RNS Number:0703S
Burtonwood Brewery PLC
17 November 2003
Burtonwood Brewery PLC announces its Interim Results for the 26 weeks to
27 September 2003
HIGHLIGHTS
* Reported profit before tax up 12.5% to #4.7 million.
* Underlying profit before tax up 7.6% to #4.7 million.
* Underlying earnings per share up 6.3% to 15.2 pence.
* Interim dividend increased by 6.7% to 3.2 pence.
* Organic growth in both pub divisions: increased volumes
across tenanted estate.
* Sale of poorest pubs completed.
* Strong cash flow - gearing reduced to 37%.
* Net assets per share up to 415 pence.
A presentation for analysts will be held today in the city. For invitations,
contact Deborah Walter or Louisa Hollins at Gavin Anderson & Co on 0207 554
1400. For further information please contact:-
Lynne D'Arcy Managing Director 01925 225131
Nigel Wimpenny Finance Director 01925 225131
Charles Tattersall City Press 0161 606 0260
CHAIRMAN'S STATEMENT
Results and dividend
On behalf of the board, I am delighted to report another set of strong results
and further creation of shareholder value. Reported profit before tax in the 26
weeks ending 27 September 2003 rose by 12.5% to #4.7 million; underlying
profits, adjusting for the goodwill written off in last year's accounts, were up
by 7.6%. Reflecting our progress and prospects, the interim dividend, will be
increased by 6.7% to 3.2 pence and will be paid on 10 February 2004 to
shareholders registered at the close of business on 16 January 2004.
Operating review
Both pub divisions increased their turnover and operating profit. Once again
progress came primarily through organic growth, as we continue to invest in and
maximise returns from our existing asset base. The pub trade has benefited from
the mild spring and hot summer weather; most of our estate of predominantly
traditional, upgraded community pubs was able to take advantage of these
conditions: like-for-like sales in the managed estate grew by 5.5% and in the
tenanted estate by 3.4%.
Turnover Operating profit
2003 2002 % 2003 2002 %
Managed pubs 8,088 7,467 8 1,781 1,584 12
Tenanted pubs 16,607 16,294 2 6,525 5,966 9
Managed
One transfer from tenancy - the Coracle near Shrewsbury - and two acquisitions -
the Olde Boars Head in Holywell, North Wales and the Farmyard near Manchester -
brought the total number of managed houses to 39 at the period end. The Coracle
and The Olde Boars Head have undergone refurbishment and all three will make a
profit contribution in the second half of the year. Across the estate, turnover
rose by 8% and operating profit by 12%. Capital expenditure amounted to #0.4
million, including one major project at the Red Lion, Parbold near Wigan, where
sales have incresaed significantly since the pub reopened. Five minor projects
were completed. Our managed estate is not capital intensive and increasingly we
will carry out minor schemes to maintain standards. Since the period end we
have exchanged contracts on an exciting development opportunity in Retford,
Nottinghamshire. We have a portfolio of good managed houses, mainly upgraded
community pubs with some destination outlets and student bars, which provide a
stable platform for the future development of this division.
Tenanted
The disposal of a package of 31 of our poorest pubs, which we announced with our
2002/3 annual results, completed in early June 2003. Nevertheless, beer volumes
across the tenanted estate actually rose again; turnover was up by 2% and
operating profit by 9%. The operating margin improved; although most of this
increase is due to the elimination of rental payments following the acquisition
of 94 freeholds in July 2002, there was nevertheless an improvement in gross
margin. This reflects the quality of our estate and underlines the fact that
our pubs are not caught up in the price discounting war which is raging on the
high street. We acquired three pubs - The Little Pig at Stourbridge, The Bakers
Arms in Buxton and The Station at Howden, East Yorkshire. We sold three more
pubs, realising the book value. This brought the number of tenancies to 408 at
the end of the period. We are currently negotiating the acquisition of four
more good tenanted pubs, which I am hopeful will be completed before the year
end.
Capital expenditure amounted to #1.0 million, including major schemes at ten
pubs. Investment and disposal have combined to improve the quality of the
tenanted estate: average barrelage per pub has increased by 4% against the same
period last year. Operational management continues to run the business in
successful partnership with our tenants. We aim to maximise the company's
returns from wholesale sales, rents and machine income while keeping the
business viable for the tenant.
Finance Review
* Profit
Profit before tax rose by 12.5% to #4.7 million; eliminating the charge for
goodwill amortisation last year (#188,000) which was made in last year's
accounts, underlying PBT rose by 7.6%.
* Interest
The net interest charge of #1.2 million is covered nearly five times by
operating profit. 73% of borrowings are at fixed rates of interest or hedged.
The average rate of interest payable on fixed rate borrowings was 6.2%.
* Taxation
The group's effective rate of Corporation Tax payable is 28%; including deferred
tax, the effective rate is 30%.
* Cashflow
We generate strong cash flow. Operating cash flow rose again, to #8.5 million
(2002: #8.2 million) reflecting the higher profits. Capital expenditure in the
period amounted to:
#000
Acquisitions 1,430
Refurbishment - tenanted 1,022
- managed 417
Other 269
Total 3,138
Net debt fell during the period to #33.3 million, reducing our balance sheet
gearing to 37% (2002: 46%).
* Shareholder return
Basic earnings per share rose 13.4% to 15.2 pence; underlying earnings per
share, reflecting last years' goodwill amortisation, rose 6.3%.
Reflecting the underlying growth in profits and prospects, the dividend will be
increased by 6.7% to 3.2 pence.
Ordinary shareholders' funds increased in the period by #2.6 million to #89.2
million; this is now equivalent to 415 pence per share. Our share price ranged
from a low of 216.5 pence to a high of 314.5 pence. It began the year at 236.5
pence and closed at 308.5 pence, giving a market capitalisation of #66.3 million
on 27 September 2003.
* Pensions
The company operates a defined benefit pension scheme, which is closed to new
entrants. A full actuarial valuation as at 29 March 2003 has been carried out.
Provision has been made in these accounts for the increased estimated company
contributions (#300,000 annually) which will be required due to the experience
of equity markets over the past couple of years.
Thomas Hardy Burtonwood Ltd
These accounts include the following amounts representing our 40% share of its
results:
Goodwill
Profit Write-off Net
#000 #000 #000
Operating profit 90 (25) 65
Interest (40) - (40)
Profit before tax 50 (25) 25
Taxation - - -
Profit after tax 50 (25) 25
Thomas Hardy Burtonwood's business has progressed during the period. Further
investment has been made in facilities to package drinks in PET (plastic)
bottles. This will open up new sales opportunities but the installation of the
equipment disrupted production and consequently held back profits.
Licensing reform
The Licensing Act 2003 will transfer responsibility for pub licences from the
Magistrates' Court to Local Authorities over the next twelve months. We are
prepared for the higher operating costs and the administrative burden, and we
will ensure that we take every opportunity to increase pub opening hours where
it is viable.
Outlook
We have started the year well and the board remains confident about the
prospects for the company and its potential for continuing growth.
R.A. Gilchrist
Chairman
17th November, 2003
Group profit and loss account
For the 6 months ended 27th September, 2003
Notes 6 months to 6 months to Year to
27/9/03 28/9/02 29/3/03
#000 #000 #000
Turnover - including share of associate 27,217 25,767 51,710
Less: share of associate (2,300) (1,669) (3,774)
Group Turnover 2 24,917 24,098 47,936
Operating profit
Group operating profit before goodwill amortisation and 5,835 5,137 11,197
impairment
Goodwill amortisation - (188) (645)
Impairment of properties - (752)
Group operating profit 2 5,835 4,949 9,800
Share of operating profits of associate 65 125 270
Total operating profit 5,900 5,074 10,070
Loss and provision for loss on disposal of fixed assets - - (2,230)
Profit on ordinary activities before interest and taxation 5,900 5,074 7,840
Net interest payable 3 (1,224) (916) (2,202)
Profit on ordinary activities before taxation 4,676 4,158 5,638
Taxation 4 (1,400) (1,284) (2,460)
Profit on ordinary activities after taxation 3,276 2,874 3,178
Dividends - preference (16) (16) (32)
- ordinary (688) (641) (2,047)
Retained profit 2,572 2,217 1,109
Basic earnings per share 5 15.2p 13.4p 14.7p
Diluted earnings per share 5 14.9p 13.2p 14.5p
Underlying earnings per share 5 15.2p 14.3p 30.7p
The above results are derived from continuing activities.
Group balance sheet
At 27th September 2003
At At 28/9/02 At 29/3/03
27/9/03
Notes #000 #000 #000
Fixed assets
Tangible assets 129,589 135,434 131,864
Intangible assets: goodwill - 456 -
Investments 6 5,039 4,400 4,497
134,628 140,290 136,361
Current assets
Stock 1,039 1,296 1,062
Debtors 2,878 3,347 3,065
Cash at bank and in hand 7,504 781 4,026
11,421 5,424 8,153
Creditors - due within one year (9,891) (9,475) (10,768)
Net current assets/(liabilities) 1,530 (4,051) (2,615)
Total assets less current liabilities 136,158 136,239 133,746
Creditors - due after more than one year (42,149) (42,986) (42,438)
Provision for liabilities and charges (4,408) (4,178) (4,308)
Net assets 89,601 89,075 87,000
Capital and reserves
Called-up share capital 5,821 5,785 5,817
Reserves 83,780 83,290 81,183
Shareholders' funds (including non-equity interests) 7 89,601 89,075 87,000
R.A. Gilchrist
Chairman
17th November, 2003
Group cash flow statement
For 6 months ended 27th September 2003
6 months to 6 months to Year to
27/9/03 28/9/02 29/3/03
#000 #000 #000
Net cash inflow from operating activities(i) 8,489 8,167 16,837
Returns on investments and servicing of finance(ii) (1,411) (1,881) (3,009)
Taxation (1,097) (926) (2,544)
Capital expenditure and financial investment(iii) (901) (5,199) (7,092)
Acquisition - (2,533) (2,533)
Equity dividends paid (1,380) (1,282) (1,922)
Net cash inflow/(outflow) before financing 3,700 (3,654) (263)
Financing(iv) (222) 3,252 3,106
Increase/(decrease) in cash in the year 3,478 (402) 2,843
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash in the year 3,478 (402) 2,843
Loan capital issued in connection with acquisition - (17,000) (17,000)
Loan repayments 318 - 486
Repayment of subsidiary's loans - 13,825 13,825
Finance lease 17 - 16
Change in net debt resulting from cash flows 3,813 (3,577) 170
Loans acquired with subsidiary - (15,025) (15,025)
Release of fair value adjustment - 1,200 1,200
Amortisation of debenture issue costs (5) (4) (10)
Finance lease - (105) (105)
Opening net debt (37,157) (23,387) (23,387)
Closing net debt (33,349) (40,898) (37,157)
Analysis of changes in net debt
At 29/3/03 Cash flow Non cash flow At 27/9/03
item
#000 #000 #000 #000
Cash at bank and in hand 4,026 3,478 - 7,504
Borrowings repayable within one year (871) - (70) (941)
Borrowings repayable after more than one year (40,223) 318 65 (39,840)
Finance lease (89) 17 - (72)
(37,157) 3,813 (5) (33,349)
Group cash flow statement
For 6 months ended 27th September 2003
6 months to 6 months to Year to
27/9/03 28/9/02 29/3/03
#000 #000 #000
i) Reconciliation of operating profit to net cash inflow
from operating activities
Operating profit 5,835 4,949 9,800
Depreciation 2,005 1,831 3,510
Impairment of properties - - 752
Amortisation of goodwill arising on acquisition - 188 645
Increase in trade loan provision - - 154
Decrease/(increase) in stocks 23 (39) 195
Decrease in debtors 176 353 635
Increase in creditors 450 885 1,146
Net cash inflow from operating activities 8,489 8,167 16,837
Analysis of cash flows from headings netted in the cash
flow statement
ii) Returns on investments and servicing of finance
Interest received 62 57 101
Interest paid (1,454) (796) (1,947)
Cost of redemption of subsidiary's financial liabilities (16) (1,126) (1,126)
Dividends paid on non equity shares (3) (16) (32)
Interest element of finance lease - - (5)
Net cash outflow from returns on investments and (1,411) (1,881) (3,009)
servicing of finance
iii) Capital expenditure and financial investment
Purchase of tangible fixed assets (3,138) (5,453) (8,098)
Proceeds on sale of tangible fixed assets 2,838 375 1,401
Investment in Thomas Hardy Burtonwood Limited - 84 -
Increase in trade loans and bonds (601) (205) (395)
Net cash outflow from capital expenditure and financial (901) (5,199) (7,092)
investment
iv) Financing
Issue of ordinary share capital 29 77 265
New secured loan - 17,000 17,000
Loan repayments (318) - (486)
Repayment of subsidiary's loans - (13,825) (13,825)
Repayment of loans by associate 84 - 168
Capital element of finance lease (17) - (16)
Net cash (outflow)/inflow from financing (222) 3,252 3,106
NOTES
1 Accounting policies
The interim results, which are unaudited, have been prepared on the basis of the
accounting policies set out in the 2003 Annual Report. The comparative figures
for the year ended 29th March 2003 are extracted from the full financial
statements for that year, which received an unqualified audit report and which
have been delivered to the Registrar of Companies.
2 Segmental information
Turnover Operating profit
6 months to 6 months to Year 6 months to 6 months to Year
27/9/03 28/9/02 to 27/9/03 28/9/02 to 29/3/03
29/3/03
#000 #000 #000 #000 #000 #000
Tenanted pubs 16,607 16,294 32,444 6,525 5,966 12,476
Managed pubs 8,088 7,467 14,974 1,781 1,584 3,000
Wholesale trade 172 283 413 74 40 71
Brewery, distribution and site 50 54 105 (246) (246) (446)
Central costs - - - (2,299) (2,207) (3,904)
Impairment - - - - - (752)
Amortisation of goodwill - - - - (188) (645)
Group total 24,917 24,098 47,936 5,835 4,949 9,800
3 Net interest payable
6 months to 6 months to Year to
27/9/03 28/9/02 29/3/03
#000 #000 #000
Group:
Net interest payable 1,184 940 2,158
Costs of early redemption of subsidiary's financial liabilities - 1,126 1,126
Release of fair value adjustment following redemption of
subsidiary's financial liabilities
- (1,200) (1,200)
Group total 1,184 866 2,084
Share of interest payable by associate 40 50 118
Total 1,224 916 2,202
4 Taxation
Taxation on the profits for the period:
6 months to 6 months to Year to
27/9/03 28/9/02 29/3/03
#000 #000 #000
Group:
UK Corporation Tax at 30% 1,300 1,212 2,550
Prior year refund - - (224)
Deferred taxation 100 60 190
Group total 1,400 1,272 2,516
Share of associate's tax - 12 (56)
Total 1,400 1,284 2,460
5 Earnings per share
Basic and underlying earnings per share are calculated by dividing the earnings
attributable to ordinary shareholders, as calculated below, by the weighted
average number of shares in issue during the period of 21,482,655 (September
2002: 21,326,392; March 2003: 21,355,759).
6 months to 6 months to Year to
27/9/03 28/9/02 29/3/03
#000 #000 #000
Profit after taxation 3,276 2,874 3,178
Preference dividend (16) (16) (32)
Basic earnings 3,260 2,858 3,146
Loss and provision for loss on disposal of fixed assets - - 2,230
Prior year tax credits - - (224)
Amortisation of goodwill on acquisition - 188 645
Impairment of properties - - 752
Underlying earnings 3,260 3,046 6,549
6 months to 6 months to Year to
27/9/03 28/9/02 29/3/03
pence pence pence
Basic earnings per share 15.2 13.4 14.7
Loss on and provision for loss on disposal of fixed assets - - 10.5
Prior year tax credits - - (1.0)
Amortisation of goodwill on acquisition - 0.9 3.0
Impairment of properties - - 3.5
Underlying earnings per share 15.2 14.3 30.7
Adjusted earnings per share shows more clearly the underlying performance of the
group. Diluted earnings per share is the basic earnings per share after
allowing for the dilutive effect of the conversion into ordinary shares of the
weighted average number of options outstanding during the period of 338,055
(September 2002: 353,616; March 2003: 278,683).
6 Associate Company
The investment in Thomas Hardy Burtonwood has again been treated as an associate
company. The following, additional information is given:-
Cost Share of Goodwill Equity Loans(i) Total
profits written off
#000 #000 #000 #000 #000 #000
At 29th March 2003 912 258 (50) 1,120 718 1,838
Changes in the period - 50 (25) 25 (84) (59)
At 27th September 2003 912 308 (75) 1,145 634 1,779
#000
Goodwill at 29th March 2003(ii) 441
Amortised in the period (25)
Goodwill at 27th September 2003 416
Share of net assets at 29th March 2003 679
Share of profits in the period 50
Share of net assets at 27th September 2003 729
Share of net assets and goodwill at 27th September 2003 1,145
(i) Includes preference shares.
(ii) Goodwill is being written off over 10 years; accordingly #25,000 has been
charged against operating profits in the period.
7 Movements in shareholders' funds
At 27/9/03 At 28/9/02 At 29/03/03
#000 #000 #000
Opening equity shareholders' funds 86,550 86,331 86,331
Profit earned for ordinary shareholders 3,260 2,858 3,178
Dividends (688) (641) (2,069)
Share capital issued 29 77 265
Unrealised deficit on revaluation of properties - - (1,155)
Closing equity shareholders' funds 89,151 88,625 86,550
Non equity shareholders' funds 450 450 450
Total closing shareholders' funds 89,601 89,075 87,000
This information is provided by RNS
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