HEAVITREE BREWERY PLC

Quarterly Report • Jun 24, 2021

National Storage Mechanism | Additional information

RNS Number : 8883C

Heavitree Brewery PLC

24 June 2021

The Heavitree Brewery PLC

Trood Lane

Matford

Exeter EX2 8YP

Date:               24 June 2021

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, 24 June 2021, the Directors announce the interim results for the six months ended 30 April 2021.

Chairman's statement

In my statement accompanying the accounts for the previous financial year, I warned that the next half year results would be further impacted by the trading restrictions and lockdown of our sector as the Government battled this country's second wave of infection of Covid-19.  Despite a write back of rent in the period of £344,000 caused by the peculiarity of the IFRS 16 Lease Accounting calculations which I explained in my year-end statement as at 31 October 2020, turnover has reduced by 67.77% to £846,000 (2020: £2,623,000).  This turnover figure is predominantly comprised of a discounted rental income from our licensed properties for December 2020 only and some income from tied products from the trading under restrictions before Christmas.

Results

The Group has returned an Operating Loss of £647,000 (2020: £243,000 Profit).  There is a Loss Before Tax of £76,000 (2020: £184,000 Profit Before Tax).

Dividend

The Directors do not recommend the payment of a dividend at the half-year.  As disruption and uncertainty within our sector continues, the Board will not consider the payment of a dividend during the current financial year.  When trading does return to some sort of normality, the Board will be able to review future dividend payments.

Property

The sale of some non-core assets has been achieved during the period under review:

A small parcel of land in Abbotskerswell was sold for £20,000.

A flat on the site of the old St.Loye's Hotel site was sold for £185,000.

The closed Maltster's Arms and adjoining cottage in Harbertonford was sold for £225,000.

The Castle Inn in Holcombe was sold for £425,000.

Prospects

The reopening of the garden areas and, in turn the reopening of indoor trading areas under restrictions is an early step on the road to a recovery. We have tenants in all our pubs and the feedback from our houses and the support from our customers shows great promise for the summer months and for future trading.  The Company's cashflow forecasts continue to show that we are able to trade within our banking facility and as I reported at the year-end, Barclays Bank has waived the testing of our banking covenants until April 2022.  The Board is most grateful for the patience, support and determination shown by all stakeholders in the Company's business.

N H P TUCKER

Chairman

Group income statement (unaudited)

For the six months ended 30 April 2021

		6 months to 30 April 2021	6 months to 30 April 2020	Audited 12 months to 31 October 2020
	Note	£' 000	£' 000	£' 000
Revenue		846	2,623	5,019
Change in stocks		-	-	-
Other operating income		183	136	317
Purchase of inventories		(253)	(995)	(2,065)
Staff costs		(655)	(713)	(1,310)
Depreciation of property, plant and equipment		(77)	(87)	(177)
Other operating charges		(691)	(721)	(1,245)
		(1,493)	(2,380)	(4,480)
Group operating Loss/ profit		(647)	243	539
Profit on sale of property, plant and equipment		647	15	293
Movements in valuation of estate and related assets		-	-	(279)
Group Loss/profit before finance costs and taxation		-	258	553
Finance income		-	2	2
Finance costs		(76)	(76)	(141)
Other finance costs-pensions		-	-	-
		(76)	(74)	(139)
Loss/profit before taxation		(76)	184	414
Tax expense		(10)	(42)	(300)
Loss/profit for the period		(86)	142	114
Earnings per share - basic - diluted	2	(1.8)p (1.8)p	3.0p 3.0p	2.4p 2.4p

Group statement of comprehensive income (unaudited)

For the six months ended 30 April 2021

		6 months to 30 April 2021	6 months to 30 April 2020	Audited    12months     to  31 October       2020
		£' 000	£' 000	£' 000
Loss/profit for the period		(86)	142	114
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		4 -	(9) -	(12) -
		4	(9)	(12)
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		- - -	(2) - (2)	(4) - (4)
Other comprehensive income for the year, net of tax		(82)	131	98
Total comprehensive income attributable to: Equity holders of the parent		(82)	131	98

Group balance sheet (unaudited)

at 30 April 2021		30 April 2021 £' 000	30 April 2020 £' 000	Audited 31 October 2020 £'000
Non-current assets
Property, plant and equipment		18,743	19,364	18,745
Financial assets		33	32	30
Deferred tax asset		16	16	16
		18,792	19,412	18,791
Current assets
Trade and other receivables		1,852	915	1,277
Inventories		10	10	10
Cash and short-term deposits		66	45	49
		1,928	970	1,336
Assets held for sale		211	-	219
Total assets		20,931	20,382	20,346
Current liabilities
Trade and other payables		(619)	(452)	(666)
Financial liabilities		(2,162)	(1,681)	(1,520)
Income tax payable		(98)	(267)	(237)
		(2,879)	(2,400)	(2,423)
Non-current liabilities
Other payables		(279)	(296)	(274)
Financial liabilities		(4,508)	(4,531)	(4,322)
Deferred tax liabilities		(536)	(394)	(536)
Defined benefit pension plan		(92)	(92)	(92)
		(5,415)	(5,313)	(5,224)
Total liabilities		(8,294)	(7,713)	(7,647)
Net assets		12,637	12,669	12,699
Capital and reserves
Equity share capital		264	264	264
Capital redemption reserve		673	673	673
Treasury shares		(1,502)	(1,585)	(1,522)
Fair value adjustments reserve		9	8	5
Currency translation		13	15	13
Retained earnings		13,180	13,294	13,266
Total equity		12,637	12,669	12,699

Dividends

The Directors do not recommend a dividend to be paid at the half-year. 

Group statement of cash flows (unaudited)

for the six months ended 30 April 2021                                                           

		6 months to 30 April 2021	6 months to 30 April 2020	Audited 12months  to 31 October 2020
Operating activities		£' 000	£' 000	£' 000
# (Loss)/profit for the period		(86)	142	114
Tax expense		10	42	301
Net finance costs		76	74	139
(Profit) on disposal of non-current assets and assets held for sale		(647)	(15)	(293)
Depreciation and impairment of property, plant and equipment		97	87	177
Exchange gain on cash, liquid resources and loan		-	-	-
Difference between pension contributions paid and recognised in the income statement		-	-	-
(Increase)/decrease in trade and other receivables		(338)	416	220
(Decrease)/increase in trade and other payables Impairment of assets		(58) -	(528) -	(274) 279
Cash generated from operations		(946)	218	663
Income taxes paid		(150)	-	(151)
Interest paid		(76)	(76)	(141)
Net cash(outflow)/ inflow from operating activities		(1,172)	142	371
Investing activities
Interest received		-	2	2
Proceeds from sale of property, plant and equipment and assets held for sale		584	15	186
Payments to acquire property, plant and equipment		(209)	(262)	(315)
Net cash(outflow)/ inflow from investing activities		375	(245)	(127)
Financing activities
Preference dividend paid		(1)	(1)	(1)
Equity dividends paid		-	-	-
Consideration received by EBT on sale of shares		41	-	62
Consideration paid by EBT on purchase of shares		(54)	(23)	(25)
Capital element of finance lease rental payments		(7)	(6)	(9)
Repayment of bank borrowings		(27)	(6,000)	(1,500)
Draw down of bank borrowings		-	4,500	-
Net cash outflow from financing activities		(48)	(1,530)	(1,473)
(Decrease)/increase in cash and cash equivalents		(845)	(1,633)	(1,229)
Cash and cash equivalents at the beginning of the period		(1,232)	(3)	(3)
Cash and cash equivalents at the period end		(2,077)	(1,636)	(1,232)
Group statement of cash flows (unaudited) (continued) for the six months ended 30 April 2021
Represented by:
Cash and short term deposits		66	45	49
Overdraft		(2,143)	(1,681)	(1,281)
		(2,077)	(1,636)	(1,232)

Group reconciliation of movements in equity (unaudited)

6 months to	Equity	Capital		Fair
30 April 2021	share	redemption	Treasury	value	Currency	Retained	Total
	capital	reserve	shares	adjustment	translation	earnings	equity
	£' 000	£' 000	£' 000	£' 000	£' 000	£' 000	£' 000
At 1November 2020	264	673	(1,522)	5	13	13,266	12,699
(Loss) for the period	-	-	-	-	-	(86)	(86)
Other comprehensive income for the period, net of income tax	-	-	-	4	-	-	4
Total     comprehensive income for the period	-	-	-	4	-	(86)	(82)
Consideration received by EBT on sale of shares	-	-	41	-	-	-	41
Consideration paid by EBT on purchase of shares	-	-	(54)	-	-	-	(54)
Loss by EBT on sale of shares	-	-	33	-	-	-	33
Equity dividend paid	-	-	-	-	-	-	-
At 30 April 2021	264	673	(1,502)	9	13	13,180	12,637

Group reconciliation of movements in equity (unaudited) - continued

6 months to	Equity	Capital		Fair
30 April 2020	share	redemption	Treasury	value	Currency	Retained	Total
	capital	reserve	shares	adjustment	Translation	earnings	equity
	£' 000	£' 000	£' 000	£' 000	£' 000	£' 000	£' 000
At 1November 2019	264	673	(1,562)	17	17	13,152	12,561
Profit for the period	-	-	-	-	-	142	142
Other comprehensive income for the period, net of income tax	-	-	-	(9)	(2)	-	(11)
Total     comprehensive income for the period	-	-	-	(9)	(2)	142	131
Consideration received by EBT on sale of shares	-	-	-	-	-	-	-
Consideration paid by EBT on purchase of shares	-	-	(23)	-	-	-	(23)
Gain by EBT on sale of shares	-	-	-	-	-	-	-
Equity dividend paid	-	-	-	-	-	-	-
At 30 April 2020	264	673	(1,585)	8	15	13,294	12,669

Group reconciliation of movements in equity (unaudited) - continued

12 months to 31 October 2020 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 2019	264	673	(1,562)	17	17	13,152	12,561
Profit for the year	-	-	-	-	-	114	114
Other comprehensive income for the year net of income tax	-	-	-	(12)	(4)	-	(16)
Total comprehensive
income for the year	-	-	-	(12)	(4)	114	98
Consideration received by EBT on sale of shares	-	-	62	-	-	-	62
Consideration paid by
EBT on purchase of shares	-	-	-	-	-	-	-
Loss by EBT on sale of shares	-	-	(24)	-	-	-	(24)
Equity dividends paid	-	-	2	-	-	-	2
At 31 October 2020	264	673	(1,522)	5	13	13,266	12,699

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'). Shares held at half-year 415,975.

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 2020. 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 24 June 2021.

2. Going concern

With the continued uncertainty of the Covid-19 pandemic the Directors have continued to review the Group's financial resources including a continued review of the medium-term financial plan, along with a range of cash flow forecasts, the Group has positive cash generation from its operations and the gearing remains low. These forecasts include the rent concessions which have been given to the end of May 2021 for Tenants including and factoring in any further lockdowns. As reported in the year end Chairman's Statement the Board has taken the decision to accelerate its programme of non-core asset sales and in the first half of the financial year four of these assets have been sold. The Board continues to monitor and control costs and where possible and have claimed on the Governments Furlough Scheme and will continue to review cashflows as guidance from Government changes.

As reported in the Chairman's Statement a waiver of covenants has been agreed by Barclays Bank until April 2022, the Bank continues to be satisfied with the Group's forecasts and projections, which take account any future changes which may come about as a direct result of the Covid-19 pandemic and shows that the Group will be able to operate within its facilities. 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.

Notes to the interim results - continued

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.  The impact of the ongoing Covid-19 pandemic on the pub trade and the wider UK economy could have ramifications for the valuation of the Group's estate.  Given the current significant and unprecedented levels of uncertainty, the Directors' view is that it is not possible to quantify any potential impact at this time, and as such the values in these interim financial statements have not been adjusted to take into account the impact of the pandemic.

4.  Basic and diluted earnings per share

The calculation of basic earnings per ordinary share is based on earnings of £(86,000) (2020: £142,000), being (loss)/profit after taxation for the period, and on 4,819,991 (2020: 4,777,939) 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 2021 has been posted to shareholders today and will be available on our website at www.heavitreebrewery.co.uk.

Ends.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

IR XXLFLFQLEBBV