The Heavitree Brewery PLC

Trood Lane

Matford

Exeter EX2 8YP

Date:               19 February 2025

Contact:          Graham Crocker - Director - 01392 217733

Nicola McLean - Company Secretary - 01392 217733

Patrick Castle /Anita Ghanekar - Shore Capital - 0207 408 4052

Following a Board Meeting held today, 19 February 2025, the Directors announce the preliminary statement of results for the year ended 31 October 2024.

ISIN: GB0004182720 for 'A' Limited Voting Ordinary Shares

ISIN: GB0004182506 for Ordinary Shares

Chairman's statement

Turnover has increased by 2% to £7,498,000 (2023: £7,346,000) returning an operating profit of £1,424,000 (2023: £1,054,000), an increase of 35% on the previous year.  Shareholders will recall that operating profit was adversely affected last year by significant individual repair spends at five of our houses in 2023.  In this year under review our total repairs spend was reduced from the previous year to £890,000 (2023: £1,061,000) but it still remains a significant figure as we strive to balance the maintenance of our properties to the highest standard whilst being subject to mounting building costs.  It is not a coincidence but a positive consequence of this policy that the two named storms to hit our region so far this winter have not caused any significant damage across the estate.

The Board is pleased with the Company's performance and the numbers reported in this set of accounts.  However, the trading environment has remained tough at the sharp end with the cost of doing business casting a shadow over the good levels of turnover being reported in our pubs.  The new Government's budget in October has not helped in this respect.  The announcements concerning the increases in business rates and Employer National Insurance contributions will come into effect in April.  Particularly concerning for pubs with a tradition of employing many part time staff is the lowering of the threshold at which National Insurance is applied with the result that many employees will be subject to NI when they were not before.  Very small pubs may not be affected but operations the size of our houses will be subject to effectively a double increase in the cost of employing personnel.  The 1p per pint of beer reduction in duty announced at the budget is, of course, welcome but does little to mitigate the increase in cost pressures.

Dividend

The Board is particularly pleased with the Company's performance in the second half of the year after the steady start I reported on at the half year.  Consequently, the Directors recommend a 10% increase in the final dividend for the year ended 31 October 2024 to 3.85p per Ordinary and "A" Ordinary Limited Voting share to those shareholders on the Register on 14 March 2025.  The dividend, subject to shareholder approval at the Annual General Meeting to be held on 16 April 2025, will be paid on 25 April 2025.

Property

Plans for the rebuild of The Jolly Sailor at East Ogwell have been submitted to Teignbridge District Council and seem to have attracted positive comment and support from people local to the pub.  I hope to report further on this at the half-year.

We have continued with our policy during the year of selling non-core assets to reduce debt.  The Exeter Inn in Honiton Clyst was sold together with an adjacent parcel of land returning a book profit of £308,000. Two further properties are the subject of offers and/or are being marketed for sale at the end of the financial year, and I shall report further on these at the half-year.

Chairman's statement (continued)

Pension Scheme

I reported at the half-year that the wind-up of the Company's final salary pension scheme had not happened and yet at the time I was "reasonably confident" that the conclusion of the process would have happened before year-end.  Ill-chosen words on my part; unfortunately, "reason" is not playing its part, and we have remained thwarted by the pace of work of the insurance companies who are transferring the annuities into the members own names.  Both we and the scheme's actuary continue to apply pressure for a completion.

Personnel

On 15 January 2025 a stock exchange announcement reported that Graham Crocker had decided to step back from his Managing Director and Finance Director roles. Effective from 1 February 2025 Terry Wheatley has been appointed Managing Director and Nicola McLean has joined the Board of Directors as Finance Director.  I could not be more delighted with these two appointments, and we have been blessed to have such strong candidacy from within our organisation to be able to fill these two roles.  I am also delighted that Graham will assist with a smooth transition by remaining on the Board of Directors as a full-time executive until April 2026.

Graham joined the Company in 1974.  He rose to Group Accountant and in 1989 became Company Secretary.  He was appointed to the Board as Finance Director in 1991 and then also became the Managing Director in 2007.  Over the years his total dedication to the business added to his wealth of knowledge about the Company and its long history, together with an uncanny ability to recall the finest of details (and immediately be able to put his finger on the corresponding archive file!) has allowed him to direct Heavitree Brewery with subtlety and great charm to today's position of strength.  I am taking this opportunity to thank Graham on behalf of the Board, all shareholders, employees and pensioners including the previous Chairman, and all other stakeholders, for the many years of his composed direction of our business.

Prospects

As I have said in previous years, the success of the Company is so reliant on our tenants' success in the pubs which is aided by our dedicated team at head office and the relationship we enjoy with the people we do business with.  At the time of writing, we have three vacancies available within the estate, all of which are attracting strong interest from operators with proven track records.  The Board is confident that we are well positioned to face 2025 and we are delighted to be raising the final dividend to give a total increase of 10.9% for the year.

N H P TUCKER
Chairman

19 February 2025

Income Statement

for the year ended 31 October 2024

Statement of Comprehensive Income

for the year ended 31 October 2024

Balance Sheet

at 31 October 2024

Statement of Cashflows

for the year ended 31 October 2024

     Statement of changes in equity

for the year ended 31 October 2024

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 2024 the Company held 98,938 Ordinary Shares and 51,156 'A' Limited Voting Ordinary Shares (2023: 98,938 Ordinary Shares and 59,641 'A' Limited Voting Ordinary Shares) of its own shares. During the year there were purchases of 48,946 and sales of 57,431 '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.

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 2024. 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 2024 and 31 October 2023. 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 2024, which are expected to be mailed to shareholders on 06 March 2025.  The financial statements will also be available on the Company's website www.heavitreebrewery.co.uk.

Going Concern

The Directors continue to closely monitor the Company's financial resources. This included a continual review of the medium-term financial plan, along with sensitised cash flow forecasts for 12 months from the date of approval of these financial statements.

With legislation arising from the Budget announced on the 30 October 2024 expected to take effect in the new financial year, this will bring about more difficulties for the industry. The increases in National Insurance (NI) rates for Employers and the threshold change will bring new challenges for us and our Tenants, while some of the very small Tenancies may not be affected by the NI change due to the nature of the seasonal business many employ a lot of part time staff during busy periods so a large amount of the Estate will be affected. Aside from the NI rates changes the biggest impact may be the decrease in the allowance of business rates as this will affect all Tenants. We are waiting to see as an industry if the government will step up and change the thresholds on rates to mitigate some of this impact. The knock on impact on the Company from these factors is potential for more vacancies with tenants which would result in reduced rental revenue and potential for reduced demand resulting in a reduction in wet sales revenue. This has been taken into account when forecasting wet sales revenue and rental revenue for the coming year and is included within the forecast for the period to April 2026. The forecast for capital receipts in 2025 includes two assets already held for sale which should complete in the calendar year. Any further decisions on the sale of assets will be discussed in Board meetings during the year. These forecasts leave the Company with minimum headroom of over £2m on an overdraft facility of £3m. The Board will continue to review cashflows as part of its ongoing strategy.

The Board took the decision a few years ago to accelerate the paying down of its £4.5m term loan by the selling of non-core assets to secure its current position and the long-term trading position of the Company. The Board originally identified up to 15 non-core assets with a value of between £5m and £7m to be realised over a period of 2 to 3 years. The process of disposal and the assets originally identified is now under a complete review. This year the Company has sold one (2023: 7) of the non-core assets resulting in profits of £308,000 being realised from this sale, leaving the balance of the Term Loan at 31 October 2024 of £1,819,000.

The Board continues to liaise with the bank on a regular basis for trading updates. The Board negotiated a new 5 year banking facility including the Term Loan and the £3m overdraft facility at the beginning of the financial year. The overdraft facility terms remain the same with no increase on interest rate over the base rate. A small reduction in interest rate on the Term Loan over bank of England base rate has been achieved with an adjustment in the debt service covenant which is now an EBITDA calculation only. The forecasts indicate that the Company will be able to operate within its new covenants and facilities. Loans from other individuals including related parties have been drawn down in the year, any of these loans outstanding at the end of the financial year have been repaid in full in the new financial year.  

The Directors are satisfied that the Company's forecasts and projections, have included the anticipated cost increases which may impact the Estate. This has been reflected in the budgets with a decrease percentage 3.5% built in on wet revenue and rental revenue. The current trading performance of the Company 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 the support from the bank there are no material uncertainties in relation to going concern. For this reason, the Company 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 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:

3. Dividends paid and proposed

4. Segment information

 Primary reporting format - business segments

During the year the Company operated in one business segment - leased estates.

Leased estate represents properties which are leased to tenants to operate independently from the Company, under tied and free of tie tenancies.

Secondary reporting format - geographical segments

Revenue is based on the geographical location of customers. All revenue is generated in, and all assets are held in the United Kingdom.

5. General information

The 2024 Annual Report and Financial Statements will be published and posted to shareholders on 6th March 2025 Further copies may be obtained by contacting the Company Secretary at The Heavitree Brewery PLC, Trood Lane, Matford, Exeter EX2 8YP. The 2024 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 16 April 2025 at 11.30am.

Ends.