Interim Results
Young & Co's Brewery PLC
15 November 2007
15 November 2007
INTERIM RESULTS
For the 26 weeks ended 29 September 2007
Financial highlights
Revenue £63.9m +11.9%
EBITDA* £18.0m +77.5%
Operating profit* £12.1m +72.1%
Profit before tax £4.3m +867.4%
Profit before tax* £10.9m +89.2%
Earnings per share* 69.47p +105.8%
Interim dividend per share declared 24.00p +33.3%
All of the results above are on continuing operations.
* Adjusted for exceptional items, premium on redemption of debenture, and
discount of site proceeds.
Operating highlights
• Total managed house revenue +13.6% with operating profit +33.0%;
• Like for like managed house revenue +5.7% on same outlet basis and +1.9%
on an uninvested basis;
• Food sales growth +23.9%, helping offset any possible effect of the
smoking ban;
• One pub acquired for £3.5 million; with £4.9 million invested on
existing pubs;
• Head office relocated and rationalised; and
• Completion of the previously announced sale of Buckhold Road site for
£10.3 million and £58.7 million due on completion of unconditional brewery
sale on 4 January 2008.
Stephen Goodyear, Chief Executive of Young's, commented:
'I am very pleased with our strong first half performance, which reflects the
benefits from the substantial changes made to the company last year and has been
achieved despite the twin challenges of the disappointing summer weather and the
smoking ban.
'Trading in our pubs in the first six weeks of the second half to date has been
resilient, with managed house sales up 8.7% and up 8.3% on a same outlet like
for like basis (up 1.4% on an uninvested basis). There are clearly some
continuing uncertainties facing the market generally, in particular how the
smoking ban might affect trade over the colder winter months, although given the
'summer' we had this contrast may be less obvious. It has also still to be seen
whether the summer's economic problems result in a dip in consumer confidence,
which in turn could affect leisure spending.
'Despite these challenges, we believe Young's is in very good shape and we are
confident in the outlook for the business for the year as a whole.'
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 / Sarah Richardson
INTERIM RESULTS
26 weeks to 29 September 2007
Interim statement
The business has delivered a strong first half performance, incorporating
benefits from the substantial changes made to the company last year. With these
strategic changes now completed, our focus in the period was on operational
improvements and the continued drive to secure Young's position at the premium
end of the pub sector.
The benefits of this strategy are evident in the results: revenues from
continuing operations were up 11.9%, adjusted profits up 89.2% and adjusted
earnings per share up 105.8% to 69.47p. This has led to another step change in
the dividend, with the interim dividend being increased by a third to 24.00p per
share. This dividend has now doubled over the last two years, a measure of the
Board's determination to deliver increased shareholder value. It will be paid on
7 December 2007 to shareholders on the register on 23 November 2007.
Total basic earnings per share were 32.96p, significantly down on last year's
earnings which were distorted by the one-off profit from the sale of the brewery
and Buckhold Road sites.
Retail operations
Young's estate is positioned at the premium end of the pub market, focusing on
the style, quality and individuality of each outlet, with a strong emphasis on
food and service. By investing in high quality pub design, ambience, food and
training and by ensuring a premium drinks offering, this consumer led strategy
aims to deliver both absolute and like for like sales and profit growth.
Managed pubs
Revenue was up 13.6%, with like for like growth of 5.7% on a same outlet basis
(up 1.9% on an uninvested basis). These figures mask some significant monthly
variations, with a very strong start to the half offset by the poor summer
weather. Operating profit for our managed division increased 33.0%.
A key driver of this performance has been the continued growth of food sales, a
major part of our strategy to position Young's at the premium end of the pub
sector and as a means to help combat the effects of the smoking ban. Food sales
were up 23.9% and now represent 24.5% of revenue. The quality of our pubs and of
our food offer has been highlighted in the press and this has been supported by
excellent feedback from our customers.
The success of our recent redevelopments continues to support our premium
strategy. The increase in EBITDA from the investment in major redevelopments in
the comparable period (pubs that have now completed their first twelve months
post development) delivered a 26.4% cash return. A further £4.3 million was
invested in managed pub refurbishments in the first half, including major works
at the Brewers Inn in Wandsworth, the Brook Green Hotel, the Bunch of Grapes at
London Bridge, the Chequers in Walton on the Hill, the Clockhouse on Peckham
Rye, the Crown in Chertsey, the Greyhound in Carshalton, the Halfway House in
Earlsfield, the Spotted Horse in Putney and the Windmill on Clapham Common.
We are half way through our five year investment plan to refurbish all our 359
hotel rooms. During the six months we refurbished 70 rooms. RevPar for all our
hotel rooms (average room rate achieved multiplied by occupancy percentage) was
up 14.0% at £42.59, supporting our investment decision.
Acquisitions remain a key part of our long term growth strategy but
opportunities of the right quality at the right price have been limited. We
acquired only one pub in the period, the Rose and Crown in Farnborough, which
was bought in the last week of the period for £3.5 million. The eight pubs and
the three Thames side developments acquired last year have been fully integrated
into the managed estate. These are good investments which we believe will
provide attractive returns over the longer term once we have been successful in
repositioning the pubs under the Young's brand.
56 of our managed pubs now host their own websites, with over 800,000 hits
during the period, an increase of more than 185% over last year, and the pub
databases now manage over 100,000 individual e-mail addresses. During the course
of the six months these venues sent out a combined total of more than five
million e-mails to customers who have registered to receive news about Young's,
its pubs, events and products. This provides cost effective marketing with a
wide reach and is helping to drive customer visits. In addition to the
individual pub websites, Young's has updated and re-launched its corporate
website - www.youngs.co.uk.
This e-marketing drive is complemented by increased investment in consumer
public relations, focusing on promoting and marketing our pubs generally and in
particular after significant refurbishments. The profile of our estate has been
raised significantly both in the national and local press.
Customer service remains a key point of differentiation for Young's with a
doubling of training hours in the period and the benefits derived from a
dedicated central training team complete with its own facilities at our new head
office. Pub managers are incentivised on service levels and on their performance
in our independently managed mystery drinker programme which provides feedback
on all aspects of a pub's service quality from unannounced visits. Our managed
pubs are now achieving average scores of 91%, compared with an industry norm of
84% and our own target based on a selection of premium London pubs and
restaurants of 90%. Our aim is to improve these ratings still further.
Our managed estate comprised 112 trading sites at the end of the period of which
90 are freehold.
Tenanted and leased
Revenue was up 1.6%, with like for like growth up 0.8% on a same outlet basis
(up 0.5% on an uninvested basis). Operating profit for our tenanted and leased
division increased 35.9%.
The success of our mystery drinker programme has now been extended to include
all of our tenanted and leased pubs as we work to maintain consistent standards
across our entire pub estate.
The division benefited from a full six months' trade from the six pubs acquired
last year and also from the Cock Inn in Maidstone, the Robin Hood in Sutton and
the Ship Inn in East Grinstead which were transferred from management during the
period. We have invested £0.6 million on refurbishments with major works
underway at the Red Cow in Richmond, the Thatched House in Hammersmith, the
Black Lion in Surbiton and the Half Moon in Putney.
We regularly 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.
The total number of tenancies and leases at the end of the half was 104 of which
87 are freehold.
Wells & Young's Brewing Company
Wells & Young's has now completed its first full year of trading. This has been
a transitional year which included the challenge of integrating the Wells,
Young's and Courage beers into the portfolio (to which we have received
excellent consumer response) and combining the two workforces.
Revenue for the six months under review was £108.6 million. Profit, before
charging £2.1 million of exceptional costs, was £3.0 million. Young's share of
this profit in the period was £1.2 million. This was against a background of a
difficult beer market with higher raw material and utility costs compounded by a
poor summer. Wells & Young's sold 458,000 barrels in the six months, of which
255,000 were brewed in Bedford.
At the end of the period, the southern distribution was outsourced to KN Drinks
Logistics. This will not only reduce costs but at the same time provide greater
flexibility to exploit sales opportunities over a wider geographical area.
Investment and finance
We invested a total of £8.4 million in our estate in the period, including one
new site, leaving group net debt at the end of the period at £94.5 million. Once
adjusted for the remaining £58.7 million due from Minerva in January, this
leaves an adjusted net debt position of £35.8 million. This is partly funded by
a long dated £15.0 million RBS facility fixed at 6.1%. The remaining debt is at
a variable rate.
In May 2007 the group redeemed a high coupon debenture at a premium. As noted in
the annual report, this resulted in a £6.8 million loss. The redemption of this
debenture considerably improves the group's financial flexibility.
Young's has substantial headroom for funding acquisitions and we continue to
explore opportunities for appropriate acquisitions, though at present these are
limited. We have an operating infrastructure and management team capable of
managing such growth. In line with the Board's stated policy, investment
opportunities will be measured against the benefits of returning capital to
shareholders.
Certain items have been classified as exceptional in order to give shareholders
a better understanding of the underlying trends in the business. These items
include the £6.8 million costs resulting from the debenture redemption mentioned
above and losses and provision for losses on sales of properties (£0.2 million).
These costs are partly offset by the discount on site proceeds; this was an
accounting charge made in the prior year which reverses this year. In addition,
the results of Young's brewing and wholesaling operation have been separated out
as a discontinued operation.
International Financial Reporting Standards
These are the first financial statements prepared under International Financial
Reporting Standards and there have been a number of adjustments and restatements
as a result. The detail behind these adjustments is in a separate document
called the Restatement of Financial Information to International Financial
Reporting Standards ('IFRS') which can be downloaded from the investor relations
section of the group's website - www.youngs.co.uk. Photocopies are also
available from the Company Secretary on request.
There is no material impact on the income statement as a result of IFRS. The
major impacts of the new standards, as highlighted in the annual report, are on
the group's balance sheet where the net assets have been restated for the effect
of the deferred tax on our revalued property and the tax payable on the capital
gain on the sale of the brewery and Buckhold Road sites. These liabilities would
become payable only if the group were unable to invest the proceeds from the
sale of these sites into replacement assets.
Outlook
We have delivered a strong first half performance, achieved despite the twin
challenges of disappointing summer weather and any possible effects of the
smoking ban. As expected, the first half benefited from the changes made to the
business in October 2006 and therefore these are already included in our second
half comparatives.
The second half also has a number of uncertainties. How the smoking ban might
affect trade over the colder winter months remains to be seen (although given
the 'summer' we have had, this contrast may be less obvious). It has also still
to be seen whether the summer's economic problems result in a dip in consumer
confidence, which in turn could affect leisure spending.
Despite these uncertainties, we believe we are in very good shape. Trading in
our pubs in the first six weeks of the second half to date has been resilient
with managed house sales up 8.7% and up 8.3% on a same outlet like for like
basis (up 1.4% on an uninvested basis). We remain confident in the outlook for
Young's for the year as a whole.
Interim report
On 23 November 2007, the Interim Report 2007 will be mailed to shareholders.
From that date, copies of it will also be available on the investor relations
section of the company's website - www.youngs.co.uk - and on request from the
Company Secretary.
Independent review report to Young & Co.'s Brewery, P.L.C.
For the 26 weeks ended 29 September 2007
Introduction
We have been engaged by the company to review the financial information for the
26 weeks ended 29 September 2007 which comprises the Group Income Statement,
Group Balance Sheet, Group Cash Flow Statement, Group Statement of Recognised
Income and Expense, and the related notes 1 to 10. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with guidance contained
in ISRE 2410 (UK and Ireland) 'Review of Interim Financial Information Performed
by the Independent Auditor of the Entity' issued by the Auditing Practices
Board. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our work, for this report,
or for the conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the AIM
Rules issued by the London Stock Exchange.
As disclosed in note 1, the next annual financial statements of the group will
be prepared in accordance with those IFRSs adopted for use by the European
Union.
The accounting policies are consistent with those that the directors intend to
use in the next financial statements. There is, however, a possibility that the
directors may determine that some changes to these policies are necessary when
preparing the full annual financial statements for the first time in accordance
with those IFRSs adopted for use by the European Union.
Review work performed
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review consists principally of
making enquiries of group management and applying analytical procedures to the
financial information and underlying financial data, and based thereon,
assessing whether the accounting policies have been applied. A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the 26 weeks ended
29 September 2007.
Ernst & Young LLP
London, England
14 November 2007
Unaudited group income statement
For the 26 weeks ended 29 September 2007
26 weeks 26 weeks 52 weeks
to 29 Sept 07 to 30 Sept 06 to 31 Mar 07
£000 £000 £000
----------------------------- --------- --------- ---------
Continuing operations
Revenue 63,885 57,101 114,602
Operating costs before exceptional (51,745) (50,046) (99,214)
items
----------------------------- --------- --------- ---------
Operating profit before exceptional 12,140 7,055 15,388
items
Operating exceptional items (note 4) (8) (1,260) (709)
----------------------------- --------- --------- ---------
Operating profit 12,132 5,795 14,679
----------------------------- --------- --------- ---------
Share of associate's profit before
exceptional
items and tax 1,210 - 83
Share of associate's exceptional (852) - -
items (note 4)
Share of associate's tax (expense)/ (118) - 21
credit (note 5)
----------------------------- --------- --------- ---------
Share of post tax and post minority 240 - 104
result of associate
Non-operating exceptional items (225) (183) (444)
(note 4)
----------------------------- --------- --------- ---------
Profit before interest 12,147 5,612 14,339
Net finance costs (3,094) (2,197) (5,184)
Premium on redemption of debenture (6,827) - -
(note 7)
Discount of site proceeds 1,480 (3,863) (2,161)
Other finance income 628 896 1,731
----------------------------- --------- --------- ---------
Profit before tax 4,334 448 8,725
Taxation (note 5) (324) (1,815) (3,919)
----------------------------- --------- --------- ---------
Profit/(loss) from continuing 4,010 (1,367) 4,806
operations
Discontinued operation
(Loss)/profit from discontinued (148) 34,060 31,441
operation (note 2)
----------------------------- --------- --------- ---------
Profit attributable to equity 3,862 32,693 36,247
holders of parent
----------------------------- --------- --------- ---------
Earnings per 50p ordinary share from continuing operations (note
6)
Pence Pence Pence
----------------------------- --------- --------- ---------
Adjusted 69.47 33.75 69.97
Basic 34.23 (11.81) 41.41
Adjusted diluted 68.94 32.89 68.53
Diluted 33.97 (11.51) 40.56
----------------------------- --------- --------- ---------
Earnings per 50p ordinary share from continuing and discontinued operations
(note 6)
Pence Pence Pence
----------------------------- --------- --------- ---------
Basic 32.96 282.54 312.33
Diluted 32.71 275.35 305.92
----------------------------- --------- --------- ---------
The comparative figures to 30 September 2006 and 31 March 2007 have been
restated for the effects of IFRS.
Unaudited group balance sheet
At 29 September 2007
At 29 Sept 07 At 30 Sept 06 At 31 Mar 07
£000 £000 £000
----------------------------- ---------- ---------- ----------
Non current assets
Property, plant and equipment 226,906 218,013 223,425
Prepaid operating lease premiums 5,894 5,968 5,918
Investment in associate 23,930 22,508 22,458
Receivable from site disposal - 55,236 -
Derivative financial instruments 329 - 179
Deferred tax 3,152 3,399 3,746
Retirement benefit 6,219 - 955
----------------------------- ---------- ---------- ----------
266,430 305,124 256,681
----------------------------- ---------- ---------- ----------
Current assets
Prepaid operating lease premiums 92 92 92
Assets classified as held for sale 1,513 666 348
Inventories 1,470 1,419 1,431
Receivable from site disposal 58,069 9,901 66,839
Trade and other receivables 6,300 11,000 4,697
Cash - - 999
----------------------------- ---------- ---------- ----------
67,444 23,078 74,406
----------------------------- ---------- ---------- ----------
Total assets 333,874 328,202 331,087
----------------------------- ---------- ---------- ----------
Current liabilities
Borrowings (60,001) (1,939) (58,185)
Trade and other payables (23,534) (20,099) (21,212)
Income tax payable (1,413) (66) (2,171)
----------------------------- ---------- ---------- ----------
(84,948) (22,104) (81,568)
----------------------------- ---------- ---------- ----------
Non current liabilities
Borrowings (34,519) (100,675) (44,295)
Derivative financial instruments - (264) -
Provisions (1,771) (2,802) (2,171)
Deferred tax (35,316) (36,382) (33,920)
Retirement benefit obligations - (902) -
----------------------------- ---------- ---------- ----------
(71,606) (141,025) (80,386)
----------------------------- ---------- ---------- ----------
Total liabilities (156,554) (163,129) (161,954)
----------------------------- ---------- ---------- ----------
Net assets 177,320 165,073 169,133
----------------------------- ---------- ---------- ----------
Capital and reserves
Called-up share capital 6,028 6,028 6,028
Share premium account 1,274 1,285 1,274
Other reserves 2,181 1,623 2,071
Investment in own shares (552) (2,657) (2,123)
Retained earnings 168,389 158,794 161,883
----------------------------- ---------- ---------- ----------
Total equity 177,320 165,073 169,133
----------------------------- ---------- ---------- ----------
The comparative figures at 30 September 2006 and 31 March 2007 have been
restated for the effects of IFRS.
Unaudited group cash flow statement
For the 26 weeks ended 29 September 2007
26 weeks 26 weeks 52 weeks
to 29 Sept 07 to 30 Sept 06 to 31 Mar 07
£000 £000 £000
----------------------------- ---------- ---------- ----------
Operating activities
Cash generated from operations (note 18,533 9,527 27,821
9)
Taxes paid - (1,500) (2,706)
----------------------------- ---------- ---------- ----------
Net cash flow from operating 18,533 8,027 25,115
activities
----------------------------- ---------- ---------- ----------
Investing activities
Sale of brewery and Buckhold Road 10,250 - -
sites
Sales of other property, plant and 908 49 468
equipment
Purchases of property, plant and (8,442) (37,786) (46,755)
equipment
Investment in associate - (10,000) (10,000)
Restructuring costs (3,603) (4,389) (6,896)
----------------------------- ---------- ---------- ----------
Net cash used in investing (887) (52,126) (63,183)
activities
----------------------------- ---------- ---------- ----------
Financing activities
Interest received 82 108 3
Interest paid (3,096) (2,384) (5,622)
Premium on redemption of debenture (6,827) - -
Equity dividends paid (2,269) (1,498) (3,589)
Proceeds from exercise of share 1,425 - 535
options in the employee
benefit trust
(Decrease)/increase in borrowings (8,658) 46,226 47,851
Repayment of finance leases (5) (9) (17)
----------------------------- ---------- ---------- ----------
Net cash flow from financing (19,348) 42,443 39,161
activities ---------- ---------- ----------
-----------------------------
(Decrease)/increase in cash (1,702) (1,656) 1,093
Cash at the beginning of the period 999 (94) (94)
----------------------------- ---------- ---------- ----------
Cash at the period end (703) (1,750) 999
----------------------------- ---------- ---------- ----------
Group analysis of net debt
At 29 September 2007
At 29 Sept 07 At 30 Sept 06 At 31 Mar 07
£000 £000 £000
----------------------------- ---------- ---------- ----------
Cash - - 999
Bank overdraft (703) (1,750) -
Loan capital and finance leases (93,817) (100,864) (102,480)
----------------------------- ---------- ---------- ----------
Net debt (94,520) (102,614) (101,481)
----------------------------- ---------- ---------- ----------
The comparative figures to 30 September 2006 and 31 March 2007 have been
restated for the effects of IFRS.
Unaudited group statement of recognised income and expense
For the 26 weeks ended 29 September 2007
26 weeks 26 weeks 52 weeks
to 29 Sept 07 to 30 Sept 06 to 31 Mar 07
£000 £000 £000
----------------------------- ---------- ---------- ----------
Income and expense recognised
directly in equity
Actuarial gain on retirement benefit 3,968 2,169 3,539
schemes
Actuarial gain (net) on retirement
benefit
schemes - associate 1,232 - -
Cashflow hedges: profits taken to 150 186 629
equity
Deferred tax on other items taken (967) 676 322
directly to equity (note 5)
----------------------------- ---------- ---------- ----------
4,383 3,031 4,490
Profit for the financial period 3,862 32,693 36,247
----------------------------- ---------- ---------- ----------
Total recognised income for the 8,245 35,724 40,737
period
----------------------------- ---------- ---------- ----------
The comparative figures to 30 September 2006 and 31 March 2007 have been
restated for the effects of IFRS.
Notes to the accounts
(1) Accounts
The interim financial statements were approved by the Board on 14 November 2007.
They are unaudited, and do not constitute statutory accounts within the meaning
of S.240 of the Companies Act 1985.
Statutory accounts for the 52 weeks ended 31 March 2007 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.
Change in accounting policies
In accordance with the directive of the Council of the European Union, Young &
Co.'s Brewery, P.L.C. has adopted International Financial Reporting Standards
('IFRS') this year, having previously applied UK generally accepted accounting
principles ('UK GAAP'). These interim statements are the first that Young's has
prepared under IFRS and they have been prepared in accordance with the IFRS
accounting policies endorsed by the European Union that management expects to
apply in the 2008 full year financial statements. These accounting policies are
consistent with those adopted for the restatement of the 2007 financial
information.
The restatement includes the consolidated financial information at 2 April 2006
(date of transition), for the 26 weeks ended 30 September 2006, and for the 52
weeks ended 31 March 2007. Both the restatement and a summary of significant
accounting principles are available as a separate document on the company's
website, www.youngs.co.uk.
This interim report has been prepared in accordance with the AIM Rules issued by
the London Stock Exchange, and in accordance with pronouncements on interim
reporting issued by the Accounting Standards Board. As permitted, the interim
report has not been prepared in accordance with IAS 34 'Interim Financial
Reporting', which is not mandatory for UK Groups.
Impact of IFRS on prior period reporting
26 weeks to 30 Sept 06 52 weeks to 31 Mar 07
------------------ ------------------
Profit Net Profit Net
before tax* assets before tax* assets
£000 £000 £000 £000
----------------- ----------- ---------- ---------- ----------
Reported under UK GAAP 5,774 195,334 12,023 199,538
Discontinued operation (36) - (36) -
Lease reclassifications 16 (318) 31 (317)
Income tax and deferred - (29,758) - (30,213)
tax
Financial instruments - (185) - 125
----------------- ----------- ---------- ---------- ----------
Reported under IFRS 5,754 165,073 12,018 169,133
----------------- ----------- ---------- ---------- ----------
* Continuing operations before exceptional items and discount of site proceeds.
Under IFRS, revenue, previously known as turnover, includes only the gross
inflows of economic benefits received and receivable by the enterprise on its
own account. Amounts collected on behalf of third parties such as excise duty
(26 weeks to 30 September 2006: £5,533,000; 52 weeks to 31 March 2007:
£5,533,000) are not economic benefits which flow to the enterprise and do not
result in increases in equity. Therefore, they are excluded from revenue.
The classification and presentation of leased assets changes under IFRS. For
leases categorised as operating leases under IFRS, any upfront lease premium
amounts paid are treated as a prepayment and not as property, plant and
equipment. Accordingly, any revaluation increment previously booked on operating
leases is required to be reversed.
Under IFRS, deferred tax is recognised in respect of nearly all taxable
temporary differences arising between the tax base and the accounting book value
of balance sheet items (a balance sheet approach). This results in deferred tax
being recognised on certain timing differences that would not have given rise to
deferred tax under UK GAAP, including historic property revaluation gains, roll
over capital gains tax relief claims, fair value gains on the exchange of assets
for the associate, and share based payments.
(2) Discontinued operation
On 23 May 2006 the group announced the merger of its brewing, beer brands and
wholesale operations with the brewing assets, beer brands and wholesale
operations of Charles Wells Ltd to form a new brewing business called Wells &
Young's Brewing Company Ltd.
On 3 August 2006, the group 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 group's brewing, beer brands and wholesale operation has been treated as a
discontinued operation in the current and prior periods.
The table below shows the results of the discontinued operation included in the
income statement of the group:
26 weeks 26 weeks 52 weeks
to 29 Sept 07 to 30 Sept 06 to 31 Mar 07
£000 £000 £000
---------------------------- ---------- --------- ----------
Sales to external customers - 6,501 6,501
Intra-group sales - 10,533 10,533
---------------------------- ---------- --------- ----------
Total revenue - 17,034 17,034
Operating costs before exceptional - (16,998) (16,998)
items
---------------------------- ---------- --------- ----------
Operating profit - 36 36
Non-operating exceptional items
Restructuring costs (212) (4,404) (9,016)
Profit on sale of Wandsworth sites - 46,608 46,608
Gain on exchange of assets for - 11,205 11,205
interest in associate
---------------------------- ---------- --------- ----------
(Loss)/profit before tax (212) 53,445 48,833
Taxation (note 5) 64 (19,385) (17,392)
---------------------------- ---------- --------- ----------
(Loss)/profit from discontinued (148) 34,060 31,441
operation
---------------------------- ---------- --------- ----------
(3) Adjusted profit before tax and adjusted EBITDA*
26 weeks 26 weeks 52 weeks
to 29 Sept 07 to 30 Sept 06 to 31 Mar 07
£000 £000 £000
---------------------------- ---------- --------- ----------
Profit before tax 4,334 448 8,725
Exceptional items 1,085 1,443 1,153
Premium on redemption of debenture 6,827 - -
Discount on site proceeds (1,480) 3,863 2,161
Share of associate's tax expense/ 118 - (21)
(credit)
---------------------------- ---------- --------- ----------
Adjusted profit before tax* 10,884 5,754 12,018
Depreciation of continuing 3,472 3,113 6,429
operations - group
Depreciation - associate 634 - 679
Net finance costs - group 3,094 2,197 5,184
Net finance costs - associate 593 - 253
Other finance income (628) (896) (1,731)
---------------------------- ---------- --------- ----------
Adjusted EBITDA* 18,049 10,168 22,832
---------------------------- ---------- --------- ----------
* Continuing operations before exceptional items, premium on redemption of
debenture, and discount of site proceeds.
Alternative performance measures have been provided as the Board believes that
they give a useful additional indication of underlying performance.
(4) Exceptional items
26 weeks 26 weeks 52 weeks
to 29 Sept 07 to 30 Sept 06 to 31 Mar 07
£000 £000 £000
(a) Operating exceptional items
---------------------------- ---------- --------- ----------
Capital gains tax on ESOP allocated (8) (1,060) (509)
shares
Property valuation costs - (200) (200)
---------------------------- ---------- --------- ----------
(8) (1,260) (709)
---------------------------- ---------- --------- ----------
(b) Non-operating exceptional items
---------------------------- ---------- --------- ----------
Loss on sales of properties and investments (4) (183) (444)
Provision for loss on sales of properties (221) - -
---------------------------- ---------- --------- ----------
Profit/(loss) on sales of property, plant and (225) (183) (444)
equipment ---------- --------- ----------
----------------------------
(c) Associate non-operating exceptional item
Restructuring costs (852) - -
---------------------------- ---------- --------- ----------
(5) Tax (charge)/credit
26 weeks 26 weeks 52 weeks
to 29 Sept 07 to 30 Sept 06 to 31 Mar 07
£000 £000 £000
---------------------------- ---------- --------- ----------
Income statement
Continuing operations
Group excluding associate
Tax on profit on ordinary activities (2,885) (1,080) (2,705)
Movements in deferred tax (389) (769) (1,214)
Adjustment in deferred tax from 30% 902 - -
to 28%
Tax on non-operating exceptional - 34 -
items
Tax credit on premium on debenture 2,048 - -
redemption
---------------------------- ---------- --------- ----------
(324) (1,815) (3,919)
---------------------------- ---------- --------- ----------
Associate
Tax on profit on ordinary activities (373) - 21
Tax on non-operating exceptional 255 - -
items
---------------------------- ---------- --------- ----------
(118) - 21
---------------------------- ---------- --------- ----------
Discontinued operation
Group excluding associate
Tax on profit on ordinary activities - (10) (10)
Movements in deferred tax - (1) (1)
Tax on non-operating exceptional 64 (19,374) (17,381)
items
---------------------------- ---------- --------- ----------
64 (19,385) (17,392)
---------------------------- ---------- --------- ----------
Statement of recognised income and
expense
Movements in deferred tax (1,171) 676 322
Adjustment in deferred tax from 30% 204 - -
to 28%
---------------------------- ---------- --------- ----------
(967) 676 322
---------------------------- ---------- --------- ----------
(6) Earnings per 50p ordinary share
26 weeks 26 weeks 52 weeks
to 29 Sept 07 to 30 Sept 06 to 31 Mar 07
£000 £000 £000
(a) Earnings
------------------------------ ---------- ---------- ----------
Profit/(loss) from continuing 4,010 (1,367) 4,806
operations
(Loss)/profit from discontinued (148) 34,060 31,441
operation
------------------------------ ---------- ---------- ----------
Profit attributable to equity 3,862 32,693 36,247
holders of the parent
------------------------------ ---------- ---------- ----------
Profit/(loss) from continuing 4,010 (1,367) 4,806
operations
Operating exceptional items, net of 8 1,260 709
tax
Non-operating exceptional items, net 225 149 444
of tax
Associate exceptional items, net of 597 - -
tax
Premium on redemption of debenture, 4,779 - -
net of tax
Discount of site proceeds (1,480) 3,863 2,161
------------------------------ ---------- ---------- ----------
Adjusted earnings after tax from 8,139 3,905 8,120
continuing operations
------------------------------ ---------- ---------- ----------
Number Number Number
------------------------------ ---------- ---------- ----------
Weighted average number of ordinary 11,716,342 11,570,927 11,605,450
shares in issue
Add: the notional exercise of the
weighted average number
of ordinary share options 89,849 302,155 243,158
outstanding during the year ---------- ---------- ----------
------------------------------
Diluted weighted average number of 11,806,191 11,873,082 11,848,608
ordinary shares in issue
------------------------------ ---------- ---------- ----------
(b) Basic earnings per share
Pence Pence Pence
------------------------------ ---------- ---------- ----------
Basic from continuing operations 34.23 (11.81) 41.41
Effect of exceptional items, premium 35.24 45.56 28.56
on redemption of debenture and ---------- ---------- ----------
discount of site proceeds
------------------------------
Adjusted from continuing operations 69.47 33.75 69.97
------------------------------ ---------- ---------- ----------
Basic from continuing operations 34.23 (11.81) 41.41
Basic from discontinued operation (1.27) 294.35 270.92
------------------------------ ---------- ---------- ----------
Basic 32.96 282.54 312.33
------------------------------ ---------- ---------- ----------
(c) Diluted earnings per share
Pence Pence Pence
------------------------------ ---------- ---------- ----------
Diluted from continuing operations 33.97 (11.51) 40.56
Effect of exceptional items, premium 34.97 44.40 27.97
on redemption of debenture and ---------- ---------- ----------
discount of site proceeds
------------------------------
Adjusted diluted from continuing 68.94 32.89 68.53
operations
------------------------------ ---------- ---------- ----------
Diluted from continuing operations 33.97 (11.51) 40.56
Diluted from discontinued operation (1.26) 286.86 265.36
------------------------------ ---------- ---------- ----------
Diluted 32.71 275.35 305.92
------------------------------ ---------- ---------- ----------
The weighted average number of shares in issue excludes the group's investment
in its own shares. Adjusted earnings per share and adjusted diluted earnings per
share are presented to eliminate the effect of the exceptional items on basic
and diluted earnings per share.
(7) Premium on redemption of debenture
The 9.5% debenture stock, repayable at par on 14 September 2018, and secured by
a floating charge over the company's assets and undertaking, was redeemed in
advance on 21 May 2007. As a result of this repayment, the group has recognised
a loss before tax of £6,827,000 in the income statement in the period.
(8) Ordinary dividends on equity shares
26 weeks 26 weeks 52 weeks
to 29 Sept 07 to 30 Sept 06 to 31 Mar 07
Pence Pence Pence
------------------------------ ---------- ---------- ----------
Final dividend 19.35 12.90 12.90
Interim dividend - - 18.00
------------------------------ ---------- ---------- ----------
19.35 12.90 30.90
------------------------------ ---------- ---------- ----------
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.
(9) Net cash generated from operations
26 weeks 26 weeks 52 weeks
to 29 Sept 07 to 30 Sept 06 to 31 Mar 07
£000 £000 £000
------------------------------ ---------- ---------- ----------
Operating profit from continuing and 12,132 5,831 14,715
discontinued operations
Depreciation 3,472 4,349 7,665
Employee benefit trust share 786 204 744
allocations
Provision for capital gains tax on 8 1,060 509
ESOP allocated shares
Share based payment - - 90
Movements in working capital
Inventories (39) 2,774 2,716
Receivables (1,356) (4,161) 2,485
Payables 3,530 (530) (1,103)
------------------------------ ---------- ---------- ----------
Net cash generated from operations 18,533 9,527 27,821
------------------------------ ---------- ---------- ----------
(10) Reconciliation of movements in equity
26 weeks 26 weeks 52 weeks
to 29 Sept 07 to 30 Sept 06 to 31 Mar 07
£000 £000 £000
------------------------------ ---------- ---------- ----------
Total recognised income for the 8,245 35,724 40,737
period
Dividends (2,269) (1,498) (3,589)
Movement in own shares: Employee
benefit trust allocations 2,211 204 1,279
Share based payment:
Movement for the period - - 90
Deferred tax on movement - - (27)
------------------------------ ---------- ---------- ----------
8,187 34,430 38,490
Opening equity 169,133 130,643 130,643
------------------------------ ---------- ---------- ----------
Closing equity 177,320 165,073 169,133
------------------------------ ---------- ---------- ----------
This information is provided by RNS
The company news service from the London Stock Exchange
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