2008 has been a year of both progress and chalenge for China Pub Company plc.
As you are no doubt aware, global financial markets are experiencing difficult times and China Pub Company plc has not been immune. However while the economic struggle has impacted negatively on our strategy and timing for expansion plans, it has also provided the Board with reassurance that Greater China is the place to be. Individual trading results for our pubs have not eroded and the World Bank forecast for economic growth in China remains a buoyant 6.5% for 2009. Even at half of this growth rate the outlook for our strategy looks good.
In April 2008 the Group launched its anticipated expansion programme into mainland China with the opening of Malone’s, an American themed sports bar, located in the heart of the vibrant Pudong business and residential district of Shanghai. The strength of the Malone’s brand and the style and theme of this new outlet leaves our management confident that we are ideally positioned to leverage our success and maximise future opportunities across Greater China. This is the first pub opened under the Malone’s brand agreement that was signed during 2007. It is extensively larger than our other existing pubs, being approximately 9,000 square feet in size and split over three levels.
We also further developed our presence in Greater China with the sponsorship of the “China Pub Company Yellow Sea Cup” ruby tournament. The sponsorship agreement between the Yellow Sea Cup Tournament and China Pub Company plc covers the seasons 2008-2017. In 2008 this hotly contested rugby tournament included four teams from Shanghai, Beijing, Guangzhou and Seoul from South Korea and is set to be expanded in 2009 to include another four new teams from the region. China Pub Company plc wll use its association with the Yellow Sea Cup to promote the Groups brand of pubs to players as well as the fans and public in general in their various locales.
Where the Group did struggle in 2008 and into 2009, was to secure fundraising to support our development and expansion plans. Unfortunately the Group had geared up its management team and had several sites under option when the economic crisis began to unfold. Alas, like most in this current market, new finance was nonexistent or impractical to raise on economic terms and several good opportunities for us have been lost. However in more recent news I am pleased to advise that an option finally presented itself. An agreement has been entered into with The Phoenician Fund Corporation I (”Phoenician”) for a share for share reverse merger which will see China Pub Company plc move from the CISX to the Toronto Stock Exchange (TSX-V). The transaction was seen as a positive move by the Board of China Pub Company plc as Phoenician has sufficient cash reserves to cover our immediate working capital and expansion plans until a significant amount of finance can be raised from elsewhere. Further information about this transaction is outlined in note 25 of the financial statements. Th Board remains optimistic about our strategy and believe we are now better positioned to raise the required capital to take China Pub Company plc to the next level.
The Board’s strategy remains unchanged as we continue to acquire more thmed pubs and to develop our existing brands across Greater China.
Obtain the full Annual Report and Accounts 2008.
John May
Executive Chairman