REG - Heavitree Brewery - Half-year Report
28/06/2023 14:00
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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
Audited
6 months 6 months 12 months
to to to
30 April 30 April 31 October
2023
2022 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 4
- basic 15.3p 15.4p 40.7p
- diluted
15.3p
15.4p
40.7p
Group statement of comprehensive income (unaudited)
For the six months ended 30 April 2023
Audited
6 months 6 months 12months
to to to
30 April 30 April 31 October
2023
2022 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 - 9 1
Tax relating to items that may be reclassified
- - -
-
-
-
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 Audited
30 April 30 April 31 October 2022
2023 2022 £'000
£' 000 £' 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
Audited
6 months 6 months 12months
to to to
30 April 30 April 31 October
2023
2022 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 (38) 274 157
Impairment of assets - - -
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
Equity share capital Capital redemption reserve Own Fair value adjustment reserve
£000 £000 share reserves £000 Currency Retained earnings Total equity
12 months to 31 October 2022 £000 Translation £000 £000
Audited £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 - - - - 1 - 1
net of income tax
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 (http://www.heavitreebrewery.co.uk)
.
Ends.
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