Registered No 30800
The Heavitree Brewery PLC
Financial Statements
31 October 2021
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
5
8
16
21
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30
31
32
34
36
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39
41
42
1
The Heavitree Brewery PLC
Registered Number: 30800
Managing and Finance
Chairman
Trade
Directors
N H P Tucker
G J Crocker
T Wheatley
T P Duncan*
K Pease-Watkin*
C J Bush*
*Non-executive
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 & Hamlins
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 Second Annual General Meeting of The
Heavitree Brewery PLC will be held at the Company’s offices, Trood Lane, Matford, Exeter on 13 April
2022 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 2021 and the strategic report and the report of the Directors thereon.
To re-elect N H P Tucker as a Director of the Company.
To re-elect C J Bush 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 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 2023 (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).
By Order of the Board
N J MCLEAN
Secretary
11 March 2022
Trood Lane
Matford
Exeter
EX2 8YP
3
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.
4
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Chairman’s statement
The results reported at the half-year showed that this Company, like most in the hospitality sector,
inevitably would be reporting at the year-end numbers that had been detrimentally affected by the ongoing
Covid-19 pandemic. At the beginning of the year under review, during November 2020, our pubs were
under lockdown. This was followed by trading under restrictions in December until Boxing Day when the
Government implemented another lockdown which continued until 12th April. Following this our pubs
were permitted to trade with restrictions until 19th July when social distancing measures were eased. As
in the previous year, the Board has remained determined to support and protect our Tenants and
Leaseholders as best we can during the periods of lockdown and the periods of restricted trading by
waiving and discounting rents as appropriate. Consequently, only three months of the year had rents
collected at the full rate. This has had an increased impact on turnover against the previous year and
revenue for the year under review has decreased by 7.98% to £4,618,000 (2020: £5,019,000). The Group
returned a small operating loss of £59,000. Profit before taxation was £1,114,000 (2020: £414,000).
The IFRS 16 Lease Accounting calculation which apportions rental income to each year of the full term of
the lease and which I referred to in last year’s statement, has once again skewed the position by causing
the inclusion of significant rental income that was not actually collected, nor charged, in the year.
Also, in April 2021, The Jolly Sailor in East Ogwell was destroyed by a devastating fire. Thankfully, and
most importantly, our Tenants John Turner and Amanda Bearne and their customers were not harmed, nor
any members of the local emergency services who bravely attended the scene and prevented any spread to
other properties in the village. At the time of writing, the site has been made secure while we await the
decision, following the recommendation of the conservation officer, of a demolition application of the
damaged, unstable gable end. Included in the operating loss for the year is the impairment loss £119,000
for The Jolly Sailor, in order to write off the book ‘historical cost’ carrying value.
The Company has continued the programme of selling some non-core assets and this has realised a book
profit of £1,318,000 (2020: £293,000) in this respect. This policy is in line with the Board’s decision to
reduce the Company’s level of borrowing.
Dividend
At the half-year, I reported that the Directors would not consider the payment of a dividend for the
financial year 2020/2021. When trading does return to some sort of normality, the Board will be able to
review future dividend payments.
5
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Sale of Property
The properties that were sold during the year are listed as follows:
The Maltsters Arms in Harbertonford, which had been closed since September 2018. The adjacent cottage
Bridge house. The garage opposite the pub.
The Castle Inn in Holcombe.
The Toby Jug Inn in Bickington which had been closed since May 2003.
Rose Cottage in Strete.
Two flats at the Old St.Loye’s Hotel site.
Land at the rear of the Globe Inn in Chudleigh.
Two garden plots in Abbotskerswell.
Within the financial year, the Company made a reduction in borrowings of £661,000. Early in the new
year following the completion of further sales of The Victoria Inn in Ashburton with a small adjoining
cottage and the Maltster’s Arms site in Clyst St Mary, a prepayment on the term loan of £750,000 was
made.
Heavitree Inc.
The final piece of land held by our American subsidiary in Houston has been sold for $45,000 (£33,000).
This is a post balance sheet event which will end our involvement in Houston. This started in 1982 with
our investment in a company operating an English style pub and restaurant in the city called The Bear and
Ragged Staff. The collapse of the oil price and, in turn, the collapse of the Houston economy led to the
demise of the operating company and this Company taking direct control of the site in 1983. In 1986 the
original site was swapped for a parcel of undeveloped land. Over the years, a series of land sales has
distributed cash to the parent Company.
Pension Scheme
In January 2022 the trustees of the Final Salary Pension Scheme and the Company formally gave notice to
trigger the wind-up of the Scheme. The Scheme was closed to new members in July 2002, with no future
accrual since April 2006 and the last deferred members transferred out in June 2018. Wind-up must be
completed within a two-year period. As part of the wind-up, retired members who had annuities
purchased on their behalf in the Scheme’s name will, in due course, have those annuities transferred into
their own names.
6
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Personnel
I am very sad to report that Joan Ballman who was the landlady of our Locomotive Inn in Exeter since
1988 and who held the tenancy of The Mitre in Exeter before that, passed away in December 2021. Joan
commanded the utmost respect and affection from all of us at head office during her long time at The
Locomotive and the huge number of attendees at her funeral showed how she was held in the highest
esteem by the many who visited her pub. We will all miss Joan.
A similarly huge figure from the Exeter licencing trade was Derek Elson who we also sadly lost early in
2022. Derek (with his wife Adrienne) was probably ahead of his time in terms of being a multi pub
operator and started as our very first Manager when taking on The Gardeners’ Arms in Exeter in 1965. He
was then appointed as our Manager at The Upton Vale in Torquay in 1968 and after that held tenancies or
leases with us at The St. Loye’s Hotel in Exeter, The George in Babbacombe and most famously at The
Kings Arms in Exeter, which he took on in 1976. Our Managing Director even managed to persuade him
to come out of retirement to help us by taking The Royal Oak in Exeter, for a short period, while a new
tenant was being sought. We will always be grateful to Derek for a long, happy and highly respected
association with this Company and again, he will be greatly missed by many.
Prospects
The trading environment remains testing; although there was no actual lockdown, Christmas trading was
hindered as customers became unsettled by the recent infection rate peak caused by the Omicron variant.
Staff shortages and increasing costs are also a continual concern.
However, the success of the vaccination programme has clearly helped in encouraging customers to
support pubs and enjoy everything they have to offer and some comfort for the future was drawn from the
strong trade during late Summer and Autumn. Also, the houses I visited during the variant affected build
up to Christmas and in the early new year showed not only how professional and robust our operators are
but also how determined our customers are to enjoy the offer provided by our great pubs.
N H P TUCKER
Chairman
15 February 2022
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 65 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 to maintain our business model in what has proved to
be another challenging year for the hospitality sector, not only in terms of lockdowns and restrictions but
also the effect that the pandemic has had on staffing shortages in our sector. The year started with a
lockdown in November 2020 with limited trading in December, followed by a full lockdown until 12
April 2021 which saw restricted trading measures through to mid-July when all restrictions were lifted. To
put this in perspective, our Tenanted Estate has only been able to trade with no restrictions for a total of
106 days in this financial year. Our Half year statement of accounts showed the impact of the winter
lockdown with turnover being 67.77% down on the previous half years results. As we have gone through
the year, we have seen a recovery in our trading during the summer and early autumn trading months
ending the year pleased with the results in comparison to our position at Half Year. This has helped us to
complete a small refurbishment on The Pewsham near Chippenham Wiltshire which has transformed the
trading ability of the Tenancy. For more details on the refurbishment please see section 172 statement on
page 13 of this report.
The winter lockdown and continued restrictions in the year have resulted in our wet trade continuing to be
below pre pandemic levels, although this has been mitigated slightly by pleasing results over the late
summer and early autumn months. Group revenue for the year was £4,618,000, down on last year by
7.98% (£401,000). The Group has reported a small operating loss in the year. While the figures include
adjustments as mentioned in the Chairman’s Statement for IFRS16 it also includes the impairment loss of
£119,000 on the Jolly Sailor due to a fire in April. As the property traded in the year the loss on disposal
has been included within other operating charges. With more rental concessions being given in this
financial year only three months were charged at 100% this has resulted in our rents before IFRS 16
adjustments being 13.85% less than the previous year.
Unfortunately, in April 2021 the Jolly Sailor at Newton Abbot suffered a fire which caused significant
damage to the pub, although neither the Tenants nor their staff were injured in the fire. It has however
meant that the pub has remained closed and will continue to be closed until all the insurance and listed
building processes have been completed which will then allow the Board to make decisions on the future
of the pub. For more details on this please see note 2 accounting policies on page 47 of the report.
The combined result of sales of non-current assets and assets held for sale realised a profit of £1,318,000
(2020: £293,000). 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 agreed by the Board. The property
review which has been carried out this year has resulted in no further impairment to property.
8
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Strategic review (continued)
The Group took the decision last year not to take out any further borrowings but instead has concentrated
on the sale of non-core assets. In this year the Group has sold 9 of the non-core assets in its programme of
disposals. These sales have enabled the Group to not only to reduce its borrowings including overdraft by
£661,000 but also to complete the small refurbishment mentioned, preserve cash, and combat the impact
that the rental concessions 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.
The Group renewed its banking facilities in the previous financial year, and it has in place a waiver of
covenant testing until April 2022. Despite a reduced trading year, the Group has successfully managed to
reduce its bank borrowings by £661,000 within the year, with a further prepayment to the term loan of
£750,000 being paid post year end in line with its strategic plan, part of which is to pay down £2m from
the Term Loan before April 2022 (see the going concern section on page 10 for further details).
The Group net assets have increased in the financial year by £766,000 to £13,465,000.
Further information on the assets sold can be found in the Chairman’s Statement on pages 5-7 of the
strategic review.
In order to mitigate the continued 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 any support offered by the
Government. Once lockdown lifted, although in the first couple of months there were still restrictions in
place, we saw an improvement in trade, and this has helped in reducing the impact of the lockdown. We
will continue to help Tenants should further restrictions come into force through the coming winter
months.
Since the year end, we are waiting to see if the new Covid variant will have an impact on the winter
trading months. As we continue further into the New Year, we will continue to monitor and tightly control
the business so that we may return to pre-pandemic trading levels.
For a further review of the business please see the Chairman’s Statement on pages 5 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 winter lockdown
these measures have been reviewed and revised accordingly. The furlough of Head Office staff, the
minimising of non-essential spending and no dividend payments were put in place specifically to maintain
the Group’s cash position. The rental concessions which we have given to Tenants have once again helped
them manage their cash and in turn they have continued to settle their accounts. This has helped to
preserve and maintain the Group’s cashflow.
9
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Strategic review (continued)
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 loss before taxation of £59,000 (2020: operating profit of £539,000) down 110.94%
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. Due to the continued effect of the pandemic the Group has a small operating loss in the
year which has resulted in a negative figure on the interest calculation. In 2020 interest was covered 3.88
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 continued uncertain nature of the pandemic and further lockdowns and restrictions being in place
during this financial year, the Directors have considered the Group’s financial resources. This had
included a further 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 before tax and interest and the gearing remains low. These forecasts include a
reduction in trade in the financial year to October 2022 due to an anticipated decrease in footfall and
assume that there will be no further lockdown or significant trading restrictions. The mitigation measures
which are in place in order to protect the cash position of the business have been incorporated into the
forecasts for future cash positions. The forecast for capital receipts in 2022 includes non-core asset sales
of £2m of which £880,000 has been received. These forecasts leave the Group with headroom of over
£1.4m on an overdraft facility of £3m. The Board will continue to review cashflows as guidance from
Government changes.
The Board took the decision last year to accelerate the paying down of its £4.5m term loan by the selling
of non-core assets to secure its current position and the long term trading position of the Group. The
Board 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. This year the Group has sold 9 of the non-core assets resulting in profits of
£1,318,000 being realised from these sales, with a further property completing early in the new financial
year this has enabled the Group post year end to make a further prepayment on the term loan of £750,000,
meaning that by the 31 December 2021 the Group has paid down £992,000 on the loan.
10
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Strategic review (continued)
The Board has continued to engage with the bank regarding its facilities and forward trading, it has in
place a waiver of covenant testing until April 2022 along with the agreement on paying down of loan
facilities, projections show that there is a good level of headroom in the debt service cover covenant both
to April 2022 and October 2022. However one covenant will fail the April 2022 testing but will have
headroom in October 2022. A further waiver has been received from the bank in respect of the April 2022
covenant test. The Directors are satisfied that the Group’s forecasts and projections, which take account
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 12 months from date of
approval. With value in the Estate being realised over time and with the support from the bank there are
no material uncertainties in relation to going concern. For this reason, the Group continues to adopt the
going concern basis in preparing its financial statements.
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 continues to be 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 has been no major disruption to our supply
chain. Any issues that have surfaced have been as a result of staff shortages due to Covid and these have
had a minimal effect on our supply to Tenants. 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.
11
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Principal risks and uncertainties (continued)
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 there has been no impairments. The Group
carries out regular reviews of the property portfolio and is in regular contact with its debt provider.
General economic conditions
The Group carries out regular reviews of the economic and changing consumer spending patterns within
its estate. We have seen a drop in footfall through the pandemic and are anticipating this to continue, with
the cost of living on the increase and some consumers continuing to feel nervous about socialising. We
have seen some impact on our more wet led Tenancies with some having not returned to pre pandemic
levels on their barrelage. 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 Group’s 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 again been in response to the Covid-19 pandemic.
The Board has communicated its key decisions to shareholders 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. As
we have moved through this year the original measures that were in place in 2020 have been reviewed and
revised accordingly. This year Head Office staff were placed on flexible furlough in order to minimise
payroll costs but to also be able to maintain our services to the Tenants. The minimising of non-essential
spending and no dividend payments have been in place through the year to continue to protect and
maintain the Group’s cash position. The rental concessions which we have given this year during the
lockdown have again enabled us to help Tenants manage their cash and in turn the settlement of their sales
accounts. This has in turn helped to preserve and maintain the Group’s cashflow.
• No rental charges For November 2020, 50% charged in December 2020 and no rental charge
from January 2021 to May 2021 with 75% being charged in June and July. Full rental has been
charged from August 2021 to October 2021.
• Flexible Furlough for a small number of Head Office staff from November 2020 through to April
2021.
• No ordinary dividend payments throughout the year.
• Minimising of all non-critical costs and the delay of some large capital projects.
The Board took the decision in the year to undertake a small refurbishment at one of its Tenancies based
in Wiltshire. It was agreed by all of the Board that despite what would be a difficult year a decision on
The Pewsham, nr Chippenham (previously known as Lysley Arms), needed to be made to either sell or
complete the refurbishment. The refurbishment is now complete, and it has transformed the ability of the
pub to trade successfully as a Tenancy and has exceeded the Board’s expectations.
Customers
As the pandemic has continued to disrupt the hospitality sector, not only with extended lockdowns but
also from closures due to staff shortages and isolation rules, we have continued to help and support the
Tenants, which includes regular newsletters and direct contact with their Tenanted Operation Managers.
The decisions which have been taken regarding rental concessions and help for the Tenants have been
taken 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
Managers. The decisions to give rental concessions was taken by the Board in order to keep the 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 four
Tenancy changes with only one being a Covid-19 related Tenancy change.
13
The Heavitree Brewery PLC
Registered Number: 30800
Strategic report
Section 172 statement (continued)
During normal trading the Board considers on a monthly basis in Board meetings any further support it
can offer our Tenants, for example we will be introducing the offer of perfect pour training sessions to our
tenants in the coming financial year, along with a winter discount voucher scheme being offered from
January 2022. The Tenants also have access to industry support through the Company’s corporate BII
membership.
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 winter lockdown staff have worked from home where possible. When this has not been
possible, we have operated flexible furlough so that working standards and the operation of the business
can continue smoothly. As the regulations surrounding the pandemic have altered during this year we
have adapted and updated our COVID-19 procedures at Head Office. 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 of changes which have affected the business via emails and newsletter.
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.
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 as being published on our website along with stock exchange announcements. The
Company responds to shareholder letters and queries individually. 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, we have continued through this year to receive 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 2022
15
The Heavitree Brewery PLC
Registered Number: 30800
Directors’ report
The Directors have pleasure in submitting their report for the year ended 31 October 2021.
Results and dividends
The profit for the year, after taxation, attributable to shareholders amounts to £801,000 (2020: £114,000).
The total comprehensive income for the year is £806,000 (2020: £98,000).
The Directors do not recommend a dividend (2020: no dividend recommended) on the Ordinary and ‘A’
Limited Voting Ordinary Shares. An interim dividend was not paid (2020: no dividend paid). The fixed
dividend of 11.5p per share was paid on the preference shares in the year.
Financial Instruments
As at 31 October 2021 the Group’s total bank borrowings were £5,120,000 (2020: £5,781,000).
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 5 and 7.
Directors
The Directors of the Company during the year ended 31 October 2021 were those listed on page 2.
N H P Tucker and C J Bush 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 2021 were as
follows:
N H P Tucker
G J Crocker
T P Duncan
K Pease-Watkin
T Wheatley
C J Bush
Ordinary Shares
31 October 2021 31 October 2020
‘A’ Limited Voting
Ordinary Shares
31 October 2021
31 October 2020
742,215
-
150,335
27,088
-
-
742,215
-
150,335
27,088
-
-
79,385
59,052
196,992
50,638
72,619
2,223
79,385
52,289
196,992
50,638
66,859
2,223
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
All these interests are beneficial, save for the following non-beneficial interests:
(a) N H P Tucker’s interest in 53,750 (2020: 53,750) Ordinary Shares.
Included in these interests are the following joint holdings:
(a) 53,750 (2020: 53,750) Ordinary Shares held jointly by W P Tucker and N H P Tucker.
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 2021 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:
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
Ordinary
%
‘A’-Limited
Voting
Ordinary
‘A’ Limited
Voting
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 set 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. 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.
A full copy of the QCA Code is available from the QCA’s website: www.theqca.com.
Board of Directors
At 31 October 2021, 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. The contribution of Directors in terms of relevance and
effectiveness of each one is subject to evaluation, overseen by the Executive Chairman along with their
commitment and attendance at Board meetings. Since October 2019 the company has in place a
formalised framework for Director review which is overseen by the Independent Non-Executive Director.
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 Trade Director and is responsible for the Group’s Tenanted
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.
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 is in place 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-Watkin
C J Bush
Board Meetings
Entitled to attend
11
11
11
11
11
11
Attended
11
10
11
8
8
11
Shareholder Communication
The Company believes in good communication with shareholders and encourages shareholders to attend
its Annual General Meeting, any important updates are sent to all our shareholders as well as being
published on our website along with stock exchange announcements. The Company responds to
shareholder letters and queries individually.
19
The Heavitree Brewery PLC
Registered Number: 30800
Directors’ report
Corporate governance (continued)
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. However external auditors meet with the MD, Company Secretary, and independent Non-
Executive Director in advance of the audit and provide a comprehensive strategy document that is then
distributed to the Board and reviewed at the next Board meeting. In addition, a detailed audit completion
report is presented by the external auditors to the full Board.
The Board is satisfied that the Groups Auditors are objective and independent of the Group, an
independent audit report is shown within the yearly financial statements.
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.
The Group is committed to the highest standards of corporate social responsibility in its activities these
areas are looked at within Board and Management meetings.
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 2022
20
The Heavitree Brewery PLC
Registered number: 30800
Ten year review of profits and dividends
Year ended
31 October
Operating
profit/(loss)
£000
Profit
before tax
£000
Earnings
per 5p share
p
Dividends
per 5p share
p
2012
2013
2014
2015
2016
2017
2018
2019
2020
1,245
1,345
1,404
1,412
1,420
1,778
1,632
1,839
539
927
1,014
1,642
1,173
1,653
1,554
2,251
1,844
414
12.5
14.8
28.0
18.8
28.0
27.0
39.6
32.0
2.4
2021 (59) 1,114 16.6
7.0
7.0
7.35
7.35
7.425
7.675
7.925
7.925
-
-
Notes:
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
United Kingdom. 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 United Kingdom 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 2021, 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 in accordance with UK adopted
International Financial Reporting Standards (IFRS)
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 2021 and of the Group’s profit for the year then ended;
• The Group and Parent Company financial statements have been properly prepared in accordance
•
with UK adopted IFRS 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
Group 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.
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
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 for significant periods of 2020 and
2021 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 in each of the last two years.
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 2 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, 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 Group’s banking facilities and
the covenant waiver given for April 2022;
• Performed covenant calculations using budgeted figures to consider if there are indications of
possible breaches in covenants.
•
considered the level of headroom in bank facilities based on management’s cash flow forecasts
and the impact of changing assumptions particularly around the impact of the Covid-19
pandemic 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 £15.6m (2020: £15.9m). Given the age of the portfolio and the Group’s policy of
holding assets at depreciated historical cost, many of the individual property carrying values are relatively
low and therefore there is minimal risk of a material impairment in a moderate proportion of the estate.
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
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)
assessment, as well as comparing their consideration of market value to relevant local market data and
post year end sales values realised.
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 2022, 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
permanent impairment to the carrying value of the trading properties.
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.
Risk: accounting for the fire at the Jolly Sailor
The Jolly Sailor, a listed building, was destroyed by fire in April 2021. We identified key audit risks in
relation to the carrying value of the asset and recognition of any insurance proceeds.
The pub is no longer capable of generating economic benefit for the Group and an impairment provision
of £119k has been made against the carrying value, being a 100% provision. The charge has been
included within Other Operating Charges within the Group Income Statement.
The asset was covered by an insurance indemnity policy which will compensate the Group for its losses.
At the year end the Group had no legal or constructive obligation to reinstate the asset, as a number of
planning issues remaining outstanding. Management have not accounted for any insurance proceeds in the
financial statements, nor is there any provision for future costs to rebuild the property.
25
The Heavitree Brewery PLC
Registered number: 30800
Independent auditor’s report
To the members of The Heavitree Brewery PLC
Risk: accounting for the fire at the Jolly Sailor (continued)
We have reviewed the provisions within IAS 16, property plant and equipment, and IAS 37, provisions,
contingent liabilities and contingent assets. We concur with the assessment that there is no liability to
recognise at the year end on the basis that there is no legal or constructive obligation to reinstate the asset.
In accordance with IAS 37, a reimbursement asset cannot be recognized in excess of any provision and
therefore we agree that no insurance proceeds should be recognized in the 2021 financial statements.
We are satisfied that the accounting treatment in respect of the loss event 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 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the Group or Company's
ability to continue as a going concern for a period of at least twelve months from when the original
financial statements were authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in
the relevant sections of this report.
26
The Heavitree Brewery PLC
Registered number: 30800
Independent auditor’s report
To the members of The Heavitree Brewery PLC
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.
Opinion on other matter 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 Directors' Report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the Strategic Report and 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 our knowledge and understanding of the group and company and its environment obtained
in the course of the audit, we have not identified material misstatements in the Strategic Report and the
Directors' Report.
We have nothing to report in respect of the following matters where 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.
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities 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 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.
27
The Heavitree Brewery PLC
Registered number: 30800
Independent auditor’s report
To the members of The Heavitree Brewery PLC
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
We obtained an understanding of the legal and regulatory framework that is applicable to the group and
the industry in which it operates. We identified the principal risks of non-compliance with laws and
regulations as relating to breaches around the Licensing Act 2003 (Amended 2007), health and safety and
General Data Protection Regulation. We also considered those laws and regulations that have a direct
impact on the preparation of the financial statements such as financial reporting legislation (including the
Companies Act 2006), taxation legislation and Coronavirus Job Retention Scheme (CJRS) legislation.
We considered the extent to which any non- compliance with these laws and regulations may have a
negative impact on the group’s ability to continue trading and the risk of a material misstatement in the
financial statements.
We discussed with management how the compliance with these laws and regulations in monitored. We
also identified the individuals who have responsibility for ensuring that the group complies with laws and
regulations and deals with reporting any issues if they arise.
We also evaluated management’s incentives and opportunities for fraudulent manipulation of the financial
statements and determined that the principal risks were related to the overstatement of profit, either
through incorrect revenue recognition, understating expenditure or management bias in accounting
estimates and judgements included in the financial statements.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws
and regulations. Our procedures involved the following:
• Revenue recognition was assessed as a key audit matter and our work in respect of this is discussed
above.
• We made enquiries of management regarding their knowledge of any non-compliance or potential non-
compliance with laws and regulations that could affect the financial statements. As part of these enquiries
we also discussed with management whether there have been any known instances of fraud.
• We identified the individuals with responsibility for ensuring compliance with laws and regulations and
discussed with them policies and procedures in place.
• We reviewed processes around compliance with the Licensing Act and discussed with those responsible
for compliance whether there had been any breaches during the year.
• We reviewed minutes of meetings of Senior Management and those charged with governance.
28
The Heavitree Brewery PLC
Registered number: 30800
Independent auditor’s report
To the members of The Heavitree Brewery PLC
Auditor’s responsibilities for the audit of the financial statements (continued)
• We performed testing on CJRS claims which included substantive testing of management’s calculations
and review of supporting paperwork.
• Audited the risk of management override of controls, including testing journal entries and other
adjustments for appropriateness, and evaluating the business rationale of significant transactions outside
the normal course of business.
• We challenged assumptions and judgements made in the accounts by management.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities,
including those leading to a material misstatement in the financial statement. This risk increases the
further removed non-compliance with laws and regulations is from the events and transactions reflected in
the financial statements as we are less likely to become aware of instances of non-compliance. The risk of
not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment, collusion, omission or misrepresentation.
A further description of our responsibilities is available 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
15 February 2022
29
The Heavitree Brewery PLC
Registered number: 30800
Group income statement
For the year ended 31 October 2021
Revenue
Change in stocks
Other operating income
Purchase of inventories
Staff costs
Depreciation of property, plant and equipment
Other operating charges
Group operating (loss)/profit
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
Notes
Total
2021
£’000
Total
2020
£’000
3
4,618
–––——
5,019
––––——
-
-
5
310
317
(1,909)
(2,065)
10
(1,349)
(1,310)
(177)
(177)
(1,552)
(1,245)
––––——
(4,677)
––––——
(4,480)
6
(59)
539
8
293
1,318
16 - (279)
––––——
553
––––——
1,259
11
29
-
(145)
-
––––——
2
(141)
-
––––——
(145) (139)
1,114
414
12a
13
13
(313)
––––——
801
(300)
––––——
114
══════ ══════
2.4p
══════ ══════
16.6p
16.6p
2.4p
══════ ══════
30
The Heavitree Brewery PLC
Registered number: 30800
Group statement of comprehensive income
for the year ended 31 October 2021
Profit for the year
Notes
2021
£’000
801
2020
£’000
114
–––––––––––––––
–––––––––––––––
Items that will not be reclassified to profit or loss
Fair value adjustment on investment in equity 27
5
(12)
Items that may be reclassified to profit or loss
Exchange rate differences on translation of subsidiary undertaking
-
(4)
–––––––––––––––
5
–––––––––––––––
(12)
Other comprehensive income for the year, net of tax
Total comprehensive income attributable to:
Equity holders of the parent
–––––––––––––––
-
806
–––––––––––––––
(4)
98
–––––––––––––––
–––––––––––––––
806
98
–––––––––––––––
–––––––––––––––
31
The Heavitree Brewery PLC
Registered Number: 30800
Group balance sheet
at 31 October 2021
Non-current assets
Property, plant and equipment
Investment property
Right of use asset
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
16
16
16b
18
12c
2021
£’000
16,436
1,490
71
2020
£’000
16,615
2,130
-
–––––––––––––––
17,997
–––––––––––––––
18,745
34
16
30
16
–––––––––––––––
18,047
–––––––––––––––
18,791
–––––––––––––––
–––––––––––––––
19
20
21
10
1,936
52
10
1,277
49
–––––––––––––––
1,998
–––––––––––––––
1,336
–––––––––––––––
883
17
–––––––––––––––
219
–––––––––––––––
20,928
–––––––––––––––
20,346
–––––––––––––––
–––––––––––––––
22
23
(984)
(1,158)
(108)
(666)
(1,520)
(237)
–––––––––––––––
(2,250)
–––––––––––––––
(2,423)
–––––––––––––––
–––––––––––––––
22
23
12c
29
(318)
(4,069)
(734)
(92)
(274)
(4,322)
(536)
(92)
–––––––––––––––
(5,213)
–––––––––––––––
(7,463)
–––––––––––––––
(5,224)
–––––––––––––––
(7,647)
–––––––––––––––
13,465
–––––––––––––––
12,699
–––––––––––––––
–––––––––––––––
32
The Heavitree Brewery PLC
Registered Number: 30800
Group balance sheet
at 31 October 2021
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
2021
£’000
264
673
(1,529)
10
13
14,034
2020
£’000
264
673
(1,522)
5
13
13,266
––––––––––––––
13,465
–––––––––––––––
12,699
–––––––––––––––
–––––––––––––––
The notes on pages 42 to 77 form part of the financial statements.
These accounts were approved by the Board of Directors and authorised for issue on 15 February 2022
and were signed on its behalf by
N H P TUCKER )
G J CROCKER ) Directors
33
The Heavitree Brewery PLC
Registered Number: 30800
Group statement of changes in equity
for the year ended 31 October 2021
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
34
The Heavitree Brewery PLC
Registered Number: 30800
Group statement of changes in equity
for the year ended 31 October 2021
Equity
share
capital
£’000
Capital
redemption
reserve
£’000
Treasury
shares
£’000
Fair value
adjustment
reserve
£’000
264
673
(1,522)
-
-
-
-
-
-
5
-
5
Currency
translation
£’000
Retained
earnings
£’000
Total
equity
£’000
13
13,266
12,699
-
-
801
801
-
5
–––––
–––––
–––––
–––––
––––––
–––––
––––
-
-
-
5
-
801
806
–––––
–––––
–––––
–––––
–––––
–––––
––––
-
-
-
-
-
-
41
(81)
33
-
-
-
-
-
-
-
-
41
(81)
(33)
-
-
–––––
-
–––––
-
–––––
-
–––––
-
––––––
-
–––––
-
––––
264
––––––
673
––––––
(1,529)
––––––
10
––––––
13
––––––
14,034
––––––
13,465
––––
At 1 November
2020
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
2021
Details of the reserves can be found in note 27.
35
The Heavitree Brewery PLC
Registered Number: 30800
Group statement of cash flows
For the year ended 31 October 2021
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
(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
Notes
Net cash(outflow)/ inflow from operating activities
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 inflow/(outflow) from investing activities
2021
£’000
801
313
145
(1,200)
177
(442)
353
-
2020
£’000
114
301
139
(293)
177
220
(274)
279
–––––––––––––––
147
(245)
(145)
–––––––––––––––
(243)
–––––––––––––––
663
(151)
(141)
–––––––––––––––
371
––––––––––––––
–––––––––––––––
-
1,411
(473)
2
186
(315)
–––––––––––––––
938
–––––––––––––––
(127)
–––––––––––––––
–––––––––––––––
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
Mortgage receipts received
Net cash outflow from financing activities
Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the year end
14
(1)
-
41
(81)
(25)
(187)
35
(1)
-
62
(25)
(9)
(1,500)
-
–––––––––––––––
(218)
–––––––––––––––
477
(1,232)
–––––––––––––––
(755)
–––––––––––––––
(1,473)
–––––––––––––––
(1,229)
(3)
–––––––––––––––
(1,232)
–––––––––––––––
–––––––––––––––
21
21
36
The Heavitree Brewery PLC
Registered Number: 30800
Company balance sheet
at 31 October 2021
Non-current assets
Property, plant and equipment
Investment property
Right of use asset
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
16
16
16b
18
12c
2021
£’000
16,394
1,490
71
2020
£’000
16,573
2,130
-
–––––––––––––––
17,955
–––––––––––––––
18,703
68
16
64
16
–––––––––––––––
18,039
–––––––––––––––
18,783
–––––––––––––––
–––––––––––––––
19
20
21
10
1,936
52
10
1,277
49
–––––––––––––––
1,998
–––––––––––––––
1,336
–––––––––––––––
883
17
–––––––––––––––
219
–––––––––––––––
20,920
–––––––––––––––
20,338
–––––––––––––––
–––––––––––––––
22
23
(1,082)
(1,158)
(108)
(772)
(1,520)
(237)
–––––––––––––––
(2,348)
–––––––––––––––
(2,529)
–––––––––––––––
–––––––––––––––
22
23
12c
29
(318)
(4,069)
(734)
(92)
(274)
(4,322)
(536)
(92)
–––––––––––––––
(5,213)
–––––––––––––––
(7,561)
–––––––––––––––
(5,224)
–––––––––––––––
(7,753)
–––––––––––––––
–––––––––––––––
13,359
12,585
–––––––––––––––
–––––––––––––––
37
The Heavitree Brewery PLC
Registered Number: 30800
Company balance sheet
at 31 October 2021
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
2021
£’000
264
673
(1,529)
10
-
13,941
2020
£’000
264
673
(1,522)
5
-
13,165
–––––––––––––––
13,359
–––––––––––––––
12,585
–––––––––––––––
–––––––––––––––
The notes on pages 42 to 77 form part of the financial statements.
These accounts were approved by the Board of Directors and authorised for issue on 15 February 2022
and were signed on its behalf by
N H P TUCKER )
G J CROCKER ) Directors
38
The Heavitree Brewery PLC
Registered Number: 30800
Company statement of changes in equity
for the year ended 31 October 2021
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
-
Retained
earnings
£’000
13,042
123
Total
equity
£’000
12,434
123
-
-
-
(12)
-
(12)
–––––
–––––
–––––
–––––
–––––
––––
-
–––––
-
–––––
-
–––––
(12)
–––––
123
–––––
111
––––
-
-
62
-
-
62
-
-
–––––
264
––––––
-
-
–––––
673
––––––
(24)
2
–––––
(1,522)
––––––
-
-
–––––
5
––––––
-
-
–––––
13,165
––––––
(24)
2
––––
12,585
––––
39
The Heavitree Brewery PLC
Registered Number: 30800
Company statement of changes in equity
for the year ended 31 October 2021
At 1 November 2020
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 2021
Equity
share
capital
£'000
264
-
-
Capital
redemption
reserve
£’000
673
-
-
–––––
-
–––––
-
–––––
–––––
-
-
-
-
-
–––––
264
––––––
-
–––––
673
––––––
Treasury
shares
£’000
(1,522)
-
-
–––––
-
–––––
41
(81)
33
-
–––––
(1,529)
––––––
Fair value
adjustment
reserve
£’000
5
-
5
Retained
earnings
£’000
13,165
809
-
–––––
5
–––––
809
–––––
–––––
Total
equity
£’000
12,585
809
5
––––
814
––––
41
-
-
-
(81)
(33)
-
-
–––––
10
––––––
-
–––––
13,941
––––––
-
––––
13,359
––––
Details of the reserves can be found in note 27.
40
The Heavitree Brewery PLC
Registered Number: 30800
Company statement of cash flows
for the year ended 31 October 2021
Notes
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 (outflow)/inflow from operating activities
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 inflow/(outflow) from investing activities
2021
£’000
809
313
145
(1,200)
177
-
(442)
345
-
2020
£’000
123
301
139
(293)
177
-
222
(285)
279
–––––––––––––––
147
(245)
(145)
–––––––––––––––
(243)
–––––––––––––––
663
(151)
(141)
–––––––––––––––
371
–––––––––––––––
–––––––––––––––
-
1,411
(473)
-
-
2
186
(315)
-
-
–––––––––––––––
938
–––––––––––––––
(127)
–––––––––––––––
–––––––––––––––
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 repayments
Mortgage receipts received
Net cash outflow from financing activities
Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the year end
14
(1)
-
41
(81)
(25)
(187)
35
(1)
-
62
(25)
(9)
(1,500)
-
–––––––––––––––
(218)
–––––––––––––––
477
(1,232)
–––––––––––––––
(755)
–––––––––––––––
(1,473)
–––––––––––––––
(1,229)
(3)
–––––––––––––––
(1,232)
–––––––––––––––
–––––––––––––––
21
21
41
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
1. Authorisation of financial statements
The financial statements of The Heavitree Brewery PLC and its subsidiaries (the “Group”) for the year
ended 31 October 2021 were authorised for issue by the board of Directors on 15 February 2022. 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 United Kingdom 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 2021 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 continued uncertain nature of the pandemic and further lockdowns and restrictions being in
place during this financial year, the Directors have considered the Group’s financial resources. This had
included a further 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 before tax and interest and the gearing remains low. These forecasts
include a reduction in trade in the financial year to October 2022 due to an anticipated decrease in footfall
and assume that there will be no further lockdown or significant trading restrictions. The mitigation
measures which are in place in order to protect the cash position of the business have been incorporated
into the forecasts for future cash positions. The forecast for capital receipts in 2022 includes non-core
asset sales of £2m of which £880,000 has been received. These forecasts leave the Group with headroom
of over £1.4m on an overdraft facility of £3m. The Board will continue to review cashflows as guidance
from Government changes.
The Board took the decision last year to accelerate the paying down of its £4.5m term loan by the selling
of non-core assets to secure its current position and the long term trading position of the Group. The
Board 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. This year the Group has sold 9 of the non-core assets resulting in profits of
£1,318,000 being realised from these sales, with a further property completing early in the new financial
year this has enabled the Group post year end to make a further prepayment on the term loan of £750,000,
meaning that by the 31 December 2021 the Group has paid down £992,000 on the loan.
42
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
2. Accounting policies (continued)
The Board has continued to engage with the bank regarding its facilities and forward trading, it has in
place a waiver of covenant testing until April 2022 along with the agreement on paying down of loan
facilities, projections show that there is a good level of headroom in the debt service cover covenant both
to April 2022 and October 2022. However one covenant will fail the April 2022 testing but will have
headroom in October 2022. A further waiver has been received from the bank in respect of the April 2022
covenant test. The Directors are satisfied that the Group’s forecasts and projections, which take account
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 12 months from date of
approval. With value in the Estate being realised over time and with the support from the bank there are
no material uncertainties in relation to going concern. For this reason, the Group continues to adopt the
going concern basis in preparing its financial statements.
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 Directors have considered all IFRS and IFRIC interpretations issued but not yet in force and have
concluded that there is no impact on the financial statements in 2021 and no material impact is expected
in respect of the year ended 31 October 2022.
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 receivables are recognised on a straight-line basis over the lease term.
As noted in the Chairman’s statement on page 5 and the business review on page 8 the Group has again
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
£350,000 (2020: £333,000) rental income that has not yet been received from tenants.
43
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
2. Accounting policies (continued)
Revenue recognition
Government Grants Coronavirus Job Retention 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 Group
Income Statement under Other Operating 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.
44
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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.
45
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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 and 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.
46
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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. There were no impairments
identified in the year.
Assumptions used in value in use calculations are as follows:
Industry growth rate of 1%- taking the average growth in the 5 years prior to the Covid pandemic.
Weighted average cost of capital 5.76%-calculated using the Group’s beta value.
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 2021 at £92,000. Further details are given in note 29.
Insurance proceeds from Jolly Sailor fire
The Group suffered a fire at the Jolly Sailor East Ogwell in April 2021. The Group is covered by an
indemnity insurance policy to cover the losses incurred and reinstate the asset to its original state. As the
asset is no longer capable of generating an economic return, an impairment loss has been recognised in
the year and had been accounted for under other operating charges within the Group income statement.
The Group is currently waiting for Heritage England and Council listing bodies to make decisions
regarding the listing of the property. Once decisions are known the Directors may have several options to
look at in respect of the property which would result in various different outcomes for the insurance
proceeds which range from £nil to £1.2m. There is no obligation to rebuild at the year-end exists, so no
liability has been included. No insurance income has been recognised as amounts are uncertain and under
IFRS no reimbursement asset can be recognised in excess of the related liability.
47
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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
2021
£’000
3,289
26
––––––
3,315
2020
£’000
3,502
52
––––––
3,554
1,303
1,465
–––––––––––
4,618
–––––––––––
5,019
——————
——————
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 2021 and 2020. 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 2021
Revenue
Sales to external customers
Other segment information
Segment assets
Total assets
Capital expenditure
Property, plant and equipment
Right of use asset
UK
£’000
4,618
══════
21,382
––––——
-
══════
473
71
══════
United
States
£’000
-
══════
42
––––——
-
══════
-
-
══════
Total
£’000
4,618
══════
21,424
––––——
-
══════
473
71
══════
48
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
4. Segment information (continued)
Year ended 31 October 2020
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 Grants (CJRS)
6. Operating (loss)/profit
This is stated after charging:
Depreciation of property, plant and equipment
Repairs and maintenance of properties
Short term lease expense
Impairment loss-Jolly Sailor
UK
£’000
5,019
══════
20,304
––––——
20,304
══════
355
══════
United
States
£’000
-
══════
42
––––——
42
══════
-
══════
Total
£’000
5,019
══════
20,346
––––——
20,346
══════
355
══════
2021
£’000
260
-
50
2020
£’000
276
-
41
––––––––
–––––––––
310
══════
317
══════
2021
£’000
177
885
29
119
══════
2020
£’000
178
638
23
-
══════
Cost of inventories recognised as an expense (included in purchase of inventories) 1,909
══════
2,065
══════
The Group suffered a fire at the Jolly Sailor East Ogwell in April 2021, the Group is covered by an
indemnity insurance policy to cover the losses incurred and reinstate the asset to its original state. The
Impairment loss of the asset in the year has been accounted for under other charges within the income
statement.
49
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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
2021
£’000
2020
£’000
46
43
–––––––––––––––
2
-
4
–––––––––––––––
6
–––––––––––––––
52
–––––––––––––––
2
6
4
–––––––––––––––
12
–––––––––––––––
55
–––––––––––––––
–––––––––––––––
Other services relate to a review of the Group’s Interim Report of £4,000 (2020: £4,000).
8. Profit on sale of property, plant and equipment
Profits on sale of property, plant and equipment
2021
£’000
1,318
══════
2020
£’000
293
══════
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)
2021
£’000
2020
£’000
-
══════
-
══════
50
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
10. Staff costs and Directors’ emoluments
(a) Staff costs
Wages and salaries
Social security costs
Other pension costs
2021
£’000
1,087
119
143
––––——
1,349
══════
2020
£’000
1,088
118
104
––––——
1,310
══════
Included in other pension costs is £64,213 (2020: £62,448) 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:
2021
No.
16
2020
No.
16
══════
══════
Total
2021
£’000
Total
2020
£’000
Average monthly number of employees
(b) Directors’ emoluments
Basic Performance
salary and
fees
£’000
178
176
165
-
18
18
18
N H P Tucker
G J Crocker
T Wheatley
W P Tucker
T P Duncan
K Pease-Watkin
C J Bush
Pension
related
bonus Benefits contributions
£’000 £’000
£’000
13
-
-
-
-
-
-
1
1
12
-
-
-
-
-
-
-
-
-
-
-
192
177
177
-
18
18
18
191
170
170
16
17
17
17
––––——
573
––––——
––––—— ––––——
14
––––—— ––––——
13
––––——
-
––––——
––––——
600
––––——
––––—
598
––––——
51
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
10. Staff costs and Directors’ emoluments (continued)
(b) Directors’ emoluments
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 £192,000
(2020: £191,000). The number of Directors accruing pension benefits is nil (2020: nil). The highest paid
Director has an accrued pension entitlement of £nil (2020: £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
Changes in tax rates
Total deferred tax
Tax expense in the income statement
2021
£’000
138
7
2020
£’000
133
8
–––––––––––––––
145
–––––––––––––––
141
–––––––––––––––
–––––––––––––––
2021
£’000
111
(13)
17
2020
£’000
128
18
12
–––––––––––––––
115
–––––––––––––––
158
–––––––––––––––
–––––––––––––––
30
168
142
-
–––––––––––––––
198
–––––––––––––––
313
–––––––––––––––
142
–––––––––––––––
300
–––––––––––––––
–––––––––––––––
52
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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
2021
£’000
2020
£’000
-
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
–––––––––––––––
The tax expense in the income statement for the year is higher than the standard rate of corporation tax in
the UK of 19% (2020: 19%). The differences are reconciled below:
Accounting profit before income tax
Accounting profit multiplied by the UK standard rate of
corporation tax of 19% (2020: 19 %)
Expenses not deductible for tax purposes
Income not taxable
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
Chargeable gains
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:
Deferred tax liability
Accelerated capital allowances
Short term timing differences
Rolled over gain
2021
£’000
1,114
2020
£’000
414
–––––––––––––––
–––––––––––––––
212
(209)
(7)
(13)
-
(4)
17
142
175
79
69
-
18
90
3
13
-
28
–––––––––––––––
313
–––––––––––––––
300
–––––––––––––––
–––––––––––––––
2021
£’000
2020
£’000
757
(23)
-
394
-
142
–––––––––––––––
734
–––––––––––––––
536
–––––––––––––––
–––––––––––––––
53
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
12. Taxation (continued)
(c) Deferred tax (continued)
Deferred tax asset
Pension plans
2021
£’000
2020
£’000
16
16
–––––––––––––––
–––––––––––––––
The deferred tax asset has been recognised 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
Change in tax rates on opening balances
Rolled over gains
Deferred income tax expense
2021
£’000
30
-
168
-
2020
£’000
125
-
-
17
–––––––––––––––
198
–––––––––––––––
142
–––––––––––––––
–––––––––––––––
A potential deferred tax asset of £6,729 (2020: £6,729) 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.
Factors that may affect future tax charges
An increase in the UK corporation tax rate from 19% to 25% (effective 1 April 2023) was substantively
enacted on 24 May 2021. Deferred tax balances have been remeasured to reflect this higher long-term
rate, with differences recognised in the current year tax charge.
54
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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
2021
£’000
2020
£’000
801
114
–––––––––––––––
–––––––––––––––
2021
No.
(‘000)
2020
No.
(‘000)
Basic weighted average number of shares (excluding treasury shares)
4,824
4,801
There have been no other transactions involving ordinary shares between the reporting date and the date
of completion of these financial statements.
–––––––––––––––
–––––––––––––––
14. Dividends paid and proposed
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2020: nil (2019: nil)
First dividend for 2021: nil (2020: nil)
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 2021: nil (2020: nil)
Cumulative preference dividends
2021
£’000
2020
£’000
-
-
-
-
-
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
–––––––––––––––
-
-
–––––––––––––––
–––––––––––––––
1
1
–––––––––––––––
–––––––––––––––
15. Profit attributable to members of the parent company
The profit dealt with in the financial statements of the parent company is £809,000 (2020: £123,000).
55
-
-
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
16. Property, plant and equipment
Group
Land and Furniture Equipment Assets under
buildings and fittings and vehicles construction
£’000
£’000
£’000
£’000
17,135
266
Cost:
At 31 October 2019
Additions
Transfer to assets held
for sale
(219)
Transfer to investment properties(644)
Impairment
Disposals
Transfers out
-
-
-
(1,297)
60 (153)
(279)
(333)
4,289
48
474
41
-
-
-
(166)
22
-
-
-
-
-
-
-
Investment
properties
£’000
1,485
-
-
644
-
-
1
Total
£’000
23,383
355
(219)
-
(279)
(1,796)
(70)
––––––––––––––
15,986
172
(254)
At 31 October 2020
Additions
Transfer to assets held
for sale
Transfer to investment properties(17)
Impairment
Disposals
Transfers out
-
(217)
-
––––––––––––––
2,887
266
-
–––––––––––––
371
34
-
–––––––––––––––
-
-
-
–––––––––––––––
2,130
1
(430)
–––––––––––––––
21,374
473
(684)
-
-
-
76
-
-
-
-
-
-
-
-
17
-
(228)
-
-
-
(445)
76
At 31 October 2021
––––––––––––––
15,670
––––––––––––––
3,229
–––––––––––––
405
–––––––––––––––
-
–––––––––––––––
1,490
–––––––––––––––
20,794
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
56
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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 31 October 2019
Provided during the year
Transfer from current assets
Disposals
Transfers out
At 31 October 2020
Provided during the year
Transfer from current assets
Disposals
Transfers out
At 31 October 2021
Net book value
At 31 October 2021
Net book value at
31 October 2020
Net book value at
31 October 2019
427
-
-
(267)
(48)
3,501
112
-
(1,297)
(15)
278
66
-
(123)
(5)
––––—— ––––—— ––––——
216
59
-
-
-
––––—— ––––—— ––––——
275
2,301
106
-
-
76
112
-
-
(2)
-
2,483
110
-
-
-
-
-
––––——
-
-
-
-
-
––––——
-
-
-
-
-
-
––––——
-
-
-
-
-
––––——
-
4,206
178
-
(1,687)
(68)
––––——
2,629
165
-
(2)
76
––––——
2,868
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
––––––––––––––
15,560
746
130
-
1,490
17,926
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
15,874
586
155
-
2,130
18,745
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
16,708
788
196
-
1,485
19,177
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
In the Directors’ opinion the investment properties have a fair value as at 31 October 2021 of £2,080,000
(2020: £3,355,000). 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 (2020: £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.
57
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
16. Property, plant and equipment (continued)
Company
Land and Furniture Equipment Assets under
buildings and fittings and vehicles construction
£’000
‘£000
£’000
£’000
Cost:
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
-
-
-
-
-
-
Investment
properties
£’000
1,485
-
-
644
-
-
1
Total
£’000
23,339
355
(219)
-
(279)
(1,796)
(69)
––––––––––––––
15,941
At 31 October 2020
Additions
172
Transfer to assets held for sale (254)
Transfer to investment properties (17)
Impairment
Disposals
Transfer between categories
-
(217)
-
––––––––––––––
2,887
266
-
-
-
-
76
–––––––––––––
373
34
-
-
-
-
-
–––––––––––––––
-
-
-
-
-
-
–––––––––––––––
2,130
1
(430)
17
-
(228)
-
–––––––––––––––
21,331
473
(684)
-
-
(445)
76
At 31 October 2021
––––––––––––––
15,625
––––––––––––––
3,229
–––––––––––––
407
–––––––––––––––
-
–––––––––––––––
1,490
–––––––––––––––
20,751
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
277
66
-
-
-
-
4,205
178
Depreciation and impairment:
At 31 October 2019
Provided during the year
Transfer from assets
Disposals
(1,297)
Transfer between categories (48) (15)
3,501
112
(267)
427
-
At 31 October 2020
Provided during the year
Transfer from assets
Disposals
Transfer between categories
(1,687)
(68)
–––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––
2,628
165
2,301
106
(123)
(5)
112
-
215
59
-
-
-
-
-
-
-
-
(2)
-
-
76
-
-
-
-
-
-
(2)
76
––––––––––––––
––––––––––––––
–––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
At 31 October 2021
110
2,483
274
-
-
2,867
––––––––––––––
––––––––––––––
–––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
Net book value at
At 31 October 2021
Net book value at
31 October 2020
Net book value at
31 October 2019
15,515
746
133
-
1,490
17,884
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
15,829
586
158
-
2,130
18,703
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
16,663
788
198
-
1,485
19,134
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
58
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
16. Property, plant and equipment (continued)
In the Directors’ opinion the investment properties have a fair value as at 31 October 2021 of £2,080,000
(2020: £3,355,000). 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 (2020: £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.
16b. Right of Use Asset
Group and Company
At 31 October 2020
Additions
Disposals
At 31 October 2021
Depreciation and impairment
At 31 October 2020
Provided during the year
Disposals
At 31 October 2021
NBV at 31 October 2021
£’000
-
83
-
Total
£’000
-
83
-
–––––––––––––––
83
–––––––––––––––
83
–––––––––––––––
–––––––––––––––
-
12
-
-
12
-
–––––––––––––––
12
–––––––––––––––
12
–––––––––––––––
–––––––––––––––
–––––––––––––––
71
–––––––––––––––
71
–––––––––––––––
–––––––––––––––
The split in the right of use asset are Motor vehicle cost of £35,000, Motor Vehicle Depreciation of
£5,000 and Motor vehicle NBV £30,000; Property cost of £48,000, depreciation on Property of £7,000
and Property NBV £41,000.
59
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
17. Non-current assets held for sale
Group and Company
At 1 November 2020
Transfer (to)/from property, plant and equipment (note 16)
Additions
Disposals
Impairment
Transfer (to)/from current assets
At 31 October 2021
2021
£’000
2020
£’000
219
684
-
(20)
-
-
-
219
-
-
-
-
–––––––––––––––
883
–––––––––––––––
219
–––––––––––––––
–––––––––––––––
As at 31 October 2021 six properties were being actively marketed for sale (2020 – two properties).
18. Financial assets
Group
Financial assets – non-current
Financial assets measured at fair value through
Other comprehensive income
2021
£’000
2020
£’000
34
30
–––––––––––––––
–––––––––––––––
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 2020
Loan advance
At 31 October 2021
Amounts provided:
At 1 November 2020
Revaluation
At 31 October 2021
Net book value:
At 31 October 2021
At 31 October 2020
Subsidiary
undertakings
£’000
Investments
£’000
86
-
55
-
Total
£’000
141
-
–––––––––––––––
86
–––––––––––––––
55
–––––––––––––––
141
(52)
-
(25)
4
(77)
4
–––––––––––––––
(52)
–––––––––––––––
(21)
–––––––––––––––
(73)
–––––––––––––––
–––––––––––––––
–––––––––––––––
34
34
68
–––––––––––––––
–––––––––––––––
–––––––––––––––
34
30
64
–––––––––––––––
–––––––––––––––
–––––––––––––––
60
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
18. Financial assets(continued)
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
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
2021
£’000
6
4
2020
£’000
6
4
–––––––––––––––
10
–––––––––––––––
10
–––––––––––––––
–––––––––––––––
2021
£’000
2020
£’000
556
811
368
201
425
442
170
240
–––––––––––––––
1,936
–––––––––––––––
1,277
–––––––––––––––
–––––––––––––––
2021
£’000
2020
£’000
556
811
368
201
425
442
170
240
–––––––––––––––
1,936
––––––––
–––––––––––––––
1,277
––––––––
61
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
20. Trade and other receivables (continued)
Included within other receivables is an amount of £328,000 (2020: £135,000) 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 £87,365 (2020: £170,247). 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 11% (2020: 22%). The Directors consider that the carrying amount of
trade and other receivables approximates to their fair value.
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 2021, trade receivables at nominal value of £87,365 (2020:
£170,247) 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
2021
£’000
170
(9)
(74)
2020
£’000
159
11
-
–––––––––––––––
87
–––––––––––––––
170
–––––––––––––––
–––––––––––––––
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
2021
2020
556
425
501
332
38
27
15
18
2
48
62
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
21. Cash and cash equivalents
Group and Company
Cash at bank and in hand
2021
£’000
2020
£’000
52
49
–––––––––––––––
52
–––––––––––––––
49
–––––––––––––––
–––––––––––––––
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
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
2021
£’000
2020
£’000
52
(807)
49
(1,281)
–––––––––––––––
(755)
–––––––––––––––
(1,232)
–––––––––––––––
–––––––––––––––
2021
£’000
371
206
205
202
2020
£’000
295
203
108
60
–––––––––––––––
984
–––––––––––––––
666
–––––––––––––––
–––––––––––––––
2021
£’000
2020
£’000
371
206
204
202
99
295
203
108
58
108
–––––––––––––––
1,082
–––––––––––––––
772
–––––––––––––––
–––––––––––––––
318
274
–––––––––––––––
–––––––––––––––
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.
63
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
23. Financial liabilities
Group and Company
Current
Bank overdrafts
Bank loan
Lease liabilities
Non-current
11.5% cumulative preference shares (note 26)
Bank loan
Lease liabilities
2020
£’000
1,281
2021
£’000
807
322
29
220
19
–––––—— –––––——
1,158
1,520
–––––––––––––––
–––––––––––––––
2021
£’000
11
3,991
67
2020
£’000
11
4,280
31
–––––—— –––––——
4,069
4,322
–––––––––––––––
–––––––––––––––
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 (2020: £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
2021
£’000
2020
£’000
19
31
-
–––––—— –––––——
29
67
-
96
50
–––––––––––––––
–––––––––––––––
Included in the obligations under lease liabilities are £25,000 in respect of Motor vehicle HP liability,
£30,000 in respect of motor vehicle right of use assets and £41,000 in respect of right of use asset on
Property.
64
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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
2021
£’000
1,777
734
543
425
367
2,537
2020
£’000
1,283
786
598
509
421
3,313
–––––––––––––––
6,383
–––––––––––––––
6,910
–––––––––––––––
–––––––––––––––
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.
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.
65
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
25. Financial instruments and derivatives (continued)
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.
2021
Sterling
Sterling
2020
Sterling
Sterling
Increase/
decrease in
basis points
Effect on
profit
before tax
£000
+100
-100
+100
-100
(58)
58
(57)
57
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.
66
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
25. Financial instruments and derivatives (continued)
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 2021
and 2020 based on contractual undiscounted payments.
Year ended 31 October 2021
Bank loan/overdraft
Tenants’ deposits
Trade payables
Lease liabilities
Less than
On demand 3 months
£’000
-
-
-
-
£’000
1,129
-
371
29
3-12
months
£’000
-
-
-
-
1-5 years
£’000
3,991
318
-
67
More
than
5 years
£’000
-
-
-
-
Total
£’000
5,120
318
371
96
––––––––––
––––––––––
–––––––––––
–––––––––––
–––––––––––
––––––––––
Year ended 31 October 2020
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
––––––––––
––––––––––
–––––––––––
–––––––––––
–––––––––––
––––––––––
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.
67
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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. Debtors are considered on an
individual basis each year.
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
2021
£’000
52
34
369
Fair
value
2021
£’000
52
34
369
Book
value
2020
£’000
49
30
155
Fair
value
2020
£’000
49
30
155
–––––––––––––––
455
–––––––––––––––
455
–––––––––––––––
234
–––––––––––––––
234
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
Financial liabilities
Bank loan/overdraft
Interest-bearing loans and borrowings:
Floating rate borrowings
Tenants’ deposits
Cumulative preference shares
Lease liabilities
Level 2
(5,120)
(5,120)
(5,781)
(5,781)
Level 3
Level 3
Level 2
(318)
(11)
(96)
(318)
(11)
(96)
(274)
(11)
(50)
(274)
(11)
(50)
–––––––––––––––
(5,545)
–––––––––––––––
(5,545)
–––––––––––––––
(6,116)
–––––––––––––––
(6,116)
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
68
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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 2021 and 31 October 2020 there were no transfers between level 1, 2
or 3 fair value measurements.
69
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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
2021
£
2020
£
99,735
164,124
924,446
99,735
164,124
924,446
–––––––––––––––
1,188,305
–––––––––––––––
1,188,305
–––––––––––––––
–––––––––––––––
Allotted, called up and fully paid
2021
No.
2020
No.
2021
£
2020
£
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
2021
No.
2020
No.
2021
£
2020
£
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.
70
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
26. Authorised and issued share capital (continued)
(ii) Preference shares classified as non-current liability
Authorised
11.5% Cumulative Preference Shares of £1 each
2021
£
2020
£
11,695
11,695
–––––––––––––––
–––––––––––––––
Allotted, called up and fully paid
2021
No.
2020
No.
2021
£
2020
£
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 16 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 34 and 39 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 2021, the Group held 193,053 Ordinary Shares and 238,310 ‘A’ Limited Voting Ordinary
Shares (2020: 183,719 Ordinary Shares and 254,153 ‘A’ Limited Voting Ordinary Shares) of its own
shares. During the year there were purchases of 9,334 Ordinary Shares and 17,204 ‘A’ Limited Voting
Ordinary Shares and sales of 33,147 ‘A’ Limited Voting Ordinary Shares.
71
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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 2021, amounts contracted for but not provided in the financial statements amounted to £nil
(2020: £nil).
29. Pensions and post-retirement benefits
Group and Company
(i)
Optional pension payments
During the year the Group made discretionary pension payments of £34,943 (2020: £26,126) 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 £62,214 (2020: £62,448).
(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 2021. There have
been no changes in the valuation methodology adopted for this period compared to the previous period.
Wind-up of the scheme has been entered into from the 17 January 2022.
72
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
29. Pensions and post-retirement benefits (continued)
Amounts included in the Balance Sheet
31 October 31 October 31 October
2019
£’000
2020
£’000
2021
£’000
Fair value of plan assets
18
18
18
Present value of defined benefit obligation
(110)
(110)
(110)
Surplus/(deficit) in scheme
–––––––––––––––
(92)
–––––––––––––––
(92)
–––––––––––––––
(92)
–––––––––––––––
–––––––––––––––
–––––––––––––––
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 2021.
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
2021
£’000
2020
£’000
110
-
-
-
-
-
-
-
-
110
-
-
-
-
-
-
-
-
–––––––––––––––
110
–––––––––––––––
110
–––––––––––––––
–––––––––––––––
73
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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
2021
£’000
2020
£’000
18
-
-
-
-
-
18
-
-
-
-
-
–––––––––––––––
18
–––––––––––––––
18
–––––––––––––––
–––––––––––––––
The actual return on the plan assets over the period ended 31 October 2021 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
2021
£’000
-
-
2020
£’000
-
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
–––––––––––––––
2021
£’000
-
-
-
-
2020
£’000
-
-
-
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
––––––––––––––-–
74
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
29. Pensions and post-retirement benefits (continued)
Plan assets
Corporate Bonds
Government Bonds
Cash
Insured Contract
Total assets
31 October 31 October 31 October
2019
£’000
2021
£’000
-
-
18
-
2020
£’000
-
-
18
-
-
-
18
-
–––––––––––––––
18
–––––––––––––––
18
–––––––––––––––
18
–––––––––––––––
–––––––––––––––
–––––––––––––––
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
2021.
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
2019
% per annum % per annum % per annum
1.90
2020
2021
1.50
1.80
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.
75
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
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 2021
31 October 2020
Sales to
related parties
£’000
69
89
from related
Trading amounts Purchases
owed from
related parties parties
£’000
£’000
-
6
-
14
During the year the company received a loan amount from a close family member of one of the Directors.
The loan advanced in the year totalled £50,000 (2020: £nil). The balance outstanding at the year end was
£50,707. 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 2021, the Group has not made any provision for doubtful debts relating to
amounts owed by related parties (2020: £nil).
Compensation of key management personnel (including Directors)
The only key management personnel are Directors, and their compensation is disclosed in note 10.
76
The Heavitree Brewery PLC
Registered Number: 30800
Notes to the financial statements
for the year ended 31 October 2021
31. Notes to the cashflow statement
Changes in liabilities arising from financing activities
Group and Company
At 1 Financing
cash flows
November
2020
£’000
£’000
New
finance
leases
£’000
Other
changes
£’000
At 31
October
2021
£’000
Cash
Bank overdraft
49
3
-
-
52
(1,281)
474
––––—— ––––——
-
––––——
-
(807)
––––—— ––––——
Cash and cash equivalents
(1,232)
477
-
-
(755)
══════ ══════ ══════ ══════ ══════
Bank loans
Lease liabilities
11.5% cumulative preference shares
(4,500)
187
(50)
(11)
25
-
-
-
-
-
(71)
-
(4,313)
(96)
(11)
––––—— ––––——
––––——
––––—— ––––——
Liabilities
(4,561)
212
-
(71)
(4,420)
══════ ══════ ══════ ══════ ══════
––––—— ––––——
––––——
––––—— ––––——
Net debt
(5,793)
689
-
(71)
(5,175)
══════ ══════ ══════ ══════ ══════
32. Post balance sheet events
Since the year end Heavitree Inc has sold a material parcel of land and this has resulted in an expected
return of £30,000 to the Group.
77