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').

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 2019 except for the adoption of new accounting standards as set out below. The accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as adopted by the European Union.

These unaudited financial statements were approved and authorised for issue by a duly appointed and authorised committee of the Board of Directors on 26 June 2020.

2. Going concern

Due to the impact of Covid-19 on the Pub sector the Directors have revised budgets and cash flow forecasts.  As noted in the Chairman's statement, the Group is committed to supporting its tenants through this challenging time and has cancelled rents for all licenced houses up to the end of July 2020.  Combined with no revenue from tied product sales during the period of closure this represents a significant reduction in cash generation. 

The Board has therefore taken measures to minimise cash outflow by putting all project work and major building work on hold, withdrawing the recommendation to pay a final dividend for the year ending 31 October 2019, the Directors taking a salary reduction and making use of the Government's Coronavirus Job Retention Scheme where necessary. 

Additionally, the Directors have been in discussions with the company's bankers to provide flexibility to its existing facilities, which includes an extended overdraft facility should it be required, a twelve-month payment holiday on the term Loan, and a postponement on covenant testing.  With these measures in place, and having prepared prudent budgets and cash flow forecasts, the Board is satisfied that the Group will be able to operate within available resources for a period of at least 12 months from the date of approval of these interim financial statements.  For this reason, the Group continues to adopt the going concern basis of preparation.

3. New Standard

The following new standards have been adopted, effective from 1 November 2019:

IFRS16:  Leases.  The Group holds a small number of immaterial operating leases as a lessee and as a result there is no material impact upon adoption of the new standard.

Notes to the interim results - continued

4. 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.  The impact of the ongoing Covid-19 pandemic on the pub trade and the wider UK economy could have ramifications for the valuation of the Group's estate.  Given the current significant and unprecedented levels of uncertainty, the Directors' view is that it is not possible to quantify any potential impact at this time, and as such the values in these interim financial statements have not been adjusted to take into account the impact of the pandemic.

5.  Basic and diluted earnings per share

The calculation of basic earnings per ordinary share is based on earnings of £142,000 (2019: £564,000), being profit after taxation for the period, and on 4,777,939 (2019: 4,786,818) 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.

6.  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.

7.  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 2020 has been posted to shareholders today and will be available on our website at www.heavitreebrewery.co.uk.

Ends.