HEAVITREE BREWERY PLC

Earnings Release • Jun 28, 2023

National Storage Mechanism | Additional information

RNS Number : 2343E

Heavitree Brewery PLC

28 June 2023

The Heavitree Brewery PLC

Trood Lane

Matford

Exeter EX2 8YP

Date: 28 June 2023

Contact:        Graham Crocker - Managing Director - 01392 217733

Nicola McLean - Company Secretary - 01392 217733

Patrick Castle /Anita Ghanekar - Shore Capital - 0207 408 4090

Following a meeting by a duly authorised committee of the Board of Directors held today, 28 June 2023, the Directors announce the interim results for the six months ended 30 April 2023.

Chairman's statement

I reported at the 2022 year-end that the Company had returned to a performance level on a par with 2019 before the impact of the pandemic was felt.  Despite this, I warned that we had much to be cautious about in the new trading year and I had concerns about how the cost of doing business exacerbated by hikes in energy, food and labour costs might affect our operators and how the cost-of-living increases might affect how our customers would support our pubs.  Fortunately, these worries have not materialised as feared and I am pleased to report that we are hearing from our tenants that top line trading has held up well during the first half of this financial year and continues to do so; in turn, I can report that the Company has returned satisfactory numbers at the half-year.

Results

Turnover for the Group at the half-year was £3,326,000 (2022: £3,290,000).  The turnover figure was reduced by £61,000 due to the IFRS 16 Lease Accounting unwind.  I have explained the mechanics of this accounting standard in previous statements.

The Group has returned an operating profit of £523,000 (2022: an operating profit of £522,000) at the half-year.  Profit before tax is £947,000 after a book profit of £503,000 was realised from the sale of property in accordance with our disposal programme of non-core assets.  This corresponds to a profit before tax at the 2022 half-year of £1,063,000 which included a book profit of £601,000 from the sale of property in that period.

Dividend

As reported, the Directors were delighted to reinstate the payment of a dividend at the 2022 year-end.  The Directors recommend the reinstatement of an interim dividend at a rate of 2p per Ordinary and 'A' Ordinary share to those shareholders on the register on 14th July 2023 payable on 4th August 2023.   The payment of future dividends in these times of uncertainty remains under continual review.

Property

The Jolly Abbot in Newton Abbot has been sold during this period under review.  Also, a cottage in Honiton Clyst and a second one in Barnstaple have been sold, together with a small parcel of land in Christow.

A set of plans to rebuild on the site of the Jolly Sailor in East Ogwell which we lost to a devastating fire more than two years ago have been submitted as a pre-application to Teignbridge District Council and I hope to report further on this matter at the year-end.

The development of the new accommodation block at the Ley Arms in Kenn continues at pace and we remain on target to complete this project in September 2023.  There is much interest in the addition of seven bedrooms to this flourishing pub.

Prospects

The period of consolidation has continued and although the Board remains cautious about the head winds facing our sector, the half-year results show the Company is back to generating cash through a sustainable operating profit which gives the Directors the confidence to reinstate an interim dividend.

N H P TUCKER

Chairman

Group income statement (unaudited)

For the six months ended 30 April 2023

		6 months to 30 April 2023	6 months to 30 April 2022	Audited 12 months to 31 October 2022
	Note	£' 000	£' 000	£' 000
Revenue		3,326	3,290	7,280
Change in stocks		-	-	-
Other operating income		103	110	211
Purchase of inventories		(1,271)	(1,312)	(2,980)
Staff costs		(669)	(714)	(1,477)
Depreciation of property, plant and equipment		(98)	(98)	(228)
Other operating charges		(868)	(754)	(1,384)
		(2,803)	(2,768)	(5,858)
Group operating profit		523	522	1,422
Profit on sale of property, plant and equipment		503	601	968
Group Profit before finance costs and taxation		1,026	1,123	2,390
Finance income		-	-	-
Finance costs		(79)	(60)	(117)
		(79)	(60)	(117)
Profit/(loss) before taxation		947	1,063	2,273
Tax expense		(213)	(208)	(306)
Profit for the period		734	855	1,967
Earnings per share - basic - diluted	4	15.3p 15.3p	15.4p 15.4p	40.7p  40.7p

Group statement of comprehensive income (unaudited)

For the six months ended 30 April 2023

		6 months to 30 April 2023	6 months to 30 April 2022	Audited    12months     to  31 October       2022
		£' 000	£' 000	£' 000
Profit for the period		734	855	1,967
Items that will not be reclassified to profit or loss Fair value adjustment on investment in equity Actuarial (losses)/gains on defined benefit pension plans Tax relating to items that will not be reclassified		- -	- -	- -
		-	-	-
Items that may be reclassified to profit or loss Exchange rate differences on translation of subsidiary undertaking Tax relating to items that may be reclassified		- - -	9 - -	1 - -
Other comprehensive income/ (loss) for the year, net of tax		734	864	1,968
Total comprehensive income/ (loss) attributable to: Equity holders of the parent		734	864	1,968

Group balance sheet (unaudited)

at 30 April 2023		30 April 2023 £' 000	30 April 2022 £' 000	Audited 31 October 2022 £'000
Non-current assets
Property, plant and equipment		18,291	17,798	17,864
Financial assets		34	34	34
Deferred tax asset		16	16	16
		18,341	17,848	17,914
Current assets
Trade and other receivables		2,146	1,996	1,631
Inventories		10	10	10
Cash and short-term deposits		566	35	788
		2,722	2,041	2,429
Assets held for sale		125	371	180
Total assets		21,188	20,260	20,523
Current liabilities
Trade and other payables		(1,296)	(1,274)	(1,133)
Financial liabilities		(35)	(1,051)	(229)
Income tax payable		(552)	(318)	(339)
		(1,883)	(2,643)	(1,701)
Non-current liabilities
Other payables		(299)	(325)	(326)
Financial liabilities		(2,126)	(2,187)	(2,195)
Deferred tax liabilities		(784)	(734)	(784)
Defined benefit pension plan		(92)	(92)	(92)
		(3,301)	(3,338)	(3,397)
Total liabilities		(5,184)	(5,981)	(5,098)
Net assets		16,004	14,279	15,425
Capital and reserves
Equity share capital		251	264	264
Capital redemption reserve		686	673	673
Own share reserve		(946)	(1,579)	(1,537)
Fair value adjustments reserve		10	10	10
Currency translation		14	22	14
Retained earnings		15,989	14,889	16,001
Total equity		16,004	14,279	15,425

Dividends

The Directors  recommend a dividend of 2.00p to be paid at the half-year. 

Group statement of cash flows (unaudited)

for the six months ended 30 April 2023                                                           

		6 months to 30 April 2023	6 months to 30 April 2022	Audited 12months  to 31 October 2022
Operating activities		£' 000	£' 000	£' 000
# Profit/(loss) for the period		734	855	1,967
Tax expense		213	208	306
Net finance costs		78	60	117
(Profit) on disposal of non-current assets and assets held for sale		(503)	(601)	(968)
Depreciation and impairment of property, plant and equipment		98	98	228
Exchange gain on cash, liquid resources and loan		-	-	-
(Increase)/decrease in trade and other receivables		(452)	(80)	264
(Decrease)/Increase in trade and other payables Impairment of assets		(38) -	274 -	157 -
Cash generated from operations		(130)	814	2,071
Income taxes paid		-	-	(24)
Interest paid		(78)	(60)	(117)
Net cash  (outflow)/inflow from operating activities		(52)	754	1,930
Investing activities
Interest received		-	-	-
Proceeds from sale of property, plant and equipment and assets held for sale		564	1,402	2,038
Payments to acquire property, plant and equipment		(577)	(153)	(425)
Net cash (outflow)/inflow from investing activities		(13)	1,249	1,613
Financing activities
Preference dividend paid		(1)	(1)	(1)
Equity dividends paid		(171)	-	-
Consideration received by EBT on sale of shares		636	-	42
Consideration paid by EBT on purchase of shares		(45)	(50)	(50)
Own Share buyback		(575)	-	-
Capital element of finance lease rental payments		(27)	(4)	(34)
Repayment of bank borrowings		(100)	(1,892)	(1,998)
Mortgage Receipts		22	21	41
Net cash outflow from financing activities		(261)	(1,926)	(2,000)
(Decrease)/increase in cash and cash equivalents		(222)	77	1,543
Cash and cash equivalents at the beginning of the period		788	(755)	(755)
Cash and cash equivalents at the period end		566	(678)	788
Group statement of cash flows (unaudited) (continued) for the six months ended 30 April 2023
Represented by:
Cash and short term deposits		566	35	736
Overdraft		-	(713)	807
		566	(678)	1,543

Group reconciliation of movements in equity (unaudited)

6 months to	Equity	Capital	Own	Fair
30 April 2023	share	redemption	share	value	Currency	Retained	Total
	capital	reserve	reserve	adjustment	translation	earnings	equity
	£' 000	£' 000	£' 000	£' 000	£' 000	£' 000	£' 000
At 1November 2022	264	673	(1,537)	10	14	16,001	15,425
Profit for the period	-	-	-	-	-	734	734
Other comprehensive income for the period, net of income tax	-	-	-	-	-	-	-
Total     comprehensive income for the period	-	-	-	-	-	734	734
Consideration received by EBT on sale of shares	-	-	61	-	-	-	61
Consideration paid by EBT on purchase of shares	-	-	(45)	-	-	-	(45)
Buy back and cancellation of own shares	(13)	13	575	-	-	(575)	-
Loss by EBT on sale of shares	-	-	-	-	-	-	-
Equity dividend paid	-	-	-	-	-	(171)	(171)
At 30 April 2023	251	686	(946)	10	14	15,989	16,004

Group reconciliation of movements in equity (unaudited) - continued

6 months to	Equity	Capital	Own	Fair
30 April 2022	share	redemption	share	value	Currency	Retained	Total
	capital	reserve	reserve	adjustment	Translation	earnings	equity
	£' 000	£' 000	£' 000	£' 000	£' 000	£' 000	£' 000
At 1November 2021	264	673	(1,529)	10	13	14,034	13,465
Profit for the period	-	-	-	-	-	855	855
Other comprehensive income for the period, net of income tax	-	-	-	-	9	-	9
Total     comprehensive income for the period	-	-	-	-	9	855	864
Consideration received by EBT on sale of shares	-	-	-	-	-	-	-
Consideration paid by EBT on purchase of shares	-	-	(50)	-	-	-	(50)
Loss by EBT on sale of shares	-	-	-	-	-	-	-
Equity dividend paid	-	-	-	-	-	-	-
At 30 April 2022	264	673	(1,579)	10	22	14,889	14,279

Group reconciliation of movements in equity (unaudited) - continued

12 months to 31 October 2022 Audited	Equity share capital £000	Capital redemption reserve £000	Own share reserves £000	Fair value adjustment reserve £000	Currency Translation £000	Retained earnings £000	Total equity £000
At 1 November 2021	264	673	(1,529)	10	13	14,034	13,465
Profit for the year	-	-	-	-	-	1,967	1,967
Other comprehensive income for the year net of income tax	-	-	-	-	1	-	1
Total comprehensive
income for the year	-	-	-	-	1	1,967	1,968
Consideration received by EBT on sale of shares	-	-	42	-	-	-	42
Consideration paid by
EBT on purchase of shares	-	-	(50)	-	-	-	(50)
Loss by EBT on sale of shares	-	-	-	-	-	-	-
Equity dividends paid	-	-	-	-	-	-	-
At 31 October 2022	264	673	(1,537)	10	14	16,001	15,425

Equity share capital

The balance classified as share capital includes the total net proceeds (both nominal value and share premium) on issue of the Company's equity share capital, comprising 5p Ordinary and 'A' Limited Voting Ordinary Shares.

On the 7th of December 2022 a stock exchange announcement was made by the Group regarding the following share transactions.

Purchase of own shares from the Company's Employee Benefit Trust

-           150,000 Ordinary Shares of 5p each at £2.90 (mid-market price on 6/12/22) per share representing 7.51% of the total number of Ordinary Shares in issue.

-           100,000 'A' Limited Voting Shares of 5p each at £1.40 (mid-market price on 6/12/22) per share representing 3.04% of the total number of 'A' Limited Voting Shares in issue.

The shares purchased by the Company pursuant to the Share Purchase have been cancelled.

Own share reserve

Own shares reserve represents the cost of The Heavitree Brewery PLC shares purchased in the market and held by The Heavitree Brewery PLC Employee Benefit Trust ('EBT'). Shares held at half-year 123,276.

Notes to the interim results

1.  Basis of preparation

These unaudited interim condensed and consolidated financial statements have been prepared in accordance with IAS34 "interim financial reporting" and do not constitute statutory accounts as defined in section 434 of the Companies Act 2006.  They have been prepared on the basis of the accounting policies that were complied with in the annual financial statements for the year ended 31 October 2022. The accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as adopted by the United Kingdom.

These unaudited financial statements were approved and authorised for issue by a duly appointed and authorised committee of the Board of Directors on 28 June 2023.

2. Going concern

The impact of rising energy, interest rates and food costs continues to hit the industry , all of these factors were taken into consideration when  forecasting for the current financial year, while we have exceeded expectations the Board has continued to take these factors into consideration when reviewing forecasts in order to minimise any impact these may have on the second half of the trading year. The Group remains well within its forecasts to April 2023 with the full £3M overdraft available the term loan has been decreased in the year by £100k. The Board continues to focus attention on the long-term trading position of the Group. The acceleration of the Group's programme of non-core asset sales is continuing and in line with targets set, achieving £458k of sales within the first six months of the financial year. The current trading performance of the Group also shows that it will be able to operate within the level of its facilities for the foreseeable future. With the value in the Estate being realised over time and with the support from the bank there are no material uncertainties. For this reason, the Group continues to adopt the going concern basis in preparing its financial statements.

3. Key Estimates

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below:

Impairment of assets

The Directors assess impairment of assets at each reporting date on a property by property basis. The Directors take into consideration trade performance during the year and open market value as to whether there is an indication that an asset may be permanently impaired.  When necessary external valuations are carried out. Within this trading period the Directors conclude that there were no impairments. 

4.  Basic and diluted earnings per share

The calculation of basic earnings per ordinary share is based on earnings of £734,000 (2022: £855,000), being profit after taxation for the period, and on 4,794,270 (2022: 4,818,652) shares being the weighted average number of Ordinary and 'A' Limited Voting Ordinary Shares in issue during the period after excluding the shares owned by The Heavitree Brewery PLC Employee Benefits Trust and those shares under option pursuant to the Employee Share Option Scheme. Employee share options could potentially dilute basic earnings per share in the future but are not included in the interim calculation of dilutive earnings per share because they are antidilutive for the period presented. The Ordinary Shares and the 'A' Limited Voting Ordinary Shares have equal dividend rights and therefore no separate calculation of earnings per share for the different classes has been given.

5.  Segment information

Primary reporting format - Business segments

The primary segmental reporting format is determined to be business segments as the Group's risks and rates of return are affected predominantly by differences in the products and services provided.

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.

6.  Interim report

Copies of this announcement are available from the Company at Trood Lane, Matford, Exeter EX2 8YP. The Company's interim report for the six months ended 30 April 2023 has been posted to shareholders today and will be available on our website at www.heavitreebrewery.co.uk.

Ends.

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