Thwaites (Daniel) Plc Half-year Report
December 23 2020 - 4:36AM
UK Regulatory
TIDMTHW
INTERIM RESULTS FOR THE SIX MONTHSED 30 SEPTEMBER 2020
CHAIRMAN'S STATEMENT
OVERVIEW
The six month period to 30 September 2020 represents without doubt the most
challenging period in the 213 year history of this business. Shortly before the
start of the period, on 20 March 2020, we closed all our pubs, inns and hotels
following the directive from the UK Government in response to the COVID-19
pandemic. We then took all possible steps to secure the business, control
costs, protect cash flow and take advantage of the support measures put in
place by the Government. In particular the Job Retention Scheme has allowed us
to protect the jobs of most of our employees with only a small number of
initial redundancies.
During the period of closure, we focused on communicating with our staff,
tenants, customers and suppliers, whilst also dealing with the challenges of
lockdown and closure, including destroying over 250,000 pints of beer. We also
spent time and invested considerable resources in developing new operating
procedures to allow us to build a safe and comfortable environment for our
customers and staff on reopening.
After over three months of closure, we reopened all our pubs, inns and hotels
on 4 July, or shortly thereafter and the leisure facilities, swimming pools and
spas were reopened towards the end of the month. Trade built steadily from
reopening and during the period from 4 July to 30 September sales performance
was at 76% of last year.
RESULTS
As a consequence of the three-month lockdown, turnover for the half year was
GBP21.8m, which is a 59% reduction compared to turnover last year of GBP53.4m.
An operating loss of GBP1.4m compares to an operating profit of GBP9.5m last
year.
The economic impact of the pandemic led to an emergency cut in interest rates
by the Bank of England, reducing base rates to a historic low of 0.1%. This cut
in rates, together with the ongoing economic uncertainty, has resulted in
expectations that interest rates will stay low for the foreseeable future and
has had a negative impact on the fair value of our interest rate swaps. This
has required a further increase in the provision of GBP1.8m at the half year
(2019: GBP4.0m increase in the provision due to political and Brexit
uncertainties), and this negative movement is shown in our profit and loss
account.
Net debt at 30 September 2020 was GBP66.6m (2019: GBP61.6m); an increase of
GBP5.0m compared to last year, but an increase of only GBP1.2m in the half year
from GBP65.4m at 31 March 2020, which considering the challenges faced is a
creditable result. This has been achieved with the help of significant support
from the UK Government for the hospitality sector in the form of a business
rates holiday, business grants, the Job Retention Scheme, reduction in VAT on
accommodation, food and soft drinks to 5% and the Eat Out to Help Out scheme.
PUBS AND INNS
All our tenanted pubs closed on 20 March 2020 and the majority reopened on 4
July or shortly thereafter, although a number of pubs offered basic take away
services during lockdown. We took a tailored approach to charging rent during
the period. All tied pubs were given a rent-free period for April, and
thereafter rents were charged based on the level of business rate grants
received by the pubs and the degree to which trading recovered after reopening.
Overall, we gave GBP1.3m of rental support to our tenant pubs over this period.
After reopening on 4 July, we saw trade recover steadily in the pubs, with
volumes of beer sales in July 28% lower than last year. The Eat Out to Help Out
scheme in August accelerated that recovery such that beer volume sales were 13%
down on last year in the month. Beer volume sales continued to recover through
September to a point where they were 96% of last year. At that point the
Government introduced the 10.00pm curfew on 24 September which led to an
immediate and substantial reduction in sales of approximately 25%.
Our pub estate benefits from being largely based in community and rural
locations with very little town and city centre presence.
We have continued our regular maintenance spending on our pubs over this period
but capital expenditure projects have been kept to a minimum to preserve cash.
Our Inns are ideally located in rural and honeypot locations which are very
attractive to the consumer in the current environment. Prior to reopening a
significant amount of time and effort was put into making our properties Covid
safe to make our customers feel comfortable to return, including putting in
place an online order and pay solution. All of the inns reopened on 4 July and
sales built strongly as customers gained in confidence and felt more at ease
with the measures we had put in place. Sales built strongly through July and by
August, with the Eat Out to Help Out scheme and the VAT reduction, sales were
up 13% on last year, and this performance continued into September. The
increased demand for UK leisure breaks led to increased room occupancy and
average room rate.
HOTELS & SPAS
In the hotels & spas sales were very slow to pick up after reopening in July,
as there was very little corporate business since, encouraged by the
Government, most organisations were still working from home. Leisure breaks did
not start to recover until the leisure facilities, swimming pools and spas were
allowed to reopen on 25 July.
Trading improved during August with the leisure facilities open again, and
assisted by the Eat Out to Help Out scheme together with the reduction in VAT,
sales increased such that they were 16% below last year. Performance fell back
slightly in September as demand for leisure breaks subsided as schools reopened
and corporate activity continued to be at a low level. The ongoing restrictions
banning significant group gatherings for weddings, conferences and events
continues to have a negative impact on the level of business in the hotels.
EARNINGS PER SHARE
Due to the losses incurred when the business was closed during lockdown, the
loss per share was 8.2p (2019: earning per share of 2.7p).
DIVID
The Board does not recommend the payment of an interim dividend (2019: 1.10p)
as the preservation of cash continues to be an absolute priority due to the
ongoing restrictions and economic uncertainty. Future dividend policy will be
reviewed in line with the recovery of the business. The Board does not envisage
paying a dividend whilst the business is making losses.
CASH FLOW & FINANCING
The Company has recently increased its total borrowing facilities to GBP90m,
which is made up of the long-term loan of GBP45m, revolving credit facilities
of GBP43m and overdraft facilities of GBP2m. When compared to net debt of
GBP66.6m at 30 September 2020, this gives head room of GBP23.4m, which should
be more than sufficient to take us through the challenges of the winter months
and beyond the end of this crisis.
The Company received covenant waivers or relaxed covenant tests from its
lenders at 30 September 2020 and has recently put in place a revised set of
covenant tests through to March 2023, to deal with the current restrictions on
trading and support the recovery of the business once these restrictions are
lifted.
SUMMARY AND OUTLOOK
It is difficult to describe adequately the uncertainty and anxiety that has
gripped the business over the past nine months. All I can say, once again, is
that without the terrific can-do attitude of our teams within the business, and
their ability to look forward and be positive, then things would have been even
bleaker. I would like to thank every one of them for their fortitude and belief
that we can prevail - it is that which will carry us to the other side of this
pandemic. I would also like to thank our tenanted pub operators for their
incredible tenacity and our customers, suppliers and shareholders for their
steadfast support over this very difficult period.
What has become clear over the past few months is that the pub is deeply
misunderstood by those in the seat of power. Far from being the drinking dens
of 50 years ago, community pubs are the biggest community outreach programme
that this country has, provided free of charge by landlords and landladies the
length and breadth of the country. The employment and social cohesion that the
pub provides are the glue that hold our local communities together. It is
therefore hugely distressing to see that as we exit the second lockdown pubs
have been targeted for special measures in the reshaped tier system which will
lead to the inevitable failure of some of these precious community assets.
These are unchartered waters that we are navigating, and it has been difficult
for the Government to pick their way through them. Earlier in the year they
were hugely supportive of the industry, which they chose to close for long
periods in response to the pandemic and that support was invaluable. I fear
that now that interest in supporting the sector has been superseded by other
political distractions and has weakened significantly. Without further
financial support from Government, our industry will face irrecoverable damage
over the rest of this winter and I hope that the Prime Minister will intervene
to avert that and ensure that the investment he has made so far is not
squandered. It will be repaid many times over on the other side of this, in
particular the extension of a lower rate of VAT and the Business Rates holiday
for a further 12 months would help pubs and hospitality claw their way back to
pay their way once more.
Our country is in a terrible economic state; it has supported interference in
the minutiae of people's lives at the expense of liberty and the freedom to
exercise common sense and self-awareness. I hope that once those at risk from
Covid are protected by a vaccine the Government will step back and allow the
innate creativity and cultural ingenuity of our great nation, its businesses
and its pubs to come to the fore to save the day.
Richard Bailey
Chairman
23 December 2020
Profit and Loss Account for the six months ended 30 September 2020
Unaudited Unaudited Audited
6 months 6 months 12 months ended
ended ended 31 March
30 September 2020 30 September 2019 2020
GBP'm GBP'm GBP'm
Turnover 21.8 53.4 98.1
Operating (loss) profit before property disposals (1.4) 8.7 11.8
Property disposals - 0.8 0.8
______ ______ ______
Operating (loss) profit (1.4) 9.5 12.6
Net interest payable (2.0) (2.0) (3.9)
Loss on interest rate swaps measured at fair
value (1.8) (4.0) (4.5)
Finance charge on pension liability (0.3) (0.5) (0.6)
______ ______ ______
(Loss) profit on ordinary activities (5.5) 3.0 3.6
before taxation
Taxation 0.7 (1.4) (0.3)
______ ______ ______
(Loss) profit on ordinary activities after taxation (4.8) 1.6 3.3
______ ______ ______
(Loss) earnings per share (8.2) p 2.7 p 5.6 p
Balance Sheet as at 30 September 2020
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020
GBP'm GBP'm GBP'm
Fixed assets
Tangible assets 294.7 293.3 297.5
Investments 0.7 1.0 0.8
______ ______ ______
295.4 294.3 298.3
Current assets
Stocks 0.6 0.7 0.5
Trade and other debtors 11.0 10.8 11.1
Cash at bank and in hand 2.9 5.9 0.5
______ ______ ______
14.5 17.4 12.1
Creditors due within one year
Trade and other creditors (13.1) (17.0) (13.3)
Loan capital and bank overdraft - (22.5) (0.4)
______ ______ _____
(13.1) (39.5) (13.7)
Net current assets (liabilities) 1.4 (22.1) (1.6)
______ ______ ______
Total assets less current liabilities 296.8 272.2 296.7
Creditors due after one year
Loan capital (69.5) (45.0) (65.5)
Interest rate swaps (22.2) (22.0) (21.4)
______ ______ ______
(91.7) (67.0) (86.9)
Net assets excluding pension liability 205.1 205.2 209.8
Pension liability (32.4) (24.9) (32.3)
______ ______ ______
Net assets including pension liability 172.7 180.3 177.5
______ ______ ______
Capital and reserves
Called up share capital 14.7 14.7 14.7
Capital redemption reserve 1.1 1.1 1.1
Revaluation reserve 75.8 73.8 75.8
Profit and loss account 81.1 90.7 85.9
______ ______ ______
Equity shareholders' funds 172.7 180.3 177.5
______ ______ ______
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 2020.
2. Taxation
The taxation charge is based on the estimated tax rate for the year.
END
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