Thwaites (Daniel) Plc Half-year Report
November 03 2021 - 4:15AM
UK Regulatory
TIDMTHW
INTERIM RESULTS FOR THE SIX MONTHSED 30 SEPTEMBER 2021
CHAIRMAN'S STATEMENT
OVERVIEW
We started the six-month period to 30 September 2021 having been in lockdowns
or periods of significant restrictions to trade for over six months, with most
of our properties closed and the majority of our staff on furlough under the
Job Retention Scheme.
On 12 April 2021 we reopened those properties with outdoor trading space, which
was all of our hotels and about two thirds of the pubs and inns. The remaining
properties reopened on 17 May, with limited capacity due to social distancing
measures, which were removed on 19 July.
Trade has recovered quickly and has surpassed our early expectations, after
months of lockdown our customers were very keen to return to our pubs and
hotels, they were very welcome and we were delighted that they could enjoy our
hospitality once again.
The majority of our staff returned to work during April and May, and they have
had to deal with a number of supply chain issues, staff shortages and
intermittent outbreaks of Covid. I am incredibly proud of the way that our
teams have responded to the challenge of getting going once again and they have
all done an incredible job in helping the business to recover quickly and get
back on track.
RESULTS
Turnover for the half year was £47.8m, which is a 119% increase compared to
turnover last year of £21.8m, which was impacted by three months of lockdown.
Turnover was only 10% down compared to the same period in 2019, which is a good
result considering that trade was restricted during the first three months of
the period.
An operating profit of £9.3m compares to an operating loss of £1.4m last year
and an operating profit of £9.5m in 2019. This has been achieved with the help
of significant support from the UK Government for the hospitality sector in the
form of reduced business rates, business grants, the Job Retention Scheme, and
the reduction in VAT on accommodation, food and soft drinks.
Base rates have remained at their historic low of 0.1% throughout the period.
However, the widely reported price inflation, has resulted in expectations that
the Bank of England will increase interest rates in the near future and this
has had a positive impact on the fair value of our interest rate swaps. This
has resulted in a decrease in the provision of £0.5m at the half year (2020: £
1.8m increase in the provision due to COVID-19 uncertainties), and this
positive movement is shown in our profit and loss account.
Net debt has been an area of special focus and at 30 September 2021 it was £
61.4m (2020: £66.6m); a decrease of £5.2m compared to last year, but more
significantly I am pleased that it represents a decrease of £17.4m during this
half year, reduced from £78.8m at 31 March 2021. At its current level the
business has considerable headroom against its total banking facilities of £90m
as we enter a period of trading uncertainty coming into the winter.
PUBS AND INNS
We started the year with all our tenanted pubs closed, although a number of
pubs offered basic take away services during lockdown. On 12 April, those pubs
with outdoor trading space (about two thirds of the estate) were allowed to
reopen, providing table service only. The creativity of our tenanted pub
operators to maximise the number of customers they could serve by converting
carparks, pavements and spare land into trading space, together with erecting
tents and marquees and other structures to deal with inclement weather was
truly inspiring, demonstrated real community spirit and epitomised why pubs are
at the heart of their communities.
Those pubs that put real and obvious effort into reopening were rewarded with
strong sales as customers were keen to return to their local pubs after months
of lockdown, this coincided with some good spring weather which made for busy
gardens and outside areas.
The remaining pubs opened on 17 May, when indoor trading was permitted, albeit
with social distancing measures in place until 19 July.
Beer volume sales continued to recover through the period, and by September
they were at 97% of 2019 levels. We have seen a shift in consumer behaviour
since reopening, with a move to more premium products as people seek to treat
themselves after the turmoil of the last eighteen months.
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 there have been limited capital expenditure projects in order to
minimise the disruption to trading during this period of recovery.
Our Inns are ideally located in rural and honeypot locations which are very
attractive to the domestic leisure market at the moment. They have performed
very strongly since reopening and the increased demand for UK leisure breaks
has led to record levels of room occupancy and average room rates. Sales for
the period were at 98% of 2019 levels, a creditable performance given that
their capacity was severely constrained for seven weeks of the period.
HOTELS & SPAS
The hotels & spas have limited outdoor trading space and in general do not have
passing footfall, so whilst they reopened on 12 April, they did not trade in
any material way until 17 May. Thereafter, leisure sales recovered quickly,
although corporate sales were very slow to pick up as many organisations were
still encouraging their staff to continue working from home.
We saw a slight reduction in demand for leisure breaks as we came into
September, but at the same time we started to see an increase in corporate
activity. On 19 July, the removal of restrictions banning significant group
gatherings saw us host a large number of weddings over the summer, many of
which were re-bookings from weddings that would have taken place if allowed
over the past 18 months.
Sales for the period are at 89% of 2019 levels, although they have been growing
steadily as the year has progressed, by September sales were running 15% ahead
of 2019.
ACQUISITIONS AND DISPOSALS
On 5 October, just after the period end, we were delighted to announce the
acquisition of the Red Lion at Burnsall. This is an iconic coaching inn sitting
alongside the River Wharfe in the Yorkshire Dales. The property has 25 bedrooms
together with five holiday cottages, each with two bedrooms, a large outdoor
area, a busy bar and restaurant and function facilities.
We have also continued to divest of pubs that no longer suit our requirements
and sold eleven properties in the period. We also sold our old Blackburn
brewery site, that we vacated in 2018, during the period. We received total
proceeds from these disposals of £4.5m, making a profit on disposal of £0.3m.
EARNINGS PER SHARE
Earnings per share for the period were 10.7p per share, which compares to loss
per share of 8.2p per share in 2020, due to the period of lockdown and
restrictions last year.
DIVID
The Board does not recommend the payment of an interim dividend (2020: £Nil) as
whilst the business has recovered strongly over the period, the results have
been achieved with financial support from the UK Government. The Board will
continue to review future dividend policy in line with the recovery of the
business and the degree of future uncertainty.
SUMMARY AND OUTLOOK
All credit must be given to our teams across the business for their success in
making the most of the opportunity that has presented itself since re-opening
in the spring. Our decision to reinstate quality cues within our properties at
the earliest opportunity and remove measures that constrain our operational
capacity has been vindicated by strong trading and an excellent set of interim
results.
Our conservative approach and a focus on our balance sheet, in particular in
reducing our level of net debt puts the business in a strong position to face
into a winter with lingering Covid cases and consequently potential government
reactions.
There are many headwinds, largely outside our control, which are creating a
level of uncertainty as we look to the future. The lack of availability of new
team members is disrupting both our ability to fully man our properties as well
as our supply chains. Inflation is rising more quickly than in recent years
with the national minimum wage set to increase by 6.6% next April. Lastly, in
the next six months we will see the withdrawal of government support, which has
been critical in achieving this set of interim results.
The announcement of changes to draught beer duty in the budget are welcome, but
this reduction will be more than offset by inflationary rises elsewhere. As an
industry we have campaigned for a permanent reduction in VAT to 12.5% for pubs
and the hospitality industry as well as root and branch reform of business
rates, both of which would be major investments in the long-term health of our
sector, help it to recover from the past 18 months of closures and provide
confidence and employment, particularly for young people.
The changes that we have made in recent years to orientate the business to
larger scale properties towards the more premium end of the market, means that
we are as well placed as any and better than most to navigate our way through
any difficulties that are thrown at us. I have no doubt that the Company and
our teams will together put the era of Covid behind us and continue to build on
our success.
Richard Bailey
Chairman
3 November 2021
Profit and Loss Account for the six months ended 30 September 2021
Unaudited Unaudited Audited
6 months 6 months 12 months ended
ended ended 31 March
30 September 2021 30 September 2021
GBP'm 2020 GBP'm
GBP'm
Turnover 47.8 21.8 32.2
Operating profit (loss) before property disposals 9.0 (1.4) (9.6)
Property disposals 0.3 - 0.2
______ ______ ______
Operating profit (loss) 9.3 (1.4) (9.4)
Net interest payable (2.0) (2.0) (3.9)
Gain (loss) on interest rate swaps measured at fair
value 0.5 (1.8) 1.6
Finance charge on pension liability (0.3) (0.3) (0.7)
______ ______ ______
Profit (loss) on ordinary activities 7.5 (5.5) (12.4)
before taxation
Taxation (1.2) 0.7 1.9
______ ______ ______
Profit (loss) on ordinary activities after taxation 6.3 (4.8) (10.5)
______ ______ ______
Earnings (loss) per share 10.7 p (8.2) p (17.8) p
Balance Sheet as at 30 September 2021
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
GBP'm GBP'm GBP'm
Fixed assets
Tangible assets 285.2 294.7 291.0
Investments 0.8 0.7 0.6
______ ______ ______
286.0 295.4 291.6
Current assets
Stocks 0.7 0.6 0.5
Trade and other debtors 10.6 11.0 10.4
Cash at bank and in hand 8.1 2.9 0.3
______ ______ ______
19.4 14.5 11.2
Creditors due within one year
Trade and other creditors (17.7) (13.1) (9.8)
Loan capital and bank overdraft (3.5) - (11.6)
______ ______ _____
(21.2) (13.1) (21.4)
Net current (liabilities) assets (1.8) 1.4 (10.2)
______ ______ ______
Total assets less current liabilities 284.2 296.8 281.4
Creditors due after one year
Loan capital (66.0) (69.5) (67.5)
Interest rate swaps (15.9) (22.2) (17.5)
______ ______ ______
(81.9) (91.7) (85.0)
Net assets excluding pension liability 202.3 205.1 196.4
Pension liability (19.5) (32.4) (19.9)
______ ______ ______
Net assets including pension liability 182.8 172.7 176.5
______ ______ ______
Capital and reserves
Called up share capital 14.7 14.7 14.7
Capital redemption reserve 1.1 1.1 1.1
Revaluation reserve 73.6 75.8 74.8
Profit and loss account 93.4 81.1 85.9
______ ______ ______
Equity shareholders' funds 182.8 172.7 176.5
______ ______ ______
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 2021.
2. Taxation
The taxation charge is based on the estimated tax rate for the year.
END
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