Heartwood Collection CEO – momentum from ‘momentous’ year has carried into current financial year, refinances debt facilities: Heartwood Collection chief executive Richard Ferrier has said the momentum from a “momentous” year for the company has carried into its current financial year, and that it has refinanced its debt facilities with, making an extra £6m available. The company’s accounts for the year to 30 June 2024 show revenue grew revenue grew by 12.6% from £60,291,000 in 2023 to £67,900,000. Site Ebitda grew from £10,943,000 to £11,689,000, with gross margin improving from 73.2% to 73.3%. The company said this growth is attributed both to new site openings in the year and a positive trend, with like for like sales in 3% growth. The company said its strength lies in its pub and restaurant sales volumes, and that once fixed costs are covered, the highest volume outlets “convert to profit well”. The company’s pre-tax loss more than doubled from £6,839,000 to £15,330,000. The key factor in this, the company said, was financing costs of £13.2m, although only £6m of this was cash paid in the year as the remainder is accruing on shareholder debt. In addition, it said central overheads of £6.7m and depreciation of fixed assets of £5.2m are “reflective of the significant investment of capital in the ongoing growth of business”. Ferrier said: “It was a momentous year for us as we opened our first pub with rooms in Dorking and continued to grow through our freehold expansion strategy. The momentum has carried into the current financial year, which has already seen the successful opening of four additional pubs with rooms and three standalone pubs. I am immensely grateful to everyone at Heartwood Collection for their dedication, passion, and camaraderie.” Ferrier said the company’s first pub with rooms had seen “brisk initial trading” and “heralded a successful launch into accommodation”. Since then, a further five pubs with rooms have launched – the most recent being The Ragged Robin in Godalming, Surrey, last week. Overall, the current financial year has already seen the opening of seven new locations, bringing its total to 31 Heartwood Inns pubs and 14 Brasserie Blanc restaurants across the UK. Its next opening will be The George & Dragon in Marlow, Buckinghamshire, on Tuesday, 15th July – with The Red Lion in Stratford upon Avon, Warwickshire, The Old Crown in Bookham, Surrey, and The Woodman in Southgate, London, already confirmed to follow this in 2025. Post year end, in May 2025, the group refinanced all its existing debt facilities with OakNorth Bank. The overall facility available has been increased from £75m to £81m and the new facility runs to July 2028, with repayments commencing from April 2026. This follows a new debt facility of £25m agreed in November 2024 with Heritable Development Finance, primarily to fund new site acquisition and development, with £12m so far committed to ongoing projects. In his statement in the company’s accounts, executive chairman Mark Derry added: “Beyond the wider environment, the sector itself faced further challenges. Energy costs remained high throughout the year in comparison to previous years, duty on alcohol has increased and food inflation, like energy, while easing as the year progressed, nonetheless was a constant test. In such a labour-intensive industry, our single biggest investment is in our employees. The single greatest threat is the unsustainable year on year increases in national living wage. Another 10% hike in the living wage in April 2024 highlighted that in all but one of the last seven years recorded wage increases at twice the rate of inflation. Conservative and now Labour governments alike, based on the recommendations of the Low Pay Commission, have committed to pursue the policy of making the minimum wage equivalent to two thirds of the median wage. This in itself causes further inflation in the labour market as the median wage earners seek to gain recognition for their endeavours. Since the year end, there has been further material increases in minimum wage and national insurance contributions in April 2025. Critically, it pushes the ever-increasing costs onto business operators who are already struggling to pass on inflationary pressures. It is unlikely to change until the inevitable catastrophe of company insolvencies accelerates. I am delighted to report that no employees in the Heartwood Collection are at or near minimum wage as our substantial tips mean that they are gratifyingly highly remunerated. On the subject of tipping, in October 2024, we revisited our internal policies alongside the new government legislation to ensure that we treat all of our staff fairly and transparently. Thankfully, Heartwood remains one of very few businesses in the sector to continue to invest as others cut investment to cope with rising costs. This has presented the group with a number of excellent property opportunities in anticipation of a much-improved economic environment in the future. Capital expenditure reached £49m, £27m on 11 freeholds and £22m on development capital and maintenance. This was funded through a combination of bank debt of £26m and shareholder funding of £27m drawn in the year. We are currently under development at a further two pub locations and one pub with rooms, all of which are expected to open later this year. Once all sites are open and trading, the group will be holding freehold properties with a combined value in excess of £130m.” No dividends were paid (2023: nil).