THW Daniel Thwaites PLC

 
TIDMTHW 
 
Daniel Thwaites PLC 
 
                       AGM Statement and Covid-19 update 
 
                                                               3 September 2020 
 
Dear Shareholder, 
 
I am writing to provide a further update to the one published in May on how 
Daniel Thwaites PLC is faring in the current economic environment and to 
appraise you on our plans for the Annual General Meeting and the process for 
approving the Annual Report and Accounts. 
 
Covid-19 Impact 
 
The Company closed all its pubs, inns and hotels on 20 March 2020 following the 
directive from the UK Government that all hospitality businesses should shut. 
 
The Company then quickly took all possible steps to secure the business, 
protect cash flow and take advantage of the support measures put in place by 
the Government. These included: 
 
  * Putting over 90% of the workforce on furlough leave; 
 
  * Only allowing staff in key roles and those securing our properties to work 
    - which meant that the business was operating and being safeguarded by a 
    skeleton team; 
 
  * The Board and Executive team all taking pay cuts of up to 30%; 
 
  * Taking advantage of business rate exemptions across its retail properties, 
    which are available for the 2020/21 business rate period; 
 
  * Assisting pub tenants to claim grants across all the tenanted pub estate 
    which assisted the tenanted pubs to survive and come through the crisis; 
 
  * Claiming pub grants directly where they were available for the pubs that we 
    operate on a managed basis; 
 
  * Negotiating either suspension of contracts with suppliers, or reduced costs 
    during the period of disruption; 
 
  * Agreeing payment deferrals with HMRC for VAT and PAYE; 
 
  * Temporarily pausing deficit contributions to its defined benefit pension 
    funds; and 
 
  * Putting all non-essential capital expenditure on hold. 
 
Liquidity and Financing 
 
The Company renewed its banking facilities in Q1 2020 and at 31 March 2020 had 
net debt of GBP65.4m with total facilities of GBP82m giving it liquidity headroom 
of over GBP16m. During the period of closure, the Company monitored its cash flow 
very closely and at the end of June 2020 net debt had increased to GBP71.8m. 
Whilst this was an increase of GBP6.4m during the period of closure, GBP12m of 
headroom remained against the Company's existing facilities and with the 
support of its banks its banking covenants were relaxed. 
 
The Company is currently giving consideration as to whether it is necessary to 
increase facilities further as a prudent measure to ensure that it has 
sufficient facilities to deal with the ongoing uncertainties that might arise 
over the winter period. 
 
Reopening 
 
The Company reopened all its pubs, inns and hotels on 4 July 2020 or shortly 
thereafter and the leisure facilities, swimming pools and spas reopened towards 
the end of July. 
 
Since reopening trade has built steadily, aided by the significant measures of 
government support in the form of the VAT reduction on accommodation, food and 
soft drinks from 20% to 5%, which took effect on 15 July 2020 and remains in 
place until 12 January 2021. In addition, the Eat Out to Help Out scheme ran 
during August and boosted customers coming to eat in the early part of the 
week. The fine weather and the increase in staycations due to the travel 
restrictions put in place to prevent UK citizens from going abroad has also 
assisted our recovery. 
 
Reopening the business, under our "Stay Safe" covid-friendly operating 
procedures, has been a significant challenge for our teams, but they have done 
an amazing job of getting going and starting on the road to rebuild our 
position. I would like to thank them for the way in which they have helped to 
build a rigorous, safe and comfortable environment for our customers whilst 
balancing that with our fundamental objective of providing a warm and welcoming 
environment, being hospitable and making our guests feel at ease. 
 
In our pubs our Area Business Managers have been a tremendous support for our 
tenanted pubs, helping them to understand the new environment that we are all 
operating in. They have assisted, where needed, in helping our tenanted pub 
partners to access grants, plan for re-opening and providing clear guidance on 
the full range of support that the Company is able to offer, including rent 
concessions and the restocking of spoilt beer. It has been our underling 
objective that wherever possible, and in the overwhelming majority of cases, 
that the Company will do everything we can to give our tenanted pubs the best 
chance of coming out the other side of the crisis able to re-establish their 
business and thrive once more. 
 
Our suppliers have also faced some major challenges in restarting a supply 
chain that had been shut down for over three months, and whilst there have been 
some minor issues, their efforts in supplying us during reopening have been 
greatly appreciated. 
 
What has become very clear in reopening is that the visibility we had last year 
on forward bookings has been greatly shortened, and we see no sign that this 
will change as we enter the winter. Against this background, we have taken the 
unwelcome decision to initiate a programme of redundancies to ensure our cost 
base reflects the environment that we expect to operate in over the coming 
months and protect the business against significant ongoing uncertainty. 
 
Dividend 
 
The preservation of cash continues to be an absolute priority, as a result the 
Company took the decision that it will not pay a final dividend for the year 
ending 31 March 2020. Future dividends will be reviewed when normal trading 
levels resume. 
 
Annual General Meeting 
 
In normal times we would have had our AGM in July and invited shareholders to 
meet the Board and ask questions. 
 
Having taken into consideration the current measures published by the UK 
Government restricting public gatherings, the Board is in the unprecedented 
position that it is forced to take the decision that shareholders will not be 
invited physically to attend this meeting. 
 
The AGM will therefore be conducted as a closed meeting on 30 September 2020 
with the business of the AGM limited to the formal business section only and a 
necessary quorum established by the Company and its Directors. 
 
Ahead of the meeting I would ask you to return the proxy form indicating your 
votes for the resolutions. Any questions that you have should either be sent 
with the proxy form or by e-mail to susanwoodward@thwaites.co.uk. A summary of 
the questions and answers together with the results of the resolutions will be 
published on our website after the AGM. 
 
Annual Report and Shareholder Meeting 
 
It is was not possible to have the year-end results audited whilst the business 
was closed and staff were furloughed, therefore the Company has taken advantage 
of the extra-ordinary three-month extension to the normal filing deadline for 
Annual Report and Accounts by Companies House. This means that these documents 
will be filed at Companies House by the end of December 2020. 
 
We expect to publish our Annual Report and Accounts in mid-October; it is 
important to us to see those shareholders who like to attend our general 
meetings and if it is by then possible we will hold a shareholder meeting to 
approve the Annual Report and Accounts, for shareholders to be able to attend 
in person, during November.  We will confirm dates in due course. 
 
Outlook 
 
The Company was trading very strongly prior to this crisis. Since reopening we 
have seen steady growth in sales and are encouraged that our net debt has 
stabilised and begun to reduce. However, whilst social distancing rules are in 
place the capacities and permitted activities in our properties are restricted 
and therefore sales will not be capable of returning to pre-crisis levels until 
those restrictions are no longer required. 
 
Our hotels business is dependent on both corporate and leisure customers, and 
whilst there are a significant number of people still working from home, the 
former are likely to be present in lower numbers which will most likely 
adversely impact our business over the winter months; we are hopeful that some 
of this will be partially mitigated by the continuing trend for people to stay 
in the UK and take leisure breaks. 
 
The Company benefits from the fact that it owns the freeholds of all of its 
properties and is therefore not under pressure to pay third party landlords 
rent, as others in the industry are having to do. However, it does have 
financing obligations in the form of interest payments to its funders. We are 
committed to taking those difficult and necessary decisions in the short term 
to preserve the long-term future of the business and once again flourish for 
the benefit of all our stakeholders. 
 
I understand that the decision to pass on the final dividend will be an 
unpopular one, it is not one that has been taken lightly, nor without thought 
of the impact that it might have on our shareholders. I would like to thank all 
of our shareholders for their support as we come through this crisis. I would 
also like to thank our dedicated teams throughout the Company who are working 
so hard to re-establish the strong position that we were in at the start of the 
year. 
 
Whilst this pandemic is unexpected, the Company embarked upon Covid-19 and 
shutdown in good health. Our initial experience upon reopening has been better 
than we had at first hoped, however the coming months are likely to test us 
again. The Company has been through troubled times before and has a strong 
asset base and an experienced management team to assist in finding a pathway 
through the challenges we face. 
 
Yours faithfully, 
 
Richard Bailey 
 
Executive Chairman, Daniel Thwaites PLC 
 
 
 
END 
 

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