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Mon 24th Sep 2018 - West Berkshire Brewery reports increased losses but expects to be profitable by end of this month
West Berkshire Brewery reports increased losses but expects to be profitable by end of this month: West Berkshire Brewery, which has raised more than £10m in its latest Enterprise Investment Scheme (EIS) fund-raise, has revealed increased losses but expects to be profitable from the end of this month. Accounts filed at Companies House showed losses for the year to 31 March 2018 had increased to £2.27m with adjusted Ebitda of minus £942,000. However, the company reported sales for the current financial year have increased 95% to £1.6m, while the company expects to start making a profit from the end of September. The accounts also showed Tom Lucas was promoted from operations and finance director to managing director last month. For the year ending 31 March 2018, turnover increased to £3,341,738, compared with £2,595,952 the year before. Pre-tax losses were up to £2,274,312, compared with £737,219 the previous year. In September 2017, the company launched its 6% convertible bond, which has now been fully subscribed at £2m from 42 investors and that, together with the funds from the EIS raise, has been invested into the new brewery and visitor centre, which was launched at the end of last year, and its share of two London pubs – The Old Suffolk Punch in Hammersmith and The Oxford in Kentish Town – with Maverick Pubs. West Berkshire Brewery acquired a 20% stake in Maverick Pubs in January this year, which immediately bought the freehold of the two London pubs for £5m. West Berkshire Brewery also owns the lease of The Depot in Islington through its The Renegade Pub Co vehicle. In his report accompanying the accounts, chairman David Bruce said: “In March 2018, we decided to raise additional equity under the EIS. To date, we have raised just over £10m of the £12m maximum permitted by HMRC for any one company. In this transformational year our company made a loss of £2.27m and when adjusted for exceptional items, interest, depreciation and amortisation resulted in an Ebitda loss of £942,000. It is more than disappointing our financial results do not yet reflect the keenly anticipated benefits of our capital expenditure and our investment in our company’s personnel infrastructure. Our company continues to invest heavily in developing its personnel infrastructure for the future and is also in the middle of a large and expensive further expansion into its new premises while continuing to pay rent on its previous site. Delays caused by the late arrival of our new brewing and packaging plant, together with unforeseen teething problems with its commissioning, have meant we are about six months behind the schedule expressed in our business plan. Specifically, this has impacted negatively with us not only having to pay rent and rates on two premises but also delaying implementation of our plans to attract more contract-brewing and packaging business. Furthermore, our plans to invest in Maverick Pubs’ two London freehold pubs were inopportunely delayed due to recent changes to the EIS rules. However, in spite of the many obstacles we have had to overcome, the board is confident our vision and corporate strategy remains correct. The current financial year is seeing rapidly growing sales, which, to the end of July, have increased 95% to £1.6m. We also anticipate by the end of September we will have reached an important milestone, one where our business stops losing money and starts making it. Our forecasts and budgets show both positive cash flow and profit for the second half of the current year. Since the year-end, to satisfy increasing demand, we took delivery in July of a further £2m of 18 new vessels up to 240HL that will be fully operational by September, thereby increasing our annual production capacity to 50,000HL. We are continuing to invest in our team and brands to drive sales across all channels. We are in a position of consolidation and retrenchment as we focus on further improving all aspects of our new business.” Since the year end, the company has issued a further 224,340 ordinary shares for a total consideration of £908,576 and entered into a finance agreement for a total amount of £1,730,850, which is to be repaid over five years. It has also appointed former Young’s finance director Peter Whitehead and Pitcher & Piano founder Sheila McKenzie as non-executive directors.

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