RNS Number:8003A
Cains Beer Company PLC
25 July 2007
For release 7.00am 25 July 2007
CAINS BEER COMPANY PLC (CBC/L)
("Cains" or "the Company")
SECOND INTERIM RESULTS
Cains, the AIM-listed craft brewer and operator of 109 pubs, announces its
second set of audited interim results for the 12 months ended 29 April 2007.
HIGHLIGHTS
* Completion on 7th June 2007 of the reverse takeover of Honeycombe Leisure
Plc ("Honeycombe") by Robert Cain & Company Limited.
* The combined entity has been renamed Cains Beer Company PLC and the
current accounting period has been extended to 30 October.
* These results therefore represent a second set of interim results of
Honeycombe for the twelve month period to 29 April 2007 and do not include
any trading from Robert Cain & Company Limited.
* Honeycombe reports an operating loss of #488,000 (this is before including
goodwill amortisation of #304,000 and a net impairment write back of
tangible fixed assets of #1,331,000). The equivalent figure for 2006 was a
profit of #311,000.
HIGHLIGHTS POST REVERSE TAKEOVER
* First 100 day plan ahead of target
* Cains Finest Lager now pouring across 60% of the pub estate
* Positive feedback from customers and licensees to the Cains beer brand
* Distribution of Cains beers now being delivered direct by the group's own
fleet
* Smoking ban - action to provide smokers with outdoor facilities already
being implemented
* Former Honeycombe Leisure head-office in Preston now closed and relocated
to Cains brewery in Liverpool
Sudarghara Dusanj, Cains Beer Company chief executive, comments:
"The results of the former Honeycombe Leisure business are in line with our
expectations at the time of acquisition.
Now, as an enlarged group, we are already starting to see the synergies and
benefits of being a vertically integrated operator. With a strong management
team in place, we are working together to drive the business forward and achieve
our ambition of becoming Britain's Favorite Beer Company.
Although we are in the early stages of our programme of change and investment in
the business, good progress is being made and the implementation of our post
acquisition 100 day plan is ahead of target.
We have closed the former Honeycombe head office in Preston. This led to eight
redundancies and the remaining employees have transferred to our Liverpool head
office. Cains beers, including our award-winning Finest Lager, are already
pouring across 60% of the estate and the reaction from our customers and
licensees has been extremely positive.
The enthusiasm and backing for Cains beers is extremely encouraging and we
intend to use our new distribution foot print to further build the strength of
our brand, in which we will continue to invest.
With a unified team, strong asset base and a high quality brand, I look forward
to realising the full growth potential of the enlarged Cains business in the
future."
Enquiries
Cains Beer Company PLC Tel: 0151 709 8734
Sudarghara Dusanj / Ajmail Dusanj
Charles Stanley Securities - Nominated Adviser Tel: 0207 149 6482
Rick Thompson / Henry Fitzgerald-O'Connor
Adventis Financial PR Tel: 0207 034 4758/9
Tarquin Edwards / Chris Steele
CHAIRMAN'S STATEMENT
I am pleased to be issuing the first Chairman's statement since the completion
on 7th June 2007 of the reverse takeover of Honeycombe Leisure Plc by Robert
Cain & Company Ltd. The combined entity has since been renamed Cains Beer
Company PLC.
Following the transaction, the accounting period has been extended for a further
six months to 30 October 2007. These results therefore represent a second set of
interim results for the current accounting period.
The period covered represents the results of the Honeycombe business only and
reflects the difficult trading position discussed in previous announcements.
With the completion of the transaction, the strengthened management team and the
improved financial position, we look forward to a brighter future for all
stakeholders.
Post 7th June 2007 highlights are as follows:
* First 100 day plan ahead of target
* Cains Finest Lager now pouring across 60 % of the pub estate
* Positive feedback from customers and licensees to the Cains beer brand
* Distribution of Cains beers now being delivered direct by the group's own
fleet
* Smoking ban - action to provide smokers with outdoor facilities already
being implemented
* Former Honeycombe Leisure head-office in Preston now closed and relocated
to Cains brewery in Liverpool
Results
Total revenues for the period fell to #36.2m (2006: #41.6m), reflecting the
disposal of loss making short-term lease contracts and some loss in volume in
other areas.
The consequent results for the twelve months to 29 April 2007 amounted to an
operating loss of #488,000 (this is before including goodwill amortisation of
#304,000 and a net impairment write back of tangible fixed assets of
#1,331,000). The equivalent figure for 2006 was a profit of #311,000.
Loss per share for the twelve months to 29 April 2007 was 5.52p, compared to a
loss per share of 34.07p in the previous year, reflecting the significant
property and goodwill impairment charges in 2005/2006
Dividend
No dividend will be payable for the period under review (2006: nil).
Financing
In addition to the net placing and loan note monies raised of 3.5m, new
financing facilities have been agreed with Bank of Scotland Corporate, as part
of the transaction. These facilities provide the business with certainty and
will allow us to move forward positively.
A revolving credit facility ring-fenced for capital expenditure, has also been
made available. There will be a period of review at all sites before any
utilisation of this facility to ensure return on capital is maximised.
Trading Review
Conditions remained challenging throughout the estate for the second half year,
despite a strong performance at Christmas, which was up 3.2% on a like for like
basis.
Overall sales were down 12.9% in the twelve month period under review reflecting
the closure of loss making operations and some volume fall in the remainder of
the business.
The gross margin increased slightly to 38.2%. in the twelve months to 29 April
2007 from 37.9% in the previous year.
Property
The Honeycombe estate continues to be reflected in the balance sheet in
accordance with the full valuation carried out as at 29th October 2006.
Prospects
The opportunities identified in the admission document published in May 2007
provide the business with a positive and, we believe exciting future for all
concerned.
Cains' beer has been pouring across 60% per cent. of the estate since 20th June
and has received a positive response from customers. Brewery tours and product
training have now been carried out for all of the pub managers.
The closure of the former Honeycombe Leisure head office in Preston and
relocation to Cains brewery in Liverpool was completed in mid-June and
operations are running smoothly. The synergies catalogued in the admission
document sent to shareholders in May will be driven through the business at the
earliest opportunity in order to maximise benefit.
The whole industry faces a challenging year with the introduction of the smoking
ban on 1st July 2007. A full review of all sites has been completed with plans
in place to ensure the estate can offer a positive option to smokers wherever
possible.
Directorate
As disclosed in the admission document, James Baer, former Chief Executive
Officer, resigns as of today's date.
In addition, with the completion of these interim results and the successful
relocation of the head office, Tracey Alston has also resigned as a director of
the company. Agreement has been reached with Tracey to provide consultancy
services to Cains until the end of September 2007 thus providing continuity
within the finance function.
The Board are actively engaged in the process to recruit a new Finance Director.
The initial stages of this process have proved to be encouraging and a further
announcement will be made as soon as possible.
The Board would like to thank all of the former Directors and staff for their
efforts particularly in ensuring the successful completion of the merger.
The Board would also like to take this opportunity to wish them well for the
future.
Roy Morris
Non-Executive Chairman
25th July 2007
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Audited 12 months
ended
29 April 30 April
2007 2006
Restated
Notes #'000 #'000
Turnover 36,203 41,567
Cost of sales (22,371) (25,825)
_________ _________
Gross profit 13,832 15,742
Distribution expenses (273) (394)
__________________________________________________________________________________________________________
Administration expenses:
Amortisation of goodwill (304) (432)
Impairment of goodwill - (1,587)
Impairment of tangible fixed assets (449) (9,551)
Reversal of impairment of tangible fixed assets 2 1,780 -
Compensation for loss of office - (162)
Other (14,047) (15,037)
__________________________________________________________________________________________________________
Administrative expenses (13,020) (26,769)
_________ _________
Operating profit/(loss) 539 (11,421)
Loss on sale of tangible fixed assets 3 (491) (597)
Profit on sale of fixed asset investment - 629
_________ _________
Profit/(loss) on ordinary activities before interest 48 (11,389)
Interest payable and similar charges (1,838) (2,080)
_________ _________
Loss on ordinary activities before taxation (1,790) (13,469)
Taxation on loss on ordinary activities 4 57 2,772
_________ _________
Loss on ordinary activities after taxation (1,733) (10,697)
========= =========
Loss per share - basic and diluted (5.52p) (34.07p)
========= =========
The group's turnover and expenses all relate to continuing operations.
There is no material difference between the results reported in the profit and
loss account and the equivalent figures calculated on the historical cost basis.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED
GAINS AND LOSSES
Audited 12 months ended
29 April 30 April
2007 2006
Restated
#'000 #'000
Loss for the year (1,733) (10,697)
Unrealised surplus on revaluation of properties 59 6,606
_________ _________
Total recognised gains and losses relating to the year (1,674) (4,091)
=========
Prior year adjustment (26)
_________
Total gains and losses since last annual financial statements (1,700)
=========
CONSOLIDATED BALANCE SHEET
Audited at
29 April 30 April
2007 2006
Restated
Notes #'000 #'000
Fixed assets
Intangible assets 3,912 4,216
Tangible assets 37,252 37,442
Investments 672 8
_________ _________
41,836 41,666
_________ _________
Current assets
Stocks 878 970
Debtors - due within one year 2,623 2,638
Investments - 1,711
Cash at bank and in hand 735 978
_________ _________
4,236 6,297
Creditors: amounts falling due within one year (38,596) (38,757)
_________ _________
Net current liabilities (34,360) (32,460)
_________ _________
Total assets less current liabilities 7,476 9,206
Creditors: amounts falling due after more than one year (85) (119)
Provision for liabilities
Deferred taxation (465) (522)
_________ _________
Net assets 6,926 8,565
========= =========
Capital and reserves
Called up share capital 314 314
Share premium account 17,119 17,119
Revaluation reserve 6,665 6,606
Profit and loss account 6 (17,233) (15,500)
Share based reserve payment 7 61 26
_________ _________
Equity shareholders' funds 6,926 8,565
========= =========
CONSOLIDATED CASH FLOW STATEMENT
Audited 12 months ended
29 April 30 April
2007 2006
Restated
#'000 #'000
Operating profit/(loss) 539 (11,421)
Amortisation and impairment of goodwill 304 2,019
Depreciation and impairment of tangible fixed assets 1,504 10,905
Reversal of impairment of tangible fixed assets (1,780) -
Share based payment 35 16
Change in stocks 92 171
Change in debtors 55 241
Change in creditors 1,233 (209)
_________ _________
Net cash inflow from operating activities 1,982 1,722
_________ _________
Returns on investment and servicing of finance
Interest paid and similar charges (1,838) (1,880)
_________ _________
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (539) (2,617)
Receipts from sale of tangible fixed assets 2,450 1,301
Investments (672) (399)
Sale of trade investment 8 1,028
_________ _________
Net cash inflow/(outflow) from capital expenditure and financial
investment 1,247 (687)
_________ _________
Equity dividends paid - (298)
_________ _________
Net cash inflow/(outflow) before financing 1,391 (1,143)
_________ _________
Financing
Net repayment of secured loans (1,938) (818)
Capital element of finance lease payments (179) (167)
_________ _________
Cash outflow from financing (2,117) (985)
_________ _________
Decrease in cash (726) (2,128)
========= =========
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
Reconciliation of net cash flow to movement in net debt
Audited 12 months ended
29 April 30 April
2007 2006
#'000 #'000
Decrease in cash in the year (726) (2,128)
Cash flows from changes in debt and financing 2,117 985
_________ _________
Change in net debt resulting from cash flows 1,391 (1,143)
Non cash changes - inception of new finance leases (165) (254)
_________ _________
Movement in net debt 1,226 (1,397)
Net debt brought forward (31,212) (29,815)
_________ _________
Net debt carried forward (29,986) (31,212)
========= =========
Analysis of changes in net debt
At 1 May Non cash Cash 29 April
2006 changes flow 2007
#'000 #'000 #'000 #'000
Cash at bank and in hand 978 - (243) 735
Overdrafts (2,981) - (483) (3,464)
________ ________ ________ ________
(2,003) - (726) (2,729)
Debt due within one year
Bank and other loans (28,937) - 1,938 (26,999)
Amounts owed under finance leases (153) (85) 65 (173)
Debt due after one year
Amounts owed under finance leases (119) (80) 114 (85)
________ ________ ________ ________
(31,212) (165) 1,391 (29,986)
======== ======== ======== ========
NOTES TO THE INTERIM REPORT
1 RESULTS AND ACCOUNTING POLICIES
This Interim Report has been prepared in accordance with applicable accounting
standards and under the historical cost convention, modified to include the
revaluation of certain fixed assets and in accordance with the group's
accounting policies as set out in the financial statements for the 12 months
ended 30 April 2006 with the exception of the adoption of FRS20 as set out
below.
Adoption of FRS20 'share based payment' and re-statement
The group is required to adopt FRS20 in respect of its financial statements for
the 18 month period ending 30 October 2007. Accordingly, this interim report
has been prepared in accordance with this standard. The effect of adopting this
standard has been to increase the reported loss for the years ended 29 April
2007 and 30 April 2006 by #35,000 and #16,000 respectively. In addition a '
share based payment reserve' of an equal amount has been created.
There was no adjustment to net assets at 30 April 2006, nor was there any
material impact on taxation following the adoption of this standard.
Going concern
As part of the acquisition of Robert Cain and Company Limited as detailed in the
Post Balance Sheet Events note to this Interim Report, the group's banking
arrangements have been re-structured. The directors are of the opinion that the
group has adequate banking facilities for the foreseeable future and
consequently the interim financial information has been prepared on a going
concern basis.
2 REVALUATION OF TANGIBLE FIXED ASSET
On 29 October 2006 the Group adopted a professional valuation, provided by
Graham & Sibbald Chartered Surveyors MRICS, IRRV, of its freehold land and
buildings prepared on an open market basis as fully operational units. The
revaluation resulted in a net increase in the carrying value of tangible fixed
assets at 29 October 2006 of #1.3m. Of this increase, #1.8m has been recognised
as a reversal of previous impairment losses against certain units.
3 LOSS ON SALE OF TANGIBLE FIXED ASSETS
The loss on sale of tangible fixed assets relates to the disposal of
certain outlets. One site was exited during the year as a result of poor
contribution to the wider operating performance of the group. This outlet
incurred an early exit clause penalty of #500,000.
4 TAXATION
The effective rate of taxation differs from the expected rate of 30%
primarily because of items which are disallowable for tax purposes including
goodwill and ineligible depreciation.
5 LOSS PER ORDINARY SHARE
Loss per share is calculated as follows:
Audited 12 months ended
29 April 30 April
2007 2006
Restated
#'000 #'000
Loss after taxation (1,733) (10,697)
========= =========
Number Number
Weighted average number of shares in '000 '000
issue
- basic and diluted 31,394 31,394
========= =========
Loss per share Pence Pence
- basic and diluted (5.52) (34.07)
========= =========
At 29 April 2007 the impact of outstanding share options on earnings per share
is not dilutive.
6 MOVEMENT ON PROFIT AND LOSS ACCOUNT RESERVES
Audited 12 months ended
29 April 30 April
2007 2006
#'000 #'000
Profit and loss account brought forward as originally stated (15,474) (4,495)
Prior year adjustment (26) (10)
_________ _________
As restated (15,500) (4,505)
Loss on ordinary activities after (1,733) (10,697)
taxation
Dividends - (298)
_________ _________
Profit and loss account carried forward (17,233) (15,500)
========= =========
7 SHARE BASED PAYMENT RESERVE
#'000
At 30 April 2006 26
Charge for the year 35
_________
At 29 April 2007 61
=========
8 INTERIM FINANCIAL INFORMATION
The company has changed its accounting reference period to 31 October and full
audited financial statements will now be prepared for the eighteen month period
ending 30 October 2007.
The interim financial information contained in this Interim Report is audited
and is in respect of the twelve months ended 29 April 2007. It does not
constitute statutory accounts within the meaning of Section 240 of the Companies
Act 1985.
Copies of the Interim Report will be available to the public from the company's
registered office, Stanhope Street, Liverpool, L8 5XJ.
The comparative financial information for the year ended 30 April 2006 is
derived from the consolidated statutory accounts of the company which have been
delivered to the Register of Companies. The report of the auditors was
unqualified but contained an emphasis of matter paragraph regarding going
concern. It did not contain any statement under Section 237 (2) or (3) of the
Companies Act 1985.
9 POST BALANCE SHEET EVENTS
The company announced on 14 May 2007 that it would be seeking shareholder
approval for the acquisition of the entire issued share capital of Robert Cain &
Company Limited, a well established Liverpool based brewer. Shareholder approval
for the transaction was received at an Extraordinary General Meeting of the
company held on 7 June 2007. The acquisition was classified as a reverse
takeover for the purposes of the AIM rules of the London Stock Exchange.
Following the issue of 66,713,034 new ordinary shares in the company as
consideration for the acquisition, the former owners of Robert Cain & Company
Limited, Messrs SS and AS Dusanj assumed control of 57.65 per cent of the
issued share capital of the company. On 7 June 2007 Messrs SS and AS Dusanj were
appointed Chief Executive and Chief Operating Officer of the company
respectively. In addition Mr R A Morris was appointed Non Executive Chairman.
At the same time as the acquisition the company raised #3.5m net of expenses by
way of a placing of 52,000,000 new ordinary shares and the issue of #2.5m of
Loan Stock. The Loan Stock was issued to Messrs SS and AS Dusanj and companies
connected with them.
Full details concerning the above arrangements were set out in the document sent
to shareholders on 15 May 2007.
Subsequent to the year end, and in connection with the acquisition the company's
name was changed to Cains Beer Company PLC and the current accounting period was
extended to 30 October 2007.
As part of the rationalisation of the new group, the company's former head
office at Derby House, Preston has been vacated and the head office team
relocated to offices at the group's brewery premises in Liverpool. Redundancy
and relocation costs of #322,000 (including payments to resigning directors)
were incurred as part of this process which are anticipated to be offset by
synergy efficiencies within the group in the remainder of the financial period.
Included within investments shown in the balance sheet at 29 April 2007 are
costs of #582,000 relating to the acquisition. Additional costs in connection
with the acquisition were incurred after 29 April 2007 amounting to #1,026,000.
INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF
CAINS BEER COMPANY PLC
Introduction
We have audited the interim financial information which comprises the
consolidated profit and loss account, the consolidated balance sheet, the
consolidated statement of total recognised gains and losses, the consolidated
cash flow statement and notes to the Interim Report. The financial information
has been prepared in accordance with the group's accounting policies as stated
in the financial statements for the year ended 30 April 2007 with the exception
of the adoption of FRS 20 'Share Based Payment'.
This report is made solely to the company's members, as a body for the purpose
of the AIM rules of the London Stock Exchange and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body, for our audit
work, for this report, or for the opinion we have formed.
Directors' responsibilities
The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the Interim Report in accordance with the AIM
rules of the London Stock Exchange which require that the accounting policies
and presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
Our responsibility is to audit the financial information in accordance with
International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial information gives a
true and fair view. We also report to you if, in our opinion, the Chairman's
Statement is not consistent with the financial information.
We read the Chairman's Statement and consider the implications for our report if
we become aware of any apparent misstatement within it.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial information. It also includes an assessment of the
significant estimates and judgments made by the directors in the preparation of
the financial information, and of whether the accounting policies are
appropriate to the circumstances of the group, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial information
is free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the Interim Report.
Opinion
In our opinion
* the financial information gives a true and fair view, in accordance
with United Kingdom Generally Accepted Accounting Practice, of the state of
affairs of the group as at 29 April 2007 and of the loss of the group for the
year then ended:
* the information given in the Chairman's Statement is consistent with the
financial information.
MAZARS LLP
CHARTERED ACCOUNTANTS
and Registered Auditors
Lancaster House
67 Newhall Street
Birmingham B3 1NG
25 July 2007
This information is provided by RNS
The company news service from the London Stock Exchange
END
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