CONCLUSION

The Heavitree brewery has struggled admits the recession.
It seam to be stable from that  time.
It has had been resilient in the face of the UK austerity programme in a highly competitive market sector.
Their spread of tenancies has been beneficial in a difficult retain market share.
Debt will need to be monitored as well as the spiralling of current liabilities.

This company could face increasing problem in the retail sector as the recession continues. This with the resulting higher borrowing should their financial position deteriorate.

MEDIA COVERAGE

The Heavitree Brewery PLC announced that the Directors have resolved to pay an interim dividend of a GBP0.035 per ordinary share and A Limited Voting Ordinary Share (2009 - GBP0.035). The dividend will be paid on August 6, 2010 to shareholders registered on July 23, 2010 

PESTEL ANALYSIS

PESTEL analysis is a marketing tool used to measure the effect of such external factors on the

business.  The term PESTEL Analysis is an acronym for Political, Economic, Social, Technological,

Environmental  and Legal.  A good PESTEL  means a business can take advantage of the

trends and changes  in the market place.

The business can then adapt and change its organisation to suit the needs of the market. It can be an

essential planning tool for predicting what the market requires at a specific time and what will be

commercially successful.

By utilising a PESTEL Analysis,  the business will be equipped to make advantageous, financial and

tactical decisions internally.

PESTEL FACTORS THAT ARE CURRENTLY AFFECTING THE BREWERY INDUSTRY

P	National minimum wage increase affecting salaries and wages. Relaxation of opening hours and late night opening  EU and National Government guidelines regarding health.  Single European Market. Being part of EU mean that many industries (included the brewers industry) get help with fighting away international competitors entering the marketplace Local and National Government concerns regarding negative aspects of “binge drinking”.
E	Rise in staff wages due to National Insurance and Minimum Wage increases VAT  increase on January 2011.  Recession (credit crunch). The current global economic crisis is expected to have an  affect on overall hospitality industry.  Health conscious market .With recent problem that people been having with binge drinking.
S	Media concern with negative aspects of ‘binge drinking’  Increased awareness of health concerns  Culturally pub centre of social life, place to meet friends and for locals to socialise Shortage skills , improving customer service.
T	WI-FI Internet. Attracting people to use laptops in the Pub. Developments in delivery of cold beers and chilled ale. Advertisements for alcohol awareness and responsible drinking on media. Chip and pin. It was introduced recently to avoid card crime, small pubs owner are not prepared to the new technology
E	Recycling. Cost of the bags. Transportation and delivery costs of goods
L	Smoking Ban. Smokers feel different and isolated. Changes in Drink Driving Laws. Limits for driving under the influence of alcohol. EU legislation on measures of drinks served .Forbidding  to serve alcohol underage.

PESTEL FACTORS THAT ARE LIKELY TO AFFECT THE BREWERY INDUSTRY

P	Changes and reforms of Licensing Laws in line with Government policy Beer tax reduced or freeze.  Avoiding pub closure.
E	Ageing population. Retired generation is coming. Olympic  and Paralympic  games (London 2012). Flood of people. Strength of the Economy after the recession
S	Alcohol the “Legal Drug”. What seems to get bypassed is the fact that Alcohol is still a Drug, but a Drug that is socially acceptable to consume. Disability discrimination, requiring adjustments  to make them accessible to disable users (PUBS/BAR) Customer service improvement. Training the staff.   Showcase career opportunities. Operating  training and qualification. Increase in pub management. Inexperienced  owner and managers lead to the decline of the industry.
T	Chip and pin. Adaptation to the new technology avoiding card crime. Take advantage of Technology and social networking sites
E	Plastic pint glassed launch. Attempt to cut the yearly glass and bottle attacks. (review of the year 2009). Global warming. Sale of cold drinks increase the profit.
L	Beer tax freeze. Beer tax continued to rise and a record of pubs closed. .  The Chancellor increased beer tax by 18 per cent in 2008 alone, which contributed to the closure of 2,200 pubs  and the loss of 20,000 industry jobs. (bighospitality 2009). EU legislation on measures of drinks served.

                          

RATIO ANALYSIS

According to Guilding (2009) Financial Ratio Analysis are carried out  in order to understand  better  the company's performance, the ratio calculation will demostrate the economic situation of Heavitree Brewery.


This post will evaluate the following ratio:

• Acid Quick ratio
• Gross profit margin
• Gearing
• Roce 
• Dividend Yeald

The acid test ratio analyse whether a business has sufficient liquid resources to meet its short-term liabilities (Wood, Sangster 2002).


It's important that a company can meet short term debt obligations. Basically it indicates which 
Assets can be converted into cash immediately.  It shows the liquidity of a company.
A company goes out of business because of a lack of cash flow.


Current asset - stock  x 100
Current Liabilities


2011               2010


21.4%             109%


The above figures show an enourmus fluctuation in current  asset during 2010.

There is a marked deterioration from 2010 to 2011. Current assets are down

from 1.67m to 1.36m. Whilst current

liabilities have risen dramatically from

1.52m to 6.30m. This has impacted on liquid resources.

According to Wood & Sangster (2002) the Gross profit margin represent the ammount of gross profit for
 every £100 of sale revenue for instance.


Is One of the most important measurements of how effectively a company uses it's resources.
It shows what profit a company makes on sales if overheads stay fixed


The formula used is:


Gross Profit   x 100
     Sale


2011           2010


53%             53%


The gross profit margin stays the same for two years.




The gearing ratio measure the percentage of capital employed that is financed by debt and long term borrowing. 

In theory, the higher the level of borrowing (gearing) the higher are the risks to a business, since the payment of interest and repayment of debts are not "optional" in the same way as dividends.


It is the level of net debt compared to equity. Shows a Company's ability to service debt.  The maturity of debt is important to see when repayments have to be made. The spread of short/medium/long term debt is important because it ultimately impacts on available cash flow and the ability to operate.  A high level of debt is acceptable if principle is well spread and 
Repayments are not imminent.

The formula is:


Long term Liability   x 100
         Equity


2011              2010


21%                76%




The result above show that Heavitree brewery is an high geared company, with an high risk for the business, especially in 2010.
But sometime is good to have lots of debt if is generating lots of profit.


The return on capital employed (ROCE), is one of the most important profitability ratios.
According to  to Wood & Sangster (2002) it shows the return on capital invested in a business.


This is the primary ratio.  It shows what returns a business has made on the resources it has available. It is considered to be the best means of measuring profitability.  The ratio measures 
the return on all sources of finance used by a company.  It's equity plus debt- often called the 
Return on Investment. Anyone considering buying a Company would particularly focus on this ratio.


The formula is:


    Profit________   x 100
Capital employed




2011             2010


16%               17%




During the last two years the ROCE for the Heavitree brewery is gone down from 17% to 16%.
That means the for every 100£ invested the company is returning a profit of 16£.