Interim Results
Heavitree Brewery PLC
29 June 2007
The Heavitree Brewery PLC
Trood Lane
Matford
Exeter EX2 8YP
Date: 29 June 2007
Contact: Graham Crocker - Managing Director - 01392 217733
Rod Glanville - Director and Company Secretary - 01392 217733
Alex Borrelli - Shore Capital - 0207 468 7932
Following a Board Meeting held today, 29 June 2007, the Directors announce the
half-year results for the six months ended 30 April 2007.
Chairman's statement
Results
Turnover has slightly increased on last year giving an operating profit of
£790,000 which reflects a 53.1% increase. Excluding FRS 17 operational charge
adjustments a 21.7% increase in operating profit can still be reported. The
profit before taxation for the half-year is £796,000. This includes the profit
on the sale of a house and compares to last year's profit before taxation of
£1,137,000 (restated) which included the windfall profit from the sale of our
shares in George Gale and Company Limited. A like-for-like comparison, excluding
profits on sales of properties and fixed asset investments, shows a satisfactory
improvement of £266,000.
The Company continues to perform well thanks to growth in our Managed House
Subsidiary, improved margins and good controls in this period.
Board restructure
It was reported to the Stock Exchange on 18 April 2007 that my father, Bill
Tucker, had decided to give up the Chairmanship of this Company with effect from
1 May 2007. This has in turn, led to a restructuring of the Board with myself
assuming the position of Chairman, Graham Crocker becoming Managing Director and
Rod Glanville becoming Company Secretary.
My father became Chairman in November 1974 following the retirement of his
father. During his 33 years in the Chair, he has overseen the continued
independence of this Company in an ever changing market. His policy of
redemption of shares has seen 21.7% of the Ordinary issued shares and 37.6% of
the 'A' Ordinary issued shares being cancelled at an average cost per share of
£2.17. This equates to 32.3% of the ordinary share capital. This successful
policy has returned great value to shareholders and he leaves the Chair with the
Company in good health. I am delighted to be able to report that he has agreed
to remain on the Board as a Non-executive Director.
Share buy-backs
In April, and in keeping with the Company's policy of being able to buy-back its
own shares, 45,000 'A' Limited Voting Ordinary Shares were bought at a price of
£11.00 per share and cancelled.
Properties
The Eagle Tavern in Exeter was sold giving a pre-taxation profit of £230,000.
Pension scheme
As reported in previous statements, our final salary pension scheme is closed
and now in the process of being wound up. The Company still awaits the final
valuation of the deficit from the scheme's actuary. I hope to report further on
this matter at the year end.
Accounting treatment for share based payment
FRS 20 (Relating to the accounting treatment for share based payments) having
taken effect for accounting periods commencing on or after 1 January 2006 has
been implemented in the period. The Group has recognised a charge of £3,000 in
these accounts relating to share options issued on or after 2 November 2002.
The comparable accounts have been adjusted by way of a prior year adjustment.
Dividend
The Directors are declaring an increased interim dividend of 4.5p per Ordinary
and 'A' Limited Voting Ordinary Share. This reflects a 12.5% increase of 0.5p
and the dividend will be paid on 28 July 2007 to shareholders on the register at
13 July 2007.
Prospects
The imminent Smoking Ban has given further focus on the policy of improving the
quality and style of our estate. As already reported, The Eagle Tavern was sold
in January and I can report that contracts have been exchanged on the sale of
The Royal Standard in Shaldon and Judge Jefferies in Exeter since the end of the
half-year. These further sales should realise a pre-taxation profit of
approximately £795,000.
We look forward to a further satisfactory performance for the year as a whole.
N H P TUCKER
Chairman
Group profit and loss account
for the six months ended 30 April 2007
As
restated
2007 2006
Note £000 £000
Turnover 6,202 6,136
Operating profit 790 516
Profit on sale of tangible fixed assets 235 -
Profit on disposal of fixed asset investments - 842
Profit on ordinary activities before interest
and taxation 1,025 1,358
Other interest receivable 4 4
Interest payable (212) (183)
Other finance charges - FRS 17 (21) (42)
Profit on ordinary activities before taxation 796 1,137
Taxation on profit on ordinary activities (250) (242)
Profit attributable to shareholders 546 895
Basic earnings per share 3 10.3p 16.7p
Diluted earnings per share 3 10.3p 16.6p
All revenues and costs relate to continuing operations.
Group statement of total recognised gains and losses
for the six months ended 30 April 2007
As
restated
2007 2006
£000 £000
Profit attributable to shareholders 546 895
Exchange difference on retranslation of subsidiary 2 1
Actuarial loss on pension scheme (120) (74)
Deferred tax relating to actuarial loss on pension scheme 36 22
Total recognised gains and losses relating to period and since 464 844
last annual report
Group statement of movement on shareholders' funds
for the six months ended 30 April 2007
2007 2006
Note £000 £000
At 1 November as previously reported 7,598 6,581
Prior year adjustment - FRS 21 - 317
Prior year adjustment - FRS 25 - (12)
At 1 November as restated 7,598 6,886
Total recognised gains and losses relating to the period 464 844
Dividends (370) (319)
Consideration received by EBT on sale of shares 518 63
Consideration paid by EBT on purchase of shares (108) (605)
Reserve arising from the fair value of options granted - FRS 20 2 3 3
Buy-back of own shares (495) -
At 30 April 7,610 6,872
Dividends
The Directors declare an interim dividend of 4.5p per share (2006 - 4.0p) on the
Ordinary and 'A' Limited Voting Ordinary Shares. This dividend will be paid on
28 July 2007 to shareholders on the register at 13 July 2007.
Group balance sheet
At 30 April 2007
As
restated
2007 2006
£000 £000
Fixed assets
Tangible assets 16,912 16,503
Investments 20 20
16,932 16,523
Current assets
Stocks 154 168
Debtors 1,926 1,664
Cash at bank and in hand 467 647
2,547 2,479
Creditors: amount falling due within one year (9,818) (9,805)
Net current liabilities (7,271) (7,326)
Total assets less current liabilities 9,661 9,197
Creditors: amount falling due after more than one year (284) (288)
Provisions for liabilities and charges
Deferred taxation (262) (283)
Net assets excluding pension liability 9,115 8,626
Pension liability (1,505) (1,754)
7,610 6,872
Capital and reserves
Called up share capital 276 279
Capital redemption reserve 661 658
Other reserves 69 73
Own shares reserve (1,172) (1,306)
Profit and loss account 7,776 7,168
Total shareholders' funds - equity 7,610 6,872
Group statement of cash flows
for the six months ended 30 April 2007
2007 2006
Note £000 £000
Net cash flow from operating activities 4 557 1,496
Returns on investments and servicing of finance
Interest paid (212) (225)
Interest received 4 4
Preference dividend paid (1) (1)
Net cash outflow from returns on investments
and servicing of finance (209) (222)
Taxation
Corporation tax paid (123) (186)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (678) (975)
Receipts from sales of tangible fixed assets 289 -
Receipts from sale of fixed assets investments - 1,017
(389) 42
Equity dividends paid (369) (318)
Financing
Consideration received by EBT on sale of shares 23 63
Consideration paid by EBT on purchase of shares (108) (605)
(85) (542)
(Decrease)/ Increase in cash (618) 270
Reconciliation of net cash flow to movement in net debt
for the six months ended 30 April 2007
2007 2006
£000 £000
(Decrease)/Increase in cash (618) 270
Change in net debt arising from cash flows being movement in net (618) 270
debt
Net debt at beginning of period (6,442) (6,546)
Net debt at end of period (7,060) (6,276)
Notes to the interim results
1 These figures for the six months ended 30 April 2007 are unaudited.
2 The accounting policies are consistent with the previous year except for
the adoption of Financial Reporting Standard No 20 'Share Based Payment'.
The Group is required to adopt FRS 20 'Share Based Payment' for the first time
for accounting periods commencing on or after 1 January 2006. FRS 20 requires
the Group to recognise an expense in respect of the granting of options over
shares to employees and directors. This expense, which is calculated by
reference to the fair value of the options granted, is recognised on a straight
line basis over the performance period based upon the Group's estimate of
options that will eventually vest. The adoption of this standard has no overall
effect on the Group's retained reserves. The adoption of FRS 20 has had no
effect on the Group's cash flows.
Management have used a binomial option pricing model to estimate the value of
the options granted in the current and prior periods. The key input to the
model was the assumed share price volatility which management estimate to be
approximately 17% based upon the Group's historic share price volatility. The
expected option life used to estimate the fair value of the options is 3 years
from the date of grant.
Comparative figures for the 6 months ended 30 April 2006 have been restated to
apply the provisions of FRS 20, increasing expenses and consequently decreasing
operating profits for that period as shown below:
2006
£000
Operating profit as previously reported 519
FRS 20 share option charge (3)
Operating profit as restated 516
3 Basic and diluted earnings per share
The calculation of basic earnings per ordinary share is based on earnings of
£546,000 (2006 restated: £895,000), being profit after taxation for the period,
and on 5,283,727 (2006 - 5,352,674) shares being the weighted average number of
Ordinary and 'A' Limited Voting Ordinary Shares in issue during the year after
excluding the shares owned by The Heavitree Brewery PLC Employee Benefits Trust
and those shares under option pursuant to the Employee Share Option Scheme.
The calculation of diluted earnings per ordinary share is based on earnings of
£546,000 (2006 restated: £895,000), being profit after taxation for the period,
and on 5,309,965 (2006 - 5,377,479) shares being the weighted average number of
Ordinary and 'A' Limited Voting Shares in issue during the period, as diluted
for the share options in issue.
The Ordinary Shares and the 'A' Limited Voting Ordinary Shares have equal
dividend rights and therefore no separate calculation of earnings per share for
the different classes has been given.
4 Group statement of cash flows
Reconciliation of operating profit to net cash inflow from operating activities:
As restated
2007 2006
£000 £000
Operating profit 790 516
Depreciation 362 308
(Increase) in stocks (12) (19)
(Increase) in operating debtors (433) (365)
Increase in operating creditors 3 974
Net pension change (158) 78
Fair value of options granted 3 3
Exchange gain on cash 2 1
Net cash inflow from continuing operating activities 557 1,496
Ends.
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