REG - Heavitree Brewery - Preliminary Statement
15/02/2022 15:00
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RNS Number : 7519B Heavitree Brewery PLC 15 February 2022
The Heavitree Brewery PLC
Trood Lane
Matford
Exeter EX2 8YP
Date: 15 February 2022
Contact: Graham Crocker - Managing Director - 01392 217733
Nicola McLean - Company Secretary - 01392 217733
Patrick Castle /Anita Ghanekar - Shore Capital - 0207 408 4052
Following a Board Meeting held today, 15 February 2022, the Directors announce
the preliminary statement of results for the year ended 31 October 2021.
ISIN: GB0004182720 for 'A' Limited Voting Ordinary Shares
ISIN: GB0004182506 for Ordinary Shares
Chairman's statement
The results reported at the half-year showed that this Company, like most in
the hospitality sector, inevitably would be reporting at the year-end numbers
that had been detrimentally affected by the ongoing Covid-19 pandemic. At
the beginning of the year under review, during November 2020, our pubs were
under lockdown. This was followed by trading under restrictions in December
until Boxing Day when the Government implemented another lockdown which
continued until 12th April. Following this our pubs were permitted to trade
with restrictions until 19th July when social distancing measures were
eased. As in the previous year, the Board has remained determined to support
and protect our Tenants and Leaseholders as best we can during the periods of
lockdown and the periods of restricted trading by waiving and discounting
rents as appropriate. Consequently, only three months of the year had rents
collected at the full rate. This has had an increased impact on turnover
against the previous year and revenue for the year under review has decreased
by 7.98% to £4,618,000 (2020: £5,019,000). The Group returned a small
operating loss of £59,000. Profit before taxation was £1,114,000 (2020:
£414,000).
The IFRS 16 Lease Accounting calculation which apportions rental income to
each year of the full term of the lease and which I referred to in last year's
statement, has once again skewed the position by causing the inclusion of
significant rental income that was not actually collected, nor charged, in the
year.
Also, in April 2021, The Jolly Sailor in East Ogwell was destroyed by a
devastating fire. Thankfully, and most importantly, our Tenants John Turner
and Amanda Bearne and their customers were not harmed, nor any members of the
local emergency services who bravely attended the scene and prevented any
spread to other properties in the village. At the time of writing, the site
has been made secure while we await the decision, following the recommendation
of the conservation officer, of a demolition application of the damaged,
unstable gable end. Included in the operating loss for the year is the
impairment loss £119,000 for The Jolly Sailor, in order to write off the book
'historical cost' carrying value.
The Company has continued the programme of selling some non-core assets and
this has realised a book profit of £1,318,000 (2020: £293,000) in this
respect. This policy is in line with the Board's decision to reduce the
Company's level of borrowing.
Dividend
At the half-year, I reported that the Directors would not consider the payment
of a dividend for the financial year 2020/2021. When trading does return to
some sort of normality, the Board will be able to review future dividend
payments.
Sale of Property
The properties that were sold during the year are listed as follows:
The Maltsters Arms in Harbertonford, which had been closed since September
2018. The adjacent cottage Bridge house. The garage opposite the pub.
The Castle Inn in Holcombe.
The Toby Jug Inn in Bickington which had been closed since May 2003.
Rose Cottage in Strete.
Two flats at the Old St.Loye's Hotel site.
Land at the rear of the Globe Inn in Chudleigh.
Two garden plots in Abbotskerswell.
Within the financial year, the Company made a reduction in borrowings of
£661,000. Early in the new year following the completion of further sales
of The Victoria Inn in Ashburton with a small adjoining cottage and the
Maltster's Arms site in Clyst St Mary, a prepayment on the term loan of
£750,000 was made.
Heavitree Inc.
The final piece of land held by our American subsidiary in Houston has been
sold for $45,000 (£33,000). This is a post balance sheet event which will
end our involvement in Houston. This started in 1982 with our investment in a
company operating an English style pub and restaurant in the city called The
Bear and Ragged Staff. The collapse of the oil price and, in turn, the
collapse of the Houston economy led to the demise of the operating company and
this Company taking direct control of the site in 1983. In 1986 the original
site was swapped for a parcel of undeveloped land. Over the years, a series
of land sales has distributed cash to the parent Company.
Pension Scheme
In January 2022 the trustees of the Final Salary Pension Scheme and the
Company formally gave notice to trigger the wind-up of the Scheme. The
Scheme was closed to new members in July 2002, with no future accrual since
April 2006 and the last deferred members transferred out in June 2018. Wind-up
must be completed within a two-year period. As part of the wind-up, retired
members who had annuities purchased on their behalf in the Scheme's name will,
in due course, have those annuities transferred into their own names.
Personnel
I am very sad to report that Joan Ballman who was the landlady of our
Locomotive Inn in Exeter since 1988 and who held the tenancy of The Mitre in
Exeter before that, passed away in December 2021. Joan commanded the utmost
respect and affection from all of us at head office during her long time at
The Locomotive and the huge number of attendees at her funeral showed how she
was held in the highest esteem by the many who visited her pub. We will all
miss Joan.
A similarly huge figure from the Exeter licencing trade was Derek Elson who we
also sadly lost early in 2022. Derek (with his wife Adrienne) was probably
ahead of his time in terms of being a multi pub operator and started as our
very first Manager when taking on The Gardeners' Arms in Exeter in 1965. He
was then appointed as our Manager at The Upton Vale in Torquay in 1968 and
after that held tenancies or leases with us at The St. Loye's Hotel in Exeter,
The George in Babbacombe and most famously at The Kings Arms in Exeter, which
he took on in 1976. Our Managing Director even managed to persuade him to come
out of retirement to help us by taking The Royal Oak in Exeter, for a short
period, while a new tenant was being sought. We will always be grateful to
Derek for a long, happy and highly respected association with this Company and
again, he will be greatly missed by many.
Prospects
The trading environment remains testing; although there was no actual
lockdown, Christmas trading was hindered as customers became unsettled by the
recent infection rate peak caused by the Omicron variant. Staff shortages
and increasing costs are also a continual concern.
However, the success of the vaccination programme has clearly helped in
encouraging customers to support pubs and enjoy everything they have to offer
and some comfort for the future was drawn from the strong trade during late
Summer and Autumn. Also, the houses I visited during the variant affected
build up to Christmas and in the early new year showed not only how
professional and robust our operators are but also how determined our
customers are to enjoy the offer provided by our great pubs.
N H P TUCKER
Chairman
15 February 2022
Group income statement
for the year ended 31 October 2021
Total Total
2021 2020
Notes £000 £000
Revenue 4,618 5,019
Other operating income 310 317
Purchase of inventories (1,909) (2,065)
Staff costs (1,349) (1,310)
Depreciation of property, plant and equipment
(177) (177)
Other operating charges (1,552) (1,245)
(4,677) (4,480)
Group operating (loss)/profit (59) 539
Profit on sale of property plant and equipment
Impairment of fixed assets 1,318 293
- (279)
Group profit before finance costs and taxation 1,259 553
Finance income - 2
Finance costs (145) (141)
Other finance costs - pensions - -
(145) (139
Profit before taxation 1,114 414
Tax expense (313) (300)
Profit for the year attributable to equity holders of the parent
801 114
Basic earnings per share 2 16.6p 2.4p
Diluted earnings per share 2 16.6p 2.4p
Group statement of comprehensive income
for the year ended 31 October 2021
2021 2020
£000 £000
Profit for the year 801 114
Items that will not be reclassified to profit or loss
Fair value adjustment on investment in equity 5 (12)
5 (12)
Items that may be reclassified to profit or loss
Exchange rate differences on translation of subsidiary undertaking
- (4)
- (4)
Other comprehensive income for the year, net of tax 806 98
Total comprehensive income attributable to:
Equity holders of the parent 806 98
Group balance sheet
at 31 October 2021
2021 2020
£000 £000
Non-current assets
Property, plant and equipment 16,436 16,615
Investment property 1,490 2,130
Right of use asset 71 -
17,997 18,745
Financial assets 34 30
Deferred tax asset 16 16
18,047 18,791
Current assets
Inventories 10 10
Trade and other receivables 1,936 1,277
Cash and cash equivalents 52 49
1,998 1,336
Assets held for sale 883 219
Total assets 20,928 20,346
Current liabilities
Trade and other payables (984) (666)
Financial liabilities (1,158) (1,520)
Income tax payable (108) (237)
(2,250) (2,423)
Non-current liabilities
Other payables (318) (274)
Financial liabilities (4,069) (4,322)
Deferred tax liabilities (734) (536)
Defined benefit pension plan deficit (92) (92)
(5,213) (5,224)
Total liabilities (7,463) (7,647)
Net assets 13,465 12,699
Capital and reserves
Equity share capital 264 264
Capital redemption reserve 673 673
Treasury shares (1,529) (1,522)
Fair value adjustments reserve 10 5
Currency translation 13 13
Retained earnings 14,034 13,266
Total equity 13,465 12,699
Group statement of cash flows
for the year ended 31 October 2021
2021 2020
£000 £000
Operating activities
Profit for the year 801 114
Tax expense 313 301
Net finance costs 145 139
Profit on disposal of non-current assets and assets held for sale (1,200) (293)
Depreciation and impairment of property, plant and equipment 177 177
(Increase)/decrease in trade and other receivables (442) 220
Increase/(decrease) in trade and other payables 353 (274)
Impairment of fixed assets - 279
Cash generated from operations 147 663
Income taxes paid (245) (151)
Interest paid (145) (141)
Net cash(outflow)/ inflow from operating activities (243) 371
Investing activities
Interest received - 2
Proceeds from sale of property, plant and equipment and assets held for sale
1,411 186
Payments to acquire property, plant and equipment (473) (315)
Net cash inflow/(outflow) from investing activities 938 (127)
Financing activities
Preference dividend paid (1) (1)
Equity dividends paid - -
Consideration received by EBT on sale of shares 41 62
Consideration paid by EBT on purchase of shares (81) (25)
Capital element of finance lease rental payments (25) (9)
Loan repayment (187) (1,500)
Mortgage receipts received 35 -
Net cash outflow from financing activities (218) (1,473)
Increase/(decrease) in cash and cash equivalents 477 (1,229)
Cash and cash equivalents at the beginning of the year (1,232) (3)
Cash and cash equivalents at the year end (755) (1,232)
Group statement of changes in equity
for the year ended 31 October 2021
Equity share capital Capital redemption reserve Fair value adjustment reserve
£000 £000 Treasury shares £000 Currency translation Retained earnings Total equity
£000 £000 £000 £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 - - - (12) (4) - (16)
net of income tax
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 - - (24) - - - (24)
Loss by EBT on sale
of shares - - 2 - - - 2
Equity dividends paid - - - - - - -
At 31 October 2020 264 673 (1,522) 5 13 13,266 12,699
Equity share capital Capital redemption reserve Fair value adjustment reserve
£000 £000 Treasury shares £000 Currency translation Retained earnings Total equity
£000 £000 £000 £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 - - - 5 - - 5
net of income tax
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
(nominal amount only) arising or deemed to arise on the issue of the Company's
equity share capital, comprising Ordinary Shares of 5p each and 'A' Limited
Voting Ordinary Shares of 5p each.
Capital redemption reserve
The capital redemption reserve arises on the re-purchase and cancellation by
the Company of 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
Benefits Trust and Employee Share Option Scheme ('EBT').
At 31 October 2021 the Group held 193,053 Ordinary Shares and 238,310 'A'
Limited Voting Ordinary Shares (2020: 183,719 Ordinary Shares and 254,153 'A'
Limited Voting Ordinary Shares) of its own shares. During the year there were
purchases of 9,334 Ordinary Shares and 17,204 'A 'Limited Voting ordinary
Shares and sales of 33,147 'A; Limited Voting Ordinary Shares.
Fair value adjustments reserve
The fair value adjustments reserve is used to record differences in the year
on year fair value of the investment classified as fair value through other
comprehensive income.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange
differences arising from the translation of the financial statements of
foreign subsidiaries.
Notes to the preliminary announcement
1. Basis of preparation
These figures do not constitute full accounts within the meaning of Section
396 of the Companies Act 2006. They have been extracted from the statutory
financial statements for the year ended 31 October 2021. The statutory
financial statements have not yet been delivered to the Registrar of
Companies.
The auditors, PKF Francis Clark, have reported on the accounts for the years
ended 31 October 2021 and 31 October 2020. Their audit reports in both years
were unqualified, did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
did not contain a statement under Section 498 (2) or (3) of the Companies Act
2006 in respect of those accounts.
The financial information in this statement has been prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted for use in
the United Kingdom. The accounting policies have been consistently applied and
are described in full in the statutory financial statements for the year ended
31 October 2021, which are expected to be mailed to shareholders on 11 March
2022. The financial statements will also be available on the Group's website
www.heavitreebrewery.co.uk (http://www.heavitreebrewery.co.uk) .
Going concern
With the continued uncertain nature of the pandemic and further lockdowns and
restrictions being in place during this financial year, the Directors have
considered the Group's financial resources. This had included a further review
of the medium-term financial plan, along with a range of cash flow forecasts
for 12 months from the date of approval of these financial statements. The
Group has positive cash generation from its operations before tax and interest
and the gearing remains low. These forecasts include a reduction in trade in
the financial year to October 2022 due to an anticipated decrease in footfall
and assume that there will be no further lockdown or significant trading
restrictions. The mitigation measures which are in place in order to protect
the cash position of the business have been incorporated into the forecasts
for future cash positions. The forecast for capital receipts in 2022 includes
non-core asset sales of £2m of which £880,000 has been received. These
forecasts leave the Group with headroom of over £1.4m on an overdraft
facility of £3m. The Board will continue to review cashflows as guidance from
Government changes.
The Board took the decision last year to accelerate the paying down of its
£4.5m term loan by the selling of non-core assets to secure its current
position and the long term trading position of the Group. The Board identified
up to 15 non-core assets with a value of between £5m and £7m to be realised
over a period of 2 to 3 years. These include unlicensed properties and
developments with permissions which are already within the Estate. This year
the Group has sold 9 of the non-core assets resulting in profits of
£1,318,000 being realised from these sales, with a further property
completing early in the new financial year this has enabled the Group post
year end to make a further prepayment on the term loan of £750,000, meaning
that by the 31 December 2021 the Group has paid down £992,000 on the loan.
The Board has continued to engage with the bank regarding its facilities and
forward trading, it has in place a waiver of covenant testing until April 2022
along with the agreement on paying down of loan facilities, projections show
that there is a good level of headroom in the debt service cover covenant both
to April 2022 and October 2022. However one covenant will fail the April 2022
testing but will have headroom in October 2022. A further waiver has been
received from the bank in respect of the April 2022 covenant test. The
Directors are satisfied that the Group's forecasts and projections, which take
account the anticipated changes which will 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 12
months from date of approval. With value in the Estate being realised over
time and with the support from the bank there are no material uncertainties in
relation to going concern. For this reason, the Group continues to adopt the
going concern basis in preparing its financial statements.
2. Earnings per share
Basic earnings per share amounts are calculated by dividing profit for the
year attributable to ordinary equity holders of the parent by the weighted
average number of Ordinary shares and 'A' Limited Voting Ordinary shares
outstanding during the year.
The following reflects the income and shares data used in the basic and
diluted earnings per share
Computation:
2021 2020
£000 £000
Profit for the year 801 114
2021 2020
N(o). N(o).
(000) (000)
Basic weighted average number of shares (excluding treasury shares) 4,824 4,801
There have been no other transactions involving ordinary shares or potential
ordinary shares between the reporting date and the date of completion of these
financial statements.
3. Dividends paid and proposed
2021 2020
£000 £000
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2020: nil (2019: nil) - -
First dividend for 2021: nil (2020: nil) - -
Less dividend on shares held within employee share schemes - -
Dividends paid - -
Proposed for approval at AGM
(not recognised as a liability as at 31 October)
Final dividend for 2021 nil (2020: nil) - -
Cumulative preference dividends 1 1
4. Segment information
Primary reporting format - business segments
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, under tied and free of tie tenancies.
Secondary reporting format - geographical segments
The following tables present revenue, expenditure and certain asset
information regarding the Group's geographical segments for the years ended 31
October 2021 and 2020. Revenue is based on the geographical location of
customers and assets are based on the geographical location of the asset.
Segment information
Year ended 31 October 2020 UK United States Total
£000 £000 £000
Revenue
Sales to external customers 5,019 - 5,019
Other segment information
Segment assets 20,304 42 20,346
Total Assets 20,304 42 20,346
Capital expenditure
Property, plant and equipment 355 - 355
Year ended 31 October 2021 UK United States Total
£000 £000 £000
Revenue
Sales to external customers 4,618 - 4,618
Other segment information
Segment assets
21,382 42 21,424
Total Assets 21,382 42 21,424
Capital expenditure
Property, plant and equipment 473 - 473
Right of use asset 71 71
5. General information
The 2021 Annual Report and Financial Statements will be published and posted
to shareholders on 11th March 2022 Further copies may be obtained by
contacting the Company Secretary at The Heavitree Brewery PLC, Trood Lane,
Matford, Exeter EX2 8YP. The 2021 Annual Report and Financial Statements will
also be available on the Company's website at
http://www.heavitreebrewery.co.uk/financial/
The Annual General Meeting will be held at the Registered Office on 13 April
2022 at 11.30am.
Ends.
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