REG - Heavitree Brewery - Preliminary Result Announcement
19/02/2025 14:00
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RNS Number : 6877X Heavitree Brewery PLC 19 February 2025
The Heavitree Brewery PLC
Trood Lane
Matford
Exeter EX2 8YP
Date: 19 February 2025
Contact: Graham Crocker - Director - 01392 217733
Nicola McLean - Company Secretary - 01392 217733
Patrick Castle /Anita Ghanekar - Shore Capital - 0207 408 4052
Following a Board Meeting held today, 19 February 2025, the Directors announce
the preliminary statement of results for the year ended 31 October 2024.
ISIN: GB0004182720 for 'A' Limited Voting Ordinary Shares
ISIN: GB0004182506 for Ordinary Shares
Chairman's statement
Turnover has increased by 2% to £7,498,000 (2023: £7,346,000) returning an
operating profit of £1,424,000 (2023: £1,054,000), an increase of 35% on the
previous year. Shareholders will recall that operating profit was adversely
affected last year by significant individual repair spends at five of our
houses in 2023. In this year under review our total repairs spend was
reduced from the previous year to £890,000 (2023: £1,061,000) but it still
remains a significant figure as we strive to balance the maintenance of our
properties to the highest standard whilst being subject to mounting building
costs. It is not a coincidence but a positive consequence of this policy
that the two named storms to hit our region so far this winter have not caused
any significant damage across the estate.
The Board is pleased with the Company's performance and the numbers reported
in this set of accounts. However, the trading environment has remained tough
at the sharp end with the cost of doing business casting a shadow over the
good levels of turnover being reported in our pubs. The new Government's
budget in October has not helped in this respect. The announcements
concerning the increases in business rates and Employer National Insurance
contributions will come into effect in April. Particularly concerning for
pubs with a tradition of employing many part time staff is the lowering of the
threshold at which National Insurance is applied with the result that many
employees will be subject to NI when they were not before. Very small pubs
may not be affected but operations the size of our houses will be subject to
effectively a double increase in the cost of employing personnel. The 1p per
pint of beer reduction in duty announced at the budget is, of course, welcome
but does little to mitigate the increase in cost pressures.
Dividend
The Board is particularly pleased with the Company's performance in the second
half of the year after the steady start I reported on at the half year.
Consequently, the Directors recommend a 10% increase in the final dividend for
the year ended 31 October 2024 to 3.85p per Ordinary and "A" Ordinary Limited
Voting share to those shareholders on the Register on 14 March 2025. The
dividend, subject to shareholder approval at the Annual General Meeting to be
held on 16 April 2025, will be paid on 25 April 2025.
Property
Plans for the rebuild of The Jolly Sailor at East Ogwell have been submitted
to Teignbridge District Council and seem to have attracted positive comment
and support from people local to the pub. I hope to report further on this
at the half-year.
We have continued with our policy during the year of selling non-core assets
to reduce debt. The Exeter Inn in Honiton Clyst was sold together with an
adjacent parcel of land returning a book profit of £308,000. Two further
properties are the subject of offers and/or are being marketed for sale at the
end of the financial year, and I shall report further on these at the
half-year.
Chairman's statement (continued)
Pension Scheme
I reported at the half-year that the wind-up of the Company's final salary
pension scheme had not happened and yet at the time I was "reasonably
confident" that the conclusion of the process would have happened before
year-end. Ill-chosen words on my part; unfortunately, "reason" is not
playing its part, and we have remained thwarted by the pace of work of the
insurance companies who are transferring the annuities into the members own
names. Both we and the scheme's actuary continue to apply pressure for a
completion.
Personnel
On 15 January 2025 a stock exchange announcement reported that Graham Crocker
had decided to step back from his Managing Director and Finance Director
roles. Effective from 1 February 2025 Terry Wheatley has been appointed
Managing Director and Nicola McLean has joined the Board of Directors as
Finance Director. I could not be more delighted with these two appointments,
and we have been blessed to have such strong candidacy from within our
organisation to be able to fill these two roles. I am also delighted that
Graham will assist with a smooth transition by remaining on the Board of
Directors as a full-time executive until April 2026.
Graham joined the Company in 1974. He rose to Group Accountant and in 1989
became Company Secretary. He was appointed to the Board as Finance Director
in 1991 and then also became the Managing Director in 2007. Over the years
his total dedication to the business added to his wealth of knowledge about
the Company and its long history, together with an uncanny ability to recall
the finest of details (and immediately be able to put his finger on the
corresponding archive file!) has allowed him to direct Heavitree Brewery with
subtlety and great charm to today's position of strength. I am taking this
opportunity to thank Graham on behalf of the Board, all shareholders,
employees and pensioners including the previous Chairman, and all other
stakeholders, for the many years of his composed direction of our business.
Prospects
As I have said in previous years, the success of the Company is so reliant on
our tenants' success in the pubs which is aided by our dedicated team at head
office and the relationship we enjoy with the people we do business with. At
the time of writing, we have three vacancies available within the estate, all
of which are attracting strong interest from operators with proven track
records. The Board is confident that we are well positioned to face 2025 and
we are delighted to be raising the final dividend to give a total increase of
10.9% for the year.
N H P TUCKER
Chairman
19 February 2025
Income Statement
for the year ended 31 October 2024
Total Total
2024 2023
Notes £000 £000
Revenue 7,498 7,346
Other operating income 294 215
Purchase of inventories (2,982) (2,991)
Staff costs (1,505) (1,483)
Depreciation of property, plant and equipment
(222) (236)
Other operating charges (1,659) (1,797)
(6,074) (6,292)
Operating profit 1,424 1,054
Profit on sale of property plant and equipment
Impairment of fixed assets 308 1,065
- (150)
Profit before finance costs and taxation
1,732
1,969
Finance costs (172) (131)
(172) (131)
Profit before taxation 1,560 1,838
Tax expense (242) (327)
Profit for the year attributable to equity holders
1,318 1,511
Basic earnings per share 2 27.2p 31.1p
Diluted earnings per share 2 27.2p 31.1p
Statement of Comprehensive Income
for the year ended 31 October 2024
2024 2023
£000 £000
Profit for the year 1,318 1,511
Other comprehensive income for the year, net of tax 1,318 1,511
Total comprehensive income attributable to:
Equity holders 1,318 1,511
Balance Sheet
at 31 October 2024
2024 2023
£000 £000
Non-current assets
Property, plant and equipment 17,261 16,891
Investment property 2,258 2,255
Right of use asset 116 77
19,635 19,223
Financial assets 436 503
Deferred tax asset 16 16
20,087 19,742
Current assets
Inventories 10 10
Trade and other receivables 1,217 1,165
Cash and cash equivalents 754 373
1,981 1,548
Assets held for sale 504 70
Total assets 22,572 21,360
Current liabilities
Trade and other payables (1,013) (1,115)
Financial liabilities (746) (2,101)
Income tax payable (347) (263)
(2,106) (3,479)
Non-current liabilities
Other payables (326) (338)
Financial liabilities (1,638) (97)
Deferred tax liabilities (875) (852)
Defined benefit pension plan deficit (92) (92)
(2,931) (1,379)
Total liabilities (5,037) (4,858)
Net assets 17,535 16,502
Capital and reserves
Equity share capital 251 251
Capital redemption reserve 686 686
Own share reserve (1,049) (1,041)
Fair value adjustments reserve 10 10
Retained earnings 17,637 16,596
Total equity 17,535 16,502
Statement of Cashflows
for the year ended 31 October 2024
2024 2023
£000 £000
Operating activities
Profit for the year 1,318 1,511
Tax expense 242 327
Net finance costs 172 132
Profit on disposal of non-current assets and assets held for sale (308) (1,065)
Depreciation and impairment of property, plant and equipment
222 236
Decrease in trade and other receivables 11 133
(Decrease) in trade and other payables (73) (142)
Impairment of fixed assets - 150
Mortgage receipts received 33 51
Cash generated from operations 1,617 1,333
Income taxes paid (135) (335)
Interest paid (200) (166)
Net cash inflow from operating activities 1,282 832
Investing activities
Proceeds from sale of property, plant and equipment and assets held for sale
370 1,202
Payments to acquire property, plant and equipment (1,138) (1,774)
Interest received 28 -
Net cash (outflow)/inflow from investing activities (740) (572)
Financing activities
Preference dividend paid (1) (1)
Equity dividends paid (277) (267)
Consideration received by EBT on sale of shares 67 61
Consideration paid by EBT on purchase of shares (75) (140)
Capital element of finance lease rental payments (29) (76)
Loan repayment (246) (252)
Other loans 400 -
received
Net cash outflow from financing activities (161) (675)
Increase/(decrease)/increase in cash and cash equivalents 381 (415)
Cash and cash equivalents at the beginning of the year 373 788
Cash and cash equivalents at the year end 754 373
Statement of changes in equity
for the year ended 31 October 2024
Equity share capital Capital redemption reserve Own share reserve Fair value adjustment reserve
£000 £000 £000 £000 Retained earnings Total equity
£000 £000
At 1 November 2022 264 673 (1,537) 10 15,927 15,337
Profit for the year - - - - 1,511 1,511
Other comprehensive
income for the year - - - - - 1
net of income tax
Total comprehensive
income for the year - - - - 1,511 1,511
Consideration received
by EBT on sale of
shares - - 61 - - 61
Consideration paid by
EBT on purchase of shares - - (140) - - (140)
Buy back of own shares
Equity dividends paid (13) 13 575 - (575) -
- - - - (267) (267)
At 31 October 2023 251 686 (1,041) 10 16,596 16,502
Equity share capital Capital Own share reserve Fair value adjustment reserve
£000 redemption reserve £000 £000 Retained earnings Total equity
£000 £000 £000
At 1 November 2023 251 686 (1,041) 10 16,596 16,502
Profit for the year - - - - 1,318 1,318
Other comprehensive
income for the year - - - - - -
net of income tax
Total comprehensive
income for the year - - - - 1,318 1,318
Consideration received
by EBT on sale of
shares - - 67 - - 67
Consideration paid by
EBT on purchase of shares - - (75) - - (75)
Equity dividends paid - - - - (277) (277)
At 31 October 2024 251 686 (1,049) 10 17,637 17,535
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.
Own share reserve
Own share reserve represents the cost of The Heavitree Brewery PLC shares
purchased in the market and held by The Heavitree Brewery PLC Employee
Benefits Trust ('EBT').
At 31 October 2024 the Company held 98,938 Ordinary Shares and 51,156 'A'
Limited Voting Ordinary Shares (2023: 98,938 Ordinary Shares and 59,641 'A'
Limited Voting Ordinary Shares) of its own shares. During the year there were
purchases of 48,946 and sales of 57,431 '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.
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 2024. 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 2024 and 31 October 2023. 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 UK adopted international accounting standards as applied in accordance
with the Companies Act 2006. The accounting policies have been consistently
applied and are described in full in the statutory financial statements for
the year ended 31 October 2024, which are expected to be mailed to
shareholders on 06 March 2025. The financial statements will also be
available on the Company's website www.heavitreebrewery.co.uk
(http://www.heavitreebrewery.co.uk) .
Going Concern
The Directors continue to closely monitor the Company's financial resources.
This included a continual review of the medium-term financial plan, along with
sensitised cash flow forecasts for 12 months from the date of approval of
these financial statements.
With legislation arising from the Budget announced on the 30 October 2024
expected to take effect in the new financial year, this will bring about more
difficulties for the industry. The increases in National Insurance (NI) rates
for Employers and the threshold change will bring new challenges for us and
our Tenants, while some of the very small Tenancies may not be affected by the
NI change due to the nature of the seasonal business many employ a lot of part
time staff during busy periods so a large amount of the Estate will be
affected. Aside from the NI rates changes the biggest impact may be the
decrease in the allowance of business rates as this will affect all Tenants.
We are waiting to see as an industry if the government will step up and change
the thresholds on rates to mitigate some of this impact. The knock on impact
on the Company from these factors is potential for more vacancies with tenants
which would result in reduced rental revenue and potential for reduced demand
resulting in a reduction in wet sales revenue. This has been taken into
account when forecasting wet sales revenue and rental revenue for the coming
year and is included within the forecast for the period to April 2026. The
forecast for capital receipts in 2025 includes two assets already held for
sale which should complete in the calendar year. Any further decisions on the
sale of assets will be discussed in Board meetings during the year. These
forecasts leave the Company with minimum headroom of over £2m on an overdraft
facility of £3m. The Board will continue to review cashflows as part of its
ongoing strategy.
The Board took the decision a few years ago 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 Company. The Board
originally 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. The process of disposal
and the assets originally identified is now under a complete review. This year
the Company has sold one (2023: 7) of the non-core assets resulting in profits
of £308,000 being realised from this sale, leaving the balance of the Term
Loan at 31 October 2024 of £1,819,000.
The Board continues to liaise with the bank on a regular basis for trading
updates. The Board negotiated a new 5 year banking facility including the Term
Loan and the £3m overdraft facility at the beginning of the financial year.
The overdraft facility terms remain the same with no increase on interest rate
over the base rate. A small reduction in interest rate on the Term Loan over
bank of England base rate has been achieved with an adjustment in the debt
service covenant which is now an EBITDA calculation only. The forecasts
indicate that the Company will be able to operate within its new covenants and
facilities. Loans from other individuals including related parties have been
drawn down in the year, any of these loans outstanding at the end of the
financial year have been repaid in full in the new financial year.
The Directors are satisfied that the Company's forecasts and projections, have
included the anticipated cost increases which may impact the Estate. This has
been reflected in the budgets with a decrease percentage 3.5% built in on wet
revenue and rental revenue. The current trading performance of the Company
also shows that it will be able to operate within the level of its facilities
and covenant testing for the 12 months from the date of these financial
statements. With the support from the bank there are no material uncertainties
in relation to going concern. For this reason, the Company 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 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:
2024 2023
£000 £000
Profit for the year 1,318 1,511
2024 2023
N(o). N(o).
(000) (000)
Basic weighted average number of shares (excluding own shares) 4,840 4,840
3. Dividends paid and proposed
2024 2023
£000 £000
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2023: 3.5p (2022: 3.5) 176 176
First dividend for 2024: 2.25p (2023: 2.00) 113 101
Less dividend on shares held within employee share schemes (12) (10)
Dividends paid 289 267
Proposed for approval at AGM
(not recognised as a liability as at 31 October 2024)
Final dividend for 2024 3.85p (2023 : 3.5p) 193 176
Cumulative preference dividends 1 1
4. Segment information
Primary reporting format - business segments
During the year the Company operated in one business segment - leased estates.
Leased estate represents properties which are leased to tenants to operate
independently from the Company, under tied and free of tie tenancies.
Secondary reporting format - geographical segments
Revenue is based on the geographical location of customers. All revenue is
generated in, and all assets are held in the United Kingdom.
5. General information
The 2024 Annual Report and Financial Statements will be published and posted
to shareholders on 6th March 2025 Further copies may be obtained by contacting
the Company Secretary at The Heavitree Brewery PLC, Trood Lane, Matford,
Exeter EX2 8YP. The 2024 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 16 April
2025 at 11.30am.
Ends.
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