	38,286,793	31,276,189
Convertible preference share (CPS)	22	-	-
Own shares (JSOP)	22	(3,272,500)	-
Other reserve	22	92,042	92,042
Share-based payment reserve	22	703,552	326,364
Retained earnings	22	12,077,155	11,381,891
Total equity		78,538,299	71,310,153

COMPANY STATEMENT OF FINANCIAL POSITION

As at 30 December 2018

	Notes	2018 £	2017 £
Assets
Non-current
Intangible assets	11	1,961,138	1,102,295
Property, plant and equipment	12	46,387,794	38,845,198
Investments in subsidiaries	13	12,063,147	11,913,696
Total non-current assets		60,412,079	51,861,189
Current
Inventories	14	478,831	287,607
Trade and other receivables	15	19,859,377	11,569,904
Cash and cash equivalents		2,245,879	4,536,505
Total current assets		22,584,087	16,394,016
Total assets		82,996,166	68,255,205
Liabilities
Current liabilities
Trade and other payables	16	(5,085,189)	(3,390,548)
Borrowings	18	-	(122,354)
Total current liabilities		(5,085,190)	(3,512,902)
Non-current
Borrowings	18	(7,100,000)	-
Deferred tax liabilities	21	(667,093)	(308,369)
Total non-current liabilities		(7,767,093)	(308,369)
Total liabilities		(12,852,282)	(3,821,271)
Net assets		70,143,884	64,433,934
Equity
Share capital	22	30,651,257	28,233,667
Share premium	22	38,286,793	31,276,189
Convertible preference share (CPS)	22	-	-
Own shares (JSOP)	22	(3,272,500)	-
Share-based payment reserve	22	575,491	198,303
Retained earnings	22	3,902,843	4,725,775
Total equity		70,143,884	64,433,934

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the 52 week period ended 30 December 2018

	Notes	Share capital	Share premium	Convertible preference share ("CPS")	Own shares (JSOP)	Other reserve	Share- based payment reserve	Retained earnings	Total
Balance at 25 December 2016		12,934,904	97,000	5,532,076	-	90,000	798,079	11,756,110	31,208,169
Employee share-based compensation	25	-	-	-	-	-	258,195	-	258,195
Issue of new shares prior to exchange for shares in subsidiary	22	69,114	-	-	-	146,948	-	-	216,062
Reclassification of CPS debt on conversion of equity	22	-	(144,906)	4,734,378	-	(144,906)	-	-	4,444,566
Re-designation of CPS into ordinary shares	22	3,208,268	7,058,186	(10,266,454)	-	-	-	-	-
Issue of new shares	22	11,455,256	24,904,784	-	-	-	-	-	36,360,040
Bonus issue of B Shares	22	588,000	(588,000)	-	-	-	-	-	-
Purchase of own shares	22	(21,875)	(50,875)	-	-	-	-	-	(72,750)
Share options exercised	25	-	-	-	-	-	(729,910)	729,910	-
Dividends	9	-	-	-	-	-	-	(387,688)	(387,688)
Transactions with owners		15,298,763	31,179,189	(5,532,076)	-	2,042	(471,715)	342,222	40,818,425

Loss for the period		-	-	-	-	-	-	(716,441)	(716,441)
Total comprehensive income for the period		-	-	-	-	-	-	(716,441)	(716,441)

Balance at 31 December 2017		28,233,667	31,276,189	-	-	92,042	326,364	11,381,891	71,310,153

Employee share-based compensation	25	-	-	-	-	-	377,188	-	377,188
Issue of new shares	22	1,455,090	4,700,604	-	-	-	-	-	6,155,694
Purchase of JSOP shares	22	962,500	2,310,000		(3,272,500)	-	-	-	-
Dividends	9	-	-	-	-	-	-	(1,270,386)	(1,270,386)
Transactions with owners		2,417,590	7,010,604	-	(3,272,500)	-	377,188	(1,270,386)	5,262,496

Profit for the period		-	-	-	-	-	-	1,965,650	1,965,650
Total comprehensive income for the period		-	-	-	-	-	-	1,965,650	1,965,650

Balance at 30 December 2018		30,651,257	38,286,793	-	(3,272,500)	92,042	703,552	12,077,155	78,538,299

COMPANY STATEMENT OF CHANGES IN EQUITY

for the 52 week period ended 30 December 2018

	Notes	Share capital	Share premium	Convertible preference share ("CPS")	Own shares (JSOP)	Share- based payment reserve	Retained earnings	Total
Balance at 25 December 2016		6,473,702	97,000	2,766,038	-	441,174	5,762,272	15,540,186
					-
					-
Employee share-based compensation	25	-	-	-		163,270	-	163,270
Issue of new shares in exchange for shares in subsidiary	22	6,530,316	-	5,133,227	-	-	-	11,663,543
Reclassification of CPS debt on conversion of equity	22	-	(144,906)	2,367,189		-	-	2,222,283
Re-designation of convertible preference shares into ordinary shares	19	3,208,268	7,058,186	(10,266,454)		-	-	-
Issue of new shares	22	11,455,256	24,904,784	-		-	-	36,360,040
Bonus issue of B Shares	22	588,000	(588,000)	-		-	-	-
Purchase of own shares	22	(21,875)	(50,875)	-		-	-	(72,750)
Share options exercised	25	-	-	-		(406,141)	406,141	-
Dividends	9	-	-	-		-	(194,031)	(194,031)
Transactions with owners		21,759,965	31,179,189	(2,766,038)		(242,871)	212,110	50,142,355
					-
Loss for the period		-	-	-		-	(1,248,607)	(1,248,607)
Total comprehensive income for the period		-	-	-		-	(1,248,607)	(1,248,607)

Balance at 31 December 2017		28,233,667	31,276,189	-		198,303	4,725,775	64,433,934
					-
Employee share-based compensation	25	-	-	-	-	377,188	-	377,188
Issue of new shares	22	1,455,090	4,700,604	-	-	-	-	6,155,694
Purchase of JSOP shares	22	962,500	2,310,000		(3,272,500)	-	-	-
Dividends	9	-	-	-	-	-	(1,270,386)	(1,270,386)
Transactions with owners		2,417,590	7,010,604	-	(3,272,500)	377,188	(1,270,386)	5,262,496

Profit for the period		-	-	-		-	447,454	447,454
Total comprehensive income for the period		-	-	-		-	447,454	447,454

Balance at 30 December 2018		30,651,257	38,286,793	-	(3,272,500)	575,491	3,902,843	70,143,884

CONSOLIDATED STATEMENT OF CASH FLOWS

for the 52 week period ended 30 December 2018

	Notes	2018 £	2017 £
Cash flows from operating activities
Profit/(loss) for the period		1,965,650	(716,441)
Taxation	7	654,011	456,423
Finance costs	6	189,685	986,560
Operating profit		2,809,346	726,542
Adjustments for:
Depreciation	5	2,552,296	1,963,891
Share-based payment charge	25	377,188	258,195
Impairment	12	479,998	450,000
Change in inventories		(405,770)	(87,590)
Change in trade and other receivables		(992,884)	(366,233)
Change in trade and other payables		2,152,316	1,252,254
Cash generated from operations		6,972,490	4,197,059
Tax paid		(534,743)	(150,832)
Net cash from operating activities		6,437,747	4,046,227

Cash flows from investing activities
Purchase of property, plant and equipment	12	(11,430,534)	(7,610,731)
Acquisition of new property sites	26	(14,360,680)	(11,454,000)
Net cash used in investing activities		(25,791,214)	(19,064,731)

Cash flows from financing activities
Proceeds from issue of share capital	22	5,972,772	34,678,775
Repayment of borrowings		(244,707)	(13,610,040)
Dividends paid	9	(1,087,465)	(227,092)
Purchase of own shares		-	(72,750)
Proceeds from new borrowings	18	11,600,000	-
Interest paid	6	(448,695)	(600,121)
Net cash from financing activities		15,791,905	20,168,772

Net change in cash and cash equivalents		(3,561,562)	5,150,268
Cash and cash equivalents at the start of the period		6,414,854	1,264,586
Cash and cash equivalents at the end of the period		2,853,292	6,414,854

COMPANY STATEMENT OF CASH FLOWS

for the 52 week period ended 30 December 2018

	Notes	2018 £	2017 £
Cash flows from operating activities
Profit/(loss) for the period		447,454	(1,248,607)
Taxation		161,170	200,093
Finance costs		94,843	500,958
Operating profit/(loss)		703,467	(547,556)
Adjustments for:
Depreciation	12	1,508,221	1,173,267
Share-based payment charge		377,188	163,270
Impairment		479,997	-
Change in inventories		(191,224)	(20,781)
Change in trade and other receivables		(8,297,154)	(10,755,427)
Change in trade and other payables		1,661,828	1,281,743
Cash generated from/(used in) operations		(3,757,677)	(8,705,484)
Tax paid		(235,243)	(101,323)
Net cash used in operating activities		(3,992,920)	(8,806,807)

Cash flows from investing activities
Purchase of property, plant and equipment	12	(4,750,632)	(5,390,676)
Acquisition of new property sites	26	(5,185,680)	(8,819,000)
Net cash used in investing activities		(9,936,312)	(14,209,676)

Cash flows from financing activities
Proceeds from issue of share capital		5,972,772	34,613,877
Repayment of borrowings		(122,354)	(7,456,294)
Dividends paid		(1,087,465)	(113,733)
Purchase of own shares		-	(72,750)
Proceeds from new borrowings		7,100,000	-
Interest paid		(224,347)	(307,738)
Net cash from financing activities		11,638,606	26,663,362

Net change in cash and cash equivalents		(2,290,626)	3,646,879
Cash and cash equivalents at the start of the period		4,536,505	889,626
Cash and cash equivalents at the end of the period		2,245,879	4,536,505

NOTES TO THE FINANCIAL INFORMATION

for the 52 week period ended 30 December 2018

1 Company information

The financial information of The City Pub Group plc (as consolidated "the Group") for the 52 week period ended 30 December 2018 were authorised for issue in accordance with a resolution of the directors on 8 April 2019. The Company is a public limited company incorporated and domiciled in the UK. The Company number is 07814568 and the registered office is located at Essel House 2nd Floor, 29 Foley Street, London, England, W1W 7TH.

The Group's principal activity is the management and operation of public houses. Information on the Company's ultimate controlling party and other related party relationships is provided in Note 28.

Exemption from audit

For the period ended 30 December 2018 The City Pub Group plc has provided a guarantee in respect of all liabilities due by its subsidiary The City Pub (West) Limited (Company No. 07814571), Flamequire Limited (Company No. 01834157), Randall and Zacharia Limited (Company No. 08465216) and Chapel 1877 Limited (Company 04545416) thus entitling them to exemption from audit under section 479A of the Companies Act 2006 relating to subsidiary companies.

2 Significant accounting policies

2.1 Basis of preparation

The figures for the 52 week period ended 30 December 2018 have been extracted from the audited statutory financial statements for the period on which the auditors have issued an unqualified opinion. The financial information attached has been prepared in accordance with the recognition and measurement requirements of international financial reporting standards (IFRS) as adopted by the EU and international financial reporting interpretations committee (IFRIC) interpretations issued and effective at the time of preparing the financial information. The accounting policies applied in the period ended 30 December 2018 are consistent with those applied in the financial information for the period ended 31 December 2017 having noted the predecessor value method of accounting has been adopted to account for the business combination of the Group.

The financial information for the period ended 30 December 2018 does not constitute statutory financial information as defined in Section 434 of the Companies Act 2006 and does not contain all of the information required to be disclosed in a full set of IFRS financial statements. This announcement was approved by the Board of Directors and authorised for issue on 9 April 2019. The auditor's report on the financial statements for 30 December 2018 was unqualified, and did not include reference to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain a statement under either Section 498 (2) or 498 (3) of the Companies Act 2006.

2.2 Statement of Compliance

The financial information of the Company and Group is prepared in accordance with applicable International Financial Reporting Standards ("IFRS") as adopted by the European Union.

2.3 New and Revised Standards

New Standards adopted in the current period

A number of new and revised standards are effective for annual periods beginning on or after 1 January 2018. Information on the key new standards is presented below:

IFRS 9 'Financial Instruments'

IFRS 9 replaces IAS 39 and is effective for annual periods beginning on or after 1 January 2018. The amendments to IFRS 9 introduce extensive changes to IAS 39's guidance on the classification and measurement of financial assets and introduces a new "expected credit loss" model for the impairment of financial assets.

When adopting IFRS 9, the Group has applied transitional relief and opted not to restate prior periods. Differences arising from the adoption of IFRS 9 in relation to classification, measurement and impairment would be recognised in retained earnings. IFRS 9 also contains new requirements on the application of hedge accounting, which are not relevant to the Company.

On adoption of IFRS 9 there were no material impacts on the Group's financial performance or statement of financial position. No adjustments were required to the retained earnings as there have been no changes to the classification or measurement of any of the Group's financial instruments as a result of the application of IFRS 9.

IFRS 15 'Revenue from contracts with customers'

IFRS 15 and the related 'Clarifications to IFRS 15 Revenue from Contracts with Customers' (hereinafter referred to as 'IFRS 15') presents new requirements for the recognition of revenue, replacing IAS 18 'Revenue', IAS 11 'Construction Contracts' and several revenue-related interpretations. The new Standard has been applied retrospectively without restatement, with the cumulative effect of initial application to be recognised as an adjustment to the opening balance of retained earnings at 1 January 2018. In accordance with the transition guidance, IFRS 15 has only been applied to contracts that are incomplete as at 1 January 2018.

The adoption of IFRS 15 has not led to any adjustment to the opening balance of retained earnings, as the treatment of revenue has not led to any material differences.

The core principle is that an entity will recognise revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or service to a customer. The Group's revenue streams are not based on a number of performance obligations within a contract, but at a point of sale and therefore there are no material changes to the Group's financial performance or financial position on adoption of this Standard. The Group recognises revenue from the principal activities of sale of food and drink within its pubs, for which the consideration is known and the performance obligations are satisfied at the point of sale.

IFRS in issue but not applied in the current financial information

The following IFRS and IFRIC Interpretations have been issued but have not been applied by the Group in preparing the financial information, as they are not as yet effective. The Group intends to adopt these Standards and Interpretations when they become effective, rather than adopt them early.

· IFRS 16, 'Leases', effective date 1 January 2019

· IFRIC 23 "Uncertainty over Income Tax Treatments" (effective 1 January 2019 and not yet endorsed by the EU)

· "Amendments to IFRS 9: Prepayment Features with Negative Compensation", "Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures", "Annual Improvements to IFRS Standards 2015-2017 Cycle" and "Amendments to IAS19 - Plan Amendment, Curtailment or Settlement" (effective 1 January 2019 and not yet endorsed by the EU)

The above standards are yet to be subject to a detailed review. IFRS 16 is yet to be subject to a detailed review but will impact the treatment of leases currently treated as operating leases, by bringing lease liabilities and an associated asset into the statement of financial position. The biggest impact is likely to relate to property leases, it is not practicable to provide a reasonable estimate of the effect of IFRS 16 until a detailed review has been completed. This is not effective for the group until period ending December 2020.

2.4 Predecessor value method

During the prior period the Company undertook a common control combination, through the issue of new Ordinary Shares, B-Ordinary Shares and Convertible Preference Shares in exchange for 100% of the Ordinary Shares, B Ordinary Shares and Convertible Preference Shares of The City Pub Company (West) Limited an entity under common control. The Directors considered the business combination to be a common control combination, as the combining entities were ultimately controlled by the same parties both before and after the combination and the common control was not transitory.

The share capital and convertible preference shares issued to effect the merger (accounted for under the predecessor value method) had a nominal value of £6,530,316 and £5,133,227 respectively (representing £6,455,202 in respect of shares as at 28 December 2015 and £75,144 subsequent to that date; representing £2,094,358 in respect of the equity element of the CPS as at 28 December 2015 and £3,038,869 subsequent to that date). This results in enlarged share capital and convertible preference share balances for the group of £12,910,404 and £4,188,716 as at 28 December 2015. Replacement share options issued have also been accounted for under the predecessor value method.

As a common control combination, the transaction is outside the scope of IFRS 3 ('Business Combinations') and the Directors have therefore considered the nature of the transaction, which is eligible for Merger Relief under the Companies Act and decided that the predecessor value method would be the most appropriate in preparing the Group financial information.

The predecessor value method involves accounting for the assets and liabilities of the acquired business using existing carrying values rather than at fair values, as a result no goodwill has arisen on the combination. The comparative period has been restated as if the combination had taken place at the beginning of the comparative period, as the Directors consider this to give the user of the financial information the most meaningful information to assess the performance of the Group.

The use of the predecessor value method has given rise to an "other reserve", which represents the share premium of the subsidiary entity on consolidation.

The financial results of subsidiaries are included in the consolidated financial information from the date that control commences until the date that control ceases. The consolidated financial information presents the results of the companies within the same group. Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial information.

2.5 Going concern

In adopting the going concern basis for preparing the financial information, the Board has considered the business activities as set out within the Strategic Report along with the principal risks and uncertainties. Based on the current financial projections to 30 June 2020 and having considered the facilities available, the Board is confident that the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, the Board consider it appropriate for the Group to adopt the going concern basis in preparing its financial information.

We are currently in negotiation to increase and extend our banking facilities on improved terms. This will give us additional capacity to acquire new sites and take advantage of other opportunities.

2.6 Revenue

Revenue represents external sales (excluding taxes) of goods and services net of discounts. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration receivable net of trade discounts and VAT.

Revenue principally consists of drink, food and accommodation sales, which are recognised at the point at which goods and services are provided and rental income which is recognised on a straight line basis over the lease term. Revenue for bedroom accommodation is recognised at the point the services are rendered. Loyalty card revenue is immaterial and therefore no change in accounting policy is considered necessary.

Presentation and disclosures

Presentation of comparative consolidated revenue is in accordance with the previous standard IAS 18 "Revenue Recognition". No material measurement or recognition differences on comparative information were identified between IAS 18 and the current standard IFRS 15. For further understanding of the impact of the transition to IFRS 15, refer to section 2.3.

2.7 Cost of sales

Costs considered to be directly related to revenue are accounted for as cost of sales. Costs of goods sold are determined on the basis of the cost of purchase, adjusted for movements of inventories. Cost of services rendered is recognised at the time the revenue is recognised.

2.8 Operating profit

Operating profit is revenue less operating costs. Revenue is as detailed above and as shown in note 4. Operating costs are all costs excluding finance costs, costs associated with the disposal of properties and the tax charge.

2.9 Exceptional items

The Group presents as exceptional items those significant items of income and expense which, because of their size, nature and infrequency of the events giving rise to them merit separate presentation to allow Shareholders to understand better the elements of financial performance in the period, so as to facilitate comparison with prior periods to assess trends in financial performance more readily. These items are primarily pre-opening costs (including acquisition costs) and non-recurring costs, which are not expected to recur at a particular site.

2.10 Finance income and expense

Finance income is recognised as interest accrues (using the effective interest method) on funds invested outside the Group. Finance expense includes the cost of borrowing from third parties and is recognised on an effective interest rate basis, resulting from the financial liability being recognised on an amortised cost basis, including commitment fees. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale.

2.11 Taxation and deferred taxation

The income tax expense or income for the period is the tax payable on the current period's taxable income. This is based on the national income tax rate enacted or substantively enacted with any adjustment relating to tax payable in previous years and changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial information.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applicable when the asset or liability crystallises based on current tax rates and laws that have been enacted or substantively enacted by the reporting date. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability.

A deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits against which to recover carried forward tax losses and from which the future reversal of temporary differences can be deducted. The carrying amount of deferred tax assets are reviewed at each reporting date.

2.12 Financial instruments

The Group has elected to apply the limited exemption in IFRS 9 relating to classification, measurement and impairment requirements for financial instruments, and accordingly comparative periods have not been restated and remain in line with the previous standard IAS 39 "Financial Instruments: Recognition and Measurement". For further understanding of the transition to IFRS 9 refer to section 2.3.

Recognition, initial measurement and derecognition

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs. Subsequent measurement of financial assets and financial liabilities is described below.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Classification and subsequent measurement of financial assets

For the purpose of subsequent measurement the Group classifies its financial assets into the following categories: those to be measured subsequently at fair value (either through other comprehensive income (FVOCI) or through the income statement (FVPL)) and those to be held at amortised cost.

Classification depends on the business model for managing the financial assets and the contractual terms of the cash flows.

Management determines the classification of financial assets at initial recognition. The Group's policy with regard to financial risk management is set out in note 19. Generally, the Group does not acquire financial assets for the purpose of selling in the short term and does not have any financial assets measured at fair value through the income statement (FVPL) or at fair value through other comprehensive income (FVOCI) in either the current or prior year.

The Group's business model is primarily that of "hold to collect" (where assets are held in order to collect contractual cash flows).

Financial assets held at amortised cost

This classification applies to the Group's trade & other receivables which are held under a hold to collect business model and which have cash flows that meet the solely payments of principal and interest (SPPI) criteria. At initial recognition, trade and other receivables that do not have a significant financing component, are recognised at their transaction price. Other financial assets are initially recognised at fair value plus related transaction costs; they are subsequently measured at amortised cost using the effective interest method. Any gain or loss on derecognition or modification of a financial asset held at amortised cost is recognised in the income statement.

Impairment of financial assets

A forward-looking expected credit loss (ECL) review is required for: debt instruments measured at amortised cost or held at fair value through other comprehensive income; loan commitments and financial guarantees not measured at fair value through profit or loss; lease receivables and trade receivables that give rise to an unconditional right to consideration.

IFRS 9's impairment requirements use more forward-looking information to recognise expected credit losses - the 'expected credit loss (ECL) model'. This replaces IAS 39's 'incurred loss model'. The Group's instruments within the scope of the new requirements included trade and other receivables.

Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead the Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

As permitted by IFRS 9, the Group applies the "simplified approach"to trade and other receivable balances and the "general approach" to all other financial assets. The simplified approach in accounting for trade and other receivables records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses. The general approach incorporates a review for any significant increase in counterparty credit risk since inception. The ECL reviews include assumptions about the risk of default and expected loss rates.

The nature of the Group's trade and other receivables are such that the expected credit loss is immaterial in the current and prior year, therefore no additional disclosures are considered necessary within the credit risk section of note 19.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and other short term highly liquid deposits with original maturities of three months or less.

Classification and subsequent measurement of financial liabilities

The Group's financial liabilities include trade and certain other payables. Financial liabilities are measured subsequently at amortised cost using the effective interest rate.

Trade and other payables

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial period, which are unpaid.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

Classification of Shares as Debt or Equity

When shares are issued, any component that creates a financial liability of the Group is presented as a liability in the statement of financial position; measured initially at fair value net of transaction costs and thereafter at amortised cost until extinguished on conversion or redemption. The corresponding dividends relating to the liability component are charged as interest expense in the Income Statement. The initial fair value of the liability component is determined using a market rate for an equivalent liability without a conversion feature.

The remainder of the proceeds on issue is allocated to the equity component and included in shareholders' equity, net of transaction costs.

The carrying amount of the equity component is not remeasured in subsequent years. The Group's ordinary shares are classified as equity instruments. For the purposes of the disclosures given in note 22, the Group considers its capital to comprise its ordinary share capital, share premium and accumulated retained earnings. There have been no changes to what the Group considers to be capital since the prior year.

Share repurchases

Where shares are repurchased wholly out of the proceeds of a fresh issue of shares made for that purpose, no amount needs to be transferred to a capital redemption reserve as there is no reduction in capital as a result of the purchase and issue of shares.

2.13 Business combinations and goodwill

Other than the group re-organisation that took place prior to Listing, business combinations, which include sites that are operating as a going concern at acquisition and where substantive processes are acquired, are accounted for under IFRS 3 using the purchase method. Any excess of the consideration of the business combination over the interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised in the statement of financial position as goodwill and is not amortised. To the extent that the net fair value of the acquired entity's identifiable assets, liabilities and contingent liabilities is greater than the cost of the investment, a gain is recognised immediately in the profit or loss.

Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. Goodwill is carried at cost less accumulated impairment losses. Refer to Note 11 for a description of impairment testing procedures.

2.14 Property, plant and equipment

Property, plant and equipment, other than freehold land, are stated at cost or deemed cost less accumulated depreciation and any impairment in value. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, with effect from the first full year of ownership, as follows:

Freehold properties To residual value over fifty years straight line

Leasehold properties Straight line over the length of the lease

Fixtures, fittings and equipment Between four and ten years straight line

Computer equipment Between two and five years straight line

No depreciation is charged on freehold land. Where there is no depreciation on historic freehold buildings as a result of a high residual value/long useful lives, the freehold building is subject to an impairment review. Residual values and useful lives are reviewed every year and adjusted if appropriate at each financial period end.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the profit or loss.

2.15 Investments in subsidiaries

The Company recognises its investments in subsidiaries at cost, less any provisions for impairment. Income is recognised from these investments only in relation to distributions received from post-acquisition profits. Distributions received in excess of post-acquisition profits are deducted from the cost of the investment.

2.16 Impairment of goodwill, property, plant and equipment and investments in subsidiaries

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of a related business combination and represent the lowest level within the Group at which management monitors goodwill.

Cash-generating units to which goodwill has been allocated (determined by the Group's management as equivalent to its operating segments) are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset's (or cash-generating unit's) carrying amount exceeds its recoverable amount, which is the higher of fair value less costs of disposal and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable discount rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group's latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect current market assessments of the time value of money and asset-specific risk factors.

Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment loss is reversed if the asset's or cash-generating unit's recoverable amount exceeds its carrying amount.

2.17 Inventories

Inventories are counted independently and stated at the lower of cost and net realisable value. Cost is calculated using the First In First Out method. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs to sell.

2.18 Leasing

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases. These are the only types of lease utilised by the entity. Operating lease payments for assets leased from third parties are charged to profit or loss on a straight line basis over the period of the lease, on an accrued basis.

2.19 Share-based employee remuneration

The Company operates equity-settled share-based remuneration plans for its employees. None of the Company's plans are cash-settled.

All goods and services received in exchange for the grant of any share-based payment are measured at their fair values.

Where employees are rewarded using share-based payments, the fair value of employees' services is determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and sales growth targets and performance conditions). The fair value is determined by using the Black-Scholes method.

All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to share based payments reserve. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest.

Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any adjustment to cumulative share-based compensation resulting from a revision is recognised in the current period. The number of vested options ultimately exercised by holders does not impact the expense recorded in any period.

Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.

2.20 Investment in own shares (JSOP)

Shares held in the City Pub Group Joint Share Ownership Plan ("JSOP") are shown as a deduction in arriving at equity funds on consolidation. Assets, liabilities and reserves of the JSOP are included in the statutory headings to which they relate. Purchases and sales of own shares increase or decrease the book value of "Own shares" in the statement of financial position. At each period end the Group assess and recognises the value of "Own shares" held with reference to the expected cash proceeds and accounts for any difference as a reserves transfer.

3 Significant judgements and estimates

The judgements, which are considered to be significant, are as follows:

The selection of the predecessor value method, rather than the acquisition method, for accounting for the common control combination was a significant judgement for the directors. The predecessor value method was considered to better reflect the nature of the common control combination, which met the requirements for Merger Relief under the Companies Act 2006, and is considered to give users of the financial information better comparability for assessing the performance of the combined businesses.

Judgement is required when determining if an acquisition is a business combination or a purchase of an asset. Each acquisition is assessed individually to determine which is the most appropriate classification.

Judgement is used to determine those items that should be separately disclosed to allow a better understanding of the underlying trading performance of the Group. The judgement includes assessment of whether an item is of a nature that is not consistent with normal trading activities or of a sufficient size or infrequency.

The estimates, which are considered to be significant, are as follows:

The Group determines whether goodwill is impaired on an annual basis and this requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. This involves estimation of future cash flows and choosing a suitable discount rate. Full details are supplied in note 11, together with an analysis of the key assumptions.

The assessment of fair values for the assets and liabilities recognised in the financial information on the acquisition of a business and additional consideration, and the date that control is obtained, require significant judgement and estimation. Management assess fair values, particularly for property, plant and equipment, with reference to current market prices. See note 26 for business combinations and property purchases made in the year.

4 Segmental analysis

The Group focuses its internal management reporting predominantly on revenue, adjusted EBITDA (being earnings before exceptional items, share option charge, interest, taxation and depreciation) and operating profit.

The Chief Operating Decision Maker ("CODM") receives information on each pub and each pub is considered to be an individual operating segment. In line with IFRS 8, each operating segment has the same characteristics and therefore the pubs are aggregated to form the reportable segment below.

Revenue, and all the Group's activities, arise wholly from the sale of goods and services within the United Kingdom. All the Group's non-current assets are located in the United Kingdom.

Revenue arises wholly from the sale of goods and services within the United Kingdom.

	2018 £	2017 £
Revenue	45,674,016	37,403,515
Cost of sales	(11,620,737)	(9,657,731)
Gross profit	34,053,279	27,745,784
Operating expenses:
Operating expenses before adjusting items	(26,193,993)	(21,596,513)
Adjusted EBITDA	7,859,286	6,149,271
Depreciation	(2,552,296)	(1,963,891)
Share option charge	(377,188)	(258,195)
Exceptional items	(2,120,456)	(3,200,643)
Total operating expenses	(31,243,933)	(27,019,242)
Operating profit	2,809,346	726,542

5 Profit/(loss) on ordinary activities before taxation

The profit/(loss) on ordinary activities before taxation is stated after charging/(crediting):

	2018 £	2017 £
Costs of inventories recognised as an expense	12,288,424	10,412,084
Staff costs (note 23)	16,612,882	14,003,402
Depreciation	2,552,296	1,963,891
Fees payable to the company's auditor for the audit of the company's financial statements	56,000	52,500
Fees payable to the company's auditor for the audit of the group financial statement	10,500	10,000
Tax compliance	12,000	15,661
Tax advisory services	8,000	56,948
Corporate finance services	-	185,988
Exceptional costs (note 8)	2,120,456	3,200,643
Operating leases - land and buildings	1,571,644	1,256,182

6 Interest payable and similar charges

	2018 £	2017 £
On bank loans and overdrafts	448,695	417,952
On CPS and other loans	-	323,901
Accrued dividend on CPS	-	244,707
Total interest payable	448,695	986,560
Interest expense capitalised within property, plant & equipment	(259,010)	-
Total finance cost	189,685	986,560

During the period £259,010 of interest was capitalised; (2017: £nil). The accrued dividend on the CPS was paid in January 2018.

7 Tax charge on profit/(loss) on ordinary activities

(a) Analysis of tax charge for the period

The tax charge for the Group is based on the profit/(loss) for the period and represents:

	2018 £	2017 £
Current income tax:
Current income tax charge	603,784	335,014
Adjustments in respect of previous period	(80,725)	44,114
Total current income tax	523,059	379,128
Deferred tax:
Origination and reversal of temporary differences	130,952	85,229
Adjustments in respect of deferred tax of previous period	-	(7,934)
Total deferred tax	130,952	77,295
Total tax	654,011	456,423

(a) Factors affecting total tax for the period

The tax assessed for the period differs from the standard rate of corporation tax in the United Kingdom 19.00%
(2017: 19.25%). The differences are explained as follows:

	2018 £	2017 £
Profit/(loss) on ordinary activities before tax	2,619,661	(260,018)

Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the United Kingdom of 19.00% (2017: 19.25%)	497,736	(50,054)
Effect of:
Fixed asset differences	66,228	53,187
Items not deductible for tax purposes	170,772	598,830
Adjustment in respect of previous periods	(80,725)	44,114
Adjustment in respect of previous periods - deferred tax	-	(7,934)
Share options tax deduction	-	(181,720)
Total tax charge	654,011	456,423

8 Exceptional items

	2018 £	2017 £
Pre opening costs	1,454,483	852,718
Impairment of a pub site	479,998	450,000
Other non recurring items	185,975	1,897,925
	2,120,456	3,200,643

Other non-recurring items include IPO costs expensed totalling £50,348 for the period ended 30 December 2018 (2017: £1,841,190).

9 Dividends

Dividends paid during the reporting period

The Board declared a dividend of 2.25p (2017: 1.5p) per 50p Ordinary share for shareholders on the share register as at 1 June 2018, which was approved at the Annual General Meeting and paid on 2 July 2018. The Group received valid elections for the scrip dividend alternative in respect of 8,135,574 ordinary share of 50 pence each, which lead to a total of 86,816 new ordinary shares being allotted by the Company to shareholders who elected to receive the scrip dividend alternative.

Dividends not recognised at the end of the reporting period

Since the year end, the Directors have proposed the payment of a dividend in respect of the full financial year of 2.75p per fully paid Ordinary share (2017: 2.25p). The aggregate amount of the proposed dividend expected to be paid out of retained earnings at 1 July 2019, but not recognised as a liability at the year end, is £1,632,882 (2017: £1,270,386).

10 Earnings per share

	2018 £	2017 £
Earnings/(loss) for the period attributable to Shareholders	1,965,650	(716,441)

Earnings/(loss) per share:
Basic earnings/(loss) per share (p)	3.23	(2.45)
Diluted earnings/(loss) per share (p)	3.05	(2.45)

Weighted average number of shares:	Number of shares	Number of shares
Weighted average shares for basic EPS	60,801,921	29,189,803
Effect of share options in issue	3,750,956	n/a
Weighted average shares for diluted earnings per share	64,552,877	n/a

Shares held by the City Pub Group plc Joint Share Ownership Plan ("JSOP"), which has waived its entitlement to receive dividends, are treated as cancelled for the purpose of this calculation.

11 Goodwill

	Group 2018 £	Group 2017 £	Company 2018 £	Company 2017 £
Cost brought forward	2,524,681	1,359,713	1,102,295	407,758
Additions	1,328,840	1,164,968	918,840	694,537
At end of period	3,853,521	2,524,681	2,021,135	1,102,295
Amortisation/impairment brought forward	-	-	-	-
Provided during the period	(59,997)	-	(59,997)	-
Disposal	-	-	-	-
At end of period	-	-	-	-

Net book value at end of period	3,793,524	2,524,681	1,961,138	1,102,295
Net book value at start of period	2,524,681	1,359,713	1,102,295	407,758

The carrying value of goodwill included within the Group statement of financial position is £3,793,524 (Company: £1,961,138), which is allocated to the cash-generating unit ("CGU") of groupings of public houses as follows:

	Group 2018 £	Group 2017 £	Company 2018 £	Company 2017 £
Freehold	2,396,042	2,072,198	968,105	704,262
Leasehold	1,397,482	452,483	993,033	398,033
	3,793,524	2,524,681	1,961,138	1,102,295

The CGU's recoverable amount has been determined as the higher of its fair value less costs to sell and value in use based on an internal discounted cash flow evaluation.

The fair value less costs to sell is calculated based on the market value of the associated property.

For the 52 week period ended 30 December 2018, the cash-generating unit recoverable amount was determined based on value-in-use calculations, using cash flow projections based on one year budgets, extrapolated into perpetuity for freehold properties and for the length of the lease for leasehold properties (with key assumptions for both CGU's being the long-term growth rate of 2% and pre-tax discount rate of 10%). Cash flows for the businesses are based on management forecasts, which are approved by the Board and reflect management's expectations of sales growth, operating costs and margin based on past experience and anticipated changes in the local market places.

Sensitivity to changes in key assumptions: impairment testing is dependent on management's estimates and judgements, in particular in relation to the forecasting of future cash flows, the long-term growth rate and the discount rate applied to the cash flows.

The calculations show that a reasonably possible change, as assessed by the directors, would not cause the carrying amount of the CGU to exceed its recoverable amount.

12 Property, plant and equipment

Group	Freehold & leasehold property £	Fixtures, fittings and computers £	Total £
Cost
At 25 December 2016	43,624,547	11,867,609	55,492,156
Additions	4,654,086	2,956,645	7,610,731
Acquisitions	11,309,465	1,014,998	12,324,463
At 31 December 2017	59,588,098	15,839,252	75,427,350
Additions	7,381,142	4,308,402	11,689,544
Acquisitions (Note 26)	11,717,988	1,637,692	13,355,680
At 30 December 2018	78,687,228	21,785,346	100,472,574

Depreciation
At 25 December 2016	918,785	4,147,255	5,066,040
Provided during the period	276,296	1,687,595	1,963,891
Impairment	237,000	213,000	450,000
At 31 December 2017	1,432,081	6,047,850	7,479,931
Provided during the period	348,571	2,203,725	2,552,296
Impairment	419,999	-	419,999
At 30 December 2018	2,200,651	8,251,575	10,452,226

Net book value
At 30 December 2018	76,486,577	13,533,771	90,020,348
At 31 December 2017	58,156,017	9,791,402	67,947,419
At 25 December 2016	42,705,762	7,720,354	50,426,116

During the period ended 30 December 2018 the group has made a provision for impairment against a Pub Site in Cambridge, due to poor performance and it has been reduced to its value in use (using assumptions as outlined in note 11). The value in use represents a Level 3 fair value measurement, with the asset being held at its recoverable amount of £340,000. In addition, the group has made a provision for impairment against the Grapes in Oxford, which was written down to its recoverable amount, with its disposal completed on 25th February 2019.

During the period ended 31 December 2017 the group has made a provision for impairment against a Pub Site in Bristol, due to poor performance and it has been reduced to its fair value less costs to sell. The fair value less costs to sell represents a Level 3 fair value measurement, with the asset being held at its recoverable amount of £200,000.

During the period ended 30 December 2018 the group capitalised £259,010 of interest within the Freehold & Leasehold property asset.

12 Property, plant and equipment continued

Company	Freehold & leasehold property £	Fixtures, fittings and computers £	Total £
Cost
At 25 December 2016	21,250,260	7,346,992	28,597,252
Additions	3,351,534	2,039,142	5,390,676
Acquisitions	8,209,465	1,014,998	9,224,463
At 31 December 2017	32,811,259	10,401,132	43,212,391
Additions	2,758,462	2,121,675	4,880,137
Acquisitions (Note 26)	4,156,738	433,942	4,590,680
At 30 December 2018	39,726,459	12,956,749	52,683,208

Depreciation
At 25 December 2016	472,611	2,721,315	3,193,926
Provided during the period	183,979	989,288	1,173,267
At 31 December 2017	656,590	3,710,603	4,367,193
Provided during the period	255,807	1,252,414	1,508,221
Impairment	420,000	-	420,000
At 30 December 2018	1,332,397	4,963,017	6,295,414

Net book value
At 30 December 2018	38,394,062	7,993,732	46,387,794
At 31 December 2017	32,154,669	6,690,529	38,845,198
At 25 December 2016	20,777,649	4,625,677	25,403,326

13 Investments in subsidiaries

Company	2018 £	2017 £
At start of period	11,913,696	250,153
Additions	399,604	11,663,543
Disposal on liquidation of subsidiaries	(250,153)	-
At end of period	12,063,147	11,913,696

During the year the Company acquired 100% of the share capital of Randall & Zacharia Limited and Chapel 1877 Ltd as part of Pub acquisitions - see note 26.

During the year the group liquidated two subsidiaries held by the Company at the beginning of the year, being The Fat Pheasant Pub Company Limited and Ace High Enterprises Limited.

During the prior year the Company entered into a Scheme of Arrangement to acquire 100% of the Ordinary Shares, 100% of the Ordinary B Shares and 100% of the Convertible Preference Shares of The City Pub Company (West) Limited in exchange for the issue of the same number and type of new shares by the Company, see note 22 for further information.

The Company had the following subsidiary undertakings as at 30 December 2018:

Name of subsidiary	Class of share held	Country of incorporation	Proportion held	Nature of business
The City Pub Company (West) Limited	Ordinary	England and Wales	100%	Management and operation of public houses
Randall & Zacharia Limited	Ordinary	England and Wales	100%	Dormant
Chapel 1877 Ltd	Ordinary	England and Wales	100%	Dormant
Flamequire Limited*	Ordinary	England and Wales	100%	Dormant
Inn on the Beach Limited*	Ordinary	England and Wales	100%	Dormant

The above companies all had the same registered office as the parent company, being Essel House, 2nd Floor, 29 Foley Street, London, W1W 7TH.

* These companies are held indirectly through the Company's 100% subsidiary The City Pub Company (West) Limited.

14 Inventories

Group

2018

Group

2017

Company

2018

Company

2017

Finished goods and goods for resale

959,680

553,909

478,831

287,607

15 Trade and other receivables

	Group 2018 £	Group 2017 £	Company 2018 £	Company 2017 £
Trade receivables	209,331	133,520	106,007	66,483
Other receivables	813,183	510,946	529,196	230,261
Amounts due from group undertakings	-	-	18,335,959	10,687,384
Prepayments and accrued income	1,519,546	1,008,422	888,215	585,776
	2,542,060	1,652,888	19,859,377	11,569,904

16 Current trade and other payables

	Group 2018 £	Group 2017 £	Company 2018 £	Company 2017 £
Trade payables	3,467,217	2,216,492	1,733,609	1,244,213
Corporation taxation	252,111	367,506	-	116,637
Other taxation and social security	1,778,170	1,563,842	1,584,057	680,191
Amounts due to group undertakings	-	-	399,604	250,153
Accruals	1,701,238	1,441,726	934,350	839,156
Other payables (note 17)	1,295,254	557,502	433,569	260,198
	8,493,990	6,147,068	5,085,189	3,390,548

17 Non-current other payables

Group

2018

Group

2017

Company

2018

Company

2017

Deferred consideration

310,000

Deferred consideration has arisen in relation to the acquisition of the Old Fire House, see prior year accounts, with the £310,000 from the prior year now due within one year and included within other payables as at 30 December 2018 (2017: £155,000 of deferred consideration included within current other payables).

18 Borrowings and financial liabilities

	Group 2018 £	Group 2017 £	Company 2018 £	Company 2017 £
Current borrowings and financial liabilities:
CPS dividend payable	-	244,707	-	122,354
	-	244,707	-	122,354
Non-current borrowings and financial liabilities:
Bank loans	11,600,000	-	7,100,000	-
	11,600,000	-	7,100,000	-

At 30 December 2018 a revolving credit facility of £11,600,000 (2017: £nil) was outstanding, Barclays Bank PLC had a fixed charge over certain freehold property as security in respect of this loan. Interest was charged at LIBOR plus a margin, which varied dependent on the ratio of net debt to EBITDA. The revolving credit facility is repayable in June 2021.

The accrued dividend on the CPS was paid in January 2018.

Reconciliation of liabilities arising from financing activities

The changes in the Group's liabilities arising from financing activities can be classified as follows:

	Long-term Borrowings £	Short-term Borrowings £	Total £
At 1 January 2018	-	244,707	244,707
Cash flows:
Proceeds	11,600,000	-	11,600,000
Repayments	-	(244,707)	(244,707)
Non-cash items:	-	-	-
At 30 December 2018	11,600,000	-	11,600,000

	Long-term Borrowings £	Short-term Borrowings £	Total £
At 31 December 2017	18,004,917	294,396	18,299,313
Cash flows:
Repayments	(13,560,351)	(49,689)	(13,610,040)
Non-cash items:
Conversion of Convertible Preference Shares	(4,444,566)	-	(4,444,566)
At 30 December 2018	-	244,707	244,707

The changes in the Company's liabilities arising from financing activities can be classified as follows:

	Long-term Borrowings £	Short-term Borrowings £	Total £
At 1 January 2018	-	122,354	122,354
Cash flows:
Proceeds	7,100,000	-	7,100,000
Repayments	-	(122,354)	(122,354)
Non-cash items:	-	-	-
At 30 December 2018	7,100,000	-	7,100,000

	Long-term Borrowings £	Short-term Borrowings £	Total £
At 31 December 2017	9,653,732	147,198	9,800,930
Cash flows:
Repayments	(7,431,449)	(24,844)	(7,456,293)
Non-cash items:
Conversion of Convertible Preference Shares	(2,222,283)	-	(2,222,283)
At 30 December 2018	-	122,354	122,354

19 Financial instruments and risk management

Financial instruments by category:

	Group 2018 £	Group 2017 £	Company 2018 £	Company 2017 £
Financial assets - loans and receivables
Trade and other receivables	1,022,514	644,466	635,204	296,744
Amounts due from group undertakings	-	-	18,335,959	10,687,384
Cash and cash equivalents	2,853,292	6,414,854	2,245,879	4,536,505
	3,875,806	7,059,320	21,217,041	15,520,633

Prepayments are excluded, as this analysis is required only for financial instruments.

Financial liabilities - held at amortised cost	Group 2018 £	Group 2017 £	Company 2018 £	Company 2017 £
Non-current
Borrowings	11,600,000	-	7,100,000	-
Other payables	-	310,000	-	-
	11,600,000	310,000	7,100,000	-
Current
Current borrowings	-	244,707	-	122,354
Trade and other payables	4,762,471	2,773,994	2,167,178	1,504,411
Amounts due to group undertakings	-	-	399,604	250,153
	4,762,471	3,018,701	2,566,782	1,876,918

Statutory liabilities and deferred income are excluded from the trade payables balance, as this analysis is required only for financial instruments.

There is no material difference between the book value and the fair value of the financial assets and financial liabilities disclosed above.

The Group's operations expose it to financial risks that include market risk and liquidity risk. The Directors review and agree policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous periods.

Cash at bank and short-term deposits	Group 2018 £	Group 2017 £	Company 2018 £	Company 2017 £
A1	2,722,899	6,336,686	2,187,521	4,495,940
Not rated	130,393	78,168	58,358	40,565
	2,853,292	6,414,854	2,245,879	4,536,505

A1 rating means that the risk of default for the investors and the policy holder is deemed to be very low.
Not rated balances relate to petty cash amounts.

Market risk - cash flow interest rate risk

The Group had outstanding borrowing of £11,600,000 at year end as disclosed in note 18. These were loans taken out with Barclays to facilitate the purchase of additional public houses.

The Group's policy is to minimise interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are therefore usually at fixed rates. At 30 December 2018, the Group is exposed to changes in market interest rates through bank borrowings at variable interest rates. Other borrowings are at fixed interest rates. The exposure to interest rates for the Group's cash at bank and short-term deposits is considered immaterial.

The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of +/- 1% on borrowings in the period (2017: £nil). These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate on borrowings for each period. All other variables are held constant.

	Profit for the year		Equity
	+1%	-1%	+1%	-1%
30 December 2018	(167,700)	167,700	(167,700)	167,700
31 December 2017	-	-	-	-

Credit risk

The risk of financial loss due to a counter party's failure to honour its obligations arises principally in relation to transactions where the Group provides goods and services on deferred payment terms and deposits surplus cash.

Group policies are aimed at minimising losses and deferred terms are only granted to customers who demonstrate an appropriate payment history and satisfy credit worthiness procedures. Individual customers are subject to credit limits to control debt exposure. Credit insurance is taken out where appropriate for wholesale customers and goods may also be sold on a cash with order basis.

Cash deposits with financial institutions for short periods are only permitted with financial institutions approved by the Board. There are no significant concentrations of credit risk within the Group. The maximum credit risk exposure relating to financial assets is represented by their carrying value as at the financial period end.

Liquidity risk

The Group actively maintains cash and banking facilities that are designed to ensure it has sufficient available funds for operations and planned expansions. The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period at the period end date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Group	Less than 1 year £	Between 1 and 2 years £	Between 2 and 5 years £	Over 5 years £
As at 30 December 2018:
Borrowings	-	-	11,600,000	-
Trade and other payables	4,762,471	-	-	-

As at 31 December 2017:
Borrowings	244,707	-	-	-
Trade and other payables	2,773,994	310,000	-	-

Company	Less than 1 year £	Between 1 and 2 years £	Between 2 and 5 years £	Over 5 years £
As at 30 December 2018:
Borrowings	-	-	7,100,000	-
Trade and other payables	2,566,782	-	-	-

As at 31 December 2017:
Borrowings	122,354	-	-	-
Trade and other payables	1,754,564	-	-	-

Capital risk management

The Group manages its capital to ensure it will be able to continue as a going concern while maximising the return to shareholders through optimising the debt and equity balance.

The Group monitors cash balances and prepare regular forecasts, which are reviewed by the board. In order to maintain or adjust the capital structure, the Group may, in the future, return capital to shareholders, issue new shares or sell assets to reduce debt.

20 Fair value measurements of financial instruments

Financial assets and financial liabilities measured at fair value are required to be grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

· Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;

· Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

· Level 3: unobservable inputs for the asset or liability.

There were no financial asset or liabilities measured at fair value as at 26 December 2016, 31 December 2017 or 30 December 2018.

21 Deferred tax

	Group 2018 £	Group 2017 £	Company 2018 £	Company 2017 £
Provision for deferred tax
Accelerated capital allowances	742,344	611,392	343,252	308,369
Arising on acquisition	794,271	470,431	323,840	-
	1,536,615	1,081,823	667,092	308,369

Provision at the start of the period	1,081,823	534,097	308,369	290,705
Arising on acquisition	323,840	470,431	323,840	-
Deferred tax charge for the period	130,952	77,295	34,883	17,664
Provision at the end of the period	1,536,615	1,081,823	667,092	308,369

22 Share capital

2018

2017

Allotted called up and fully paid

61,302,514 Ordinary shares of 50 pence each: (2017: 56,467,333)

30,651,257

28,233,667

During the year the Company established an Employee Benefit Trust, the trustee of which, Estera Trust (Jersey) Limited, was issued with 1,925,000 ordinary shares of 50 pence per share on 25 January 2018.The ordinary shares of 50 pence per share were issued at a price of 170 pence per share, with the premium credited to the share premium account.

On 2 July 2018 86,816 new ordinary shares of 50 pence per share were issued as part of the scrip dividend alternative, with an issue price of 210.7 pence per share, with the premium credited to the share premium account.

On 10 October 2018 the Company entered into a Placing of shares and issued 2,823,365 new ordinary shares of 50 pence per share at a placing price of 220 pence per share. The premium, less the share issue costs of £238,630, was credited to the share premium account.

The ordinary shareholders are entitled to be paid a dividend out of any surplus profits and to participate in surplus assets on winding up in proportion to the nominal value of each class of share. All equity shares in the Company carry one vote per share.

The ordinary share capital account represents the amount subscribed for shares at nominal value.

	Ordinary shares Number	Ordinary B shares Number	Convertible preference shares Number
At 25 December 2016	25,845,809	1,200,000	20,532,906
Issue of new ordinary shares prior to scheme of arrangement	295,205	-	-
Purchase of ordinary shares prior to scheme of arrangement	(43,750)	-	-
Issue of new ordinary shares as part of consideration for Aragon House	644,123	-	-
Issue of new ordinary shares in lieu of Directors' bonuses	291,176	-	-
Issue of new ordinary shares on conditional exercise of share options	1,230,000	-	-
Net impact of bonus issue of 58,800,000 £0.01 ordinary B shares, followed by subdivision to £0.50 shares and re-designation to ordinary shares	1,200,000	(1,200,000)	-
Net impact of re-designation of 6,416,534 CPS as Ordinary Shares and subdivision of remaining 14,116,372 CPS into 705,818,600 £0.01 deferred shares and subsequent buy back of the deferred £0.01 shares	6,416,534	-	(20,532,906)
Issue of new ordinary shares on IPO	20,588,236	-	-
At 31 December 2017	56,467,333	-	-
Issue of new ordinary shares to own shares (JSOP)	1,925,000	-	-
Issue of new ordinary shares for Scrip dividend	86,816	-	-
Issue of new ordinary shares on Placing	2,823,365	-	-
At 30 December 2018	61,302,514	-	-

Own shares held (JSOP)

The Group announced the establishment of a Joint Share Ownership Plan ("JSOP") in January 2018, as detailed in the Company's AIM Admission Document, to be used as part of the remuneration arrangements for employees. This resulted in the purchase of the Group's own shares and the creation of an Employee Benefit Trust.

The JSOP purchases shares in the Company to satisfy the Company's obligations under its JSOP performance share plan. 1,925,000 shares (2017: nil) in the Company were purchased during the period at a cost of £3,272,500 (2017: £nil).

At 30 December 2018 the JSOP held 1,925,000 ordinary shares in The City Pub Group plc (2017: nil).

At 30 December 2018 awards over 1,925,000 (2017: nil) ordinary shares The City Pub Group plc, made under the terms of the performance share plan, were outstanding.

Nature and purpose of reserves

The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

Own shares (JSOP) represents shares in the Company purchased by the Group's Employee Benefit Trust as part of a Joint Share Ownership Plan ("JSOP").

Convertible Preference Shares represents the element of the financial instruments treated as equity.

The other reserve has arisen from using the predecessor value method to combine the results of the Company and its subsidiary The City Pub Company (West) Limited, which was acquired through a share for share exchange as part of the reorganisation of two entities under common control prior to the Company's Listing on AIM. The reserve represents the share premium that exists within The City Pub Company (West) Limited.

Share-based payments reserve is used to recognise the grant date fair value of options issued to employees but not exercised.

Retained earnings include all results as disclosed in the statement of comprehensive income.

23 Staff costs

Number of employees

The average monthly numbers of employees (including salaried Directors) during the period was:

	2018	2017
Management and Administration	80	61
Operation of Public Houses	832	462
	912	523

Employment costs (including Directors)

	2018 £	2017 £
Wages and salaries	15,204,215	12,882,845
Social security costs	1,031,479	862,362
Share options	377,188	258,195
	16,612,882	14,003,402

24 Directors' remuneration

Single total figure of remuneration table

The following table shows a breakdown of the remuneration of individual Directors who served in all or part of the year:

	Salary/Fees		Annual Bonus		IPO Bonus*		Taxable Benefits		Pension/Other		JSOP / EMI		Total
	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Clive Watson	130	101	-	136	-	254	4	3	4	1	40	269	178	764
Alex Derrick	130	101	-	147	-	180	6	5	4	1	40	208	180	642
Rupert Clark	130	101	-	156	-	240	9	5	4	1	40	208	184	711
Tarquin Williams	115	86	-	71	-	128	2	2	4	1	40	-	160	288
Richard Prickett	40	8	-	-	-	-	-	-	-	-	-	-	40	8
John Roberts	30	28	-	31	-	42	-	-	41	41	-	-	71	142
Neil Griffiths	29	-	-	-	-	-	-	-	-	-	-	-	29	-
David Bruce	-	42	-	41	-	56	-	-	-	-	-	-	-	139
James Watson	-	16	-	-	-	-	-	-	-	-	-	-	-	16
Total	604	483	-	582	-	900	21	15	57	45	160	685	842	2,710
* The IPO bonus was paid out 45% in cash and 55% in shares at the time of the IPO at the placing price of £1.70.

Emoluments in respect of the Directors are as follows:

2018

2017

Remuneration for qualifying services

841,850

2,710,080

The highest paid Director in the period received remuneration of £183,550; (2017: £765,414). Four directors had equity settled share options in issue at the period end (2017: Four). Additional information on Directors' remuneration is given within the Corporate Governance Report.

25 Share-based payments

The Group provides share-based payments to employees in the form of a Company Share Ownership Plan (CSOP), started in 2016, and a Joint Share Ownership Plan ("JSOP") started in the current period. The Company uses the Black-Scholes valuation model to value both types of share-based payment plan and the resulting value is amortised through the consolidated income statement over the vesting period of the share-based payments.

In prior periods the Group also operated an equity settled share option plan known as the Enterprise Management Incentive Share Option Plan. The Group was required to reflect the effects of share-based payment transactions in profit or loss and in its statement of financial position. For the purposes of calculating the fair value of share options granted, the Black Scholes Pricing Model was used by the Group. Fair values have been calculated on the date of grant. A key input into the model is the share price, on the date of grant of the options. The share price has been estimated based on the most recent subscription for shares. In the prior period a transfer was made between the share based payment reserve and the retained earnings in respect of the EMI share options that were all exercised during the prior period.

During the period ended 30 December 2018 922,500 options were granted under the CSOP scheme (2017: nil) and 1,925,000 awards were made under the JSOP scheme (2017: nil). A share-based payment charge of £377,188 (2017: £258,195) has been reflected in the consolidated statement of comprehensive income.

The fair value of options granted in the current period and the assumptions used in the calculation are shown below:

Year of grant	2018 - CSOP	2018 - JSOP
Exercise price (£)	1.70	2.05
Number of awards granted	922,500	1,925,000
Vesting period (years)	3	3
Award life (years)	10	3
Risk free rate	1.40%	0.80%
Expected dividend yield	1.40%	1.40%
Volatility	30%	20%
Fair value (£)	0.54	0.11

Movements in share-based payments are summarised in the table below:

	2018 Number of Awards	2018 Weighted average exercise price £	2017 Number of Awards	2017 Weighted average exercise price £
Outstanding at start of period	1,042,500	1.00	2,447,500	0.97
Granted	2,847,500	1.94	-	-
Exercised	-	-	(1,230,000)	0.95
Expired	(105,000)	(1.70)	(175,000)	0.99
Outstanding at 30 December 2018	3,785,000	1.69	1,042,500	1.00

Exercisable at 30 December 2018	-	-	-	-

26 Business combinations

During the period the Group acquired 7 new sites through business combinations, the fair values of the assets and liabilities acquired, and the nature of the consideration, are outlined within the table below. The Group has included additional disclosure of the significant acquisitions that were included within the current year business combinations.

All of the above acquisitions were part of the Group's continuing strategy to expand its pub portfolio via selective quality acquisitions. Material acquisitions are disclosed below.

	Group 2018 £	Company 2018 £
Provisional fair value:
Property, plant and equipment acquired	13,355,680	4,590,680
Deferred tax liability	(323,840)	(323,840)
Goodwill	1,328,840	918,840
Total	14,360,680	5,185,680

Satisfied by:
Cash	14,360,680	5,185,680

	Belle Vue	Travellers Friend	Chapel 1877
Provisional fair value:
Property, plant and equipment acquired	2,875,000	3,940,680	2,140,000
Deferred tax liability	-	(323,840)	-
Goodwill	-	323,840	60,000
Total	2,875,000	3,940,680	2,200,000

Satisfied by:
Cash	2,875,000	3,940,680	2,200,000

All other pub acquisitions have been accounted for as property acquisitions.

27 Financial commitments

The Group had commitments under non-cancellable operating leases in respect of land and buildings. The Group's future minimum operating lease payments are as follows:

	Group 2018 £	Group 2017 £	Company 2018 £	Company 2017 £
Within one year	1,774,803	1,167,053	1,299,803	954,553
Between one and five years	7,099,212	4,668,212	5,199,212	3,818,212
After five years	16,505,025	12,816,510	12,680,525	11,171,510
	25,379,040	18,651,775	19,179,540	15,944,275

Commercial operating leases are typically for 15 to 25 years, although certain leases have lease periods extending up to 99 years.

28 Ultimate controlling party and related party transactions

(i) Ultimate controlling party and related party transactions

The Directors consider there to be no ultimate controlling party. The following related party transactions took place during the period:

During the period the Company hived up Randall & Zacharia Limited for £399,604 and this amount is shown as an amount due to group undertakings in note 16.

As disclosed in note 15 the Company is owed £18,335,959 (2017: £10,687,384) by its subsidiary undertakings, The City Pub Company (West) Limited.

£11,377; 2018: £10,400 was paid to Helen Watson, who is related to Clive Watson. At the period end Helen Watson was owed £nil (2017: £nil). Helen Watson has an existing £10,000 float with the group.

(ii) Remuneration of Key Management Personnel

The Company consider that the Directors are their key management personnel and further detail of their remuneration is disclosed in note 24.

No key personnel other than the directors have been identified in relation to the periods ended 30 December 2018 and 31 December 2017.

29 Post balance sheet events

In January 2019 the Company completed on a former Prezzo site in Exeter and a site in in Norwich that will allow the Group to increase the number of letting bedrooms at the Georgian Town House.

In February 2019 the company exchanged and completed on the Pride of Paddington in London for £2,000,000 which started trading on completion.

The Group also exchanged on a freehold site in Bath and the Hoste in Burnham Market.

30 Capital commitments

At the period end the Group and Company has no capital commitments excluding the financial commitments disclosed in note 27.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR SSIEEAFUSEFL

Companies

The City Pub Group (CPC)

Tuesday, 3rd December 2024

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