HEAVITREE BREWERY PLC

Quarterly Report • Jun 29, 2022

National Storage Mechanism | Additional information

RNS Number : 6656Q

Heavitree Brewery PLC

29 June 2022

The Heavitree Brewery PLC

Trood Lane

Matford

Exeter EX2 8YP

Date:               29 June 2022

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, 29 June 2022, the Directors announce the interim results for the six months ended 30 April 2022.

Chairman's statement

I am satisfied to report that the Company has begun to move on from the intensely difficult and much reported upon trading environments of the previous two years. Although there remains much to be cautious about in the months ahead, at this half-year under review, we have returned to a performance level on a par with 2019 before the various measures implemented to combat the Covid 19 pandemic impacted the whole of our sector. Having reported a small operating loss at the previous year-end, this half-year has generated a turnover of £3,290,000 and returned an operating profit of £522,000.  The turnover figure has been reduced by £109,000 due to the IFRS 16 Lease Accounting unwind corresponding to the positive write back effect in previous years. I have explained the mechanics of this accounting standard in previous statements. 

Results

The Group has returned an operating profit of £522,000 (2021: an operating loss of £647,000) at the half-year.  Profit before tax is £1,063,000 (2021: a loss before tax of £76,000) after a book profit of £601,000 (2021: a book profit £647,000) was achieved on Property sales.

Dividend

The Directors do not recommend the payment of a dividend at the half-year.  The Board considers the payment of dividends to be an intrinsic part of our business and we are determined to resume the payment of dividends at the earliest possible time but only when the Directors are confident about generating cash through a sustainable operating profit.  The payment of a future dividend remains under continual review.

Property

The Company has continued to pursue the policy of the sale of non-core assets. The following properties have been sold during the period under review:

Two cottages on the site adjoining the Exeter Inn in Honiton Clyst.

The Marshalls Hotel in Barnstaple.

The Victoria Inn and an adjoining cottage in Ashburton.

The Maltsters Arms, the converted skittle alley and the adjoining development site in Clyst St Mary.

In line with the Board's strategy of reducing debt and following these sales, three prepayments against the term loan held with Barclays have been made during the period under review, totalling £1,750,000.

Personnel

I am very sad to report the passing of Andy Paver, our tenant at The Dewdrop Inn in Kingsteignton.  He died shortly after his deteriorating health had forced him to retire from the tenancy in April after nearly thirty years as the licensee.  He ran the pub with impeccable standards and a natural charm that made the pub a very special place under his stewardship.  He was also held in the highest esteem by all at head office and he will be greatly missed. 

Prospects

Whilst pleased with the rebound in trade across our houses in the preliminary months of the year and the boost in sales enjoyed by many pubs during the long Jubilee weekend, I am acutely aware of the two-fold strain to the trade caused by the cost of living hikes to our customers and the cost of doing business hikes faced by our operators.  The Directors are, of course, concerned as to how these pressures might manifest themselves across the estate, particularly come this Autumn and Winter.  We shall continue to monitor the situation as it develops.

N H P TUCKER

Chairman

Group income statement (unaudited)

For the six months ended 30 April 2022

		6 months to 30 April 2022	6 months to 30 April 2021	Audited 12 months to 31 October 2021
	Note	£' 000	£' 000	£' 000
Revenue		3,290	846	4,618
Change in stocks		-	-	-
Other operating income		110	183	310
Purchase of inventories		(1,312)	(253)	(1,909)
Staff costs		(714)	(655)	(1,349)
Depreciation of property, plant and equipment		(98)	(77)	(177)
Other operating charges		(754)	(691)	(1,552)
		(2,768)	(1,493)	(4,677)
Group operating profit/(loss)		522	(647)	(59)
Profit on sale of property, plant and equipment		601	647	1,318
Group Profit before finance costs and taxation		1,123	-	1,259
Finance income		-	-	-
Finance costs		(60)	(76)	(145)
		(60)	(76)	(145)
Profit/(loss) before taxation		1,063	(76)	1,114
Tax expense		(208)	(10)	(313)
Profit/(loss) for the period		855	(86)	801
Earnings per share - basic - diluted	4	15.4p 15.4p	(1.8)p  (1.8)p	16.6p 16.6p

Group statement of comprehensive income (unaudited)

For the six months ended 30 April 2022

		6 months to 30 April 2022	6 months to 30 April 2021	Audited    12months     to  31 October       2021
		£' 000	£' 000	£' 000
Profit/loss for the period		855	(86)	801
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 -	5 -
		-	4	5
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      - -	- - -	- - -
Other comprehensive income/ (loss) for the year, net of tax		864	(82)	806
Total comprehensive income/ (loss) attributable to: Equity holders of the parent		864	(82)	806

Group balance sheet (unaudited)

at 30 April 2022		30 April 2022 £' 000	30 April 2021 £' 000	Audited 31 October 2021 £'000
Non-current assets
Property, plant and equipment		17,798	18,743	17,997
Financial assets		34	33	34
Deferred tax asset		16	16	16
		17,848	18,792	18,047
Current assets
Trade and other receivables		1,996	1,852	1,936
Inventories		10	10	10
Cash and short-term deposits		35	66	52
		2,041	1,928	1,998
Assets held for sale		371	211	883
Total assets		20,260	20,931	20,928
Current liabilities
Trade and other payables		(1,274)	(619)	(984)
Financial liabilities		(1,051)	(2,162)	(1,158)
Income tax payable		(318)	(98)	(108)
		(2,643)	(2,879)	(2,250)
Non-current liabilities
Other payables		(325)	(279)	(318)
Financial liabilities		(2,187)	(4,508)	(4,069)
Deferred tax liabilities		(734)	(536)	(734)
Defined benefit pension plan		(92)	(92)	(92)
		(3,338)	(5,415)	(5,213)
Total liabilities		(5,981)	(8,294)	(7,463)
Net assets		14,279	12,637	13,465
Capital and reserves
Equity share capital		264	264	264
Capital redemption reserve		673	673	673
Treasury shares		(1,579)	(1,502)	(1,529)
Fair value adjustments reserve		10	9	10
Currency translation		22	13	13
Retained earnings		14,889	13,180	14,034
Total equity		14,279	12,637	13,465

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 2022                                                           

		6 months to 30 April 2022	6 months to 30 April 2021	Audited 12months  to 31 October 2021
Operating activities		£' 000	£' 000	£' 000
# Profit/(loss) for the period		855	(86)	801
Tax expense		208	10	313
Net finance costs		60	76	145
(Profit) on disposal of non-current assets and assets held for sale		(601)	(647)	(1,200)
Depreciation and impairment of property, plant and equipment		98	97	177
Exchange gain on cash, liquid resources and loan		-	-	-
(Increase)/decrease in trade and other receivables		(80)	(338)	(442)
Increase/(decrease) in trade and other payables Impairment of assets		274 -	(58) -	353 -
Cash generated from operations		814	(946)	147
Income taxes paid		-	(150)	(245)
Interest paid		(60)	(76)	(145)
Net cash inflow / (outflow) from operating activities		754	(1,172)	(243)
Investing activities
Interest received		-	-	-
Proceeds from sale of property, plant and equipment and assets held for sale		1,402	584	1,411
Payments to acquire property, plant and equipment		(153)	(209)	(473)
Net cash Inflow/outflow from investing activities		1,249	375	938
Financing activities
Preference dividend paid		(1)	(1)	(1)
Equity dividends paid		-	-	-
Consideration received by EBT on sale of shares		-	41	41
Consideration paid by EBT on purchase of shares		(50)	(54)	(81)
Capital element of finance lease rental payments		(4)	(7)	(25)
Repayment of bank borrowings		(1,892)	(27)	(187)
Mortgage Receipts		21	-	35
Net cash outflow from financing activities		(1,926)	(48)	(218)
Increase/(decrease) in cash and cash equivalents		77	(845)	477
Cash and cash equivalents at the beginning of the period		(755)	(1,232)	(1,232)
Cash and cash equivalents at the period end		(678)	(2,077)	(755)
Group statement of cash flows (unaudited) (continued) for the six months ended 30 April 2022
Represented by:
Cash and short term deposits		35	66	52
Overdraft		(713)	(2,143)	(807)
		(678)	(2,077)	(755)

Group reconciliation of movements in equity (unaudited)

6 months to	Equity	Capital		Fair
30 April 2022	share	redemption	Treasury	value	Currency	Retained	Total
	capital	reserve	shares	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

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

12 months to 31 October 2021 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 2020	264	673	(1,522)	5	13	13,266	12,699
Profit for the year	-	-	-	-	-	801	801
Other comprehensive income for the year net of income tax	-	-	-	5	-	-	5
Total comprehensive
income for the year	-	-	-	5	-	801	806
Consideration received by EBT on sale of shares	-	-	41	-	-	-	41
Consideration paid by
EBT on purchase of shares	-	-	(81)	-	-	-	(81)
Loss by EBT on sale of shares	-	-	33	-	-	(33)	-
Equity dividends paid	-	-	-	-	-	-	-
At 31 October 2021	264	673	(1,529)	10	13	14,034	13,465

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 444,155.

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 2021. 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 29 June 2022.

2. Going concern

While Covid restrictions are no longer in place, there are concerns around the general increase in costs including the hike in energy prices, which we have not yet seen the impact of in our half year results. The Board has continued to review and adjust forecasts to take into account any possible impact this may have on trading in the second half of the year. The Group remains well within its forecasts to April 2023 with minimum headroom of £2.1m on the £3m overdraft, and three prepayments to the term loan have been made totalling £1,750,000. 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 £1.4m 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 £855,000 (2021: £(86,000)), being profit/(loss) after taxation for the period, and on 4,818,652 (2021: 4,819,991) 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.

Within our Financial statements year ended 31 October 2021 a presentation error occurred in the segment information section. This was a cross casting error due to a late balance sheet adjustment. The balance sheet at the year end and the split in the assets held in the United States were correct.

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 2022 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 MZGZVZLZGZZM