Punch Taverns plc 2007 Annual Report and Financial Statements

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Financial glossary Beta model A model for pricing share options which applies the same principles as the binomial model but takes into account the relationship of the share price to a portfolio of a comparator group companies’ shares. Binomial model A model for pricing share options which applies the same principles as decision tree analysis by considering the possibilities that prices may increase or decrease by a pcertain percentage. Black-Scholes model A model for pricing share options using the share price, the time to expiration of the option, the risk-free interest rate and the expected standard deviation of the share return. Cash flow hedges A hedge of the exposure to variability in cash flows. Collateralised cash Cash pledged as security. Combined Code The Combined Code on corporate governance sets out standards of good practice in relation to issues such as board composition and development, remuneration, accountability and audit, and relations with shareholders. Convertible bond A corporate bond that can be exchanged for a specific number of ordinary shares. Convertible bonds generally have lower interest rates than non-convertible bonds because they accrue value as the price of the underlying shares rise. Convertible bonds therefore reflect a combination of the benefits of shares and corporate bonds. Corporate governance Corporate governance describes the system by which an organisation is directed and controlled. Curtailment gains / losses Curtailment gains / losses arise on the curtailment or settlement of a defined benefit pension plan. A curtailment occurs when a company is demonstrably committed to make a material reduction in the number of employees covered by the plan or amends the terms of the plan such that a material element of future service by current employees will no longer qualify for benefits. Debenture notes A form of bond taken out by a company, which it agrees to repay at a specified future date and which bears interest (either fixed or variable) until maturity. Derivative financial instruments Financial instruments whose value changes in response to changes in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, or other variable, and are settled at a future date. Diluted earnings per share Diluted earnings per share is earnings per share after allowing for the dilutive effect of the conversion into ordinary shares of the weighted average number of options outstanding during the period and shares from the assumed conversion of convertible bonds. Dividend cover A performance measure which shows the number of times that profit for the year covers dividends paid and proposed. Earnings per share (EPS) Earnings per share is a performance measure that expresses the earnings attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the period. EBITDA EBITDA represents earnings before finance income, finance costs, movement in fair value of interest rate swaps, UK income tax, depreciation, amortisation and profit on sale of non-current assets. EBITDAR EBITDAR represents earnings before finance income, finance costs, movement in fair value of interest rate swaps, UK income tax, depreciation, amortisation, rental costs and profit on sale of non-current assets. Effective interest rate method A method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or expense over the relevant period. Experience gains / losses Changes in the valuation of a defined benefit pension scheme which arise when events have not coincided with the actuarial assumptions made for the previous valuation. Fair value The amount at which assets can be exchanged, or liabilities settled, between knowledgeable, willing parties in an arm’s length transaction. Finance lease A method of purchasing an asset by making rental payments throughout the expected lifetime of the asset. The lessee shows an asset and a corresponding liability in the balance sheet. Finance lease payments are accounted for as a reduction in the liability. Goodwill Goodwill is the excess of the amount paid for a company over the fair value of the net assets acquired at the date of acquisition. IAS International Accounting Standards IASB International Accounting Standards Board IFRS International Financial Reporting Standards IFRIC International Financial Reporting Interpretations Committee Indexation allowance Indexation allowance is tax relief given when calculating capital gains which takes into account inflation based on the Retail Prices Index (RPI). Indexation allowance can only reduce an unindexed gain to nil and cannot create or increase a capital loss. Interest cover A performance measure which shows the number of times EBITDA and net finance income and finance cost covers the net finance income and finance cost. Interest rate swap A derivative financial instrument used to minimise exposure to changes in interest rates by payment to receive a fixed interest rate in exchange for a floating rate interest rate, or payment to receive a floating rate interest rate in exchange for a fixed interest rate. LIBOR London Inter Bank Offered Rate. Interest rate quoted between banks which is a recognised basis for calculating a floating interest rate. Operating lease A method of renting assets over a period which is less than the expected life of the asset. The lessee does not show an asset or liability on their balance sheet and periodic payments are accounted for by the lessee as operating expenses in the period. 100 2 www.punchtaverns.com
Punch Taverns plc Annual Report and Financial Statements 2007 1013 Operating result Profit after deducting all operating expenses including depreciation and amortisation. Over-hedge An over-hedge occurs when the notional principal amount of the hedging instrument is greater than that of the hedged item. Net debt Loans, convertible bonds and finance leases net of other interest bearing deposits and cash and cash equivalents. Exceptional items Items which management consider will distort comparability, either due to their significant non-recurring nature or as a result of specific accounting treatments. These are separately identified in order to provide a trend measure of underlying performance. PBT Profit before tax Projected unit credit method The accounting method used to calculate provisions for pensions. It includes not only the pensions and vested interests accrued at the date of calculation, but also anticipated increases in salaries and pensions. Securitisation The process of raising finance by creating a financial instrument secured by pooling other financial assets to back the instrument. Segmental reporting Information regarding the financial position and results of operations in different business areas. Total Shareholder Return (TSR) The growth in value of a shareholding over a specific period, assuming that dividends are reinvested to purchase additional shares. UK GAAP UK Generally Accepted Accounting Principles Working capital Short-term disposable capital used to finance day-to-day operations. It is calculated as current assets less current liabilities.
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Passionate about our pubs Punch Tav
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Punch Taverns: Our Punch Taverns le
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Operational highlights • We conti
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Managed estate: We have significant
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award winning training. Our managed
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Operational review Overview The fin
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Whilst the leased and managed estat
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Passionate about our people ATTRACT
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Corporate social responsibility Com
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Our ‘NITA’ award winning retail
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Results for the year The financial
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Capital expenditure and cash flow T
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purchased by the Group as well as f
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5 8 6 9 7 5 Peter Cawdron Non-execu
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Directors’ report The Directors p
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Punch Taverns plc Annual Report and
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Introduction This report has been p
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Annual bonus Policy: maximum bonus
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Punch Taverns plc Deferred Share Bo
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Directors’ contracts The policy o
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Audited information The total of Di
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Statement of Directors’ responsib
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Consolidated statement of recognise
Page 53 and 54: Consolidated cash flow statement fo
Page 55 and 56: Company statement of recognised inc
Page 57 and 58: Contents for the notes to the finan
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Page 63 and 64: 2 Segmental analysis The primary se
Page 65 and 66: 3 Analysis of expenses The followin
Page 67 and 68: 7 Employees and Directors continued
Page 69 and 70: 9 Earnings per share continued The
Page 71 and 72: 12 Goodwill and intangible assets O
Page 73 and 74: 14 Trade and other receivables 18 A
Page 75 and 76: 15 Deferred tax continued Company F
Page 77 and 78: 20 Financial liabilities continued
Page 85 and 86: 25 Share-based payments continued D
Page 87 and 88: 25 Share-based payments continued S
Page 89 and 90: 27 Other reserves Group Equity comp
Page 91 and 92: 28 Net debt continued (c) Reconcili
Page 93 and 94: 30 Disposals On 17 September 2006,
Page 95 and 96: 31 Pensions and other post-retireme
Page 97 and 98: 31 Pensions and other post-retireme
Page 99 and 100: 32 Operating lease commitments - mi
Page 101 and 102: 34 Related party transactions conti
Page 103: Five year financial record Group tr
Page 107 and 108: The paper used in this report is fu
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