Final Results
Heavitree Brewery PLC
18 February 2008
The Heavitree Brewery PLC
Trood Lane
Matford
Exeter EX2 8YP
Contact: Mr G.J.Crocker - Managing and Finance Director 01392 217733
Mr R.J.Glanville - Director and Company Secretary 01392 217733
Mr A. Borrelli-- - Nominated Advisor 020 7408 4090
Date: 18 February 2008
Following a Board Meeting held today, 18 February 2008, the Directors announce
the preliminary results for the year ended 31 October 2007.
ISIN: GB0004182720 for 'A' Limited Voting Ordinary Shares
ISIN: GB0004182506 for Ordinary Shares
Chairman's statement
Introduction
The problems in our market caused by the fallout from the smoking ban and the
miserable weather which hit this year's season for the South West have been
further exacerbated by the economic squeeze now being experienced. A lack of
confidence in central Government has only fanned the flames of uncertainty for
the consumer. In spite of this, I am able to report that the Company has
achieved satisfactory results for the year ended 31 October 2007, and remains
well positioned to face the pressures within our industry.
Results
Turnover for the Group has decreased slightly for the period by 0.86%, and
generated an operating profit of £1,652,000 against a restated operating profit
for the previous year of £1,846,000. This shows a drop of 10.51%. Whilst income
remains stable and costs continue to rise, our energies are concentrated on
driving trade and controlling costs.
The Managed House subsidiary, Heavitree Inns, produced an operating profit of
£508,000 against last year's £522,000 which we recognised at the time as an
extremely hard fought performance.
Heavitree Incorporated, our American subsidiary, produced an operating loss of
£6,000 which was the same as the previous year. A small piece of land was sold
in the year for which we have received £28,000 on account. Our Agent in Houston
reports continuing interest in land for development.
Dividend
The Directors recommend an unchanged final dividend of 7p per Ordinary and 'A'
Limited Voting Ordinary Share. This, together with the interim dividend of 4.5p
per share, makes a total dividend of 11.5p per share (2006 - 11p). The dividend
will be paid on 14 April 2008, subject to shareholder approval at the Annual
General Meeting on 11 April 2008, to shareholders on the Register at 7 March
2008.
Property Sales
We have sold four pubs this year. This is in accordance with the Company's
continuing strategy of focusing our investment and expertise on operations which
best position us in the marketplace. The houses we have sold are The Eagle
Tavern in Exeter, The Royal Standard in Shaldon, Judge Jefferies in Exeter and
The Bird in Hand in Witney. We also sold two unlicensed properties. In total, a
gross book profit, before tax, of £1,426,000 was realised. We are currently
marketing another four houses in line with this strategy, together with a small
number of unlicensed properties.
Pension Scheme
The final salary scheme is still in the process of being wound up following the
Company's decision to close it to future accrual. At the time of writing, our
scheme actuary is still seeking quotes for securing the benefits accrued under
the scheme through the purchase of bulk annuity contracts. I hope to have more
information on this, and be able to report further as to the actual cost of the
purchase of these annuities, at the half-year.
Capital Investment
The main investments during the year were expended on extending The Anchor Inn
at Cockwood into the next door property, which we purchased in 2005, enlarging
the kitchens at The Otter Inn at Weston, completing the roll-out of the cellar
management systems across the whole estate and the strategic purchase of a
cottage next door to one of our pubs in advance of a possible major development.
One such major development is currently taking place at The Church House Inn at
Stokenham, which is due to re-open prior to Easter. The estate will benefit from
further refurbishments which are planned to take place this year.
The Company remains committed to acquiring houses in strategic positions
throughout the West Country.
Repurchase of Shares
The Company has continued to exercise its right to buy back its own shares,
purchasing a further 79,000 'A' Limited Voting Ordinary and 28,000 Ordinary
Shares, at an aggregate cost of £1,191,550, in the year. As reported and
explained in detail at the half-year, this policy continues to return great
value to shareholders.
Personnel
I would like to thank all our tenants and staff for their efforts in achieving
this year's results.
N H P TUCKER
Chairman
18 February 2008
Group profit and loss account
for the year ended 31 October 2007
As restated
2007 2006
Notes £000 £000
Turnover 13,296 13,412
Operating profit 1,652 1,846
Profit/(loss) on sale of tangible fixed assets 1,435 (74)
Profit on sale of fixed asset investments - 842
Income from other fixed asset investments 1 1
Profit on ordinary activities before interest
and taxation 3,088 2,615
Other interest receivable 6 10
Interest payable (403) (371)
Other finance charges - FRS 17 (38) (59)
Profit on ordinary activities before taxation 2,653 2,195
Taxation on profit on ordinary activities (601) (384)
Profit attributable to shareholders 2,052 1,811
Dividends - equity dividends paid 2 (607) (533)
Basic earnings per share 3 38.9p 34.0p
Diluted earnings per share 3 38.7p 33.9p
All revenues and costs relate to continuing operations.
Group statement of total recognised gains and losses
for the year ended 31 October 2007
As restated
2007 2006
£000 £000
Profit attributable to shareholders 2,052 1,811
Exchange difference on retranslation of net assets of subsidiary 1 (3)
undertaking
Actuarial gain recognised on pension scheme 572 174
Deferred tax relating to actuarial gain on pension scheme (160) (52)
Deferred tax relating to change in tax rates on deferred tax on (43) -
pension scheme
Total recognised gains and losses relating to the year and since 2,422 1,930
last annual report
Prior year adjustment (6)
2,416
Reconciliation of shareholders' funds
for the year ended 31 October 2007
Note As restated
2007 2006
£000 £000
At 1 November 7,598 6,891
Total recognised gains and losses relating to the year 2,422 1,930
Dividends 2 (607) (533)
Consideration received by EBT on sale of shares 313 63
Consideration paid by EBT on purchase of shares (481) (759)
Reserve credit for share-based payment plans 5 6
At 31 October 9,250 7,598
Group balance sheet
at 31 October 2007
2007 2006
£000 £000
Fixed assets
Tangible assets 15,263 16,650
Investments 20 20
15,283 16,670
Current assets
Stocks 210 142
Assets held for sale 733 -
Debtors 1,384 1,493
Cash at bank and in hand 738 435
3,065 2,070
Creditors: amount falling due within one year (7,510) (9,067)
Net current liabilities (4,445) (6,997)
Total assets less current liabilities 10,838 9,673
Creditors: amount falling due after more than one year (283) (296)
Provisions for liabilities and charges
Deferred taxation (243) (262)
Net assets excluding pension liability 10,312 9,115
Pension liability (1,062) (1,517)
9,250 7,598
Capital and reserves
Called up share capital 273 278
Capital redemption reserve 664 659
Other reserves 70 69
Own shares reserve (963) (1,335)
Profit and loss account 9,206 7,927
Total shareholders' funds 9,250 7,598
Group statement of cash flows
for the year ended 31 October 2007
2007 2006
Note £000 £000
Net cash inflow from operating activities 4 1,923 2,543
Returns on investments and servicing of finance
Interest paid (403) (371)
Interest received 6 10
Dividends received 1 1
Preference dividend paid (1) (1)
Net cash outflow from returns on investments
and servicing of finance (397) (361)
Taxation
Corporation tax paid (380) (316)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (1,558) (1,764)
Receipts from sales of tangible fixed assets 2,972 222
Receipts from sales of fixed asset investments - 1,017
1,414 (525)
Equity dividends paid (607) (533)
Financing
Consideration received by EBT on sale of shares 314 63
Consideration paid by EBT on purchase of shares (481) (760)
Repayment of Directors' loans (2) (7)
Loans from Directors 20 -
(149) (704)
Increase in cash 1,804 104
Reconciliation of net cash flow to movement in net debt
for the year ended 31 October 2007
2007 2006
£000 £000
Increase in cash in the year 1,804 104
Cash (inflow)/outflow resulting from decrease in debt (18) 7
Net debt at 1 November (6,506) (6,617)
Net debt at 31 October (4,720) (6,506)
Notes to the preliminary announcement
1 Financial information
These figures do not constitute full accounts within the meaning of Section 240
of the Companies Act 1985. They have been extracted from the statutory financial
statements for the year ended 31 October 2007, on which the auditors have issued
an unqualified audit report. The statutory financial statements have not yet
been delivered to the Registrar of Companies.
In preparing the financial statements for the current year, the Group has
adopted FRS 20, 'Share-based payment'. The adoption of FRS 20 has resulted in a
change of accounting policy for share-based payment transactions. The main
impact of FRS 20 on the Group is the recognition of an expense and a
corresponding entry to equity for employees' share options.
The Group has applied FRS 20 retrospectively and has taken advantage of the
transitional provisions for FRS 20 in respect of equity settled awards. As a
result, the Group has applied FRS 20 only to equity settled awards granted after
7 November 2002 that had not vested on 1 November 2006.
Comparative figures for the year ended 31 October 2006, set out within this
announcement, have been restated to apply the provisions of FRS 20, increasing
expenses and consequently decreasing operating profit for that period as shown
below:
2006
£000
Operating profit as previously reported 1,852
Prior year adjustment - FRS 20 (6)
Operating profit as restated 1,846
2 Dividends
2007 2006
£000 £000
Declared and paid during the year
Equity dividends on Ordinary and 'A' Limited Voting Ordinary Shares
Final dividend for 2006 - 7p (2005 - 6p) 389 321
First dividend for 2007 - 4.5p (2006 - 4p) 248 237
Less: dividends on shares held within employee share schemes (30) (25)
607 533
Proposed for approval at AGM
(not recognised as a liability at 31 October)
Equity dividends on Ordinary and 'A' Limited Voting Ordinary Shares
Final dividend for 2007 - 7p (2006 - 7p) 371 370
3 Basic and diluted earnings per share
The calculation of basic earnings per ordinary share is based on earnings of
£2,052,000 (2006 restated - £1,811,000), being profit after taxation for the
year, on 5,279,211 (2006 - 5,323,113) shares, being the weighted average number
of Ordinary and 'A' Limited Voting Ordinary Shares in issue during the year
after excluding those shares owned by The Heavitree Brewery PLC Employee
Benefits Trust and by the Employee Share Option Scheme.
The calculation of diluted earnings per ordinary share is based on earnings of
£2,052,000 (2006 restated - £1,811,000), being profit after taxation for the
year, on 5,307,220 (2006 - 5,349,453) shares, being the weighted average number
of Ordinary and 'A' Limited Voting Ordinary Shares in issue during the year, 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 1,652 1,846
Depreciation 661 654
(Increase)/decrease in stocks (53) 7
Decrease/(increase) in operating debtors 109 (195)
(Decrease)/increase in operating creditors (293) 337
Net pension charge (158) (112)
Share-based payment 5 6
Net cash inflow from continuing operating activities 1,923 2,543
5 General information
The 2007 Annual Report and Financial Statements will be published and posted to
shareholders on 12 March 2008. Further copies may be obtained by contacting the
Company Secretary at The Heavitree Brewery PLC, Trood Lane, Matford, Exeter EX2
8YP.
The Annual General Meeting will be held at the Registered Office on 11 April
2008 at 11.30am.
Ends.
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