Pubs 'n' Bars facing up to smoking ban

Pubs 'n' Bars more than doubled profits in the year to the end of December 2007, with its community-focused pub offer appealing to cash-strapped consumers who might think twice about visiting destination venues.

The company said it is withstanding the impact of the smoking ban better than many other operators, but has still seen like-for-like sales dip as a result.

The AIM quoted community pub operator, which has 106 pubs split evenly between freehold and leaseholds, saw revenue up by 30 per cent. to £19.9m, with pre-tax profit up 107 per cent. to £1.025m. However, underlying profit before tax was £900k, down from £1m a year before.

EBITDA rose 50 per cent. to £3.2m, with basic earning per share of 5.30p, compared to 2.32p in 2006.

The group said it was cutting its dividend to shareholders by 0.5p, a decision that was "not taken lightly", it added.

"The board of directors took the decision based upon a balanced and responsible approach to the requirements of the business going forward in the current climate."

The group said first quarter turnover was below budget by approximately two per cent, "mainly due to the full effect of the smoking ban taking hold in the winter months and an early and snowy Easter leading to lower than expected sales during the holiday".

Speaking about the full year's number, Pubs 'n' Bars chairman Seamus Murphy said: "I am pleased to report a good set of results achieved under challenging conditions including the indoor smoking ban, cheap supermarket alcohol and rising duties on beer, wine and spirits.

"We are confident that our community-driven pub business model will remain robust at a time when consumers are more cautious with their leisure spend."

As the anniversary of the smoking ban in England approaches, Murphy conceded is is "difficult to work out precisely how much trade has been lost to the smoking ban, and how much is attributable to the impact of alcohol duty, and of course, the largest threat to our business, which is competition from cut price supermarket alcohol sales."

However, despite investment in heated and covered outdoor areas, the company believes a five per cent fall in like-for-like revenues is "directly attributable to the ban".