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Pubs operator Heavitree Brewery is exiting its managed pubs business and now all of its pubs are tenanted.
Exeter-based should transfer its 20 managed pubs to tenanted or leased houses by April 2009. By then it will have 84 tenanted/leased pubs.
Interim turnover fell nearly 3% to £6.05m. Profits fell from £790,000 to £185,000 in the six months to April 2008. Heavitree would have lost money if it had not been for a rise in property disposal profits from £235,000 to £566,000. Net debt is £7.9m. Heavitree bought back £1.9m of shares during the period but it has decided to pass its dividend.
Heavitree used to be quoted on the Unlisted Securities Market. It has ordinary and A non-voting shares.
At 350p per A share and 450p per ordinary share, Heavitree is valued at £20.7m. The company’s net asset value is £6.98m - after a net £1.1m pensions liability. The final salary pension scheme is being wound up.
Property is included at cost - £13.66m - and net book value of £13.34m. At the end of October 2007, the board valued those properties at £45m. That does not include the £594,000 of property held for disposal, which is also likely to be worth more than that book value.
This suggests that the market value is a substantial discount to underlying net asset value. However, the weak property market may have reduced that discount.
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