Thwaites (Daniel) Plc Half-year Report
November 13 2018 - 3:00AM
UK Regulatory
TIDMTHW
INTERIM RESULTS FOR THE SIX MONTHSED 30 SEPTEMBER 2018
CHAIRMAN'S STATEMENT
Results
The company has benefitted from some excellent summer weather and a good
football world cup run in the first half of the year. However, headwinds in the
form of increasing costs and weakening corporate and consumer confidence linked
to the political landscape have presented challenges as the year has
progressed.
Turnover for the period of GBP49.9m (2017: GBP48.0m) represents a 4% increase.
Operating profit of GBP8.0m (2017: GBP7.7m) also represents an increase of 4%.
The expectation that the bank base rate may increase in the short to medium
term has again had a positive impact on the fair value of our interest rate
swaps, leading to a reduction in the provision of GBP0.6m at the half year
(2017: GBP1.4m) and this positive movement is shown in our profit and loss
account.
Net debt at 30 September 2018 was GBP70.2m (2017: GBP60.9m); increased as a
result of the investments that we have made at the Beverley Arms and our new
brewery, offices and stables.
The construction of our new brewery, offices and stables is now finished and we
were very pleased to move there in September. We have awarded the demolition
contract for our old brewery site, which will take just over a year to
complete.
Pubs and Inns
Our tenanted pubs have had an excellent first half to the year - they are
benefitting from sustained investment over a number of years and so were well
positioned to take advantage of the heatwave experienced over the summer and
the football world cup.
Once again our average earnings per pub has risen, by 14%, with like for like
turnover up by 5% and operating profit up by 7%. We have completed 12
investment schemes in the first half of the year, investing GBP1.7m and
continue to make good returns on our investments.
Major refurbishment schemes have been carried out at The Red Lion, Wybunbury,
The Millstone, Darwen, The Holcombe Tap, Ramsbottom and The Queen Anne in Bury.
Our Inns have also had a good summer, with turnover up by 27% and operating
profit up by 25%. They too are benefitting from investment and their premium
positioning and are in fairly robust health. The major investments made last
year at The Royal, Heysham; The Crown, Pooley Bridge; The Lister Barn, Malham;
The Fleece, Cirencester and The Royal Oak, Keswick have all contributed to this
strong performance.
We opened The Beverley Arms in July, later than we would have hoped, but just
in time to capture the latter part of the summer trading period. The property
has 38 bedrooms, a bar and restaurant area, as well as a large outside trading
space.
I am pleased to report strong trading since opening, ahead of expectations and
to positive local reviews.
We have sold five poor quality pubs for GBP1.6m, generating a profit of
GBP0.2m.
Hotels & Spas
In the hotels & spas sales for the first half of the year have grown by 1%,
although on a like for like basis they have declined by 2% due to a softening
in corporate demand.
We have had to absorb some significant increases in government imposed costs;
continued increases to the living wage, auto enrolment pension costs, business
rates and renewable energy levies - these are outside our control and we have
been unable to grow sales at a sufficient rate to absorb them. Inflation caused
by the decline in the value of sterling has led to food and utility increases.
Consequently, operating profits have decreased by 12% year on year.
We have completed the reorganisation of our hotel management structure in the
period to make efficiency gains and re-focus our operations teams. This will
significantly shorten the span of control in our hotel teams which we believe
will enhance our sales function and more importantly enrich the customer
experience.
We have continued our ongoing refurbishment programme and have spent GBP2.8m in
the half year. The current refurbishment programme in our hotels is now
largely complete.
Brand Review
During the period we undertook a review of the marketing of our inns and
hotels, particularly to review how we encourage people to re-visit us across a
number of different property types.
As a result we have relaunched our properties under a new collective, which we
have called The House of Daniel Thwaites. The purpose of this was not to build
another hotel collection in a crowded market but to celebrate our family of
highly individual, characterful properties, in a way that preserves their
identity.
Our ethos is to offer guests in our managed properties rich experiences and
build on our reputation for high quality places to eat, drink and relax where
people can feel genuinely at home.
An important part of this transition was to build new websites for each of our
managed properties, which were completed and launched in July. We are pleased
with the results and believe that it will allow us to market our properties in
a new and different manner, helping us to appeal to a niche but discerning
audience.
Funny Girls
When we sold our Free Trade business to Marston's in 2015 we retained our
investment in one large free trade account in Blackpool. Over a number of
years, we had advanced loans to the business, secured over its freehold assets.
Funny Girls comprises a popular cabaret venue, a nightclub and several bars
based in the historic art deco Odeon cinema in the heart of the town; it is an
iconic part of Blackpool's nightlife.
In September administrators were appointed to the business, which is now being
marketed for sale. Since administration we have been operating the business
under license, which may or may not become a longer term arrangement depending
on the outcome of the sale process.
Whilst it is our preference that a new owner be found to take the business
forward, equally we are ready do so under our own stewardship should that be
required. We expect that the position will be clearer by the end of the
financial year.
Change of Auditor
The Board has conducted a review of the Group's audit arrangements and,
following a tendering process, has decided to appoint BDO LLP to replace KPMG
LLP for the financial year ending 31 March 2019.
Earnings per Share
The basic earnings per share for the period was 8.5p per share (2017: 9.0p).
This movement is largely due to the year on year movement in the fair value of
our interest rate swaps, which whilst again positive this year, is less so than
last.
Dividend
The Board recommends an interim dividend of 1.10p (2017: 1.10p) to be paid on 3
January 2019 to shareholders on the register on 7 December 2018.
Board Changes
John Barnes has decided to step down as a non-executive director on 31 December
2018. I would like to thank John for his valuable contribution over the past 4
years. His experience in many different hospitality and restaurant businesses
has been invaluable to us as we have grown our managed operations.
I am delighted to confirm that he will be replaced by Andrew Stothert who will
join us from 1 January 2019. Andrew is the Chief Executive of Brand Vista, and
one of its founding partners.
Andrew has been an integral part in building Brand Vista into a highly regarded
consumer brand consultancy and is passionate about helping his clients build
genuinely differentiated brands that deliver a customer experience that becomes
"irresistible". I am sure that his disciplined approach to what matters to the
customer will help us remain focused and encourage us to evolve in a fast
moving market.
After 18 years as Chairman, I also intend to step down from that role at the
end of the current financial year. I will be replaced by Rick Bailey, our Chief
Executive, who, with the support of the rest of the board and our family
shareholders, will become Executive Chairman.
Summary
The Company is in good shape following a prolonged period of investment and our
financial results have moved forward in a challenging market. Our pubs, inns
and hotels are now in a strong position to weather any further changes in the
market.
We have opened an exciting new property in Beverley, together with our new
small and artisan brewery. We have a differentiated approach to the beer and
pub market that is shaped around our ability to offer our own award winning
beers for sale exclusively in our own properties.
We have delivered on our goal to move from Blackburn town centre after over 200
years to our new home at Mellor Brook. This is a momentous change that should
not be understated in our ambition to evolve our business for the future
leaving behind our industrial past, whilst not failing to acknowledge its'
place in our heritage.
These past six months have cemented the delivery of a longer term plan and
there is much to celebrate. However, there is no doubt that the second half of
this year will be a challenge, particularly in our hotels business, which is
having to absorb cost increases that we are struggling to recoup through sales
growth.
Whilst I firmly believe that our business is in a strong position to move
forward into the future, we face challenges to our trade, which are almost
exclusively politically induced. For the time being our focus must move to
making the most of our assets and tightening our operational performance. We
expect continued volatility and uncertainty in the negotiations around Brexit,
so we maintain a cautious outlook and will be watchful.
Mrs A J M Yerburgh
Chairman
13 November 2018
Profit and Loss Account for the six months ended 30 September 2018
Unaudited Unaudited Audited
6 months 6 months 12 months ended
ended ended 31 March
30 September 2018 30 September 2018
GBP'm 2017 GBP'm
GBP'm
Turnover 49.9 48.0 92.2
Operating profit 8.0 7.7 12.9
Property disposals 0.2 - 0.1
______ ______ ______
Profit before interest 8.2 7.7 13.0
Net interest payable (1.9) (1.8) (3.5)
Gain on interest rate swaps measured at fair
value 0.6 1.4 1.3
Finance charge on pension liability (0.5) (0.5) (1.0)
______ ______ ______
Profit on ordinary activities 6.4 6.8 9.8
before taxation
Taxation (Note 2) (1.4) (1.5) (1.7)
______ ______ ______
Profit on ordinary activities after taxation 5.0 5.3 8.1
______ ______ ______
Earnings per share 8.5p 9.0p 13.8p
Balance Sheet as at 30 September 2018
Unaudited Unaudited Audited
30 September 30 September 31 March
2018 2017 2018
GBP'm GBP'm GBP'm
Fixed assets
Tangible assets 297.2 287.7 289.5
Investments 3.2 3.0 3.1
______ ______ ______
300.4 290.7 292.6
Current assets
Stocks 0.6 0.6 0.6
Trade and other debtors 12.8 12.6 12.6
Cash at bank and in hand 2.3 2.6 2.8
______ ______ ______
15.7 15.8 16.0
Creditors due within one year
Trade and other creditors (15.5) (15.6) (14.7)
______ ______ ______
Net current assets 0.2 0.2 1.3
______ ______ ______
Total assets less current liabilities 300.6 290.9 293.9
Creditors due after one year (89.2) (82.8) (84.8)
______ ______ ______
Net assets excluding pension liability 211.4 208.1 209.1
Pension liability (34.2) (38.5) (34.9)
______ ______ ______
Net assets including pension liability 177.2 169.6 174.2
______ ______ ______
Capital and reserves
Called up share capital 14.7 14.7 14.7
Capital redemption reserve 1.1 1.1 1.1
Revaluation reserve 77.3 78.3 77.5
Profit and loss account 84.1 75.5 80.9
______ ______ ______
Equity shareholders' funds 177.2 169.6 174.2
______ ______ ______
NOTES:-
1. Basis of preparation
The interim accounts, which have not been audited, have been prepared on the
basis of the accounting policies set out in the Annual Report and Accounts for
the year ended 31 March 2018.
2. Taxation
The taxation charge is based on the estimated tax rate for the year.
END
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