GRS Pubs, the tenanted pub group formerly owned by London Town, reduced operating losses from £626k to £66k in 2013 as it sold a further 15 pubs and saw “significant trading improvement”, M&C Report has learnt.

EBITDA grew more than 80% to £817k, allowing for a non-cash property impairment charge of £754k. Turnover fell 27.1% to £3m, in line with the disposals, which left GRS with 45 sites at the year end.

GRS chief executive Ted Kennedy told M&C Report: “The combination of good EBITDA and sale of pubs meant that in the year we repaid the bank a further £4.3m and also ensured that the company kept a low level of trade creditors.”

He added: “We continued to drive the successful free-of-tie model and this delivered a significant trading improvement on the previous year with operating losses reduced from £626k in 2012 to £66k in 2013. In fact the underlying position was even stronger than that, as continuing our prudent approach we impaired the value of the pubs by £754k. Allowing for this non-cash item and depreciation the company delivered £817k at the EBITDA level, an increase of just over +80% year on year.” 

GRS Pubs remains in breach of its banking covenants on its £46.9m loan facility, which derives from its parent company London Town PLC being in administration.

Kennedy down played the impact. “As this is a bank-led recovery this is pretty academic and there is no impact on the day-to-day running of the company. There is no requirement to carry out any financial restructuring as the company generates cash for interest and the sales proceeds from the pubs are remitted to the bank.”

According to the accounts, directors forecast the firm will generate sufficient cash to last until 30 September 2015, but there will be insufficient funds for a loan repayment if demanded.

“The directors have been in discussion with its lenders and continue with a planned property disposal programme. The company is dependent on the on-going support of the lenders and there can be no guarantee that this will continue. Should the bank request repayment of some or all of the loan, the company may be unable to realise its assets and discharge its liabilities in the normal course of business.

“These conditions indicate the existence of a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern.”