Restructuring costs (b)
Impairment of equity accounted investment (c)
Reversal of impairment/(impairment) of property, plant & equipment (d)
Rights Issue costs (e)
Operating profit/(loss) exceptional items
Profit on disposal (g)
Finance income (h)
Finance expense (i)
Share of equity accounted investments’ exceptional items (c)
Included in profit/(loss) before tax
Income tax (charge)/credit (j)
Included in profit/(loss) after tax
The Group has continued to account for the ongoing COVID-19 pandemic as an exceptional item and has realised an exceptional credit of €17.5m from operating activities at 28 February 2022 (FY2021: charge of €4.6m). The Group reviewed the recoverability of its debtor book and advances to customers and booked a credit of €7.9m with respect to its provision against trade debtors (FY2021: €6.1m) and a credit of €5.5m with respect to its provision for advances to customers (FY2021: charge of €1.2m). The Group also realised an exceptional credit of €4.1m with respect to inventory (FY2021: charge of €5.8m), this related to inventory that had previously been deemed at risk of obsolescence in FY2021, all as a consequence of the COVID-19 restrictions.
In the prior financial year, the Group also incurred costs of €1.7m with respect to a provision for lost kegs, €0.3m with respect to the write off of an IT intangible asset where the project was not completed due to COVID-19 and a net credit of €0.6m with respect to the release of a trade provision. Other costs of €2.3m were incurred, which included site improvement costs, impairment of brand dispense equipment and an excess holiday accrual all directly linked to the pandemic.
(b) Restructuring costs
A credit of €1.2m relating to restructuring costs was incurred in the current financial year. This included severance costs of €0.6m, all of which arose as a consequence of the optimisation of the delivery networks in England and Scotland. In addition, the Group realised a credit of €1.8m in relation to the profit on disposal of a property, as a direct consequence of the optimisation project.
Restructuring costs of €8.1m were incurred in the prior financial year. These included severance costs of €6.8m, of which €4.9m was incurred with respect to the restructuring of the Group as a consequence of the COVID-19 pandemic and €1.9m arose as a consequence of the optimisation of the delivery networks in England and Scotland. The Group also incurred additional costs of €2.0m with respect to the optimisation of the delivery networks in England and Scotland which was offset by a credit of €0.7m relating to the profit on disposal of a property as a direct consequence of the optimisation project.
(c) Equity accounted investments’ exceptional items
On 17 May 2022, the Group announced the sale of its joint venture investment in Admiral Taverns, to Proprium Capital Partners for a total consideration of €65.8m (£55.0m). The sale of the shares will be completed and the consideration will be paid in three tranches during FY2023, subject only to FCA approval. Admiral Taverns was classified as an asset held for sale as at 24 February 2022.
The net impact of exceptional items in relation to Admiral is a charge of €3.7m (FY2021: €17.7m). The Group continued to equity account for this investment up until this date, with the Group recognising a credit of €2.7m with respect to its share of Admiral Taverns’ exceptional items (FY2021: €8.8m charge). This included a credit of €4.1m with respect to the Group’s share of the revaluation gain arising from the fair value exercise to value Admiral’s property assets (FY2021: €7.0m loss). The Group also recognised an exceptional charge of €1.4m (FY2021: €1.8m) in relation to its share of other exceptional items for the year, including the Group’s share of acquisition costs of €1.4m incurred with respect to Admiral Taverns’ acquisition of Hawthorn. The Group also recognised its share of other exceptional items for the year of €0.5m, primarily relating to restructuring costs. This was offset by a release from the expected loss provision with respect to the recoverability of Admiral Taverns’ debtor book as a consequence of COVID-19 of €0.5m.
As a result of the same property valuation exercise, a gain of €2.2m with respect to the Group’s share of the revaluation was recognised in Other Comprehensive Income (FY2021: €0.4m loss).
Also in the current financial year, the Group assessed the carrying value of its equity accounted investment as a result of its classification as an asset held for sale as at 24 February 2022 and recognised an impairment charge of €6.4m (FY2021: €8.9m). This impairment charge reverses previously accumulated gains and losses in relation to the application of equity accounting for the Admiral Taverns investment, to reflect the recoverable value of the Group’s investment in line with the agreed consideration of £55.0m (€65.9m at date of classification as held for sale, €65.8m at year-end rate).
In the prior financial year, the Group also recorded an impairment charge of €0.2m with respect to the carrying value of its investment in Drygate Brewing Company Limited.
(d) Reversal of impairment of property, plant & equipment
Property (comprising freehold land & buildings) and plant & machinery are valued at fair value on the Consolidated Balance Sheet and reviewed for impairment on an annual basis. During the current financial year, as outlined in detail in note 11, the Group engaged external valuers to value the freehold land & buildings and plant & machinery at the Group’s Clonmel (Tipperary), Wellpark (Glasgow) and Portugal sites. Using the valuation methodologies, this resulted in a net revaluation gain of €0.6m (FY2021: €1.2m net loss) accounted for in the Consolidated Income Statement and a gain of €2.5m (FY2021: €0.9m) accounted for within Other Comprehensive Income.
(e) Rights Issue costs
The Group completed a successful Rights Issue in June 2021 issuing 81,287,315 New Ordinary Shares at 186 pence per New Ordinary Share, raising gross proceeds of £151.2m (€176.3m). Attributable costs of €9.2m were incurred, of which €6.6m was debited directly to Equity and €2.6m was recorded as an exceptional charge in the Group’s Condensed Consolidated Income Statement.
During the current financial year €0.3m was released against a provision for legal disputes (FY2021: €2.2m charge).
(g) Profit on disposal
During the current financial year, as outlined in further detail in note 10, the Group completed the sale of its wholly owned US subsidiary, Vermont Hard Cider Company to Northeast Kingdom Drinks Group, LLC on the 2 April 2021 for a total consideration of €17.5m (USD 20.5m) (comprised of cash proceeds of €13.4m (€12.9m net cash impact on disposal) and promissory notes of €4.1m at the date of transaction), realising a profit of €4.5m on disposal.
During the prior financial year, the Group disposed of its Tipperary Water Cooler business for an initial consideration of €7.4m, realising a profit of €5.8m on disposal.
(h) Finance income
The Group earned finance income of €0.2m (FY2021: €nil) relating to promissory notes issued as part of the disposal of the Group’s subsidiary Vermont Hard Cider Company.
(i) Finance expense
The Group incurred costs of €6.7m (FY2021: €7.9m) during the current financial year directly associated with continued covenant waivers including waiver fees, increased margins payable and other professional fees associated with covenant waivers, negotiated in the prior year due to the impact of COVID-19.
(j) Income tax (charge)/credit
The tax charge in the current financial year, with respect to exceptional items amounted to €2.4m (FY2021: €2.4m credit).