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Wolv.& Dudley Brews. (WOLV)

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Friday 26 May, 2006

Wolv.& Dudley Brews.

Interim Results

Wolverhampton& Dudley Breweries PLC
26 May 2006

                                                                     26 May 2006



•    Turnover and operating profit growth in each trading division

•    Record underlying* earnings per share up 10.0% to 36.2p (2005: 32.9p)

•    Interim dividend up 10.0% to 14.52p (2005: 13.20p)

•    Underlying operating margin up by 1.0% to 23.6% (2005: 22.6%)

•    Underlying profit before taxation up 12.9% to £40.2m (profit before
     taxation after exceptional items up 20.2% to £41.0 million)

•    Pathfinder Pubs like-for-like sales** up by 1.0%: up by 2.5% in the last 9 
     weeks to 20 May 2006

•    The Union Pub Company average profit per pub up 4.4%

•    Integration of Celtic Inns completed at the end of March

•    Cashflow from operating activities up 72.2% to £99.2m

Ralph Findlay, Chief Executive, commented:

'These good results are the product of combining value adding acquisitions and
organic development in each of our trading divisions. Current trading in The
Union Pub Company, Pathfinder Pubs and W&DB Brands has been satisfactory and in
line with expectations'

All figures have been reported under IFRS and prior years restated.

* The underlying results reflect the performance of the Group before exceptional
items.  The Directors consider that these figures provide a useful indication of
the underlying performance of the Group.

** First half like-for-like sales include the period for 24 weeks to 18 March
2006. This year, the Easter bank holiday, which fell in the first half-year last
year, falls in the second half-year.


The Wolverhampton & Dudley Breweries, PLC                   Tel:   020 7796 4133 on Friday 26 May 2006 only
Ralph Findlay, Chief Executive                              01902 329516 thereafter
Paul Inglett, Finance Director

Hudson Sandler
Andrew Hayes/Nick Lyon/James White                          Tel:   020 7796 4133

To access interviews with Ralph Findlay and Paul Inglett, available in video,
audio and text, go to High quality images for the media to
access and download free of charge are available from Visual Media Online at

Chairman's Statement

These first half-year results include strong growth in turnover and profits
reflecting the organic development of the business and acquisitions made over
the last 18 months. Good progress has been achieved despite weaker consumer
confidence and the impact of higher energy and employment costs as we have
exploited the flexibility inherent in our model.

Our acquisitions strategy has brought benefits of additional scale, with our pub
estate now numbering 2,358 mainly freehold pubs. This expansion has enabled us
to reduce purchasing costs significantly and spread our overheads, as well as to
increase our trading geography across England and Wales.

We have maintained our focus on investment across the business, both in pubs and
beer brands. As a result, we continue to realise the trading benefits of having
one of the highest quality pub estates in the industry whilst our brands
business continues to capture market share.


Turnover increased by 9.2% to £281.4 million, reflecting good progress in both
pub divisions, and the acquisitions of Burtonwood PLC in January 2005, Jennings
Brothers PLC in May 2005 and English Country Inns PLC in September 2005. The
acquisition of Celtic Inns in March 2006 did not have a significant impact on
these interim results.

Turnover and profit growth was achieved in each of our three trading divisions.

Underlying operating margin increased to 23.6% (2005: 22.6%) despite cost
pressure across the business. Good management of costs and acquisition synergies
contributed to this improvement.

Underlying profit before taxation increased by 12.9% to £40.2 million. Profit
after exceptional items (principally profits relating to property disposals) was
£41.0 million (2005: £34.1 million).

Underlying earnings per share increased by 10.0% to 36.2 pence per share (2005:
32.9 pence). Basic earnings per share after exceptional items was 36.2 pence per
share (2005: 32.8 pence).

Cashflow from operating activities increased by 72.2% to £99.2 million.


The Board declares an interim dividend of 14.52 pence per share (2005: 13.20
pence) which will be paid on 30 June 2006 to those shareholders on the register
at the close of business on 9 June 2006. This increase of 10.0% is in line with
earnings growth and is consistent with a track record of dividend increases
averaging over 10% for the last 30 years.


The pressures affecting the pub sector, including regulatory and other cost
pressures are not new, and are set to continue. Specifically, current and future
risks are presented by the proposed smoking ban in England and Wales (due to be
implemented in the summer of 2007), rising energy costs, and the impact of an
increasing tax burden and other costs on consumers.

These are all catalysts for further consolidation in the industry. For our part
we are well positioned with a strong balance sheet and a low cost of debt. Our
integrated business model provides opportunity to create additional value, a
factor which has enabled us to make successful acquisitions whilst remaining
disciplined about our investment criteria.

Additionally, we have well developed plans for continued investment and organic
development, providing momentum for future growth. We remain confident of
achieving a satisfactory out-turn for the year as a whole.

David Thompson

Chief Executive's review

Business development

These good results are the product of combining value adding acquisitions and
organic development in each of our trading divisions.

The integrations of Burtonwood, Jennings and English Country Inns last year were
completed quickly, and realised synergy benefits in excess of £6 million per
year - ahead of original targets. We completed the acquisition of Celtic Inns, a
predominantly freehold estate of 70 mostly tenanted pubs (including 2 pubs
acquired shortly after completion) in south Wales and the south of England in
March 2006.

These acquisitions are consistent with our clear strategy of investment in
predominantly freehold community pubs. It is beneficial that our integrated
business model offers opportunities to create additional value. Burtonwood
tenants, which were tied to Burtonwood ales when we bought the business, now
choose over 60% of their ales from the range brewed by WDB Brands, and have a
more extensive choice of lagers and wines and spirits.

Similarly, Jennings tenants and lessees have a wider choice of brands, and the
Jennings range of ales has performed well throughout the rest of the estate. The
same benefits are being offered to tenants of Celtic Inns.

In addition to extending our trading geography, which now covers all of England
and Wales, the increased scale of the business has enabled us to reduce
purchasing costs, most significantly in categories such as factored drinks
products and food. We now own 2,358 pubs, which means that our buying terms are
competitive against even the largest operators in the industry. Additionally,
central overheads as a percentage of turnover continue to decline.

Our acquisition strategy and the flexibility of our business model have enabled
us to respond effectively to rising costs and regulatory change. Operating
margin increased despite the impact of an extra £1 million of employment costs
as a result of the higher national minimum wage, and the rise in electricity and
gas prices which increased costs by £3 million in the first half-year. As a
consequence of these cost increases, 93 smaller managed pubs are being
transferred to tenancy or lease during the second half of this financial year.

The implementation of new licensing legislation in November 2005 has not so far
produced a significant change in consumer spending patterns, but more civilised
closing time arrangements are welcome and relationships with local authorities
have been constructive.

In anticipation of the introduction of the proposed smoking ban in England and
Wales next summer, we will have invested £8 million in patios, gardens and
shelters by the end of this financial year. We have clear plans to invest a
further £12 million in the next financial year, and expect to be well prepared
to neutralise risks and maximise opportunities.

Pathfinder Pubs - 543 managed pubs (2005: 537 pubs)

Turnover increased by 3.9% to £153.1 million. Total like-for-like sales
increased by 1.0% in the 24 weeks to 18 March 2006 compared to a 3.1% increase
at the same stage last year.

Underlying operating margin was 16.9% compared to 17.5% last year. This
reduction was principally due to higher electricity and gas prices, higher
employment costs as a consequence of above inflationary increases in the
national minimum wage, and higher Sky TV costs.

Underlying operating profit increased to £25.9 million (2005: £25.8 million).

We aim to develop our estate through organic investment as well as through
acquisition. Seven new pubs were opened in the first half-year: The Elms,
Lutterworth; West Meon, Hampshire; The Willows, Blackburn; The Talbot, Wigan;
The Crows Nest, Seaham; The Cheshire Tavern, Congleton; and The Nags Head,

Pathfinder Pubs is a market leader in new build pub development, acquiring sites
suitable for a range of formats from good value community pubs to Pitcher &
Piano bars. Sites acquired are generally freehold, with subsequent returns on
investment exceeding 15%.  We expect to open 8 more pubs in the second half-year
and around 20 in 2006/7.

In the first half-year we also completed 40 major refurbishments, investing an
average £327,000 per pub, with expected cash returns on capital invested of at
least 20%. This significant investment included 8 pubs from the former Wizard
Inns estate, 1 from English Country Inns and 4 Burtonwood managed houses.

Pitcher & Piano, comprising 27 bars, performed strongly. In the first half-year
we re-opened 5 bars, having refurbished units in London (Cornhill), York,
Swansea, Harrogate and Taunton, the last being the conversion of a former Wizard

The Union Pub Company - 1,815 pubs (2005: 1,610 pubs)

Total turnover increased by 22.7% to £86.4 million. Like-for-like sales were
1.0% ahead of last year in the 24 weeks to 18 March 2006, with average profit
per pub up by 4.4%. As we increase the number of pubs let on longer term lease
agreements, profit measures better reflect the overall impact of higher
discounts and rent.

Underlying operating margin was 43.9% compared to 42.3% last year. Underlying
operating profit increased by 27.2% to £37.9 million. This increase was achieved
through the effective integration of the Burtonwood and Jennings estates last

The estate now includes 730 leased pubs and 1,085 pubs on shorter term
agreements. We will continue to offer leases to tenants of suitable pubs, and we
expect that the proportion of our estate let on longer term agreements will
steadily increase to around 60%.  For the right pubs, security, the ability to
assign, and high discounts are particularly attractive features of our 'Open
House' lease. Within the former Burtonwood estate, which was mainly let on short
term agreements when we acquired the business, new Union Pub Company agreements
are being processed in respect of 70% of the tenants.

During the period we completed 37 investment schemes across the estate,
investing £7.4 million in total in the tenanted estate. Three trading pubs were
acquired for £1.6 million, and 8 pubs were sold, realising proceeds of £5.2

In March, we acquired Celtic Inns for £43.1 million. Of the 70 pubs acquired, 63
are now operated by The Union Pub Company. This acquisition has extended our
trading geography for leased and tenanted pubs further southwards, and is
consistent with our strategy of investing in good quality freehold pubs.

WDB Brands

Total turnover increased by 5.0% to £41.9 million. Underlying operating margin
was 19.3% compared to 20.1% last year as a consequence of higher energy prices
and a competitive market.  Underlying operating profit increased to £8.1 million
(2005: £8.0 million).

The UK beer market has declined by 2% in the last twelve months. We have,
however, continued to gain market share. Over the last twelve months our premium
ale range, which includes Marston's Pedigree, Cumberland Ale and Old Empire, has
grown by over 12%.  Our standard ales, comprising Banks's, Mansfield, and
Marston's beers, have outperformed the market with particularly strong growth in
Marston's Smooth. Market share increased in both on-trade and off-trade and is
now 7.6% of the UK ale market.

Investment in marketing was similar to last year, being maintained at £2.6
million, with particular emphasis on the Marston's Pedigree 'Don't Compromise'
campaign and 'Caskforce' quality initiative.

Current trading

Current trading in The Union Pub Company, Pathfinder Pubs and WDB Brands has
been satisfactory and in line with expectations. In the 9 weeks to 20 May 2006
like-for-like sales in Pathfinder Pubs were 2.5% ahead of last year.

Ralph Findlay
Chief Executive

Financial review

International Financial Reporting Standards (IFRS)

W&DB has adopted IFRS in preparing its group accounts for 2005/06. Restated
comparisons for the year ended 1 October 2005 have already been published on our

Accounting policies used in the preparation of these accounts are consistent
with the polices adopted on transition, with the exception of IAS 32 and 39 and
IFRS 5, which were all effective and have been applied by W&DB from 2 October

Trading overview
                                       Turnover                     Underlying                       Margin
                                                                 operating profit
                                                                   (see note 2)
                                       2006           2005          2006           2005          2006             2005
                                         £m             £m            £m             £m             %                %
Pathfinder Pubs                       153.1          147.3          25.9           25.8          16.9             17.5
The Union Pub Co.                      86.4           70.4          37.9           29.8          43.9             42.3
WDB Brands                             41.9           39.9           8.1            8.0          19.3             20.1
Central costs                             -              -          (5.5)          (5.3)         (2.0)            (2.1)
Group                                 281.4          257.6          66.4           58.3          23.6             22.6

All of the key financial measures have shown strong growth, including a 9.2%
increase in turnover, a 13.9% increase in underlying operating profit, a 12.9%
increase in underlying profit before tax, and a 10.0% increase in underlying
earnings per share. As a consequence, the dividend per share has increased by
10.0% to 14.52 pence per share, and the dividend is covered 2.5 times by
earnings per share.

The impact of Easter falling into the second half this year compared to the
first half last year has resulted in moving approximately £3.0 million of
turnover and £1.2 million of operating profit into the second half of the year.

Increased margin

The underlying operating margin of the Group increased by 1.0% to 23.6%. This
increase was achieved despite some significant cost pressures, including a £3
million increase in utility costs across the Group. These cost increases have
been more than offset by the synergy benefits achieved from successfully
integrating our recent acquisitions and excellent cost management. Also the
increased proportion of longer leases in the Union Pub Company has led to higher
margins in this part of the business.

Strong cashflow

The business continues to be strongly cash generative - with cashflow from
operating activities increasing by 72.2% to £99.2 million. Free cashflow, after
the payment of interest, tax and maintenance capital, increased by 177.9% to
£64.2 million.

Acquisition of Celtic Inns

Celtic Inns was acquired on 17 March 2006 for £43.1 million including a
consideration of £18.1 million and net debt acquired of £25.0 million. The
acquisition was funded from existing bank facilities. The Celtic Inns properties
have subsequently been independently valued at £31.0 million. Goodwill arising
as a result of the acquisition was £15.9 million (see note 7).

Financing and Balance sheet

The balance sheet remains very strong, supported by a property portfolio of
predominantly freehold, community pubs valued at around £1.6 billion. On a
12-month pro-forma basis to 1 April 2006 the ratio of net debt to EBITDA
(earnings before interest, taxation, depreciation and amortisation) was 4.7
times and interest cover 3.0 times. Headroom in our bank facility as at 1 April
2006 was £112 million.


The underlying rate of taxation (before exceptional items) has decreased from
31.5% in 2005 to 30.3% in 2006.

Exceptional items

There was a nil after tax impact from exceptional items. This comprised a £0.8
million profit on the sale of fixed assets offset by a taxation cost of £0.8
million representing the tax charge associated with the sale of these assets, of
which £0.5 million relates to a prior period adjustment.

Paul Inglett
Finance Director


for the 26 weeks ended 1 April 2006

                                    26 weeks to 1 April 2006                26 weeks to 2 April 2005           52 weeks
                                                                                                                   to 1
                                  Before                                     Before 
                               exceptional   Exceptional                exceptional Exceptional
                                     items         items     Total            items       items     Total         Total
                                        £m            £m        £m               £m          £m        £m            £m
Revenue                             281.4             -     281.4            257.6           -     257.6         556.1
Operating expenses                 (215.0)          0.8    (214.2)          (199.3)       (1.5)   (200.8)       (421.3)
Operating profit                     66.4           0.8      67.2             58.3        (1.5)     56.8         134.8
Finance costs
- Excluding retirement benefits     (25.5)            -     (25.5)           (21.5)          -     (21.5)        (78.2)
- Retirement benefits                (1.3)            -      (1.3)            (1.3)          -      (1.3)         (2.6)
                                    (26.8)            -     (26.8)           (22.8)          -     (22.8)        (80.8)
Finance income                        0.6             -       0.6              0.1           -       0.1           0.2
Net finance costs                   (26.2)            -     (26.2)           (22.7)          -     (22.7)        (80.6)
Profit before taxation               40.2           0.8      41.0             35.6        (1.5)     34.1          54.2
Income tax expense                  (12.2)         (0.8)    (13.0)           (11.2)        1.4      (9.8)        (15.1)
Profit for the period                28.0             -      28.0             24.4       (0.1)      24.3          39.1
attributable to equity

All results relate to continuing operations.

Earnings per share:
Basic earnings per share                                     36.2p                                  32.8p         51.9p
Basic earnings per share                                     36.2p                                  32.9p         81.7p
before exceptional items
Diluted earnings per share                                   35.9p                                  32.4p         51.2p
Diluted earnings per share                                   35.9p                                  32.5p         80.7p
before exceptional items


for the 26 weeks ended 1 April 2006
                                                                                       26 weeks 26 weeks to 52 weeks to
                                                                                           to 1     2 April   1 October
                                                                                          April        2005        2005
                                                                                                         £m          £m
Profit for the period                                                                     28.0        24.3        39.1
(Expense)/income recognised directly in equity:
Cash flow hedges - losses taken to equity                                                 (3.3)          -           -
Unrealised surplus on revaluation of properties                                            0.2         0.3         5.8
Tax on items taken directly to equity                                                      0.4           -         0.5
                                                                                          (2.7)        0.3         6.3
Total recognised income for the period                                                    25.3        24.6        45.4


for the 26 weeks ended 1 April 2006

                                                                       26 weeks to       26 weeks to       52 weeks to
                                                                      1 April 2006      2 April 2005    1 October 2005
                                                                                £m                £m                £m
Operating activities
Operating profit                                                             67.2              56.8             134.8
Depreciation and amortisation                                                20.3              18.9              38.3
EBITDA*                                                                      87.5              75.7             173.1
Working capital and non-cash movements                                        4.0              (7.4)            (54.0)
Income tax refunded/(paid)                                                    7.7             (10.7)            (19.9)
Net cash inflow from operating activities                                    99.2              57.6              99.2

Investing activities
Interest received                                                             0.7               0.3               0.5
Sales of property, plant and equipment                                       15.9               8.8              14.8
Investment in plant and equipment for existing business                     (39.1)            (35.4)            (63.9)
Purchase of new pubs/site developments                                      (11.7)            (19.3)            (34.2)
Movements in other non-current assets                                        (0.5)              2.3               5.8
Acquisition of subsidiaries, net of cash received                           (20.4)            (78.3)           (140.1)
Repayment of debt of subsidiary upon acquisition                            (10.0)                -                 -
Net cash outflow from investing activities                                  (65.1)           (121.6)           (217.1)

Financing activities
Equity dividends paid                                                       (19.8)            (17.6)            (27.8)
Issue of shares                                                               1.3               0.8               2.6
Sale of own shares from share trust                                           0.8               0.1               0.3
Purchase of own shares by share trust                                        (4.6)                -                 -
Interest paid                                                               (21.7)            (22.8)            (50.2)
Arrangement costs of new bank facilities                                        -              (0.7)             (1.8)
Proceeds from issue of securitised debt                                         -                 -             805.0
Issue costs paid on securitised debt                                         (0.7)                -             (12.5)
Repayment of securitised debt                                                (4.7)                -                 -
Advance/(repayment) of loans                                                 27.8             117.1            (281.2)
Settlement of debentures                                                        -                 -            (287.9)
Repayment of loan notes                                                         -                 -              (0.1)
Capital element of finance leases repaid                                     (0.1)             (0.1)             (0.1)
Net cash (outflow)/inflow from financing activities                         (21.7)             76.8             146.3
Increase in cash and cash equivalents in the period                          12.4              12.8              28.4

Reconciliation of net cash flow to movement in net debt
Increase in cash and cash equivalents in the period                          12.4              12.8              28.4
Cash inflow from increase in debt                                           (23.0)           (116.3)           (278.6)
Change in debt resulting from cash flows                                    (10.6)           (103.5)           (250.2)
Net debt acquired with subsidiaries                                         (14.2)            (43.8)            (65.9)
Non-cash movements                                                           (1.3)             (7.0)              4.8
Movement in net debt in the period                                          (26.1)           (154.3)           (311.3)
Net debt at beginning of period                                            (871.7)           (560.4)           (560.4)
Net debt at end of period                                                  (897.8)           (714.7)           (871.7)

*EBITDA - Earnings before interest, tax, depreciation and amortisation


as at 1 April 2006

                                                                              1 April          2 April        1 October
                                                                                 2006             2005             2005
                                                                                   £m               £m               £m
Non-current assets
Intangible assets                                                                5.2              0.9              3.9
Goodwill                                                                       147.1            117.0            131.0
Property, plant and equipment                                                1,594.3          1,445.3          1,551.0
Other non-current assets                                                        24.2             23.4             22.1
                                                                             1,770.8          1,586.6          1,708.0
Current assets
Inventories                                                                     14.6             13.5             13.6
Assets held for resale                                                           2.7                -                -
Trade and other receivables                                                     50.1             49.8             54.0
Current tax assets                                                                 -                -              5.9
Cash and cash equivalents                                                       96.9             24.9             76.1
                                                                               164.3             88.2            149.6
Current liabilities
Borrowings                                                                     (64.0)            (0.2)           (53.8)
Derivative financial instruments                                                (0.6)            (1.8)                -
Trade and other payables                                                      (100.5)          (102.8)           (92.4)
Current tax liabilities                                                        (12.7)           (10.8)               -
                                                                              (177.8)          (115.6)          (146.2)
Non-current liabilities
Borrowings                                                                    (930.7)          (739.4)          (894.0)
Derivative financial instruments                                               (17.8)            (9.5)            (0.9)
Pension liabilities                                                            (42.6)           (69.0)           (42.6)
Deferred tax liabilities                                                      (123.6)          (101.5)          (118.8)
Other non-current liabilities                                                   (0.9)            (1.9)            (0.8)
Provisions                                                                      (2.1)            (1.2)            (2.2)
                                                                            (1,117.7)          (922.5)        (1,059.3)

Net assets                                                                     639.6            636.7            652.1
Shareholders' equity
Equity share capital                                                            22.9             22.7             22.9
Share premium account                                                          186.4            210.7            185.1
Merger reserve                                                                  41.5             41.5             41.5
Revaluation reserve                                                            311.6            306.0            311.2
Capital redemption reserve                                                       6.0              6.0              6.0
Hedging reserve                                                                (17.6)               -                -
Retained earnings                                                               88.8             49.8             83.4
Shareholders' equity                                                           639.6            636.7            650.1
Minority interest in equity                                                        -                -              2.0
Total equity                                                                   639.6            636.7            652.1


1      Basis of preparation of accounts

These interim financial statements have been prepared in accordance with the
Group's accounting policies as set out in its International Financial Reporting
Standards (IFRS) adoption statement released on 28 March 2006, which is
available at  The IFRS adoption statement restates the
consolidated financial information as at 2 October 2004 (being the date of
transition), for the year ended 1 October 2005 and for the 26 weeks ended 2
April 2005, which were previously reported under UK GAAP.  The impact of the
IFRS restatement has been summarised in note 12.

The financial information contained in these interim financial statements has
been prepared on the basis of IFRS that the Directors expect to be applicable as
at 30 September 2006.  IFRS currently in issue are subject to amendment and
interpretation by the IASB and there is an ongoing process of review and
endorsement by the European Commission. For these reasons it is possible that
the information presented here may be subject to change before its inclusion in
the full year financial statements.

The financial information for the year ended 1 October 2005 is extracted from
the audited financial statements for that year, which have been delivered to the
Registrar of Companies, and subsequently restated for the transition to IFRS.
The auditors' report was unqualified and did not contain a statement under
Section 237 (2) or (3) of The Companies Act 1985.

As permitted under IFRS 1 'First time adoption of International Financial
Reporting Standards' the comparative figures have not been adjusted to take
account of IAS 32 'Financial instruments: disclosure and presentation' and IAS
39 'Financial instruments: recognition and measurement'.  These standards have
been applied from 2 October 2005 and the impact on equity is disclosed in note
11.  IFRS 5 'Non-current assets held for sale and discontinued operations' has
also been adopted with effect from 2 October 2005 and has not been applied

Exceptional items are defined as those that are both significant and
non-recurring, whose significance is sufficient to warrant separate disclosure
in the financial statements.

IAS 34 'Interim Financial Reporting' has not been adopted in the United Kingdom
and hence this report is not prepared in accordance with this standard.

Actuarial valuations of the Group's defined benefit pension schemes are carried
out on an annual basis and hence the interim financial statements do not reflect
any actuarial gains or losses.

2      Segmental analysis
                                                                     1 April 2006
                                                        Operating                           Operating
                                                    profit before                        profit after
                                                exceptional items Exceptional items exceptional items               Net
                                        Revenue                                                                  assets
                                             £m                £m                £m                £m                £m
Continuing operations:
Pathfinder Pubs                          153.1              25.9                 -              25.9             752.3
The Union Pub Company                     86.4              37.9               0.1              38.0             816.3
WDB Brands                                41.9               8.1              (0.1)              8.0             108.3
Central                                      -              (5.5)              0.8              (4.7)             15.2
                                         281.4              66.4               0.8              67.2           1,692.1
Exceptional items                            -               0.8                 -                 -                 -
Debt, tax and derivatives                    -                 -                 -                 -          (1,052.5)
                                         281.4              67.2               0.8              67.2             639.6

Included in the above is revenue of £0.5m, operating profit before and after
exceptional items of £nil and net assets of £2.2m in relation to Celtic Inns
(see note 7) which have not been separately analysed.

                                                                     2 April 2005
                                                        Operating                           Operating
                                                    profit before                        profit after
                                                      exceptional       Exceptional       exceptional               Net
                                        Revenue             items             items             items            assets
                                             £m                £m                £m                £m                £m
Continuing operations:
Pathfinder Pubs                          147.3              25.8              (0.2)             25.6             679.7
The Union Pub Company                     70.4              29.8              (1.5)             28.3             703.3
WDB Brands                                39.9               8.0              (0.7)              7.3              75.8
Central                                      -              (5.3)              0.9              (4.4)             16.2
                                         257.6              58.3              (1.5)             56.8           1,475.0
Exceptional items                            -              (1.5)                -                 -                 -
Debt, tax and derivatives                    -                 -                 -                 -            (838.3)
                                         257.6              56.8              (1.5)             56.8             636.7

As described in the financial statements to 1 October 2005, inter-divisional
transfer terms and the method of allocating central overheads were amended
following the refinancing that occurred during that year.  The operating profit
comparatives above have been restated to reflect these changes.

In addition, following the transition to IFRS, the goodwill asset has been
reviewed and reallocated between the divisions.  This has also been reflected in
the above comparatives.

3      Exceptional items
                                                                                                  1 April       2 April
                                                                                                     2006          2005
                                                                                                       £m            £m
Goodwill impairment following disposals of property, plant and equipment                               -          (0.5)
Costs of reorganisation of newly acquired subsidiaries                                                 -          (2.1)
Profit on disposal of property, plant and equipment                                                  0.8           1.1
                                                                                                     0.8          (1.5)

4      Finance costs and income
                                                                                                 1 April       2 April
                                                                                                    2006          2005
                                                                                                      £m            £m
Bank interest payable                                                                                2.9          12.7
Securitised debt/debenture interest payable                                                         21.3           8.3
Unwinding of premium                                                                                   -          (0.9)
Other interest payable                                                                               0.7           0.2
Amortisation of issue costs on securitised debt                                                      0.5             -
Amortisation of issue costs on bank loan                                                             0.1           1.2
Net finance expense in respect of retirement benefits                                                1.3           1.3
Total finance costs                                                                                 26.8          22.8

Finance income                                                                                      (0.6)         (0.1)

Net finance costs                                                                                   26.2          22.7

5      Income tax expense

The income tax expense for the 26 weeks ended 1 April 2006 is calculated by
applying an estimate of the effective tax rate for the year ending 30 September
                                                                                                  1 April       2 April
                                                                                                     2006          2005
                                                                                                       £m            £m
Current tax                                                                                          11.4           7.6
Deferred tax                                                                                          1.6           2.2
                                                                                                     13.0           9.8

6      Earnings per ordinary share
                                                         1 April 2006                      2 April 2005
                                         Earnings Weighted average Per share     Earnings    Weighted     Per share
                                                    no. of shares     amount              average no.        amount
                                                                                            of shares
                                               £m               m          p           £m           m             p
Basic earnings per share                     28.0            77.3       36.2         24.3        74.1          32.8
Diluted earnings per share                   28.0            77.9       35.9         24.3        75.0          32.4

Underlying earnings per share figures      
Basic earnings per share before exceptional  28.0            77.3       36.2         24.4        74.1          32.9
Diluted earnings per share before            28.0            77.9       35.9         24.4        75.0          32.5
exceptional items

Basic earnings per share is calculated by dividing the profit after tax by the
weighted average number of shares in issue during the period excluding those
held in the Employee Share Ownership Plan and Long Term Incentive Plan.

Diluted earnings per share is calculated by adjusting the basic earnings per
share to assume the notional exercise of the weighted average number of ordinary
share options outstanding during the period. The effect of dilutive options is
to increase the weighted average number of shares by 0.6m (2005: 0.9m).

Underlying earnings per share figures are presented to exclude the effect of
exceptional items. The Directors consider that the supplementary figures provide
a useful indication of performance.

7      Acquisition of Celtic Inns

On 17 March 2006, the Group acquired 100% of Celtic Inns Holdings Limited and
its wholly owned subsidiaries. The acquisition has been accounted for under
acquisition accounting principles and is therefore included in the consolidated
balance sheet as at 1 April 2006.
                                                                              Fair value adjustments       Provisional
                                                               Book value   Revaluations          Other     fair value
                                                                       £m             £m             £m             £m

Property, plant and equipment                                        26.6            3.5              -           30.1
Intangible assets - lease premiums                                      -            0.9              -            0.9
Inventories                                                           0.1              -              -            0.1
Trade and other receivables                                           1.4              -              -            1.4
Cash and cash equivalents                                             0.1              -              -            0.1
Bank overdraft                                                       (0.9)             -              -           (0.9)
Trade and other payables                                             (1.8)             -              -           (1.8)
Borrowings                                                          (23.3)             -           (0.9)         (24.2)
Derivative financial instruments                                        -              -           (0.1)          (0.1)
Deferred tax                                                         (0.2)          (3.6)           0.4           (3.4)
Net assets acquired                                                   2.0            0.8           (0.6)           2.2
Consideration (including acquisition fees)
Cash                                                                                                              17.4
Loan notes                                                                                                         0.7
Total consideration                                                                                               18.1
Goodwill arising on consolidation                                                                                 15.9

The attributed fair values are provisional.

The revaluation adjustment reflects the valuation of the acquired estate as at
17 March 2006. The valuation was carried out by independent chartered surveyors
Christie & Co on an open market basis.  Deferred tax on property revaluations
has been recognised on acquisition.

The other fair value adjustments reflect the elimination of prepaid finance
costs on borrowings, the market value of the swap instrument at acquisition
date, deferred tax in respect of tax losses which are available for offset
against future trading profits and deferred tax on the elimination of finance

The net cash outflow in respect of the acquisition of Celtic Inns was:
Acquisition of equity
Cash                                                                                                              17.4
Net overdrafts of subsidiary                                                                                       0.8

Acquisition of debt
Immediate repayment of subsidiary's debt                                                                          10.0
Net cash outflow in respect of the acquisition                                                                    28.2

The purchase agreement for Celtic Inns required the immediate repayment of
certain borrowings, which were included in its balance sheet at the date of
acquisition. The debt repayments have therefore been classified as part of the
overall consideration for the acquisition of Celtic Inns.

8      Acquisition of English Country Inns

On 15 September 2005 the Group acquired English Country Inns PLC.  The fair
value adjustments stated in the financial statements for the year ended 1
October 2005 are now confirmed.

An additional cash consideration of £2.2m was paid in the period to 1 April
2006, which increased the Group's holding in the ordinary share capital of
English Country Inns from 85% to 100%, eliminating the minority interest of
£2.0m and generating additional goodwill of £0.2m.

9      Working capital and non-cash movements
                                                                                   1 April       2 April     1 October
                                                                                      2006          2005          2005
                                                                                        £m            £m            £m
Income from fixed asset investments                                                   (0.2)         (0.1)         (0.3)
Increase in pension cost provision                                                       -          (1.4)        (32.2)
(Increase)/decrease in inventories                                                    (1.0)          1.0           1.5
Decrease/(increase) in trade and other receivables                                     3.0          (0.7)         (0.8)
Increase/(decrease) in trade and other payables                                        3.0          (5.8)        (20.3)
Net operating income with no cash impact                                              (0.8)         (0.4)         (1.9)
Working capital and non-cash movements                                                 4.0          (7.4)        (54.0)

10   Analysis of net debt
                                                         1 April                      Non-                   1 October
                                                            2006   Cash flow     cash flow   Acquisition          2005
                                                              £m          £m            £m            £m            £m
Cash and cash equivalents
Cash at bank and in hand                                    96.9        20.8             -             -          76.1
Bank overdraft                                             (44.0)       (8.4)            -             -         (35.6)
                                                            52.9        12.4             -             -          40.5
Debt due within one year
Loan notes                                                  (9.9)          -          (0.7)            -          (9.2)
Bank loans                                                   0.2        14.2             -         (14.2)          0.2
Securitised debt                                           (10.2)        4.7          (5.8)            -          (9.1)
Finance leases                                              (0.1)        0.1          (0.1)            -          (0.1)
                                                           (20.0)       19.0          (6.6)        (14.2)        (18.2)
Debt due after one year
Bank loans                                                (153.2)      (42.0)         (0.1)            -        (111.1)
Securitised debt                                          (777.3)          -           5.3             -        (782.6)
Finance leases                                              (0.2)          -           0.1             -          (0.3)
                                                          (930.7)      (42.0)          5.3             -        (894.0)
                                                          (897.8)      (10.6)         (1.3)        (14.2)       (871.7)

Bank loans due within one year represent unamortised issue costs expected to be
charged within the next year.

11   Movements in total equity
                                                                                   1 April       2 April      1 October
                                                                                      2006          2005           2005
                                                                                        £m            £m             £m
Total equity at beginning of the period                                              652.1         583.7         583.7
Effect on equity of adoption of IAS 32 and IAS 39 on 2 October 2005                  (14.3)            -             -
Restated total equity at beginning of the period                                     637.8         583.7         583.7
Total recognised income and expense for the period                                    25.3          24.6          45.4
Dividends paid                                                                       (19.8)        (16.9)        (27.0)
Proceeds of ordinary share capital issued                                              1.3           2.0           3.8
Merger reserve on Burtonwood acquisition                                                 -          41.5          41.5
Sale of own shares from share trust                                                    0.8           0.1           0.3
Purchase of own shares by share trust                                                 (4.6)            -             -
Tax in relation to share based payments                                                0.8           1.7           2.4
Equity minority interests                                                             (2.0)            -           2.0
Net movement in total equity                                                           1.8          53.0          68.4
Total equity at end of the period                                                    639.6         636.7         652.1

12   Impact of adoption of IFRS on prior periods

                                     26 weeks to 2 April 2005                           Year to 1 October 2005
                              Profit before Profit before                       Profit before Profit before
                                    tax and     tax after                             tax and     tax after
                                exceptional   exceptional                         exceptional   exceptional
                                      items         items  Net assets                   items         items  Net assets
                                         £m            £m          £m                      £m            £m          £m
As stated under UK GAAP               36.0          32.6       704.3                    90.1          47.9       758.5
Retirement benefits                   (0.5)         (0.5)      (45.8)                   (0.6)         (0.6)      (45.9)
Share based payments                   0.1           0.1         3.2                     0.2           0.2         2.5
Property revaluations                    -          (1.7)       52.0                       -          (0.4)          -
Deferred tax                             -             -       (90.7)                      -             -       (89.9)
Dividends                                -             -        10.1                       -             -        19.8
Goodwill                                 -           3.6         3.6                       -           7.1         7.1
Total adjustments                     (0.4)          1.5       (67.6)                   (0.4)          6.3      (106.4)
Restated under IFRS                   35.6          34.1       636.7                    89.7          54.2       652.1

The impact of deferred tax has been included in each of the individual items

13   Post balance sheet event

An interim dividend of £11.3m, being 14.52p (2005: 13.20p) per ordinary share
and 3.00p (2005: 3.00p) per preference share, has been proposed and will be paid
on 30 June 2006 to those shareholders on the registers at the close of business
on 9 June 2006.

These financial statements do not reflect this dividend payable.

14   Interim report

The interim report was approved by the Board on 26 May 2006.

15   Copies

Copies of this report have been sent to shareholders and are available to the
public on request from: The Company Secretary, The Wolverhampton & Dudley
Breweries, PLC, PO Box 26, Park Brewery, Wolverhampton, WV1 4NY.

                      This information is provided by RNS
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