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Half-year Report

27th Jun 2024 14:00

RNS Number : 1379U
Heavitree Brewery PLC
27 June 2024
 

The Heavitree Brewery PLC

Trood Lane

Matford

Exeter EX2 8YP

 

Date: 27 June 2024

 

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, 27 June 2024, the Directors announce the interim results for the six months ended 30 April 2024.

 

 

Chairman's statement

 

Results

The Company performed well in the first half of this year against the same period last year despite the combination of weeks of cold and wet weather conditions and a very early Easter weekend which one would expect to have an adverse effect on number comparisons. Turnover has in fact increased by 2.1% to £3,396,000 (2023: £3,326,000). As reported in recent years, the turnover figure for this period was again reduced by the IFRS 16 Lease Accounting unwind. This equated to a reduction of £39,500.

The Group has returned an operating profit of £540,000 (2023: operating profit of £523,000), a 3% improvement on the previous year. In turn, profit before tax is £761,000 (2023: £947,000) which includes the book profit of £300,000 realised on the sale of non-core assets (2023 non-core assets : £503,000). The reduction in profit before tax reflects greater non-core asset sales for the corresponding period of 2023.

 

Dividend

The Directors recommend the payment of an increased interim dividend at a rate of 2.25p (2023: 2.0p) per Ordinary and 'A' Ordinary share to those shareholders on the register on 12 July 2024. The dividend will be payable on 02 August 2024.

 

Property

In accordance with the disposal programme of non-core assets, The Exeter Inn in Honiton Clyst was sold.

The new accommodation block at The Ley Arms in Kenn is finished offering quality bedrooms at this very popular pub. 

 

 

 

Heavitree Inc.

I reported at this year's Annual General Meeting that we were awaiting the issue of a 'certificate of good standing' from the Texas Secretary of State before being able to further move towards terminating our American subsidiary. The certificate was duly received and a 'certificate of termination' subsequently issued and filed with the Secretary of State and Texas Comptroller of Tax. The wind-up was officially concluded on 04 June 2024, ending our involvement in the United States which began in 1982.

 

Final Salary Pension Scheme.

I had hoped to be updating conclusively concerning the wind up of the final salary pension scheme. I reported at the Annual General Meeting that the process has been protracted as we remain beholden to the pace of work of the relevant insurance companies which will be supplying annuity reassignments so that future payments can be made directly to individual members. Matters appear to be moving forward with all but one company at the time of writing which means that I am reasonably confident the wind up can be achieved during the second part of the year.

 

Prospects

A retirement planned for the end of this year of one of our longstanding tenants has meant that we have just one pub under notice with no further vacancies within the estate. This should position us well for the second half of the year and we hope for a boost in sales from the Euros football competition and the summer Olympics, both of which will be broadcast at times favourable to licensed hours. The Board's confidence for the second half of the year is reflected in the increase to the interim dividend.

 

 

 

 

 

 

 

N H P TUCKER

Chairman

 

 

Group income statement (unaudited)

For the six months ended 30 April 2024

 

6 months

to

30 April2024

 

6 months

to

30 April

2023

Audited

12 months

to

31 October

2023

Note

£' 000

£' 000

£' 000

Revenue

3,396

3,326

7,346

Change in stocks

-

-

-

Other operating income

106

103

215

Purchase of inventories

(1,281)

(1,271)

(2,991)

Staff costs

(694)

(669)

(1,483)

Depreciation of property, plant and equipment

(106)

(98)

(236)

Other operating charges

(881)

(868)

(1,809) 

 

(2,856)

(2,803)

(6,304)

Group operating profit

540

523

1,042

Profit on sale of property, plant and equipment

Impairment

300

503

-

1,065

(150)

Group Profit before finance costs and taxation

840

1,026

1,957

Finance income

-

-

-

Finance costs

(79)

(79)

(131)

(79)

(79)

(131)

Profit/(loss) before taxation

761

947

1,826

Tax expense

(192)

(213)

(327)

Profit for the period

569

734

1,499

Earnings per share

- basic- diluted

4

 

11.8p11.8p

 

15.3p15.3p

 

31.0p31.0p

 

 

Group statement of comprehensive income (unaudited)

For the six months ended 30 April 2024

 

6 months

to

30 April2024

 

6 months

to

30 April

2023

Audited

12months

to

 31 October

2023

 

£' 000

£' 000

£' 000

Profit for the period

 569

 734

 1,499

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

Tax relating to items that may be reclassified

 

 

 

1

 

-

-

 

-

 

-

-

 

5

 

-

-

 

Other comprehensive income/ (loss) for the year, net of tax

 570

 734

 1,504

Total comprehensive income/ (loss) attributable to:

Equity holders of the parent

 

570

 

 734

 

1,504

 

 

 

 

 

 

Group balance sheet (unaudited)

at 30 April 2024

 

30 April

2024

£' 000

 

30 April

2023

£' 000

Audited

31 October 2023

£'000

Non-current assets

Property, plant and equipment

 

20,058

 

18,291

19,223

Financial assets

453

465

469

 

Deferred tax asset

16

16

16

 

20,527

18,772

19,708

Current assets

Trade and other receivables

1,583

1,715

1,170

Inventories

10

10

10

Cash and short-term deposits

66

566

373

1,659

2,291

1,553

Assets held for sale

29

125

 

70

Total assets

22,215

 21,188

 21,331

Current liabilities

Trade and other payables

(1,228)

(1,296)

(1,005)

Financial liabilities

(560)

(35)

(2,101)

Income tax payable

(454)

(552)

(263)

(2,242)

(1,883)

(3,369)

Non-current liabilities

Other payables

(327)

(299)

(338)

Financial liabilities

(1,721)

(2,126)

(97)

Deferred tax liabilities

(852)

(784)

(852)

Defined benefit pension plan

 (92)

(92)

 (92)

(2,992)

(3,301)

(1,379)

Total liabilities

(5,234)

(5,184)

(4,748)

Net assets

16,981

16,004

16,583

Capital and reserves

Equity share capital

251

251

251

Capital redemption reserve

685

686

686

Own share reserve

(1,044)

(946)

(1,041)

Fair value adjustments reserve

10

10

10

Currency translation

22

14

19

Retained earnings

17,057

15,989

16,658

Total equity

16,681

16,004

16,583

 

Dividends

 

The Directors recommend a dividend of 2.25p to be paid at the half-year. 

 

 

 

 

 

 

Group statement of cash flows (unaudited)

for the six months ended 30 April 2024

 

6 months

to

30 April2024

 

6 months

to

30 April

2023

Audited

12months

 to

31 October

2023

Operating activities

£' 000

£' 000

£' 000

Profit/(loss) for the period

569

734

1,499

Tax expense

192

213

327

Net finance costs

79

78

132

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

 

(300)

 

(503)

 

(1,065)

Depreciation and impairment of property, plant and equipment

 

106

98

236

Impairment of property

 

-

-

150

(Increase)/decrease in trade and other receivables

(413)

(452)

133

Increase/(decrease) in trade and other payables

Impairment of assets

213

-

(38)

-

(130)

-

Cash generated from operations

446

130

1,282

Income taxes paid

-

-

(335)

Interest paid

(93)

 (78)

(166)

Net cash Inflow/(outflow) from operating activities

 353

 52 

 781

Investing activities

Interest received

14

-

-

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

341

564

1,202

Payments to acquire property, plant and equipment

 (940)

(577)

(1,774)

Net cash (outflow) from investing activities

(585)

(13)

 (572)

Financing activities

Preference dividend paid

(1)

(1)

(1)

Equity dividends paid

(170)

(171)

(267)

Consideration received by EBT on sale of shares

67

636

61

Consideration paid by EBT on purchase of shares

(69)

(45)

(140)

Own Share buyback

-

(575)

-

Capital element of finance lease rental payments

(20)

(27)

(76)

Repayment of bank borrowings

(99)

(100)

(252)

Mortgage Receipts

15

22

51

Net cash outflow from financing activities

(277)

(261)

(624)

(Decrease) in cash and cash equivalents

(509)

(222)

(415)

Cash and cash equivalents at the beginning of the period

 373

 788

788 

Cash and cash equivalents at the period end

(136)

 566

 373 

 

Group statement of cash flows (unaudited) (continued)

 

for the six months ended 30 April 2024

Represented by:

Cash and short term deposits

66

566

373

Overdraft

(202)

-

-

Cash and cash equivalents

(136)

566

373

 

Group reconciliation of movements in equity (unaudited)

 

 

 

6 months to

Equity

Capital

Own

Fair

30 April 2024

share

redemption

share

value

Currency

Retained

Total

capital

reserve

reserve

adjustment

translation

earnings

equity

£' 000

£' 000

 £' 000

£' 000

£' 000

£' 000

£' 000

At 1November 2023

251

686

(1,041)

10

19

16,658

16,583

Profit for the period

-

-

-

-

-

569

569

Other comprehensive income for the period, net of income tax

-

-

-

-

1

-

1

Total comprehensive income for the period

-

-

-

-

1

569

570

Consideration

received by EBT on sale of shares

 

 

 

-

 

 

 

-

 

 

 

67

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

67

Consideration paid by EBT on purchase of shares

-

-

(69)

-

-

-

(69)

Buy back and cancellation of own shares

-

-

-

-

-

-

-

Loss by EBT on sale of shares

-

-

-

-

-

-

-

Equity dividend paid

-

-

-

-

-

(170)

(170)

At 30 April 2024

251

686

(1,043)

10

20

17,057

16,981

 

 

 

 

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

 

 

 

 

12 months to 31 October 2023

Audited

 

 

Equity share capital

£000

Capital redemption reserve

£000

Own

share reserves

£000

Fair value adjustment reserve

£000

 

Currency

Translation

£000

 

Retained earnings

£000

 

Total equity

£000

At 1 November 2022

264

673

(1,537)

10

14

16,001

15,425

Profit for the year

-

-

-

-

-

1,499

1,499

Other comprehensive income for the year

net of income tax

-

-

-

-

5

-

5

Total comprehensive

income for the year

-

-

-

-

5

1,499

1,504

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

(13)

13

575

-

-

(575)

-

Equity dividends paid

-

-

-

-

-

(267)

(267)

At 31 October 2023

251

686

(1,041)

10

19

16,658

16,583

 

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.

 

 

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 146,957.

 

 

 

 

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 2023 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 27 June 2024.

 

2. Going concern

The cost of living crisis was taken into account when forecasting for this financial year, as this continues to affect all areas of the hospitality sector. We have seen a steady start to the first half of the financial year and have exceeded budget expectations, while this is a positive start the factors affecting the industry continue and with this in mind the Board continues with its cautious approach in the second half of the financial year. The Group remains well within its forecasts to April 2025 with £2.8M overdraft available as at April 2024 and the term loan has been decreased in the year by £99k. 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 £300k 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 £569,000 (April 2023:£734,000), being profit after taxation for the period, and on 4,822,277 (April 2023: 4,794,270) 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 2024 has been posted to shareholders today and will be available on our website at www.heavitreebrewery.co.uk.

 

Ends.

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