Heavitree Regulatory News (HVT)

15 Feb 2006 15:00

Heavitree Brewery PLC15 February 2006 The Heavitree Brewery PLCTrood LaneMatfordExeter EX2 8YP Telephone: 01392 217733 Contact: Mr G.J.Crocker - Finance Director and Company Secretary Mr R.J.Glanville - Director Date: 15 February 2006 Preliminary Notice of Results Following a Board Meeting held today, 15 February 2006, the Directors announcethe preliminary results for the year ended 31 October 2005. Chairman's Statement ResultsI would like to draw your attention to my opening remarks in last year'sstatement. The first paragraph said this: "The figures are distorted as costs ofsome £200,000 authorised but not actually spent in 2004 have been reallocated to2005. This money is part of the £400,000 which I mentioned in June 2004 as beinga minimum necessary spend to comply with the new regulations regardingDisability Discrimination, Control of Asbestos and Licensing. The profit forthis year has benefited from this, but next year's will suffer the consequences." This duly happened and the costs for this year under the above headings amountto a total of £284,000. The new Licensing Laws' procedural requirements have been completed in respectof all of our pubs. Apart from the financial costs mentioned above, there hasbeen a heavy demand on the time of our senior management people, about sevenmonths' worth of this time in fact. I find it hard, to say the least, to see any commensurate improvement or benefitto anyone resulting from the new system. The profit before tax for this year is £1,299,000 (2004 restated - £1,586,000)which, in the circumstances, is satisfactory. Other points to note are: Core Company - operating profit of £1,506,000 (2004 restated - £1,994,000). The Managed Houses (Heavitree Inns) - operating loss of £11,000 (2004 - loss£45,000). The American Subsidiary (Heavitree Inc) - operating loss of £6,000 (2004 - loss£5,000). Sales of Fixed Assets - a profit of £252,000 (2004 - £16,000). Sales of Beer - up by 0.92% by volume. Dividends The Directors recommend an unchanged final dividend of 6p per Ordinary and 'A'Limited Voting Ordinary Share. This together with the interim dividend of 3.5pmakes a total of 9.5p per share (2004 - 9.5p) for the year. If approved, thefinal dividend will be paid on 7 April 2006 to shareholders on the Register at 3March 2006. Borrowing At the AGM we will be seeking Shareholders' approval for a change in ourborrowing capacity as defined in the Memorandum & Articles of Association. Theproposal is fully described in the Directors' Report. Although there is no intention of changing our present policy of borrowingrestraint, the proposal reflects the change in the real value of our pubs andthe rising cost of the vital programme of their regular refurbishment. Heavitree Inns The previous history of losses has been virtually eradicated. In future thissubsidiary will operate under rental arrangements more in keeping with theaccepted norm for our industry and accordingly will not be liable for a rentcharge. Heavitree Inc There have been no significant events during the year. Property The Lamb Inn, Sandford, Crediton was sold giving rise to a gross profit of£293,000. We also purchased a cottage and a former village hall, both for theexpansion of our pub operations, at a cost of £439,000. Capital improvementstotalling £705,000 have been carried out at several of our pubs including TheMount Pleasant Inn, Dawlish Warren; The Carpenters Arms, Ilsington; The New Inn,Sampford Courtenay; The Crown & Sceptre, Newton St. Cyres; and The Golden LionInn, Tipton St. John, with major alterations completed at The Maltsters Arms,Clyst St. Mary and The Full Quart, Hewish, Weston-super-Mare. Personnel The whole team has worked tirelessly and every member of it has earned ourgratitude. Prospects Regulations and legislation will continue to be expensive without beingproductive and there is now the possibility of a ban on smoking in every pub inthe Country. Sales in some of them could well suffer as a result. But these willbe overshadowed by the astonishing increase in costs which we will face inhonouring our pension obligations. We started our pension scheme in 1963. Proper advice was taken and the cost of agenerous pension plan was well within our means. Longer life spans, exacerbatedby new rules about the balance of funds invested in equities as opposed to giltsand Gordon Brown's tax raid on dividends received by pension funds, have led toever-increasing contributions required by the calculations of the Actuaries. All this gives rise to a black hole which, in the course of the last few years,has been variously estimated at £1.4 million at 1 January 2002, £4.2 million at1 January 2005 (or £7.4 million in the event of cessation). And we still do nothave a definite figure. We have followed professional advice on funding levels throughout the life ofthe scheme and have never taken a contribution holiday. This clearly is a very difficult situation to have to face and we continue totake advice and consider all options. No doubt we will get through it but it isbound to have an effect on our growth strategy. As a starting point we havedecided to adopt, one year early, FRS 17 the Accounting Standard that deals withRetirement Benefits, thereby starting to reflect part of the problem on ourbalance sheet, which at 31 October 2005 is carrying a net pension deficit of£1,676,000. On a brighter note, gross profits for 2006 will be boosted by some £800,000 as aresult of the sale of our shareholding in George Gale and Company Limited, whichwas the subject of a successful cash offer from Fuller Smith & Turner PLC inDecember 2005. W P TuckerChairman15 February 2006 Group profit and loss accountfor the year ended 31 October 2005 As restated 2005 2004 Note £000 £000 Turnover 12,891 12,487 Operating profit 1,489 1,944Profit on sale of fixed assets 252 16Income from other fixed asset investments 13 13 Profit on ordinary activities before interestand taxation 1,754 1,973Other interest receivable 9 9Interest payable (379) (298)Other finance charges - FRS 17 (85) (98) Profit on ordinary activities before taxation 1,299 1,586Taxation on profit on ordinary activities (308) (495) Profit attributable to shareholders 991 1,091Dividends - equity and non-equity 3 (513) (510) Profit retained for the financial year 478 581 Basic and diluted earnings per share 4 18.4p 20.1p All revenues and costs relate to continuing operations. Group balance sheetat 31 October 2005 As restated 2005 2004 £000 £000Fixed assetsTangible assets 15,836 14,839Investments 195 195 16,031 15,034Current assetsStocks 149 143Debtors 1,299 1,608Cash at bank and in hand 520 700 1,968 2,451 Creditors: amounts falling due within one year (9,188) (9,116)Net current liabilities (7,220) (6,665)Total assets less current liabilities 8,811 8,369Creditors: amounts falling due after more than one year (272) (270) Provisions for liabilities and chargesDeferred taxation (282) (264)Net assets excluding pension liability 8,257 7,835Pension liability (1,676) (1,519) 6,581 6,316 Capital and reservesCalled up share capital 291 291Capital redemption reserve 658 658Other reserves 72 72Own shares reserve (730) (595)Profit and loss account 6,290 5,890 6,581 6,316Attributable to non-equity interests 11 11Attributable to equity interests 6,570 6,305Total shareholders' funds 6,581 6,316 Group statement of cash flowsfor the year ended 31 October 2005 2005 2004 Note £000 £000 Net cash inflow from operating activities 5 2,616 1,785 Returns on investments and servicing of financeInterest Paid (431) (246)Interest received 9 9Dividends received 13 13Preference dividend paid (1) (1)Net cash outflow from returns on investmentsand servicing of finance (410) (225) TaxationCorporation tax paid (632) (330)Return of overpayment of corporation tax - 26 (632) (304) Capital expenditure and financial investmentPayments to acquire tangible fixed assets (1,786) (1,609)Receipts from sales of tangible fixed assets 470 154Receipts from repayment of fixed assets investments - 9 (1,316) (1,446) Equity dividends paid (510) (502) FinancingConsideration received by EBT on sale of shares 39 203Consideration received by EBT on exercise of share options - 147Consideration paid by EBT on purchase of shares (163) (595)Repayment of directors' loans (21) (23)Loans from directors 17 22 (128) (246)Decrease in cash (380) (938) Notes to the preliminary announcement 1 These figures do not constitute full accounts within the meaning ofS.240 of the Companies Act 1985. They have been extracted from the statutoryaccounts for the year ended 31 October 2005, on which the auditors have issuedan unqualified audit report. The statutory accounts have not yet been deliveredto the Registrar of Companies. 2 The 2004 results have been restated following the implementation ofFRS 17 'Retirement Benefits'. 3 Dividends 2005 2004 £000 £000Non-equity interests:£1 11.5% Preference 1 1Equity interests: Interim 3.5p per Ordinary and 'A' Limited Voting Ordinary share (2004 - 3.5p) - paid 195 199 Proposed final 6p per Ordinary and 'A' Limited Voting Ordinary share (2004 - 6p) 335 335 Less dividends on shares held within employee share schemes (18) (25) 512 509 513 510 4 Basic and diluted earnings per share The calculation of basic earnings per ordinary share is based on earnings of£990,000 (2004 restated: £1,090,000), being profit after taxation for the yearof £991,000 (2004 restated - £1,091,000) less preference dividends of £1,000(2004 - £1,000), and on 5,369,929 (2004 - 5,414,935) shares being the weightedaverage number of Ordinary and 'A' Limited Voting Ordinary Shares in issueduring the year after excluding the shares owned by The Heavitree Brewery PLCEmployee Benefits Trust and those shares under option pursuant to the EmployeeShare Option Scheme. The diluted earnings per share is equal to the basic earnings per share becausethe share options within the Employee Share Option Scheme are considered to benon-dilutive potential ordinary shares. The Ordinary Shares and the 'A' Limited Voting Ordinary Shares have equaldividend rights and therefore no separate calculation of earnings per share forthe different classes has been given. 5 Group statement of cash flows Reconciliation of operating profit to net cash inflow from operating activities: 2005 2004 £000 £000 Operating profit 1,489 1,944Depreciation 571 503Increase in stocks (6) (1)Decrease/(increase) in operating debtors 309 (516)Increase in operating creditors 241 12Exchange gains on cash - 3Increase in other provisions 157 15Net pension change (145) (175)Net cash inflow from continuing operating activities 2,616 1,785 6 Copies of the 2005 Annual Report & Accounts will be posted to shareholderson 7 March 2006. Further copies may be obtained by contacting the CompanySecretary at The Heavitree Brewery PLC, Trood Lane, Matford, Exeter EX2 8YP. TheAnnual General Meeting will be held at the Registered Office on 6 April 2006. Ends. This information is provided by RNS The company news service from the London Stock Exchange