| Wed 19 Dec 2007, 16:00 | | HAL - Halogen Holdings Societe Anonyme - Preliminary announcement of unaudited |
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HAL
HAL
HAL - Halogen Holdings Societe Anonyme - Preliminary announcement of unaudited
results for the year ended 30 September 2007
Halogen Holdings Societe Anonyme
(Incorporated in Luxembourg. RC Number B39773)
Share code: HAL ISIN LU0216267913
Registered Office
6 rue Adolphe Fischer,
L-1520, Luxembourg
PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER
2007
The results for the year ended 30 September 2007 are attached.
On 13 August 2007 we were pleased to announce that our subsidiary, Halogen
Holdings P.L.C. ("Halogen plc") had invested GBP3 million of its cash resources
in Heartstone Inns Limited ("Heartstone"). Heartstone is the owner of a growing
chain of UK country pubs and will use the funds to finance the acquisition of
additional pubs. Typical pubs will have a ratio of food sales to drink sales of
approximately 60% to 40%. They will employ their own chefs, preparing high
quality pub food on the premises from fresh local ingredients and will serve a
selection of real ales and other premium drinks. Heartstone will normally own
the freehold of the pub and employ managers to run the pub on their behalf. To
ensure that pubs are readily accessible by the Heartstone management team, pubs
will generally be located within the region west of Reading, east of Exeter and
south of Warwick.
The first pub acquired by Heartstone was the Butchers Arms in Sheepscombe,
Gloucestershire and within six months it had won the award for Cotswold Country
Pub of the Year at the Cotswold Life magazine Cotswold Food and Drink Awards.
Heartstone also acquired The Cricketers in Shroton near Blandford Forum, Dorset
in April this year.
Following the fundraising, Heartstone acquired the Diggers Rest in Woodbury
Salterton near Exeter, Devon in September 2007 and in January 2008 it will
complete the acquisition of the Hare and Hounds at Putt`s Corner near Honiton,
Devon.
Heartstone has access to a strong pipeline of potential future acquisitions.
Our share of Heartstone`s results for the 7 weeks between acquisition and our
year end is a loss of GBP10,000. Heartstone management estimate that they need
to own between 6 and 7 pubs to be cash break even.
Heartstone is managed by two executive directors: Stuart Hawthorn and James
Birch who between them have 32 years of experience in the UK brewing and pubs
industry. Stuart and James own 4% of Heartstone. Heartstone has appointed
Andrew Haining as a non-executive Chairman and Robin Black as a non-executive
director. Andrew and Robin are the directors of Bfm Partners Limited, a
privately owned specialist fund management and investment company which owns 20%
of Heartstone, and have previously been directors of other leisure companies
including Malmaison Hotels and Cineworld. Heartstone has appointed to its Board
two of Halogen`s directors, Edward Beale and Lloyd Marshall.
At the same time as Halogen invested GBP3 million in Heartstone, others invested
approximately GBP468,000. Halogen`s interest in Heartstone is 76%, reducing to
61% on a fully diluted basis. Halogen plc holds 49.99% of the voting rights and
the balance of its interest is in non-voting shares.
Heartstone has banking facilities which will permit it to borrow up to 70% of
the value of the pubs acquired and, with equity of GBP4.0 million, this will
finance the acquisition of pubs up to a value of GBP13 million without the need
to raise additional equity.
Halogen has the option to invest a further GBP1 million in Heartstone by 9th
August 2008. To provide part of the funds to permit it to take up this option
and following shareholder approval at the Extraordinary General Meeting on 17
September 2007 (the "EGM"), shareholders were issued warrants on the basis of
one warrant for every three shares held. The warrants will be exercisable on 31
May 2008 at a price of GBP0.85 each, a discount of 51% to the current net asset
value. To raise additional funding to allow Halogen to invest further in
Heartstone as it grows, shareholders also approved at the EGM that for each
warrant exercised, warrantholders will be granted two new warrants exercisable
on 31 May 2010 at a price of GBP0.85.
The acquisition of Heartstone was funded in part from the sale on 1 March 2007
of our gold mining subsidiaries to Central African Gold plc for GBP2,321,000,
realising an exceptional profit on sale of GBP1,647,000. Part of the
consideration was in the form of 7.2 million shares in Central African Gold plc,
which we were not allowed to sell until September 2007. The bulk of those
shares were sold just before the year end, realising an exceptional loss of
GBP125,000 and sale proceeds of GBP373,000 were received in October. The
balance of those shares was marked down to their realisable value at 30th
September generating a further exceptional loss of GBP69,000, and has
subsequently been sold at that price.
Following this investment of GBP3 million in Heartstone, and assuming the
exercise of the option to subscribe an additional GBP1 million in Heartstone,
Halogen`s only significant asset will be its investment in Heartstone. Halogen
will work with the other shareholders in Heartstone to grow Heartstone and will
not have the resources to make any further investments until the 2010 warrants
are exercised.
At the EGM, shareholders also approved the setting up of a Halogen employee
benefit trust to incentivise group management and the endowment of that trust
with 156,948 shares, representing approximately 4% of the fully diluted share
capital of the Company.
Risk Factors
The success of the company is dependent on the success of its associate,
Heartstone. Heartstone is still dependent on a limited number of pubs, but is
intent on diversifying its exposure by acquiring additional pubs within its
target area of operation. A slowdown in UK economic activity could reduce
eating out and thus impact on the profitability of Heartstone`s pubs. To reduce
the impact of this risk, pubs are being acquired in areas where the effect of
any economic slowdown is anticipated to be less severe.
Directorate
Mr Barclay and Mr Jousse resigned as directors on 30 September 2007 and have
been replaced by Mr Beale and Mr L Marshall. I would like to thank Mr Barclay
and Mr Jousse for their many years of service through major changes in the
nature of the Group`s business and their contributions to the successful re-
organisation of the Group.
Year End
To align more closely with Heartstone`s accounting periods, shareholders will
asked at the AGM on 28 March 2008 to approve a resolution changing the Company`s
year end to 31 March. This means that the current accounting period, which
commenced on 1 October 2007, will be extended to end on 31 March 2009. If this
resolution is approved shareholders will be sent interim reports for the two
periods ending on 31 March 2008 and 30 September 2008 and the next statutory
accounts will be prepared as at 31 March 2009.
Outlook
We expect that Heartstone will become consistently profitable before the end of
the current financial year, assuming that it can continue to acquire suitable
pubs. As Heartstone`s objective is to develop a significant chain of managed
country pubs, its policy will be to re-invest all earnings and so no dividend is
forecast for at least three years. In the absence of any dividend income from
Heartstone, Halogen will not be paying a dividend in the near future.
David C. Marshall
Chairman
NOTICE OF MEETING
The Annual General Meeting will take place on Friday 28 March 2008 at 3.00 p.m.
at the registered office of the Company, 6 rue Adolphe Fischer, L-1520
Luxembourg.
Unaudited Consolidated Profit and Loss Account
FOR THE YEAR ENDED 30 SEPTEMBER 2007 2006
GBP000 GBP000
Operating costs (187) (168)
Operating loss before interest (187) (168)
and taxation
Net interest received 108 75
Exchange (losses)/gains (4) 19
Share of results of associate (10) -
Loss before exceptional items (93) (74)
and taxation
Exceptional items 1,317 -
Profit/(Loss) before taxation 1,224 (74)
Tax charge on ordinary (3) (6)
activities
Profit/(Loss) attributable to 1,221 (80)
shareholders and retained for
the year
Headline earnings calculation,
net of taxation
Profit/(Loss) per share (GB 65p (4)p
pence)
Exceptional item net of tax (GB (70)p -
pence)
Headline loss per share (GB (5)p (4)p
pence)
Unaudited Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30TH SEPTEMBER 2006
Ordinary Legal Exchange Retained Total
share reserve * reserve earnings
capital
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at start 1,090 213 215 524 2,042
of year
Exchange
differences on
translation of - - 6 (3) 3
the financial
statements and
net losses not
recognised in the
income statement
Net loss for the - - - (80) (80)
year
Balances at end 1,090 213 221 441 1,965
of year
FOR THE YEAR ENDED 30 SEPTEMBER 2007
Balance at start 1,090 213 221 441 1,965
of year
Exchange
differences on
translation of - - 46 (44) 2
the financial
statements and
net losses not
recognised in the
income statement
Shares issued 136 - - - 136
Released on - (104) - 104 -
disposal
Net profit for - - - 1,221 1,221
the year
Balances at end 1,226 109 267 1,722 3,324
of year
Luxembourg law requires that an appropriation of at least 5% of a Luxembourg
company`s own annual distributable profits be made to legal reserve until such
time as the reserve attains 10 % of its issued share capital. Distribution of
this reserve is restricted.
Unaudited Consolidated Balance Sheet
AT 30 SEPTEMBER 2007 2006
GBP000 GBP000
Assets
Non current assets
Investments 3,000 72
Current assets
Investment 178 -
Trade and other receivables 376 17
Cash and bank balances 26 1,924
580 1,941
Current liabilities
Accounts payable (falling due within one (256) (48)
year)
Net current assets 324 1,893
Total assets less current liabilities 3,324 1,965
Capital and reserves
Called up share capital 1,226 1,090
Legal reserves 109 213
Exchange reserve 267 221
Retained earnings 1,722 441
Shareholders` funds 3,324 1,965
Unaudited Consolidated Cash Flow Statement
FOR THE YEAR ENDED 30 SEPTEMBER 2007 2006
GBP000 GBP000
Cash flows from operating activities
Cash used by operations (343) (240)
Interest received 108 101
Taxation paid (3) (6)
Net cash outflows from operating activities (238) (145)
Investment activities
Acquisition of interest in associate (3,010) -
Net proceeds on disposal of subsidiary 2,213 -
Less shares in Central African Gold plc as (867)
part of proceeds
Net cash outflow from investment activities (1,664) -
Net decrease in funds (1,902) (145)
Net funds at start of year 1,924 2,066
Effect of foreign exchange rate changes 4 3
Net funds at end of year 26 1,924
Notes
1. The results for the year ended 30 September 2007 and the balance sheet at
that date, which are unaudited, have been prepared on the basis of accounting
policies adopted for the year ended 30 September 2006. The financial statements
comply with International Financial Reporting Standards.
2. Profit/(Loss) per share is based on the result for the year attributable to
members and the weighted number of shares in issue.
3. Capital expenditure during the year was equivalent to GBP Nil (2006 - GBP
Nil). At 30 September 2007, there were no outstanding capital commitments (2006
- Nil).
19 December 2007
Sponsor: Sasfin Capital
Date: 19/12/2007 16:00:01 Produced by the JSE SENS Department.
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