Interim Results
Young & Co's Brewery PLC
16 November 2006
16 November 2006
INTERIM RESULTS
for the 26 weeks to 30 September 2006
Financial Highlights
• Turnover increased to £69.1 million up 10.6%
• Adjusted profit before tax of £5.8 million* up 4.8%
• Reported profit before tax of £42.7 million up 885.5%
• Adjusted earnings per share of 33.83p* up 6.4%
• Proposed dividend per share increased to 18.00p up 50.0%
*Excludes exceptional items and discount of site proceeds
• Total managed house turnover up 15.2% with operating profit up 7.1%;
• Like for like managed house turnover up 11.2% on an invested basis and
7.0% on an uninvested basis;
• 14 pubs acquired for £32.5 million;
• Successful integration of brewing and wholesaling activities into
Wells & Young's Brewing Company, which commenced trading at the beginning of
October;
• Sale of Wandsworth sites for £69 million;
• Recent valuation of the estate at £399 million would increase NAV per
share by £15.01 to £31.87.
Stephen Goodyear, Chief Executive of Young's, commented:
'This has been an eventful half year for Young's, a period tinged with sadness
following the death of our long standing and unique Chairman John Young, but
also one in which we have undergone major changes as we set down the foundations
for the future of the business.
'We are clear in our determination to build on John's legacy and achieve a step
change in the financial performance of the business. We have a retail and
property strategy to deliver this transformation, and today's proposed 50%
increase in the interim dividend is a sign of our confidence in achieving it.
'Trading in our pubs has been strong in the first half, and this trend has
continued in the second half with managed house total sales for the first six
weeks up 21.9% and up 10.6% on an invested like for like basis. We have the
management, operational infrastructure and financial resources in place to
continue this growth. We look forward to the future with considerable
confidence.'
For further information, please contact:
Young & Co.'s Brewery, P.L.C 020 8875 7000
Stephen Goodyear, Chief Executive
Peter Whitehead, Finance Director
Hogarth Partnership 020 7357 9477
James Longfield / Georgina Briscoe
INTERIM RESULTS
for the 26 weeks to 30 September 2006
Interim statement
The first half has been a period of enormous change at Young's with the
resolution of our future brewing activities through the joint venture with
Charles Wells and the sale of the Ram Brewery and nearby office and warehouse
space, our Wandsworth sites. Sadly, it also marked the death of our long
standing and unique Chairman, John Young. John leaves behind a strong legacy
with the foundations firmly in place for Young's continued success.
All of us at Young's share a great attachment to the history and heritage of the
Ram Brewery, but the Board has been very aware of the compelling need for
change. It has been increasingly difficult for a brewer the size of Young's to
compete in a fast consolidating sector, and the costs and inefficiencies of
operating the Ram Brewery have also restricted the company's ability to expand.
The formation of the Wells & Young's joint venture has enabled us to address
these issues and facilitate the sale of the Wandsworth sites to Minerva for £69
million.
One impact of these major changes is that the results for the first half are
distorted by operating and non-operating one-off items. These include a
substantial profit on the sale of the Wandsworth sites as well as some large
exceptional costs connected with this deal and the joint venture. After these
adjustments, profit before tax was £5.8 million and adjusted earnings per share
were 33.83p up 4.8% and 6.4% respectively.
Looking at the retained retail business, however, shows that we have made good
progress in the period. Turnover was up 12.7%, driven by like for like
performance, the accelerated roll out of our high quality food offering and past
investment. Young's retail business comprised 221 pubs at the end of the first
half, of which 178 are freehold and ten are leases with in excess of 45 years to
run, with rents that in total amount to less than £10,000. A recently completed
valuation of the pub estate has set its value at £399 million, an uplift of £174
million on book value.
The substantial changes to the business executed by the Board in the first half
are designed to achieve a step change in financial performance. The Board has a
retail and property strategy to deliver this transformation. As a sign of
confidence in achieving this, the Board is today proposing a 50% increase in the
interim dividend to 18.00p. This will be paid on 8 December 2006 to shareholders
on the register on 24 November 2006.
Retail operations
Despite the substantial changes to the business, we retained our operational
focus in the period and, supported by a good summer, delivered a strong retail
performance in the first half. This highlights the quality of our estate and our
determination to widen our point of differentiation in a competitive market
place by exploiting our excellent locations, designs, high service standards,
quality food and market leading drinks.
Managed pubs
The managed division saw an increase in turnover of 15.2%. Like for like
turnover increased 11.2% on an invested basis and 7.0% on an uninvested basis.
Operating profit for our managed division increased 7.1%.
The improvement in operating profit was particularly pleasing in view of major
disruption from closures during our refurbishment programme, large start up
costs incurred on recently acquired pubs, long lead times for our newly built
riverside sites and increases in the minimum wage, utilities and business rates.
The new developments and acquired pubs are a clear point of differentiation
between us and our competitors. They also demonstrate our intent to raise our
standards and set a new level of customer experience. In particular the food
offering is individual, exciting and of exceptional quality; it has led the way
in contributing to overall food sales growth of 27.2%. Food sales now account
for 22.4% of total managed sales.
We invested £31.4 million in our managed estate. Of this, £27.4 million was on
new sites including the acquisition of eight pubs towards the end of this
period: the Crown & Anchor in Chichester, the Prince Alfred in Maida Vale, the
Grange in Ealing, the Grove in Camberwell, the Fire Stables in Wimbledon, the
Hollywood in Fulham, the Waterfront in Battersea and the Hand and Spear in
Weybridge. Major developments were also completed at the Windmill in Clapham,
the Ship and the Alma in Wandsworth, the Duke's Head in Putney, the Bear in
Esher, Horts in Bristol, the Riverside in Vauxhall and the Waterside in Fulham.
Developments continue at the Dog & Fox in Wimbledon and the Waterfront in
Battersea, both of which will be open soon for the important Christmas trade.
In recent years, all development activity has included, where appropriate,
investment in covered, well-lit and comfortable outside areas as we prepare for
the effects of the outright ban on smoking due to come into force next summer.
Whilst there may be some initial downside from a ban, the medium to long term
effects are expected to be positive for Young's, especially with our enhanced
food offering.
Our hotel rooms showed the early benefit of our room refurbishment programme
which commenced last year. RevPar for all our pubs (average room rate achieved
multiplied by occupancy percentage) was up 9.0% at £40.73.
The total number of pubs in our managed estate at the end of the period was 116,
of which 93 are freehold.
Tenanted and leased
The tenanted and leased division's turnover and profit were down 1.7% and 14.7%
respectively, as a direct result of the transfer of some landmark tenanted pubs
back in to management. The Ship in Wandsworth and the Duke of Cambridge in
Battersea were transferred out during the summer and the Alma in Wandsworth was
transferred at the end of last year.
We have invested £6.0 million in the tenanted estate, of which £5.1 million was
on six new freehold pubs. We have created a new tenanted site from part of our
Dog & Fox redevelopment, and disposed of one freehold and three leasehold pubs.
The following sites were all transferred from management: the Gardener's Arms in
Wandsworth, the Pig and Whistle in Earlsfield, the King's Arms in Mitcham, the
Princess of Wales in Merton, the Princess of Wales in Clapton and the Square
Tavern in Euston.
The tenanted estate is an area where we believe we have substantial opportunity.
In addition to investing alongside our tenants, we intend to increase markedly
the number of long leases that we grant. Such a format inevitably attracts the
best operators and should result in a significant improvement in sales and
profits. By way of example, one of our few current long lease tenants, Will
Beckett at the Marquess Tavern, recently won Time Out's Gastro pub of the year
award.
We are aware of the concern that the smoking ban is causing our tenants and have
a plan in place for each pub. Fortunately all but nine of our tenancies have
outside areas that we believe can provide those customers who wish to, with the
opportunity to smoke.
The total number of tenancies at the end of the half was 105, of which 85 are
freehold.
Wells & Young's Brewing Company
On 23 May we announced our intention to merge our brewing and wholesaling
activities with those of Charles Wells of Bedford. We successfully managed this
process, including the matching of Young's beers to Ram Brewery flavours and
standards, and Wells & Young's started trading at the beginning of October with
Young's holding a 40% share.
The combination of Charles Wells and Young's brewing interests creates a
substantial new beer company, with a broad portfolio of growing speciality cask
ale and lager brands, led by Young's Bitter (standard) and Wells Bombardier
(premium). It operates from the Eagle Brewery in Bedford, one of Europe's most
modern breweries, with capacity for further growth. The merger presents
opportunities for significant scale synergies and offers greater marketing and
sales resource and stronger routes to market than Young's could achieve
independently.
The financial impact of the brewing merger for Young's is an immediate
annualised improvement in net profit of £2.5 million, commencing 1 October 2006,
from improved beer supply terms and other cost savings. In addition, Young's
will benefit through its shareholding in Wells & Young's in any profit
improvement that the joint venture can achieve through scale, synergy and other
integration benefits.
When we announced the Wells & Young's deal, we reported that the cost of selling
the Wandsworth sites and fundamental reorganisation costs were likely to be in
the order of £8 million. During the course of the first half we have incurred
£4.2 million of such costs and there will be further costs in the second half
that relate to the decommissioning of the brewery. We continue to anticipate
that all reorganisation costs will be within our original £8 million target.
Investment and finance
We invested £37.4 million in the retail business in the first half, of which
£32.5 million was on new pubs. This was financed through a new £75 million
short-term revolving credit facility. The repayment of this is timed to coincide
with the receipt of cash proceeds from the Wandsworth sites sale. Net debt at
the end of September was £102.3 million and gearing at the end of the period was
52.4%.
Ongoing strategy
With the resolution of our future brewing operations through the creation of the
Wells & Young's joint venture, Young's today is a focused pubs and property
business; currently operating managed, tenanted and leased pubs in London and
Southern England.
Active operational management
We seek to position the Young's estate at the premium end of the pub market,
focusing on the style, quality and individuality of each outlet. We measure
ourselves against the best individual pub and restaurant operators in the
locations where we trade, with a strong emphasis on service and training and by
maintaining a high level of investment in the estate.
By investing in high quality pub design, ambience, food, service and ensuring a
premium drinks offering, we have an operational strategy to drive performance.
Through this investment, further innovation and the differentiation of the
Young's brand, we plan to deliver both absolute and like for like sales growth.
Our premium strategy aims to attract more customers and improve gross margins.
Active estate management
This organic growth will be augmented by the active management of our estate,
including acquisitions of individual pubs or pub packages to build scale to the
business and maximise value for shareholders. We have in place an operating
infrastructure and management team capable of managing a significantly larger
pub estate and we are actively exploring acquisition opportunities to deliver
this.
We will review the balance of the estate between managed, tenanted and leased to
ensure that we are adopting the most beneficial format and we will maintain our
programme of investments in high returning projects across the existing pub
estate. Where appropriate, we will continue to make disposals. Our overriding
property objective is to maximize returns, whilst maintaining and improving the
overall quality of the Young's estate.
Following the sale of the Wandsworth sites and the expected improvements in our
financial performance, Young's has substantial headroom for funding
acquisitions. We will target pubs that meet our strict investment criteria and
produce returns in excess of our cost of capital. Acquisitions will be focused
on our existing trading areas of London and Southern England. In line with the
Board's stated policy, investment opportunities will be measured against the
benefits of returning capital to shareholders.
A greater level of borrowings would also be supported by our recent pub estate
revaluation by Fleurets Chartered Surveyors. The market value of the estate is
£399 million, an uplift of £174 million on the book value, or an increase of
£15.01 per share in net asset value to £31.87 per share. This valuation has been
made in accordance with the RICS Appraisal and Valuation Standards (Red Book)
and represents the aggregate sum total of the property assets. This is not a
portfolio valuation and the value of the estate as a single entity would be
significantly higher.
Outlook
The substantial changes to the business and our investments in the first half
offer a unique opportunity to improve shareholder returns significantly and to
maximise the undoubted potential that lies within the new Young's.
Trading in our pubs has been strong in the first half, and this trend has
continued in the second half with managed house total sales for the first six
weeks up 21.9% and up 10.6% on an invested like for like basis. The second half
will additionally benefit from the new supply agreement, the joint venture and
from the recent investments in the retail estate.
We have the management, operational infrastructure and financial resources in
place to continue this growth and are looking forward to the future with
considerable confidence.
YOUNG & CO.'S BREWERY, P.L.C.
Unaudited profit and loss account
For the 26 weeks ended 30 September 2006
Restated
26 weeks to 30 26 weeks to 1 52 weeks to 1
--------------------------- Sept 06 Oct 05 Apr 06
£000 £000 £000
--------- --------- --------
---------------------------
Turnover 69,135 62,528 123,873
Net operating
costs before
exceptional
items (62,069) (55,368) (110,274)
--------------------------- --------- --------- --------
Operating
profit before
exceptional
items 7,066 7,160 13,599
Operating
exceptional
items (Note
2(a)) (1,260) (1,105) (2,574)
--------------------------- --------- --------- --------
Operating
profit 5,806 6,055 11,025
Non-operating exceptional items (Note
2(b))
Costs of
fundamental
reorganisation (4,404) - -
Profit/(loss)
on sale of
fixed assets 46,425 (72) (70)
--------------------------- --------- --------- --------
Profit on
ordinary
activities
before
interest 47,827 5,983 10,955
Net interest
charge (2,188) (1,920) (3,873)
Discount of
site proceeds (3,863) - -
Other finance
income 896 267 527
--------------------------- --------- --------- --------
Profit on
ordinary
activities
before tax 42,672 4,330 7,609
Tax on profit
on ordinary
activities
(Note 3) (1,432) (1,845) (2,958)
--------------------------- --------- --------- --------
Profit
attributable
to ordinary
shareholders 41,240 2,485 4,651
Ordinary
dividends on
equity shares
(Note 4) (1,498) (1,414) (2,808)
--------------------------- --------- --------- --------
Retained
profit for the
financial
period 39,742 1,071 1,843
--------------------------- --------- --------- --------
Pence Pence Pence
--------------------------- --------- --------- --------
Basic earnings
per 50p
ordinary share
(Note 5) 356.41 21.58 40.31
Effect of
operating
exceptional
items 10.89 9.59 18.70
Effect of
non-operating
exceptional
items (366.86) 0.63 0.64
Effect of
discount of
site proceeds 33.39 - -
--------------------------- --------- --------- --------
Adjusted
earnings per
50p ordinary
share 33.83 31.80 59.65
--------------------------- --------- --------- --------
Diluted basic
earnings per
50p ordinary
share 347.34 21.09 39.33
--------------------------- --------- --------- --------
The results above are all in respect of continuing operations of
the company.
The comparative figures to 1 October 2005 have been restated for the effects of
the recognition of capital gains tax on ESOP allocated shares.
Discount of site proceeds represents the difference between the site proceeds
and the net present value of the future cash flows in respect of those proceeds
- see note (7).
YOUNG & CO.'S BREWERY, P.L.C.
Unaudited balance sheet
at 30 September 2006
Restated
At At At
30 Sept 06 1 Oct 05 1 Apr 06
£000 £000 £000
---------------------------- --------- --------- --------
Fixed assets
Tangible fixed assets 227,265 213,198 217,526
Investments 20 42 42
Investment in associated undertaking (Note
6) 22,508 - -
---------------------------- --------- --------- --------
249, 793 213,240 217,568
---------------------------- --------- --------- --------
Current assets and liabilities
Stocks 1,419 4,364 4,193
Debtors: amounts falling due after more than
one year 55,236 - -
Debtors: amounts falling due within one year 20,901 7,003 6,839
Cash - 2,174 -
---------------------------- --------- --------- --------
77,556 13,541 11,032
---------------------------- --------- --------- --------
Short term borrowings (1,938) (183) (283)
Other creditors (20,185) (17,371) (19,261)
---------------------------- --------- --------- --------
Creditors: amounts falling due within one
year (22,123) (17,554) (19,544)
---------------------------- --------- --------- --------
Net current assets/(liabilities) 55,433 (4,013) (8,512)
---------------------------- --------- --------- --------
Total assets less current liabilities 305,226 209,227 209,056
Creditors: amounts falling due after
more than one year (100,358) (55,058) (54,140)
Provisions for liabilities and charges (8,903) (8,134) (8,122)
---------------------------- --------- --------- --------
Net assets excluding retirement benefit
liability 195,965 146,035 146,794
Retirement benefit liability (631) (4,790) (4,129)
---------------------------- --------- --------- --------
Net assets 195,334 141,245 142,665
---------------------------- --------- --------- --------
Capital and reserves
Called-up share capital 6,028 6,028 6,028
Share premium account 1,285 1,307 1,296
Revaluation reserve 77,714 87,139 87,139
Capital redemption reserve 1,808 1,808 1,808
Investment in own shares (2,657) (2,861) (2,861)
Profit and loss account 111,156 47,824 49,255
---------------------------- --------- --------- --------
Equity shareholders' funds 195,334 141,245 142,665
---------------------------- --------- --------- --------
The comparative figures at 1 October 2005 have been restated for the effects of
the recognition of capital gains tax on ESOP allocated shares.
YOUNG & CO.'S BREWERY, P.L.C.
Unaudited cash flow statement
For the 26 weeks ended 30 September 2006
26 weeks to 30 26 weeks to 1 52 weeks to 1
Sept 06 Oct 05 Apr 06
£000 £000 £000
---------------------------- --------- -------- --------
Net cash
inflow from
operating
activities
(Note 8) 9,527 9,762 21,769
---------------------------- --------- -------- --------
Interest
received 108 5 8
Interest paid (2,384) (2,002) (4,021)
---------------------------- --------- -------- --------
Returns on
investments
and servicing
of finance (2,276) (1,997) (4,013)
---------------------------- --------- -------- --------
Corporation
tax paid (1,500) (1,503) (3,088)
---------------------------- --------- -------- --------
Purchases of
tangible fixed
assets (37,786) (5,022) (13,451)
Sales of
tangible fixed
assets 49 62 123
Costs of
fundamental
reorganisation (4,389) - -
---------------------------- --------- -------- --------
Capital
expenditure &
financial
investment (42,126) (4,960) (13,328)
---------------------------- --------- -------- --------
Investment in
associated
undertaking (10,000) - -
---------------------------- --------- -------- --------
Acquisitions &
disposals (10,000) - -
---------------------------- --------- -------- --------
Equity
dividends paid (1,498) (1,414) (2,808)
---------------------------- --------- -------- --------
Cash (outflow)
before
financing (47,873) (112) (1,468)
---------------------------- --------- -------- --------
Increase in
loan capital 46,226 1,270 362
(Decrease) in
lease finance (9) (12) (16)
---------------------------- --------- -------- --------
Financing 46,217 1,258 346
---------------------------- --------- -------- --------
(Decrease)/inc
rease in cash
in period (1,656) 1,146 (1,122)
---------------------------- --------- -------- --------
YOUNG & CO.'S BREWERY, P.L.C.
Reconciliation of net cash flow to movement in net debt
For the 26 weeks ended 30 September 2006
26 weeks to 30 26 weeks to 1 52 weeks to 1
Sept 06 Oct 05 Apr 06
£000 £000 £000
--------------------------- --------- --------- --------
(Decrease)/inc
rease in cash
in period (1,656) 1,146 (1,122)
(Increase) in
debt in period (46,217) (1,258) (346)
--------------------------- --------- --------- --------
(Increase) in
net debt in
period (47,873) (112) (1,468)
Opening net
debt (54,423) (52,955) (52,955)
--------------------------- --------- --------- --------
Closing net
debt (102,296) (53,067) (54,423)
--------------------------- --------- --------- --------
YOUNG & CO.'S BREWERY, P.L.C.
Statement of total recognised gains and losses
For the 26 weeks ended 30 September 2006
Restated
26 weeks to 30 26 weeks to 1 52 weeks to 1
Sept 06 Oct 05 Apr 06
£000 £000 £000
---------------------------- --------- --------- --------
Profit for the
financial
period 41,240 2,485 4,651
Actuarial gain
on retirement
benefit
schemes 2,169 4,825 5,750
Deferred tax
on actuarial
gain (651) (1,448) (1,725)
Gain on
exchange of
assets for
interest in
associate 11,205 - -
---------------------------- --------- --------- --------
Total
recognised
gains for the
financial
period 53,963 5,862 8,676
Prior year
adjustments - - (4,821)
---------------------------- --------- --------- --------
Total gains
recognised
since last
report 53,963 5,862 3,855
---------------------------- --------- --------- --------
The comparative figures to 1 October 2005 have been restated for the effects of
the recognition of capital gains tax on ESOP allocated shares.
YOUNG & CO.'S BREWERY, P.L.C.
Reconciliation of movements in shareholders' funds
For the 26 weeks ended 30 September 2006
Restated
26 weeks to 30 26 weeks to 1 52 weeks to 1
Sept 06 Oct 05 Apr 06
£000 £000 £000
--------------------------- ----------- --------- --------
Profit
attributable
to ordinary
shareholders 41,240 2,485 4,651
Dividends (1,498) (1,414) (2,808)
Movement in own shares:
Employee
benefit trust
allocations 204 406 406
Actuarial gain
on retirement
benefit
schemes, net
of deferred
tax 1,518 3,377 4,025
Gain on
exchange of
assets for
interest in
associate 11,205 - -
--------------------------- ----------- --------- --------
Net addition
to
shareholders'
funds 52,669 4,854 6,274
Opening
shareholders'
funds 142,665 136,391 136,391
--------------------------- ----------- --------- --------
Closing
shareholders'
funds 195,334 141,245 142,665
--------------------------- ----------- --------- --------
The comparative figures to 1 October 2005 have been restated for the effects of
the recognition of capital gains tax on ESOP allocated shares.
Notes to the accounts
(1) Accounts
The interim financial statements were approved by the Board on 15 November 2006.
They are unaudited, have been prepared on the basis of the accounting policies
set out in the company's statutory accounts for the 52 weeks ended 1 April 2006
and present information about the company as an individual undertaking. They do
not constitute statutory accounts within the meaning of S.240 of the Companies
Act 1985. Statutory accounts for the 52 weeks ended 1 April 2006 have been
delivered to the Registrar of Companies. The auditors' report on those accounts
was unqualified and did not contain any statement under S.237 of the Companies
Act 1985.
(2) Exceptional items
(a) Operating exceptional items
26 weeks to 26 weeks to 52 weeks to
30 Sept 06 1 Oct 05 1 Apr 06
£000 £000 £000
Capital gains tax on ESOP allocated
shares 1,060 544 708
Property valuations 200 - -
Site review costs - 212 335
Lease compensation payments to
tenants - - 760
Transaction costs - - 141
Other employee related matters - - 244
Transfer of company's share listing
to AIM - 349 386
------------------------- ---------- --------- ----------
1,260 1,105 2,574
------------------------- ---------- --------- ----------
Site review costs in the current financial period have been classified as 'Costs
of fundamental reorganisation' in non-operating exceptional costs, due to the
finalisation of the site review.
(b) Non-operating exceptional items
26 weeks to 26 weeks to 52 weeks to
30 Sept 06 1 Oct 05 1 Apr 06
£000 £000 £000
Proceeds from Wandsworth sites 69,000 - -
Less: Net book value of sites (10,849) - -
Assets held on sites (11,543) - -
------------------------- ---------- --------- ----------
Gain on disposal of Wandsworth sites 46,608 - -
Costs of fundamental reorganisation (4,404) - -
------------------------- ---------- --------- ----------
Gain on sale and reorganisation 42,204 - -
Loss on sale of other properties (183) (72) (70)
------------------------- ---------- --------- ----------
42,021 (72) (70)
------------------------- ---------- --------- ----------
The tax credit on exceptional items was £427,000 for the 26 weeks to 30
September 2006 (2005: £Nil; for the 52 weeks to 1 April 2006: £413,000).
(3) Taxation
Corporation tax has been provided on the profits for the 26 weeks to 30
September 2006 at a rate of 30% (2005: 30%; for the 52 weeks to 1 April 2006:
30%).
(4) Ordinary dividends on equity shares
26 weeks to 26 weeks to 52 weeks to
30 Sept 06 1 Oct 05 1 Apr 06
Pence Pence Pence
Final dividend 12.90 12.25 12.25
Interim dividend - - 12.00
------------------------- ---------- --------- ----------
12.90 12.25 24.25
------------------------- ---------- --------- ----------
The trustee of the Ram Brewery Trust has waived its rights in respect of the
dividends on the shares held in the trust on behalf of the directors' share
option schemes.
(5) Earnings per share
Restated
-------------------------- --------- --------- ---------
26 weeks to 26 weeks to 52 weeks to
30 Sept 06 1 Oct 05 1 Apr 06
£000 £000 £000
-------------------------- --------- --------- ---------
Profit attributable to ordinary
shareholders 41,240 2,485 4,651
Operating exceptional items, after
adjusting for tax 1,260 1,105 2,157
Non-operating exceptional items,
after adjusting for tax (42,448) 72 74
Discount of site proceeds 3,863 - -
-------------------------- --------- --------- ---------
Adjusted earnings 3,915 3,662 6,882
-------------------------- --------- --------- ---------
Earnings per share are calculated by dividing the profit attributable to
ordinary shareholders by the weighted average number of ordinary shares in
issue. An adjusted earnings per share figure is presented to eliminate the
effect of the exceptional items and the discount of site proceeds on basic
earnings per share.
The weighted average number of shares in issue, which excludes the investment in
own shares, is 11,570,927 (2005: 11,517,202; for the 52 weeks to 1 April 2006:
11,536,993). Diluted earnings per share are calculated by adjusting basic
earnings per share to reflect the notional exercise of the weighted average
number of share options outstanding during the period. The resulting weighted
average number of shares is 11,873,082 (2005: 11,781,459; for the 52 weeks to 1
April 2006: 11,824,854).
(6) Wells & Young's Brewing Company Limited
On 23 May 2006, the company announced the merger of its brewing, beer brands and
wholesale operations with the brewing assets, including the freehold site of the
Eagle Brewery, beer brands and wholesale operations of Charles Wells Ltd.
('Charles Wells') to form a new brewing business called Wells & Young's Brewing
Company Ltd. ('Wells & Young's').
On 29 September 2006, the company contributed its beer brands and certain assets
to Wells & Young's. Following an additional subscription for shares in Wells &
Young's by the company on 29 September 2006 at a cost of £10 million, the
company now holds a 40% stake in Wells & Young's, with the remaining 60% being
held by Charles Wells.
The company has accounted for the acquisition of the investment in Wells &
Young's in accordance with UITF 31 - 'Exchanges of businesses or other
non-monetary assets for an interest in a subsidiary, joint venture or
associate'. As a result of the transaction, a gain of £11.2 million has been
recognised in the statement of total recognised gains and losses.
The company's investment in Wells & Young's is being carried at £22.5 million,
the company's 40% share of Wells & Young's net assets excluding the company's
internally generated beer brands. For the period 29 September 2006 to 30
September 2006, Wells & Young's has neither made a profit nor a loss.
The investment is accounted for as an associate using the equity method, in
accordance with FRS 9 - 'Associates and Joint Ventures'.
(7) Disposal of Wandsworth sites
On 3 August 2006, the company announced the disposal of the Ram Brewery site and
the nearby Buckhold Road office and warehouse space in Wandsworth for a total
cash consideration of £69 million.
The cash consideration is made up of a deposit of £14 million, held in trust by
solicitors and receivable by the company on completion of each of the sites. In
addition, £8.5 million will become payable in June 2007, on completion of the
sale of the Buckhold Road site, and £46.5 million will become payable in January
2008, on completion of the sale of the Ram Brewery site. All payments are
unconditional and are guaranteed by Minerva plc, a company listed on the main
market of the London Stock Exchange.
The £69 million cash receivable has been discounted to £64.6 million in the
financial statements, based on a discount rate of 6% per annum. This discount of
£4.4 million has been charged to the profit and loss account after deducting a
writeback of £0.5 million and described as 'Discount of site proceeds'. The £4.4
million is being written back through the profit and loss account over the
period until receipt of the final consideration.
The net book value of the Wandsworth sites at 3 August 2006 was £10.8 million
and at 30 September 2006 there were £11.6 million of additional assets connected
with the wholesaling activities on these sites which have been written off as
part of this transaction.
Assuming reinvestment of the disposal proceeds, the company expects that the
taxable gains on the disposal of the Wandsworth sites should not be
crystallised.
(8) Net cash inflow from operating activities
--------------------------- -------- -------- ----------
26 weeks to Restated 52 weeks to
30 Sept 06 26 weeks to 1 Apr 06
1 Oct 05
£000 £000 £000
--------------------------- -------- -------- ----------
Operating profit 5,806 6,055 11,025
Depreciation 4,422 4,103 8,145
Employee benefit trust share allocations 204 406 406
Provision for capital gains tax on ESOP
allocated shares 1,060 544 708
Movements in working capital
Stocks 2,774 (346) (175)
Debtors (4,161) (756) (592)
Creditors (578) (244) 2,252
--------------------------- -------- -------- ----------
Net cash inflow from operating
activities 9,527 9,762 21,769
--------------------------- -------- -------- ----------
This information is provided by RNS
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