HEAVITREE BREWERY PLC

Interim / Quarterly Report • Jun 27, 2024

National Storage Mechanism | Additional information

RNS Number : 1379U

Heavitree Brewery PLC

27 June 2024

The Heavitree Brewery PLC

Trood Lane

Matford

Exeter EX2 8YP

Date:               27 June 2024

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, 27 June 2024, the Directors announce the interim results for the six months ended 30 April 2024.

Chairman's statement

Results

The Company performed well in the first half of this year against the same period last year despite the combination of weeks of cold and wet weather conditions and a very early Easter weekend which one would expect to have an adverse effect on number comparisons.  Turnover has in fact increased by 2.1% to £3,396,000 (2023: £3,326,000).  As reported in recent years, the turnover figure for this period was again reduced by the IFRS 16 Lease Accounting unwind.  This equated to a reduction of £39,500.

The Group has returned an operating profit of £540,000 (2023: operating profit of £523,000), a 3% improvement on the previous year.  In turn, profit before tax is £761,000 (2023: £947,000) which includes the book profit of £300,000 realised on the sale of non-core assets (2023 non-core assets : £503,000). The reduction in profit before tax reflects greater non-core asset sales for the corresponding period of 2023.

Dividend

The Directors recommend the payment of an increased interim dividend at a rate of 2.25p (2023: 2.0p) per Ordinary and 'A' Ordinary share to those shareholders on the register on 12 July 2024.  The dividend will be payable on 02 August 2024.

Property

In accordance with the disposal programme of non-core assets, The Exeter Inn in Honiton Clyst was sold.

The new accommodation block at The Ley Arms in Kenn is finished offering quality bedrooms at this very popular pub. 

Heavitree Inc.

I reported at this year's Annual General Meeting that we were awaiting the issue of a 'certificate of good standing' from the Texas Secretary of State before being able to further move towards terminating our American subsidiary.  The certificate was duly received and a 'certificate of termination' subsequently issued and filed with the Secretary of State and Texas Comptroller of Tax.  The wind-up was officially concluded on 04 June 2024, ending our involvement in the United States which began in 1982.

Final Salary Pension Scheme.

I had hoped to be updating conclusively concerning the wind up of the final salary pension scheme.  I reported at the Annual General Meeting that the process has been protracted as we remain beholden to the pace of work of the relevant insurance companies which will be supplying annuity reassignments so that future payments can be made directly to individual members.  Matters appear to be moving forward with all but one company at the time of writing which means that I am reasonably confident the wind up can be achieved during the second part of the year.

Prospects

A retirement planned for the end of this year of one of our longstanding tenants has meant that we have just one pub under notice with no further vacancies within the estate.  This should position us well for the second half of the year and we hope for a boost in sales from the Euros football competition and the summer Olympics, both of which will be broadcast at times favourable to licensed hours.  The Board's confidence for the second half of the year is reflected in the increase to the interim dividend.

N H P TUCKER

Chairman

Group income statement (unaudited)

For the six months ended 30 April 2024

		6 months to 30 April 2024	6 months to 30 April 2023	Audited 12 months to 31 October 2023
	Note	£' 000	£' 000	£' 000
Revenue		3,396	3,326	7,346
Change in stocks		-	-	-
Other operating income		106	103	215
Purchase of inventories		(1,281)	(1,271)	(2,991)
Staff costs		(694)	(669)	(1,483)
Depreciation of property, plant and equipment		(106)	(98)	(236)
Other operating charges		(881)	(868)	(1,809)
		(2,856)	(2,803)	(6,304)
Group operating profit		540	523	1,042
Profit on sale of property, plant and equipment Impairment		300 -	503 -	1,065 (150)
Group Profit before finance costs and taxation		840	1,026	1,957
Finance income		-	-	-
Finance costs		(79)	(79)	(131)
		(79)	(79)	(131)
Profit/(loss) before taxation		761	947	1,826
Tax expense		(192)	(213)	(327)
Profit for the period		569	734	1,499
Earnings per share - basic - diluted	4	11.8p 11.8p	15.3p 15.3p	31.0p 31.0p

Group statement of comprehensive income (unaudited)

For the six months ended 30 April 2024

		6 months to 30 April 2024	6 months to 30 April 2023	Audited    12months     to  31 October       2023
		£' 000	£' 000	£' 000
Profit for the period		569	734	1,499
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		1 - -	- - -	5 - -
Other comprehensive income/ (loss) for the year, net of tax		570	734	1,504
Total comprehensive income/ (loss) attributable to: Equity holders of the parent		570	734	1,504

Group balance sheet (unaudited)

at 30 April 2024		30 April 2024 £' 000	30 April 2023 £' 000	Audited 31 October 2023 £'000
Non-current assets
Property, plant and equipment		20,058	18,291	19,223
Financial assets		453	465	469
Deferred tax asset		16	16	16
		20,527	18,772	19,708
Current assets
Trade and other receivables		1,583	1,715	1,170
Inventories		10	10	10
Cash and short-term deposits		66	566	373
		1,659	2,291	1,553
Assets held for sale		29	125	70
Total assets		22,215	21,188	21,331
Current liabilities
Trade and other payables		(1,228)	(1,296)	(1,005)
Financial liabilities		(560)	(35)	(2,101)
Income tax payable		(454)	(552)	(263)
		(2,242)	(1,883)	(3,369)
Non-current liabilities
Other payables		(327)	(299)	(338)
Financial liabilities		(1,721)	(2,126)	(97)
Deferred tax liabilities		(852)	(784)	(852)
Defined benefit pension plan		(92)	(92)	(92)
		(2,992)	(3,301)	(1,379)
Total liabilities		(5,234)	(5,184)	(4,748)
Net assets		16,981	16,004	16,583
Capital and reserves
Equity share capital		251	251	251
Capital redemption reserve		685	686	686
Own share reserve		(1,044)	(946)	(1,041)
Fair value adjustments reserve		10	10	10
Currency translation		22	14	19
Retained earnings		17,057	15,989	16,658
Total equity		16,681	16,004	16,583

Dividends

The Directors  recommend a dividend of 2.25p to be paid at the half-year. 

Group statement of cash flows (unaudited)

for the six months ended 30 April 2024                                                            

		6 months to 30 April 2024	6 months to 30 April 2023	Audited 12months  to 31 October 2023
Operating activities		£' 000	£' 000	£' 000
# Profit/(loss) for the period		569	734	1,499
Tax expense		192	213	327
Net finance costs		79	78	132
(Profit) on disposal of non-current assets and assets held for sale		(300)	(503)	(1,065)
Depreciation and impairment of property, plant and equipment		106	98	236
Impairment of property		-	-	150
(Increase)/decrease in trade and other receivables		(413)	(452)	133
Increase/(decrease) in trade and other payables Impairment of assets		213 -	(38) -	(130) -
Cash generated from operations		446	130	1,282
Income taxes paid		-	-	(335)
Interest paid		(93)	(78)	(166)
Net cash  Inflow/(outflow) from operating activities		353	52	781
Investing activities
Interest received		14	-	-
Proceeds from sale of property, plant and equipment and assets held for sale		341	564	1,202
Payments to acquire property, plant and equipment		(940)	(577)	(1,774)
Net cash (outflow) from investing activities		(585)	(13)	(572)
Financing activities
Preference dividend paid		(1)	(1)	(1)
Equity dividends paid		(170)	(171)	(267)
Consideration received by EBT on sale of shares		67	636	61
Consideration paid by EBT on purchase of shares		(69)	(45)	(140)
Own Share buyback		-	(575)	-
Capital element of finance lease rental payments		(20)	(27)	(76)
Repayment of bank borrowings		(99)	(100)	(252)
Mortgage Receipts		15	22	51
Net cash outflow from financing activities		(277)	(261)	(624)
(Decrease) in cash and cash equivalents		(509)	(222)	(415)
Cash and cash equivalents at the beginning of the period		373	788	788
Cash and cash equivalents at the period end		(136)	566	373
Group statement of cash flows (unaudited) (continued) for the six months ended 30 April 2024
Represented by:
Cash and short term deposits		66	566	373
Overdraft		(202)	-	-
Cash and cash equivalents		(136)	566	373

Group reconciliation of movements in equity (unaudited)

6 months to	Equity	Capital	Own	Fair
30 April 2024	share	redemption	share	value	Currency	Retained	Total
	capital	reserve	reserve	adjustment	translation	earnings	equity
	£' 000	£' 000	£' 000	£' 000	£' 000	£' 000	£' 000
At 1November 2023	251	686	(1,041)	10	19	16,658	16,583
Profit for the period	-	-	-	-	-	569	569
Other comprehensive income for the period, net of income tax	-	-	-	-	1	-	1
Total     comprehensive income for the period	-	-	-	-	1	569	570
Consideration received by EBT on sale of shares	-	-	67	-	-	-	67
Consideration paid by EBT on purchase of shares	-	-	(69)	-	-	-	(69)
Buy back and cancellation of own shares	-	-	-	-	-	-	-
Loss by EBT on sale of shares	-	-	-	-	-	-	-
Equity dividend paid	-	-	-	-	-	(170)	(170)
At 30 April 2024	251	686	(1,043)	10	20	17,057	16,981

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

12 months to 31 October 2023 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 2022	264	673	(1,537)	10	14	16,001	15,425
Profit for the year	-	-	-	-	-	1,499	1,499
Other comprehensive income for the year net of income tax	-	-	-	-	5	-	5
Total comprehensive
income for the year	-	-	-	-	5	1,499	1,504
Consideration received by EBT on sale of shares	-	-	61	-	-	-	61
Consideration paid by
EBT on purchase of shares	-	-	(140)	-	-	-	(140)
Buy back of own shares	(13)	13	575	-	-	(575)	-
Equity dividends paid	-	-	-	-	-	(267)	(267)
At 31 October 2023	251	686	(1,041)	10	19	16,658	16,583

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.

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 146,957.

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 2023 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 27 June 2024.

2 .   Going concern

T he cost of living crisis was taken into account when forecasting for this financial year, as this continues to affect all areas of the hospitality sector. We have seen a steady start to the first half of the financial year and have exceeded budget expectations, while this is a positive start the factors affecting the industry continue and with this in mind the Board continues with its cautious approach in the second half of the financial year. The Group remains well within its forecasts to April 2025 with £2.8M overdraft available as at April 2024 and the term loan has been decreased in the year by £99k. The Board co ntinues 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 £300k 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 £569,000 (April 2023:£734,000), being profit after taxation for the period, and on 4,822,277 (April 2023: 4,794,270) 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 2024 has been posted to shareholders today and will be available on our website at www.heavitreebrewery.co.uk.

Ends.

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