Final Results

24th Feb 2009 16:33



The Heavitree Brewery PLCTrood Lane

Matford

Exeter EX2 8YP

Date: 24 February 2009

Contact: Graham Crocker - Managing Director - 01392 217733

Rod Glanville - Director and Company Secretary - 01392 217733

Pascal Keane - Shore Capital - 0207 408 4090

Following a Board Meeting held today, 24 February 2009, the Directors announce the preliminary results for the year ended 31 October 2008. 

ISIN: GB0004182720 for 'A' Limited Voting Ordinary Shares

ISIN: GB0004182506 for Ordinary Shares

Chairman's statement

My statement that accompanied our Interim Report and Accounts 2008 followed a trading statement issued in June 2008, announcing that the Company was to conduct a strategic review of its business. The outcome of that review was the decision announced in November to close the Managed House operation (Heavitree Inns) and return the pubs operated by this subsidiary to tenancy or leasehold.

This restructure of our business sadly brought with it a number of redundancies both in the pubs and at Head Office. At the time of writing fourteen houses out of the twenty formerly operated by Heavitree Inns have been successfully moved to our tenanted and leased operation.

The Group has not been immune from the well-documented difficulties facing our industry specifically and the economy generally. Accordingly, a drop in operating profit was expected. However, the severity of the costs incurred dealing with the associated operational problems was disappointing and much greater than anticipated. This was exacerbated by a poor summer and the economic downturn. 

In what has been an extremely challenging year, the further substantial costs imposed as a result of the transition to International Financial Reporting Standards is regrettable but unavoidable.

RESULTS

Turnover for the Group decreased by 1.4% with an operating profit before tax of £554,000 (2007: £1,679,000).

Heavitree Inns Limited generated an operating profit of £86,000 before tax (2007: £488,000).

Heavitree Inc generated an operating loss of £9,000 before tax (2007: loss of £6,000).

DIVIDEND

Having decided not to pay an interim dividend, the Directors recommend a final dividend of 7p per Ordinary and "A" Limited Voting Ordinary Share (2007: 7p) making a total dividend for the year of 7p (2007 11.5p). The dividend will be paid on 29 April 2009, subject to shareholder approval at the Annual General Meeting on 24 April 2009, to shareholders on the Register at 27 March 2009.

PROPERTY SALES

The following houses have been sold during the year:

The Heavitree Arms, Newton Abbot.

The Windsor Castle, Heavitree.

The Cowley Bridge Inn, Exeter.

The Castle Inn, Lydford.

Together with the sale of a small unlicensed property, these sales realised a gross book profit, before tax, of £928,000.

Since the year end we have completed the sale of The Steam Packet Inn, Topsham and the following houses are currently being marketed for sale:

The Heavitree Arms, Bideford.

The Dawlish Inn, Teignmouth. 

The King's Arms, South Zeal.

The Old Rydon, Kingsteignton. 

REFINANCING

I am happy to report that we have negotiated secured financing with Barclays until 2012.

CAPITAL INVESTMENTS

At the beginning of the year a refurbishment at The Church House Inn, Stokenham was completed. When it became clear that the need to preserve cash was of paramount importance, further potential large projects were postponed.

PENSION SCHEME

Against the market background of increased difficulty in raising additional finance, it has been decided that it is now more appropriate for the Company to meet its funding obligations to its closed final salary Pension Scheme through an annualised deficit correction payment, as opposed to the earlier preference for a full purchase of bulk annuity contracts. The amount of the required annual payment will be determined as part of the triennial actuarial funding review which the Scheme is currently undergoing. This review is due for completion by the end of March 2009. 

REPURCHASE OF SHARES

During the year, the Company has continued to exercise its right to buy back its own shares, purchasing a further 73,583 "A" Limited Voting Ordinary Shares (2007: 79,000) at a cost of £754,226 (2007: £868,150) and 103,563 Ordinary Shares (2007: 28,000) at a cost of £1,144,371 (2007: £323,400).

Although there are no current plans to repurchase any further shares, the Directors are nevertheless seeking to renew the Company's authority to do so.

PERSONNEL

I am sorry to report the sad deaths of two retired members of staff. Tony Davidson was with the Company from 1953 to 1995 and Cliff Dummett joined the Company in 1973 and retired as Company Secretary in 1989.

I would like to thank all of our staff for their hard work during a difficult year.

OUTLOOK

I believe the measures we have taken, and are continuing to take, will ensure the Company is best placed to deal with the undoubted problems that lie ahead. Although it is difficult to foresee any upturn in the coming year, the strength of any pub business is in its pubs and operators and I have every confidence that we have quality in both.

N H P TUCKER

Chairman

Group income statement

for the year ended 31 October 2008

	Notes	2008 £000		2007 £000
Revenue		13,114		13,296
Change in stocks		(46)		69
Other operating income		63		64
Purchase of inventories		(4,886)		(4,904)
Staff costs		(3,789)		(3,189)
Depreciation of property, plant and equipment		(562)		(614)
Other operating charges		(3,340)		(3,043)
		(12,560)		(11,617)
Group operating profit		554		1,679
Profit on disposal of non-current assets and assets held for sale		928		1,435
Group profit before finance costs and taxation		1,482		3,114
Finance income		34		7
Finance costs		(420)		(403)
Other finance costs - pensions		(74)		(38)
		(460)		(434)
Profit before taxation		1,022		2,680
Tax credit/(expense)		111		(599)
Profit for the year attributable to equity holders of the parent		1,133		2,081
Basic earnings per share	2	21.9p		39.4p
Diluted earnings per share	2	21.9p		39.2p

Group statement of recognised income and expense 

for the year ended 31 October 2008

	Notes	2008 £000		2007 £000
Income and expense recognised directly in equity
Actuarial gains on defined benefit pension plans		386		572
Tax on items taken directly to or transferred from equity		(92)		(140)
Tax relating to change in tax rates		-		(44)
Exchange difference on retranslation of subsidiary		2		1
Fair value adjustment		(54)		(16)
Net income recognised directly in equity		242		373
Profit for the year		1,133		2,081
Total recognised income and expense for the year		1,375		2,454

Group balance sheet 

at 31 October 2008

		2008 £000		2007 £000
Non-current assets
Property, plant and equipment		14,682		15,277
Financial assets		58		112
Deferred tax asset		295		419
		15,035		15,808
Current assets
Trade and other receivables		1,796		1,497
Inventories		163		210
Cash and short-term deposits		324		738
		2,283		2,445
Assets held for sale		795		733
Total assets		18,113		18,986
Current liabilities
Trade and other payables		(1,582)		(1,633)
Financial liabilities		(6,479)		(5,376)
Income tax payable		(104)		(521)
		(8,165)		(7,530)
Non-current liabilities
Other payables		(232)		(272)
Financial liabilities		(11)		(11)
Deferred tax liabilities		(367)		(263)
Defined benefit pension plan		(1,005)		(1,475)
		(1,615)		(2,021)
Total liabilities		(9,780)		(9,551)
Net assets		8,333		9,435
Capital and reserves
Equity share capital		264		273
Capital redemption reserve		673		664
Treasury shares		(1,248)		(963)
Fair value adjustments reserve		38		92
Currency translation		3		1
Retained earnings		8,603		9,368
Total equity		8,333		9,435

Group statement of cash flows 

for the year ended 31 October 2008

	Notes	2008 £000		2007 £000
Operating activities
Profit for the year		1,133		2,081
Tax on continuing operations		(111)		599
Net finance costs		460		434
Profit on disposal of non current assets and assets held for sale		(928)		(1,435)
Depreciation and impairment of property, plant and equipment		767		614
Share-based payments		13		5
Difference between pension contributions paid and amounts
recognized in the income statement		(158)		(158)
Decrease/(increase) in inventories		47		(53)
(Increase)/decrease in trade and other receivables		(297)		129
Decrease in trade and other payables		(17)		(293)
Cash generated from operations		909		1,923
Income tax paid		(169)		(380)
Net cash flow from operating activities		740		1,543
Investing activities
Interest received		32		6
Proceeds from sale of property, plant and equipment and assets held for sale		2,252		2,972
Payments to acquire property, plant and equipment		(1,558)		(1,558)
Dividends received		1		1
Net cash flow from investing activities		727		1,421
Financing activities
Interest paid		(419)		(403)
Preference dividend paid		(1)		(1)
Dividends paid	3	(370)		(607)
Loans from Directors		-		20
Repayment of Directors' loans		(74)		(2)
Consideration received by EBT on sale of shares		145		314
Consideration paid by EBT on purchase of shares		(366)		(481)
Repurchase of share capital		(1,899)		-
Net cash flow from financing activities		(2,984)		(1,160)
(Decrease)/increase in cash and cash equivalents		(1,517)		1,804
Effect of exchange rates on cash and cash equivalents		-		-
Cash and cash equivalents at the beginning of the year		(4,638)		(6,442)
Cash and cash equivalents at the year end		(6,155)		(4,638)

Group reconciliation of movements in equity 

	Equity share capital £000	Capital redemption reserve £000	Treasury shares £000	Fair value adjustments reserve £000	Currency translation £000	Retained earnings £000	Total equity  £000
At 1 November 2006	278	659	(1,335)	108	-	8,040	7,750
Total recognised income
and expense for the year	-	-	-	(16)	1	2,469	2,454
Transfer in respect of the
buy back of own shares	(5)	5	611	-	-	(611)	-
Consideration paid by
EBT on purchase
of shares	-	-	(481)	-	-	-	(481)
Consideration received
by EBT on sale of
Shares	-	-	314	-	-	-	314
Gain by EBT on sale
of shares	-	-	(72)	-	-	72	-
Share based payment	-	-	-	-	-	5	5
Equity dividends paid	-	-	-	-	-	(607)	(607)
At 31 October 2007	273	664	(963)	92	1	9,368	9,435

	Equity share capital £000	Capital redemption reserve £000	Treasury shares £000	Fair value adjustments reserve £000	Currency translation £000	Retained earnings £000	Total equity  £000
At 31 October 2007	273	664	(963)	92	1	9,368	9,435
Total recognised income
and expense for the year	-	-	-	(54)	2	1,427	1,375
Transfer in respect of the
buy back of own shares	(9)	9	-	-	-	(1,899)	(1,899)
Consideration paid by
EBT on purchase
of shares	-	-	(366)	-	-	-	(366)
Consideration received
by EBT on sale of
Shares	-	-	145	-	-	-	145
Gain by EBT on sale
of shares	-	-	(64)	-	-	64	-
Share based payment	-	-	-	-	-	13	13
Equity dividends paid	-	-	-	-	-	(370)	(370)
At 31 October 2008	264	673	(1,248)	38	3	8,603	8,333

Equity share capital

The balance classified as share capital includes the total net proceeds (both nominal value and share premium) on issue of the Company's equity share capital, comprising 5p ordinary shares.

Treasury shares

Treasury shares represents the cost of The Heavitree Brewery PLC shares purchased in the market and held by The Heavitree Brewery PLC Employee Benefit Trust ('EBT').

At 31 October 2008 the Group held 58,779 ordinary shares and 120,393 'A' limited voting ordinary shares (2007: 63,183 ordinary shares and 94,358 'A' limited voting ordinary shares) of its own shares at an average cost of £6.81 (2007: £5.80). The market value of these shares as at 31 October 2008 was £776,000 (2007: £1,765,000)

Fair value adjustments reserve

The fair value adjustments reserve is used to record differences in the market value of the available-for-sale investment year on year.

Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

Notes to the preliminary announcement

1. Basis of preparation

These figures do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985. They have been extracted from the statutory financial statements for the year ended 31 October 2008. The statutory financial statements have not yet been delivered to the Registrar of Companies. They have been prepared on the basis of the accounting policies as set out in the Group's IFRS Restatement Announcement issued on 22 July 2008, and which is available upon request. Further disclosure concerning the impact of IFRS on the financial statements of the Group can also be found in that document including the reconciliations required by IFRS 1 'First Time Adoption of International Financial Reporting Standards'. The accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

2. Basic and diluted earnings per share

Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the parent by the weighted average number of Ordinary shares and 'A' Limited Voting Ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the profit attributable to ordinary equity holders of the parent by the weighted average number of Ordinary shares and 'A' Limited Voting Ordinary shares outstanding during the year as diluted for the share options in issue.

The following reflects the income and shares data used in the basic and diluted earnings per share computations:

	2008 £000	2007 £000
Profit for the year	1,133	2,081
	2008 No. (000)	2007 No. (000)
Basic weighted average number of shares (excluding treasury shares)	5,165	5,279
Dilutive potential ordinary shares:
Employee share options	-	28
Diluted weighted average number of shares	5,165	5,307

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements.

Employee share options could potentially dilute basic earnings per share in the future but are not included in the 2008 calculation of dilutive earnings per share because they are antidilutive for the period presented.

3. Dividends paid and proposed

	2008 £000	2007 £000
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2007: 7p (2006: 7p)	381	389
First dividend for 2008: £nil (2007: 4.5p)	-	248
Less dividend on shares held within employee share schemes	(11)	(30)
Dividends paid	370	607
Proposed for approval at AGM
(not recognised as a liability as at 31 October)
Final dividend for 2008: 7p (2007: 7p)	357	371

4. Segment information Primary reporting format - business segments

The primary segmental reporting format is determined to be business segments as the Group's risks and rates of return are affected predominantly by differences in the products and services provided.

The Group operates in two business segments; leased estate and managed estate.

Leased estate represents properties which are leased to tenants to operate independently from the Group.

Managed estate represents properties which are owned, operated and maintained by the Group.

Segment information
Year ended 31 October 2008	Leased £000	Managed £000	Eliminations £000	Total £000
Revenue
Sales to external customers	6,276	6,838	-	13,114
Inter-segment sales	1,262	-	(1,262)	-
Segment revenue	7,538	6,838	(1,262)	13,114
Results
Segment results	1,319	89	-	1,408
Unallocated expenses				(386)
Profit before taxation				1,022
Tax credit				111
Profit for the year				1,133
Assets and liabilities
Segment assets	17,184	1,462	(828)	17,818
Unallocated assets				295
Total assets				18,113
Segment liabilities	(8,741)	(1,396)	828	(9,309)
Unallocated liabilities				(471)
Total liabilities				(9,780)
Other segment information
Capital expenditure:
Property, plant and equipment	1,304	254	-	1,558
Depreciation	318	244	-	562
Impairment of assets held for sale	205	-	-	205
Year ended 31 October 2007	Leased £000	Managed £000	Eliminations £000	Total £000
Revenue
Sales to external customers	6,950	6,346	-	13,296
Inter-segment sales	1,209	-	(1,209)	-
Segment revenue	8,159	6,346	(1,209)	13,296
Results
Segment results	2,553	523	-	3,076
Unallocated expenses				(396)
Profit before taxation				2,680
Tax expenses				(599)
Profit for the year				2,081
Assets and liabilities
Segment assets	17,836	1,568	(837)	18,567
Unallocated assets				419
Total assets				18,986
Segment liabilities	(8,041)	(1,563)	837	(8,767)
Unallocated liabilities				(784)
Total liabilities				(9,551)
Other segment information
Capital expenditure:
Property, plant and equipment	1,254	304	-	1,558
Depreciation	365	249	-	614

Secondary reporting format - geographical segments

The following tables present revenue, expenditure and certain asset information regarding the Group's geographical segments for the years ended 31 October 2008 and 2007. Revenue is based on the geographical location of customers and assets are based on the geographical location of the asset.

Year ended 31 October 2008	UK £000	United States £000	Total £000
Revenue
Sales to external customers	13,114	-	13,114
Other segment information
Segment assets	17,753	65	17,818
Unallocated assets			295
Total assets			18,113
Capital expenditure
Property, plant and equipment	1,537	21	1,558
Year ended 31 October 2007	UK £000	United States £000	Total £000
Revenue
Sales to external customers	13,296	-	13,296
Other segment information
Segment assets	18,515	52	18,567
Unallocated assets			419
Total assets			18,986
Capital expenditure
Property, plant and equipment	1,558	-	1,558

5. General information 

The 2008 Annual Report and Financial Statements will be published and posted to shareholders on 20 March 2009. Further copies may be obtained by contacting the Company Secretary at The Heavitree Brewery PLC, Trood Lane, Matford, Exeter EX2 8YP. The 2008 Annual Report and Financial Statements will also be available on the Company's website at http://www.heavitreebrewery.co.uk/financial/

The Annual General Meeting will be held at the Registered Office on 24 April 2009 at 11.30am.

.

Ends. 

ENDFR TIMATMMATBJL

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Related Shares:

Heavitree