REG.L Regulatory News (REG)

9 Feb 2005 07:00

Regent Inns PLC09 February 2005 Wednesday 9 February 2005 Regent Inns PLC Interim results for the 26 weeks ended 1 January 2005 Regent Inns plc ("Regent" or "the Company") is the operator of late night, entertainment-led bars in the UK. Its core brands are Walkabout and Bar Risa /Jongleurs. The Company is reporting the results of its continuing operations separately from its discontinued operations which comprise its unbranded pubs of which therewere nine at the start of the period. Financial highlights: Continuing operations • Turnover up by 8.9% to £67.2m (2004: £61.8m)• Like-for-like sales increase for Walkabout and Bar Risa/Jongleurs of 2.5%• EBITDA before exceptional items £13.7m (2004: £14.9m)• Operating profit before exceptional item and goodwill amortisation £8.9m (2004: £10.6m)• Profit before tax, goodwill amortisation and exceptional items £5.9m (2004: £7.7m)• Earnings per share before goodwill amortisation and exceptional items 3.8p (2004: 5.4p)• Gross margins remained in line with the second half of 2004 Total Company • Strong cash generation up 11.1% at £12.7m (2004: £11.5m) • Exceptional item of £4.3m relating to the cost of renegotiating bank facilities, reorganisation of the business and a write-off of abortive site acquisition costs • Net bank debt reduced by £8.4m since 3 July 2004 to £62.7m• No interim dividend to be paid Corporate progress: • Agreement reached on revised banking facilities until March 2006 with an option to extend• Reorganisation of the business with anticipated savings of £1.5m in a full year• Of the 9 unbranded pubs for disposal, 3 have been sold and a further 2 are under offer• Walkabout Leicester closed and disposal of Walkabout Shoe Lane and Freedom • No new venues opened in the period• Appointment of Alan Jackson as Non-Executive Director on 1 January 2005 • Appointment of David Turner, Operations Director, and Simon Kaye, Commercial Director to the Board with immediate effect• Nigel Potter and Peter Savage, Non-Executive Directors, stepped down in December 2004 and January 2005 respectively• Paul Felton-Smith, Interim Finance Director, to leave on 31 March 2005 Commenting on the results, Bob Ivell, Executive Chairman, said: "The first six months of this financial year proved to be a turbulentperiod for the Company with a number of significant changes taking place. Despite this difficult and challenging time for the Company,I am pleased to report that we have made significant progress in a number of areas. "Like-for-like sales in the first half increased by 2.5% in the branded estate and by 2.0% in the Company as a whole. We have taken action to address the central cost base of the Company, resulting in anticipated full year savings of £1.5m; and the Board has been further strengthened by the appointment of Alan Jackson as a Non-Executive Director. "Trading since the New Year continued the positive trends, with like-for-like growth in January. The focus continues to be on deliveringa quality experience for our customers, with attention to price and productoffering at the top of our agenda. Despite the increased cost pressures on the business at an operating level, we are confident of the Company's prospects." - Ends - Enquiries: Regent Inns plc 020 8375 3000 Bob Ivell, Executive Chairman John Leslie, Chief Financial Officer Merlin 020 7653 6620 Paul Downes 07900 244 888 Vanessa Maydon 07802 961 902 Rebecca Penney 07795 108 178 Attached: Chairman's Statement Group Profit & Loss Group Balance Sheet Group Cash Flow Statement Reconciliation of Movements in Shareholders Funds Notes to the Financial Statements CHAIRMAN'S STATEMENT Summary The first six months of this financial year proved to be a turbulent period forthe Company with a number of significant changes taking place. Following acontinuing period of poor performance by the Company, the Chief Executive andFinance Director stood down on 10 September 2004. On 14 September 2004, the Company announced that the historic calculation of itsinterest cover covenant in its banking facilities had not been strictly inaccordance with the procedure set out in its loan facility documentation. Thisresulted in the Company being in default. Paul Felton-Smith joined the Board on 15 September 2004 as Interim FinanceDirector and immediately commenced the process of stabilising the Company'sposition. The Company's banking syndicate subsequently agreed to a temporarywaiver of the default, while discussions were continued regarding the Company'sfinancial position and banking facilities. After the announcement of the preliminary results for 2004, I joined the Boardon 26 October 2004 as Executive Chairman along with John Leslie, who joined asChief Financial Officer. John and I had previously worked together at Scottish &Newcastle Retail. We were pleased to announce at the AGM on 16 December 2004 that agreement hadbeen reached on the terms of the revised facilities with the Company's existingbanking syndicate. This followed an independent accountants' review of thebusiness on behalf of the banks, which not only confirmed the absence ofunexpected liabilities, but also served as a useful tool for the Board inassessing the future of the Company. Accordingly, the revised facilitiesincluded reset covenant levels which reflected rebased expectations of theearnings and asset profile of the Company. Despite this difficult and challenging time for the Company, I am pleased toreport that we have made significant progress in a number of areas:- • like-for-like sales in the first half increased by 2.5% in the branded estate and by 2.0% in the Company as a whole, with the positive trend continuing into the New Year. • we have taken action to address the central cost base of the Company, resulting in anticipated full year savings of £1.5m; and • the Board has been further strengthened by the appointment of Alan Jackson as a Non-Executive Director Results Sales in continuing operations increased in the period by 8.9% to £67.2m (2004:£61.8m). However operating profit before exceptional items and goodwillamortisation reduced by 16.6% to £8.9m (2004: £10.6m). Pre-exceptional earningsbefore interest, tax, depreciation and goodwill amortisation (EBITDA), was£13.7m in the 6 months, a reduction of 8.0% on last year (2004: £14.9m). Consistent with last year, sales and profits in the discontinued business havebeen reported separately from the continuing operations. Sales were £0.9m in thefirst half, generating a pre-tax loss of £0.5m. Profit before tax, goodwill amortisation, exceptional items and discontinuedoperations decreased by 22.4% to £5.9m (2004: £7.7m). While the tax rate of28.7% (2004: 33.7%) included full provision for deferred tax, the cash tax rateof 24.8% (2004: 20%) remained below the UK corporation tax rate of 30%. Theincrease in the cash tax rate compared with the previous year reflected thereduced capital expenditure programme. Earnings per share before goodwill amortisation, exceptional items andoperations to be discontinued have decreased by 30.0% to 3.8p (2004: 5.4p). The Company continues to be cash generative. Cash generated from operations was£12.7m, £8.9m greater than operating profit and an increase of 11.1% over thecomparative period. Free cash flow, being cash from operations less interest,tax, dividend payments and reinvestment in our existing venues increased by£8.4m to £9.9m (2004: £1.5m). Capital expenditure in the first half onconversions and new venues of £1.0m represented a significant reduction on lastyear (2004: £14.2m). There were no site acquisitions in the period. Since 3 July 2004, net bank debt has been reduced by £8.4m to £62.7m. At1 January 2005, the Company had £8.1m of cash, and had available a further£12.0m of undrawn facilities, providing sufficient flexibility to reposition theestate if required. Interest was covered 3.0 times by operating profits andfixed charge cover was 1.6 times. Exceptional items The Company incurred exceptional items in the period of £4.3m. This comprised the costs of renegotiating the banking facilities (£1.9m) and are-organisation of the business (£1.6m), together with a write off of abortivesite acquisition costs (£0.8m). Reorganisation costs included payments to formerdirectors (£0.3m), with the balance representing the severance payments to HeadOffice staff. Anticipated savings of £1.5m in a full year will be generated bythis reorganisation. Operational review Trading in the first half has been encouraging with positive like-for-like salesgrowth evidenced in both Walkabout and Bar Risa/Jongleurs. During the Summer, we developed a basket offering of sensible but competitivelypriced drinks during off peak periods and we will continue to refine thisoffering. Customer response to these initiatives has been positive. One-off promotional events in Walkabout have contributed to the strongperformance and reinforced Walkabout in our customers' minds as a destinationfor large scale entertainment. Televising the big sporting events continues to be an important ingredient tothe Walkabout experience. A large number of venues benefited from some keyPremiership football matches during the period. We keenly anticipate the SixNations Tournament, FA Cup and Premiership title race to underpin our secondhalf performance. Jongleurs celebrated its 21st birthday in November 2004 with a number of specialshows across the country. Jongleurs has a unique product offering which isbetter insulated from the threats of competition and regulation than high streetbars and clubs. We are therefore seeking to build on the successful Jongleursformat and are looking at opportunities for improvement in areas such asdatabase marketing and corporate initiatives. Overall gross margins have remained in line with those achieved in the secondhalf last year after the business changed from a premium pricing policy to amore competitive off-peak approach earlier in the year. Although the business has shown encouraging sales growth and consistent grossmargin achievement, the cost base has been under increasing pressure resultingin a 16.6% reduction in operating profit. Profitability has been impacted for anumber of reasons. • Firstly, in a drive for sales growth, the cost of promotional and marketing expenditure has increased. We will continue to focus on creative and fun marketing but ensure a greater level of control over expenditure. • Secondly, based on our initial review of the business, we have already taken a number of actions in relation to internal controls and reporting, particularly, at venue level. These include the appointment of an Internal Audit Manager, a full review of managers' responsibilities and performance incentives and an upgrade in the quality of management information. It is anticipated that the benefits of these various measures will start to be evidenced in the second half. • Finally, following the renegotiation of our bank facilities, we have more closely aligned the central cost base of the business in relation to the size of the operations. Consequently, we have restructured the business and streamlined a number of central functions at Head Office with effect from February 2005 which now enables us to run the Company with more efficiency and greater focus. We have made 27 positions redundant across Head Office functions and operations, generating expected full year savings of £1.5 million. We believe there are further areas for business improvement, which we will focuson in the second half including reviewing the Company's food offering andquality of delivery. At the year end we announced that there remained nine venues within theunbranded disposal estate. Of these, we have disposed of three, two other sitesare currently under offer, and the remaining four are being marketed. Walkabout Leicester was closed in the early part of the first half and we have,in early February 2005, disposed of Walkabout Shoe Lane and Freedom. Weanticipate a small number of disposals may be made as we continue to monitorsite-by-site performance. It is essential that we maintain a high quality estate. Accordingly, we haveallocated £4.8m of capital expenditure on site improvements for the currentyear. We are currently carrying out a major refurbishment of WalkaboutSheffield, which will significantly improve this venue as well as enabling us toextend the licensing hours. Approximately half of the venues are planned to havecapital allocated during the year. Dividend In view of the events in the first half of this financial year and thesubsequent costs of restructuring the business, the Board have decided thatpayment of an interim dividend is not appropriate. Board As announced at the AGM, Alan Jackson joined the Board on 1 January 2005 as aNon-Executive Director. He will chair the Company's Remuneration andAppointments Committee. I am also pleased to announce that David Turner (35), Operations Director, andSimon Kaye (46), Commercial Director, are being promoted to the Board withimmediate effect. David joined Regent in July 2000 as Property Director from Bass Leisure Retail,and became Operations Director of Regent in April 2004. Simon joined Regent asCommercial Director in December 2001 from Scottish & Newcastle, where he wasManaging Director of its Western Pub business. Both have been on the ExecutiveBoard of Regent since 2001, and it is the firm belief of the Board that thesepromotions will create greater focus on operations. As announced at the AGM, Nigel Potter resigned as a Non-Executive Director inDecember 2004, and Peter Savage has also stood down as a Non-Executive Director.We would like to thank them both for their contribution, and, in particular,Peter's contribution as Chairman over the last six years. We are in the processof recruiting a replacement Non-Executive Director. Paul Felton-Smith, who joined as Interim Finance Director in September 2004,will leave the Board on 31 March 2005. I would like to express the gratitude ofthe Company to Paul for his valuable contribution in renegotiating our bankingfacilities. Our people The events of last year have created a great deal of uncertainty for our staff.It is a tribute to their dedication and hard work that the business is now on asound footing and is in a position to take advantage of developments in theindustry over the forthcoming year. Current trading Trading since the New Year continued the positive trends in the branded estate,with like-for-like sales growth in January. The focus continues to be ondelivering a quality experience for our customers, with attention to price andproduct offering at the top of our agenda. Despite the increased cost pressureson the business at an operating level, we are confident of the Company'sprospects. UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the twenty six weeks ended 1 January 2005 Continuing Operations 26 weeks ended 26 weeks ended 26 weeks ended 26 weeks (audited) 1 January 1 January 1 January ended 52 weeks ended 2005 2005 2005 January 2004 3 July Operations Operations Total 2004 ongoing to be discontinued Notes £'000 £'000 £'000 £'000 £'000 Turnover 67,229 868 68,097 64,441 126,736 Operatingcosts(includingexceptionalsand goodwillamortisation) 6 (62,876) (1,366) (64,242) (54,702) (127,305)______________________________________________________________________________________________________ Operatingprofit beforeexceptionalsand goodwillamortisation 8,858 (498) 8,360 9,954 17,036Exceptionalitems 7 (4,291) - (4,291) - (17,174) Goodwillamortisation (214) - (214) (215) (431)_______________________________________________________________________________________________________ Operatingprofit/(loss) 4,353 (498) 3,855 9,739 (569) Profit/(loss)on ordinaryactivitiesbeforeinvestmentincome,interest andtaxation 4,353 (498) 3,855 9,739 (569) Net interestpayable (2,912) - (2,912) (2,955) (6,006)______________________________________________________________________________________________________Profit/(loss)on ordinaryactivitiesbeforetaxation 1,441 (498) 943 6,784 (6,575) Taxation 8 (540) 149 (391) (2,449) (1,021)______________________________________________________________________________________________________ Profit/(loss)on ordinaryactivitiesafter taxation 901 (349) 552 4,335 (7,596) Dividends 4 - - - (2,044) (2,044)______________________________________________________________________________________________________ Retainedprofit/(loss)for the period 901 (349) 552 2,291 (9,640)======================================================================================================= Earnings per share beforegoodwill, exceptional items and operations to be discontinued - basic 3 3.8p 5.4p 9.1p ---------------------------------------- - diluted 3 3.8p 5.3p 9.0p ----------------------------------------Earnings per share - basic 3 0.5p 4.6p (7.4)p ---------------------------------------- - diluted 3 0.5p 4.6p (7.4)p ---------------------------------------- UNAUDITED CONSOLIDATED BALANCE SHEETas at 1 January 2005 1 January 3 January (audited) 3 July 2005 2004 2004 Notes £'000 £'000 £'000 Fixed assets Intangible assets 6,716 7,146 6,930Tangible assets 9 155,444 166,904 156,796________________________________________________________________________________ 162,160 174,050 163,726Current assetsAssets to be sold 327 153 460Stocks 2,199 1,866 2,025Debtors 10 6,873 6,437 7,390Cash at bank and in hand 8,055 9,716 -________________________________________________________________________________ 17,454 18,172 9,875 Creditors - amounts falling duewithin one year 11 (32,214) (32,352) (88,507)________________________________________________________________________________ Net current liabilities (14,760) (14,180) (78,632)________________________________________________________________________________ Total assets less current liabilities 147,400 159,870 85,094 Creditors - amounts falling due afterone year 12 (67,646) (70,623) (6,000) Provisions for liabilities and (19,161) (17,245) (19,053)charges ________________________________________________________________________________ 60,593 72,002 60,041=============================================================================== Capital and reservesCalled up share capital 5,615 5,615 5,615Share premium account 49,951 49,951 49,951Capital reserve - own shares (322) (240) (322)Profit and loss account 5,349 16,676 4,797________________________________________________________________________________ Equity shareholders' funds 60,593 72,002 60,041================================================================================ UNAUDITED CONSOLIDATED CASH FLOW STATEMENTFor the twenty six weeks ended 1 January 2005 26 weeks 26 weeks (audited) ended ended 52 weeks 1 January 3 January ended 2005 2004 3 July 2004 Notes £'000 £'000 £'000 Operating cashflows excluding the 13,265 12,463 23,748effects of fundamental reorganisation Cash outflows resulting from (532) (1,001) (1,801)fundamental reorganisation ________________________________________________________________________________ Net cash inflow from operating 13 12,733 11,462 21,947activities Returns on investments andservicing of finance Interest received 57 53 79Interest paid (2,899) (3,396) (6,008)________________________________________________________________________________ (2,842) (3,343) (5,929)________________________________________________________________________________Taxation Corporation tax paid 2,949 (643) (653)________________________________________________________________________________ Capital expenditure and financialinvestmentPurchases of tangible fixed assets (4,398) (17,426) (28,609)________________________________________________________________________________ Acquisitions and disposalsFundamental reorganisation - netproceeds from asset sales - 4,826 5,538________________________________________________________________________________ DividendsDividends paid - (3,045) (5,089)________________________________________________________________________________ Net cash inflow/(outflow) before 8,442 (8,169) (12,795)financing Financing Repayment of long term loans - - (1,226)New long term loans 450 2,201 -Repayment of loan notes - (992) (3,492)Net proceeds from issue of shares - 16,695 16,695Payments to acquire investments - (27) (27)________________________________________________________________________________ Net cash inflow from financing 450 17,877 11,950________________________________________________________________________________ Increase/(decrease) in cash 8,892 9,708 (845)================================================================================ RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDSFor the twenty six weeks ended 1 January 2005 26 weeks 26 weeks (audited) ended ended 52 weeks 1 January 3 January ended 2005 2004 3 July 2004 £'000 £'000 £'000 Profit/(loss) attributable to shareholders'for the financial period 552 4,335 (7,596) Dividends - (2,044) (2,044)________________________________________________________________________________ 552 2,291 (9,640) New share capital subscribed - 16,695 16,695 Movement in investment in own shares - (27) (27) UITF 17 charge on investment - - (30)________________________________________________________________________________ Net addition to shareholders' funds 552 18,959 6,998 Opening shareholders' funds as previouslyreported 60,041 53,043 53,256 Prior period adjustment - investment in ownshares - - (295) Prior period adjustment - investmentamortisation - - 82________________________________________________________________________________ Closing shareholders' funds 60,593 72,002 60,041================================================================================ NOTES TO THE FINANCIAL STATEMENTSFor the twenty six weeks ended 1 January 2005 1. The results for the year ended 3 July 2004 have been extracted from the audited financial statements for that year, which have been filed with the Registrar of Companies. The auditors' report on those financial statements was unqualified. 2. The unaudited results for the 26 weeks ended 1 January 2005 do not amount to full accounts within the meaning of Section 240 of the Companies Act 1985 and have not been delivered to the Registrar of Companies. The interim results have been prepared in accordance with the Group's normal accounting policies as stated in the statutory accounts for the year ended 3 July 2004. 3. Earnings per share have been calculated using the weighted average number of shares in issue during the relevant financial periods. The weighted average number of shares in issue is 111,741,206 (2004 - 93,748,355) and the earnings, being profit on ordinary activities after taxation, are £552,000 (2004 - £4,335,000). Diluted earnings per share have been calculated using the weighted average number of shares in issue diluted for the effect of share options and convertible loan stock, where the option price or conversion rate has a diluting effect. The diluted weighted average number of shares is 111,986,963 (2004 - 95,251,256). Earnings per share before goodwill amortisation, exceptional items and operations to be discontinued excludes goodwill amortisation of £214,000 (2004 - £215,000), exceptional losses of £4,291,000 (2004 - £Nil) together with a taxation credit thereon of £1,166,000 and operations to be discontinued losses of £498,000 (2004 - £663,000) together with a taxation credit thereon of £149,000 (2004 - £133,000). 4. The directors do not propose an interim dividend (2004 - 1.82p per share). 5. The interim report is being despatched to shareholders and copies will be available from the Company's registered office at 77 Muswell Hill, London N10 3PJ. 6. Net operating expenses Continuing Operations 26 weeks 26 weeks 26 weeks 26 weeks ended (audited) ended ended ended 3 January 2004 2 weeks ended 1 January 1 January 1 January 2005 3 July 2004 2005 2005 Total Operations Operations ongoing to be discontinued £'000 £'000 £'000 £'000 £'000 Cost of sales (15,504) (325) (15,829) (14,105) (28,831) Administration costsOperatingexpenses (34,187) (1,041) (35,228) (32,455) (64,835)Depreciation (4,801) - (4,801) (4,235) (8,652)Goodwillamortisation (214) - (214) (215) (431)Exceptionalitems (4,291) - (4,291) - (17,174)Head officeexpenses (3,912) - (3,912) (3,886) (7,601) Other operatingincome 33 - 33 194 219__________________________________________________________________________________________ (62,876) (1,366) (64,242) (54,702) (127,305)=========================================================================================== 7. Exceptional items Continuing Operations 26 weeks 26 weeks 26 weeks 26 weeks ended (audited) ended ended ended 3 January 2004 52 weeks ended 1 January 1 January 1 January 2005 3 July 2005 2005 Total 2004 Operations Operations ongoing to be discontinued £'000 £'000 £'000 £'000 £'000 Bank restructuringcosts (1,858) - (1,858) - - Head officerestructuringcosts (1,633) - (1,633) - - Aborted acquisitioncosts (800) - (800) - - Provision forimpairment oftangible fixedassets - - - - (14,374) Provision foronerous leases - - - - (2,800)__________________________________________________________________________________________ (4,291) - (4,291) - (17,174)========================================================================================== 8. Taxation The taxation charge for the twenty six weeks ended 1 January 2005 is calculated by applying an estimate of the effective tax rate for the year ended 2 July 2005. Continuing Operations 26 weeks 26 weeks 26 weeks 26 weeks ended (audited) ended ended ended 3 January 52 weeks ended 1 January 1 January 1 January 2004 3 July 2005 2005 2005 2004 Operations Operations Total ongoing to be discontinued £'000 £'000 £'000 £'000 £'000 Current tax (310) 149 (161) (1,399) 427Deferred tax (230) - (230) (1,050) (1,448)______________________________________________________________________________________ (540) 149 (391) (2,449) (1,021) 9. Fixed assets 1 January 3 January (audited) 2005 2004 3 July 2004 £'000 £'000 £'000 Opening Book Value 156,796 154,292 154,292Additions 4,249 16,847 28,357Depreciation (4,801) (4,235) (8,652)Provision for impairment - - (14,374)Disposals - - (2,827)Aborted acquisition costs (800) - -________________________________________________________________________________Closing Book Value 155,444 166,904 156,796================================================================================ 10. Debtors 1 January 3 January (audited) 2005 2004 3 July 2004 £'000 £'000 £'000 Amounts falling due within one year:Trade debtors 987 622 716Corporation tax - - 1,600Other debtors 458 350 549Prepayments and accrued income 5,428 5,465 4,525________________________________________________________________________________ 6,873 6,437 7,390================================================================================ 11. Creditors - amounts falling due within one year 1 January 3 January (audited) 2005 2004 3 July 2004 £'000 £'000 £'000 Bank loan 9,100 9,100 70,296Bank overdraft - - 837Jongleurs loan notes - 2,500 -Trade creditors 4,680 5,653 5,318Corporation tax 1,510 236 -Tax & social security 2,912 1,883 1,302Accruals & deferred income 12,537 8,781 8,820Proposed dividends - 2,044 -Other creditors 1,475 2,155 1,934________________________________________________________________________________ 32,214 32,352 88,507================================================================================ 12. Creditors - amounts falling due after one year 1 January 3 January (audited) 2005 2004 3 July 2004 £'000 £'000 £'000 Bank loan 1-2 years 61,646 9,100 -Bank loan 2-5 years - 55,523 -Jongleurs unsecured convertible loan notes2-5 years 6,000 6,000 6,000________________________________________________________________________________ 67,646 70,623 6,000================================================================================ 13. Reconciliation of operating profit to operating cash flows 26 weeks 26 weeks ended (audited) ended 3 January 52 weeks 1 January 2004 ended 2005 3 July 2004 £'000 £'000 £'000 Operating profit/(loss) 3,855 9,739 (569)Non-cash exceptional items 2,693 - 17,174Depreciation 4,801 4,235 8,652Amortisation of goodwill 214 215 431Increase in stocks (174) (434) (593)Increase in debtors (1,083) (1,488) (845)Increase /(decrease) in creditors 2,959 196 (502)________________________________________________________________________________ 13,265 12,463 23,748 Cashflows resulting from fundamentalreorganisation (532) (1,001) (1,801)________________________________________________________________________________Net cashflow from operating activities 12,733 11,462 21,947================================================================================ 14. Reconciliation of net cash flow to movement in net debt 26 weeks 26 weeks ended (audited) ended 3 January 52 weeks 1 January 2004 ended 2005 3 July 2004 £'000 £'000 £'000 Increase/(decrease) in cash in theperiod 8,892 9,708 (845)Cash (outflow)/inflow from increase inloans (450) (2,201) 1,226Repayment of long term loans - 992 3,492________________________________________________________________________________ Change in net debt resulting fromcashflows 8,442 8,499 3,873 Net debt at beginning of period (77,133) (81,006) (81,006)________________________________________________________________________________Net debt at end of period (68,691) (72,507) (77,133)================================================================================ 15. EBITDA - before exceptional items Earnings before interest, tax, depreciation and amortisation (EBITDA) is as follows:- 26 weeks 26 weeks ended (audited) ended 3 January 52 weeks 1 January 2004 ended 2005 3 July 2004 £'000 £'000 £'000 Operating profit/(loss) 3,855 9,739 (569)Exceptional items 4,291 - 17,174Depreciation 4,801 4,235 8,652Goodwill amortisation 214 215 431________________________________________________________________________________ 13,161 14,189 25,688================================================================================ INDEPENDENT REVIEW REPORT TO REGENT INNS PLC Introduction We have been instructed by the company to review the financial information forthe 26 weeks ended 1 January 2005 which comprises of the consolidated profit andloss account, consolidated balance sheet, consolidated cash flow statement,reconciliation of shareholders' funds and the related notes 1 to 15. We haveread the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. This report is made solely to the company in accordance with guidance containedin Bulletin 1999/4 'Review of interim financial information' issued by theAuditing Practices Board. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the company, for our work,for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4"Review of interim financial information" issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof group management and applying analytical procedures to the financialinformation and underlying financial data, and based thereon, assessing whetherthe accounting policies and presentation have been consistently applied, unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with UnitedKingdom Auditing Standards and therefore provides a lower level of assurancethan an audit. Accordingly we do not express an audit opinion on the financialinformation. Review conclusion On the basis of our review we were not aware of any material modifications thatshould be made to the financial information as presented for the 26 weeks ended1 January 2005. Ernst & Young LLPLondon9 February 2005 This information is provided by RNS The company news service from the London Stock Exchange