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. This information is provided by RNS The company news service from the London Stock Exchange
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