Thwaites (Daniel) Plc Half-yearly Report
10 November 2015 - 8:00PM
UK Regulatory
TIDMTHW
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
CHAIRMAN'S STATEMENT
Results
The company has had an excellent first half of the year. Despite the disposal
of the major part of our Beer Co to Marston's we have achieved operating
profits at the same level as last year, and when the impact of lower interest
costs is taken into account, we have moved forward on a profit before tax
basis.
We had a strong start, helped by some good weather taking us into the key
summer months. Despite no period of sustained sunshine during the summer
holidays, our pubs and inns traded well through the key July and August period
with increases in sales in all areas.
The provincial hotel market has shown pleasing growth, building on progress
made last year. An improved economic climate has meant that we have seen growth
in sales at almost all of our hotels. Thwaites Inns of Character have performed
well, with occupancy increasing by 3% on the previous year and we have seen
strong sales growth.
Turnover for the period of GBP45.0m (2014: GBP71.1m) has reduced significantly
as a result of the sale of our beer wholesaling, supermarket and national pub
company business, which is reported as a discontinued activity, however in our
continuing business the turnover grew by 4%. Despite the loss of the
contribution from our discontinued operations, we achieved an operating profit
of GBP7.1m (2014: GBP7.1m), level with last year. On a like for like basis,
operating profits for our continuing business have increased strongly by 21% to
GBP7.0m. Profit before tax for the period has increased 217% to GBP5.7m (2014:
GBP1.8m), and earnings per share increased to 7.2p (2014: 1.7p).
Net debt at 30 September 2015 was GBP29.1m (2014: GBP59.4m), reducing mainly as
a result of the receipt of approximately GBP29m of proceeds on sale of the Beer
Co to Marston's. Interest costs of GBP1.6m are 16% lower than last year as a
result of a lower level of borrowings.
Our full year accounts will be prepared under the new accounting standard, FRS
102, and there are several changes to the presentation of our results which are
explained below.
The Company now has deposits at the bank which it is actively looking to
reinvest to build on its strategy of providing superb hospitality in
outstanding properties in great locations.
We have put significant focus and attention into looking for opportunities to
invest in freehold properties that complement our tenanted pubs and Inns
businesses over the past nine months. I am pleased to report that we have
acquired three properties, two of which completed shortly after the period end.
They are The Crown, an outstanding pub with a riverside location in Pooley
Bridge in the Lake District, The Royal, a characterful property in the old
village of Heysham on the Lancashire coast and The Boot and Shoe, a well
situated property to the south of Lancaster. It is our intention to improve
these properties through investment over the next 12 months.
More importantly we have also continued to make investments across our pubs,
our inns and our hotels. Our growing experience of the performance of the
investments that we have made over the past few years is overwhelmingly
positive, which gives us confidence for the future.
Thwaites Pubs
In Thwaites Pubs the investments in our properties are steadily improving the
quality of our estate and raising the average contribution per pub. Our focus
continues, where possible, to be on improving the scale and penetration of food
sales within the estate and attracting the very best individuals to partner
with. The success of this approach means that our pub estate is in the best
shape that it has been in for a number of years. We have spent GBP1.8m on
investment projects in the first half year and have a strong pipeline of
projects for the second half which will see that level of spend more than
double.
The investment in our properties together with the disposal of poor performing
pubs from the bottom end of our estate resulted in sales growth of 1% in the
first half of the year and operating profits increasing by 5%.
We have sold thirteen poor quality pubs and two ancillary properties for
GBP2.7m, at valuations that were broadly in line with their net book values.
Thwaites Inns of Character
In Thwaites Inns of Character sales increased by 19% compared to last year,
which was a period in which two Inns suffered closure periods to carry out
large refurbishment schemes. I am pleased to report that those investments have
been successful and have seen significant improvements in the quality of our
customer offering, which has translated into financial success. As a result the
operating profits in our Inns have more than doubled in the period.
Before Christmas we have major refurbishment schemes planned for The Lion,
Settle and Penny Street Bridge, Lancaster. We continue to appraise acquisition
opportunities as they arise.
Shire Hotels & Spas
In Shire Hotels & Spas we continue to see a recovery spreading throughout the
regional hotel market. Sales have grown over the first half of the year at 4%
and are now ahead of their pre-recession levels.
At the half year, we are making good progress extending the Cottons Hotel &
Spa, Knutsford by adding an additional 30 bedrooms, which will be completed in
December. Furthermore, we have applied for planning consent to build a new 54
bedroom lodge on part of the site at The Solent Hotel & Spa, Fareham, which if
successful would see building work commence before the year end.
Elsewhere in the hotels we are accelerating our programme to refurbish our
bedrooms, which will allow us to take advantage of the improving state of the
provincial hotel market and the potential to increase room rates and grow the
rooms yield.
FRS 102
We have adopted FRS 102 with effect from 1 April 2015, including the
restatement of the comparative numbers. The key changes relate to the
accounting for interest rate swaps and pensions. The impact on the profit and
loss account is that the movement in the fair value of interest rate swaps is
now shown, and the interest on the pension liability has changed from a large
credit to a charge. Neither of these changes have an impact on cash. The full
impact of the changes and a reconciliation of the changes to comparative
numbers are set out in note 3.
Board
Peter Boddy, who has been a non-executive director since October 2007, decided
to step down from the Board on 20 October. I would like to thank Peter for the
tremendous contribution he made to the Board over an eight year period. We are
now looking to recruit a new non-executive Board member.
Earnings per Share
Basic earnings per share rose to 7.2p per share (2014: 1.7p).
Dividend
The Board recommends an interim dividend of 1.10p (2014: 1.10p) to be paid on 4
January 2016 to shareholders on the register on 4 December 2015.
Summary
The first half of our financial year has provided us with some welcome growth
in our continuing business and I am pleased that we have been able to replace
almost all of the profits that were lost to discontinued activities. The period
has been a critical one in the simplification of the Company for the future
through the restructuring of our head office functions. The business is now in
a strong position to grow both organically and through acquisition.
The prospects for the second half seem favourable and the early indications are
positive, although uncertainty in the financial markets and in the wider world
economy has the potential to surprise us. Once again it is our challenge to
sustain the momentum that we have created into the second half, which, with a
pipeline of in house investment opportunities and some recent property
acquisitions, we are well placed to do.
We continue to look for freehold properties to acquire to complement our
existing business and grow and we are in a strong position to be decisive and
act quickly for the right opportunities. I hope to be able to share more good
news on that front in our full year statement.
Mrs A J M Yerburgh
Chairman
10th November 2015
Profit and Loss Account for the six months ended 30 September 2015
Unaudited FRS 102 FRS 102
Unaudited Unaudited
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2015 2014 2015
GBP'm GBP'm GBP'm
Turnover - continuing operations 41.8 40.1 78.2
Turnover - discontinued operations 3.2 31.0 59.4
______ ______ ______
Turnover 45.0 71.1 137.6
Operating profit - continuing operations 7.0 5.8 9.8
Operating profit - discontinued 0.1 1.3 2.2
operations - - (2.4)
Exceptional items ______ ______ ______
Operating profit 7.1 7.1 9.6
Profit on sale of Beer Company - - 9.6
Property disposals (0.1) - 0.2
______ ______ ______
Profit before interest 7.0 7.1 19.4
Net interest payable (1.6) (1.9) (3.4)
Gain (loss) on interest rate swaps
(MORE TO FOLLOW) Dow Jones Newswires
November 10, 2015 04:00 ET (09:00 GMT)