Heavitree Regulatory News (HVT)

The Heavitree Brewery PLC

Trood Lane

Matford

Exeter EX2 8YP

Date: 29 June 2022

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, 29 June 2022, the Directors announce the interim results for the six months ended 30 April 2022.

Chairman's statement

I am satisfied to report that the Company has begun to move on from the intensely difficult and much reported upon trading environments of the previous two years. Although there remains much to be cautious about in the months ahead, at this half-year under review, we have returned to a performance level on a par with 2019 before the various measures implemented to combat the Covid 19 pandemic impacted the whole of our sector. Having reported a small operating loss at the previous year-end, this half-year has generated a turnover of £3,290,000 and returned an operating profit of £522,000. The turnover figure has been reduced by £109,000 due to the IFRS 16 Lease Accounting unwind corresponding to the positive write back effect in previous years. I have explained the mechanics of this accounting standard in previous statements. 

Results

The Group has returned an operating profit of £522,000 (2021: an operating loss of £647,000) at the half-year. Profit before tax is £1,063,000 (2021: a loss before tax of £76,000) after a book profit of £601,000 (2021: a book profit £647,000) was achieved on Property sales.

Dividend

The Directors do not recommend the payment of a dividend at the half-year. The Board considers the payment of dividends to be an intrinsic part of our business and we are determined to resume the payment of dividends at the earliest possible time but only when the Directors are confident about generating cash through a sustainable operating profit. The payment of a future dividend remains under continual review.

Property

The Company has continued to pursue the policy of the sale of non-core assets. The following properties have been sold during the period under review:

Two cottages on the site adjoining the Exeter Inn in Honiton Clyst.

The Marshalls Hotel in Barnstaple.

The Victoria Inn and an adjoining cottage in Ashburton.

The Maltsters Arms, the converted skittle alley and the adjoining development site in Clyst St Mary.

In line with the Board's strategy of reducing debt and following these sales, three prepayments against the term loan held with Barclays have been made during the period under review, totalling £1,750,000.

Personnel

I am very sad to report the passing of Andy Paver, our tenant at The Dewdrop Inn in Kingsteignton. He died shortly after his deteriorating health had forced him to retire from the tenancy in April after nearly thirty years as the licensee. He ran the pub with impeccable standards and a natural charm that made the pub a very special place under his stewardship. He was also held in the highest esteem by all at head office and he will be greatly missed. 

Prospects

Whilst pleased with the rebound in trade across our houses in the preliminary months of the year and the boost in sales enjoyed by many pubs during the long Jubilee weekend, I am acutely aware of the two-fold strain to the trade caused by the cost of living hikes to our customers and the cost of doing business hikes faced by our operators. The Directors are, of course, concerned as to how these pressures might manifest themselves across the estate, particularly come this Autumn and Winter. We shall continue to monitor the situation as it develops.

N H P TUCKER

Chairman

Group income statement (unaudited)

For the six months ended 30 April 2022

Group statement of comprehensive income (unaudited)

For the six months ended 30 April 2022

Group balance sheet (unaudited)

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 2022

Group reconciliation of movements in equity (unaudited)

Group reconciliation of movements in equity (unaudited) - continued

Group reconciliation of movements in equity (unaudited) - continued

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'). Shares held at half-year 444,155.

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 2021. 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 29 June 2022.

2. Going concern

While Covid restrictions are no longer in place, there are concerns around the general increase in costs including the hike in energy prices, which we have not yet seen the impact of in our half year results. The Board has continued to review and adjust forecasts to take into account any possible impact this may have on trading in the second half of the year. The Group remains well within its forecasts to April 2023 with minimum headroom of £2.1m on the £3m overdraft, and three prepayments to the term loan have been made totalling £1,750,000. 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 £1.4m 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 £855,000 (2021: £(86,000)), being profit/(loss) after taxation for the period, and on 4,818,652 (2021: 4,819,991) 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.

Within our Financial statements year ended 31 October 2021 a presentation error occurred in the segment information section. This was a cross casting error due to a late balance sheet adjustment. The balance sheet at the year end and the split in the assets held in the United States were correct.

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 2022 has been posted to shareholders today and will be available on our website at www.heavitreebrewery.co.uk.

Ends.