Thwaites (Daniel) Plc Annual Financial Report

 
TIDMTHW 
 
DANIEL THWAITES PLC 
 
RESULTS FOR YEARED 31 MARCH 2022 
 
CHAIRMAN'S STATEMENT 
 
After another challenging year Daniel Thwaites has emerged from the COVID-19 
pandemic in a strong financial position. Our priority for the past two years 
has been to take decisive action to control our cost base and debt levels to 
protect the business for a time when we could put restrictions and a loss of 
liberty behind us. 
 
The Company and our teams have risen to this task in the most impressive 
fashion and I am immensely proud of the way in which they have responded. 
Our decision to reinstate quality cues within our properties at the earliest 
opportunity after government restrictions were removed has been vindicated by 
strong trading, profitability being restored and the business generating 
significant cashflows. This has allowed us to initiate investments for the 
future, start to make acquisitions and confidently set ourselves back on a path 
for growth which the pandemic temporarily disrupted. 
 
Once more our family values, and the strong culture within the business has 
helped us to come through all that has been thrown at us. Well publicised 
issues with recruitment coupled with natural attrition to our teams from 
repeated lockdowns and closure has meant that for much of the year we have had 
significant numbers of vacancies across all of the business. This has been 
extremely testing for our teams and the way that they have responded by going 
the extra mile, being inventive and resourceful is humbling. 
 
Different parts of the business have pulled at different speeds throughout the 
year, with outdoor areas playing a hugely important role for our pubs, despite 
there being no prolonged period of sunny weather last summer. Likewise, the 
leisure facilities in our hotels and spas and the honeypot locations of our 
inns have been very helpful in a strong staycation market. As a result, despite 
long periods of disruption the business has traded well and has been able to 
capitalise on its premium levels of service and positioning, which in turn has 
produced a strong set of results. 
 
Results 
 
For the second year running the business was not able to trade without some 
form of government restrictions for 23 weeks. We started the year with the 
business shut, opening with outdoor trading space only on 12 April, which 
accounted for about half of our pubs and all of our inns and hotels. 
 
The remaining properties opened on 17 May, with limited capacity due to social 
distancing measures, which were removed on 19 July. Trading throughout the key 
summer period was very encouraging and in the first half of the year the pubs 
and the inns traded strongly, particularly those with good outside areas, which 
benefited from investments made in anticipation of people wanting to get out 
and about but nervous of indoor areas. 
 
The leisure market for our hotels was also strong and we were able to achieve 
strong growth in room rates in both the hotels and inns as a result of the 
strong summer staycation market. The corporate hotel market began to pick up 
once the summer leisure business tailed off in September, and this built 
steadily over the following month. 
 
On 10 December we embarked upon Plan B measures in the face of trying to 
pre-empt the unknown Omicron variant. These measures mandated and advised the 
use of face masks in most public settings as well as COVID passes and guidance 
to work from home. Although hospitality settings were excluded for customers 
who were seated the measures destroyed confidence and the all-important 
Christmas season was largely lost. 
 
Plan B measures were ended on 27 January, with the business starting to rebuild 
itself once more between 27 January and its year end on 31 March. 
 
Despite these material levels of disruption, the financial performance has been 
resilient given the circumstances, with turnover increasing to £96.0m (2021: £ 
32.2m; 2020: £98.1m) and an operating profit of £12.3m (2021: £(9.6)m; 2020: £ 
12.6m).  The earnings per share was 20.6p (2021: (17.8)p; 2020: 5.6p). 
 
Net Debt at 31 March 2022 was £61.6m (2021: £78.8m; 2020: £65.4m), broadly 
similar to that at the interim results at 30 September 2021 despite the 
disruption to the winter season. 
 
The Bank of England has now started to respond to higher inflation arising from 
the unprecedented amounts of monetary and fiscal stimulus funded through 
central government debt in response to the pandemic, and subsequently the 
actions of Russia in Eastern Europe. 
 
Interest rates have now risen from their all-time low of 0.1% to 1% with market 
speculation that they will rise further. Increases in interest rates and the 
discount rate used to value the Company's pension scheme and swap liabilities 
have a positive impact on their mark to market valuations. As a result, we have 
seen a gain of £3.8m on our swap liabilities and a decrease in our pension 
liabilities of £30.0m, such that the pension scheme is now showing a surplus of 
£10.1m for the first time in many years. 
 
The profits retained for the year together with these mark to market gains 
provided a net asset value per share at the year-end of £3.62 (2021: £3.00; 
2020: £3.02). 
 
Acquisitions, Developments and Disposals 
 
During the year we acquired The Red Lion at Burnsall to join our Inns. This is 
an iconic coaching inn, sitting alongside the River Wharfe in the Yorkshire 
Dales, and we have exciting plans to develop its 25 bedrooms and 5 holiday 
cottages in the coming year. 
 
In addition, we have acquired a number of staff houses to assist us in 
recruiting team members in some of our more rural locations and we believe that 
this gives us an advantage in these local markets, particularly in Cumbria and 
the Yorkshire Dales. 
 
The Company has sold 15 bottom end pubs and our old brewery site in Blackburn, 
with total proceeds of £7.5m. 
 
Dividend 
 
The Board understands that the dividend plays an important role for 
shareholders and that one has not been paid whilst the Company was making 
losses and sought to protect its financial health for the future. Now that the 
Company is making profits once more the Board recommends reinstating a final 
dividend. There is still much uncertainty about the pace and strength of any 
recovery, as well as an increasingly challenging domestic economic picture. The 
Board is mindful of maintaining a dividend distribution that is prudent and 
sustainable, with a view to increasing it as conditions permit, as a result the 
Board recommends a final dividend of 2.2 pence per share. 
 
People 
 
I have written above of the way that our teams have pulled us through the last 
two years, and we would not be in the strong position that we are without them. 
I was delighted that we recently held our Pride of Thwaites Awards, which 
celebrates and recognises the outstanding contribution that they make. Whilst I 
am immensely grateful to all of our team members, I would like to highlight the 
role that the area business managers of our tenanted pubs have played over the 
past two years. It has been far from easy and we have asked much of them, 
however they are justly our winners of our Team of the Year Award. 
 
I would also like to thank our shareholders, who have supported the business so 
strongly over the past two years. I am pleased that we have been able to 
restart paying them a dividend and hopeful that we are embarking on a path of 
dividend growth. 
 
Outlook 
 
It is possible that the interruption of COVID may have been contained within 
the past two sets of financial results, certainly we all hope that is the case. 
From 1 April 2022 government financial support was largely withdrawn and the 
business is now trading with a new set of challenges. 
 
Our new headwinds are of a different nature, largely outside our control, which 
we are working our way through. Staffing our properties, particularly our 
kitchens, continues to be a major issue and everywhere you turn inflation of 
our everyday goods is rampant, a dynamic that has not been present for many 
years. 
 
Supply chain issues are continuing to cause major problems with on-going 
out-of-stock products and shortages. Investment schemes are experiencing long 
lead times and cost increases, both of underlying goods and from the exchange 
rate impact of a weak pound. Together these are threatening to undermine the 
feasibility of some projects that for the time being are expensive to deliver 
and so hamper our ability to invest. 
 
As we grapple with these issues the country now, more than ever, needs its 
businesses to be trading freely and investing to help to pay off our national 
debt.  The government is in a position to help businesses firstly by seeing 
through its promised reform of business rates and secondly by opening up the 
labour market by relaxing measures to allow some foreign workers to come into 
the country in a controlled manner through short term employment licenses. We 
continue to lobby the government strongly in both areas as well as other tax 
reforms to lessen the burden on pubs. 
 
None of these issues are ours alone, we are only able to manage our own destiny 
and are confident in our ability to do so. To that end we continue to improve 
the quality of our estate and our offering and our recent trading over Easter 
has been promising. Our properties are well invested and attractive, ready to 
make the most of the coming summer season. Our customers are becoming more 
adventurous and people's new socialising habits are becoming clearer. 
 
Like us, our customers are ready to put the pandemic behind them, meet their 
friends and family and rediscover that time spent with others, and the 
enjoyment of our pubs, inns and hotels makes life a little brighter. 
 
R A J Bailey 
 
Chairman 
 
14 June 2022 
 
OPERATING REVIEW 
 
Overview 
 
The biggest challenge in the year was not the managing of COVID and opening and 
closing, which we learnt to do last year, but the staffing of the teams in our 

pubs, inns, hotels, and spas. For much of the year we had vacancies across many 
of the departments, particularly in our kitchens, housekeeping teams and front 
of house. 
 
It is not completely clear why the UK, like much of the world is facing a 
shortage of employable labour, it is also not possible to separate the effects 
of Brexit, which was now nearly six years ago, from the pandemic. However, 
reports of around 1.5 million people leaving employment through either going 
back overseas, leaving the hospitality industry or choosing to retire early 
probably cover most of this shortfall, none of it helpful. 
 
It is very frustrating when the customer demand is there not to be able to make 
the most of it and we have worked hard to make sure that we are better 
positioned for this coming summer, that said the business turned in a strong 
performance for the year given the disruption that it faced. 
 
We have developed our order and pay capabilities further which has the benefit 
of reducing the intensity of front line order taking and allows the team to 
focus on delivering food and drink. We have obtained a sponsorship license to 
bring skilled labour in from abroad, which has had some impact in helping to 
bolster our kitchens and senior front of house teams. We are having to be much 
more flexible in our rotas, as people generally seem to want to work fewer 
hours, and we have recruited a number of older people returning to the 
workforce in retirement, as well increasingly some of those who have left the 
industry but miss the human contact. 
 
 We have boosted our employee benefits, as well as moving to a higher than 
minimum wage for younger team members. We have had some success with our URefer 
scheme, which rewards team members for helping us to find new people and we 
have strengthened our induction and training process, together with developing 
our ELMA happiness and performance reviews. There is no silver bullet, but many 
threads create the tapestry of our teams and we continue to think of new ways 
to attract and retain the best talent. 
 
Increasing costs are also a major challenge and we have been forced to increase 
our prices in response, continuing to monitor the pricing of our competition to 
make sure that we stay within the cohort but at a level that reflects the 
quality of our properties. We raised our prices in December, tweaked again in 
April and are likely to have to increase again later this year. Utility prices 
are also a major concern and whilst we have had the benefit of some forward 
contracts these will expire towards the latter part of this year, at which 
point we will be exposed to market increases. We will protect our position as 
far as possible, however some real pain will be felt, which will put our 
profits under pressure. 
 
Our supply chain has been fragile and in response to this we have reformulated 
menus to take advantage of what is available. This has meant slimming the menus 
down and relying more on specials, which helps us to create more interesting 
and seasonal alternatives. We have also had interruptions to our drinks 
supplies, which have been difficult to manage, particularly in our tenanted 
pubs, where the temptation is to go elsewhere. 
 
The steps that we continue to take to premiumise our offer across all of our 
properties have been helpful as we are riding a strong consumer trend. The 
investments in our properties over the last few years puts us in a position to 
make the most of that trend. Premiumisation extends not only to the drinks 
ranges in our pubs, where premium world lagers, cocktails and gin amongst other 
things have been very popular, but also in our restaurants where people have 
been treating themselves when out and we have had significant interest in 
lobsters, Exmoor caviar, fillet steaks and large premium sharing platters, all 
of which present good margin opportunities. 
 
Financial Results 
 
Turnover for the year was £96.0m (2021: £32.2m), the business was shut for 3% 
of the year and traded under restrictions for a further 40% of the time. When 
trading under Plan B and the associated government messaging our customers lost 
confidence and people socialised less in December to protect Christmas and to 
shield the vulnerable from infection at this time. The operating profit for the 
year was £12.3m (2021: operating loss £9.6m). Net debt decreased to £61.6m 
(2021: £78.8m) a decrease of £17.2m. At the year end the company had banking 
facilities of £83m. 
 
The results in the year benefited from government support in the form of 
business rate concessions, lower rates of VAT and grants. This support was 
withdrawn from 1 April 2022 with the exception of the 2022/23 Retail, 
Hospitality and Leisure Business Rates Relief (RHL) scheme which provides 
eligible, occupied, retail, hospitality, and leisure properties with a 50% 
relief, up to a cash cap limit of £110,000 per business from 1 April 2022 to 31 
March 2023. This is of benefit to our tenanted pubs but our managed properties 
do not qualify. 
 
Pubs and Inns 
 
Understanding our Pubs 
 
Our freehold estate of tenanted pubs numbers approximately 215 properties. We 
continue to recycle capital into new, more attractive tenanted and managed pub 
opportunities, where there is the potential to invest and add value and so we 
continue to dispose of pubs that we do not believe have a long-term future with 
us. 
 
Our pub estate encompasses community locals to destination food led pubs in 
both rural and town centre locations, ranging geographically from Cumbria to 
the Midlands, and from North Wales to Yorkshire.  In the trading environment 
during the pandemic the geographic diversity of the pub estate and the lack of 
exposure to major city centres has provided some resilience. 
 
We have been operating tenanted pubs for a long time, and we have a strong 
reputation for our well-established approach. We strongly value our reputation 
as a partner of choice, acting with integrity, and focusing on investing 
alongside proven operators to expand and improve the premises with a focus on 
establishing good quality food offerings. Where the property has the scope, and 
we believe the demand exists, we support the development of letting bedrooms. 
We have an estate of high quality, sustainable businesses with multiple income 
streams that have the ability to generate attractive cashflows. 
 
Our tenanted pubs are a mature business and we aim to deliver returns at least 
in line with inflation. They tend to be heavily influenced by weather and so 
are subject to the vagaries of the British summer. 
 
Pubs performance 
 
The tenanted pubs re-opened their outdoor areas with table service only after 
lockdown from 12 April and about two-thirds of them were able to do so. The 
creativity that our tenanted operators showed to maximise the number of 
customers that they could serve by converting carparks, pavements and spare 
land into trading space, together with erecting tents, marquees and other 
structures to deal with the inclement weather was truly inspiring and 
epitomised why pubs are at the heart of their communities. The steps that the 
government has since taken to extend pavement licenses permanently will be 
helpful. 
 
It was the case that the more real and obvious the effort put in to re-opening 
these pubs was directly correlated to their success and with a patch of good 
spring weather, customers were quick to flock back to their local and support 
it after winter months of lockdown and confinement. 
 
The remaining pubs opened on 17 May, when indoor trading was permitted, albeit 
with social distancing measures in place until 19 July. There was no further 
sustained period of good weather throughout the summer but beer sales grew 
steadily, such that by the autumn they had regained their 2019 volume levels, 
before another period of disruption in the winter, after which they started to 
rebuild their trade once again. 
 
There were no acquisitions of tenanted pubs in the year and very little has 
come to the market which would suit us. We disposed of 15 pubs to which we 
could no longer add any future value. 
 
During the year we completed four development projects at a cost of £0.7m. The 
largest of which was The Foundry in Blackburn, with schemes also completed at 
the Fox & Hounds, Ewood, the Eagle & Child, Ramsbottom and The Clockface, 
Prescot. 
 
The financial support provided to the tenanted pubs from government grants and 
business rate support has given a period of protection ahead of the spring and 
a plethora of cost increases. This will not fully mitigate the pressure that is 
coming to bear from price rises, particularly from utilities which are creating 
immense pressure on pub profitability. 
 
Partly as a result of this and partly as a result of people reassessing their 
life options, we have seen an increase in the number of pubs where our tenanted 
partner has decided to move on. We monitor this statistic closely as it is a 
lead indicator of the financial health of our tenanted pubs, it has hovered at 
about 20 pubs all year (9% of the estate), compared with about half this number 
two years ago. We are continuing to receive high numbers of enquiries for new 
customers and are taking care to make sure that we match candidates to pubs 
that we believe will be successful for both parties. 
 
Brewery 
 
Our craft brewery has gone from strength to strength. It has won awards for the 
quality of its ales and the customer feedback on the beers has been very 
positive, although the cask market has been challenged by changing habits.  We 
were delighted to be recognised by CAMRA for our contribution to the beer 
market over the past 50 Years and to celebrate their same anniversary, as well 
as receiving design awards for our beer range. 
 
We have started to reintroduce our popular range of guest ales, but cask ales 
have suffered significant declines over the past two years whilst people have 
been drinking packaged beers at home. Whilst we are proud of the beers that we 

produce we are investigating broadening our range into some new craft keg 
products. This will require a low level of investment in the brewery in the 
coming year. 
 
Understanding our Inns 
 
We own and manage a growing portfolio of inns and we will continue to look to 
expand this segment of our business in the future through the acquisition of 
high quality properties in outstanding locations. 
 
Our Inns are positioned at the premium end of the market, they have a busy bar 
at their core, a home cooked food offering and high quality, comfortable 
accommodation - they focus on providing outstanding hospitality and offer an 
attractive and more personal alternative to the mid-market hotel chains. 
 
This segment of the market has performed strongly over the past few years and 
is positioned for continued growth as customers look for something special that 
is authentic and honest, delivered by operators who can provide a quality 
experience consistently. 
 
Inns performance 
 
Almost all of the Inns have large outside trading areas and so they were able 
to open from 12 April and very quickly started to trade strongly. Over the 
summer period we were seeing weeks where the trading performance was up by 20% 
per week, but this benefited from VAT support from the government, on a like 
for like performance this was more like 12%. The Inns even showed single digit 
growth against the Eat Out to Help Out Scheme in the previous year. 
 
In parts the Inns performance was held back by not being able to recruit 
sufficient team members, where in order to protect the offering and quality of 
the service we restricted trade.  This was most acute in the National Parks, 
which are presently devoid of any foreign workers, a resource that they have 
relied upon in the past. 
 
When all was said and done, the Inns had an outstanding year, with some star 
performances, particularly at The Royal Oak, Keswick, The Lister Arms, Malham, 
The Beverley Arms and the Bulls Head, Earlswood. 
 
The Pendle Inn, Barley joined the Inns for its first full year of trading and 
we have plans to develop this in the coming year, Barley is a beautiful 
location at the foot of Pendle Hill and walkers flock to it throughout the 
year. In October we purchased the Red Lion, Burnsall; another honeypot rural 
location, and after some teething problems in assembling a new team, this 
property is now performing strongly and will be a high performer for the 
future. 
 
The opportunity arose in the autumn to acquire Lendal House, a beautiful listed 
building adjacent to the Judge's Lodgings, York and this will be developed to 
provide an additional ten bedrooms, which will complement the 21 bedrooms that 
we have already. 
 
We have also acquired additional staff houses to strengthen our ability to 
recruit team members in Keswick, Penrith and Beverley. This has been a 
necessary reaction to the problems of recruitment but should give us an 
advantage in each of those markets. 
 
Understanding our Hotels & Spas 
 
We own and operate ten hotels which are spread across England. Our hotels are 
positioned towards the premium end of the market and most have leisure and spa 
facilities. In recent years we have invested in them to amplify the individual 
character of each hotel in its local area, supported by a great food and drink 
offering with local nuances. Our vision, similar to our inns, is to create a 
collection of interesting, characterful contemporary hotels, that are the best 
in their local area. 
 
Hotels & Spas performance 
 
The hotels were slower to build sales after re-opening as for the second year 
running they were not allowed to open properly until late July. Once they did 
open, they traded well and were well positioned to take advantage of the 
staycation market.  We worked hard to add to their offer to maximise spend per 
head and cash margin. This included upgrading supplements to room packages, 
expanding the range of treatments in our spa treatment rooms, which were very 
busy, upscaling our restaurant specials and serving thousands of cocktails. 
 
The corporate bedroom and conference business overall was weak throughout the 
year but gaining momentum by the autumn. This was put into sharp reverse by the 
work from home order in December and January which was a major setback and at 
the time impacted the all-important Christmas party season - which was a 
write-off. Weddings had a busy season in the summer and autumn as people took 
the opportunity to catch up on those lost the previous year.  This seems to be 
a trend that looks like it will continue into the coming year as we have strong 
forward bookings. The leisure business has been strong all year and reflects a 
changing mix in the sales for the hotels, we will aim to hold onto this 
business and use the corporate business to backfill our occupancy, typically at 
marginally lower rates. 
 
Hotel profitability returned to a level equivalent to 2019/20, which was a very 
satisfactory result given the level of disruption. 
 
Summary and future developments 
 
Our strategy last year was to maintain the quality of our offering in all 
areas, push service levels higher than our competition and trade the business 
for cash, to protect the strength of our balance sheet and the financial health 
of the business coming out of the pandemic. The business has re-established its 
profitability, albeit with some government support and saving a disaster, it 
really does feel like we have been able to move on from the past two years of 
closure and disruption. 
 
The issues now facing the business are different but no less immediate. 
Managing high levels of inflation requires us to be nimble in our offering, 
whilst not diluting it and be agile in responding to price rises, passing them 
on wherever possible without overly subduing demand. 
 
Our approach in the coming year will therefore not be radically different, the 
major change being that now we have more confidence about our ability to trade 
uninterrupted by government intervention, which means that we can position 
ourselves to start to reinvest in the properties and the business, to regain 
our growth and momentum for next year and beyond. 
 
We are therefore in the advanced stages of developing a number of investment 
schemes that will help to grow our profits, and these will be started once we 
have a few months clear trading under our belts. 
 
The cost of living squeeze has been much discussed in the press and will no 
doubt have an impact on the business. At this stage it is difficult to assess 
exactly how detrimental it will be, nor whether the UK economy will contract 
and so we should be cautious, having been careful to put the business in a 
position of financial strength. 
 
We will consider acquisitions on a case by case basis, but our focus for the 
moment must be on the core business and sticking to the knitting.  We are 
likely to have a challenging year or two that will need all of our attention. 
Where outstanding opportunities do arise, we will work hard to convert them and 
add them to our portfolio as we have the resources to do so. 
 
The early part of the year has seen encouraging trading, but our continuing 
recovery has been disjointed and halting, with a series of strong weeks then 
seeing inexplicable lapses. The overall trend is however positive and we are 
forecasting to grow our sales year on year, despite the loss of government 
support. 
 
The hospitality industry is likely to face some challenging months ahead, 
particularly next winter if the cost of utilities does not subside. However, 
our businesses have been positioned to appeal to the mid-market and above, 
where there is more disposable income and affordability. In the medium to 
longer term people still want to socialise, treat themselves to a trip away or 
a meal out with their family and friends, so whilst we may see some short term 
challenges the business is invested in long term sustainable markets. The pub 
will continue to play its critical role - it is the social glue that holds 
communities together and helps people to fend off loneliness and it is 
difficult to see that changing in the coming years. 
 
We are a strong business that has endured one of the most testing of times. The 
philosophy of freehold ownership of our assets is of huge benefit and the steps 
we have taken over the past year means that we do not have a legacy of debts 
and unpaid bills to deal with. 
 
Real focus on our purpose, values and culture; maintaining the quality of our 
approach; being creative and single minded in facing the inflationary threat; 
and confidence in the strength of offering will mean that we will continue to 
strive to be the best we can be and will grow the business for the future. 
 
Financial Review 
 
Results 
 
Turnover for the year ended 31 March 2022 increased by 198% to £96.0m (2021: £ 
32.2m). An operating profit of £13.3m was made compared to an operating loss of 
£9.4m in the prior year. 
 
The measurement of the interest rate swaps at fair value resulted in a credit 
to the profit and loss account of £3.8m (2021: £1.6m). 
 
Profit before taxation for the year was £12.7m (2021: loss of £12.4m). 
 
Business Review 
 
The key issues facing the Group are covered in the Chairman's Statement and 
Strategic Report. The KPIs used by the Group to monitor its overall financial 
position can be summarised as follows: 
 
                                                       2022        2021 
 
Group                                                  £m          £m 
 
Turnover                                               96.0        32.2 
 
EBITDA                                                 20.1        (2.2) 
 
Depreciation                                           6.8         7.2 
 
Operating profit (loss)                                13.3        (9.4) 
 
Profit (loss) before tax                               12.7        (12.4) 
 
Net debt                                               61.6        78.8 
 

Earnings (loss) per share (pence)                      20.6        (17.8) 
 
Pubs and Inns 
 
                                                       £m          £m 
 
Turnover                                               52.1        19.0 
 
EBITDA                                                 18.8        5.4 
 
Depreciation                                           3.2         3.5 
 
Operating profit (before Group central charges)        15.6        1.9 
 
Average number 
Tenanted                                                   219         226 
Managed                                                    14          12 
 
Hotels & Spas 
 
                                                       £m          £m 
 
Turnover                                               43.9        13.2 
 
EBITDA                                                 10.1        (1.0) 
 
Depreciation                                           3.1         3.3 
 
Operating (loss) profit (before Group central charges) 7.0         (4.3) 
 
Average number                                         10          10 
 
The principal non-financial indicators monitored by management are: 
 
Pubs and Inns 
 
Utility consumption, health and safety incidents, beer volumes, customer 
ratings and tenant recruitment. 
 
Hotels 
 
Room occupancy rates, customer ratings, health and safety incidents, spa 
memberships and wedding and event numbers. 
 
Interest rate swaps measured at fair value 
 
The Group has interest rate swaps for £55m which are recognised as a financial 
liability.  The recent increases in interest rates and expectations of further 
increases led to a reduction in the fair value of the interest rate swaps, 
which resulted in a credit to the profit and loss account for the year ended 31 
March 2022 of £3.8m (2021: £1.6m). 
 
Interest payable 
 
Whilst loan capital has reduced from £78.5m at the start of the year to £67.0m 
at the year end, increasing interest rates resulted in net interest payable 
increasing slightly to £4.0m (2021: £3.9m). 
 
Taxation 
 
There is a tax charge of £0.6m on the profit for the year, an effective rate of 
4.7% due to a credit to deferred tax in respect of the pension schemes. 
 
Earnings per share 
 
Earnings per share of 20.6p (2021: loss per share 17.8p). 
 
Dividend 
 
The last dividend paid by the Company was in January 2020, prior to the start 
of the pandemic. As the performance of the business has recovered strongly over 
the past year, the Board recommends a final dividend in respect of the year 
ended 31 March 2022 of 2.2p per share. 
 
Cash ?ow and ?nancing 
 
The Group's net borrowing decreased by £17.2m, from £78.8m at 31 March 2021 to 
£61.6m at 31 March 2022 due to the recovery of the business. 
 
The Group has £45m of long-term debt, £22m of bank loans and cash balances of £ 
5.4m at 31 March 2022. The Group has three-year revolving credit bank 
facilities which are due to be renewed in the first quarter of 2023, which is 
less than 12 months from the date of the balance sheet. Consequently, bank 
loans are shown within current liabilities at 31 March 2022. 
 
Pensions 
 
The Group made contributions to the defined benefit pension schemes of £1.2m 
(2021: £0.4m). Whilst these schemes were closed in August 2009, the Group is 
committed to the long-term funding of the schemes. At 31 March 2022 the schemes 
had a combined surplus, before tax, of £10.1m which was a movement of £30.0m 
from a deficit of £19.9m, before tax, at 31 March 2021. 
 
The movement from deficit to surplus was due to an increase in the value of 
scheme assets and a significant fall in liabilities due to increases in bond 
yields. 
 
Property 
 
During the year we sold 15 pubs and our old brewery site for a total of £7.5m 
generating a profit against book value, after disposal costs, of £1.0m. 
 
In line with our accounting policy, 20% of our properties were subject to a 
formal revaluation, and additionally an impairment review was carried out on 
the rest of our property estate.  This resulted in an increase in the total 
value of our property portfolio of £1.9m, of which £2.2m was added to the 
revaluation reserve and £0.3m deducted from cost and charged to the profit and 
loss account. 
 
Treasury policy and ?nancial risk management 
 
Treasury policies are subject to Board approval. All borrowings are in sterling 
and comprise a mixture of fixed interest loans and facilities carrying SONIA 
related floating rates. The Group has interest rate swaps for £55m where it is 
committed to pay the difference between SONIA and fixed interest rates. At 31 
March 2022 a financial liability of £11.4m has been recognised in respect of 
these interest rate swap contracts. 
 
Going Concern 
 
At 31 March 2022 the Company had total borrowing facilities of £83m, which were 
made up of the long-term loan of £45m, revolving credit facilities of £35m, and 
overdraft facilities of £3m. When compared to net debt of £61.6m at 31 March 
2022, this gave headroom of £21.4m. 
 
The Company has generated positive cashflows over the period, such that it has 
reduced its net debt by £17.2m during the year and has comfortably met all of 
its banking covenants. Its financial modelling shows that it is expected to be 
cash generative and meet its banking covenants for at least the next twelve 
months. 
 
The revolving credit facilities are due to be renewed in the first quarter of 
2023 and the Directors believe that this process will have a satisfactory 
outcome. 
 
The Directors therefore believe that the Company has the cash flows and 
facilities to meet its needs for the foreseeable future. 
 
Kevin Wood 
 
Finance Director 
 
14 June 2022 
 
EXTRACT FROM AUDITED FULL FINANCIAL STATEMENTS FOR THE YEARED 
 
31 MARCH 2022 
 
GROUP PROFIT AND LOSS ACCOUNT 
 
                                                                                    2022    2021 
                                                                                     £'m     £'m 
 
Turnover                                                                            96.0    32.2 
 
Cost of sales                                                                     (72.7)  (42.8) 
 
Gross profit (loss)                                                                       (10.6) 
                                                                               23.3 
 
Distribution costs                                                                 (3.3)   (2.5) 
 
Administrative expenses                                                            (9.4)   (7.8) 
 
Other operating income                                                               1.7    11.3 
 
Operating profit (loss) before                                                      12.3   (9.6) 
property disposals 
 
Property disposals                                                                   1.0     0.2 
 
Operating profit (loss)                                                             13.3   (9.4) 
 
Net interest payable                                                               (4.0)   (3.9) 
Gain on interest rate swaps 
measured at fair value                                                               3.8     1.6 
 
Finance charge on pension                                                          (0.4)   (0.7) 
liability 
 
Profit (loss) on ordinary                                                                 (12.4) 
activities before taxation                                                     12.7 
 
Taxation on profit (loss) for                                                      (0.6) 
the year                                                                                   1.9 
 
Profit (loss) on ordinary                                                                 (10.5) 
activities after taxation                                                      12.1 
 
 
  Earnings (loss) per 
share 
                      20.6p  (17.8)p 
 
 
 
 DANIEL THWAITES PLC 
 
GROUP BALANCE SHEET 
At 31 March 2022                                                                2022 2021 
                                                                                 £'m £'m 
 
___________________________________________________________________________ _______  _______ 
 
Fixed Assets 
 
Tangible assets                                                                292.9       291.0 
 
Investments                                                                      0.6         0.6 
___________________________________________________________________________  _______     _______ 
 
                                                                               293.5       291.6 
 
Current assets 
 
Stocks                                                                           0.7         0.5 
 
Trade and other debtors                                                          5.5        10.4 
 
Cash at bank and in hand                                                         5.4         0.3 
___________________________________________________________________________  _______     _______ 
 
Creditors due within one year                                                   11.6        11.2 
 
Trade and other creditors                                                     (20.6)       (9.8) 
 
Loan capital and bank overdraft 
___________________________________________________________________________  (22.0)    (11.6) 
                                                                            _______ 
                                                                                       _______ 
 
                                                                                          (21.4) 
                                                                             (42.6) 
 
 
Net current liabilities                                                      (31.0)    (10.2) 

___________________________________________________________________________ _______    _______ 
 
Total assets less current liabilities                                          262.5       281.4 
 
Creditors due after one year                                                  (60.0)      (85.0) 
___________________________________________________________________________   ______     _______ 
 
 
Net assets excluding pension asset (liability)                                 202.5       196.4 
___________________________________________________________________________  _______     _______ 
 
 
Pension asset (liability)                                                       10.1      (19.9) 
___________________________________________________________________________  _______     _______ 
 
Net assets including pension asset (liability)                                 212.6       176.5 
___________________________________________________________________________  _______     _______ 
 
Capital and reserves 
 
Called up share capital                                                         14.7        14.7 
 
Capital redemption reserve                                                       1.1         1.1 
 
Revaluation reserve                                                             75.1        74.8 
 
Profit and loss account                                                        121.7        85.9 
 
___________________________________________________________________________  _______    ________ 
 
 
Equity shareholders' funds                                                     212.6       176.5 
___________________________________________________________________________ ________    ________ 
 
DANIEL THWAITES PLC 
 
GROUP CASH FLOW STATEMENT 
 
For the year ended 31 March 2022 
 
                                                                                2022          2021 
                                                                                 £'m           £'m 
__________________________________________________________________________   _______       _______ 
 
 
Cash flow from operating activities                                             28.2         (5.4) 
 
Tax received (paid)                                                              1.4         (0.2) 
 
Cash flow from financing activities                                           (17.9)          6.9 
 
Cash flow from investing activities                                            (6.0)         (1.7) 
 
Equity dividends paid                                                              - 
__________________________________________________________________________   _______       - 
                                                                                        _______ 
 
 
Increase (decrease) in cash and cash equivalents                                 5.7         (0.4) 
Cash and cash equivalents at beginning of year                                 (0.3)           0.1 
__________________________________________________________________________   _______       _______ 
Cash and cash equivalents at end of year                                         5.4         (0.3) 
Loan capital                                                                  (67.0)        (78.5) 
__________________________________________________________________________   _______       _______ 
Net debt                                                                      (61.6)        (78.8) 
 
Reconciliation of net cash flow to movement in net debt 
 
Increase (decrease) in cash                                                                  (0.4) 
                                                                              5.7 
 
Cash flow from decrease (increase) in debt                                                 (13.0) 
___________________________________________________________________________   11.5      _______ 
                                                                            _______ 
 
                                                                                            (13.4) 
                                                                              17.2 
 
Net debt at beginning of year                                                 (78.8)        (65.4) 
___________________________________________________________________________  _______       _______ 
 
 
Net debt at end of year                                                       (61.6)        (78.8) 
___________________________________________________________________________ ________      ________ 
 
 
 
END 
 
 

(END) Dow Jones Newswires

June 14, 2022 10:36 ET (14:36 GMT)