Registered No 30800
The Heavitree Brewery PLC
Financial Statements
31 October 2020
The Heavitree Brewery PLC
Registered Number: 30800
Annual report and financial statements
Table of contents
Directors and other information
Notice of annual general meeting
Strategic report
: Chairman’s statement
: Strategic review
Directors’ report
Ten year review of profits and dividends
Statement of Directors’ responsibilities in respect of the financial statements
Independent auditor’s report
Group income statement
Group statement of comprehensive income
Group balance sheet
Group statement of changes in equity
Group statement of cash flows
Company balance sheet
Company statement of changes in equity
Company statement of cash flows
Notes to the financial statements
Page
2
3
6
8
16
21
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23
28
29
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32
34
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37
39
40
1
The Heavitree Brewery PLC
Registered Number: 30800
Managing and Finance
Chairman
Directors
N H P Tucker
G J Crocker
T Wheatley
W P Tucker * (resigned 1 August 2020)
T P Duncan*
K Pease-Watkin*
C J Bush*
*Non-executive
Trade
Secretary and registered office
N J McLean
The Heavitree Brewery PLC
Trood Lane
Matford
Exeter EX2 8YP
Bankers
Barclays Bank PLC
High Street
Exeter
Solicitors
WBW Solicitors
Exeter
National Westminster Bank PLC
St Thomas
Exeter
Trowers & Hamlin
3 Bunhill Row
London
EC1Y 8YZ
Nominated advisor and broker
Shore Capital and Corporate Limited
Cassini House
57 St James’s Street
London
SW1A 1LD
Shore Capital Stockbrokers Limited
Cassini House
57 St James’s Street
London
SW1A 1LD
Auditor
PKF Francis Clark
Centenary House
Peninsula Park
Rydon Lane
Exeter
EX2 7XE
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 8AE
Shareholders’ dedicated telephone number: 0370 707 1063
2
The Heavitree Brewery PLC
Registered Number: 30800
Notice of annual general meeting
NOTICE IS HEREBY GIVEN that the One Hundred and Thirty First Annual General Meeting of The
Heavitree Brewery PLC will be held at the Company’s offices, Trood Lane, Matford, Exeter on 15 April
2021 at 11.30am to transact the following business:
Ordinary business
1.
2.
3.
4.
To receive and, if thought fit, adopt the financial statements of the Company for the year ended
31 October 2020 and the strategic report and the report of the Directors thereon.
To re-elect G J Crocker as a Director of the Company.
To re-elect K Pease-Watkin as a Director of the Company.
To re-appoint PKF Francis Clark as auditor of the Company for the period prescribed in section
489 of the Companies Act 2006.
5.
To authorise the Directors to determine the remuneration of the auditor.
Special business
To consider and, if thought fit, pass the following Resolutions, of which Resolution 8 will be proposed as
a Special Resolution.
6.
THAT the Company be hereby authorised to purchase up to an aggregate of 299,204 Ordinary
Shares of 5p each and/or 492,371 ‘A’ Limited Voting Ordinary Shares of 5p each in the capital of
the Company at a price (exclusive of expenses) which is:
(i)
(ii)
not more than £15 nor less than 5p per share; and
not more than 5% above the arithmetical average of business transacted (as derived from the
Daily Official List of The London Stock Exchange) for the ten business days next preceding
any such purchase;
AND THAT the authority conferred by this resolution shall expire on the date of the Company’s
Annual General Meeting in 2022 (except in relation to the purchase of shares the contract for
which was concluded before such date and might be executed wholly or partly after such date).
7.
THAT the authority conferred upon the Directors by Article 3.3 of the Company’s Articles of
Association (authority to allot, and to make offers or agreements to allot, relevant securities) be
hereby extended for the five-year period ending on the date of the Company’s Annual General
Meeting in 2026 (or, if earlier, on 14 April 2026): AND THAT such authority shall for that
period relate to relevant securities up to an aggregate nominal amount of £87,953.
3
The Heavitree Brewery PLC
Registered Number: 30800
Notice of annual general meeting
8
THAT the power conferred upon the directors by Article 3.4 of the Company’s Articles of
Association (power to allot, or make offers or agreements to allot, equity securities as if Section
561 of the Companies Act 2006 did not apply to any such allotment) be hereby renewed for the
five-year period ending on the date of the Company’s Annual General Meeting in 2026 (or, if
earlier, on 14 April 2026): PROVIDED THAT the aggregate nominal amount of equity
securities allotted or agreed to be allotted wholly for cash during such period (otherwise than in
connection with a rights issue) shall not exceed £13,192.
By Order of the Board
N J MCLEAN
Secretary
12 March 2021
Trood Lane
Matford
Exeter
EX2 8YP
4
The Heavitree Brewery PLC
Registered Number: 30800
Notice of annual general meeting
Notes:
1.
2.
3.
Any member entitled to attend and vote at the above meeting may appoint one or more proxies to
attend and, on a poll, to vote instead of him. A proxy need not be a member of the Company.
Only holders of Ordinary Shares and ‘A’ Limited Voting Ordinary Shares are entitled to attend and
vote at the meeting. On a poll the Ordinary Shares carry one vote for every £1 in nominal amount
and the ‘A’ Limited Voting Ordinary Shares carry one vote for every £10 in nominal amount.
The Directors’ service contracts will be available for inspection at the registered office of the
Company during normal business hours on any weekday, and at the place of the Annual General
Meeting for fifteen minutes prior to, and during, the meeting.
4.
The Directors do not recommend a dividend.
5
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
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 £5,019,000. In turn, the Group has returned an operating profit of £539,000, 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 £333,000, money which we have not actually received or even charged during the period.
This has also attracted a corporation tax charge of £63,000.
The Group results are also affected by an impairment cost of £279,000 relating to the Lysley Arms in
Pewsham and the George and Dragon in Dartmouth.
DIVIDEND
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
£15,000. 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
£15,156 and £56,244 respectively. Also, an outbuilding adjacent to the Sandygate Inn near Newton Abbot
was sold realising £60,738. Finally, the Bell Inn in Cullompton was sold realising £178,507.
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.
6
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
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
7
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Strategic review
Business model
The Group’s business is the running and development of a Leased and Tenanted Estate in the south west
of England. The Group currently operates 66 Leased and Tenanted public houses along with non-core
assets and a dormant managed estate. The Group has one trading subsidiary, Heavitree Inc, which owns
land in America. The Group continually maintains and evaluates the estate with the intention of
maximising the full potential of its public houses, this includes development for alternative use where
appropriate. The focus is always on attracting and retaining tenants for the estate in order to maintain the
quality of the portfolio. As the Group operates a Tenanted Estate these are our customers and the main
focus of our business. To understand more about our customers and how we interact with them see the
section 172 statement section on page 13.
Business review
Throughout the current year, we have worked hard at maintaining our business model. While we had a
good start in the first couple of months of the financial year with management results showing us to be
9.9% above our budget and 8.6% above last year on operating profit, our half year results showed the
impact of the March and April trading loss and rent concessions being down 23% on revenue at the end of
April 2020 and 61% down on operating profit.
The continued lockdowns and tier restrictions through the year for significant periods in order to combat
the spread of the virus has resulted in further material differences in the second half of the financial year,
although this has been mitigated by slightly better than expected trading over the summer months. Group
revenue for the year was £5,019,000, down on last year by 33.32% (£2,509,000). The operating profit for
the year was £539,000, down on last year by 70.69% (£1,300,000). The reduction in turnover in the year
has come from rental income being down 39% as a result of the concessions which have been given to the
Tenants and a reduction of 33% in the wet trade, however the impact on the cash receipts has been greater.
The combined result of sales of non-current assets and assets held for sale realised a profit before tax of
£293,000 (2019: £185,000). Further information on the assets sold can be found in the Chairman’s
Statement on pages 6-7 of the strategic review. The assets which have been sold in the year were not a
direct result of the Covid-19 pandemic and were already scheduled for disposal in the business plan for
the year.
During the year the Group renewed its banking facilities for a further five years, the renewal of facilities
meant that the Group now has a reduced term loan of £4.5m from £6m rolling credit, with an overdraft of
£2.5m currently extended due to the pandemic to £3m. This can be seen on the balance sheet as a
reduction in the current liabilities within the year. The property review which has been carried out this
year has resulted in two property impairments which total £279,000. These were not a direct result of the
Covid-19 pandemic, they were due to changes in trading conditions.
As the Group runs a Tenanted and Leased Estate, limited direct Government assistance was available by
way of support. The Group has therefore taken the decision not to take out any further borrowings but
instead look at the selling of non-core assets in the new financial year, in order to maintain and improve
its cash position for the long-term future of the Group. This will help us to preserve cash and combat the
impact that the rental decisions have had on the Group’s revenue. For further details on the selling of
assets please refer to the going concern section on page 10.
8
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Strategic review (continued)
In order to mitigate the impact of the Covid-19 pandemic the Group has worked closely and engaged with
its Tenants on a regular basis to encourage and help them to get all of the available grants and support
offered by the Government. Trade improved over the summer months and this went some way to
reducing the impact of the pandemic on revenue for the Group. However, moving into the winter months
and the Tier levels under which our tenants were trading proved difficult. We are continuing to help
tenants with rental reductions, regular updates and contact with our Trade Director and Tenanted
Operation Managers.
Since the year end with new lockdown measures introduced, the Group is continuing to support the
Tenants with further concessions on rent. No rent has been charged in November 2020, with a 50%
charge for December 2020 and no charge for January 2021. As we continue further into the New Year,
we will continue to monitor and tightly control the business so that we may return to the strong financial
position we started the 2019/20 financial year in.
For a further review of the business please see the Chairman’s Statement on pages 6 and 7 which forms
part of this report.
Covid-19- measures to help the business
The measures below were put in place at the beginning of the pandemic in order to minimise the impact
on the Estate and to preserve the Group’s cash position. As we have gone through the year these measures
have been reviewed and revised accordingly. The furlough of Head Office staff, pay reductions and the
minimising of non-essential spending and no dividend payments have been put in place specifically to
maintain the company’s position. The rental concessions which we have given to Tenants have helped
them manage their cash and in turn the settlement of their sales accounts. This has in turn helped to
preserve and maintain the Company’s cashflow.
• No rental charges from April through to the end of July with rental concessions from August to
October 2020.
• Furlough of Head Office staff
• The Board taking a 20% pay reduction
• No ordinary dividend payments throughout the year
• Removal of all non-critical costs and the suspension of capital projects.
Key performance indicators
The Directors measure the development, performance and position of the Group’s business by reference to
a number of factors including the following:
Adjusted operating profit before tax
This is the operating profit before tax adjusted to reflect continuing operations only. This provides useful
insight into the Group’s activities before allowing for finance costs.
Group operating profit before Taxation of £539,000 was down 70.69 %.
9
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Strategic review (continued)
Interest cover
This is the Group’s adjusted operating profit before tax, as detailed above, divided by the net finance
costs, adjusted to exclude finance costs relating to the valuation of the pension scheme under IAS19. This
is a useful tool in determining whether the Group can maintain its current level of debt and its capacity to
increase that level.
Interest costs were covered 3.88 times. (2019: 10.21 times)
Dividends and dividend policy
When determining the level of dividend each year, the Board considers the ability of the Group to
generate cash, the level of distributable reserves and the level of reserves required to invest in the business
to ensure the policy can continue on a long-term basis. Consequently, due to the Covid-19 pandemic no
ordinary dividends have been paid through this financial year and a final dividend will not be
recommended.
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 £2m. These forecasts leave the Group with
headroom of over £1.1m on an overdraft facility of £3m. 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 £4.5m
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 £5m and £7m 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.
10
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Principal risks and uncertainties
The Group is exposed to a variety of financial, operational, economic and regulatory risks and
uncertainties. The Group has risk management processes in place which are designed to identify and
evaluate these risks and uncertainties based on the probability of them occurring and the impact they may
have on the business. The Board has overall responsibility for ensuring that there is a robust assessment of
the principal risks facing the group and they are aware that these risks and uncertainties may, either
singularly or, collectively, affect the Group’s revenue. Some risks may not be known at present or may be
considered to be currently immaterial but could develop into material risks in the future. The risk
management processes are therefore designed to manage the risks which may have a material impact on
our ability to meet our corporate objectives, rather than fully obviate all risks.
The main current risk is the Covid-19 pandemic, and the Board has taken steps to mitigate the impact on
the business including rent reductions, no dividend payments and furlough of staff. For more detail, please
see the business review on page 8 of this report.
The Directors review the material or emerging risks on an ongoing basis. Other main risks and how we
manage them are shown below; however, this is not an exhaustive list of all the risks which we may face.
Operations
We rely on a number of key suppliers to provide our Tenanted Estate with tied products. Supply
disruption could affect customer satisfaction, leading to a reduction in our revenue. Although there have
been changes in trading with the EU in January 2021, there is no anticipation for this to have a disruption
in our supply chain. The contracts for our wet trade are sourced from a number of suppliers and formal
contracts are in place. The products and variety across the estate for our Tenants to choose from are
regularly evaluated with our suppliers to be able to give the best choice to our Tenants across the estate to
maximise revenue from this income stream.
As a Tenanted Pub Operation Estate, we rely on attracting and retaining the best Tenants for our pubs in
order to maximise the potential of each of our pubs. Not attracting the right Tenants has a direct impact on
the running of the relevant pub and reduces the revenue received and in turn may reduce profits. In order
to minimise the risk, the Trade Director works closely with the Tenanted Operation Managers and
carefully monitors the candidates who come forward for our Tenanted vacancies.
Property valuations
The UK property market continues to fluctuate and any variations in valuations due to market conditions
could reduce the value of the Group’s property portfolio over time. These economic factors could also
lead to a reduction in the value realised by the Group on the disposal of pubs and have an impact on the
amount of property held as security for the loan facility. However, as the Group’s strategy is to retain its
better performing and more profitable pubs over the longer term, any such risk would be mitigated
accordingly.
The Group continues to realise appropriate returns from disposals by disposing of less sustainable or less
profitable pubs where appropriate. Where impairment indicators are identified, the Group carries out an
impairment review on an individual pub basis. This year it has identified two properties resulting in an
impairment of £279,000 being shown on the income statement. The Group carries out regular reviews of
the property portfolio and is in regular contact with its debt provider.
11
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Principal risks and uncertainties (continued)
General economic conditions
The Group carries out regular reviews of the economic and changing consumer spending patterns within
its estate. As the Group operates a Tenanted and Leased Estate the Trade Director and the Tenanted
Operations Managers actively work with our Tenants and Leaseholders on a monthly basis to assess what,
if any, impact may occur due to changing economic conditions and consumer trends. The types of pubs
and the way in which people visit pubs continues to change for the industry as a whole and being able to
work closely with our Tenants in this way provides us with the ability to minimise any negative impact to
the estate and the Groups revenue, while still being able to maintain and support the estate as a whole.
Licensing
The Group is committed to ensuring that properties meet all required licensing and other property
regulatory requirements. Failure of our Tenants to comply with licensing requirements could result in
licenses being revoked which would have a direct impact on the Tenants’ ability to trade. This is closely
monitored by our Tenanted team overseen by the Trade Director to ensure compliance with licensing and
trading regulations. The Group works closely with appropriate local Licensing Authorities to ensure that
all licensing requirements are met, and any changes are closely monitored.
12
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Section 172 statement
In accordance with section 172 of the Companies Act 2006, the Board has a duty to promote the success
of the Group for the benefit of its members as a whole. Details of the Group’s key stakeholders and how
we engage with them are set out below. In governing and directing the business the Board considers the
interests of all of its members as well as its employees, suppliers and customers in order to develop and
maintain its Tenanted Estate for the long term.
Key decisions
The key decisions that were made during the year have been in response to the Covid-19 pandemic. The
Board has communicated all of its key decisions to shareholders at regular intervals during the year. This
has been done by stock exchange announcements and memorandum information sent out directly to each
shareholder when posting the half year results. The Board has focused on protecting the Estate for the
long term future. The measures below were put in place at the beginning of the pandemic in order to
minimise the impact on the Estate and to preserve the Group’s cash position. As we have moved through
the year these measures have been reviewed and revised accordingly. The furlough of Head Office staff
pay reductions and the minimising of non-essential spending and no dividend payments have been put in
place specifically to maintain the Company’s position. The rental concessions which we have given to
Tenants have helped them manage their cash and in turn the settlement of their sales accounts. This has in
turn helped to preserve and maintain the company’s cashflow.
• No rental charges from April through to the end of July with rental concessions from August to
October 2020.
• Furlough of Head Office staff
• The Board taking a 20% pay reduction
• No ordinary dividend payments throughout the year
• Removal of all non-critical costs and the suspension of capital projects.
Customers
During what has been a difficult and trying time for the hospitality industry we have and are continuing to
send the Tenants regular newsletters giving them all of the Government guidance on claiming grant
money, business rate exemptions etc. and all the required Covid-19 measures so that they remain
compliant. The decisions which have been taken regarding rental concessions and help for the Tenants has
been done during formal Board meetings and communicated by the Managing Director via email
newsletters and telephone calls directly to the tenants by the Trade Director and his team of Tenanted
Operations Manager. The decisions taken to give rental concessions was taken by the Board in order to
assist in the retention of Tenants and allow them to keep trading where possible in order to minimise
tenancy changes during the Covid-19 pandemic. The feedback that has been received from our Tenants
has helped the Board to make these informed decisions on rental charges and specific support for each
Tenant which has in turn led to keeping a positive and strong relationship with our Tenants which has in
turn meant that we have had only three tenancy changes with only one being possibly Covid-19 related.
During normal trading the Board considers on a monthly basis in Board meetings any further support it
can offer our tenants, for example this has included perfect pour training seminars and access to industry
support through the Company’s corporate BII membership.
13
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Section 172 statement (continued)
The Board continues to concentrate fully on its business model of running and developing its Tenanted
Estate. In order to achieve the full potential of the Estate the Board constantly strives to build strong and
lasting relationships with the Tenants, as the Board believes that attracting and retaining the best Tenants
will maximise the full potential of our pubs. We actively engage with our tenants on a daily basis along
with monthly visits by our Tenanted Operation Managers and the Trade Director. We use these visits and
the contact that we have with tenants to make informed decisions to maximise the trade the Tenants can
achieve for the business.
Employees
During the current Covid-19 pandemic staff have worked from home where possible. When this has not
been possible staff have been furloughed and rotas and flexible hours have been introduced along with
strict Covid-19 measures in place to ensure the safety and wellbeing of our staff. The Board has
communicated through senior management the changes to be implemented. This has been done through
telephone and virtual online meetings where formal meetings have not been able to take place. All staff
have been kept up to date on a weekly basis changes which have affected the business via emails and
newsletter, this includes stock exchange announcements regarding concessions for our Tenants and
Director pay cuts.
The Board is committed to providing a working environment that promotes employee wellbeing and
safety, whilst facilitating their performance. The Board is committed to training and incentivising its staff.
Various training schemes are offered along with different incentive plans including a private healthcare
scheme and a share incentive scheme plan, to maximise potential and maintain good practice. It is
important to the Board that the company as a whole works as a team and finding the right people to
enhance the team is a major factor in the recruitment process. The Board is kept up to date with all
employee matters on a regular basis through the management team. During the year we have enhanced
our performance appraisal system and increased internal meetings with a view to improving
communication and teamwork.
Suppliers
We build strong relationships with our suppliers to develop mutually beneficial and lasting partnerships so
that we may get the best deals in order to supply the Tenanted Estate and maximise business potential.
The Board actively promotes the use of local business where possible. Engagement with suppliers is
primarily through a series of interactions and formal reviews. The Board agrees multi-year contracts with
its wet trade suppliers. The Board recognises that relationships with suppliers are important and is briefed
on suppliers’ issues and feedback on a regular basis. The regular feedback from our Tenants through the
monthly meetings with their Tenanted Operation Managers assists with this process.
Shareholders
We recognise the importance of our shareholders and their opinions are important to us. We engage with
our shareholders openly and any change in the business or any important updates are sent to all our
shareholders as well being published on our website along with stock exchange announcements. The
Company responds to shareholder letters and queries individually when possible. Shareholder feedback
along with details of movements in our shareholder base are regularly reported to and discussed by the
Board and their views are considered as part of our decision making. Our shareholders are also
encouraged to attend the Annual General Meeting, where all shareholders are given the opportunity to ask
questions and raise any issues.
14
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Communities
We engage with the communities in which we operate and look to understand the local issues that are
important to them. We provide financial support to the Heavitree Brewery Charitable Trust which in turn
aims to support local causes. The Board is committed to the responsible retailing of alcohol to and by our
tenants and ensures that any feedback or issues from the communities are dealt with effectively and
appropriately.
Government and regulators
We engage with Government and regulators through a range of industry consultations. The Group is
registered with the pub sector England and Wales Tenanted Code of Practice, along with the BBPA and
corporate membership to the BII, which allows our Tenants to have free access to newsletters and direct
industry support.
Because of these memberships, during the current Covid-19 pandemic we have received industry updates
quickly and efficiently which has enabled us to inform our Tenants on a regular basis regarding changes
or updates from the Government on the pandemic.
The Board is updated monthly through its Board meetings on legal and regulatory developments and takes
these into account when considering future actions.
By Order of the Board
N J McLean
Secretary
15 February 2021
15
The Heavitree Brewery PLC
Registered Number: 30800
Directors’ report
The Directors have pleasure in submitting their report for the year ended 31 October 2020.
Results and dividends
The profit for the year, after taxation, attributable to shareholders amounts to £114,000 (2019:
£1,531,000). The total comprehensive income for the year is £98,000 (2019: £1,527,000).
The Directors do not recommend a dividend per share (2019: 4.25p) on the Ordinary and ‘A’ Limited
Voting Ordinary Shares. An interim dividend was not paid (2019: 3.675p). The fixed dividend of 11.5p
per share was paid on the preference shares in the year.
Financial Instruments
As at 31 October 2020 the Group’s total bank borrowings were £5,781,000 (2019: £6,054,000).
The Directors continue to monitor and, where appropriate, take necessary action to minimise the Group’s
risk to interest rate exposure and to ensure sufficient working capital exists for the Group to operate
efficiently. Debt is kept at a manageable level, with gearing no higher than necessary, whilst the Covid-
19 pandemic is ongoing the Board has revised its investment strategy in order to maintain its cash
position.
For further details of the Group’s policy on financial instruments and management of financial risk, please
refer to note 25.
The Group’s capital management strategy is to maintain gearing as low as possible while still ensuring
that borrowing requirements are sufficient to service its needs and allow it to invest in its houses at an
appropriate level.
When monitoring gearing, the Group uses the Directors’ valuation as the basis of its asset value.
The Group currently has no intention of formally re-valuing its assets and will continue to use the
Directors’ valuation in monitoring gearing.
Information on borrowings and strategies surrounding managing interest rate risk, liquidity risk, capital
risk and credit risk can also be found in note 25.
Future developments
The Group continues to concentrate fully on the running and development of its Tenanted and Leased
estate with the intention of maximising the full potential of its houses. This may include development for
alternative use where appropriate.
Further information in relation to the business activities, together with the factors likely to affect its future
development, performance and position is set out in the Chairman’s Statement on pages 6 and 7.
Directors
The Directors of the Company during the year ended 31 October 2020 were those listed on page 2. W P
Tucker resigned as a Director on 1 August 2020
G J Crocker and K Pease-Watkin are the Directors retiring by rotation under Article 14 and, being
eligible, offer themselves for re-election.
16
The Heavitree Brewery PLC
Registered Number: 30800
Directors’ report
Directors’ interests
The interests of the Directors and their spouses in the Company’s shares as at 31 October 2020 were as
follows:
Ordinary Shares
31 October 2020 31 October 2019
‘A’ Limited Voting
Ordinary Shares
31 October 2020
31 October 2019
W P Tucker
N H P Tucker
G J Crocker
T P Duncan
K Pease-Watkin
T Wheatley
C J Bush
53,750
742,215
-
150,335
27,088
-
-
53,750
742,215
-
150,335
27,088
-
-
184,480
79385
52,289
196,992
50,638
66,859
2,223
184,480
79,385
43,853
196,992
50,638
59,656
2,223
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
All these interests are beneficial, save for the following non-beneficial interests:
(a) W P Tucker’s interest in 53,750 (2019: 53,750) Ordinary Shares; and
(b) N H P Tucker’s interest in 53,750 (2019: 53,750) Ordinary Shares.
Included in these interests are the following joint holdings:
(a) 53,750 (2019: 53,750) Ordinary Shares held jointly by W P Tucker and N H P Tucker.
In the case of W P Tucker’s holdings these are up to the date of his resignation as a Director on
1 August 2020.
Service contracts exist for each of the Executive Directors and contain either a one-year or a three-year
notice period. Non-Executive Directors are appointed by letter for a fixed term of three years.
Substantial interests
At 31 October 2020 the following interests of shareholders in excess of 3% of each class of ordinary share
capital, other than Directors, had been notified to the Company:
‘A’-Limited
Voting
Ordinary Ordinary
‘A’ Limited
Voting
Ordinary
%
P A Benett
R A Duncan
R H Duncan
J E M Duncan
S T Tucker
Mrs T C Yule
Mrs T D Tucker
Ordinary
135,380
-
151,643
133,545
-
78,010
125,840
%
6.7%
-
7.6%
6.7%
-
3.9%
6.3%
270,740
101,369
177,611
186,637
109,000
178,205
-
8.2%
3.0%
5.4%
5.6%
3.3%
5.4%
-
——————
——————
——————
——————
17
The Heavitree Brewery PLC
Registered Number: 30800
Directors’ report
Corporate governance
The Board of The Heavitree Brewery PLC (“Heavitree”) is collectively accountable to the Company’s
shareholders for good corporate governance. Accordingly, the Board has adopted the Quoted Companies
Alliance (QCA) Corporate Governance Code (Code). The information below and the statement on our
website sets out in broad terms how we comply with the Code. We provide annual updates about our
compliance with the code, any updates are uploaded to our website and dated accordingly. The Board is
responsible for ensuring that Heavitree is managed for the long-term benefit of all shareholders, through
effective and efficient decision-making. Corporate governance is an important part of the Board’s role by
providing oversight and control to manage risk and build long-term value.
At Heavitree, the Board has adopted the principles of the 2018 QCA Code to support the Company's
governance framework. During the year the code has been updated and a full version of this can be found
on our website. The Directors acknowledge the importance of the ten principles set out in the QCA Code
and the statement in full on our website sets out how we currently comply with the provisions of the QCA
Code and the reasons for any departures from it.
Board of Directors
At 31 October 2020, the Board consisted of an Executive Chairman, two Executive Directors and three
Non-Executive Directors. The Directors will continue to re-consider the structure of the Board and believe
the current structure remains appropriate. In order to assess the Board yearly appraisals are carried out for
Directors.
N H P Tucker is the Executive Chairman; G J Crocker is the Managing Director and is also responsible
for the finance function; T Wheatley is the Estates Director and is responsible for the Group’s Estate. T P
Duncan and K Pease-Watkin are Non-Executive Directors, C J Bush is an Independent Non-Executive
responsible for corporate governance and audit oversight. The Board is satisfied it has an effective and
appropriate balance of skills and experience of Financial, Hospitality Trade, and General industry
knowledge to give it the ability to constructively challenge strategy and scrutinise performance.
Independent advice along with the appointment of the Independent Non-Executive Director the Board
maintains its access to professional advisors and is able to take independent advice in the performance of
their duties, at the Company’s expense.
The business and management of the Group is the collective responsibility of the Board. At each meeting
the Board considers and reviews the Group’s financial and trading performance. It has a formal written
schedule of matters reserved for its review and approval. The Board meets every month with additional
meetings arranged as required. Formal agendas and reports are provided to the Board on a timely basis,
along with other information to enable it to discharge its duties.
A full copy of the QCA Code is available from the QCA’s website: www.theqca.com.
18
The Heavitree Brewery PLC
Registered Number: 30800
Directors’ report
Corporate governance (continued)
Audit Committee
Given the size of the Group, the Board does not consider it appropriate to have a separate audit
committee, however an Independent Non-Executive Director has now been appointed and part of his role
is audit oversight. The Board considers matters relating to the reporting of results, financial controls, and
the cost and effectiveness of the audit process at the monthly board meetings and meets at least once a
year with the auditors in attendance.
The Board is satisfied that the Group’s auditors, PKF Francis Clark, have been objective and independent
of the Group. The Group’s auditors performed non-audit services for the Group as outlined in Note 7 but
the Board is satisfied that their objectivity and independence were not impaired by such work.
Remuneration Committee
Given the size of the Group, the Board does not consider it appropriate to have a separate remuneration
committee. The Board considers and determines the remuneration of the Executive and Non-Executive
Directors. No Director is involved in setting his or her own remuneration.
Details of Directors Remuneration can be found in Note 10 to the financial statements.
Summary of Directors’ Attendance within the financial year
N H P Tucker
G J Crocker
T Wheatley
T P Duncan
K Pease-Watkins
C J Bush
Board Meetings
Entitled to attend
9
9
9
9
9
9
Attended
9
8
9
8
5
9
Shareholder Communication
The Company believes in good communication with shareholders and encourages shareholders to attend
its Annual General Meeting.
Internal Financial Control
The Board is responsible for ensuring that the Group maintains a system of internal financial controls.
The objective of the system is to safeguard Group assets, ensure proper accounting records are maintained
and that the financial information used within the business and for publication is timely and reliable. Any
such system can only provide reasonable, but not absolute, assurance against material loss or
misstatement.
Given the size of the Group, the Board does not consider it appropriate to have its own internal audit
function.
19
The Heavitree Brewery PLC
Registered Number: 30800
Directors’ report
Corporate governance (continued)
All the day to day operational decisions are taken initially by the Executive Directors, in accordance with
the Group’s strategy. The Executive Directors are also responsible for initiating commercial transactions
and approving payments, save for those relating to their own employment.
The key internal controls include specific levels of delegated authority and the segregation of duties; the
review of pertinent commercial, financial and other information by the Board on a regular basis; the prior
approval of all significant strategic decisions; and maintaining a formal strategy for business activities.
Directors’ statement as to disclosure of information to auditor
The Directors who were members of the Board at the time of approving the Directors’ report are listed on
page 2. Having made enquiries of fellow Directors and of the Company’s auditor, each of these Directors
confirms that:
•
•
to the best of each Director’s knowledge and belief, there is no information relevant to the
preparation of their report of which the Company’s auditor is unaware; and
each Director has taken all the steps a Director might reasonably be expected to have taken to be
aware of relevant audit information and to establish that the Company’s auditor is aware of that
information.
Auditor
A resolution to re-appoint PKF Francis Clark as the Company’s auditor will be put to the forthcoming
Annual General Meeting.
By Order of the Board
N J McLean
Secretary
15 February 2021
20
The Heavitree Brewery PLC
Registered number: 30800
Ten year review of profits and dividends
Year ended
31 October
Operating
profit
£000
Profit
before tax
£000
Earnings
per 5p share
p
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Notes:
1,408
1,245
1,345
1,404
1,412
1,420
1,778
1,632
1,839
539
1,232
927
1,014
1,642
1,173
1,653
1,554
2,251
1,844
414
16.4
12.5
14.8
28.0
18.8
28.0
27.0
39.6
32.0
2.4
Dividends
per 5p share
p
7.0
7.0
7.0
7.35
7.35
7.425
7.675
7.925
7.925
-
1. Dividends per 5p share for all years include interim dividends and dividends proposed or subsequently
declared in respect of the profits of each year.
2. The earnings per share figures are both basic and diluted.
21
The Heavitree Brewery PLC
Registered number: 30800
Statement of Directors’ responsibilities in respect of the
financial statements
The Directors are responsible for preparing the Annual Report and the financial statements in accordance
with applicable law and regulations. Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have prepared the Group and Company financial
statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU.
Under company law the Directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of affairs of the Group and the Company and of the profit or loss of the
Group and Company for that period. In preparing these financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them consistently
• Make judgements and accounting estimates that are reasonable and prudent
• State whether applicable IFRSs as adopted by the EU have been followed, subject to any material
departures disclosed and explained in the financial statements, and
• Prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Company will continue in business
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company’s and the Group’s transactions and disclose with reasonable accuracy at any time the
financial position of the Company and the Group and to enable them to ensure that the financial statement
comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the
Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website.
22
The Heavitree Brewery PLC
Registered number: 30800
Independent auditor’s report
To the members of The Heavitree Brewery PLC
Opinion
We have audited the financial statements of The Heavitree Brewery PLC and its subsidiaries for the year
ended 31 October 2020, which comprise the Group income statement, the Group statement of
comprehensive income, the Group and Parent Company balance sheet, the Group and Parent Company
statement of changes in equity, the Group and Parent Company statement of cash flows and notes to the
financial statements, including a summary of significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union and, as regards to the company financial
statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
• The financial statements give a true and fair view of the state of the Group’s and of the Parent
Company’s affairs as at 31 October 2020 and of the Group’s profit for the year then ended;
• The Group financial statements have been properly prepared in accordance with IFRSs as
•
•
adopted by the European Union;
the Parent Company financial statements have been properly prepared in accordance with IFRSs
as adopted by the European Union and as applied in accordance with the provisions of the
Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with those requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require
us to report to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties
that may cast significant doubt about the Company’s ability to continue to adopt the going
concern basis of accounting for at least twelve months from the date when the financial
statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the financial statements as
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
23
The Heavitree Brewery PLC
Registered number: 30800
Independent auditor’s report
To the members of The Heavitree Brewery PLC
Risk: Going concern
The Group has been adversely impacted by the Covid-19 pandemic, which continues to present significant
challenges to the hospitality industry. The Group’s pubs were closed during the first lockdown period
between March and July 2020 and this, combined with the rent concessions granted by the Group to
support its tenants, has had a significant impact on the Group’s revenue, operating profit and cash flow.
There is continued uncertainty in the early months of 2021 over the extent and duration of the current
lockdown restrictions. We therefore assessed going concern as a significant audit risk and a key audit
matter for inclusion in our report. The audit engagement partner and senior team members increased their
time spent directing and reviewing our audit procedures in relation to going concern, including
discussions with the Group’s management and the Board of Directors.
Our work centred on management’s assessment of going concern, which is detailed in note 1 to the
financial statements. In particular we:
• obtained management’s cash flow forecasts supporting the Group’s ability to trade within current
banking facilities for a period of at least twelve months from the date of approval of the financial
statements and critically challenged the assumptions used in their preparation, including the
extent of the current lockdown restrictions and the timing of planned non-core asset sales;
•
•
•
•
assessed the plans of management to carry out a rationalisation of the property estate to enable
the level of gearing to result in a business model that is sustainable both for the period of the
going concern review and for the longer term;
reviewed the outcome of prior year forecasts to determine their forecasting accuracy;
reviewed correspondence with the Group’s Bankers confirming the waiver of covenant tests until
April 2022;
considered the level of headroom in bank facilities based on management’s cash flow forecasts
and the impact of changing assumptions particularly around the extent of current lockdown
restrictions and the timing of planned non-core asset sales; and
•
reviewed the adequacy of the related disclosures in the financial statements.
As a result of the procedures performed, we are satisfied that the directors’ use of the going concern basis
of preparation is appropriate and the related disclosures adequately describe the risks associated with the
Group’s ability to continue as a going concern for a period of at least twelve months from the date of our
report.
Risk: impairment of property
As detailed in the accounting policies and note 16, the Group has a large portfolio of trading properties with a net
book value of £15.9m (2019: £16.7m). Given the age of the portfolio and the Group’s policy of holding them at
depreciated historical cost, many of the individual property carrying values are relatively low and therefore the risk of
a material impairment in a moderate proportion of the estate is considered low. Notwithstanding this, given the size
and value of the portfolio, the nature of the industry and the increased economic uncertainty as a result of the Covid-
19 pandemic, a key audit risk is the Group’s assessment of whether there is any permanent impairment to the carrying
value of trading properties.
Our work focussed on management’s assessment of the need for any impairment on an individual property basis. We
paid particular attention to any closed houses in the year, being a potential indicator of impairment. We reviewed and
challenged the assumptions used by management in making their assessment, as well as comparing their consideration
of market value to relevant local market data and post year end sales values realised.
24
The Heavitree Brewery PLC
Registered number: 30800
Independent auditor’s report
To the members of The Heavitree Brewery PLC
Risk: impairment of property (continued)
We also performed our own value in use calculation for all properties, setting expectations for future cash flows by
reference to both rental income and wet sales. We made prudent assumptions in relation to cash inflows, taking into
account expected restrictions on trading during 2021, moderate growth and discount rates and assessed the sensitivity
of the calculation to these rates. Where our work highlighted any properties with a value in use lower than carrying
value, we challenged management’s assertions and sought to understand and corroborate assumptions such as
alternate uses for those properties.
As a result of the procedures performed, we are satisfied with the Group’s assessment that there is no additional
permanent impairment to the carrying value of the trading properties, other than the £279,000 charge recognised in
the financial statements.
Risk: revenue recognition
The Group’s primary revenue streams are outlined in the accounting policies and note 3. The Group derives most of
its revenue from wet sales to, and rent receivable from, licenced premises. Sales are routine and no judgement is
applied. Based on our understanding of the business and the environment in which it operates, we identified
completeness and cut-off as key audit risks for these revenue streams. We also considered other industry relevant
areas of potential misstatement such as volume rebates and lease incentives, including lease modifications in the light
of the rent concessions granted to tenants during the Covid-19 pandemic.
Our work on completeness and cut-off included substantive analytical procedures on the main revenue streams, a
review of post year end credit notes and the use of data analytics software to match all wet purchases to the resulting
wet sale. In addition, we performed tests of detail on a sample of transactions, including those around the year end to
test cut off. We also reviewed the level of volume rebates and lease incentives and concluded these are not material to
the financial statements.
In respect of the rent concessions granted to tenants, we reviewed a sample of agreements to determine whether they
fall under the scope of IFRS16. We recalculated the amount of total expected rent due over the remaining lease term
and considered whether this had been appropriately recognised on a straight line basis.
As a result of the procedures performed, we are satisfied that revenue has been appropriately recorded.
Our application of materiality
Misstatements, including omissions, are considered to be material if individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
Materiality is applied in planning the scope of our audit, determining the nature, timing and extent of our audit
procedures and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality group and company: £80k
Performance materiality: £60k
Misstatements considered above triviality: £2.4k
Basis for determination: The basis of determination is reviewed each year taking into account current market
conditions and levels set across similar companies in the industry. We also consider whether there are any additional
risk factors. In previous years the basis used has been 5% of profit before tax, excluding profits or losses on property
disposals. However, in anticipation of the Group’s results being impacted by the Covid-19 pandemic we concluded
that this would not be appropriate in the current year. We established that the principal reasons for the reduction in
turnover and profitability were related to the pandemic and that the underlying business was largely unchanged. Our
judgement is that materiality is more appropriately determined using a normalised profit before tax from continuing
25
The Heavitree Brewery PLC
Registered number: 30800
Independent auditor’s report
To the members of The Heavitree Brewery PLC
operations figure based on past results. We therefore concluded that materiality of £80k, being that adopted in 2019,
remains appropriate.
During the course of the audit, we reassessed initial materiality and did not consider any changes to materiality
necessary based on the final results.
An overview of the scope of our audit
We planned and performed our audit by obtaining an understanding of the Group and its environment, including the
accounting processes and controls, and the industry in which it operates. The Group comprises one trading entity and
a dormant subsidiary in the UK, with an immaterial subsidiary in the US. The US subsidiary represents nil% of
Group turnover and 0.2% of Group total assets. Accordingly, our audit work is focussed on the trading entity, The
Heavitree Brewery PLC, and the detailed scope in relation to the key audit matters is explained above. We performed
a limited amount of work on the US subsidiary, Heavitree Inc, which included agreement of any significant
transactions to source documentation.
Other information
The directors are responsible for the other information. The other information comprises the information included in
the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in
the course of the audit, we have not identified any material misstatements in the strategic report or the directors’
report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us
to report to you if, in our opinion:
•
adequate accounting records have not been kept, or returns adequate for our audit have not been received
from branches not visited by us; or
•
the financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
26
The Heavitree Brewery PLC
Registered number: 30800
Independent auditor’s report
To the members of The Heavitree Brewery PLC
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement [set out on page 22], the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of the financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and Parent Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or Parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
Use of our report
This report is made solely to the Company’s shareholders, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken, so that we might state to the Company’s shareholders
those matters we are required to state to them in an audit report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s
shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
Christopher Hicks BA FCA DChA (Senior Statutory Auditor)
For and on behalf of
PKF Francis Clark
Statutory Auditor
Centenary House
Peninsula Park
Rydon Lane
Exeter
EX2 7XE
27
The Heavitree Brewery PLC
Registered number: 30800
Group income statement
For the year ended 31 October 2020
Revenue
Change in stocks
Other operating income
Purchase of inventories
Staff costs
Depreciation of property, plant and equipment
Other operating charges
Notes
3
5
Total
2020
£’000
Total
2019
£’000
5,019
–––——
7,528
––––——
-
-
317
302
(2,065)
(3,100)
10
(1,310)
(1,385)
(177)
(222)
(1,245)
(1,284)
––––——
(4,480)
––––——
(5,689)
Group operating profit
6
539
1,839
Profit on sale of property, plant and equipment
Impairment of fixed assets
Group profit before finance costs and taxation
Finance income
Finance costs
Other finance costs – pensions
Profit before taxation
Tax expense
Profit for the year attributable to equity holders of the parent
Basic earnings per share
Diluted earnings per share
8
16
11
29
12a
13
13
293
(279)
––––——
553
185
-
––––——
2,024
2
(141)
-
––––——
(139)
4
(184)
-
––––——
(180)
414
1,844
(300)
––––——
114
(313)
––––——
1,531
══════ ══════
32.0p
══════ ══════
2.4p
2.4p
32.0p
══════ ══════
28
The Heavitree Brewery PLC
Registered number: 30800
Group statement of comprehensive income
for the year ended 31 October 2020
Profit for the year
Notes
2020
£’000
114
2019
£’000
1,531
–––––––––––––––
–––––––––––––––
Items that will not be reclassified to profit or loss
Fair value adjustment on investment in equity 27
Actuarial (losses) on defined benefit scheme
on defined benefit pension plans
Tax relating to items that will not be reclassified
29
12a
(12)
-
-
(6)
-
-
–––––––––––––––
(12)
–––––––––––––––
(6)
Items that may be reclassified to profit or loss
Exchange rate differences on translation of subsidiary undertaking
(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
–––––––––––––––
–––––––––––––––
–––––––––––––––
(4)
–––––––––––––––
2
29
The Heavitree Brewery PLC
Registered Number: 30800
Group balance sheet
at 31 October 2020
Non-current assets
Property, plant and equipment
Investment property
Financial assets
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Assets held for sale
Total assets
Current liabilities
Trade and other payables
Financial liabilities
Income tax payable
Non-current liabilities
Other payables
Financial liabilities
Deferred tax liabilities
Defined benefit pension plan deficit
Total liabilities
Net assets
Notes
2020
£’000
16,615
2,130
2019
£’000
17,692
1,485
–––––––––––––––
18,745
–––––––––––––––
19,177
16
18
12c
30
16
41
16
–––––––––––––––
18,791
–––––––––––––––
19,234
–––––––––––––––
–––––––––––––––
19
20
21
10
1,277
49
10
1,344
51
–––––––––––––––
1,336
–––––––––––––––
1,405
–––––––––––––––
219
17
–––––––––––––––
-
–––––––––––––––
20,346
–––––––––––––––
20,639
–––––––––––––––
–––––––––––––––
22
23
(666)
(1,520)
(237)
(953)
(6,087)
(231)
–––––––––––––––
(2,423)
–––––––––––––––
(7,271)
–––––––––––––––
–––––––––––––––
22
23
12c
29
(274)
(4,322)
(536)
(92)
(284)
(37)
(394)
(92)
–––––––––––––––
(5,224)
–––––––––––––––
(7,647)
–––––––––––––––
(807)
–––––––––––––––
(8,078)
–––––––––––––––
12,699
–––––––––––––––
12,561
–––––––––––––––
–––––––––––––––
30
The Heavitree Brewery PLC
Registered Number: 30800
Group balance sheet
at 31 October 2020
Capital and reserves
Equity share capital
Capital redemption reserve
Treasury shares
Fair value adjustments reserve
Currency translation
Retained earnings
Total equity
Notes
27
27
27
27
27
27
2020
£’000
264
673
(1,522)
5
13
13,266
2019
£’000
264
673
(1,562)
17
17
13,152
–––––––––––––––
12,699
–––––––––––––––
12,561
–––––––––––––––
–––––––––––––––
The notes on pages 40 to 73 form part of the financial statements.
These accounts were approved by the Board of Directors and authorised for issue on 15 February 2021
and were signed on its behalf by
N H P TUCKER )
G J CROCKER ) Directors
31
The Heavitree Brewery PLC
Registered Number: 30800
Group statement of changes in equity
for the year ended 31 October 2020
Equity
share
capital
£’000
Capital
redemption
reserve
£’000
Treasury
shares
£’000
Fair value
adjustment
reserve
£’000
Currency
translation
£’000
Retained
earnings
£’000
Total
equity
£’000
264
673
(1,317)
-
-
-
-
-
-
23
-
15
11,997
11,655
-
1,531
1,531
(6)
2
-
(4)
–––––
–––––
–––––
–––––
––––––
–––––
––––
-
-
-
(6)
2
1,531
1,527
–––––
–––––
–––––
–––––
–––––
–––––
––––
-
-
-
-
-
-
56
(298)
(3)
-
-
-
-
-
-
-
-
56
(298)
3
-
-
–––––
-
–––––
-
–––––
-
–––––
-
––––––
(379)
–––––
(379)
––––
264
––––––
673
––––––
(1,562)
––––––
17
––––––
17
––––––
13,152
––––––
12,561
––––
At 1 November
2018
Profit for the
year
Other
comprehensive
income for the
year, net of
income tax
Total
comprehensive
income for the
year
Consideration
received by
EBT on sale of
shares
Consideration
paid by EBT on
purchase of
shares
Loss by EBT on
sale of shares
Equity
dividends paid
At 31 October
2019
32
The Heavitree Brewery PLC
Registered Number: 30800
Group statement of changes in equity
for the year ended 31 October 2020
Equity
share
capital
£’000
Capital
redemption
reserve
£’000
Treasury
shares
£’000
Fair value
adjustment
reserve
£’000
Currency
translation
£’000
Retained
earnings
£’000
Total
equity
£’000
264
673
(1,562)
-
-
-
-
-
-
17
-
17
13,152
12,561
-
114
114
(12)
(4)
-
(16)
–––––
–––––
–––––
–––––
––––––
–––––
––––
-
-
-
(12)
(4)
114
98
–––––
–––––
–––––
–––––
–––––
–––––
––––
-
-
-
-
-
-
62
(24)
2
-
-
-
-
-
-
-
-
-
62
(24)
2
-
–––––
-
–––––
-
–––––
-
–––––
-
––––––
-
–––––
-
––––
264
––––––
673
––––––
(1,522)
––––––
5
––––––
13
––––––
13,266
––––––
12,699
––––
At 1 November
2019
Profit for the
year
Other
comprehensive
income for the
year, net of
income tax
Total
comprehensive
income for the
year
Consideration
received by
EBT on sale of
shares
Consideration
paid by EBT on
purchase of
shares
Loss by EBT on
sale of shares
Equity
dividends paid
At 31 October
2020
Details of the reserves can be found in note 27.
33
The Heavitree Brewery PLC
Registered Number: 30800
Group statement of cash flows
For the year ended 31 October 2020
Operating activities
Profit for the year
Tax expense
Net finance costs
Profit on disposal of non-current assets and assets held for sale
Depreciation and impairment of property, plant and equipment
Exchange gain on cash, liquid resources and loans
Difference between pension contributions paid and amounts
recognised in the income statement
Decrease in trade and other receivables
Decrease in trade and other payables
Impairment of fixed assets
Cash generated from operations
Income taxes paid
Interest paid
Net cash inflow from operating activities
Notes
2020
£’000
2019
£’000
114
301
139
(293)
177
-
-
220
(274)
279
1,531
313
180
(185)
222
-
52
(72)
(145)
-
–––––––––––––––
663
(151)
(141)
–––––––––––––––
1,896
(97)
(184)
–––––––––––––––
371
–––––––––––––––
1,615
––––––––––––––
–––––––––––––––
2
186
(315)
4
278
(506)
–––––––––––––––
(127)
–––––––––––––––
(224)
–––––––––––––––
–––––––––––––––
Investing activities
Interest received
Proceeds from sale of property, plant and equipment and assets held for sale
Payments to acquire property, plant and equipment
Net cash (outflow)/inflow from investing activities
Financing activities
Preference dividend paid
Equity dividends paid
Consideration received by EBT on sale of shares
Consideration paid by EBT on purchase of shares
Capital element of finance lease rental payments
Loan repayment
Net cash outflow from financing activities
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the year end
14
21
21
(1)
-
62
(25)
(9)
(1,500)
(1)
(379)
56
(298)
(15)
-
–––––––––––––––
(1,473)
–––––––––––––––
(1,229)
(3)
–––––––––––––––
(1,232)
–––––––––––––––
(637)
–––––––––––––––
754
(757)
–––––––––––––––
(3)
–––––––––––––––
–––––––––––––––
34
The Heavitree Brewery PLC
Registered Number: 30800
Company balance sheet
at 31 October 2020
Non-current assets
Property, plant and equipment
Investment property
Financial assets
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Assets held for sale
Total assets
Current liabilities
Trade and other payables
Financial liabilities
Income tax payable
Non-current liabilities
Other payables
Financial liabilities
Deferred tax liabilities
Defined benefit pension plan deficit
Total liabilities
Net assets
Notes
2020
£’000
16,573
2,130
2019
£’000
17,649
1,485
–––––––––––––––
18,703
–––––––––––––––
19,134
16
18
12c
64
16
75
16
–––––––––––––––
18,783
–––––––––––––––
19,225
–––––––––––––––
–––––––––––––––
19
20
21
10
1,277
49
10
1,344
51
–––––––––––––––
1,336
–––––––––––––––
1,405
–––––––––––––––
219
17
–––––––––––––––
-
–––––––––––––––
20,338
–––––––––––––––
20,630
–––––––––––––––
–––––––––––––––
22
23
(772)
(1,520)
(237)
(1,071)
(6,087)
(231)
–––––––––––––––
(2,529)
–––––––––––––––
(7,389)
–––––––––––––––
–––––––––––––––
22
23
12c
29
(274)
(4,322)
(536)
(92)
(284)
(37)
(394)
(92)
–––––––––––––––
(5,224)
–––––––––––––––
(7,753)
–––––––––––––––
(807)
–––––––––––––––
(8,196)
–––––––––––––––
12,585
–––––––––––––––
12,434
–––––––––––––––
–––––––––––––––
35
The Heavitree Brewery PLC
Registered Number: 30800
Company balance sheet
at 31 October 2020
Capital and reserves
Equity share capital
Capital redemption reserve
Treasury shares
Fair value adjustments reserve
Cash flow hedging reserve
Retained earnings
Total equity
Notes
27
27
27
27
27
27
2020
£’000
264
673
(1,522)
5
-
13,165
2019
£’000
264
673
(1,562)
17
-
13,042
–––––––––––––––
12,585
–––––––––––––––
12,434
–––––––––––––––
–––––––––––––––
The notes on pages 40 to 73 form part of the financial statements.
These accounts were approved by the Board of Directors and authorised for issue on 15 February 2021
and were signed on its behalf by
N H P TUCKER )
G J CROCKER ) Directors
36
The Heavitree Brewery PLC
Registered Number: 30800
Company statement of changes in equity
for the year ended 31 October 2020
At 1 November 2018
Profit for the year
Other comprehensive
income for the year, net of
income tax
Total comprehensive
income for the year
Consideration received by
EBT on sale of shares
Consideration paid by
EBT on purchase of shares
Loss by EBT on sale of
shares
Equity dividends paid
At 31 October 2019
Equity
share
capital
£'000
264
-
Capital
redemption
reserve
£’000
673
-
Treasury
shares
£’000
(1,317)
-
Fair value
adjustment
reserve
£’000
23
-
Retained
earnings
£’000
11,917
1,501
Total
equity
£’000
11,560
1,501
-
-
-
(6)
-
(6)
–––––
–––––
–––––
–––––
–––––
––––
-
–––––
-
–––––
-
–––––
(6)
–––––
1,501
–––––
-
-
-
-
–––––
264
––––––
-
56
-
(298)
-
-
-
-
-
-
–––––
673
––––––
(3)
-
–––––
(1,562)
––––––
-
-
–––––
17
––––––
3
(379)
–––––
13,042
––––––
1,495
––––
56
(298)
-
(379)
––––
12,434
––––
37
The Heavitree Brewery PLC
Registered Number: 30800
Company statement of changes in equity
for the year ended 31 October 2020
At 1 November 2019
Profit for the year
Other comprehensive
income for the year, net of
income tax
Total comprehensive
income for the year
Consideration received by
EBT on sale of shares
Consideration paid by
EBT on purchase of shares
Loss by EBT on sale of
shares
Equity dividends paid
At 31 October 2020
Equity
share
capital
£'000
264
-
-
Capital
redemption
reserve
£’000
673
-
-
Treasury
shares
£’000
(1,562)
-
-
Fair value
adjustment
reserve
£’000
17
-
(12)
Retained
earnings
£’000
13,042
123
-
Total
equity
£’000
12,434
123
(12)
–––––
-
–––––
-
–––––
-
–––––
(12)
–––––
123
––––
111
–––––
–––––
–––––
–––––
–––––
––––
-
-
-
-
-
–––––
264
––––––
-
–––––
673
––––––
62
(24)
2
–––––
(1,522)
––––––
-
-
-
-
-
–––––
5
––––––
-
–––––
13,165
––––––
62
(24)
2
––––
12,585
––––
Details of the reserves can be found in note 27.
38
The Heavitree Brewery PLC
Registered Number: 30800
Company statement of cash flows
for the year ended 31 October 2020
Operating activities
Profit for the year
Tax expense
Net finance costs
Profit on disposal of non-current assets and assets held for sale
Depreciation and impairment of property, plant and equipment
Difference between pension contributions paid and amounts
recognised in the income statement
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Impairment of fixed assets
Cash generated from operations
Income taxes paid
Interest paid
Net cash inflow from operating activities
Notes
2020
£’000
2019
£’000
123
301
139
(293)
177
-
222
(285)
279
1,501
313
180
(185)
222
52
(72)
(115)
-
–––––––––––––––
663
(151)
(141)
–––––––––––––––
1,896
(97)
(184)
–––––––––––––––
371
–––––––––––––––
1,615
–––––––––––––––
–––––––––––––––
2
186
(315)
-
-
4
278
(506)
-
-
–––––––––––––––
(127)
–––––––––––––––
(224)
–––––––––––––––
–––––––––––––––
Investing activities
Interest received
Proceeds from sale of property, plant and equipment and assets held for sale
Payments to acquire property, plant and equipment
Payments to acquire fixed asset investments
Receipts from fixed asset investments
Net cash (outflow)/inflow from investing activities
Financing activities
Preference dividend paid
Equity dividends paid
Consideration received by EBT on sale of shares
Consideration paid by EBT on purchase of shares
Capital element of finance lease rental payments
Net movement in long-term borrowings
Net cash outflow from financing activities
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the year end
14
21
21
(1)
-
62
(25)
(9)
(1,500)
(1)
(379)
56
(298)
(15)
-
–––––––––––––––
(1,473)
–––––––––––––––
(1,229)
(3)
–––––––––––––––
(1,232)
–––––––––––––––
(637)
–––––––––––––––
754
(757)
–––––––––––––––
(3)
–––––––––––––––
–––––––––––––––
39
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
1. Authorisation of financial statements
The financial statements of The Heavitree Brewery PLC and its subsidiaries (the “Group”) for the year
ended 31 October 2020 were authorised for issue by the board of Directors on 15 February 2021. The
Heavitree Brewery PLC is a public company incorporated and domiciled in England. The Company’s
ordinary shares are traded on the AIM market of the London Stock Exchange.
2. Accounting policies and statement of compliance
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union and as regards the Parent Company financial statements, as
applied in accordance with the Companies Act 2006.
The financial statements have been prepared on the historical cost basis except for certain items that are
measured at fair value at the end of each reporting period as explained in the accounting policies below.
The accounting policies which follow set out those policies which apply in preparing the financial
statements for the year ended 31 October 2020 the financial statements are presented in Sterling. All
values are rounded to the nearest thousand pounds (£’000) except when otherwise indicated.
No income statement or statement of comprehensive income is prepared by the Company as permitted by
Section 408 of the Companies Act 2006. The profit for the year is disclosed in Note 15.
The financial statements have been prepared on a going concern basis. In determining the appropriate
basis of preparation of the financial statements, the Directors are required to consider whether the Group
and the Company can continue in operational existence for the foreseeable future. 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
this has also been put into the forecasts for future cash positions. The forecast for capital receipts in 2021
include non-core asset sales of £2m. These forecasts leave the Group with headroom of over £1.1m on an
overdraft facility of £3m. 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 £4.5m
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 £5m and £7m 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
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 are no material uncertainties For this reason, the Group continues to adopt the going concern basis
in preparing its financial statements.
40
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
2. Accounting policies (continued)
Further information on principal risks and uncertainties and financial instruments can be found in the
Strategic Report, Directors’ Report and in note 25.
Basis of consolidation
The Group financial statements consolidate the financial statements of The Heavitree Brewery PLC and
its subsidiaries drawn up to 31 October each year.
The assets of the Employee Share Option Scheme and the Employee Benefits Trust are fully consolidated
within the financial statements.
New standards, interpretations and amendments to existing standards
The Group has adopted IFRS16: Leases from 1 November 2019 and as permitted under the specific
transition provisions, has not restated the comparatives. In applying IFRS16 for the first time, the Group
has determined that it has in place three leasing arrangements as a lessee, all of which expire within
twelve months of the year end. Consequently, any lease liability and right-of-use asset as calculated
under IFRS16 is considered immaterial to the financial statements and therefore the Group has elected to
account for these as a short term lease, with lease payments continuing to be recognised as an expense in
the profit and loss account.
As noted in the Chairman’s statement on page 5 and the business review on page8 the Group has offered
substantial rent concessions to its tenants throughout the course of the year in order to support them
through the COVID-19 pandemic. In accordance with IFRS16, these rent concessions have been
accounted for as a lease modification and subsequently the revised total amount of rent due over the
remaining lease term is recognised on a straight line basis. This has resulted in the recognition of
£333,000 rental income that has not yet been received from tenants.
The Directors have considered all IFRS and IFRIC interpretations issued but not yet in force.
Revenue recognition
Revenue is measured at transaction price when control passes to the customer in respect of goods and
services provided, net of discounts and VAT. The following criteria must be met before revenue is
recognised:
Drink and food sales (Revenue)
Revenue in respect of drink and food sales is recognised at the point at which the goods are provided, net
of any discounts or volume rebates allowed.
Rents receivable from licenced properties (Revenue) and Rents receivable from investment properties
(Other operating income)
Rents receivable are recognised on a straight-line basis over the lease term.
41
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
3. Accounting policies (continued)
Revenue recognition
Government Grants Furlough scheme
Under this scheme HMRC reimburses up to 80% of the wages of certain employees who have been
furloughed. The scheme is designed to compensate for staff so amounts are recognised in the income
statement over the same period as the costs to which they relate. These have been shown on the income
statement under other income.
Machine income (Revenue)
The Group’s share of net machine income is recognised in the period to which it relates.
Property, plant and equipment
Buildings, furniture and fittings, equipment and vehicles are stated at cost less accumulated depreciation
and accumulated impairment losses.
Depreciation is provided on all property, plant and equipment, other than freehold land, on a straight-line
basis at rates calculated to write off the cost less estimated residual value of each asset over its expected
useful life, as follows:
Fixtures and fittings
• Buildings
-
•
-
• Computer equipment -
• Office equipment
-
• Motor vehicles
-
2%
10% to 20%
20% to 331/3%
20%
25%
Freehold land and assets under construction are not depreciated.
An annual assessment of residual values is performed and there is no depreciable amount if residual
values are the same as, or more than, book value. Residual values are based on the estimated amount
which would be currently obtainable from disposal of the asset net of disposal costs if the asset were
already of the age and condition expected at the end of its useful life.
Useful lives and residual values are reviewed annually and where adjustments are required these are made
prospectively.
Investment property
Unlicensed property held to earn rental income is classified as investment property and is recorded at cost
less accumulated depreciation and any recognised impairment losses. The depreciation policy is
consistent with that described for property, plant and equipment.
Non-current assets held for sale
Properties identified for disposal which are classified in the Balance Sheet as non-current assets held for
sale are held at the lower of carrying value on transfer to non-current assets held for sale, as assessed at
the time of transfer, and fair value less costs to dispose. The fair value less costs to dispose is based on the
net estimated realisable disposal proceeds (ERV) which are provided by third party property agents who
have been engaged to sell the properties. Licensed land and buildings are classified as held for sale when
they have been identified for disposal by the Group. They must be available for immediate sale in their
present condition and the sale should be highly probable. These conditions are met when management are
committed to the sale, the property is actively marketed, and the sale is expected to occur within one year.
Licensed land and buildings held for sale are not depreciated.
42
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
2. Accounting policies (continued)
Impairment of assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If
any such indication exists, the Group makes an estimate of the asset’s recoverable amount. Where the
carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount. Impairment losses are recognised immediately in the income
statement in those expense categories consistent with the function of the impaired asset.
Financial instruments
Financial assets and financial liabilities are recognised when a group entity becomes a party to the
contractual provisions of the instrument and are initially measured at fair value.
Mortgages
Where the Group holds a debt instrument for the purpose of collecting contractual cash flows and the
contractual terms of the asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding, the instrument is measured at amortised cost
net of any write down for impairment.
Trade receivables
Trade receivables are initially recognised at the transaction price less impairment. In measuring the
impairment, the group has applied the simplified approach to expected credit losses as permitted by IFRS
9. Expected credit losses are assessed by considering the Group’s historical credit loss experience, factors
specific for each receivable, the current economic climate and expected changes in forecasts of future
events. Changes in expected credit losses are recognised in the Group income statement.
Preference shares
Preference shares are measured at amortised cost and recognised as a liability in the balance sheet, net of
transaction costs. Preference shares are classified as a financial liability measured at amortised cost until
they are extinguished on redemption. The corresponding dividends on those shares are charged as
finance costs in the income statement.
Interest-bearing loans and borrowings
Obligations for loans and borrowings are recognised when the Group becomes party to the related
contracts and are measured initially at the fair value of consideration received less directly attributable
transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised
cost using the effective interest method.
Gains and losses arising on the repurchase, settlement or otherwise cancellation of liabilities are
recognised respectively in finance income and finance cost.
Fair value measurement
The fair value of quoted investments is determined by reference to bid prices at the close of business on
the balance sheet date.
43
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
2. Accounting policies (continued)
Leases – lessor accounting
Leases where the lessor retains a significant portion of the risks and benefits of ownership of the asset are
classified as operating leases and rentals payable are charged in the income statement on a straight line
basis over the lease term.
Assets leased out under operating leases are included in property, plant and equipment and depreciated
over their estimated useful lives. Rental income, including the effect of lease incentives, is recognised on
a straight line basis over the lease term.
Where the Group transfers substantially all the risks and benefits of ownership of the asset, the
arrangement is classified as a finance lease and a receivable is recognised for the initial direct costs of the
lease and the present value of the minimum lease payments. As payments fall due, finance income is
recognised in the income statement so as to achieve a constant rate of return on the remaining net
investment in the lease.
Leases – Lessee accounting
Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities. Right of use assets are depreciated on a straight line
basis over the estimated useful life of the asset. The corresponding lease liability is measured at the
present value of lease payments to be made over the lease term.
The Group applies the short term lease recognition exemption to its short term leases of property and
equipment, where the lease term expires within twelve months of the year end. Lease payments on short
term leases are recognised as an expense on a straight line basis over the lease term.
Pensions and other post-retirement benefits
The Group has both defined contribution and defined benefit pension arrangements.
The cost of defined contribution payments is charged to the income statement as incurred.
The Group provides discretionary additional post-retirement benefits to retired employees. The benefits,
which are entirely discretionary, are reviewed on an annual basis and charged to the income statement
during the year in which they are made available.
As described in note 29, the Group maintains a defined benefit pension scheme that was closed to new
members on 18 July 2002 and there has been no future accrual since 5 April 2006.
In respect of the defined benefit pension scheme the amount recognised in the Balance Sheet comprises
the difference between the present value of the scheme’s liabilities and the fair value of the scheme’s
assets determined by qualified actuaries using the projected unit credit method. The financing charge is
determined by applying the discount rate used to measure the defined benefit obligation to both the
scheme liabilities and plan assets and is recognised within net finance costs. Remeasurement gains and
losses are recognised in full in the period in which they occur in Other Comprehensive Income.
Income taxes
The tax expense comprises both the tax payable based on taxable profits for the year end deferred tax.
Deferred tax is provided using the balance sheet liability method in respect of temporary differences
between the carrying value of assets and liabilities for accounting and tax purposes. Deferred tax assets
are recognised to the extent that it is probable that future taxable profits will be available against which
the asset can be utilised.
Income tax is charged or credited to equity or to other comprehensive income if it relates to items that are
charged or credited to equity or to other comprehensive income. Otherwise income tax is recognised in
the income statement. Tax is calculated using tax rates and laws that are enacted or substantively enacted
at the balance sheet date.
44
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
2. Accounting policies (continued)
Foreign currency
There are no transactions in currencies other than the individual entity’s functional currency.
On consolidation, the financial statements of the overseas subsidiary undertaking are translated at the year
end rate of exchange, with the results translated at the average rate. Exchange differences arising on
consolidation are dealt with in the currency translation reserve and reported in Other Comprehensive
Income.
Treasury shares
The cost of own shares held by The Heavitree Brewery PLC Employee Benefits Trust and Employee
Share Option Scheme are deducted from shareholders’ equity until the shares are cancelled, re-issued or
disposed of. Consideration received for the sale of such shares is also recognised in shareholder’s equity.
No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of own
shares held.
Key sources of estimation uncertainty
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 year, are discussed below.
Impairment of assets
As discussed in the accounting policies above, the Directors assesses 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.
Pension benefits
The cost of defined benefit pension plans are determined using actuarial valuations. While the Company
continues to operate its Final Salary Pension Scheme, the final three deferred members transferred out of
the scheme in 2018. Accordingly, the net liability for the company is now solely the rectification and the
more recent GMP equalisation of benefits for all qualifying retired members. These have been estimated
by the Scheme’s Actuary, as at 31 October 2020 at £92,000. Further details are given in note 29.
45
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
3. Revenue
Revenue recognised in the income statement is analysed as follows.
Sale of goods
Machine revenue
Revenue recognised under contracts with customers
Rents from licensed properties
Total revenue recognised
2020
£’000
3,502
52
––––––
3,554
2019
£’000
5,273
90
––––––
5,363
1,465
2,165
–––––––––––
5,019
–––––––––––
7,528
——————
——————
Sale of goods comprises the invoiced values of beers and ciders supplied by the Group to tenants,
together with gaming machine revenue. All revenue is derived in the United Kingdom.
4. Segment information
Primary reporting format – business segments
During the year the Group operated in one business segment - leased estates.
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.
Secondary reporting format – geographical segments
Year ended 31 October 2020
Revenue
Sales to external customers
Other segment information
Segment assets
Total assets
Capital expenditure
Property, plant and equipment
UK
£’000
United
States
£’000
Total
£’000
5,019
══════
-
══════
5,019
══════
20,304
––––——
20,304
══════
42
––––——
42
══════
20,346
––––——
20,346
══════
355
══════
-
══════
355
══════
46
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
4. Segment information (continued)
Year ended 31 October 2019
Revenue
Sales to external customers
Other segment information
Segment assets
Total assets
Capital expenditure
Property, plant and equipment
5. Other operating income
Rents from unlicensed properties
Heavitree Inc
Government Grant (furlough)
6. Operating profit
This is stated after charging:
Depreciation of property, plant and equipment
Repairs and maintenance of properties
Short term lease expense
UK
£’000
United
States
£’000
Total
£’000
7,528
══════
-
══════
7,528
══════
20,596
––––——
20,596
══════
43
––––——
43
══════
20,639
––––——
20,639
══════
505
══════
-
══════
505
══════
2020
£’000
2019
£’000
276
-
41
––––––––
262
40
-
–––––––––
317
══════
302
══════
2020
£’000
2019
£’000
178
638
23
══════
222
713
26
══════
Cost of inventories recognised as an expense (included in purchase of inventories) 2,065
══════
3,100
══════
47
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
7. Auditors’ remuneration
The Group paid the following amounts to its auditors in respect of the audit of the financial statements
and for other services provided to the Group.
Audit of the group financial statements
Other fees to auditors
- audit of the group pension scheme
- tax compliance services
- other services
2020
£’000
2019
£’000
43
43
–––––––––––––––
2
6
4
–––––––––––––––
12
–––––––––––––––
55
–––––––––––––––
2
6
4
–––––––––––––––
12
–––––––––––––––
55
–––––––––––––––
–––––––––––––––
Other services relate to a review of the Group’s Interim Report of £4,000 (2019: £4,000).
8. Profit on sale of property, plant and equipment
Profits on sale of property, plant and equipment
2020
£’000
293
══════
2019
£’000
185
══════
Profit on disposal of non-current assets represents gains/(losses) on disposal of property, plant and
equipment. They are classified as non-operating on the basis that they arise from transactions to dispose
of assets other than at the end of their expected useful lives or at values significantly different to their
previously assessed residual value.
9. Movements in valuation of estate and related assets
Write down of non-current assets held for sale
to fair value less costs to sell (note 17)
2020
£’000
2019
£’000
-
══════
-
══════
48
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
10. Staff costs and Directors’ emoluments
(a) Staff costs
Wages and salaries
Social security costs
Other pension costs
2020
£’000
1,088
118
104
––––——
1,310
══════
2019
£’000
1,149
129
107
––––——
1,385
══════
Included in other pension costs is £62,448 (2019: £57,802) in respect of the defined contribution scheme.
Other pension costs include those defined benefit scheme costs included within operating costs and any
defined contribution scheme charge.
Coronavirus job retention scheme: under this scheme HMRC reimburses up to 80% of the wages of
certain employees who have been furloughed, the amounts received have been recognised in the income
statement under other income.
The average monthly number of employees during the year was made up as follows:
Average monthly number of employees
(b) Directors’ emoluments
Basic Performance
N H P Tucker
G J Crocker
T Wheatley
W P Tucker
T P Duncan
K Pease-Watkin
C J Bush
salary and
fees
£’000
172
169
158
14
17
17
17
––––——
564
––––——
Pension
related
bonus Benefits contributions
£’000 £’000
£’000
6
13
1
-
12
-
2
-
-
-
-
-
-
-
––––—— ––––——
21
––––—— ––––——
13
-
-
-
-
-
-
––––——
-
––––——
2020
No.
16
2019
No.
16
══════
══════
Total
2020
£’000
191
170
170
16
17
17
17
––––——
598
––––——
Total
2019
£’000
215
187
183
30
18
18
3
––––—
654
––––——
49
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
(b) Directors’ emoluments (continued)
The performance-related bonuses comprise payments under the Company’s bonus scheme and are
dependent upon the level of profits.
The emoluments (excluding pension contributions) of the highest paid Director totalled £191,000
(2019: £215,000). The number of Directors accruing pension benefits is nil (2019: nil). The highest paid
Director has an accrued pension entitlement of £nil (2019: £nil) arising from past membership of the
defined benefit scheme.
11. Finance costs
Interest on bank loans and overdrafts
Interest on other loans (including cumulative preference shares)
Total finance costs
12. Taxation
(a) Tax on profit on ordinary activities
Tax expensed in the income statement
Current income tax:
UK corporation tax
Under/(over) provision of tax in prior years
Tax paid by Employee Benefits Trust
Total current income tax
Deferred tax:
Origination and reversal of temporary differences
Total deferred tax
Tax expense in the income statement
2020
£’000
133
8
2019
£’000
181
3
–––––––––––––––
141
–––––––––––––––
184
–––––––––––––––
–––––––––––––––
2020
£’000
128
18
12
2019
£’000
231
(45)
11
–––––––––––––––
158
–––––––––––––––
197
–––––––––––––––
–––––––––––––––
142
116
–––––––––––––––
142
–––––––––––––––
300
–––––––––––––––
116
–––––––––––––––
313
–––––––––––––––
–––––––––––––––
50
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
12. Taxation (continued)
Tax relating to items expensed or credited to equity
Deferred tax:
Deferred tax on defined benefit pensions scheme
Total deferred tax
Tax expense in the statement of comprehensive income
(b) Reconciliation of the total tax expense
2020
£’000
2019
£’000
-
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
–––––––––––––––
The tax expense in the income statement for the year is lower than the standard rate of corporation tax in
the UK of 19% (2019: 19%). The differences are reconciled below:
Accounting profit before income tax
Accounting profit multiplied by the UK standard rate of
corporation tax of 19% (2019: 19 %)
Expenses not deductible for tax purposes
Adjustment in respect of prior years – current tax
Adjustment in respect of prior years – deferred tax
Short term timing differences
Tax paid by Employee Benefits Trust
Capital gain rebasing/indexation
Change in tax rates
Total tax expense reported in the income statement
(c) Deferred tax
The deferred tax included in the balance sheet is as follows:
2020
£’000
2019
£’000
414
1,844
–––––––––––––––
–––––––––––––––
79
69
18
90
3
13
-
28
350
33
(43)
-
(34)
11
(4)
-
–––––––––––––––
300
–––––––––––––––
313
–––––––––––––––
–––––––––––––––
The deferred tax has been calculated using the changed rate of 19% from the previous year of 17%
Deferred tax liability
Accelerated capital allowances
Short term timing differences
Rolled over gain
Deferred tax asset
Pension plans
2020
£’000
2019
£’000
394
-
142
269
-
125
–––––––––––––––
536
–––––––––––––––
394
–––––––––––––––
–––––––––––––––
16
16
–––––––––––––––
–––––––––––––––
51
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
12. Taxation (continued)
(c) Deferred tax (continued)
The deferred tax asset has been provided for on the basis that it will be relieved against future profits
anticipated to arise in the foreseeable future.
The deferred tax included in the Group income statement is as follows:
Deferred tax in the income statement
Accelerated capital allowances
Pension plans
Rolled over gain
Deferred income tax expense
2020
£’000
125
-
17
2019
£’000
55
61
-
–––––––––––––––
142
–––––––––––––––
116
–––––––––––––––
–––––––––––––––
A potential deferred tax asset of £6,729 (2019: £6,112) in respect of overseas losses incurred by Heavitree
Inc has not been recognised as it is not anticipated that these losses will be fully utilised in the foreseeable
future.
13. 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 earnings per share computation:
Profit for the year
2020
£’000
2019
£’000
114
1,531
–––––––––––––––
–––––––––––––––
2020
No.
(‘000)
2019
No.
(‘000)
Basic weighted average number of shares (excluding treasury shares)
4,801
4,786
There have been no other transactions involving ordinary shares between the reporting date and the date
of completion of these financial statements.
–––––––––––––––
–––––––––––––––
52
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
14. Dividends paid and proposed
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2019: nil (2018: 3.675p)
First dividend for 2020: nil (2019: 3.675p)
Less: dividends on shares held within employee share schemes
Dividends paid
Proposed for approval at AGM (not recognised as a liability as at 31 October)
Final dividend for 2020: nil (2019: 4.25p)
2020
£’000
2019
£’000
-
-
-
224
194
(39)
–––––––––––––––
-
–––––––––––––––
379
–––––––––––––––
–––––––––––––––
-
224
–––––––––––––––
–––––––––––––––
The proposed final dividend for 2019 of 4.25p was not approved at the 2020 AGM and was not paid.
Cumulative preference dividends
1
1
–––––––––––––––
–––––––––––––––
15. Profit attributable to members of the parent company
The profit dealt with in the financial statements of the parent company is £123,000 (2019: £1,501,000).
16. Property, plant and equipment
Group
Land and Furniture Equipment Assets under
buildings and fittings and vehicles construction
£’000
£’000
£’000
£’000
Cost:
At 1 November 2018
Additions
Transfer to assets held
for sale
Transfers to investment properties(391)
-
Transfer from current assets
-
Disposals
17,111
415
-
4,135
66
-
-
88
-
544
24
-
-
-
(94)
-
-
-
-
-
-
Investment
properties
£’000
1,094
-
-
391
-
-
––––––––––––––
17,135
266
(219)
At 31 October 2019
Additions
Transfer to assets held
for sale
Transfer to investment properties(644)
Impairment
Disposals
Transfers out
(279)
(333)
60
––––––––––––––
4,289
48
-
–––––––––––––
474
41
-
–––––––––––––––
-
-
-
–––––––––––––––
1,485
-
-
-
-
(1,297)
(153)
-
-
(166)
22
-
-
-
-
644
-
-
1
Total
£’000
22,884
505
-
-
88
(94)
–––––––––––––––
23,383
355
(219)
-
(279)
(1,796)
(70)
-
At 31 October 2020
––––––––––––––
15,986
––––––––––––––
2,887
–––––––––––––
371
–––––––––––––––
-
–––––––––––––––
2,130
–––––––––––––––
21,374
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
53
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
16. Property, plant and equipment (continued)
Group
Land and Furniture Equipment Assets under
buildings and fittings and vehicles construction
£’000
£’000
£’000
£’000
Investment
properties
£’000
Total
£’000
Depreciation and impairment:
At 1 November 2018
Provided during the year
Transfer from current assets
Disposals
At 31 October 2019
Provided during the year
Transfer from current assets
Disposals
Transfers out
At 31 October 2020
Net book value
At 31 October 2020
Net book value at
31 October 2019
Net book value at
1 November 2018
427
-
-
-
3,286
146
69
-
265
76
-
(63)
––––—— ––––—— ––––——
278
66
-
(123)
(5)
––––—— ––––—— ––––——
216
3,501
112
-
(1,297)
(15)
427
-
-
(267)
(48)
2,301
112
-
-
-
-
––––——
-
-
-
-
-
––––——
-
-
-
-
-
––––——
-
-
-
-
-
––––——
-
3,978
222
69
(63)
––––——
4,206
178
-
(1,687)
(68)
––––——
2,629
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
––––––––––––––
15,874
586
155
-
2,130
18,745
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
16,708
788
196
-
1,485
19,177
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
16,684
849
279
-
1,094
18,906
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
In performing the annual review of property values, the Directors considered that ongoing changes in
trading circumstances at two of the Estates’ licenced properties resulted in an impairment adjustment of
£279,000.
In the Directors’ opinion the investment properties have a fair value as at 31 October 2020 of £3,355,000
(2019: £3,070,000). The investment properties were valued by the Directors based on current market
prices for similar properties within a similar area. The fair value disclosure of investment property is
categorised as a level 2 recurring fair value disclosure in accordance with IFRS 13.
Included within land and buildings is £594,000 (2019: £594,000) in relation to owner occupied property.
The remainder of this category is subject to operating leases and an analysis of rent receipts is given in
note 24.
Included within equipment and vehicles is £60,000 (2019: £116,000) in relation to right-of-use assets and
the depreciation charge for the year on such assets was £13,000 (2019: £17,000).
54
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
16. Property, plant and equipment (continued)
Company
Land and Furniture Equipment Assets under
buildings and fittings and vehicles construction
£’000
‘£000
£’000
£’000
Cost:
At 1 November 2018
Additions
Transfer to assets held
for sale
Transfer to investment properties (391)
Transfer from current assets-
Disposals
17,066
415
-
-
-
4,135
66
-
-
88
-
544
24
-
-
-
(93)
-
-
-
-
-
-
Investment
properties
£’000
1,094
-
-
391
-
-
Total
£’000
22,839
505
-
-
88
(93)
––––––––––––––
17,090
At 31 October 2019
Additions
266
Transfer to assets held for sale (219)
Transfer to investment properties (644)
Impairment
Disposals
Transfer between categories
(279)
(333)
60
––––––––––––––
4,289
48
-
-
-
(1,297)
(153)
–––––––––––––
475
41
-
-
-
(166)
23
–––––––––––––––
-
-
-
-
-
-
–––––––––––––––
1,485
-
-
644
-
-
1
–––––––––––––––
23,339
355
(219)
-
(279)
(1,796)
(69)
At 31 October 2020
––––––––––––––
15,941
––––––––––––––
2,887
–––––––––––––
373
–––––––––––––––
-
–––––––––––––––
2,130
–––––––––––––––
21,331
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
Depreciation and impairment:
At 1 November 2018
Provided during the year
Transfer from assets
Disposals
At 31 October 2019
Provided during the year
Transfer from assets
Disposals
Transfer between categories
265
76
427
-
-
-
3,286
146
69
-
3,978
222
69
(64)
–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––
4,205
178
3,501
112
427
-
277
66
(64)
-
-
-
-
-
-
-
-
-
-
(267)
(48)
(1,297)
(15)
(123)
(5)
-
-
-
-
(1,687)
(68)
––––––––––––––
––––––––––––––
–––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
At 31 October 2020
112
2,301
215
-
-
2,628
––––––––––––––
––––––––––––––
–––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
Net book value at
At 31 October 2020
Net book value at
31 October 2019
Net book value at
1 November 2018
15,829
586
158
-
2,130
18,703
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
16,663
788
198
-
1,485
19,134
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
16,639
849
279
-
1,094
18,861
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
55
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
16. Property, plant and equipment (continued)
In performing the annual review of property values, the Directors considered that ongoing changes in
trading circumstances at two of the Estates’ licenced properties resulted in an impairment adjustment of
£279,000.
In the Directors’ opinion the investment properties have a fair value as at 31 October 2020 of £3,355,000
(2019: £3,070,000). The investment properties were valued by the Directors based on current market
prices for similar properties within a similar area. The fair value disclosure of investment property is
categorised as a level 2 recurring fair value disclosure in accordance with IFRS 13.
Included within land and buildings is £594,000 (2019: £594,000) in relation to owner occupied property.
The remainder of this category is subject to operating leases and an analysis of rent receipts is given in
note 24.
Included within equipment and vehicles is £60,000 (2019: £116,000) in relation to right-of-use assets and
the depreciation charge for the year on such assets was £13,000 (2019: £17,000).
17. Non-current assets held for sale
Group and Company
At 1 November 2019
Transfer (to)/from property, plant and equipment (note 16)
Additions
Disposals
Impairment
Transfer (to)/from current assets
At 31 October 2020
2020
£’000
2019
£’000
-
219
-
-
-
-
62
-
-
(62)
-
-
–––––––––––––––
219
–––––––––––––––
-
–––––––––––––––
–––––––––––––––
As at 31 October 2020 two properties were being actively marketed for sale (2019 – no property).
56
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
18. Financial assets
Group
Financial assets – non-current
Financial assets measured at fair value through
Other comprehensive income
2020
£’000
2019
£’000
30
41
–––––––––––––––
–––––––––––––––
Financial assets, measured at fair value through other comprehensive income consist of an investment in
ordinary shares of a company listed on PLUS markets.
Company
Cost:
At 1 November 2019
Loan advance
At 31 October 2020
Amounts provided:
At 1 November 2019
Revaluation
At 31 October 2020
Net book value:
At 31 October 2020
At 31 October 2019
Subsidiary
undertakings
£’000
Investments
£’000
86
-
55
-
Total
£’000
141
-
–––––––––––––––
86
–––––––––––––––
55
–––––––––––––––
141
(52)
-
(14)
(11)
(66)
(11)
–––––––––––––––
(52)
–––––––––––––––
(25)
–––––––––––––––
(77)
–––––––––––––––
–––––––––––––––
–––––––––––––––
34
30
64
–––––––––––––––
–––––––––––––––
–––––––––––––––
34
41
75
–––––––––––––––
–––––––––––––––
–––––––––––––––
The Company’s subsidiary undertakings are as follows:
Name of Company
Country of
registration (or
incorporation)
and operation
Holding
Proportion
held
Nature of
business
Heavitree Inc
USA
Common Stock
100%
Ownership of
freehold land
Heavitree Inns Limited
England and Wales
Ordinary shares
100%
Dormant
Each subsidiary undertaking is directly owned by the Company.
Registered office of subsidiary: Trood Lane Matford Exeter Devon EX2 8YP
57
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
19. Inventories
Group and Company
Fine wines
Merchandising inventory
20. Trade and other receivables
Group
Trade receivables
Prepayments and accrued income
Other receivables
Finance leases
Company
Trade receivables
Prepayments and accrued income
Other receivables
Finance leases
2020
£’000
6
4
2019
£’000
6
4
–––––––––––––––
10
–––––––––––––––
10
–––––––––––––––
–––––––––––––––
2020
£’000
2019
£’000
425
442
170
240
735
230
15
364
–––––––––––––––
1,277
–––––––––––––––
1,344
–––––––––––––––
–––––––––––––––
2020
£’000
2019
£’000
425
442
170
240
735
230
15
364
–––––––––––––––
1,277
––––––––
–––––––––––––––
1,344
––––––––
Included within other receivables is an amount of £135,000 (2019: £nil) in respect of a mortgage, which
is due after more than one year.
Trade receivables are all denominated in sterling.
An allowance has been made for estimated irrecoverable amounts of £170,247 (2019: £159,067). The
estimated irrecoverable amount is arrived at by considering the historical loss rate and adjusting for
current expectations, client base and economic conditions. The Directors have applied a single average
rate for expected credit losses to the overall population of trade receivables and accrued income. The
single expected loss rate applied is 22% (2019: 22%). The Directors consider that the carrying amount of
trade and other receivables approximates to their fair value.
58
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
20. Trade and other receivables (continued)
Trade receivables are non-interest bearing and are generally on 30 days’ terms and are shown net of a
provision for impairment. As at 31 October 2020, trade receivables at nominal value of £170,247 (2019:
£159,067) were impaired and fully provided. Movements in the provision for impairment of receivables
were as follows:
At 1 November
(Credit)/charge for the year
Amounts written off
At 31 October
2020
£’000
159
11
-
2019
£’000
227
(68)
-
–––––––––––––––
170
–––––––––––––––
159
–––––––––––––––
–––––––––––––––
As at 31 October, the analysis of trade receivables that were past due but not impaired is as follows:
Neither past
due nor
impaired
£’000
Total
£’000
Past due but
not impaired
30-90 days
£’000
0-30 days
£’000
90+ days
£’000
2020
2019
425
735
332
555
27
66
18
19
48
95
21. Cash and cash equivalents
Group and Company
Cash at bank and in hand
2020
£’000
2019
£’000
49
51
–––––––––––––––
49
–––––––––––––––
51
–––––––––––––––
–––––––––––––––
For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise the
following at 31 October:
Cash at bank and in hand
Bank overdrafts
2020
£’000
49
(1,281)
2019
£’000
51
(54)
–––––––––––––––
(1,232)
–––––––––––––––
(3)
–––––––––––––––
–––––––––––––––
59
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
22. Trade and other payables
Group
Current
Trade payables
Other taxation and social security
Accruals
Other payables
Company
Current
Trade payables
Other taxation and social security
Accruals
Other payables
Amount owed to subsidiary
Non-current
Other payables - tenants’ deposits
2020
£’000
295
203
108
60
2019
£’000
394
181
218
160
–––––––––––––––
666
–––––––––––––––
953
–––––––––––––––
–––––––––––––––
2020
£’000
2019
£’000
295
203
108
58
108
394
181
218
160
118
–––––––––––––––
772
–––––––––––––––
1,071
–––––––––––––––
–––––––––––––––
274
284
–––––––––––––––
–––––––––––––––
Tenants’ deposits mature when the tenant leaves the property or if trading terms are altered at which point
they are repaid. Interest is based on the base rate and an appropriate margin.
23. Financial liabilities
Group and Company
Current
Bank overdrafts
Bank loan
Lease liabilities
2020
£’000
2019
£’000
1,281
220
19
54
6,000
33
–––––—— –––––——
1,520
6,087
–––––––––––––––
–––––––––––––––
60
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
23. Financial liabilities (continued)
Non-current
11.5% cumulative preference shares (note 26)
Bank loan
Lease liabilities
2020
£’000
11
4,280
31
2019
£’000
11
-
26
–––––—— –––––——
4,322
37
–––––––––––––––
–––––––––––––––
The bank loan and overdraft are secured over certain of the Group’s freehold properties by a first legal
charge to the value of £15,125,000 (2019: £15,125,000). Lease liabilities are secured on the assets to
which they relate.
Obligations under lease liabilities
Amounts payable under lease liabilities:
Within one year
Within two to five years
After five years
Present value of lease obligation
2020
£’000
2019
£’000
33
26
-
–––––—— –––––——
19
31
-
50
59
–––––––––––––––
–––––––––––––––
24. Operating lease agreements where the group is a lessor
Group and Company
The Group is a lessor of licensed properties to tenants. The leases have various terms, escalation clauses
and renewal rights.
The maturity of undiscounted lease receipts is as follows:
Within one year
One to two years
Two to three years
Three to four years
Four to five years
More than five years
2020
£’000
1,283
786
598
509
421
3,313
2019
£’000
2,174
1,218
828
623
506
3,679
–––––––––––––––
6,910
–––––––––––––––
9,028
–––––––––––––––
–––––––––––––––
As a lessor the Group gave various rent concessions during the year, resulting in a reduction in rents
received in the year as shown in the above table. In accordance with IFRS16 the revised total rent receipts
are being recognised on a straight line basis over the lease term.
61
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
25. Financial instruments and derivatives
Group and Company
The Group’s principal financial instruments comprise cash, tenants’ deposits, loans, investments and its
own non-equity share capital. The principal purpose of these financial instruments is to provide finance
for the Group’s operations. The Group has various other financial instruments such as trade receivables
and trade payables that arise directly from its operations.
Short-term trade receivables and trade payables
Short-term trade receivables and trade payables have been excluded from the numerical disclosures on
fair values below.
Interest rate risk
As the Group has no significant interest-bearing assets, other than cash and cash equivalents, the Group’s
income and operating cash flows are substantially independent of changes in market interest rates.
Income and cash flows from cash and cash equivalents fluctuate with interest rates.
The Group finances its operations through a mixture of equity shareholders’ funds, preference shares and
a secured term loan and overdraft.
Cash and borrowings are denominated in sterling and interest is paid on cash and borrowings at a floating
rate. The interest rate risk exposure is managed by the use of interest rate swap contracts when considered
appropriate, and the Group continually monitors its interest rate risk exposure. The following table
demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held
constant, of the Group’s profit before tax (through the impact on cash and floating rate borrowings).
There is no impact on the Group’s equity.
The sensitivity analysis of interest rates on bank borrowings is as follows. 100 basis points has been used
as movements are linear.
2020
Sterling
Sterling
2019
Sterling
Sterling
Increase/
decrease in
basis points
Effect on
profit
before tax
£000
+100
(57)
-100
57
+100
-100
(66)
66
62
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
25. Financial instruments and derivatives (continued)
Interest rate risk profile of non-equity shares
The Company has in issue 11,695 £1 cumulative preference shares with a fixed coupon rate of 11.5%.
These represent the remaining preference shares in issue following the offer made by the Company in
1996 to repurchase these shares. They are no longer listed on any public market and have no fixed
maturity date.
Liquidity risk
The Group is primarily financed by equity shareholders’ funds and a secured term loan, subject to
relevant covenants being met.
Cash flow forecasts are produced to assist management in identifying liquidity requirements and are
stress tested for possible scenarios. Cash balances are invested in the short-term such that they are readily
available to settle short-term liabilities or fund capital additions.
The table below summarises the maturity profile of the Group’s financial liabilities at 31 October 2020
and 2019 based on contractual undiscounted payments.
Year ended 31 October 2020
Bank loan/overdraft
Tenants’ deposits
Trade payables
Lease liabilities
Less than
On demand 3 months
£’000
-
-
-
-
£’000
1,501
-
295
19
3-12
months
£’000
-
-
-
-
1-5 years
£’000
4,280
274
-
31
More
than
5 years
£’000
-
-
-
-
Total
£’000
5,781
274
295
50
––––––––––
––––––––––
–––––––––––
–––––––––––
–––––––––––
––––––––––
Year ended 31 October 2019
Less than
On demand 3 months
£’000
-
-
-
-
£’000
54
-
394
33
3-12
months
£’000
6,000
-
-
-
1-5 years
£’000
-
284
-
26
More
than
5 years
£’000
-
-
-
-
Total
£’000
6,054
284
394
59
––––––––––
––––––––––
–––––––––––
–––––––––––
–––––––––––
––––––––––
Bank loan/overdraft
Tenants’ deposits
Trade payables
Lease liabilities
Capital risk
The Group’s capital structure is made up of net debt, issued share capital and reserves. These are
managed effectively to minimise the Group’s cost of capital, to add value to shareholders and to service
debt obligations, ultimately ensuring that the Group continues as a going concern.
The securitised debt is monitored by a variety of measures which are reported to debt providers on a
quarterly basis. The Group assesses the performance of the business; the level of available funds and the
short to medium-term plans concerning capital spend as well as the need to meet financial covenants.
Such assessment influences the level of dividends payable.
63
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
25. Financial instruments and derivatives (continued)
Credit risk
There are no significant concentrations of credit risk within the Group. The maximum credit risk
exposure relating to financial assets is represented by their carrying value as at the balance sheet date.
Trade and other receivables, as shown on the consolidated balance sheet, comprise a large number of
individually small amounts from unrelated customers and are shown net of a provision for doubtful debts.
The Group has established procedures to minimise the risk of default on trade receivables including,
when considered appropriate, undertaking detailed credit checks before a customer is accepted this
includes mortgages owed to the company. The credit quality of counterparts is assessed through the use of
credit agencies at the outset of the business relationship.
Monthly checks are made and credit terms altered where appropriate. Historically, these procedures have
proved effective in minimising the level of impaired and past due debtors.
Foreign currency risk
As a result of the investment in operations in the United States of America, the Group’s financial
statements can be affected by movements in the exchange rate between sterling and the US dollar. This
risk has been considered by the Group and is not deemed significant enough to warrant the extra cost of
hedging the risk as foreign currency exposure is not material to the Group.
The Group does not face transactional currency exposure as all transactions are denominated in the
functional currency.
Fair values of financial assets and liabilities
Set out below is a comparison by category of book values and fair values of all the Group’s financial
assets, financial liabilities and non-equity shares as at 31 October:
Hierarchical
classification
Financial assets
Cash
Assets held at fair value through
other comprehensive income
Mortgage
Level 1
Level 1
Level 2
Book
value
2020
£’000
49
30
155
Fair
value
2020
£’000
49
30
155
Book
value
2019
£’000
51
41
-
Fair
value
2019
£’000
51
41
-
–––––––––––––––
234
–––––––––––––––
234
–––––––––––––––
92
–––––––––––––––
92
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
Financial liabilities
Bank loan/overdraft
Interest-bearing loans and borrowings:
Floating rate borrowings
Tenants’ deposits
Cumulative preference shares
Lease liabilities
Level 2
(5,781)
(5,781)
(6,054)
(6,054)
Level 3
Level 3
Level 2
(274)
(11)
(50)
(274)
(11)
(50)
(284)
(11)
(59)
(284)
(11)
(59)
–––––––––––––––
(6,116)
–––––––––––––––
(6,116)
–––––––––––––––
(6,408)
–––––––––––––––
(6,408)
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
64
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
25. Financial instruments and derivatives (continued)
The fair value of financial assets and liabilities are included at the amount at which the instrument could
be exchanged in a current transaction between willing parties, other than in a forced liquidation or sale.
The following methods and assumptions were used to estimate the fair values:
The fair value of short-term loans and overdrafts approximates to the carrying amount because of the
short maturity of these instruments.
The carrying value of tenants’ deposits and cumulative preference shares are assumed to approximate
their fair value.
The fair value of assets held at fair value through other comprehensive income is based on market value
(see note 18).
Valuation techniques and assumptions applied for the purposes of measuring fair value
The fair values of financial assets and financial liabilities with standard terms and conditions and traded
on active liquid markets are determined with reference to quoted market prices.
Hierarchical classification of financial assets and liabilities measured at fair value
IFRS 13 requires that the classification of financial instruments at fair value be determined by reference
to the source of inputs used to derive fair value.
The classification uses the following three-level hierarchy:
Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 – other techniques for which all inputs which have a significant effect on the recorded fair value
are observable, either directly or indirectly.
Level 3 – techniques which use inputs which have a significant effect on the recorded fair value that are
not based on observable market data.
During the years ending 31 October 2020 and 31 October 2019 there were no transfers between level 1, 2
or 3 fair value measurements.
65
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
26. Authorised and issued share capital
Group and Company
(i) Ordinary shares
Authorised
Ordinary shares of 5p each
‘A’ limited voting ordinary shares of 5p each
Unclassified shares of 5p each
2020
£
2019
£
99,735
164,124
924,446
99,735
164,124
924,446
–––––––––––––––
1,188,305
–––––––––––––––
1,188,305
–––––––––––––––
–––––––––––––––
Allotted, called up and fully paid
2020
No.
2019
No.
2020
£
2019
£
Ordinary Shares of 5p each
At 1 November
Purchases
At 31 October
1,994,699
-
1,994,699
-
99,735
-
99,735
-
–––––––––––––––
1,994,699
–––––––––––––––
1,994,699
–––––––––––––––
99,735
–––––––––––––––
99,735
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
‘A’ Limited Voting Ordinary Shares of 5p each
At 1 November
Purchases
At 31 October
2020
No.
2019
No.
2020
£
2019
£
3,282,478
-
3,282,478
-
164,124
-
164,124
-
–––––––––––––––
3,282,478
–––––––––––––––
3,282,478
–––––––––––––––
164,124
–––––––––––––––
164,124
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
The Ordinary Shares and ‘A’ Limited Voting Ordinary Shares are entitled equally to dividends, and rank
equally on a winding up, after the Cumulative Preference Shares. The Ordinary Shares carry one vote for
every £1 in nominal amount and the ‘A’ Limited Voting Ordinary Shares carry one vote for every £10 in
nominal amount. There are no Unclassified Shares in issue; shares purchased by the Company become
authorised (but unissued) Unclassified Shares.
66
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
26. Authorised and issued share capital (continued)
(ii) Preference shares classified as non-current liability
Authorised
11.5% Cumulative Preference Shares of £1 each
2020
£
2019
£
11,695
11,695
–––––––––––––––
–––––––––––––––
Allotted, called up and fully paid
2020
No.
2019
No.
2020
£
2019
£
11.5% Cumulative Preference Shares of £1 each
11,695
11,695
11,695
11,695
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
The Cumulative Preference Shares are entitled to a fixed cumulative preferential dividend at 11.5% per
annum. On a return of capital on a winding up, these shares will rank first for their nominal amount and
any arrears of dividend. The Cumulative Preference Shares do not normally carry voting rights.
An explanation of the Group’s capital management process and objectives is set out in the discussion of
financial instruments on page 13 in the Directors’ report.
27. Reconciliation of movements in equity
Group and Company
The reconciliations of movements in equity are shown in the group statement of changes in equity and the
company statement of changes in equity on pages 29 and 34 respectively.
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 repurchase 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.
67
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
27. Reconciliation of movements in equity (continued)
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 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.
28. Capital commitments
Group and Company
At 31 October 2020, amounts contracted for but not provided in the financial statements amounted to £nil
(2019: £nil).
29. Pensions and post-retirement benefits
Group and Company
(i)
Optional pension payments
During the year the Group made discretionary pension payments of £26,126 (2019: £35,226) directly to
past employees.
(ii)
Defined contribution schemes
From 1 January 2003, the Company has also operated an employer-sponsored personal pension
arrangement. The assets of the arrangement are held separately from those of the Company in an
independently administered fund. The pension charge for the period was £62,448 (2019: £57,802).
(iii) Defined benefit scheme
The Company sponsors the plan which is a funded defined benefit arrangement. This is a separate trustee
administered fund holding the pension plan assets to meet long term pension liabilities for past and
present employees. The scheme is subject to the funding legislation outlined in the Pensions Act 2004
which came into force on 30 December 2005. This, together with documents issued by the Pensions
Regulator, and Guidance Notes adopted by the Financial Reporting Council, set out the framework for
funding defined benefit occupational pension plans in the UK.
The scheme was closed to new members on 18 July 2002 and there has been no future accrual since
5 April 2006.
The Trustees of the scheme are required to act in the best interest of the scheme’s beneficiaries. The
appointment of the Trustees is determined by the scheme’s trust documentation. It is policy that one third
of all Trustees should be nominated by the members and there must be a minimum of one such trustee.
A full actuarial valuation was carried out as at 31 December 2016 in accordance with the scheme funding
requirements of the Pensions Act 2004 and the funding of the scheme is agreed between the Company
and the Trustees in line with those requirements. These in particular require the surplus/deficit to be
calculated using prudent, as opposed to best estimate actuarial assumptions.
For the purposes of IAS 19 the actuarial valuation as at 31 December 2016, which was carried out by a
qualified independent actuary, has been updated on an approximate basis to 31 October 2020. There have
been no changes in the valuation methodology adopted for this period compared to the previous period.
68
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
29. Pensions and post-retirement benefits (continued)
Amounts included in the Balance Sheet
31 October 31 October 31 October
2018
£’000
2019
£’000
2020
£’000
Fair value of plan assets
Present value of defined benefit obligation
Surplus/(deficit) in scheme
18
18
(110)
(110)
59
(98)
–––––––––––––––
(92)
–––––––––––––––
(92)
–––––––––––––––
(39)
–––––––––––––––
–––––––––––––––
–––––––––––––––
The present value of scheme liabilities is measured by discounting the best estimate of future cash flows
to be paid out by the scheme using the projected unit credit method. The value calculated in this way is
reflected in the net liability in the balance sheet as shown above.
All actuarial gains and losses will be recognised in the year in which they occur in other comprehensive
income.
Reconciliation of the impact of the asset ceiling
The Company has reviewed the implications of the guidance provided by IFRIC 14 and has concluded
that it is not necessary to make any adjustments to the IAS 19 figures in respect of an asset ceiling or
Minimum Funding requirement as at 31 October 2020.
Reconciliation of opening and closing present value of the defined benefit obligation
As at 1 November
Current service cost
Interest cost
Actuarial losses due to scheme experience
Actuarial gains due to changes in demographic assumptions
Actuarial losses due to changes in financial assumptions
Benefits paid
Past service costs
Liabilities extinguished on settlement
At 31 October
The past service costs represent best estimate of GMP equalisation.
2020
£’000
2019
£’000
110
-
-
-
-
-
-
-
-
98
-
2
-
-
-
(4)
52
(38)
–––––––––––––––
110
–––––––––––––––
110
–––––––––––––––
–––––––––––––––
69
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
29. Pensions and post-retirement benefits (continued)
There have been no plan amendments, or curtailments in the accounting period.
Reconciliation of opening and closing values of the fair value of plan assets
As at 1 November
Interest
Return on plan assets (excluding amounts included in interest income)
Employer contributions
Assets distributed on settlement
Benefits paid
At 31 October
2020
£’000
2019
£’000
18
-
-
-
-
-
59
(3)
-
4
(38)
(4)
–––––––––––––––
18
–––––––––––––––
18
–––––––––––––––
–––––––––––––––
The actual return on the plan assets over the period ended 31 October 2020 was £nil.
Defined benefit costs recognised in profit or loss
Past service costs and loss on settlements
Net interest cost
Defined benefit cost recognised in profit or loss
Defined benefit costs recognised in Other Comprehensive Income
Return on plan assets (excluding amounts included in net interest cost) –loss
Experience losses arising on the defined benefit obligation
Effects of changes in the demographic assumptions - gain
Effects of changes in the financial assumptions - loss
Total amount recognised in other comprehensive income
2020
£’000
-
-
2019
£’000
52
-
–––––––––––––––
-
–––––––––––––––
52
–––––––––––––––
–––––––––––––––
2020
£’000
-
-
-
-
2019
£’000
-
-
-
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
––––––––––––––-–
70
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
29. Pensions and post-retirement benefits (continued)
Plan assets
Corporate Bonds
Government Bonds
Cash
Insured Contract
Total assets
31 October 31 October 31 October
2018
£’000
2020
£’000
-
-
18
-
2019
£’000
-
-
18
-
-
-
21
38
–––––––––––––––
18
–––––––––––––––
18
–––––––––––––––
59
–––––––––––––––
–––––––––––––––
–––––––––––––––
None of the fair values of the assets shown above include any direct investments in the company’s own
financial instruments or any property occupied by, or other assets used by, the company. The scheme
assets consist of the Trustee bank account; therefore the scheme assets do not have a quoted market price
in an active market. There are no additional assets pledged, and no additional arrangements agreed
between the company and trustees to secure members benefits under the plan.
It is the policy of the Trustees and the Company to review the investment strategy at the time of each
funding valuation. The Trustees’ investment objectives and the processes undertaken to measure and
manage the risks inherent in the plan investment strategy are illustrated by the allocation as at 31 October
2020.
There are no asset-liability matching strategies in place for the scheme.
Significant Actuarial Assumptions
Rate of discount
Allowance for commutation of pension
for cash at retirement
31 October 31 October 31 October
2018
% per annum % per annum % per annum
2.50
2019
2020
1.50
1.90
N/A
N/A
N/A
It is not considered necessary to disclose details of mortality rates and sensitivity to principal actuarial
assumptions given the scheme has only retired members and their dependants at the year end, where the
benefits are substantially covered by purchased annuities.
71
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
30. Related party transactions
Group and Company
During the year the Group entered into transactions, in the ordinary course of business, with other related
parties.
A close family member of one of the Directors is a tenant of one of the licensed properties and rents one
of the unlicensed properties. Transactions with this related party are as follows:
31 October 2020
31 October 2019
Sales to
related parties
£’000
89
152
from related
Trading amounts Purchases
owed from
related parties parties
£’000
£’000
-
14
-
23
During the year the company received a loan amount from a Director of the company and a close family
member of one of the Directors. The loan advanced in the year totalled £nil (2019: £30,000). Repayments
were made of £30,000 (2019: £80,720). The balance outstanding at the year end was £53,198 (2019:
£81,736). Interest is accrued on the loans at 1.75% over base rate.
Terms and conditions of transactions with related parties
Sales and purchases between related parties are made on normal commercial terms. Outstanding balances
with entities other than subsidiaries are unsecured, interest free and cash settlement is expected within 30
days of month end. Terms and conditions for transactions with subsidiaries are the same, with the
exception that balances are placed on intercompany accounts with no specified credit period. The Group
has not provided or benefited from any guarantees for any related party receivables or payables. During
the year ended 31 October 2020, the Group has not made any provision for doubtful debts relating to
amounts owed by related parties (2019: £nil).
Compensation of key management personnel (including Directors)
The only key management personnel are Directors and their compensation is disclosed in note 10.
31. Notes to the cashflow statement
Changes in liabilities arising from financing activities
Group and Company
At 1 Financing
cash flows
November
2019
£’000
£’000
New
finance
leases
£’000
Other
changes
£’000
At 31
October
2020
£’000
Bank loans
Lease liabilities
11.5% cumulative preference shares
6,000
(1,500)
59
11
(9)
-
-
-
-
-
-
-
4,500
50
11
––––—— ––––——
––––——
––––—— ––––——
Total liabilities
6,070
(1,509)
-
-
4,561
══════
══════ ══════ ══════ ══════
72
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2020
32. Post balance sheet events
Following the third national Covid-19 lockdown announced in January 2021, all our pubs remain closed.
As noted in the Strategic Report, we continue to support our Tenants with rent concessions and minimise
our non-essential spending. Since the year end the Directors have also taken the decision to realise cash
from the sale of non-core property assets, of which £385k has been received to date from two properties.
It is anticipated that the roll out of the vaccine may enable easing of restrictions in the Spring and our
latest working assumption is that our pubs will remain closed until May 2021. The situation remains fluid
and the Directors will continue to review and revise measures accordingly.
73