REG - Heavitree Brewery - Interim Results 2020

Heavitree BreweryAnnouncement

26/06/2020 12:00

RNS Number : 2294R
  
Heavitree Brewery PLC
  
26 June 2020
  
 

The Heavitree Brewery PLC
Trood Lane
Matford
Exeter EX2 8YP
 
Date:               26 June 2020
 
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 2020, the Directors announce the interim results for the six months ended 30 April 2020.
 
 
Chairman's statement
 
The request by the Prime Minister asking the public to avoid visiting pubs, and the subsequent forced closure of pubs, clubs and restaurants across the UK on March 20th 2020 has had an inevitably devastating effect on the trade as a whole and, of course, our business is not immune to the impact that has been felt by all pub companies. After the closure announcement, in a move to conserve cash within the business at this incredibly challenging time, all capital works were immediately postponed, the Board withdrew its recommendation to pay a final dividend for the year ending October 2019, the Directors volunteered and took a salary reduction and in turn, some members of our Head Office staff were placed on the Government's Coronavirus Job Retention Scheme. Whilst we all understand the reasoning for the closure, it is hard to convey the shockwave felt by all within our organisation and how saddening it has been to see our pubs standing empty during a traditionally strong trading time of the year. One of our tenants commented that in the 45 years of his family operating one of our houses, this was the first time he had ever had to close. Similar sentiments have been felt throughout our estate.
Results
 
Turnover for the period under review has decreased by £804,000 (23.46%) to £2,623,000.  The Group has returned an Operating Profit of £243,000 (2019: £624,000), a reduction of 61.00%.  Profit Before Tax is £184,000 (2019: £705,000) a reduction of 73.90% on the previous year.  It is worth noting that the Profit Before Tax in the previous year did include a book profit of £173,000 on, predominantly, the sale of an unlicensed property.
Dividend
 
The Directors do not recommend the payment of a dividend at the half-year. Once our pubs reopen and when we see trading back on a more even keel, the Board will be able to review future dividends.
 
Property
 
A small parcel of land has been sold in Christow, near Exeter for £15,000.
Prospects
 
Much has been written about getting the pubs open to "save our summer".  It is important to remember that, rather ominously for the second  half of our financial year, we already have two months without any trading to absorb.
Immediately following the closure, we gave some comfort to our tenants by deferring the rents that were to be collectable. Since then we have taken the decision to cancel rents completely for all our licensed houses up to the end of July 2020.  Rents will be reviewed as we go forward.  Obviously, there has been no revenue coming in from tied product sales during the period of closure.
I am most grateful to each of our staff members for the calm and considered response to the closure and to the changes and stresses to office and day to day life that the pandemic has caused.  This approach has aided us in updating and advising all our tenants regularly to help them to navigate through an ever-changing landscape.
Barclays Bank has extended its support to our business by offering an increased overdraft facility if required, a 12 months' capital repayment holiday on our existing facility and a relaxation of the covenants attached to the original facility.  We have enjoyed a long relationship with Barclays and are appreciative of the Bank's reaction to the difficulties that have arisen from the pandemic.
At the time of writing we are reacting to the publication of the Government's "Safer Workplace Guidance for Pubs and Restaurants" following the confirmation by the Prime Minister that pubs can reopen on or after July 4th.  There will be restrictions and new practices to adhere to, each of which bring their own issues which will have to be managed.  Our team will continue to support our tenants through this next chapter, and we all look forward to the sector returning to happier times.
 
 
N H P TUCKER
Chairman
 
Group income statement (unaudited)
For the six months ended 30 April 2020




 


 


 
6 months
to
30 April

2020


 
6 months
to
30 April
2019


Audited
12 months
to
31 October
2019




 


Note


£' 000


£' 000


£' 000




Revenue


 


   2,623


  3,427


 7,528




Change in stocks


 


-


-


-




Other operating income


 


136


131


302




Purchase of inventories


 


(995)


(1,362)


(3,100)




Staff costs


 


(713)


(706)


(1,385)




Depreciation of property, plant and equipment


 


(87)


(111)


(222)




Other operating charges


 


   (721)


   (755)


  (1,284)




 


 


  (2,380)


  (2,803)


  (5,689)




Group operating profit


 


243


624


1,839




Profit on sale of property, plant and equipment


 


15


             173


        184




Movements in valuation of estate and related assets


 


                 - 


                 -


          -




Group profit before finance costs and taxation


 


258


797


2,024




Finance income


 


2


2


4




Finance costs


 


(76)


(94)


(185)




Other finance costs-pensions


 


            -


            -


            -




 


 


          (74)


          (92)


         (180)




Profit before taxation


 


184


705


1,844




Tax expense


 


          (42)


          (141)


          (313)




Profit for the period


 


         142


          564


         1,531




Earnings per share
- basic

- diluted


2




3.0p

3.0p




11.8p

11.8p




32.0p

32.0p




 
 
 
 
Group statement of comprehensive income (unaudited)
For the six months ended 30 April 2020




 


 


 
6 months
to
30 April

2020


 
6 months
to
30 April
2019


    Audited
   12months
    to
 31 October
      2019




 


 


£' 000


  £' 000


       £' 000




Profit for the period


 


 142


 564


 1,531




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
 


 


 
(9)
    -  


 
(6)
-


 
(6)
-




 


 


(9)


(6)


(6) 




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)


 
(5)
 
-
 
(5)


 
(2)
 
-
 
(2)




 


 


 


 


 




Other comprehensive income for the year, net of tax


 


 131


 553


 1,527




Total comprehensive income attributable to:
Equity holders of the parent


 


 
 131


 
 553


 
 1,527




 


 


 


 


 




 
 
 
 
 
 
Group balance sheet (unaudited)




at 30 April 2020


 


 
30 April
2020
£' 000


 
30 April
2019
£' 000


Audited
31 October 2019
£'000




Non-current assets


 


 


 


 




Property, plant and equipment
 


 


19,364
 


19,064


19,177




Financial assets


 


32


42


41
 




Deferred tax asset


 


     16


       38


       16




 


 


19,412


19,144


19,234




Current assets


 


 


 


 




Trade and other receivables


 


915


1,322


1,344




Inventories


 


10


10


10




Cash and short-term deposits


 


  45


     61


     51




 


 


970


1,393


1,405




Assets held for sale


 


-


-
 


-




Total assets


 


20,382


 20,537


 20,639




Current liabilities


 


 


 


 




Trade and other payables


 


(452)


(918)


(953)




Financial liabilities


 


(1,681)


(977)


(6,087)




Income tax payable


 


   (267)


   (268)


   (231)




 


 


(2,400)


(2,163)


(7,271)




Non-current liabilities


 


 


 


 




Other payables


 


(296)


(274)


(284)




Financial liabilities


 


(4,531)


(6,011)


(37)




Deferred tax liabilities


 


(394)


(300)


(394)




Defined benefit pension plan


 


 (92)


(40)


 (92)




 


 


(5,313)


(6,625)


(807)




Total liabilities


 


(7,713)


(8,788)


(8,078)




Net assets


 


12,669


11,749


12,561




Capital and reserves


 


 


 


 




Equity share capital


 


264


264


264




Capital redemption reserve


 


673


673


673




Treasury shares


 


(1,585)


(1,573)


(1,562)




Fair value adjustments reserve


 


8


17


17




Currency translation


 


15


10


17




Retained earnings


 


13,294 


12,358


13,152




Total equity


 


12,669


11,749


12,561




 
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 2020                                                           




 


 


 
6 months
to
30 April

2020


 
6 months
to
30 April
2019


Audited
12months
 to
31 October
2019




Operating activities


 


£' 000


£' 000


£' 000




Profit for the period


 


142


564


1,531




Tax expense


 


42


141


313




Net finance costs


 


74


92


180




(Profit) on disposal of non-current assets and assets held for sale


 


 
(15)


 
(173)


 
(185)




Depreciation and impairment of property, plant and equipment


 


87


165


222




Exchange gain on cash, liquid resources and loan


 


-


-


-




Difference between pension contributions paid and recognised in the income statement


 


 
-


 
-


 
52




Decrease/(increase) in trade and other receivables


 


416


(30)


   (72)




(Decrease)/increase in trade and other payables


 


(528)


(204)


(145)




Cash generated from operations


 


218


555


1,896




Income taxes paid


 


-    


          5    


         (97)   




Interest paid


 


(76)  


 (94)   


(184)




Net cash inflow from operating activities


 


 142   


  466   


 1,615




Investing activities


 


 


 


 




Interest received


 


2


2


4




Proceeds from sale of property, plant and equipment and assets held for sale


 


15


229


278




Payments to acquire property, plant and equipment


 


(262)


(323)


(506)




Net cash(outflow)/ inflow from investing activities


 


(245)


(92)


   (224)




Financing activities


 


 


 


 




Preference dividend paid


 


(1)


(1)


(1)




Equity dividends paid


 


-


(203)


 (379)




Consideration received by EBT on sale of shares


 


-


-


56




Consideration paid by EBT on purchase of shares


 


(23)


(256)


(298)




Capital element of finance lease rental payments


 


(6)


(1)


(15)




Repayment of bank borrowings


 


       (6,000)


-


-




Draw down of bank borrowings


 


4,500


-


-




Net cash outflow from financing activities


 


  (1,530)


 (461)


 (637)




(Decrease)/increase in cash and cash equivalents


 


(1,633)


(87)


754




Cash and cash equivalents at the beginning of the period


 


 (3)


 (757) 


(757) 




Cash and cash equivalents at the period end


 


 (1,636) 


 (844)


 (3) 




 
Group statement of cash flows (unaudited) (continued)
 
for the six months ended 30 April 2020                               


 


 


 


 




Represented by:


 


 


 


 




Cash and short term deposits


 


45


61


51




Overdraft


 


(1,681)


(905)


(54)




 


 


(1,636)


(844)


(3)




 
 
Group reconciliation of movements in equity (unaudited)
 
 
 




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
 




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
 
 




 
 
12 months to 31 October 2019
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 2018


264


673


(1,317)


23


15


11,997


11,655




 


 


 


 


 


 


 


 




Profit for the year


-


-


-


-


-


1,531


1,531




Other comprehensive income for the year
net of income tax


-


-


-


(6)


2


-


(4)




Total comprehensive


 


 


 


 


 


 


 




income for the year


-


-


-


(6)


2


1,531


1,527




Consideration received by EBT on sale of shares


 
-


 
-


 
56


 
-


 
-


 
-


 
56




Consideration paid by


 


 


 


 


 


 


 




EBT on purchase of shares        


-


-


(298)


-


-


-


(298)




Loss by EBT on sale of shares


-


-


(3)


-


-


3


-




Equity dividends paid


-


-


-


-


-


(379)


(379)




At 31 October 2019


264


673


(1,562)


17


17


13,152


12,561




                                                                
 
 
 
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 2019 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 2020.
 
2. Going concern
 
Due to the impact of Covid-19 on the Pub sector the Directors have revised budgets and cash flow forecasts.  As noted in the Chairman's statement, the Group is committed to supporting its tenants through this challenging time and has cancelled rents for all licenced houses up to the end of July 2020.  Combined with no revenue from tied product sales during the period of closure this represents a significant reduction in cash generation.  
 
The Board has therefore taken measures to minimise cash outflow by putting all project work and major building work on hold, withdrawing the recommendation to pay a final dividend for the year ending 31 October 2019, the Directors taking a salary reduction and making use of the Government's Coronavirus Job Retention Scheme where necessary.  
 
Additionally, the Directors have been in discussions with the company's bankers to provide flexibility to its existing facilities, which includes an extended overdraft facility should it be required, a twelve-month payment holiday on the term Loan, and a postponement on covenant testing.  With these measures in place, and having prepared prudent budgets and cash flow forecasts, the Board is satisfied that the Group will be able to operate within available resources for a period of at least 12 months from the date of approval of these interim financial statements.  For this reason, the Group continues to adopt the going concern basis of preparation.
 
3. New Standard
 
The following new standards have been adopted, effective from 1 November 2019: 
 
IFRS16:  Leases.  The Group holds a small number of immaterial operating leases as a lessee and as a result there is no material impact upon adoption of the new standard.
 
 
 
Notes to the interim results - continued
 
4. 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.
 
5.  Basic and diluted earnings per share
The calculation of basic earnings per ordinary share is based on earnings of £142,000 (2019: £564,000), being profit after taxation for the period, and on 4,777,939 (2019: 4,786,818) 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.
 
6.  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. 
 
7.  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 2020 has been posted to shareholders today and will be available on our website at www.heavitreebrewery.co.uk.
 
Ends.


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