TIDMHVT
RNS Number : 1540Q
Heavitree Brewery PLC
16 February 2023
The Heavitree Brewery PLC
Trood Lane
Matford
Exeter EX2 8YP
Date: 16 February 2023
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, 16 February 2023, the
Directors announce the preliminary statement of results for the
year ended 31 October 2022.
ISIN: GB0004182720 for 'A' Limited Voting Ordinary Shares
ISIN: GB0004182506 for Ordinary Shares
Chairman's statement
Having reported a pandemic-affected small operating loss at the
2021 year-end, it is pleasing that the company returned a
satisfactory performance in the second half of this year to follow
the steady performance reported on at the half-year. This has
resulted in an increase in turnover of 57.64% to GBP7,280,000
against the previous year's figure of GBP4,618,000 and this
includes a reduction in rental income of GBP230,000 in accordance
with the IFRS 16 accounting treatment, the application of which I
have explained in recent years. An operating profit for the year
for the Group of GBP1,422,000 has been returned (2021: a loss of
GBP59,000). We have finished the year returning numbers similar to
those achieved before the start of the Covid pandemic.
In my statement accompanying the half-year accounts I expressed
caution about just what might be lying ahead of us in future
months. The much reported hikes in the cost of living, rises in
mortgage rates and the cost of doing business are inevitably
putting pressures on the general trading environment for all our
operators. Energy costs are of a particular concern, and we have
seen some renegotiated contracts during the last six months which
have resulted in a tripling, or even quadrupling of electricity and
gas costs. Another example of the many inflationary pressures the
sector is exposed to is reflected in the extraordinary wholesale
beer price increases announced by one of our main suppliers; a 9%
increase in September of last year followed by a further 15%
increase in January of this year. These beer price rises are not
immediately impacting our pubs due to timings within our
contractual agreements, but some level of increase will be applied
during the year ahead. I have given you two examples of the
numerous inflationary strains on our pubs.
The Company has continued the programme of selling non-core
assets to reduce the level of borrowing. The term loan with
Barclays has been reduced by GBP1,998,000 and overall bank debt
which includes the overdraft facility has been reduced by
GBP2,805,000 during the year under review. This programme will
continue, and other sites will be considered when they become
available.
Dividend
I reported after the first six months that the payment of a
dividend is considered by the Board to be an intrinsic part of our
business and it would be further reviewed once trading had returned
to some sort of normality and the Directors are confident about
generating cash through a sustainable operating profit. The
Directors are pleased to be reinstating a final dividend at a rate
of 3.5p per share to those shareholders on the Register at 17 March
2023. The dividend, subject to shareholder approval at the Annual
General Meeting to be held on 13 April 2023, will be paid on 21
April 2023.
The Board would like to thank all shareholders for their
patience, understanding and support during the period of
non-payment of dividends while our ability to trade properly was
affected by the pandemic.
Sale of Property
Further to the properties I reported on at the half-year, there
are three unlicensed houses which have been sold during the second
half of the year. All three cottages are at the Exeter Inn site in
Honiton Clyst.
A book profit of GBP968,000 on the sale of properties has been
returned during this full year (2021: GBP1,318,000).
Heavitree Inc.
Our American subsidiary is in the process of being wound up
after the sale of the final piece of land held by Heavitree Inc.
early in this year under review. The final tax return is due in May
2023.
Development
The building of a new eight bedroom development, replacing the
old function room, is at last underway at the Ley Arms in Kenn.
Planning approval was granted before the original lockdown. We are
looking for completion of this project to be in September 2023 and
there is already great interest in the addition of these facilities
to such a popular and busy pub.
Pension Scheme
The process of winding up our defined benefit pension scheme
continues. All liabilities from the Guaranteed Minimum Pension
(GMP) calculated by the scheme's actuary have been met. There
remain small liabilities for GMP arrears to be finalised and also,
the Board is waiting on a requote before securing a trustees'
indemnity policy. There is a legal requirement to complete the
wind-up process by January 2024.
Prospects
Reducing our level of debt so successfully over the last 3 years
has strengthened the company's financial position. Net debt has
reduced overall in this year by GBP3,539,000.
Our team has recently let three tenancies to new, quality
operators who we welcome to the Company. At present there are no
vacancies within our estate, and I am very pleased by our retention
of tenants and our ability to attract new people.
Together these two achievements are giving us a foundation for
the future while we face a trading environment being challenged by
the many issues of today's world.
N H P TUCKER
Chairman
16 February 2023
Group income statement
for the year ended 31 October 2022
Total Total
2022 2021
Notes GBP000 GBP000
Revenue 7,280 4,618
--------- ---------
Other operating income 211 310
Purchase of inventories (2,980) (1,909)
Staff costs (1,477) (1,349)
Depreciation of property,
plant and equipment (228) (177)
Other operating charges (1,384) (1,552)
--------- ---------
(5,858) (4,677)
--------- ---------
Group operating profit/(loss) 1,422 (59)
Profit on sale of
property plant and
equipment 968 1,318
Group profit before
finance costs and
taxation 2,390 1,259
Finance costs (117) (145)
(117) (145)
Profit before taxation 2,273 1,114
Tax expense (306) (313)
Profit for the year
attributable to equity
holders of the parent 1,967 801
--------- ---------
Basic earnings per
share 2 40.7p 16.6p
--------- ---------
Diluted earnings
per share 2 40.7p 16.6p
--------- ---------
Group statement of comprehensive income
for the year ended 31 October 2022
2022 2021
GBP000 GBP000
Profit for the year 1,967 801
-------- --------
Items that will not be reclassified
to profit or loss
Fair value adjustment on investment
in equity - 5
- 5
Items that may be reclassified to
profit or loss
Exchange rate differences on translation
of subsidiary undertaking 1 -
1 -
Other comprehensive income for the
year, net of tax 1,968 806
-------- --------
Total comprehensive income attributable
to:
Equity holders of the parent 1,968 806
Group balance sheet
at 31 October 2022
2022 2021
GBP000 GBP000
Non-current assets
Property, plant and equipment 16,593 16,436
Investment property 1,211 1,490
Right of use asset 60 71
17,864 17,997
Financial assets 34 34
Deferred tax asset 16 16
--------- ---------
17,914 18,047
--------- ---------
Current assets
Inventories 10 10
Trade and other receivables 1,631 1,936
Cash and cash equivalents 788 52
--------- ---------
2,429 1,998
--------- ---------
Assets held for sale 180 883
--------- ---------
Total assets 20,523 20,928
--------- ---------
Current liabilities
Trade and other payables (1,133) (984)
Financial liabilities (229) (1,158)
Income tax payable (339) (108)
--------- ---------
(1,701) (2,250)
--------- ---------
Non-current liabilities
Other payables (326) (318)
Financial liabilities (2,195) (4,069)
Deferred tax liabilities (784) (734)
Defined benefit pension plan deficit (92) (92)
--------- ---------
(3,397) (5,213)
--------- ---------
Total liabilities (5,098) (7,463)
--------- ---------
Net assets 15,425 13,465
--------- ---------
Capital and reserves
Equity share capital 264 264
Capital redemption reserve 673 673
Own share reserve (1,537) (1,529)
Fair value adjustments reserve 10 10
Currency translation 14 13
Retained earnings 16,001 14,034
--------- ---------
Total equity 15,425 13,465
--------- ---------
Group statement of cash flows
for the year ended 31 October 2022
2022 2021
GBP000 GBP000
Operating activities
Profit for the year 1,967 801
Tax expense 306 313
Net finance costs 117 145
Profit on disposal of non-current (968) (1,200)
assets and assets held for sale
Depreciation and impairment of property,
plant and equipment 228 177
Decrease/increase in trade and other
receivables 264 (442)
Increase/(decrease) in trade and
other payables 157 353
Impairment of fixed assets - -
--------- ---------
Cash generated from operations 2,071 147
Income taxes paid (24) (245)
Interest paid (117) (145)
Net cash inflow/(outflow) from operating
activities 1,930 (243)
--------- ---------
Investing activities
Interest received - -
Proceeds from sale of property,
plant and equipment and assets held
for sale 2,038 1,411
Payments to acquire property, plant
and equipment (425) (473)
Net cash inflow from investing activities 1,613 938
--------- ---------
Financing activities
Preference dividend paid (1) (1)
Equity dividends paid - -
Consideration received by EBT on
sale of shares 42 41
Consideration paid by EBT on purchase
of shares (50) (81)
Capital element of finance lease
rental payments (34) (25)
Loan repayment (1,998) (187)
Mortgage 41 35
Net cash outflow from financing
activities (2,000) (218)
--------- ---------
Increase in cash and cash equivalents 1,543 477
Cash and cash equivalents at the
beginning of the year (755) (1,232)
--------- ---------
Cash and cash equivalents at the
year end 788 (755)
--------- ---------
Group statement of changes in equity
for the year ended 31 October 2022
Equity Capital Own Fair
share redemption share value Currency Retained Total
capital reserve reserve adjustment translation earnings equity
GBP000 GBP000 GBP000 reserve GBP000 GBP000 GBP000
GBP000
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
net of income
tax - - - 5 - - 5
--------- ------------ --------- ------------ -------------- ----------- ---------
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 Capital Own Fair
share redemption share value Currency Retained Total
capital reserve reserve adjustment translation earnings equity
GBP000 GBP000 GBP000 reserve GBP000 GBP000 GBP000
GBP000
At 1 November
2021 264 673 (1,529) 10 13 14,034 13,465
Profit for the
year - - - - - 1,967 1,967
Other comprehensive
income for the
year
net of income
tax - - - - 1 - 1
--------- ------------ --------- ------------ -------------- ----------- ---------
Total comprehensive
income for the
year - - - - 1 1,967 1,968
--------- ------------ --------- ------------ -------------- ----------- ---------
Consideration
received
by EBT on sale
of
shares - - 42 - - - 42
Consideration
paid by
EBT on purchase
of shares - - (50) - - - (50)
Loss by EBT on
sale
of shares - - - - - - -
Equity dividends - - - - - - -
paid
--------- ------------ --------- ------------ -------------- ----------- ---------
At 31 October
2022 264 673 (1,537) 10 14 16,001 15,425
--------- ------------ --------- ------------ -------------- ----------- ---------
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 2022 the Group held 210,335 Ordinary Shares and
195,386 'A' Limited Voting Ordinary Shares (2021: 193,053 Ordinary
Shares and 238,310 'A' Limited Voting Ordinary Shares) of its own
shares. During the year there were purchases of 17,282 Ordinary
Shares and sales of 34,205 '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 2022. 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 2022 and 31 October 2021. 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
2022, which are expected to be mailed to shareholders on 09 March
2023. The financial statements will also be available on the
Group's website www.heavitreebrewery.co.uk .
Going concern
The Directors closely monitor the Group's financial resources.
This had included a continued 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 and the gearing remains low. Although we
have not yet seen the full impact of the energy, inflation, and
cost of living crisis the Board has included within its forecasts
an anticipated decrease in footfall and possible rental
difficulties within the forecast for the period to April 2024. The
forecast for capital receipts in 2023/24 includes non-core asset
sales of GBP3m. These forecasts leave the Group with headroom of
over GBP2m on an overdraft facility of GBP3m. The Board will
continue to review cashflows as part of its ongoing strategy.
The Board took the decision 2 years ago to accelerate the paying
down of its 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 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. This year the
Group has sold 8 (2021: 9) of the non-core assets resulting in
profits of GBP968,000 being realised from these sales, this has
enabled the Group to pay down an extra GBP1,750,000 on the term
loan, leaving the balance of the term loan at 31 October 2022
GBP2,315,000.
The Board has continued to engage with the bank regarding its
facilities and forward trading, it had a waiver for the covenant
testing to April 2022, with covenant testing resuming from the 31
October 2022. Our year end results have enabled us to achieve
better than expected cover on both our debt service covenant and
our gross borrowings EBITDA calculations and this has resulted
since year end in our covenants being put back to a 12 month
covenant testing on half year and year end results. The Directors
are satisfied that the Group's forecasts and projections, which
take account of the anticipated cost of living impact on the
estate, show that the Group will be able to operate within its
current covenants and facilities. The current trading performance
of the Group 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 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:
2022 2021
GBP000 GBP000
Profit for the year 1,967 801
-------- --------
2022 2021
N(o) . N(o) .
(000) (000)
-------- --------
Basic weighted average number of shares
(excluding own shares shares) 4,834 4,824
-------- --------
On the 7(th of) December 2022 a stock exchange announcement was
made by the Group regarding the following share transactions.
Purchase of own shares from the Company's Employee Benefit
Trust
- 150,000 Ordinary Shares of 5p each at GBP2.90 (mid-market
price on 6/12/22) per share representing 7.51% of the total number
of Ordinary Shares in issue.
- 100,000 'A' Limited Voting Shares of 5p each at GBP1.40
(mid-market price on 6/12/22) per share representing 3.04% of the
total number of 'A' Limited Voting Shares in issue.
The EBT's net proceeds from the Share Purchase, which amounts to
GBP575,000, will be applied to repay debt of GBP635,386 which is
owed to the Company by the EBT (the "Debt Repayment" and together
with the Share Purchase (the "Transaction")). Following the Share
Purchase, the EBT will hold 60,335 Ordinary Shares representing
3.27% of total Ordinary share in issue and 95,386 'A' Limited
Voting Shares representing 2.99% of the total number of 'A' limited
Voting Shares in issue. The outstanding balance post the Debt
Repayment will be GBP60,386.
The shares purchased by the Company pursuant to the Share
Purchase have been cancelled.
3. Dividends paid and proposed
2022 2021
GBP000 GBP000
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2021: nil (2020: nil) - -
First dividend for 2022: nil (2021: 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 )
176 -
176 -
Final dividend for 2022 3.5p (2021: 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 2022 and 2021. 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 2021 UK United Total
GBP000 States GBP000
GBP000
Revenue
Sales to external customers 4,618 - 4,618
Other segment information
Segment assets 20,886 42 20,928
-------- -------- --------
Total Assets 20,886 42 20,928
-------- -------- --------
Capital expenditure
Property, plant and equipment 473 - 473
Right of use asset 71 71
-------- -------- --------
Year ended 31 October 2022 UK United Total
GBP000 States GBP000
GBP000
Revenue
Sales to external customers 7,280 - 7,280
Other segment information
Segment assets
20,523 - 20,523
-------- -------- --------
Total Assets 20,523 - 20,523
-------- -------- --------
Capital expenditure
Property, plant and equipment 474 474
Right of use asset - - -
-------- -------- --------
5. General information
The 2022 Annual Report and Financial Statements will be
published and posted to shareholders on 9th March 2023 Further
copies may be obtained by contacting the Company Secretary at The
Heavitree Brewery PLC, Trood Lane, Matford, Exeter EX2 8YP. The
2022 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 2023 at 11.30am .
Ends.
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