Registered No 00030800
The Heavitree Brewery PLC
Financial Statements
31 October 2023
The Heavitree Brewery PLC
Registered Number: 00030800
Annual report and financial statements
Table of contents
Directors and other information
Notice of annual general meeting
Strategic report
: Chairman’s statement
: Strategic review
: S172 statement
Directors’ report
:Corporate Governance
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
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1
The Heavitree Brewery PLC
Registered Number: 00030800
Directors and other information
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
4th Floor
Bridgewater House
Counterslip
Finzels Reach
Bristol
BS1 6BX
Solicitors
WBW Solicitors
3rd Floor
The Forum
Barnfield Road
Exeter
EX1 1QR
National Westminster Bank PLC
59 High Street
Exeter
Devon
EX4 3DL
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
Tax Advisors
Bishop Fleming
Stratus House
Emperor Way
Exeter Business Park
Exeter
EX1 3QS
Registrars
Computershare Investor Services PLC The Pavilions Bridgewater Road Bristol BS13 8AE
Shareholders’ dedicated telephone number: 0370 707 1063
2
The Heavitree Brewery PLC
Registered Number: 00030800
Notice of annual general meeting
NOTICE IS HEREBY GIVEN that the One Hundred and Thirty Fourth Annual General Meeting of The
Heavitree Brewery PLC will be held at the Company’s offices, Trood Lane, Matford, Exeter on 11 April
2024 at 11.30am to transact the following business:
Ordinary business
1.
To receive and, if thought fit, adopt the financial statements of the Company for the year ended
31 October 2023 and the strategic report and the report of the Directors thereon.
2. To declare final dividends on the Ordinary Shares and the ‘A limited Voting Ordinary Shares.
3. To re-elect G J Crocker as a Director of the Company.
4.
5.
To re-elect K Pease Watkin as a Director of the Company.
To re-appoint PKF Francis Clark as auditor of the Company for the period prescribed in section
489 of the Companies Act 2006.
6.
To authorise the Directors to determine the remuneration of the auditor.
Special business
To consider and, if thought fit, pass the following Resolution as a Special Resolution.
7.
THAT the Company be hereby authorised to purchase up to an aggregate of 276,704 Ordinary
Shares of 5p each and/or 477,371 ‘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 2025 (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
07 March 2024
Trood Lane
Matford
Exeter
EX2 8YP
3
The Heavitree Brewery PLC
Registered Number: 00030800
Notice of annual general meeting
Notes:
1.
2.
3.
4.
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.
The dividend, if approved, will be paid on 19 April 2024 to shareholders on the register on 15
March 2024.
4
The Heavitree Brewery PLC
Registered Number: 00030800
Strategic report
Chairman’s statement
In my statement at the half-year, I reported that the consensus among our tenants was that top line trading
had held up well during the first six months of the year despite the many concerns we all shared about the
pressures to which the trade as a whole was and continues to be subjected. Now that we are reviewing the
full year, I am pleased that the second half of the year has continued in a similar vein and a small increase
in turnover has been achieved. I do feel it is important to understand that very few of the aforementioned
pressures have gone away and it is a reflection of the hard work of our tenants in the pubs combined with
the good support from Head Office that has meant that the pubs continue to trade well in these difficult
times.
Turnover has increased by 0.9% to £7,346,000 (2022: £7,280,000). Rental income has been adjusted, as
in recent years, by the winding down of the rental concessions given during the Covid years in accordance
with the IFRS16 Lease Accounting standard; there has been reduction to revenue of £121,000 (2022:
£230,000). An operating profit for the year for the Group of £1,042,000 has been returned (2022:
£1,422,000).
The reduction in operating profit against the previous year has been as a direct result of a programme of
significant spending on repairs including at the Swan Inn in Lympstone, Henry’s Bar in Exeter and the
Two Mile Oak near Newton Abbot which now have wonderfully improved external trading areas. Further
significant repairs were completed at the Beach in Exmouth and the Horse and Groom in Heavitree. In
total the spend on repairs has reached £1,061,000 (2022: £771,000). Operating profit was further affected
by increased insurance costs inflated by an 18% hike in the rebuild index applied to the base cost.
The Group results are also affected by an impairment cost of £150,000 relating to the Heavitree in
Exmouth
The Company has continued with the programme of selling non-core assets to reduce debt and it is
planned to make a further reduction in the year ahead. Although in the year under review an increase in
net debt of £188,000 has been reported, this is a consequence of a large capital refurbishment at the Ley
Arms (further details below), large repair costs as detailed above and the timing of the sales of a couple of
properties which have been delayed into the new financial year.
Dividend
The Directors are pleased to recommend a final dividend at a rate (unchanged from last year) of 3.5p per
ordinary and ‘A’ limited voting ordinary shares to those shareholders on the Register on 15 March 2024.
The dividend, subject to shareholder approval at the Annual General Meeting to be held on 11 April 2024,
will be paid on 19 April 2024.
5
The Heavitree Brewery PLC
Registered Number: 00030800
Strategic report
Chairman’s statement (continued)
Property
The following properties have been sold during the year under review:
The Jolly Abbot in Newton Abbot.
The Sun Inn in Buckfastleigh.
The Wonford Inn in Exeter.
The Dewdrop Inn in Kingsteignton.
Also, a terraced cottage in Clyst Honiton and a house connected to The Marshalls in Barnstaple (sold in
the previous year) have been sold together with a pocket of garden land in Christow. These sales have
realised a profit of £1,065,000 in total.
The development of the new accommodation block at the Ley Arms in Kenn is close to completion with
the bedrooms being available to book from the beginning of February. The rooms are original in design,
beautifully finished and complement the quality offer at the pub. We wish Karen and Martin every success
with this exciting new addition to their business.
The plans for the rebuild on the Jolly Sailor site in East Ogwell, which was destroyed by fire in 2021, are
being discussed with the local parish council prior to submitting a full application to Teignbridge District
Council
Heavitree Inc.
All final tax returns were filed in the year under review. Our accountants in the USA are awaiting the
issue of a ‘Certificate of Good Standing’ to allow the Texas Secretary of State to finalise the termination
of our American subsidiary.
Bank Facility
Our bank facility with Barclays was renegotiated and renewed for a further five years under slightly better
terms but without any additions or reductions applied. The Directors are grateful for this continued
relationship with Barclays. Please see the Going Concern explanation on page 10 for further details on the
renewal.
During the course of finalising the draft statutory accounts, it was identified that a technical breach in the
debt service covenant as at 31 October 2023 had occurred. The bank are not able to issue a formal waiver
of the breach as the old loan and applicable covenants are no longer in existence following the agreement
of the new loan after the year end. The bank have confirmed that the debt service covenant was not an
appropriate testing mechanism and as the loan has already been replaced with a new facility, there will be
no further action in respect of the breach.
However, due to the requirements of IAS1 the Term Loan balance of £2,065,000 is shown in the balance
sheet of the 2023 financial statements as a current, rather than non-current liability. As a result of the post
year-end renewal, and on the basis that there are no further instances of covenant non-compliance, next
year’s financial statements will show a movement back to non-current liabilities.
6
The Heavitree Brewery PLC
Registered Number: 00030800
Strategic report
Chairman’s statement (continued)
Pension Scheme
The last requirements to achieve the wind-up of the Company’s final salary pension scheme have been
slow to finalise. The regulatory obligation to complete wind-up by 17 January 2024 was not met although
all the delays have been out of the hands of the Trustees and, in turn, the Directors. We are caught up in
the painfully slow process of the insurance companies (of which there are five) providing their annuity
reassignment requirements to allow for direct payments to each individual member. Although immensely
frustrating, the scheme’s actuary is continuing to liaise with insurers and progress is being made. The
scheme’s actuary has also contacted the Pension Regulator and passed on all relevant correspondence. I
shall report further at the half-year.
Prospects
The announcement by the Government to extend the 75% business rates relief for a further 12 months was
received with relief from all operators although the headline announcement failed to draw attention to the
inflationary increase that was implemented. There had been nervousness about a further financial squeeze
which would have been, in the present inflationary climate, difficult to absorb.
The Company has enjoyed a decent start to the new financial year with like-for-like beer sales being ahead
of the previous year. I look forward to further progress during the year ahead.
N H P TUCKER
Chairman
19 February 2024
7
The Heavitree Brewery PLC
Registered Number: 00030800
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 62 Leased and Tenanted public houses. 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 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 S172 statement section on page 12.
Business review
This year has seen our Estate face many economic headwinds including rising food inflation, energy costs
and a rapid rise in interest rates along with continued issues with staff retention and shortages. Despite this
our turnover has held steady with a small increase on last year of 0.9% to £7,346,000 (2022: £7,280,000).
The figures continue to include adjustments for the winding down of the rent concessions under IFRS 16
which in this year has reduced the rental income by £121,000 (2022: £230,000). The Board took the
decision to reinstate a programme of repairs across the estate in the year which had been kept to minimum
since the pandemic to preserve cash, this year’s spend being £1,061,000 (2022: £771,000). While this has
affected the Operating Profit in the year 2023 which totalled £1,042,000 (2022: £1,422,000), investment
in the Estate is a priority for the Directors as this helps trade and to attract new Tenants and retain its
current Tenant base. In the year, the Board has continued with its programme of selling certain assets 7
properties have been sold in the year resulting in a profit of £1,065,000 (2022 £968,000). (for more
information, please see S172 statement on page 12).
The Group has continued to focus on the retention of its current Tenants and attracting new operators for
any vacancies which occur across the Estate. We have had a number of vacancies during the year with all
of them being successfully filled with good, experienced operators. Our trade team have worked closely as
always across the Estate and focussed their attention on helping where possible in the difficult economic
conditions. We have been able to offer some promotions to the Tenants during the year including winter
bounce back offers and vouchers for meal prizes for their customers, to support them where we can. All
factors affecting the economy have had some level of impact across the Estate with some Tenants
reporting almost weekly rises in food costs. Energy costs, while not reaching the high levels predicted,
have affected most Tenants along with our own Head Office energy costs doubling in the year due to
contract changes. While footfall overall has seen a slight decrease, Tenants have worked hard on their
offer and had to make difficult decisions on costs and staffing in order to keep their customer base and
attract new customers.
The Directors have successfully mitigated increases from our main wet suppliers resulting in only a small
increase on beer prices passed to Tenants as opposed to the large percentages being initially proposed by
our suppliers.
We have looked at the offer we provide to Tenants and believe we have continued to have one of the most
competitive Tenancy Agreements within the market as our Tenants have the opportunity to only be tied
for draught beer products.
The combined effect of property and fixed asset sales realised a profit of £1,065,000 and the annual
property review which has been carried out this year has led to one impairment of £150,000 resulting in a
net profit from assets of £915,000 (2022: £968,000). The assets which have been sold in the year were
part of the schedule for disposal within the business plan already agreed by the Board.
8
The Heavitree Brewery PLC
Registered Number: 00030800
Strategic report
Strategic review (continued)
In this year, the Group has sold 7 of the non-core assets in its programme of disposals. Over the last 3
years the Group has sold various properties and parcels of land identified within its assets for sale, with
the schedule being reviewed each year. More properties have been identified for disposal in the next
financial year, two non-core assets and one unlicensed property. The programme of various disposals is
looked at and evaluated at each Board meeting. These sales have enabled the Group to continue to reduce
its Term Loan and preserve cash in the year. For further details on the selling of assets please refer to the
going concern section on page 10.
The Group has managed to achieve a reduction in its term loan of £250,000. While the overdraft facility
has not been used in the year. Due to the programme of repairs carried out in the year, there has been an
increase of £188,000 in net debt in the year. (See the going concern section on page 10 and net debt note
on page 78 for further details). Covenant testing resumed from the 31 October 2022 and our year end
results show that we have achieved one of our covenants but that a technical breach has been shown in the
debt service cover covenant which has resulted in the bank loan being presented as due within one year in
the accounts. This covenant changes with the new bank agreement, which is now in place from November
2023. (See going concern section on page 10 for further details).
The Group continues to work closely and engage with its Tenants on a regular basis to encourage and help
them through the year. With the impact of the cost of living crisis, working with our Tenants closely and
offering help where we can has been of the upmost priority within this year. For a further review of the
business please see the Chairman’s Statement on pages 5-7 which forms part of this report.
The Group’s net assets have increased in the financial year by £1,158,000 to £16,583,000.
Further information on the assets sold can be found in the Chairman’s Statement on pages 5-7 of the
strategic review.
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 remove non trading transactions such as property sales.
This provides useful insight into the Group’s activities before allowing for finance costs.
Group operating profit before taxation of £1,042,000 (2022: operating profit before taxation of
£1,422,000).
Interest cover
This is the Group’s adjusted operating profit before tax, as detailed above, divided by the net finance
costs. This is a useful tool in determining whether the Group can maintain its current level of debt and its
capacity to increase that level. This year’s interest cover is 7.95 (2022: 12.16).
Net debt
The Group is following a longer-term strategy of paying down debt. (Net debt details on page 78)
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. An interim dividend was paid of 2.00p and a final
dividend of 3.5p has been recommended. Please see Chairman’s Statement on page 5 for details.
9
The Heavitree Brewery PLC
Registered Number: 00030800
Strategic report
Strategic review (continued)
Going Concern
The Directors closely monitor the Group’s financial resources. This included a continual review of the
medium-term financial plan, along with sensitised cash flow forecasts for 12 months from the date of
approval of these financial statements. We have seen some of the impact on our Tenants with the
continued increase in prices for food, energy, staffing, along with the continued difficulty of retaining
staff. These factors remain across the Estate and the industry as a whole. This has been taken into account
when forecasting for the coming year and is included within the forecast for the period to April 2025. The
forecast for capital receipts in 2024 includes sales of two non-core assets and one unlicensed property,
with a budgeted estimate of £1.7m. Any further decisions on the sale of assets will be discussed in Board
meetings during the year. These forecasts leave the Group with minimum headroom of over £2m on an
overdraft facility of £3m. The Board will continue to review cashflows as part of its ongoing strategy.
The Board took the decision 3 years ago to accelerate the paying down of its £4.5m Term Loan by the
selling of non-core assets to secure its current position and the long-term trading position of the Group.
The Board originally identified up to 15 non-core assets with a value of between £5m and £7m to be
realised over a period of 2 to 3 years. This has been reviewed each year with some further properties being
added as the process has progressed. These include unlicensed properties and developments with
permissions which are already within the Estate. This year the Group has sold 7 (2022: 8) of the non-core
assets resulting in profits of £1,065,000 being realised from these sales, leaving the balance of the Term
Loan at 31 October 2023 of £2,065,000.
The Board has continued to engage with the bank regarding its facilities and forward trading. After the
year end the Board has negotiated a new 5 Year banking facility including the Term Loan and the £3m
overdraft facility. The overdraft facility terms remain the same with no increase on interest rate over the
base rate. A small reduction in interest rate on the Term Loan over base has been achieved with an
adjustment in the debt service covenant which is now an EBITDA calculation only.
Covenant testing resumed from the 31 October 2022 and our year end results show that we have achieved
one of our covenants but that a technical breach has been shown in the debt service cover, this covenant
changes with the new bank agreement, which is now in place from November 2023. The bank are not able
to issue a formal waiver of the loan as the old loan and applicable covenants are no longer in existence
following the agreement of the new loan after the year end. The bank have confirmed that as the loan has
been replaced with a new facility, there will be no further action in respect of the breach at the year end.
The Directors are satisfied that the Group’s forecasts and projections, which take account of the
anticipated cost of living impact on the Estate. This has been reflected in the budgets with decrease
percentage built in on trade and rental income. The forecasts indicate that the Group will be able to
operate within its new covenants and facilities. The current trading performance of the Group also shows
that it will be able to operate within the level of its facilities and covenant testing for the 12 months from
the date of these financial statements. With value in the Estate being realised over time and with the
support from the bank there are no material uncertainties in relation to going concern. For this reason, the
Group continues to adopt the going concern basis in preparing its financial statements.
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
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.
10
The Heavitree Brewery PLC
Registered Number: 00030800
Strategic report
Strategic report (continued)
Principal risks and uncertainties (continued)
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. 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
enable us able to give the best choice to our Tenants across the Estate in order 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.
Fluctuations in market values of property
The UK property market continues to fluctuate and the rapid rise in interest rates in the last twelve months
has seen it have an effect on the general housing market. 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. The Group carries out an impairment review on an individual pub
basis at each financial reporting date. In this financial year an impairment totalling £150,000 has been
identified. (2022: no impairments). The Group carries out regular reviews of the property portfolio and is
in regular contact with its debt provider. 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.
General economic conditions
The Directors review the material or emerging risks on an ongoing basis. Current risks to the business and
our Tenants are the ongoing cost of living crisis. While inflation has decreased, food costs remain high
and energy costs remain unpredictable with the added pressure for all Tenants to find and retain staff the
year ahead continues to be of concern and will be closely monitored. We continue to see a small impact
on some our more wet led Tenancies with lower wet sales and footfall being lower in these pubs it
increases the risk of Tenants resigning. As the Group operates a Tenanted and Leased Estate the full
impact of these difficulties will not be seen. However, the forecasts prepared for the coming year have
taken all of these factors into account. Other main risks and how we manage them are shown below,
although this is not an exhaustive list of all the risks which we may face.
11
The Heavitree Brewery PLC
Registered Number: 00030800
Strategic report
Strategic report (continued)
Principal risks and uncertainties (continued)
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.
Section 172 statement
In accordance with S172 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
At the end of the last financial year the Board gave the green light to The Ley Arms capital project which
has progressed through this financial year with costs to the Company at the financial year end totalling
over £1m. It is now almost complete with rooms being up and open for business in early 2024 the Tenants
have been involved at each stage of the project resulting in a stylish timber frame seven bedroom country
style B&B offering with a small local produce shop with a food and coffee capacity.
The Board has continued to progress its programme of property disposals with 7 property sales in the
financial year and another completed in January 2024. The Board has remarketed the Locomotive site as
unconditional for sale and this has produced renewed interest.
The Board has looked closely this year at repairs issues within the Estate and many projects have been
given the go ahead in the year, catching up from a restriction on repairs during the pandemic in order to
preserve cash. One of the larger repair projects was an overdue roofing and structural issue at the Horse
and Groom which has contributed to the large spend in the year on repairs, with the total repair and small
capital element on this project costing over £250,000 in the year. The Board also gave the go ahead for
two small refurbishment projects. One at the Market Gate Inn which had a conversion of the old flat to
customer toilets and a garage converted extended to maximise the outside trading area. The second being
the Beach in Exmouth has seen the old function room upgraded which extends the pub trading area to
increase the trading capacity of the pub for both restaurant and general wet trade. The Trade Director and
Tenanted Operations Manager liaise with the Tenants throughout each project undertaken within the
Estate.
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. Having considered all of these factors the Board
took the decision to agree a final dividend of 3.5p per share based on the financial year results to 31
October 2023.
12
The Heavitree Brewery PLC
Registered Number: 00030800
Strategic report
Strategic report (continued)
Section 172 statement (continued)
Customers
The cost-of-living and energy crisis has affected the Estate as a whole especially in food inflation and the
continued problem of staff retention. We have continued to help and support the Tenants, which includes
regular newsletters and direct contact with their Tenanted Operation Managers. The feedback that we
continue to get from the Tenants enables the Board to target any help needed across the Estate, which has
in turn led to keeping a positive and strong relationship with our Tenants and has meant that we have had
very few vacancies during the year.
During normal trading the Board considers, on a monthly basis in Board meetings, any further support it
can offer our Tenants, for example we have continued the winter discount voucher scheme. 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
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, this
has been especially important this year with rising costs across the industry and has enabled the Board to
keep any increases on wet products to a minimum. 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.
13
The Heavitree Brewery PLC
Registered Number: 00030800
Strategic report
Strategic report (continued)
Section 172 statement (continued)
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.
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 £6k was donated in the financial year. 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
19 February 2024
14
The Heavitree Brewery PLC
Registered Number: 00030800
Directors’ report
The Directors have pleasure in submitting their report for the year ended 31 October 2023.
Results and dividends
The profit for the year, after taxation, attributable to shareholders amounts to £1,499,000 (2022:
£1,967,000). The total comprehensive income for the year is £1,504,000 (2022: £1,968,000).
The Directors recommend a final dividend of 3.5p (2022: 3.5p) on the Ordinary and ‘A’ Limited Voting
Ordinary Shares. An interim dividend of 2p was paid (2022: no dividend paid). The fixed dividend of
11.5p per share was paid on the preference shares in the year (2022: 11.5p).
Financial Instruments
As at 31 October 2023 the Group’s total bank borrowings were £2,065,000 (2022: £2,315,000).
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. The Board revises
its investment strategy where needed 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 23.
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.
Information on borrowings and strategies surrounding managing interest rate risk, liquidity risk, capital
risk and credit risk can also be found in note 23.
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 and the continuation of debt reduction.
At the end of this Financial Year the Board renewed the Company’s banking facilities for a further five
years taking effect from November 2023. This includes a renewal of the £3m overdraft facility and a
reduced interest rate on the Term Loan along with a change in the debt service covenant to an EBITDA
covenant only.
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 5-7.
Directors
The Directors of the Company during the year ended 31 October 2023 were those listed on page 2.
G J Crocker and K Pease-Watkin are the Directors retiring by rotation under Article 14 and, being
eligible, offer themselves for re-election.
15
The Heavitree Brewery PLC
Registered Number: 00030800
Directors’ report
Directors’ interests
The interests of the Directors and their spouses in the Company’s shares as at 31 October 2023 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 2023 31 October 2022
‘A’ Limited Voting
Ordinary Shares
31 October 2023
31 October 2022
742,215
-
150,335
27,088
-
-
742,215
-
150,335
27,088
-
-
79,385
75,213
196,992
50,638
86,263
2,223
79,385
64,781
196,992
50,638
77,483
2,223
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
All these interests are beneficial, save for the following non-beneficial interests:
(a) N H P Tucker’s interest in 53,750 (2022: 53,750) Ordinary Shares.
Included in these interests are the following joint holdings:
(a) 53,750 (2022: 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 a three-year notice period. Non-
Executive Directors are appointed by letter for a fixed term of three years.
Substantial interests
At 31 October 2023 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
Mr D Barry
Ordinary
Ordinary
%
‘A’-Limited
Voting
Ordinary
‘A’ Limited
Voting
Ordinary
%
135,380
-
151,643
133,545
-
78,010
125,840
84,108
7.33%
-
8.22%
7.23%
-
4.22%
6.80%
4.55%
270,740
101,369
177,611
186,637
109,000
178,205
-
136,684
8.50%
3.18%
5.58%
5.86%
3.42%
5.59%
-
4.29%
——————
——————
——————
——————
16
The Heavitree Brewery PLC
Registered Number: 00030800
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 this is updated each year for any changes. A full version of this can be found on
our website. A new QCA Code which came into effect in 2023 will be adopted in the financial year 2025.
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 2023, 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, effectiveness is evaluated at each Board meeting along
with yearly appraisals which include skills assessments. 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 and an ICAEW qualified professional. He has no family connection to any of the other
Directors and holds a nominal shareholding only. He is responsible for Board members appraisals which
are completed each financial year along with an independent overview of the Audit. 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 is sought where needed, 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. No advice was sought in the year.
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. For more information, please see principal
risks and uncertainties on page 10.
17
The Heavitree Brewery PLC
Registered Number: 00030800
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 and Board member reviews. 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 9 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
10
10
10
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.
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. Financial information is presented and reviewed at each Board meeting, on a day to day
basis controls are in place to ensure no payments or financial transactions can take place without two
signatures and one being an Executive Director. Each process within the finance and operations
department are done and then verified by another, individual levels of authority and signatures are set up
for all transactions within the Company from orders through to payments, the Board is satisfied it has
robust structures in place.
18
The Heavitree Brewery PLC
Registered Number: 00030800
Directors’ report
Corporate governance (continued)
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 Managing Director, 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. All documents are
reviewed by the whole of the Board, and nothing is signed off until agreed by both Executive and Non-
executive Director’s.
The Board is satisfied that the Group’s 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. Our Head office site actively recycles all
paper produced is recycled through a shred it scheme, Company vehicles where it is possible are electric
or hybrid models and the site contains electric charging points. All of our staff are encouraged in training
and an inclusive culture is promoted within the Head Office environment and any recruitment is carried
out on this basis.
On a Group level within the community, 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. Tenants actively look to support their local communities
where they can and encourage the pub to be the local hub of the community. Our Tenants and our
contractors are actively encouraged to use energy efficient materials and practices wherever possible
The Group is committed to the care of the environment and encourages its contractors and Tenants to use
energy efficient materials and practices wherever possible. The Board is committed to promoting a
healthy corporate culture. The Group actively works with its Tenants and Leaseholders holding monthly
meetings with them conducted by our Tenanted Operations Managers and reviewed and overseen by the
Trade Director.
The Group is committed to training and incentivising its staff, various training schemes are offered along
with different incentives plans including a Group share incentive plan to help staff attain maximum
potential and maintain good practice.
The Group is committed to the highest standards of corporate social responsibility in its activities. The
Group falls below the threshold to report in accordance with the Modern Slavery Act 2015 and antibribery
and corruption regulations, however these areas are looked at within Board and Management meetings.
19
The Heavitree Brewery PLC
Registered Number: 00030800
Directors’ report
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
19 February 2024
20
The Heavitree Brewery PLC
Registered number: 00030800
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
2014
2015
2016
2017
2018
2019
2020
1,404
1,412
1,420
1,778
1,632
1,839
539
1,642
1,173
1,653
1,554
2,251
1,844
414
28.0
18.8
28.0
27.0
39.6
32.0
2.4
2021 (59) 1,114 16.6
7.35
7.35
7.425
7.675
7.925
7.925
-
-
2022
1,422
2,273
40.7
3.5
2023 1,042 1,826 31.0 5.5
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: 00030800
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 UK-Adopted International Accounting Standards. 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 UK–Adopted International Accounting Standards 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 and Group 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
Statements 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: 00030800
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 2023, 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 Accounting Standards (UK-adopted IAS).
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 2023 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 IAS 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, a dormant subsidiary in the UK and a dormant subsidiary in the US.
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.
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: 00030800
Independent auditor’s report
To the members of The Heavitree Brewery PLC
Risk: impairment of property
As detailed in the accounting policies and note 14, the Group has a portfolio of trading properties with a
net book value of £15.8m (2022: £15.6m) and investment properties with a net book value of £2.2m
(2022: £1.2m). 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 low. Accordingly, the risk of a material
impairment in a proportion of the estate is significantly mitigated. Notwithstanding this, given the size and
value of the portfolio, the nature of the industry and the depressed consumer confidence and discretionary
spend as a result of the continued cost of living crisis in the United Kingdom, a key audit risk is the
Group’s assessment of whether there is any impairment to the carrying value of the 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 and empty properties in the year, being a potential
indicator of impairment. We reviewed and challenged the assumptions used by management in making
their assessment, as well as comparing their consideration of market value to relevant local market data
and post year end sales values realised.
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 contribution. We made prudent assumptions in
relation to moderate growth rate and the 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
impairment to the carrying value of the 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 sales of alcoholic and non-alcoholic beverages to, and rent receivable
from, licenced premises. Sales are routine and little judgement is applied. Based on our understanding of
the business and the environment in which it operates, we identified completeness and cut-off as
significant audit risks for these revenue streams. We also considered other industry relevant areas of
potential misstatement such as volume rebates and lease incentives.
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 expected level of volume rebates
and concluded these are not material to the financial statements.
In respect of the rent incentives granted to tenants, we reviewed a sample of agreements and 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.
24
The Heavitree Brewery PLC
Registered number: 00030800
Independent auditor’s report
To the members of The Heavitree Brewery PLC
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: £209k
Performance materiality: £156k
Misstatements considered above triviality: £10k
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.
The Group holds a significant amount of properties in order to carry out their trade. The assessment of
impairment of these properties is a key judgement within the financial statements and a key risk area (as
discussed above). As a result, we have considered it appropriate to base materiality on gross assets and
have applied a materiality level of 1% of the gross assets.
Materiality using adjusted profit before tax is considered a more appropriate basis to assess the licenced
trade of the business. Additional procedures have been performed in key risk areas and where considered
appropriate on trading balances and transactions using testing thresholds set based on 5% of profit before
tax (adjusted for property disposals) at £44k.
During the course of the audit, we reassessed initial materiality but did not consider any changes to
materiality necessary based on the final results.
25
The Heavitree Brewery PLC
Registered number: 00030800
Independent auditor’s report
To the members of The Heavitree Brewery PLC
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.
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. We critically challenged the assumptions used in their preparation and considered the
timing of planned non-core asset sales;
reviewed the outcome of prior year forecasts to assess management’s forecasting accuracy;
reviewed correspondence with the Group’s bankers confirming the Group’s banking facilities;
considered the level of headroom in bank facilities based on management’s cash flow forecasts
and the impact of changing assumptions, particularly around timing of planned non-core asset
sales; and
reviewed the adequacy of the related disclosures in the financial statements.
•
•
•
•
As disclosed in the financial statements, it was identified that the debt service financial covenant relating
to the bank term loan was breached as at 31 October 2023. This breach has caused the bank debt to be
shown as due within one year in the group and company balance sheets. The facility has been renegotiated
since the year end and the debt service covenant has been changed from a cashflow basis to an EBITDA
basis. We therefore reviewed the new covenants and examined likely covenant calculations using
forecasted figures to consider whether there are indications of possible breaches in the new covenants
during the forecast period.
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.
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.
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 this gives rise to a material misstatement in the
financial statements themselves. 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.
26
The Heavitree Brewery PLC
Registered number: 00030800
Independent auditor’s report
To the members of The Heavitree Brewery PLC
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 their environment
obtained in the course of the audit, we have not identified material misstatements in the Strategic Report
or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept, or returns adequate for our audit have not been received
from branches not visited by us; or
•
the financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set out on page 21, 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: 00030800
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), Tenant and Landlord
Act 1985 and health and safety regulations. 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) and taxation 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 is monitored. We
also identified the individuals who have responsibility for ensuring that the group complies with laws and
regulations and deal 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 (in particular around property impairments) 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 under key audit matters.
• 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 2003 (Amended 2007) and Tenant
and Landlord Act and discussed with those responsible for compliance whether there had been any
breaches during the year.
28
The Heavitree Brewery PLC
Registered number: 00030800
Independent auditor’s report
To the members of The Heavitree Brewery PLC
• We discussed health and safety with those responsible for compliance and enquired as to whether there
had been any reportable incidents during the year.
Auditor’s responsibilities for the audit of the financial statements (continued)
• We reviewed minutes of meetings of Senior Management and those charged with governance.
• We 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 statements. 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.
Nicholas Farrant BA MSc FCA (Senior Statutory Auditor)
For and on behalf of
PKF Francis Clark
Statutory Auditor
Centenary House
Peninsula Park
Rydon Lane
Exeter
EX2 7XE
19 February 2024
29
The Heavitree Brewery PLC
Registered number: 00030800
Group income statement
For the year ended 31 October 2023
Revenue
Change in stocks
Other operating income
Purchase of inventories
Staff costs
Depreciation of property, plant and equipment
Other operating charges
Group operating profit
Profit on sale of property, plant and equipment
Impairment of fixed assets
Group profit before finance costs and taxation
Finance costs
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
2023
£’000
Total
2022
£’000
3
7,346
–––——
7,280
––––——
-
-
5
215
211
(2,991)
(2,980)
9
(1,483)
(1,477)
(236)
(228)
(1,809)
(1,384)
––––——
(6,304)
––––——
(5,858)
6
1,042
1,422
8
968
1,065
14 (150) -
––––——
2,390
––––——
1,957
10
(131)
––––——
(117)
––––——
(131) (117)
1,826
2,273
11a
12
12
(327)
––––——
1,499
(306)
––––——
1,967
══════ ══════
31.0p
40.7p
══════ ══════
31.0p
40.7p
══════ ══════
30
The Heavitree Brewery PLC
Registered number: 00030800
Group statement of comprehensive income
for the year ended 31 October 2023
Profit for the year
Notes
2023
£’000
1,499
2022
£’000
1,967
–––––––––––––––
–––––––––––––––
Items that will not be reclassified to profit or loss
Fair value adjustment on investment in equity 25
-
-
Items that may be reclassified to profit or loss
Exchange rate differences on translation of subsidiary undertaking
5
-
1
–––––––––––––––
–––––––––––––––
Other comprehensive income for the year, net of tax
1,504
1,968
Total comprehensive income attributable to:
Equity holders of the parent
–––––––––––––––
–––––––––––––––
1,504
1,968
–––––––––––––––
–––––––––––––––
–––––––––––––––
5
–––––––––––––––
1
31
The Heavitree Brewery PLC
Registered Number: 00030800
Group balance sheet
at 31 October 2023
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
14
14
14b
16
11c
2023
£’000
16,891
2,255
77
Restated
2022
£’000
16,593
1,211
60
–––––––––––––––
19,223
–––––––––––––––
17,864
469
16
362
16
–––––––––––––––
19,708
–––––––––––––––
18,242
–––––––––––––––
–––––––––––––––
17
18
19
10
1,170
373
10
1,303
788
–––––––––––––––
1,553
–––––––––––––––
2,101
–––––––––––––––
70
15
–––––––––––––––
180
–––––––––––––––
21,331
–––––––––––––––
20,523
–––––––––––––––
–––––––––––––––
20
21
11a
(1,005)
(2,101)
(263)
(1,133)
(229)
(339)
–––––––––––––––
(3,369)
–––––––––––––––
(1,701)
–––––––––––––––
–––––––––––––––
20
21
11c
26
(338)
(97)
(852)
(92)
(326)
(2,195)
(784)
(92)
–––––––––––––––
(1,379)
–––––––––––––––
(4,748)
–––––––––––––––
(3,397)
–––––––––––––––
(5,098)
–––––––––––––––
16,583
–––––––––––––––
15,425
–––––––––––––––
–––––––––––––––
32
The Heavitree Brewery PLC
Registered Number: 00030800
Group balance sheet
at 31 October 2023
Capital and reserves
Equity share capital
Capital redemption reserve
Own share reserve
Fair value adjustments reserve
Currency translation
Retained earnings
Total equity
Notes
25
25
25
25
25
25
2023
£’000
251
686
(1,041)
10
19
16,658
2022
£’000
264
673
(1,537)
10
14
16,001
––––––––––––––
16,583
–––––––––––––––
15,425
–––––––––––––––
–––––––––––––––
The notes on pages 42 to 78 form part of the financial statements.
These accounts were approved by the Board of Directors and authorised for issue on 19 February 2024
and were signed on its behalf by
N H P TUCKER )
G J CROCKER ) Directors
33
The Heavitree Brewery PLC
Registered Number: 00030800
Group statement of changes in equity
for the year ended 31 October 2023
Equity
share
capital
£’000
Capital
redemption
reserve
£’000
Own
share
reserve
£’000
Fair value
adjustment
reserve
£’000
Currency
translation
£’000
Retained
earnings
£’000
Total
equity
£’000
264
673
(1,529)
-
-
-
-
-
-
10
-
13
14,034
13,465
-
1,967
1,967
-
1
-
1
–––––
–––––
–––––
–––––
––––––
–––––
––––
-
-
-
-
1
1,967
1,968
–––––
–––––
–––––
–––––
–––––
–––––
––––
-
-
-
-
42
-
(50)
-
-
-
-
-
42
(50)
–––––
–––––
–––––
–––––
––––––
–––––
––––
264
––––––
673
––––––
(1,537)
––––––
10
––––––
14
––––––
16,001
––––––
15,425
––––
At 1 November
2021
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
At 31 October
2022
34
The Heavitree Brewery PLC
Registered Number: 00030800
Group statement of changes in equity
for the year ended 31 October 2023
Equity
share
capital
£’000
Capital
redemption
reserve
£’000
Own
Share
Reserve
£’000
Fair value
adjustment
reserve
£’000
Currency
translation
£’000
Retained
earnings
£’000
Total
equity
£’000
264
673
(1,537)
10
14
16,001
15,425
-
-
-
-
-
-
-
-
-
1,499
1,499
5
-
5
–––––
–––––
–––––
–––––
––––––
–––––
––––
-
-
-
-
5
1,499
1,504
–––––
–––––
–––––
–––––
–––––
–––––
––––
-
-
(13)
-
-
-
13
-
61
(140)
575
-
-
-
-
-
-
-
-
-
-
61
-
(140)
(575)
-
(267)
(267)
–––––
251
–––––
686
–––––
(1,041)
–––––
10
––––––
19
–––––
16,658
––––
16,583
––––––
––––––
––––––
––––––
––––––
––––––
––––
At 1 November
2022
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
Buy back of
own shares
Equity
dividends paid
At 31 October
2023
Details of the reserves can be found in note 25.
35
The Heavitree Brewery PLC
Registered Number: 00030800
Notes
Group statement of cash flows
For the year ended 31 October 2023
Operating activities
Profit for the year
Tax expense
Net finance costs
Profit on disposal of non-current assets and assets held for sale
Impairment of property
Depreciation and impairment of property, plant and equipment
Decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from operations
Income taxes paid
Interest paid
Net cash inflow from operating activities
Investing activities
Proceeds from sale of property, plant and equipment and assets held for sale
Payments to acquire property, plant and equipment
Net cash(outflow)/inflow from investing activities
2023
£’000
1,499
327
132
(1,065)
150
236
133
(130)
2022
£’000
1,967
306
117
(968)
-
228
264
157
–––––––––––––––
1,282
(335)
(166)
–––––––––––––––
781
–––––––––––––––
2,071
(24)
(117)
–––––––––––––––
1,930
––––––––––––––
–––––––––––––––
1,202
(1,774)
2,038
(425)
–––––––––––––––
(572)
–––––––––––––––
1,613
–––––––––––––––
–––––––––––––––
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 lease rental payments
Loan repayment
Mortgage receipts received
Net cash outflow from financing activities
(Decrease)/Increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the year end
13
(1)
(267)
61
(140)
(76)
(252)
51
(1)
-
42
(50)
(34)
(1,998)
41
–––––––––––––––
(624)
–––––––––––––––
(415)
788
–––––––––––––––
373
–––––––––––––––
(2,000)
–––––––––––––––
1,543
(755)
–––––––––––––––
788
–––––––––––––––
–––––––––––––––
19
19
36
The Heavitree Brewery PLC
Registered Number: 00030800
Company balance sheet
at 31 October 2023
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
14
14
14b
16
11c
2023
£’000
16,891
2,255
77
Restated
2022
£’000
16,593
1,211
60
–––––––––––––––
19,223
–––––––––––––––
17,864
503
16
396
16
–––––––––––––––
19,742
–––––––––––––––
18,276
–––––––––––––––
–––––––––––––––
17
18
19
10
1,165
373
10
1,303
788
–––––––––––––––
1,548
–––––––––––––––
2,101
–––––––––––––––
70
15
–––––––––––––––
180
–––––––––––––––
21,360
–––––––––––––––
20,557
–––––––––––––––
–––––––––––––––
20
21
(1,115)
(2,101)
(263)
(1,255)
(229)
(339)
–––––––––––––––
(3,479)
–––––––––––––––
(1,823)
–––––––––––––––
–––––––––––––––
20
21
11c
26
(338)
(97)
(852)
(92)
(326)
(2,195)
(784)
(92)
–––––––––––––––
(1,379)
–––––––––––––––
(4,858)
–––––––––––––––
(3,397)
–––––––––––––––
(5,220)
–––––––––––––––
16,502
–––––––––––––––
15,337
–––––––––––––––
–––––––––––––––
37
The Heavitree Brewery PLC
Registered Number: 00030800
Company balance sheet
at 31 October 2023
Capital and reserves
Equity share capital
Capital redemption reserve
Own share reserve
Fair value adjustments reserve
Cash flow hedging reserve
Retained earnings
Total equity
Notes
25
25
25
25
25
25
2023
£’000
251
686
(1,041)
10
-
16,596
2022
£’000
264
673
(1,537)
10
-
15,927
–––––––––––––––
16,502
–––––––––––––––
15,337
–––––––––––––––
–––––––––––––––
The notes on pages 42 to 78 form part of the financial statements.
As permitted by S408 of the Companies Act 2006, the company has not presented its own profit and loss
account and related notes. The company’s profit for the year was £1,511,000 (2022: £1,986,000)
These accounts were approved by the Board of Directors and authorised for issue on 19 February 2024
and were signed on its behalf by
N H P TUCKER )
G J CROCKER ) Directors
38
The Heavitree Brewery PLC
Registered Number: 00030800
Company statement of changes in equity
for the year ended 31 October 2023
At 1 November 2021
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
Equity dividends paid
At 31 October 2022
Equity
share
capital
£'000
264
-
-
–––––
-
–––––
-
Capital
redemption
reserve
£’000
673
-
-
Own share
reserve
£’000
(1,529)
-
-
Fair value
adjustment
reserve
£’000
10
-
-
Retained
earnings
£’000
13,941
1,986
-
Total
equity
£’000
13,359
1,986
-
–––––
-
–––––
-
–––––
-
–––––
42
–––––
-
–––––
-
–––––
1,986
––––
1,986
–––––
-
––––
42
-
-
(50)
-
-
(50)
-
–––––
264
––––––
-
–––––
673
––––––
-
–––––
(1,537)
––––––
-
–––––
10
––––––
-
–––––
15,927
––––––
-
––––
15,337
––––
39
The Heavitree Brewery PLC
Registered Number: 00030800
Company statement of changes in equity
for the year ended 31 October 2023
Equity
share
capital
£'000
264
-
-
–––––
-
At 1 November 2022
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
Buy back of own shares
Capital
redemption
reserve
£’000
673
-
-
Own share
reserve
£’000
(1,537)
-
-
Fair value
adjustment
reserve
£’000
10
-
-
–––––
-
–––––
-
–––––
-
–––––
61
-
-
(140)
(13)
13
575
–––––
-
–––––
-
-
-
Retained
earnings
£’000
15,927
1,511
-
–––––
1,511
–––––
-
Total
equity
£’000
15,337
1,511
-
––––
1,511
––––
61
-
(140)
(575)
-
Equity dividends paid
At 31 October 2023
-
–––––
251
––––––
-
–––––
686
––––––
-
–––––
(1,041)
––––––
-
–––––
10
––––––
(267)
–––––
16,596
––––––
(267)
––––
16,502
––––
Details of the reserves can be found in note 25.
40
The Heavitree Brewery PLC
Registered Number: 00030800
Notes
Company statement of cash flows
for the year ended 31 October 2023
Operating activities
Profit for the year
Tax expense
Net finance costs
Profit on disposal of non-current assets and assets held for sale
Impairment of property
Depreciation and impairment of property, plant and equipment
Decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from operations
Income taxes paid
Interest paid
Net cash 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 (outflow)/inflow from investing activities
2023
£’000
1,511
327
132
(1,065)
150
236
133
(142)
2022
£’000
1,986
306
117
(974)
-
228
264
182
–––––––––––––––
1,282
(335)
(166)
–––––––––––––––
781
–––––––––––––––
2,109
(24)
(117)
–––––––––––––––
1,968
–––––––––––––––
–––––––––––––––
1,202
(1,774)
-
2,000
(425)
–––––––––––––––
(572)
–––––––––––––––
1,575
–––––––––––––––
–––––––––––––––
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
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the year end
13
(1)
(267)
61
(140)
(76)
(252)
51
(1)
-
42
(50)
(34)
(1,998)
41
–––––––––––––––
(624)
–––––––––––––––
(415)
788
–––––––––––––––
373
–––––––––––––––
(2,000)
–––––––––––––––
1,543
(755)
–––––––––––––––
788
–––––––––––––––
–––––––––––––––
19
19
41
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
1. Authorisation of financial statements
The financial statements of The Heavitree Brewery PLC and its subsidiaries (the “Group”) for the year
ended 31 October 2023 were authorised for issue by the board of Directors on 19 February 2024. 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 UK-Adopted International Accounting
Standards 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 2023. 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 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.
Prior period reclassification
Having considered the nature of the loans/ mortgage’s receivable from Tenants and former Tenants in
both the current and prior financial year, the Directors have deemed it most appropriate to show the loans
due as financial assets rather than other debtors as they were presented last year and as such, the
comparatives have been restated to reclassify the balances in 2022.
42
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
2. Accounting policies (continued)
Going Concern
The Directors closely monitor the Group’s financial resources. This included a continual review of the
medium-term financial plan, along with sensitised cash flow forecasts for 12 months from the date of
approval of these financial statements. We have seen some of the impact on our Tenants with the
continued increase in prices for food, energy, staffing, along with the continued difficulty of retaining
staff. These factors remain across the Estate and the industry as a whole. This has been taken into account
when forecasting for the coming year and is included within the forecast for the period to April 2025. The
forecast for capital receipts in 2024 includes sales of two non-core assets and one unlicensed property,
with a budgeted estimate of £1.7m. Any further decisions on the sale of assets will be discussed in Board
meetings during the year. These forecasts leave the Group with minimum headroom of over £2m on an
overdraft facility of £3m. The Board will continue to review cashflows as part of its ongoing strategy.
The Board took the decision 3 years ago to accelerate the paying down of its £4.5m Term Loan by the
selling of non-core assets to secure its current position and the long-term trading position of the Group.
The Board originally identified up to 15 non-core assets with a value of between £5m and £7m to be
realised over a period of 2 to 3 years. This has been reviewed each year with some further properties
being added as the process has progressed. These include unlicensed properties and developments with
permissions which are already within the Estate. This year the Group has sold 7 (2022: 8) of the non-core
assets resulting in profits of £1,065,000 being realised from these sales, leaving the balance of the Term
Loan at 31 October 2023 of £2,065,000.
The Board has continued to engage with the bank regarding its facilities and forward trading. After the
year end the Board has negotiated a new 5 Year banking facility including the Term Loan and the £3m
overdraft facility. The overdraft facility terms remain the same with no increase on interest rate over the
base rate. A small reduction in interest rate on the Term Loan over base has been achieved with an
adjustment in the debt service covenant which is now an EBITDA calculation only.
Covenant testing resumed from the 31 October 2022 and our year end results show that we have achieved
one of our covenants but that a technical breach has been shown in the debt service cover, this covenant
changes with the new bank agreement, which is now in place from November 2023. The bank are not
able to issue a formal waiver of the loan as the old loan and applicable covenants are no longer in
existence following the agreement of the new loan after the year end. The bank have confirmed that as the
loan has been replaced with a new facility, there will be no further action in respect of the breach at the
year end.
The Directors are satisfied that the Group’s forecasts and projections, which take account of the
anticipated cost of living impact on the Estate. This has been reflected in the budgets with decrease
percentage built in on trade and rental income. The forecasts indicate that the Group will be able to
operate within its new covenants and facilities. The current trading performance of the Group also shows
that it will be able to operate within the level of its facilities and covenant testing for the 12 months from
the date of these financial statements. With value in the Estate being realised over time and with the
support from the bank there are no material uncertainties in relation to going concern. For this reason, the
Group continues to adopt the going concern basis in preparing its financial statements.
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 Benefits Trust are fully consolidated within the financial statements. The
company share incentive plan is not consolidated on the grounds of materiality.
43
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
2. Accounting policies (continued)
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 2023 and no material impact is expected
in respect of the year ended 31 October 2024.
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.
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.
44
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
2. Accounting policies (continued)
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.
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. The mortgages currently held are for previous Tenants who have
purchased a non-core asset for sale.
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.
45
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
2. Accounting policies (continued)
Financial instruments (continued)
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.
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.
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: 00030800
Notes to the financial statements
for the year ended 31 October 2023
2. Accounting policies (continued)
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 26, 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.
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.
Own share reserve
The cost of own shares held by The Heavitree Brewery PLC Employee Benefits Trust is 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 assess impairment of assets at each reporting
date, on a property by property basis. The Directors’ take into consideration trade performance during the
year and open market value as to whether there is an indication that an asset may be permanently
impaired. When necessary external valuations are carried out. This year has seen bank valuations being
done as this is required every seven years. There has been one impairment in the year £150,000 (2022: no
impairment).
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 costs incurred while the
scheme is being wound up. The costs have been estimated as at 31 October 2023 at £92,000. Further
details are given in note 26.
47
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
2. Accounting policies (continued)
Key sources of estimation uncertainty (continued)
Insurance proceeds from Jolly Sailor fire
The Group suffered a fire at the Jolly Sailor 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. Demolition is now
complete. The Directors have made the decision to put plans forward for a small operating pub and shop
plus two cottages to be built on the site. The insurers have confirmed this is covered as long as it is within
the original footprint of the pub. This has is being put to a parish committee meeting to be held in January
2024. There is no liability to rebuild the property at the year end. As a result, no insurance income has
been recognised as, under IAS 37, no reimbursement asset can be recognised in excess of related liability.
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
2023
£’000
5,165
65
––––––
5,230
2022
£’000
5,180
55
––––––
5,235
2,116
2,045
–––––––––––
7,346
–––––––––––
7,280
——————
——————
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.
48
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
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
Revenue is based on the geographical location of customers. All revenue is generated in, and all assets are
held in the United Kingdom.
5. Other operating income
Rents from unlicensed properties
6. Operating profit
This is stated after charging:
Depreciation of property, plant and equipment
Repairs and maintenance of properties
2023
£’000
2022
£’000
215
211
––––––––
–––––––––
215
══════
211
══════
2023
£’000
236
1061
2022
£’000
228
771
══════
══════
Cost of inventories recognised as an expense (included in purchase of inventories) 2,991
══════
2,980
══════
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
- other compliance services
2023
£’000
2022
£’000
55
50
–––––––––––––––
2
6
–––––––––––––––
8
–––––––––––––––
63
–––––––––––––––
2
5
–––––––––––––––
7
–––––––––––––––
57
–––––––––––––––
–––––––––––––––
Other compliance services relate to a review of the Group’s Interim Report of £6,000 (2022: £5,000).
49
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
8. Profit on sale of property, plant and equipment
Profits on sale of property, plant and equipment
Impairment of property
2023
£’000
1,065
(150)
══════
2022
£’000
968
-
══════
Profit on disposal of non-current assets represents gains 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. Staff costs and Directors’ emoluments
(a) Staff costs
Wages and salaries
Social security costs
Other pension costs
2023
£’000
1,203
139
141
––––——
1,483
══════
2022
£’000
1,152
137
188
––––——
1,477
══════
Included in other pension costs is £65,567 (2022: £66,155) 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. The Company operates an Inland Revenue approved share incentive
plan for its employees. Employees (including Directors) can purchase shares in the scheme and the
Company can match these shares and issue free shares. The maximum amounts the Company can issue
are within the Inland Revenue maximum allowances. The total cost in the year of the issue of these shares
by the Company is £48,735 (2022: £25,337). The scheme is not consolidated into the accounts as it is
immaterial to the group.
The average monthly number of employees during the year including Executive Directors was made up as
follows:
Average monthly number of employees
2023
No.
15
2022
No.
16
══════
══════
50
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
9. Staff costs and Directors’ emoluments (continued)
(b) Directors’ emoluments
Basic Performance
salary and
fees
£’000
191
188
177
19
19
19
N H P Tucker
G J Crocker
T Wheatley
T P Duncan
K Pease-Watkin
C J Bush
Pension
related
bonus Benefits contributions
£’000 £’000
£’000
27
12
11
-
-
-
2
1
12
-
-
-
-
-
-
-
-
-
Total
2023
£’000
220
201
200
19
19
19
Total
2022
£’000
205
188
186
18
18
18
––––——
613
––––——
––––—— ––––——
15
––––—— ––––——
50
––––——
-
––––——
––––——
678
––––——
––––—
633
––––——
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 £220,000
(2022: £205,000). The number of Directors accruing pension benefits is nil (2022: nil). The highest paid
Director has an accrued pension entitlement of £nil (2022: £nil) arising from past membership of the
defined benefit scheme. During the year, shares were awarded to G J Crocker and T Wheatley with a
value of £7,198 as part of the company share incentive plan.
10. Finance costs
Interest on bank loans and overdrafts
Interest on other loans (including cumulative preference shares)
Interest received on loans and mortgages
Total finance costs
2023
£’000
145
20
(34)
2022
£’000
106
11
-
–––––––––––––––
131
–––––––––––––––
117
–––––––––––––––
–––––––––––––––
51
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
11. 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
Adjustments in respect of prior periods
Changes in tax rates
Total deferred tax
Tax expense in the income statement
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
2023
£’000
263
(4)
-
2022
£’000
339
(83)
-
–––––––––––––––
259
–––––––––––––––
256
–––––––––––––––
–––––––––––––––
67
1
-
32
18
-
–––––––––––––––
68
–––––––––––––––
327
–––––––––––––––
50
–––––––––––––––
306
–––––––––––––––
–––––––––––––––
2023
£’000
2022
£’000
-
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
–––––––––––––––
52
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
11. Taxation (continued)
(b) Reconciliation of the total tax expense
The tax expense in the income statement for the year is lower than the (2022: lower than) standard rate of
corporation tax in the UK of 25% (2022: 19%). The differences are reconciled below:
Accounting profit before income tax
Accounting profit multiplied by a blended rate as the rate
changed within the financial year a rate of
corporation tax of 22.52% was used (2022: 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
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
2023
£’000
2022
£’000
1,826
2,273
–––––––––––––––
–––––––––––––––
414
432
(191)
(157)
(6)
(4)
1
-
107
6
(8)
(83)
18
3
94
7
–––––––––––––––
327
–––––––––––––––
306
–––––––––––––––
–––––––––––––––
2023
£’000
2022
£’000
858
(6)
790
(6)
–––––––––––––––
852
–––––––––––––––
784
–––––––––––––––
–––––––––––––––
53
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
11. Taxation (continued)
(c) Deferred tax (continued)
Deferred tax asset
Pension plans
2023
£’000
2022
£’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
Change in tax rates on opening balances
Deferred income tax expense
2023
£’000
68
-
2022
£’000
32
18
–––––––––––––––
68
–––––––––––––––
50
–––––––––––––––
–––––––––––––––
54
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
12. 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
2023
£’000
2022
£’000
1,499
1,967
–––––––––––––––
–––––––––––––––
2023
2022
Basic weighted average number of shares (excluding own share reserve)
4,840
4,834
–––––––––––––––
–––––––––––––––
13. Dividends paid and proposed
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2022: 3.5p (2021: nil)
First dividend for 2023: 2.00p (2022: nil)
Less: dividends on shares held within employee share schemes
Dividends paid
2023
£’000
2022
£’000
176
101
(10)
-
-
-
–––––––––––––––
267
–––––––––––––––
-
–––––––––––––––
–––––––––––––––
Proposed for approval at AGM (not recognised as a liability as at 31 October 2023)
Final dividend for 2023: 3.5p (2022: 3.5p)
176
176
Cumulative preference dividends
–––––––––––––––
–––––––––––––––
1
1
–––––––––––––––
–––––––––––––––
55
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
14. Property, plant and equipment
Group
At 31 October 2021
Additions
Transfer to assets held
for sale
Transfer to investment properties -
(45)
Disposals
Land and Furniture Equipment
buildings and fittings and vehicles
£’000
£’000
£’000
405
3,229
15,670
195
183
96
-
-
(35)
Investment
properties
£’000
1,490
-
(279)
-
(452)
-
(157)
-
-
Total
£’000
20,794
474
(314)
-
(654)
At 31 October 2022
––––––––––––––
15,686
––––––––––––––
2,960
–––––––––––––
443
–––––––––––––––
1,211
–––––––––––––––
20,300
––––––––––––––
15,686
1,496
(79)
At 31 October 2022
Additions
Transfer to assets held
for sale
Transfer to investment
Properties
Transfer from current inventories
Disposals
(1,037)
-
(9)
––––––––––––––
2,960
217
(12)
–––––––––––––
443
91
-
–––––––––––––––
1,211
25
(18)
–––––––––––––––
20,300
1,829
(109)
-
39
(15)
-
-
(39)
1,037
-
-
-
39
(63)
At 31 October 2023
––––––––––––––
16,057
––––––––––––––
3,189
–––––––––––––
495
–––––––––––––––
2,255
–––––––––––––––
21,996
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
-
-
56
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
14. Property, plant and equipment (continued)
Group
Land and Furniture Equipment
buildings and fittings and vehicles
£’000
£’000
£’000
Investment
properties
£’000
Total
£’000
Depreciation:
At 31 October 2021
Provided during the year
Transfer from current assets
Disposals
Transfers out
At 31 October 2022
Provided during the year
Transfer from current assets
Impairment
Disposals
Transfers out
At 31 October 2023
Net book value
At 31 October 2023
Net book value
At 31 October 2022
Net book value at
31 October 2021
110
-
2483
110
-
-
-
-
148
-
(452)
275
68
-
(136)
-
––––—— ––––—— ––––——
207
65
-
-
(9)
-
––––—— ––––—— ––––——
263
2,179
157
7
-
(15)
-
150
(1)
-
2,328
259
-
-
-
-
-
––––——
-
-
-
-
-
-
––––——
-
2868
216
-
(588)
-
––––——
2,496
222
7
150
(25)
-
––––——
2,850
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
15,798
19,146
––––––– –––––––– –––––––– –––––––––– ––––––––
2,255
861
232
15,576
781
236
1,211
17,804
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
15,560
746
130
1,490
17,926
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
In the Directors’ opinion the investment properties have a fair value as at 31 October 2023 of £3,265,000
(2022: £1,710,000). The investment properties are held at cost in accordance with IAS 40 and the fair
value has been considered and 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 (2022: £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 22.
In performing the annual review of property values, the Directors considered that ongoing changes in
trading circumstances at one of the Estate's licenced properties resulted in an impairment adjustment of
£150,000. The considered fair value of the asset in the estate is £750,000.
57
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
14. Property, plant and equipment (continued)
Company
Land and Furniture Equipment
buildings and fittings and vehicles
£’000
£’000
‘£000
Investment
properties
£’000
15,625
Cost:
At 31 October 2021
96
Additions
Transfer to assets held for sale (35)
Transfer to investment properties -
Disposals
Transfer between categories
-
-
3,229
183
-
-
(452)
-
407
195
-
-
(159)
-
1,490
-
(279)
-
-
-
Total
£’000
20,751
474
(314)
-
(611)
-
––––––––––––––
15,686
1,496
(79)
At 31 October 2022
Additions
Transfer to assets held for sale
Transfer to investment
Properties
Transfer from current inventories
Disposals
Transfer between categories
(1,037)
-
(9)
-
––––––––––––––
2,960
217
(12)
–––––––––––––
443
91
-
–––––––––––––––
1,211
25
(18)
–––––––––––––––
20,300
1,829
(109)
-
39
(15)
-
-
-
(39)
-
1,037
-
-
-
-
39
(63)
-
At 31 October 2023
––––––––––––––
16,057
––––––––––––––
3,189
–––––––––––––
495
–––––––––––––––
2,255
–––––––––––––––
21,996
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
Depreciation and impairment:
At 31 October 2021
2,483
Provided during the year
148
Transfer from assets
-
(452)
Disposals
Transfer between categories - -
110
-
-
-
274
68
-
(135)
-
-
-
-
-
-
2,867
216
-
(587)
-
At 31 October 2022
Provided during the year
Transfer from assets
Impairment
Disposals
Transfer between categories
110
–––––––––––––––––––––––––––– ––––––––––––––––––––––––
207
65
-
-
(9)
2,496
222
7
150
(25)
2,179
157
7
-
(15)
150
(1)
-
-
-
-
-
––––––––––––––
––––––––––––––
–––––––––––––
––––––––––––––
–––––––––––––––
At 31 October 2023
259
2,328
263
-
2,850
Net book value at
At 31 October 2023
Net book value at
31 October 2022
Net book value at
31 October 2021
––––––––––––––
––––––––––––––
–––––––––––––
–––––––––––––––
–––––––––––––––
15,798
861
232
2,255
19,146
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
15,576
781
236
1,211
17,804
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
15,515
746
133
1,490
17,884
––––––––––––––
–––––––––––––– ––––––––––––––
–––––––––––––––
–––––––––––––––
58
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
14. Property, plant and equipment (continued)
In the Directors’ opinion the investment properties have a fair value as at 31 October 2023 of £3,265,000
(2022: £1,710,000). The investment properties are held at cost and the fair value has been considered and
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.
In performing the annual review of property values, the Directors considered that ongoing changes in
trading circumstances at one of the Estate's licenced properties resulted in an impairment adjustment of
£150,000. The considered fair value of the asset in the estate is £750,000.
Included within land and buildings is £594,000 (2022: £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 22.
14b. Right of Use Asset
Group and Company
Motor vehicles Property
£’000
£’000
At 31 October 2022 35
Additions 39
Disposals -
49
-
-
Total
£’000
84
39
-
–––––––––––––––
At 31 October 2023 74
–––––––––––––––
49
–––––––––––––––
123
–––––––––––––––
–––––––––––––––
–––––––––––––––
Depreciation
At 31 October 2022 10
Provided during the year 15
Disposals - - -
14
7
24
22
–––––––––––––––
At 31 October 2023 25
–––––––––––––––
21
–––––––––––––––
46
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
NBV at 31 October 2023 49
–––––––––––––––
28
–––––––––––––––
77
–––––––––––––––
NBV at 31 October 2022 25
–––––––––––––––
35
–––––––––––––––
60
–––––––––––––––
–––––––––––––––
–––––––––––––––
59
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
15. Non-current assets held for sale
Group and Company
At 1 November 2022
Transfer (to)/from property, plant and equipment (note 16)
Additions
Disposals
At 31 October 2023
2023
£’000
180
109
-
(219)
2022
£’000
883
314
14
(1,018)
–––––––––––––––
70
–––––––––––––––
180
–––––––––––––––
–––––––––––––––
As at 31 October 2023 two properties were being actively marketed for sale (2022 – three properties).
16. Financial assets
Group
Financial assets – non-current
Financial assets measured at fair value through
Other comprehensive income
Financial assets at amortised cost (mortgages)
At 31 October 2023
2023
£’000
2022
£’000
34
435
––––––––
469
34
328
––––––––
362
–––––––––––––––
–––––––––––––––
Financial assets, measured at fair value through other comprehensive income consist of an investment in
ordinary shares of a company listed on Aquis markets. Financial assets at amortised cost are mortgages
provided to previous tenants to purchase property. The company holds security against these properties.
The loans are being paid over 10-15 years. See below in the company note for more information.
Subsidiary
Company
Mortgages undertakings
£’000
£’000
Cost:
At 1 November 2022 365
Loan advance 125
86
-
Investments
£’000
55
-
Total
£’000
506
125
–––––––––––––––
At 31 October 2023 490
–––––––––––––––
86
–––––––––––––––
55
–––––––––––––––
631
Amounts provided or paid:
At 1 November 2022 (37)
Amounts paid in the year (18)
(52)
-
(21)
-
(110)
(18)
–––––––––––––––
At 31 October 2023 (55)
–––––––––––––––
(52)
–––––––––––––––
(21)
–––––––––––––––
(128)
–––––––––––––––
Net book value:
At 31 October 2023 435
–––––––––––––––
–––––––––––––––
–––––––––––––––
34
34
503
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
At 31 October 2022 328
34
34
396
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
60
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
16. Financial assets(continued)
The Company’s subsidiary undertakings are as follows:
Name of Company
Heavitree Inc
Country of
registration (or
incorporation)
and operation
USA
Holding
Common Stock
Proportion
held
100%
Nature of
business
Ownership of
freehold land
Heavitree inc USA the final piece of land was sold during the year a process has been started to wind up
this Company.
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
17. Inventories
Group and Company
Fine wines
Merchandising inventory
18. 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
2023
£’000
6
4
2022
£’000
6
4
–––––––––––––––
10
–––––––––––––––
10
–––––––––––––––
–––––––––––––––
2023
£’000
2022
£’000
505
449
86
130
493
585
13
212
–––––––––––––––
1,170
–––––––––––––––
1,303
–––––––––––––––
–––––––––––––––
2023
£’000
2022
£’000
505
449
81
130
493
585
13
212
–––––––––––
1,165
–––––––
–––––––––––
1,303
–––––––
61
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
18. Trade and other receivables (continued)
Mortgages given to Tenants to purchase assets for sale have now been re-classified under non-current
financial assets, previously this was included within other debtors.
Trade receivables are all denominated in sterling.
An allowance has been made for estimated irrecoverable amounts of £103,930 (2022: £95,847). 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% (2022: 11%). 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 2023, trade receivables at nominal value of £103,930 (2022:
£95,847) were considered to be fully impaired and the Directors have included a specific provision over
the expected credit losses in respect of these. Movements in the provision for impairment of receivables
were as follows:
At 1 November 2022
(Credit)/charge for the year
Amounts written off
At 31 October 2023
2023
£’000
96
7
-
2022
£’000
87
9
-
–––––––––––––––
103
–––––––––––––––
96
–––––––––––––––
–––––––––––––––
As at 31 October 2023, the analysis of trade receivables that were past due but not impaired and for where
no provision has been included in the accounts 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
2023
2022
505
493
379
462
38
22
75
8
13
1
62
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
19. Cash and cash equivalents
Group and Company
Cash at bank and in hand
2023
£’000
2022
£’000
373
788
–––––––––––––––
373
–––––––––––––––
788
–––––––––––––––
–––––––––––––––
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
20. 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-Group and company
Other payables - tenants’ deposits
2023
£’000
373
-
2022
£’000
788
-
–––––––––––––––
373
–––––––––––––––
788
–––––––––––––––
–––––––––––––––
2023
£’000
406
99
292
208
2022
£’000
462
187
264
220
–––––––––––––
1,005
–––––––––––––––
1,133
–––––––––––––––
–––––––––––––––
2023
£’000
2022
£’000
406
99
292
208
110
462
187
264
220
122
–––––––––––––––
1,115
–––––––––––––––
1,255
–––––––––––––––
–––––––––––––––
338
326
–––––––––––––––
–––––––––––––––
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: 00030800
Notes to the financial statements
for the year ended 31 October 2023
21. Financial liabilities
Group and Company
Current
Bank loan
Lease liabilities
2023
£’000
2022
£’000
2,065
36
184
45
–––––—— –––––——
2,101
229
–––––––––––––––
–––––––––––––––
At the year end the Group was in breach of one covenant under its old facility resulting in the bank
Loan being classified as a current liability. A new facility and revised covenant are now in place from the
new financial year. As a result of the post year-end renewal of banking facilities, and on the basis that
there are no further instances of covenant non-compliance, next year’s financial statements will show a
movement back to non-current liabilities. For further details please see going concern on page 10.
Non-current
11.5% cumulative preference shares (note 24)
Bank loan
Lease liabilities
2023
£’000
11
-
86
2022
£’000
11
2,131
53
–––––—— –––––——
97
2,195
–––––––––––––––
–––––––––––––––
The bank loan and overdraft are secured over certain of the Group’s freehold properties by a first legal
charge to the value. A revaluation was done in the year as per the banking agreement the value is now
£21,665,000 (2022: £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
2023
£’000
2022
£’000
36
86
45
53
-
–––––—— –––––——
122
98
–––––––––––––––
–––––––––––––––
Included in the obligations under lease liabilities are £64,000 (2022: £45,000) in respect of Motor vehicle
HP liability, £33,000 (2022:£17,000) in respect of motor vehicle right of use assets and £24,000
(2022:£35,000) in respect of right of use asset on Property.
64
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
22. 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
2023
£’000
2
1,073
838
573
446
3,042
2022
£’000
1,925
1,113
640
538
342
2,288
–––––––––––––––
7,809
–––––––––––––––
6,846
–––––––––––––––
–––––––––––––––
As a lessor the Group gave various rent concessions during the year 2020 and 2021, resulting in a
reduction in rents received in the year which is reflected in the above table. In accordance with IFRS 16
the revised total rent receipts are being recognised on a straight line basis over the lease term.
23. 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: 00030800
Notes to the financial statements
for the year ended 31 October 2023
23. 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 (none were used in the year), 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.
2023
Sterling
Sterling
2022
Sterling
Sterling
Increase/
decrease in
basis points
Effect on
profit
before tax
£000
+100
-100
+100
-100
(16)
16
(16)
16
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: 00030800
Notes to the financial statements
for the year ended 31 October 2023
23. 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. The covenants that applied at the year end are gross borrowings : EBITDA
calculation of no more than 3:1 and debt service cover of no less than 1.25. At 31 October 2023 Gross
borrowings: EBITDA was 1.62 and debt service cover was 0.26 which is a breach in covenant.
As at the year end, the loan is presented as a current liability as a result of the breach. The covenants have
been renegotiated since the year end and the basis of calculation of the debt service covenant has been
changed from an available cash flow basis to an EBITDA basis. The bank have confirmed that as the loan
has been replaced with a new facility, there will be no further action in respect of the breach at the year
end.
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 2023
and 2022 based on contractual undiscounted payments.
Year ended 31 October 2023
Less than
On demand 3 months
£’000
£’000
2,065
-
406
36
-
-
-
3-12
months
£’000
-
-
-
1-5 years
£’000
-
338
-
86
More
than
5 years
£’000
-
-
-
-
Total
£’000
2,065
338
406
122
––––––––––
––––––––––
–––––––––––
–––––––––––
–––––––––––
––––––––––
Bank loan/overdraft
Tenants’ deposits
Trade payables
Lease liabilities
Year ended 31 October 2022
Less than
On demand 3 months
£’000
-
-
-
-
£’000
184
-
462
45
3-12
months
£’000
-
-
-
-
1-5 years
£’000
2,131
326
-
53
More
than
5 years
£’000
-
-
-
-
Total
£’000
2,315
326
462
98
––––––––––
––––––––––
–––––––––––
–––––––––––
–––––––––––
––––––––––
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: 00030800
Notes to the financial statements
for the year ended 31 October 2023
23. Financial instruments and derivatives (continued)
Credit risk
There are no significant concentrations of credit risk within the Group the two largest financial assets are
three mortgages with a carrying value of £435,000 (2022: £328,000) which are secured on property to
which they relate. 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.
68
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
23. Financial instruments and derivatives (continued)
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
2023
£’000
373
34
435
Fair
value
2023
£’000
373
34
435
Book
value
2022
£’000
788
34
328
Fair
value
2022
£’000
788
34
328
–––––––––––––––
842
–––––––––––––––
842
–––––––––––––––
1,150
–––––––––––––––
1,150
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
Financial liabilities
Bank loan/overdraft*
Interest-bearing loans and borrowings:
Floating rate borrowings
Tenants’ deposits*
Cumulative preference shares*
Lease liabilities*
Level 2
(2,065)
(2,065)
(2,315)
(2,315)
Level 3
Level 3
Level 2
(338)
(11)
(122)
(338)
(11)
(122)
(326)
(11)
(98)
(326)
(11)
(98)
–––––––––––––––
(2,536)
–––––––––––––––
(2,536)
–––––––––––––––
–––––––––––––––
(2,750)
(2,750)
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
* denotes amortised cost ** financial liabilities at fair value
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 16).
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.
69
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
23. Financial instruments and derivatives (continued)
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 2023 and 31 October 2022 there were no transfers between level 1, 2
or 3 fair value measurements.
70
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
24. Issued share capital
Group and Company
(i) Ordinary shares
Ordinary shares of 5p each
‘A’ limited voting Ordinary shares of 5p each
Unclassified shares of 5p each
2023
£
2022
£
92,235
159,124
936,946
99,735
164,124
924,446
–––––––––––––––
1,188,305
–––––––––––––––
1,188,305
–––––––––––––––
–––––––––––––––
Allotted, called up and fully paid
2023
No.
2022
No.
2023
£
2022
£
Ordinary Shares of 5p each
At 1 November
Purchases
At 31 October
1,994,699
(150,000)
1,994,699
-
99,735
(7,500)
99,735
-
–––––––––––––––
1,844,699
–––––––––––––––
1,994,699
–––––––––––––––
92,235
–––––––––––––––
99,735
–––––––––––––––
–––––––––––––––
–––––––––––––––
–––––––––––––––
‘A’ Limited Voting Ordinary Shares of 5p each
At 1 November
Purchases
At 31 October
2023
No.
2022
No.
2023
£
2022
£
3,282,478
(100,000)
3,282,478
-
164,124
(5,000)
164,124
-
–––––––––––––––
3,182,478
–––––––––––––––
3,282,478
–––––––––––––––
159,124
–––––––––––––––
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.
71
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
24. Issued share capital (continued)
(ii) Preference shares classified as non-current liability
11.5% Cumulative Preference Shares of £1 each
2023
£
2022
£
11,695
11,695
–––––––––––––––
–––––––––––––––
Allotted, called up and fully paid
2023
No.
2022
No.
2023
£
2022
£
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 15 in the Directors’ report.
25. 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, and ‘A’ limited Voting Ordinary Shares.
Own share reserve
Own share reserve represents the cost of The Heavitree Brewery PLC shares purchased in the market and
held by The Heavitree Brewery PLC Employee Benefits Trust (‘EBT’).
At 31 October 2023, the Group held 98,938 Ordinary Shares and 59,641 ‘A’ Limited Voting Ordinary
Shares (2022: 210,335 Ordinary Shares and 195,386 ‘A’ Limited Voting Ordinary Shares) of its own
shares. During the year there were purchases of 38,603 Ordinary Shares and sales of 23,393 ‘A’ Limited
Voting Ordinary Shares.
72
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
25. 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.
26. Pensions and post-retirement benefits
Group and Company
(i)
Pension payments
During the year the Group made discretionary pension payments of £4,641 (2022: £3,777) 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 £65,567 (2022: £66,155).
(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.
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.
73
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
26. Pensions and post-retirement benefits (continued)
Amounts included in the Balance Sheet
31 October 31 October 31 October
2021
£’000
2022
£’000
2023
£’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 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
2023
£’000
2022
£’000
110
-
-
-
-
-
-
-
-
110
-
-
-
-
-
-
-
-
–––––––––––––––
–––––––––––––––
110 110
–––––––––––––––
–––––––––––––––
74
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
26. 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
2023
£’000
2022
£’000
18
-
-
-
-
-
18
-
-
-
-
-
–––––––––––––––
18
–––––––––––––––
18
–––––––––––––––
–––––––––––––––
The actual return on the plan assets over the period ended 31 October 2023 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
2023
£’000
-
-
2022
£’000
-
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
–––––––––––––––
2023
£’000
-
-
-
-
2022
£’000
-
-
-
-
–––––––––––––––
-
–––––––––––––––
-
–––––––––––––––
––––––––––––––-–
75
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
26. Pensions and post-retirement benefits (continued)
Plan assets
Corporate Bonds
Government Bonds
Cash
Insured Contract
Total assets
31 October 31 October 31 October
2021
£’000
2023
£’000
-
-
18
-
2022
£’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
2023.
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
2021
% per annum % per annum % per annum
1.80
2022
2023
5.00
5.00
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 fully covered by purchased annuities.
76
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
27. 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 was 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 2023
31 October 2022
Sales to
related parties
£’000
85
117
from related
Trading amounts Purchases
owed from
related parties parties
£’000
£’000
-
-
-
9
During the previous year the company received a loan amount from a close family member of one of the
Directors. The loan advanced in this year totalled £nil (2022: £50,000) and an amount of £70,000 was
repaid from a previous loan. The balance outstanding at the year end was £3,354 (2022: £71,674). Interest
is accrued on the loans at 1.5% 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 2023, the Group has not made any provision for doubtful debts relating to
amounts owed by related parties (2022: £nil).
Compensation of key management personnel (including Directors)
The only key management personnel are Directors, and their compensation is disclosed in note 9.
77
The Heavitree Brewery PLC
Registered Number: 00030800
Notes to the financial statements
for the year ended 31 October 2023
28. Notes to the cashflow statement
Group and Company
At 1 Financing
cash flows
November
2022
£’000
£’000
New
finance
leases
£’000
Other
changes
£’000
At 31
October
2023
£’000
Cash
Bank overdraft
788
(415)
-
-
-
-
-
-
373
-
Cash and cash equivalents
788
(415)
-
-
373
═════ ══════ ══════ ══════
══════
–––—— ––––——
––––——
–––——
––––——
Bank loans
Lease liabilities
11.5% cumulative preference shares
(2,315)
250
-
(98)
(11)
76
(94)
-
-
-
(5)
-
(2,065)
(121)
(11)
––––—— ––––——
––––——
––––——
––––——
Liabilities
(2,424)
326
(94)
(5)
(2,197)
══════ ══════ ══════ ══════
══════
Net debt
(1,636)
(89)
(94)
(5)
(1,824)
══════ ══════ ══════ ══════
══════
78