HEAVITREE BREWERY PLC

Earnings Release • Feb 13, 2020

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RNS Number : 9574C

Heavitree Brewery PLC

13 February 2020

The Heavitree Brewery PLC

Trood Lane

Matford

Exeter EX2 8YP

Date:                13 February 2020

Contact:           Graham Crocker - Managing Director - 01392 217733

Nicola McLean - Company Secretary - 01392 217733

Patrick Castle /Anita Ghanekar - Shore Capital - 0207 408 4052

Following a Board Meeting held today, 13 February 2020, the Directors announce the preliminary statement of results for the year ended 31 October 2019.

ISIN: GB0004182720 for 'A' Limited Voting Ordinary Shares

ISIN: GB0004182506 for Ordinary Shares

Chairman's statement

Although Turnover for the Group has decreased by £86,000 to £7,528,000, I am pleased to report that Group Operating Profit has increased by £207,000 to £1,839,000.  The drop in Turnover has, in most part, been as a result of rents not being received at two houses which are being operated by external management companies while new tenants are being sought.  These houses are The Lysley Arms in Pewsham, near Chippenham and The Traveller's Rest in Whitestone, near Exeter. A new Tenant has now been found for The Traveller's Rest.  

The increase in Group Operating Profit has been aided by a reduction in the bad debt provision of £68,000 following another year of efficient credit control. There has also been a reduction in Superannuation costs against the previous year of £86,000.

Results

Group Turnover decreased by £86,000 to £7,528,000.  Group Operating Profit has increased by £207,000 to £1,839,000, an increase of 12.68% on the previous year.

Heavitree Inns remained dormant throughout the year.

Heavitree Inc. generated an operating profit of £30,000 following the sale of a small parcel of development land during the year under review (2018 - £12,000).

Dividend

The Directors recommend a final dividend of 4.25p per Ordinary and 'A' Limited Voting Ordinary Share (2018 - 4.25p) making a total for the year of 7.925p (2018 - 7.925p).  The dividend will be paid on 17 April 2020, subject to shareholder approval at the Annual General Meeting on 15 April 2020, to those shareholders on the Register at 20 March 2020.

Sale of Property

Since the end of the financial year The Maltsters Arms in Harbertonford and the adjoining cottage, Bridge House, and also Rose Cottage in Strete have been marketed for sale. The Maltsters Arms has been closed since September 2018 and is subject to an Asset of Community Value listing. I hope to report further on these properties at the half-year.

Capital Investments

Listed Building consent and Planning Permission has been granted at The Ley Arms in Kenn to demolish the function room area and build a block of eight bedrooms to allow for an offer of bed and breakfast.  This is a wonderful house being traded exceptionally well by our tenant Karen Bayliss.  The addition of bedrooms will obviously compliment the quality offer at this house and contractors' quotes for the project are currently being sought.

Corporate Governance

The Board adopted the Corporate Governance Code of the Quoted Companies Alliance in September 2018 when this became a requirement under AIM Rules. I, and the other Members of our Board, are collectively accountable to you, the shareholders for ensuring good corporate governance. My specific role and responsibility as Chairman is to make sure that all aspects of corporate governance are covered and adhered to. Historically this Company has always strived to conduct business responsibly to the benefit of all stakeholders. The Code gives the Directors a structure to help them to deliver good governance to all shareholders and, in turn, to all our tenants and employees.

Personnel

It was announced to the London Stock Exchange on 29th August 2019 that Chris Bush had been appointed to the Board as an Independent Non-Executive Director and it gave me great pleasure at the time to extend my personal welcome.  He commenced his role with us on 1st September 2019.  Chris is an Institute of Chartered Accountants in England and Wales professional and he has many years' experience in leadership roles within audit practice.  He also fills the Independent Non-Executive role required by our QCA Corporate Governance Code with specific responsibility for Corporate Governance and Audit oversight.

Pension Scheme

The Company continues to operate its Final Salary Pension Scheme for retired Members and their dependents.  As I reported last year the final three deferred Members transferred out of the Scheme during the previous financial year. Since then, and following the High Court's ruling in October 2018 that all Guaranteed Minimum Pension (GMP) benefits in UK pension plans must be equalised for male and female members, the Scheme's actuary has been working on establishing the GMP liability to the Scheme. This process is not yet complete but as at 31 October 2019 the liability has been estimated at £52,000 and this has been accrued in the financial statements for the year under review.

Repurchase of shares

The Company did not repurchase any of its own shares during the year under review, but the Directors intend to seek shareholder approval at the forthcoming Annual General Meeting for the continuing authority to do so.

Outlook

I am pleased to report that since the year end our expiring banking facilities with Barclays, with whom we have enjoyed an excellent relationship and who have provided us with facilities for nearly 40 years, have been revised and renewed for a further term of five years.

After the prolonged period of political uncertainty endured by business and the country as a whole. The hope has to be that the result of the December General Election will deliver some much needed stability. While we await this and monitor the effects of the departure from the European Union, the Directors feel it prudent to leave the final Dividend unchanged from the previous year.

N H P TUCKER

Chairman

13 February 2020

Group income statement

for the year ended 31 October 2019

	Notes	Total 2019 £000	Total 2018 £000
Revenue		7,528	7,614
Other operating income		302	279
Purchase of inventories		(3,100)	(3,109)
Staff costs		(1,385)	(1,407)
Depreciation of property, plant and equipment		(222)	(235)
Other operating charges		(1,284)	(1,510)
		(5,689)	(5,982)
Group operating profit		1,839	1,632
Profit on sale of property plant and equipment		185	824
Group profit before finance costs and taxation		2,042	2,456
Finance income		4	5
Finance costs		(184)	(175)
Other finance costs - pensions		-	(35)
		(180)	(205)
Profit before taxation		1,844	2,251
Tax expense		(313)	(324)
Profit for the year attributable to equity holders of the parent		1,531	1,927
Basic earnings per share	2	32.0p	39.6p
Diluted earnings per share	2	32.0p	39.6p

Group statement of comprehensive income

for the year ended 31 October 2019

	2019 £000	2018 £000
Profit for the year	1,531	1,927
Items that will not be reclassified to profit or loss
Fair value adjustment on investment in equity                                    Actuarial (losses) on defined benefit scheme	(6) -	(4)     (248)
Tax relating to items that will not be reclassified	-	42
	(6)	(210)
Items that may be reclassified to profit or loss
Exchange rate differences on translation of subsidiary undertaking	2	(2)
	2	(2)
Other comprehensive income for the year, net of tax	1,527	1,715
Total comprehensive income attributable to: Equity holders of the parent	1,527	1,715

Group balance sheet

at 31 October 2019

		2019 £000		2018 £000
Non-current assets
Property, plant and equipment		17,692		17,812
Investment property		1,485		1,094
		19,177		18,906
Financial assets		41		47
Deferred tax asset		16		38
		19,234		18,991
Current assets
Inventories		10		10
Trade and other receivables		1,344		1,292
Cash and cash equivalents		51		44
		1,405		1,346
Assets held for sale		-		62
Total assets		20,639		20,399
Current liabilities
Trade and other payables		(953)		(1,078)
Financial liabilities		(6,087)		(818)
Income tax payable		(231)		(131)
		(7,271)		(2,027)
Non-current liabilities
Other payables		(284)		(311)
Financial liabilities		(37)		(6,067)
Deferred tax liabilities		(394)		(300)
Defined benefit pension plan deficit		(92)		(39)
		(807)		(6,717)
Total liabilities		(8,078)		(8,744)
Net assets		12,561		11,655
Capital and reserves
Equity share capital		264		264
Capital redemption reserve		673		673
Treasury shares		(1,562)		(1,317)
Fair value adjustments reserve		17		23
Currency translation		17		15
Retained earnings		13,152		11,997
Total equity		12,561		11,655

Group statement of cash flows

for the year ended 31 October 2019

		2019 £000		2018 £000
Operating activities
Profit for the year		1,531		1,927
Tax expense		313		324
Net finance costs		180		206
Profit on disposal of non-current assets and assets held for sale		(185)		(824)
Depreciation and impairment of property, plant and equipment Exchange gain on cash, liquid resources and loans		222 -		235 5
Difference between pension contributions paid and amounts
recognised in the income statement		52		(1,544)
(Increase)/decrease in trade and other receivables		(72)		284
(Decrease)/increase in trade and other payables		(145)		380
Cash generated from operations		1,896		993
Income taxes paid		(97)		(188)
Interest paid		(184)		(176)
Net cash inflow from operating activities		1,615		629
Investing activities
Interest received		4		6
Proceeds from sale of property, plant and equipment and assets held for sale		278		1,454
Payments to acquire property, plant and equipment		(506)		(777)
Net cash (outflow)/inflow from investing activities		(224)		683
Financing activities
Preference dividend paid		(1)		(1)
Equity dividends paid		(379)		(373)
Consideration received by EBT on sale of shares		56		54
Consideration paid by EBT on purchase of shares Capital element of finance lease rental payments		(298) (15)		(145) (68)
Net cash outflow from financing activities		(637)		(533)
Increase in cash and cash equivalents		754		779
Cash and cash equivalents at the beginning of the year		(757)		(1,536)
Cash and cash equivalents at the year end		(3)		(757)

Group statement of changes in equity

for the year ended 31 October 2019

	Equity share capital £000	Capital redemption reserve £000	Treasury shares £000	Fair value adjustment reserve £000	Currency translation £000	Retained earnings £000	Total equity £000
At 1 November 2017	264	673	(1,223)	27	17	10,646	10,404
Profit for the year	-	-	-	-	-	1,927	1,927
Other comprehensive
income for the year net of income tax	-	-	-	(4)	(2)	(206)	(212)
Total comprehensive
income for the year	-	-	-	(4)	(2)	1,721	1,715
Consideration received
by EBT on sale of shares	-	-	54	-	-	-	54
Consideration paid by
EBT on purchase of shares	-	-	(145)	-	-	-	(145)
Loss by EBT on sale
of shares	-	-	(3)	-	-	3	-
Equity dividends paid	-	-	-	-	-	(373)	(373)
At 31 October 2018	264	673	(1,317)	23	15	11,997	11,655

	Equity share capital £000	Capital redemption reserve £000	Treasury shares £000	Fair value adjustment reserve £000	Currency translation £000	Retained earnings £000	Total equity £000
At 1 November 2018	264	673	(1,317)	23	15	11,997	11,655
Profit for the year	-	-	-	-	-	1,531	1,531
Other comprehensive
income for the year net of income tax	-	-	-	(6)	2	-	(4)
Total comprehensive
income for the year	-	-	-	(6)	2	1,531	1,527
Consideration received
by EBT on sale of shares	-	-	56	-	-	-	56
Consideration paid by
EBT on purchase of shares	-	-	(298)	-	-	-	(298)
Loss by EBT on sale
of shares	-	-	(3)	-	-	3	-
Equity dividends paid	-	-	-	-	-	(379)	(379)
At 31 October 2019	264	673	(1,562)	17	17	13,152	12,561

Equity share capital

The balance classified as share capital includes the total net proceeds (nominal amount only) arising or deemed to arise on the issue of the Company's equity share capital, comprising Ordinary Shares of 5p each and 'A' Limited Voting Ordinary Shares of 5p each.

Capital redemption reserve

The capital redemption reserve arises on the re-purchase and cancellation by the Company of Ordinary Shares.

Treasury shares

Treasury shares represent the cost of The Heavitree Brewery PLC shares purchased in the market and held by The Heavitree Brewery PLC Employee Benefits Trust and Employee Share Option Scheme ('EBT').

At 31 October 2019 the Group held 179,053 Ordinary Shares and 300,002 'A' Limited Voting Ordinary Shares (2018: 146,082 Ordinary Shares and 262,885 'A' Limited Voting Ordinary Shares) of its own shares. During the year there were purchases of 32,971 Ordinary Shares and 62,737 'A 'Limited Voting ordinary Shares  and sales of 25,620 'A; Limited Voting Ordinary Shares.

Fair value adjustments reserve

The fair value adjustments reserve is used to record differences in the year on year fair value of the investment classified as fair value through other comprehensive income.

Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

Notes to the preliminary announcement

1.  Basis of preparation

These figures do not constitute full accounts within the meaning of Section 396 of the Companies Act 2006. They have been extracted from the statutory financial statements for the year ended 31 October 2019. The statutory financial statements have not yet been delivered to the Registrar of Companies.

The auditors, PKF Francis Clark, have reported on the accounts for the years ended 31 October 2019 and 31 October 2018. Their audit reports in both years were unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006 in respect of those accounts.

The financial information in this statement has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union.  The accounting policies have been consistently applied and are described in full in the statutory financial statements for the year ended 31 October 2019, which are expected to be mailed to shareholders on 10 March 2020.  The financial statements will also be available on the Group's website www.heavitreebrewery.co.uk.

The Directors are of the opinion that the Group has adequate resources to continue in operational existence for the foreseeable future and continue to adopt the going concern basis in preparing the financial statements.

2.  Earnings per share

Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the parent by the weighted average number of Ordinary shares and 'A' Limited Voting Ordinary shares outstanding during the year.

The following reflects the income and shares data used in the basic and diluted earnings per share

Computation:

	2019 £000	2018 £000
Profit for the year	1,531	1,927
	2019 No. (000)	2018 No. (000)
Basic weighted average number of shares (excluding treasury shares)	4,786	4,866

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements.

3. Dividends paid and proposed

	2019 £000	2018 £000
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2018: 4.25p (2017: 4.00p)	224	211
First dividend for 2019: 3.675p (2018: 3.675p)	194	198
Less dividend on shares held within employee share schemes	(39)	(36)
Dividends paid	379	373
Proposed for approval at AGM
(not recognised as a liability as at 31 October)
Final dividend for 2019 4.25p (2018: 4.25p)    Cumulative preference dividends	224 1	224 1

4.  Segment information

Primary reporting format - business segments

During the year the Group operated in one business segment - leased estate.

Leased estate represents properties which are leased to tenants to operate independently from the Group, under tied and free of tie tenancies.

Secondary reporting format - geographical segments

The following tables present revenue, expenditure and certain asset information regarding the Group's geographical segments for the years ended 31 October 2019 and 2018. Revenue is based on the geographical location of customers and assets are based on the geographical location of the asset.

Segment information
Year ended 31 October 2019	UK £000	United States £000	Total £000
Revenue
Sales to external customers	7,528	-	7,528
Other segment information
Segment assets	20,596	43	20,639
Total Assets	20,596	43	20,639
Capital expenditure
Property, plant and equipment	505	-	505
Year ended 31 October 2018	UK £000	United States £000	Total £000
Revenue
Sales to external customers	7,614	-	7,614
Other segment information
Segment assets
	20,356	43	20,399
Total Assets	20,356	43	20,399
Capital expenditure
Property, plant and equipment	839	-	839

5. General information

The 2019 Annual Report and Financial Statements will be published and posted to shareholders on 10th March 2020 Further copies may be obtained by contacting the Company Secretary at The Heavitree Brewery PLC, Trood Lane, Matford, Exeter EX2 8YP. The 2019 Annual Report and Financial Statements will also be available on the Company's website at http://www.heavitreebrewery.co.uk/financial/

The Annual General Meeting will be held at the Registered Office on 15 April 2020 at 11.30am.

Ends. 

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