TIDMHVT
RNS Number : 1316P
Heavitree Brewery PLC
15 February 2021
The Heavitree Brewery PLC
Trood Lane
Matford
Exeter EX2 8YP
Date: 15 February 2021
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 2021, the
Directors announce the preliminary statement of results for the
year ended 31 October 2020.
ISIN: GB0004182720 for 'A' Limited Voting Ordinary Shares
ISIN: GB0004182506 for Ordinary Shares
Chairman's statement
At the half-year I reported a 61% reduction in operating profit
as the fallout from the restrictions in trading and the first
lockdown started to impact our financial results. That impact has
been felt over the second half of the year under review with a
significant decrease in turnover, and obviously it will be felt
moving into the next financial year as the Company continues to
support all our tenants and leaseholders with rent concessions to
help them to endure long periods of tier restrictions and full
lockdowns. Although the summer months allowed some level of trade
the Board was under no illusions that a possible second wave of
infection would inevitably bring further restrictions on the sector
and we would need to do all that we could to support our pubs. At
the time of writing, it is now obvious that our concerns during the
summer have become the reality.
The consequence is that turnover for the year under review has
decreased by 33.32% from the previous year to GBP5,019,000. In
turn, the Group has returned an operating profit of GBP539,000, a
decrease of 70.69% on the previous year. The operating profit has
been distorted by the IFRS 16 Lease Accounting calculation which
has been applied to the rent concessions given to our tenants. The
accounting standards setters consider these waivers, rather
peculiarly, to be 'incentives' and as a result the total rent over
the full term of the tenancy has to be apportioned. Accordingly, we
are required to recognise a write back of rents totalling
GBP333,000, money which we have not actually received or even
charged during the period. This has also attracted a corporation
tax charge of GBP63,000.
The Group results are also affected by an impairment cost of
GBP279,000 relating to the Lysley Arms in Pewsham and the George
and Dragon in Dartmouth.
DIVID
The Directors do not recommend the payment of a dividend at the
year-end. When trading is back on a more even keel after
restrictions are eased, the Board will be able to review future
dividends.
SALE OF PROPERTY
I reported at the half-year that a small parcel of land had been
sold in Christow realising a book profit of GBP15,000. Further
sales were achieved in the second half of the year. Two further
parcels of land, one in Strete and the other adjacent to our Kings
Arms in Kingsteignton were sold realising book profits of GBP15,156
and GBP56,244 respectively. Also, an outbuilding adjacent to the
Sandygate Inn near Newton Abbot was sold realising GBP60,738.
Finally, the Bell Inn in Cullompton was sold realising
GBP178,507.
After the end of the financial year, sales have been completed
at The Maltster's Arms and the adjacent Bridge House in
Harbertonford. These properties were held for sale throughout the
year under review. Further properties are the subject of offers
and/or are being marketed for sale and I shall report further on
these at the half-year.
Chairman's statement
W P TUCKER
After a period of ill health which started at the end of 2019
and which made it difficult for him to attend Board meetings, my
father Bill Tucker offered to resign from the Board in August. With
obvious mixed feelings I accepted his resignation. He joined the
Company in 1954 and was appointed to the Board in 1955. He became
Managing Director in 1970 and oversaw, in the same year, the
ceasing of our brewing operations. In 1974 he took over as Chairman
from my Grandfather and, from then, he was instrumental in shaping
the future of the Company as an operator of an estate of quality
pubs. He remains a shareholder with a keen interest in the Company,
our pubs and especially our people. His wealth of knowledge about
our business will always be only a phone call away. I am sure you
all will want to join me in wishing him the happiest of (full)
retirements.
PROSPECTS
In this third lockdown the strain on our hospitals and health
system is being reported daily with harrowing and distressing
images. This is in spite of the restrictions to our normal daily
lives that we have been and are currently living under. Confronting
this health crisis in the best way possible has also placed an
incredible stress on the hospitality sector. The situation remains
fluid; there is hope following the fast rollout of the vaccination
programme but also concerns about the various variant strains of
Covid-19 that are appearing around the world. With this backdrop, I
am proud and grateful for the resilience and patience shown by our
landlords and landladies and of the determination and morale shown
by every one of our staff at head office. It is a commendable
achievement that since March 2020 we have had only three vacancies
to fill. One now has new tenants and the other two have approved
interested parties working with our tenancy team to formalise
agreements. We have continued to attract good candidates even while
the industry is unable to trade.
Even though our cashflow forecasts have shown that we are able
to trade within our banking facility, I am most grateful for the
understanding shown by Barclays Bank. The bank has formally agreed
to waive the testing of our banking covenants until April 2022. As
referred to in the Strategic Review, we have accelerated our
programme of selling non-core assets to keep us well within our
facility.
Since the first lockdown in March of last year, the one constant
our tenants and leaseholders have been able to rely on is the
consistent support from this Company. We have cancelled rents
during the lockdown periods and made fair concessions during the
incredibly difficult trading environment that arose with the tier
systems. The detail of this was reported in our trading update
released to the Stock Exchange on 22 December 2020. The Board are
also determined to look after our head office staff and to use the
Government's Job Retention Scheme to help us retain and protect all
jobs. We continue to conserve cash within the business and I feel
the Company is as best placed as it can be to resume trading when
permitted.
N H P TUCKER
Chairman
15 February 2021
Group income statement
for the year ended 31 October 2020
Notes Total Total
2020 2019
GBP000 GBP000
Revenue 5,019 7,528
--------- ---------
Other operating income 317 302
Purchase of inventories (2,065) (3,100)
Staff costs (1,310) (1,385)
Depreciation of property,
plant and equipment (177) (222)
Other operating charges (1,245) (1,284)
--------- ---------
(4,480) (5,689)
--------- ---------
Group operating profit 539 1,839
Profit on sale of property
plant and equipment 293 185
Impairment of fixed
assets (279) -
Group profit before
finance costs and taxation 553 2,024
Finance income 2 4
Finance costs (141) (184)
Other finance costs - -
- pensions
--------- ---------
(139) (180)
Profit before taxation 414 1,844
Tax expense (300) (313)
Profit for the year
attributable to equity
holders of the parent 114 1,531
--------- ---------
Basic earnings per
share 2 2.4p 32.0p
--------- ---------
Diluted earnings per
share 2 2.4p 32.0p
--------- ---------
Group statement of comprehensive income
for the year ended 31 October 2020
2020 2019
GBP000 GBP000
Profit for the year 114 1,531
-------- --------
Items that will not be reclassified
to profit or loss
Fair value adjustment on investment
in equity
Actuarial (losses) on defined benefit (12) (9)
scheme - -
Tax relating to items that will not - -
be reclassified
-------- --------
(12) (6)
Items that may be reclassified to
profit or loss
Exchange rate differences on translation
of subsidiary undertaking (4) 2
(4) 2
Other comprehensive income for the
year, net of tax 98 1,527
-------- --------
Total comprehensive income attributable
to:
Equity holders of the parent 98 1,527
Group balance sheet
at 31 October 2020
2020 2019
GBP000 GBP000
Non-current assets
Property, plant and equipment 16,615 17,692
Investment property 2,130 1,485
--------- ---------
18,745 19,177
Financial assets 30 41
Deferred tax asset 16 16
--------- ---------
18,791 19,234
--------- ---------
Current assets
Inventories 10 10
Trade and other receivables 1,277 1,344
Cash and cash equivalents 49 51
--------- ---------
1,336 1,405
--------- ---------
Assets held for sale 219 -
--------- ---------
Total assets 20,346 20,639
--------- ---------
Current liabilities
Trade and other payables (666) (953)
Financial liabilities (1,520) (6,087)
Income tax payable (237) (231)
--------- ---------
(2,423) (7,271)
--------- ---------
Non-current liabilities
Other payables (274) (284)
Financial liabilities (4,322) (37)
Deferred tax liabilities (536) (394)
Defined benefit pension plan deficit (92) (92)
--------- ---------
(5,224) (807)
--------- ---------
Total liabilities (7,647) (8,078)
--------- ---------
Net assets 12,669 12,561
--------- ---------
Capital and reserves
Equity share capital 264 264
Capital redemption reserve 673 673
Treasury shares (1,522) (1,562)
Fair value adjustments reserve 5 17
Currency translation 13 17
Retained earnings 13,266 13,152
--------- ---------
Total equity 12,699 12,561
--------- ---------
Group statement of cash flows
for the year ended 31 October 2020
2020 2019
GBP000 GBP000
Operating activities
Profit for the year 114 1,531
Tax expense 301 313
Net finance costs 139 180
Profit on disposal of non-current assets
and assets held for sale (293) (185)
Depreciation and impairment of property,
plant and equipment
Exchange gain on cash, liquid resources 177 222
and loans - -
Difference between pension contributions
paid and amounts
recognised in the income statement - 52
(Increase)/decrease in trade and other
receivables 220 (72)
(Decrease)/increase in trade and other
payables (274) (145)
Impairment of fixed assets 279 -
--------- --- ---------
Cash generated from operations 663 1,896
Income taxes paid (151) (97)
Interest paid (141) (184)
Net cash inflow from operating activities 371 1,615
--------- --- ---------
Investing activities
Interest received 2 4
Proceeds from sale of property, plant
and equipment and assets held for sale 186 278
Payments to acquire property, plant
and equipment (315) (506)
Net cash (outflow)/inflow from investing
activities (127) (224)
--------- --- ---------
Financing activities
Preference dividend paid (1) (1)
Equity dividends paid - (379)
Consideration received by EBT on sale
of shares 62 56
Consideration paid by EBT on purchase
of shares (25) (298)
Capital element of finance lease rental
payments (9) (15)
Loan repayment (1,500) -
Net cash outflow from financing activities (1,473) (637)
--------- --- ---------
(Decrease)/increase in cash and cash
equivalents (1,229) 754
Cash and cash equivalents at the beginning
of the year (3) (757)
--------- --- ---------
Cash and cash equivalents at the year
end (1,232) (3)
--------- --- ---------
Group statement of changes in equity
for the year ended 31 October 2020
Equity Capital Fair
share redemption Treasury value Currency Retained Total
capital reserve shares adjustment translation earnings equity
GBP000 GBP000 GBP000 reserve GBP000 GBP000 GBP000
GBP000
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 Capital Fair
share redemption Treasury value Currency Retained Total
capital reserve shares adjustment translation earnings equity
GBP000 GBP000 GBP000 reserve GBP000 GBP000 GBP000
GBP000
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
net of income
tax - - - (12) (4) - (16)
--------- ------------ ----------- ------------ -------------- ----------- ---------
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
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 2020 the Group held 183,719 Ordinary Shares and
254,153 'A' Limited Voting Ordinary Shares (2019: 179,053 Ordinary
Shares and 300,002 'A' Limited Voting Ordinary Shares) of its own
shares. During the year there were purchases of 4,666 Ordinary
Shares and 2,500 'A 'Limited Voting ordinary Shares and sales of
48,349 '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 2020. 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 2020 and 31 October 2019. 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 European Union. The accounting policies
have been consistently applied and are described in full in the
statutory financial statements for the year ended 31 October 2020,
which are expected to be mailed to shareholders on 12 March 2021.
The financial statements will also be available on the Group's
website www.heavitreebrewery.co.uk .
Going concern
With the uncertain nature of the current Covid-19 pandemic the
Directors have considered the Group's financial resources including
a 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 and the gearing remains low. These forecasts
include continued rent concessions for Tenants and factoring in a
possible lockdown until the end of May 2021 and the tier
restrictions still being in place over the summer trading months.
The mitigation measures which were put in place in March 2020 and
are detailed on page 9 are still in place in order to protect the
cash position of the business and these have been incorporated into
the forecasts for future cash positions. The forecast for capital
receipts in 2021 include non-core asset sales of GBP2m. These
forecasts leave the Group with headroom of over GBP1.1m on an
overdraft facility of GBP3m. The Board has looked at the ability to
sustain cashflow if lockdown continued into the summer and will
continue to review cashflows as guidance from Government
changes.
Since the year end, the Board also made the decision to
accelerate the paying down of its current GBP4.5m 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 has identified
up to 15 non-core assets with a value of between GBP5m and GBP7m 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.
The Board has engaged with the bank regarding its current
facilities and forward trading, this has included the securing of
the overdraft facilities and the waiving of covenant testing until
April 2022 along with the agreement on paying down of loan
facilities. The bank is satisfied that the Group's forecasts and
projections, which take account of 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
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.
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:
2020 2019
GBP000 GBP000
Profit for the year 114 1,531
-------- --------
2020 2019
N(o) . N(o) .
(000) (000)
-------- --------
Basic weighted average number of shares
(excluding treasury shares) 4,801 4,786
-------- --------
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
2020 2019
GBP000 GBP000
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2019: nil (2018: 3.675p) - 224
First dividend for 2020: nil (2019: 3.675p) - 194
Less dividend on shares held within employee
share schemes - (39)
Dividends paid - 379
-------- --------
Proposed for approval at AGM
(not recognised as a liability as at 31
October)
- 224
Final dividend for 2020 nil (2019: 4.25p)
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 2020 and 2019. 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 Total
GBP000 States GBP000
GBP000
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 2019 UK United Total
GBP000 States GBP000
GBP000
Revenue
Sales to external customers 7,528 - 7,528
Other segment information
Segment assets
20,596 43 20,639
-------- -------- --------
Total Assets 20,596 43 20,639
-------- -------- --------
Capital expenditure
Property, plant and equipment 505 - 505
5. General information
The 2020 Annual Report and Financial Statements will be
published and posted to shareholders on 12th March 2021 Further
copies may be obtained by contacting the Company Secretary at The
Heavitree Brewery PLC, Trood Lane, Matford, Exeter EX2 8YP. The
2020 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 15 April 2021 at 11.30am.
Ends.
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