Thwaites (Daniel) Plc Half-yearly Report

 
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 

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November 10, 2015 04:00 ET (09:00 GMT)