HEAVITREE BREWERY PLC

Interim / Quarterly Report • Jun 26, 2019

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RNS Number : 4743D

Heavitree Brewery PLC

26 June 2019

The Heavitree Brewery PLC

Trood Lane

Matford

Exeter EX2 8YP

Date:               26 June 2019

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, 26 June 2019, the Directors announce the interim results for the six months ended 30 April 2019.

Chairman's statement

Turnover for the period under review has increased by £29,000 (0.9%) against the corresponding period last year.  However there has been a reduction in operating profit of 1.1% to £624,000 (2018: £631,000).  This has been as a result of increased costs associated with external management services at three houses which were traded over a period before new tenants were signed up.  In turn, there has been an impact on our rental revenue (a reduction of 2.6% on the previous year) during this period between tenants.

Results

The Group has returned an operating profit of £624,000 (2018: 631,000). After allowing for finance costs of £92,000 (2018: £132,000) and book profit mostly generated by the sale of one unlicensed property (£173,000), the Group Profit before taxation is £705,000 (2018: £1,329,000).  Although this reflects a significant decrease on the previous year it needs to be remembered that 2018's half year Group Profit contained a book profit of £830,000 as a result of the sale of four properties in that period.

Dividend

The Directors have resolved to pay an unchanged interim dividend of 3.675p per Ordinary Share and 'A' Limited Voting Ordinary Share (2018: 3.675p).  The dividend will be paid on 2 August 2019 to shareholders on the register at the close of business on 19 July 2019.

Property

A house on the old St.Loye's Hotel site in Exeter has been sold having completed on 19 February 2019.  Following the sale of a small block of flats on the site last year, the sale of this last house completes the sale of the properties developed on the garden area of the pub in 2012.

The second phase of our refurbishment of the Church House Inn in Stokenham comprising of a new bar, a small extension and a new fire escape for bed and breakfast rooms has been completed.  We look forward to a healthy contribution from this house over the summer months.  

Prospects

I am pleased with this steady performance for the half year with the Company trading in line with last year and I feel, despite the continuing political uncertainty, we are well-positioned going into the second half of the year.

N H P TUCKER

Chairman

Group income statement (unaudited)

For the six months ended 30 April 2019

		6 months to 30 April 2019	6 months to 30 April 2018	Audited 12 months to 31 October 2018
	Note	£' 000	£' 000	£' 000
Revenue		3,427	3,398	7,614
Change in stocks		-	-	-
Other operating income		131	139	279
Purchase of inventories		(1,362)	(1,342)	(3,109)
Staff costs		(706)	(697)	(1,407)
Depreciation of property, plant and equipment		(111)	(115)	(235)
Other operating charges		(755)	(752)	(1,510)
		(2,803)	(2,767)	(5,982)
Group operating profit		624	631	1,632
Profit on sale of property, plant and equipment		173	830	824
Movements in valuation of estate and related assets		-	-	-
Group profit before finance costs and taxation		797	1,461	2,456
Finance income		2	2	5
Finance costs		(94)	(93)	(175)
Other finance costs-pensions		-	(41)	(35)
		(92)	(132)	(205)
Profit before taxation		705	1,329	2,251
Tax expense		(141)	(189)	(324)
Profit for the period		564	1,140	1,927
Earnings per share - basic - diluted	2	11.8p 11.8p	23.4p 23.4p	39.6p 39.6p

Group statement of comprehensive income (unaudited)

For the six months ended 30 April 2019

		6 months to 30 April 2019	6 months to 30 April 2018	Audited    12months     to  31 October       2018
		£' 000	£' 000	£' 000
Profit for the period		564	1,140	1,927
Items that will not be reclassified to profit or loss Actuarial (losses)/gains on defined benefit pension plans Tax relating to items that will not be reclassified		-              - -	(254)              99 (155)	(248)              42 (206)
Items that may be reclassified to profit or loss Fair value adjustment Exchange rate differences on translation of subsidiary undertaking Tax relating to items that may be reclassified		(6) (5)               - (11)	(5) (6)                   - (11)	(4) (2)                   - (6)
Other comprehensive income for the year, net of tax		553	974	1,715
Total comprehensive income attributable to: Equity holders of the parent		553	974	1,715

Dividends

The Directors declare an interim dividend of 3.675p per share (2018 - 3.675p) on the Ordinary and 'A' Limited Voting Ordinary Shares. This dividend will be paid on 02 August 2019 to shareholders on the register at 19 July 2019.

Group balance sheet (unaudited)

at 30 April 2019		30 April 2019 £' 000	30 April 2018 £' 000	Audited 31 October 2018 £'000
Non-current assets
Property, plant and equipment		19,064	18,163	18,906
Financial assets		42	47	47
Deferred tax asset		38	230	38
		19,144	18,440	18,991
Current assets
Trade and other receivables		1,322	1,861	1,292
Inventories		10	10	10
Cash and short-term deposits		61	113	44
		1,393	1,984	1,346
Assets held for sale		-	328	62
Total assets		20,537	20,752	20,399
Current liabilities
Trade and other payables		(918)	(747)	(1,078)
Financial liabilities		(977)	(529)	(818)
Income tax payable		(268)	(281)	(131)
		(2,163)	(1,557)	(2,027)
Non-current liabilities
Other payables		(274)	(319)	(311)
Financial liabilities		(6,011)	(6,011)	(6,067)
Deferred tax liabilities		(300)	(345)	(300)
Defined benefit pension plan		(40)	(1,352)	(39)
		(6,625)	(8,027)	(6,717)
Total liabilities		(8,788)	(9,584)	(8,744)
Net assets		11,749	11,168	11,655
Capital and reserves
Equity share capital		264	264	264
Capital redemption reserve		673	673	673
Treasury shares		(1,573)	(1,240)	(1,317)
Fair value adjustments reserve		17	22	23
Currency translation		10	11	15
Retained earnings		12,358	11,438	11,997
Total equity		11,749	11,168	11,655

Group statement of cash flows (unaudited)

for the six months ended 30 April 2019                                                           

		6 months to 30 April 2019	6 months to 30 April 2018	Audited 12months  to 31 October 2018
Operating activities		£' 000	£' 000	£' 000
# Profit for the period		564	1,140	1,927
Tax expense		141	189	324
Net finance costs		92	132	206
(Profit) on disposal of non-current assets and assets held for sale		(173)	(830)	(824)
Depreciation and impairment of property, plant and equipment		165	115	235
Exchange gain on cash, liquid resources and loan		5	5	5
Difference between pension contributions paid and recognised in the income statement		-	(240)	(1,544)
(Increase)/decrease in trade and other receivables		(30)	(131)	284
(Decrease)/increase in trade and other payables		(199)	(60)	380
Cash generated from operations		565	320	993
Income taxes paid		5	(8)	(188)
Interest paid		(94)	(93)	(176)
Net cash inflow from operating activities		466	219	629
Investing activities
Interest received		2	2	6
Proceeds from sale of property, plant and equipment and assets held for sale		229	1,441	1,454
Payments to acquire property, plant and equipment		(323)	(249)	(777)
Net cash(outflow)/ inflow from investing activities		(92)	1,194	683
Financing activities
Preference dividend paid		(1)	(1)	(1)
Equity dividends paid		(203)	(211)	(373)
Consideration received by EBT on sale of shares		-	53	54
Consideration paid by EBT on purchase of shares		(256)	(68)	(145)
Capital element of finance lease rental payments		(1)	(7)	(68)
Net cash outflow from financing activities		(461)	(234)	(533)
(Decrease)/increase in cash and cash equivalents		(87)	(1,179)	779
Cash and cash equivalents at the beginning of the period		(757)	(1,536)	(1,536)
Cash and cash equivalents at the period end		(844)	(357)	(757)
Represented by:
Cash and short term deposits		61	113	44
Overdraft		(905)	(470)	(801)
		(844)	(357)	(757)

Group reconciliation of movements in equity (unaudited)

6 months to	Equity	Capital		Fair
30 April 2019	share	redemption	Treasury	value	Currency	Retained	Total
	capital	reserve	shares	adjustment	Translation	earnings	equity
	£' 000	£' 000	£' 000	£' 000	£' 000	£' 000	£' 000
At 1November 2018	264	673	(1,317)	23	15	11,997	11,655
Profit for the period	-	-	-	-	-	564	564
Other comprehensive income for the period, net of income tax	-	-	-	(6)	(5)	-	(11)
Total     comprehensive income for the period	-	-	-	(6)	(5)	564	553
Consideration received by EBT on sale of shares	-	-	-	-	-	-	-
Consideration paid by EBT on purchase of shares	-	-	(256)	-	-	-	(256)
Gain by EBT on sale of shares	-	-	-	-	-	-	-
Equity dividend paid	-	-	-	-	-	(203)	(203)
At 30 April 2019	264	673	(1,573)	17	10	12,358	11,749

Group reconciliation of movements in equity (unaudited) - continued

6 months to	Equity	Capital		Fair
30 April 2018	share	redemption	Treasury	value	Currency	Retained	Total
	capital	reserve	shares	adjustment	Translation	earnings	equity
	£' 000	£' 000	£' 000	£' 000	£' 000	£' 000	£' 000
At 1November 2017	264	673	(1,223)	27	17	10,646	10,404
Profit for the period	-	-	-	-	-	1,140	1,140
Other comprehensive income for the period, net of income tax	-	-	-	(5)	(6)	(155)	(166)
Total     comprehensive income for the period	-	-	-	(5)	(6)	985	974
Consideration received by EBT on sale of shares	-	-	53	-	-	-	53
Consideration paid by EBT on purchase of shares	-	-	(68)	-	-	-	(68)
Gain by EBT on sale of shares	-	-	(2)	-	-	2	-
Equity dividend paid	-	-	-	-	-	(195)	(195)
At 30 April 2018	264	673	(1,240)	22	11	11,438	11,168

Group reconciliation of movements in equity (unaudited) - continued

12 months to 31 October 2018 Audited	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)
Gain 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

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.

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 Benefit Trust ('EBT').

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 2018 except for the adoption of new accounting standards as set out below. The accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as adopted by the European Union.

These unaudited financial statements were approved and authorised for issue by a duly appointed and authorised committee of the Board of Directors on 26 June 2019.

The following new standards have been adopted, both effective from 1 November 2018:

IFRS15: Revenue from contracts with customers.  The Group's revenue primarily consists of drink and food sales to the leased estate, together with rental income from both the leased estate and investment properties.  Rental income is outside the scope of IFRS15.  The Directors have concluded that the existing method for recognising revenue from drink and food sales is in accordance with IFRS15, being the point in time at which control of those goods is passed to the customer.  There is therefore no impact upon adoption of the new standard.

IFRS9: Financial instruments.  The Group does not hold any complex financial instruments, and financial assets consist primarily of short term trade and other receivables.  IFRS9 introduces a new expected loss approach for determining impairment of financial assets.  The Directors have considered this against the current method for bad debt provisioning and no material change has been required.

2.  Basic and diluted earnings per share

The calculation of basic earnings per ordinary share is based on earnings of £564,000 (2018: £1,140,000), being profit after taxation for the period, and on 4,786,818 (2018: 4,876,995) 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.

Notes to the interim results - continued

3.  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.

4.  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 2019 has been posted to shareholders today and will be available on our website at www.heavitreebrewery.co.uk.

Ends.

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