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THW - Daniel Thwaites News Story

103p -0.7  -0.7%

Last Trade - 21/01/22

Consumer Defensives
Small Cap
Market Cap £60.6m
Enterprise Value £122.0m
Revenue £58.2m
Position in Universe 1167th / 1804

Thwaites (Daniel) Plc: Half-year Report

Tue 12th November, 2019 9:00am



In a difficult retail environment, the company has benefited from the
investments made last year, a stronger UK leisure market and some improvement
in corporate hotel demand.

Turnover for the half year of GBP53.4m (2018: GBP49.9m) represents a 7%
increase, operating profit has increased by 9% to GBP8.7m (2018: GBP8.0m).

The current political and economic uncertainty has resulted in a current
expectation that interest rates will fall in the short to medium term and this
has had a negative impact on the fair value of our interest rate swaps. This
has required an increase in the provision of GBP4.0m at the half year (2018:
GBP0.6m reduction in the provision), and this negative movement is shown in
our profit and loss account.

Net debt at 30 September 2019 was GBP61.6m (2018: GBP70.2m); reduced by
GBP8.6m due to a reduced capital investment programme and the disposals of
some non-core properties.


Our tenanted pubs have had a good first half to the year despite mixed weather
compared to last year’s summer heatwave. The investments we have made over
recent years mean that our pubs’ balanced income streams provide resilience
in the face of the ups and downs of the British climate.

Turnover has risen by 2% on a like for like basis and operating profit is
level with last year. We have completed 12 investment schemes in the first
half of the year, investing GBP1.3m and continue to make good returns on our

Major refurbishments schemes have been carried out at Blue Bell, Carlton in
Lindrick; Boot & Shoe, Elswick and Malt Shovel, Barkby.

Our Inns have had an excellent summer, with turnover up by 19% and operating
profit up by 45%. They too are benefiting from investment and their premium
positioning puts them in an area of growth. The major investment made last
year at the Beverley Arms, and the year before at The Crown in Pooley Bridge
have contributed to this strong performance.


In the hotels & spas sales for the first half of the year have grown by 5%,
with operating profits growing by 3%. The hotels have experienced a strong
leisure market from UK tourism over the summer as well as improvements in
corporate bedroom and meeting room demand.

The reorganisation of our hotel management structure that was completed in the
first half of last year is delivering the intended efficiency gains and
renewed focus of our operations teams. This has helped to drive the increase
in sales and improve operating margins which has helped to absorb previously
highlighted cost increases, in particular from wage costs associated with the
national living wage, auto-enrolment and natural market inflation from
candidate shortages in key positions.

The performance has also benefited from a reduced level of disruption from
lower levels of capital expenditure following the significant refurbishment
programme we completed last year, although we have spent GBP1.6m in the


During the period we launched our new core beer range which is only available
in our own properties. The range consists of five cask beers, Original, Gold,
Amber, IPA and Mild, which have been very well received by our customers such
an extent that our new brewery at Mellor Brook is operating at full capacity.


When we sold our Free Trade business to Marston’s in 2015 we retained our
investment in one large free trade account in Blackpool. Over a number of
years, we had advanced loans to the business, secured over its freehold
assets. Funny Girls comprised a popular cabaret venue and a nightclub based in
the historic art deco Odeon cinema in the heart of the town, together with two

In September 2018 administrators were appointed to the business, which was
marketed for sale, but as no buyer was found we assumed ownership of it in
January 2019 in settlement of our outstanding debt. The former owner of the
business approached us to buy part of the business back, and we sold the Odeon
cinema to him in August 2019. This alleviated significant distraction, whilst
retaining ownership of the pubs.

In addition to selling Funny Girls, we sold three pubs and a parcel of land
adjacent to one of our pubs for a total of GBP5.1m generating a profit of


The basic earnings per share for the period was 2.7p per share (2018: 8.5p).
This movement is largely due to the year on year non-cash movement in the fair
value of our interest rate swaps, which was negative this year against a
positive last year. The underlying earnings per share, excluding the impact of
the interest rate swap movement is 9.5p (2018: 7.5p).


The Board recommends an interim dividend of 1.10p (2018: 1.10p) to be paid on
2 January 2020 to shareholders on the register on 6 December 2019.


As previously announced, Mark Fisher was appointed as an independent
non-executive director on 1 June 2019. Mark is currently Chief Development
Officer of Merlin Entertainments plc, where he has been a member of the senior
management team for over 18 years. We were delighted that he agreed to join us
and are excited by the new perspective that he brings.


For the past few years our priority has been a large capital investment
programme to reposition our properties and improve the quality of our assets.

Our plan this year has been to drive sales, control costs and invest carefully
in order to fully understand how the business trades without the disruption it
absorbed during the recent investment programme.

The Company has posted a strong performance for the first half and the focus
on our core businesses, whilst disposing of those that were non-core has
strengthened its financial position.

We will continue to adopt the same approach for the rest of the year, being
ready to move forward once clarity on a new government and Brexit comes, and
in a strong position to be agile should opportunities to acquire new assets

Richard Bailey


12 November 2019

Profit and Loss Account for the six months ended 30 September 2019

                                                                                                                                              Unaudited                                 Unaudited                                Audited 
                                                                                                              6 months  ended  30 September 2019  GBP’m    6 months ended 30 September 2018 GBP’m    12 months ended 31 March 2019 GBP’m 
 Turnover                                                                                                                                          53.4                                      49.9                                   96.9 
 Operating profit                                                                                                                                   8.7                                       8.0                                   11.7 
 Property disposals                                                                                                                         0.8  ______                               0.2  ______                            0.1  ______ 
 Profit before interest  Net interest payable (Loss) profit on interest rate swaps measured at fair value                           9.5   (2.0)   (4.0)                           8.2  (1.9)  0.6                     11.8  (3.9)  (2.5) 
 Finance charge on pension liability                                                                                                              (0.5)                                     (0.5)                                  (0.9) 
                                                                                                                                                 ______                                    ______                                 ______ 
 Profit on ordinary activities  before taxation                                                                                                     3.0                                       6.4                                    4.5 
 Taxation                                                                                                                                         (1.4)                                     (1.4)                                  (1.0) 
                                                                                                                                                 ______                                    ______                                 ______ 
 Profit on ordinary activities after taxation                                                                                                       1.6                                       5.0                                    3.5 
                                                                                                                                                 ______                                    ______                                 ______ 
 Earnings per share                                                                                                                                2.7p                                      8.5p                                   5.9p 

Balance Sheet as at 30 September 2019

                                                                       Unaudited                  Unaudited                Audited 
                                                        30 September 2019  GBP’m    30 September 2018 GBP’m    31 March 2019 GBP’m 
 Fixed assets Tangible assets Investments                     293.3  1.0  ______           297.2 3.2 ______       298.0 0.8 ______ 
                                                                           294.3                      300.4                  298.8 
 Current assets                                                                                                                    
 Stocks                                                                      0.7                        0.6                    0.7 
 Trade and other debtors                                                    10.8                       12.8                    9.8 
 Cash at bank and in hand                                                    5.9                        2.3                    3.8 
                                                                          ______                     ______                 ______ 
                                                                            17.4                       15.7                   14.3 
 Creditors due within one year                                                                                                     
 Trade and other creditors Loan capital                           (17.0)  (22.5)                   (15.5) -          (15.2) (28.5) 
                                                                          ______                     ______                  _____ 
 Net current (liabilities) assets                                (39.5)   (22.1)                (15.5)  0.2         (43.7)  (29.4) 
                                                                          ______                     ______                 ______ 
 Total assets less current liabilities                                     272.2                      300.6                  269.4 
 Creditors due after one year                                             (67.0)                     (89.2)                 (63.9) 
                                                                          ______                     ______                 ______ 
 Net assets excluding pension liability                                    205.2                      211.4                  205.5 
 Pension liability                                                        (24.9)                     (34.2)                 (24.8) 
                                                                          ______                     ______                 ______ 
 Net assets including pension liability                                    180.3                      177.2                  180.7 
                                                                          ______                     ______                 ______ 
 Capital and reserves                                                                                                              
 Called up share capital Capital redemption reserve                    14.7  1.1                   14.7 1.1               14.7 1.1 
 Revaluation reserve                                                        73.8                       77.3                   74.1 
 Profit and loss account                                                    90.7                       84.1                   90.8 
                                                                          ______                     ______                 ______ 
 Equity shareholders’ funds                                                180.3                      177.2                  180.7 
                                                                          ______                     ______                 ______ 


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 2019.

2. Taxation

The taxation charge is based on the estimated tax rate for the year.

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