5th Dec 2006 07:02
Greene King PLC05 December 2006 PRESS RELEASE 5 December 2006 GREENE KING plc Interim results for the 24 weeks ended 15 October 2006 STRONG FIRST HALF RESULTS, DRIVEN BY UNDERLYING GROWTH AND SUCCESSFUL ACQUISITIONS • Revenue £419.2m, +16% • Operating profit* £100.9m, +17% • Operating profit margin* 24.1%, +0.1 %pts • Profit before tax* £67.1m, +20% • Adjusted earnings per share* 31.1p, +17% • Interim dividend per share 6.45p, +11% • Strong balance sheet gives flexibility • Pub Company like-for-like sales +3.3% • Pub Partners operating profit per pub +5%; like-for-like sales +1% • Belhaven Best volume up 5%; solid trading post the smoking ban • Brewing Company growing share of ale market, and beer volumes up • Hardys & Hansons acquisition completed; integration and synergy capture on track * before exceptional items. Rooney Anand, Greene King chief executive, comments: "This has been another very strong first half year, with encouraging organicgrowth and profit conversion. We have benefited from our acquisition ofBelhaven, which is proving a great addition to Greene King. In the second halfthere will also be a full contribution from Hardys & Hansons, which isperforming well, and integration is on track. "Trading in all our divisions remains in line with our expectations. Thestrength of our customer offer, our pub estate, our brands, and most of all ourpeople, gives me confidence for further success and growth into the future." A copy of the results presentation is available on our website:www.greeneking.co.uk. For further information: Greene King plc Rooney Anand, chief executive Tel: 01284 763222 Ian Bull, group finance directorFinancial Dynamics Ben Foster / Charles Watenphul Tel: 020 7831 3113 GREENE KING plc Interim results for the 24 weeks ended 15 October 2006 Chairman's Statement Results It gives me great pleasure to announce another strong set of figures for the 24weeks to 15 October 2006. These include six weeks' contribution from Hardys &Hansons, which we acquired in September this year, and a full twenty four weeksfrom Belhaven, which we acquired in October last year. Revenue for the period was up 16% to £419.2m and operating profit increased by17% to £100.9m. Our profit before tax and exceptionals rose by 20% to £67.1m andearnings per share by 17% to 31.1p. This continues our twelve year record ofcompound annual growth in adjusted EPS of 10% or more. Dividend Our continued growth and ability to produce positive cashflow have allowed theboard to declare an interim dividend of 6.45p per share, an increase of 11%.This dividend will be paid on 29 January 2007 to those shareholders on theregister at the close of business on 22 December 2006. Acquisition On 15 June we announced the terms of an agreed offer for Hardys & Hansons plc,by means of a scheme of arrangement. The acquisition was completed on 5September. Hardys & Hansons has a long history as an integrated brewer and pubcompany, based at Kimberley in Nottinghamshire. The acquisition brought us afurther 83 managed houses and 185 tenanted and leased pubs, and a dedicated andtalented team of employees. Disposal Just as we will take the opportunity to acquire companies and assets to improvethe quality of our pub estate, we have continued to sell those properties whichno longer fit in with our strategic plans. Since the half year end, we announcedon 20 November the disposal of a package of 155 pub properties for £56.5m. Theyare spread widely across our trading area. The Board Alan Bowkett retired from our board after the AGM on 1 September. He had servedfor more than twelve years as a non-executive director and was a much valuedmember of the board during that time. We are presently in the process of lookingfor another suitable non-executive director. People The company owes its success to the dedication, passion and enthusiasm of itspeople - both its employees and business partners in the licensed trade. Onceagain I would like to thank them all for their own part in making these strongresults a reality. I would also like to welcome our new colleagues from Hardys &Hansons. We have always tried to benefit from the different ideas which newpeople bring to us and I am sure there will be no exception this time. I hopethat all our people will feel proud of what we continue to achieve together. Tim BridgeChairman 4 December 2006 Chief Executive's Review The first 24 weeks of the financial year have been another successful period forGreene King, continuing our unbroken growth record of the last three decades.Revenues were up 16% and profits before tax and exceptional items were up 20%.All divisions have contributed fully to this result. It is another strongperformance, which has allowed us to declare an interim dividend of 6.45p pershare, 11% up on last year. During the period we acquired Hardys & Hansons and, with it, one of the best pubestates in the Midlands. As well as the cost synergies to be achieved, we arealso capturing extensive cross-learning: there are lessons we can take fromthem, especially in large-format managed food houses. Meanwhile, synergycapture from our last acquisition, Belhaven, remains on target. Trading atBelhaven has also been encouraging considering the impact of the Scottishsmoking ban, introduced in March. Although it is still early days, and we willnot know the full impact of the smoking ban until we have lived through at leastone winter, I remain cautiously optimistic, particularly for the longer termprospects for our Scottish pubs. After the period end, we disposed of 155 pubs, continuing our consistentapproach of churning the estate to improve quality levels. Our business model continues to provide us with considerable advantages, and weare constantly finding new areas of synergy between the business units - mostrecently in recruitment and in leveraging our purchasing scale and retailexpertise to the advantage of our licensee partners as well as to the managedestate. The first half also saw us embark on our first TV sponsorship, with the'Greene King: The Sign of a Great Pub' showing on Ant & Dec's Saturday NightTakeaway. This aligns the Greene King name squarely with core pub values, andbenefits both managed and tenanted houses, and also Brewing Company. Each business unit is, and must always be, a strong and successful stand-alonebusiness in its own right. Each has its own distinctive point of difference inthe marketplace: • Pub Company: Authentic pub offer backed up by scale • Pub Partners: Best licensee support • Belhaven: At the forefront of Scottish pub development, and Champion of the Independent • Brewing Company: Best beer brands and customer service Our approach continues to be guided by quality and sustainability. First comepeople. We place great value on recruiting the best pub managers, anddeveloping long-term partnerships with tenants and lessees. With our largelyfreehold estate, we focus primarily on suburban and community sites rather thanthe more volatile high street; and we invest in quality ale brands that trade ata premium to their categories. We do not chase sales growth for its own sake,but seek to optimise margins, invest judiciously and thereby maximise returns. Pub Company 24 weeks 2005/6 2006/7 ChangeAverage number of pubs trading 786 741 -6%Revenue £m 244.4 241.3 -1%Operating profit £m 50.3 51.9 +3%Operating profit margin 20.6% 21.5% +0.9% pts An average of 741 pubs traded in Pub Company, our managed house division inEngland and Wales, during the period, delivering an average of £151.8kannualised operating profit each, an increase of 9% on the previous year. Thisis some 45 pubs fewer than the equivalent period in 2005/6, a result of ourongoing programme of transfers between the managed and tenanted / leaseddivision, to optimise each pub's performance. Overall revenues in managedhouses were therefore marginally lower, at £241.3m. Strong profit conversion,however, saw this translate into a 3% year-on-year increase in operating profit.The operating profit margin was 21.5%, up 0.9 percentage points on a yearearlier. This profit conversion is particularly pleasing, given thewell-documented cost pressures affecting the sector, especially in energy,labour and Sky TV. Total (invested and uninvested) like-for-like sales in the 24 weeks were up by3.3% on the previous year, driven by well-planned marketing and promotionsprogrammes both for the World Cup and the period following it. 29 pubs benefited from major re-development programmes, representing £7.0m ofcapital spend. Total cash capital investment in the division was £14.6m, with afurther £4.8m spent on repairs from the revenue account. At the start of the financial year, there were 761 pubs trading in Pub Company.During the 24 weeks, 16 units were transferred to Pub Partners, and one toBelhaven, while ten pubs were disposed of, either because of quality issues, orto realise high alternative-use value. The closing balance at 15 October wastherefore 734 pubs, comprising: Number of Pubs Oct 2005 Oct 2006Hungry Horse brand 126 121Real Pubs division 349 332Town Locals division 156 146Inns division 152 135Total 783 734 The 121 Hungry Horse outlets are the only overtly branded houses, although thereis also softer branding on Old English Inns and pubs serving the Giant's Platemenu. The remainder - over 60% of the sites - are unbranded, save for theGreene King name. This allows us to marry our scale advantage and commonback-of-house systems and processes with the feel and customer intimacy of realpubs. It reduces cyclicality and the requirement for frequent capitalexpenditure. Pub Partners 24 weeks 2005/6 2006/7 ChangeAverage number of pubs trading 1,290 1,364 +6%Revenue £m 69.8 72.0 +3%Operating profit £m 29.8 33.0 +11%Operating profit margin 42.7% 45.8% +3.1% pts Revenue at Pub Partners, our tenanted and leased pubs division in England andWales, rose 3% to £72.0m, and operating profit rose 11% to £33.0m. Theoperating profit margin was therefore 45.8%, up 3.1 percentage points on theprevious year. In Pub Partners, annualised average operating profit per pub rose 5% from £50.1kto £52.4k. Like-for-like sales were up 1%. The division also benefited from anaverage of 74 more pubs trading than a year earlier. At the start of thefinancial year, 1,354 pubs were trading; during the period 11 were sold, and 16transferred in from Pub Company; the closing balance was therefore 1,359. 44 pubs benefited from capital developments, representing £5.0m of capitalspend. Total cash capital investment in the division was £7.8m, with a further£2.1m spent on repairs from the revenue account. Pub Partners strives to provide the best overall package of support for tenantsand lessees in the industry. Part of that is the 'Share & Save' scheme, whichleverages our managed house scale for the advantage of licensees. Tenants canoften add 10% or more to their bottom line through this programme. This is oneof many parts of the Pub Partners package that contributes to it remaining thenumber one choice for the licensee. Belhaven 2005/6 2006/7 2 weeks 24 weeksRevenue £m 4.6 55.8Operating profit £m 0.7 11.5Operating profit margin 15.2% 20.6% Revenue at Belhaven, our Scottish division, was £55.8m for the 24 weeks, withoperating profit at £11.5m and operating profit margin at 20.6%. The 2005/6Greene King accounts reflect only two weeks of Belhaven contribution as thebusiness was acquired on 2 October 2005. Belhaven's equivalent figures for thefull 24 weeks in 2005/6 were £54.9m revenue, £10.6m operating profit and 19.3%operating profit margin. This strong growth in profits of 8% has been achieved despite the imposition ofthe Scottish smoking ban on 26 March, prior to the start of the currentfinancial year. It is a credit to the team at Belhaven that the business waswell prepared for the start of the ban, resulting in a seamless transition, withnext-to-no compliance and enforcement issues. The drinks distribution business performed well, driven in part by competitiveaccount gains, and Belhaven Best continued its growth - volume sold was 5% up onthe previous year. Like-for-like retail sales for the 24 weeks were 2.6% lowerthan the previous year. This was better than we had projected and factored inat the time of the acquisition. Within this overall result, however, we haveseen strong growth in food sales. The tenanted estate recorded a healthyincrease in profits. Belhaven's pub estate has been further enhanced and expanded in the period. Sixnew units have been acquired and one transferred from Pub Company in the period,bringing the total to 297 licensed units. £4.1m has been spent on upgrading andrefurbishing our managed and tenanted estate in Scotland. On average, 295 pubswere trading over the period - 97 of these in the managed estate. Synergy capture from the Belhaven acquisition remains on target. Brewing Company 24 weeks 2005/6 2006/7 ChangeRevenue £m 41.1 40.9 -0%Operating profit £m 9.8 10.0 +2%Operating profit margin 23.8% 24.4% +0.6% pts Brewing Company's operating profit rose 2% to £10.0m, despite marginally lowerrevenue of £40.9m. The operating profit margin was therefore 24.4%, up 0.6percentage points on 2005/6. With the unusually hot summer, combined with the effects of the World Cup, wesaw a marked switch from ale to lager, in both the on-trade and the off-trade.Our own-brewed ale volume declined by 1% during the 24 week period, while ourtotal beer volume, including lagers, was up year on year. Against the backdrop of a decline in the ale market, Greene King brands' sharerose. According to industry statistics our share rose by 0.3 percentage pointsin the on-trade and by 0.7 percentage points in the-off trade. Only about onefifth of our own-brewed volume is sold in Greene King pubs - the vast majoritygoes to external customers. In August, Old Speckled Hen, already Britain's number one premium ale in theoff-trade, was re-launched in the on-trade with a lower gravity, 4.5% ABV ratherthan 5.2%. This will allow the brand to appeal to consumers for a wider rangeof occasions. Both Old Speckled Hen and Ruddles County now benefit from adistinctive new livery. At the end of the period, we announced the biggest sponsorship deal yet forGreene King IPA. For the next four years, Greene King IPA will be the OfficialBeer of England Rugby; Greene King pubs will also become Official Supporters'Pubs of England Rugby, with in-pub promotions running over the rugby season andfor every England match. Hardys & Hansons 6 weeks 2006/7Revenue £m 9.2Operating profit £m 1.9Operating profit margin 20.7% On 5 September we completed the acquisition of Hardys & Hansons plc, a leadingintegrated pub company and brewer, based in Kimberley, Nottingham, with one ofthe best pub estates in the Midlands. At the time of acquisition, the estateconsisted of 268 sites, 83 of them managed and 185 tenanted; and almost allfreehold. It is a hand-in-glove fit - the East Midlands core of the estate isright next to, but not in, our heartland; and the acquisition extends our coreterritory in a very efficient way from a sales and distribution perspective. There are substantial synergy opportunities attached to the deal. There is anopportunity to grow the revenue line, as well as to realise cost savings frompurchasing benefits and the margin improvements that will come from deployingGreene King systems and processes in the Hardys & Hansons estate. Altogether,we estimate the synergies to total around £5m, of which £3m will come in thefirst full year. Capture of these synergies is on track. The Hardys & Hansonsrevenue of £9.2m and operating profit of £1.9m represents only six weeks ofcontribution. Their results over the period since acquisition have been in linewith our projections. In October, following a comprehensive review of both Hardys & Hansons and GreeneKing operations, we took the difficult decision to close the Kimberley breweryand office site, which inevitably results in a number of job losses. TheKimberley team have shown extraordinary professionalism and spirit through thisupheaval, and they are due our sincere thanks for all they have done. 97% of the jobs at Hardys & Hansons are being retained, including the fieldmanagement team, and distribution and logistics. Following rigorous taste-matching of the brews, production will transfer to BurySt Edmunds at the end of this month. We will be retaining a number of theHardys & Hansons brands, and we expect to extend distribution of somesignificantly more widely through the Greene King estate. There are a number of areas in which Greene King can learn from Hardys & Hansons- and these are also an important consideration in our integration plans. Inparticular, we will be taking learning points from their larger food houses.Jonathan Webster and his team have done an excellent job in developing a reallyhigh quality business. Disposal of 155 pubs On 1 December, we completed the sale of 155 pubs to Admiral Taverns, for the sumof £56.5m. Along with the deal, we have secured an attractive beer supplyagreement with Admiral for their entire estate in England. We will continue todispose of, as well as to acquire, sites in a timely manner and at the rightprice, in order to optimise the quality of our estate. These pubs generated historic pre-overhead EBITDA of £5.3m. As the transactiontook place after the end of the 24 week period, it does not impact on theseinterim results. Finances In May of this year, we completed a £550m securitisation against a further 801pubs, giving us long-term bond finance secured against high-quality freeholdassets, fully hedged against interest rate fluctuations. This means that at thehalf year we had 1,704 of our 2,659 pubs in the securitised vehicles, giving usflexibility and further options. The Hardys & Hansons acquisition was financedthrough a new debt facility from Barclays, and again is hedged. The combinedeffect, on a pro forma basis for 2006/7, gives a composite interest rate of 5.7%across our net debt of £1.5bn. Our balance sheet remains strong and effectivewith fixed charge cover of 2.8x and interest cover of 3.0x. We believe thisbalanced approach is appropriate as it provides flexibility for the future -from continued investment, to selectively making acquisitions, to returning cashto shareholders. Business and regulatory environment Following the imposition of the Scottish smoking ban in March, the next majorhurdles are the Welsh ban from 2 April 2007, and especially the English ban from1 July 2007. Over 95% of our pubs have outside space, and we have a structuredplan for the whole estate. The big prize, of course, is in expanding thecustomer franchise as a result of pubs being smoke-free. We see a majoropportunity to attract back people who have stopped going to pubs, and toattract more of key segments, especially families and women. We are paying alot of attention to making sure we benefit fully, through initiatives including'Operation Clean & Fresh', and an acceleration of food development. The pub sector continues to face a number of increased costs, most notablyenergy, wages and Sky TV. We constantly strive to absorb these costs throughproductivity gains and procurement initiatives, leveraging our scale. At the time of writing, the new licensing regime has been in place for just overone complete year. As a result, both pubs and the towns they occupy are morepleasant places, with somewhat more staggered closing times, and a reducedculture of rushed 'drinking up'. On average, our managed houses are now openfor an additional four hours a week, relative to before the change. Over themedium term, the licensing regime changes, along with the smoking bans and ourown product and service development, will help contribute positively to theevolution of the pub at the heart of the community. In the immediate term, thefinancial impact has been small. Sales have tended to be spread over a longertime period and, to the extent that the total has increased, this has generallybeen almost counterbalanced by the increased cost of being open longer; the neteffect is slightly positive. New licensing laws will apply in Scotland from2009 and are expected to introduce many of the changes which we have alreadyseen in England and Wales. However, the reforms will also include newregulations to promote sensible and responsible drinking, which we welcome. Current trading and outlook Trading in our divisions remains in line with our expectations. In the 30 weeksto 26 November, like-for-like sales in Pub Company and Pub Partners were up by3.5% and 1% respectively on the previous year. Brewing Company's own-brewedvolume remains down on a year ago, while total beer sales are up, and BelhavenBest volume remains 5% ahead. Belhaven's 30-week retail sales are 2.8% down onlast year. Overall we remain confident of achieving a satisfactory outcome for the year asa whole, and there will be a full contribution from Hardys & Hansons in thesecond half. These interim results once again demonstrate that our strategydelivers value to shareholders. I am confident that the dedication of our team,combined with the quality of our assets, and the opportunities to be had fromrecent acquisitions, will continue to deliver shareholder value into the future. Rooney AnandChief Executive 4 December 2006 Income statementfor the twenty-four weeks ended 15 October 2006 24 weeks to 15.10.06 24 weeks 52 weeks to to Before 16.10.05 30.04.06 exceptional Exceptional Change items items Total Total Total Note % £m £m £m £m £m Revenue +16 419.2 - 419.2 359.9 818.6Operating costs (318.3) 0.5 (317.8) (272.8) (626.4)Operating profit 100.9 0.5 101.4 87.1 192.2 Finance costs (33.8) (10.1) (43.9) (30.4) (71.3)Profit before tax 67.1 (9.6) 57.5 56.7 120.9Tax 4 (20.1) 4.4 (15.7) (17.6) (31.0)Profit attributable to equityholders of parent 47.0 (5.2) 41.8 39.1 89.9 Operating profit beforeexceptional items +17 100.9 86.2 190.9Profit before tax andexceptional items +20 67.1 55.8 119.6 Earnings per share- adjusted basic 5 +17 31.1 p 26.6 p 56.0 p- basic 5 27.7 p 26.8 p 60.6 p- adjusted diluted 5 +16 30.6 p 26.3 p 55.2 p- diluted 5 27.2 p 26.5 p 59.7 p Dividend paid and proposed pershare in respect of the period +11 6.45 p 5.80 p 20.15 p Adjusted operating profit/revenue 24.1% 24.0% 23.3%Adjusted tax expense/profitbefore tax 30.0% 30.5% 30.5%Adjusted interest cover (times) 3.0 2.8 2.7 Adjusted earnings per share, operating profit, and tax exclude the effect ofexceptional items. Balance sheetas at 15 October 2006 As at As at As at 15.10.06 16.10.05 30.04.06 Note £m £m £m Non current assetsProperty, plant and equipment 1,994.9 1,749.1 1,771.8Goodwill 609.0 502.0 505.1Financial assets 34.4 39.4 34.0Prepayments 6.7 - 7.3Derivative financial instruments 0.9 - 1.9Trade and other receivables 0.3 - 0.5 2,646.2 2,290.5 2,320.6 Current assetsInventories 20.6 18.0 20.1Trade and other receivables 48.1 52.3 38.0Prepayments 6.3 8.7 8.6Derivative financial instruments 0.6 1.0 1.0Cash and cash equivalents 11 63.6 23.2 30.6 139.2 103.2 98.3 Total assets 2,785.4 2,393.7 2,418.9 Current liabilities Borrowings (129.9) (58.3) (279.2)Trade and other payables (161.0) (147.8) (132.4)Derivative financial instruments (0.8) (3.7) (3.2)Income tax payable (28.4) (21.5) (17.1) (320.1) (231.3) (431.9) Non current liabilitiesBorrowings (1,423.7) (1,219.3) (998.1)Derivative financial instruments (18.0) (21.9) (17.0)Deferred tax (184.8) (154.0) (155.0)Post-employment liabilities (57.0) (64.8) (55.4) (1,683.5) (1,460.0) (1,225.5) Total liabilities (2,003.6) (1,691.3) (1,657.4) Total net assets 781.8 702.4 761.5 Issued capital and reservesCalled-up share capital 9 19.1 19.0 19.1Share premium account 9 240.7 239.9 240.6Other reserve 9 (10.9) 278.5 (10.9)Investment in own shares 9 (13.5) (12.7) (11.1)Retained earnings 9 546.4 177.7 523.8Total equity 781.8 702.4 761.5 Net debt 8 1,490.0 1,254.4 1,246.7 Cash flow statementfor the twenty-four weeks ended 15 October 2006 24 weeks to 24 weeks to 52 weeks to 15.10.06 16.10.05 30.04.06 Note £m £m £m Operating activities Cash flow from operations 10 130.5 107.9 217.6Interest received 1.2 0.4 1.0Interest paid (49.6) (30.2) (69.2)Tax paid (4.0) (10.4) (28.9)Net cashflow from operating activities 78.1 67.7 120.5 Investing activities Sales of property, plant and equipment 8.8 11.2 17.9Purchase of property, plant and equipment (36.8) (28.2) (77.9)Movements in trade loans 0.7 (0.7) 4.1Acquisition of subsidiaries, net of cash acquired 7 (172.5) (233.6) (232.7)Net cashflow from investing activities (199.8) (251.3) (288.6) Financing activities Equity dividends paid 6 (21.7) (18.8) (27.7)Issue of shares 9 2.1 49.9 51.6Purchase of own shares 9 (4.4) (3.3) (4.8)Financing costs (4.3) (4.2) (0.1)Repayment of borrowings (534.7) - (99.0)Advance of borrowings 730.0 132.2 239.7Net cashflow from financing activities 167.0 155.8 159.7 Net increase / (decrease) in cash and cash equivalents 45.3 (27.8) (8.4) Opening cash and cash equivalents 15.2 23.6 23.6Closing cash and cash equivalents 11 60.5 (4.2) 15.2 Statement of recognised income and expensefor the twenty-four weeks ended 15 October 2006 As at As at As at 15.10.06 16.10.05 30.04.06 £m £m £m Cashflow hedges: (losses)/profits taken to equity - (3.4) 4.1Pension actuarial gains - - 10.7Tax on items taken directly to equity - 1.0 (4.4)Tax on benefit relating to share based payments 1.5 - 1.7Net income/(expense) recognised directly in equity 1.5 (2.4) 12.1 Profit for the period 41.8 39.1 89.9 Total recognised income for the period 43.3 36.7 102.0 Notes to the accountsfor the twenty-four weeks ended 15 October 2006 1 Basis of preparation The interim financial information has been prepared on the basis of theaccounting policies set out in the group's statutory accounts for the year ended30 April 2006. The taxation charge is calculated by applying the directors' bestestimate of the annual tax rate to the profit for the period. Other expenses areaccrued in accordance with the same principles used in the preparation of theannual accounts. Actuarial valuations of the pension scheme are not carried outat the half year and, consequently, actuarial gains or losses are not recognisedin the interim accounts. As permitted, this interim report has been prepared in accordance with UKlisting rules and not in accordance with IAS 34 'Interim Financial Reporting'and is therefore not fully compliant with IFRS. The financial information contained in this interim statement does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The figures for the year ended 30 April 2006 have been derived from thestatutory accounts, which have been filed with the registrar of companies and onwhich the auditors gave an unqualified report. 2 Segment information 2006/07 (24 weeks) Pub Pub Brewing Belhaven Hardys & Corporate Total Company Partners Company Hansons Operations £m £m £m £m £m £m £m External revenue 241.3 72.0 40.9 55.8 9.2 - 419.2Segment operating profit(pre-exceptionals) 51.9 33.0 10.0 11.5 1.9 (7.4) 100.9% growth on prior year(pre-exceptionals) +3% +11% +2% +17%Exceptional items 2.8 0.3 - - (3.3) 0.7 0.5Segment operating profit(post-exceptionals) 54.7 33.3 10.0 11.5 (1.4) (6.7) 101.4Net assets 1,048.6 721.7 195.7 291.0 308.8 (1,784.0) 781.8EBIDTA* 63.8 35.5 11.8 13.3 2.3 (6.8) 119.9 2005/06 (24 weeks) Pub Pub Brewing Belhaven Corporate Total Company Partners Company Operations £m £m £m £m £m £m External revenue 244.4 69.8 41.1 4.6 - 359.9Segment operating profit (pre-exceptionals) 50.3 29.8 9.8 0.7 (4.4) 86.2Exceptional items 1.1 0.5 (1.7) - 1.0 0.9Segment operating profit(post-exceptionals) 51.4 30.3 8.1 0.7 (3.4) 87.1Net assets 1,062.0 691.9 189.8 308.3 (1,549.6) 702.4EBITDA* 62.1 32.2 11.3 0.9 (3.9) 102.6 2005/06 (52 weeks) Pub Pub Brewing Belhaven Corporate Total Company Partners Company Operations £m £m £m £m £m £m External revenue 516.5 149.6 87.7 64.8 - 818.6Segment operating profit(pre-exceptionals) 102.1 64.9 20.6 12.5 (9.2) 190.9Exceptional items 0.3 1.0 (2.4) (0.3) 2.7 1.3Segment operating profit(post-exceptionals) 102.4 65.9 18.2 12.2 (6.5) 192.2Net assets 1,064.5 703.5 199.4 278.4 (1,484.3) 761.5EBITDA* 128.2 70.0 24.1 14.9 (8.0) 229.2 The group's business operations are divided into four core trading segmentswhich are managed separately. Pub Company covers the results of managed houses, Pub Partners covers theresults of tenanted houses, Brewing Company covers brewing beer, marketing andselling, all predominately in England. Belhaven covers the results of ourScottish operation which includes managed and tenanted houses and brewing andselling beer. Corporate includes the group debt and any central costs and assets/liabilities. To aid comparability, the 2005/06 segmental figures have beenadjusted to re-analyse the Ridley's business from Brewing Company to PubPartners and Corporate in accordance with the 2006/7 treatment. Hardys & Hansons covers the six weeks trading and includes managed and tenantedhouses and brewing and selling beer. *EBITDA represents earnings before interest, tax, depreciation, amortisation andexceptionals. 3 Exceptional items 24 weeks to 24 weeks to 52 weeks to 15.10.06 16.10.05 30.04.06 £m £m £mOperating Integration of Laurel Neighbourhood business - 1.1 1.3Integration of Ridley's business - 1.7 2.4Integration of Belhaven business - - 0.5Integration of Hardys & Hansons business 3.1 - -Disposal of property, plant and equipment (3.6) (3.7) (5.5) (0.5) (0.9) (1.3)Financing Termination of interest rate swaps and loan facilities 10.1 - - 9.6 (0.9) (1.3) Exceptional integration costs are items of one-off expenditure incurred tocombine the acquired businesses with the rest of the group, and include stafftermination costs and incentives. 4 Income tax 24 weeks to 15.10.06 24 weeks to 52 weeks to On profits 16.10.05 30.04.06 before exceptional Exceptional items items Total Total Total £m £m £m £m £m Income tax Corporation tax before exceptional items 18.7 - 18.7 14.0 32.7Recoverable on exceptional items - (4.0) (4.0) (0.5) (0.8)Corporation tax 18.7 (4.0) 14.7 13.5 31.9Adjustment in respect of prior periods - - - - (3.3) 18.7 (4.0) 14.7 13.5 28.6 Deferred tax Origination and reversal of temporary differences 1.4 (0.4) 1.0 4.1 2.4 Total 20.1 (4.4) 15.7 17.6 31.0 5 Earnings per share Basic earnings per share has been calculated by dividing the profit aftertaxation of £41.8 million (2005 - £39.1 million) by the weighted average numberof shares in issue of 151.1 million (2005 - 146.0 million). Adjusted earnings per share excludes the effect of exceptional items and ispresented to show the underlying performance of the group. Adjusted earnings per share Earnings Earnings per share 24 weeks 24 weeks 52 weeks 24 weeks 24 weeks 52 weeks to to to to to to 15.10.06 16.10.05 30.04.06 15.10.06 16.10.05 30.04.06 £m £m £m p p p Basic 41.8 39.1 89.9 27.7 26.8 60.6Exceptionals 5.2 (0.3) (6.8) 3.4 (0.2) (4.6)Adjusted 47.0 38.8 83.1 31.1 26.6 56.0 Diluted earnings per share has taken account of 2.6 million (2005 - 1.8 million)contingent shares under option. 6 Dividends paid 24 weeks to 24 weeks to 52 weeks to 15.10.06 16.10.05 30.04.06 £m £m £m Declared and paid in the periodFinal dividend for 2005/06 - 14.35p (2004/05 - 12.925p) 21.7 18.8 18.8Interim dividend for 2005/06 - 5.8p (2004/05 - 5.225p) - - 8.9 21.7 18.8 27.7 7 Acquisitions The results of Hardys & Hansons were accounted with effect from 5 September2006. Estimated fair value of assets acquired Hardys & Hansons £m Property, plant and equipment 211.0Other financial assets 1.1Bank overdraft (0.5)Net current liabilities (8.0)Pension liabilities (2.5)Deferred tax (30.0)Fair value of net assets 171.1Estimated goodwill 103.8 274.9 Satisfied by: Cash 167.1 Fees 4.9 172.0 Loan notes issued 102.9 274.9 The values attributed to the acquisition of Hardys & Hansons are determinedprovisionally due to the proximity of the acquisition to the interim date. 8 Analysis of changes in net debt At 30 April Cash Debt issued Non-cash At 15 October 2006 flows for acquisition movements 2006 £m £m £m £m £m Cash in hand, at bank 18.3 (3.5) - - 14.8Short term deposits* 12.3 36.5 - - 48.8Overdrafts (15.4) 12.3 - - (3.1) 15.2 45.3 - - 60.5Current portion of borrowings (263.8) 239.9 (102.9) - (126.8)Non-current portion of borrowings (998.1) (435.2) - 9.6 (1,423.7) (1,246.7) (150.0) (102.9) 9.6 (1,490.0) * included in cash on the balance sheet The net cash flow movements on current and non-current borrowings representadvances of £730.0m and repayments of £534.7m. 9 Movement in equity Share Share Other Investment in Retained Total capital premium reserve Own shares earnings £m £m £m £m £m £m At 1 May 2006 19.1 240.6 (10.9) (11.1) 523.8 761.5 Total recognised income andexpense for the period - - - - 43.3 43.3 Issue of share capital - 0.1 - 2.0 - 2.1Repurchase of own shares - - - (4.4) - (4.4)Accrued share based payments - - - - 1.0 1.0Equity dividends paid - - - - (21.7) (21.7)At 15 October 2006 19.1 240.7 (10.9) (13.5) 546.4 781.8 10 Cash flow from operations 24 weeks to 24 weeks to 52 weeks to 15.10.06 16.10.05 30.04.06 £m £m £m Operating profit 101.4 87.1 192.2Operating exceptional items (0.5) (0.9) (1.3)Depreciation 19.0 16.4 38.3EBITDA* 119.9 102.6 229.2Increase in provision against financial assets - 0.3 0.7Decrease/(increase) in inventories 1.4 (0.6) (2.7)Increase in trade and other receivables (1.4) (8.9) (2.1)Increase/(decrease) in trade and other payables 13.8 17.8 (4.8)Other non cash movement - (0.3) 1.4Increase in share based payments 1.0 0.8 3.1Difference between defined benefit pensioncontributions and amounts charged (0.6) (1.0) (2.3)Integration costs (3.6) (2.8) (4.9)Cash flow from operations 130.5 107.9 217.6 * EBITDA represents earnings before interest, tax, depreciation, amortisationand exceptionals. 11 Cash and cash equivalents 24 weeks to 24 weeks to 52 weeks to 15.10.06 16.10.05 30.04.06 £m £m £m Cash at bank and in hand 14.8 14.4 18.3Short term deposits 48.8 8.8 12.3Cash and cash equivalents for balance sheet 63.6 23.2 30.6Bank overdrafts (3.1) (27.4) (15.4)Cash and cash equivalents for cash flow 60.5 (4.2) 15.2 12 Post balance sheet event An interim dividend of 6.45p per share (2005: 5.8p) amounting to a dividend of£9.8m (2005: £8.9m) was declared by the Directors at their meeting on 4 December2006. These financial statements do not reflect this dividend payable. 13 Interim report The interim report will be posted to shareholders on 29 December 2006. Copieswill be available after that date from the Company Secretary, Greene King plc,Westgate Brewery, Bury St Edmunds, Suffolk IP33 1QT. - ends - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Greene King