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DJ Thwaites (Daniel) Plc Half-year Report

 
TIDMTHW 
 
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016 
 
CHAIRMAN'S STATEMENT 
 
Results 
 
The first half of the year has been challenging due to the impact of the 
implementation of the National Living Wage from April 2016 and the UK's 
decision to leave the European Union. 
 
Turnover for the period of GBP44.0m (2015: GBP41.8m) represents a 5% increase 
in our continuing operations.    Operating profit of GBP7.4m (2015: GBP7.1m) 
represents an increase of 6% in our continuing operations. The impact of the 
returns on the investments we made in our properties last year, in particular 
the additional 30 bedrooms at Cottons Hotel & Spa in Knutsford, have helped to 
mitigate the impact of the National Living Wage. The success of this and the 
other investments we have made over the past few years has given us the 
confidence to embark on a major investment programme to underpin our future 
growth. 
 
The surprise decision to leave the European Union has not had any adverse 
impact on our trading performance to date. However, the subsequent reduction in 
bank base rate to 0.25% and the market expectation of a prolonged period of low 
interest rates has had an adverse impact on the fair value of our interest rate 
swaps, requiring a further provision of GBP5.7m at the half year. 
 
Net debt at 30 September 2016 was GBP34.9m (2015: GBP29.1m), which has 
increased due to a number of investment projects that are underway. 
 
We have finalised the plans for our new offices, brewery and stables and have 
submitted them to Ribble Valley Planning Department. We hope to be in a 
position to start the building work before the year end, with the objective of 
relocating in 2018. 
 
We have refreshed our brand identity to help better reflect our operations and 
have constructed and launched a new website. Shire Hotels and Inns of Character 
have been brought together under the Thwaites umbrella. Whilst these businesses 
operated independently in the marketplace, and did so very successfully, we 
felt that a simpler structure would be clearer for our customers. We have 
brought together all our pubs, inns, hotels & spas and lodges under one roof, 
with a single website selling all guest rooms, restaurants, conference and spa 
facilities. Furthermore this allows more structured development of our team 
members by facilitating movement between the different parts of the business. 
 
Pubs 
 
In the Pubs, the investments in our properties, together with disposing of 
poorer quality pubs, continues to improve the quality of our estate and raise 
the average contribution per pub. 
 
Our focus continues to be on improving the scale of food sales within the 
estate, adding letting bedrooms where possible and attracting the very best 
individuals to partner with. Sales growth has been 5% in the first half of the 
year, and operating profits have grown by 4%. 
 
We have sold eight poor quality pubs and a piece of land for GBP1.4m, at 
valuations that were broadly in line with their net book values. 
 
We have spent GBP2.3m on pub investment projects in the first half year, 
including extending and refurbishing The Bonny Inn, at Salesbury near 
Blackburn, together with major refurbishments at The George at Torrisholme, 
near Morecambe, and The White Boar, in Bury. 
 
There are several large pub projects currently underway which will be completed 
in the second half of the year. Last year we acquired The Royal, a characterful 
property in the old village of Heysham on the Lancashire coast, which is being 
fully refurbished to include 11 letting bedrooms and a large outdoor trading 
area. The Boot and Shoe, which is situated to the south of Lancaster, and was 
also acquired last year, is being extended and fully refurbished to include a 
wood-fired pizza oven. At The Boatyard Inn, near Blackburn we are developing an 
existing canalside site with a new concept, Grill & Grain, which will include a 
micro-brewery and a large wood-fired grill. 
 
Inns 
 
In the Inns sales have increased by 5% compared to last year, aided by major 
refurbishment schemes at The Lion at Settle and The Toll House, Lancaster, 
which were completed in the second half of last year. 
 
Operating profits are in line year on year due to the impact of implementing 
the National Living Wage. 
 
Last year we acquired a derelict property close to The Lister Arms, Malham, 
which we are currently converting into 'The Lister Barn' which will provide an 
additional eight letting bedrooms, a communal area for families and large 
groups, and some staff accommodation. The construction work is nearing 
completion and it will open this month. 
 
The Crown Inn, Pooley Bridge, was also acquired last year and is currently 
under development to add 18 letting bedrooms, a riverside dining room and a 
roof terrace overlooking Ullswater. 
 
We have submitted plans for the complete renovation of The Beverley Arms, 
Beverley, which we acquired earlier in the year. We hope to start work early in 
the New Year and open in the late summer of 2017. 
 
In the past month we have been named by Chester Council as their preferred 
partner to redevelop Dee House, a Grade II listed Georgian building which 
overlooks the amphitheatre in Chester. This is a very exciting project, the 
details of which will develop over the coming months. 
 
Hotels & Spas 
 
In September we were delighted to be named AA Hotel Group of the Year 2016-17. 
The award is presented to hotel groups that have a proven track record of 
providing the very best levels of service, food and accommodation across a 
number of properties. 
 
It is the second time we have won the award, a feat only achieved by a small 
handful of hotel groups. 
 
In the Hotels & Spas sales for the first half of the year have grown by 7%, 
which includes the benefit of the additional 30 bedrooms that were completed in 
December 2015 at Cottons Hotel & Spa, Knutsford. Operating profits have grown 
by only 2% due to the impact of implementing the National Living Wage. 
 
In August the building work started on a new 54 bedroom lodge, which is on part 
of the site at The Solent Hotel & Spa, Fareham, it is scheduled to open in time 
for Easter 2017. 
 
Elsewhere in the hotels we have continued with our accelerated programme to 
refurbish our bedrooms, completing 37 bedrooms in the half year. This will 
allow us to take full advantage of the potential increase in incoming and 
domestic tourism following the devaluation of the pound following the decision 
to leave the European Union. 
 
Board 
 
As recently announced, Nick Mackenzie was appointed as an independent 
non-executive director on 1 November. Nick is currently the Managing Director 
of Merlin Entertainments plc's Midway Attractions operating group which 
operates over 100 attractions across 21 countries with 40 million visitors last 
year. We are delighted that he has agreed to join our Board and his experience 
will help us as we continue to develop our business. 
 
Earnings per Share 
 
Due to the impact of the interest rate swaps we have reported a basic loss per 
share of 0.5p per share (2015: 7.2p). 
 
Dividend 
 
The Board recommends an interim dividend of 1.10p (2015: 1.10p) to be paid on 3 
January 2017 to shareholders on the register on 2 December 2016. 
 
Summary 
 
The first half of the financial year has provided us with good underlying 
growth in all areas of the business. During this period we have started work on 
a number of development projects that, once completed, should help the company 
continue to grow. 
 
Whilst the decision to leave the European Union has created some uncertainty in 
the financial markets, particularly around inflation and interest rates, we 
have a well invested business that is in a strong position to weather any 
further economic or political storms and take advantage of opportunities as 
they arise. 
 
We continue to develop a pipeline of potential freehold properties to acquire 
and hope to be able to add further properties to our portfolio in the second 
half of the year. 
 
Mrs A J M Yerburgh 
 
Chairman 
 
14 November 2016 
 
 
 
 
Profit and Loss Account for the six months ended 30 September 2016 
 
                                               Unaudited     Unaudited       Audited 
 
                                                6 months      6 months     12 months 
                                                   ended         ended         ended 
                                            30 September  30 September      31 March 
                                                    2016          2015          2016 
                                                   GBP'm         GBP'm         GBP'm 
 
Turnover - continuing operations                    44.0          41.8          81.4 
Turnover - discontinued operations                     -           3.2           3.2 
                                                  ______        ______        ______ 
Turnover                                            44.0          45.0          84.6 
 
Operating profit - continuing operations             7.4           7.0          11.4 
Operating profit - discontinued operations             -           0.1           0.1 
                                                  ______        ______        ______ 
 
Operating profit                                     7.4           7.1          11.5 
 
Property disposals                                   0.1         (0.1)         (0.2) 
                                                  ______        ______        ______ 
 
Profit before interest                               7.5           7.0          11.3 
 
Net interest payable                               (1.6)         (1.6)         (3.0) 
(Loss) gain on interest rate swaps 
measured at fair value                             (5.7)           0.8         (2.6) 
 
Finance charge on pension liability                (0.5)         (0.5)         (0.9) 
 
                                                  ______        ______        ______ 
 
(Loss) profit on ordinary activities               (0.3)           5.7           4.8 
before taxation 
 

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DJ Thwaites (Daniel) Plc Half-year Report -2-

Taxation (Note 2)                                      -         (1.4)         (0.2) 
 
                                                  ______        ______        ______ 
 
 
(Loss) profit on ordinary activities after         (0.3)           4.3           4.6 
taxation 
 
                                                  ______        ______        ______ 
 
 
 
 
Basic earnings per share                          (0.5)p          7.2p          7.7p 
 
Diluted earnings per share                        (0.5)p          7.2p          7.7p 
 
 
Balance Sheet as at 30 September 2016 
 
 
                                                                 Unaudited     Unaudited      Audited 
 
                                                              30 September  30 September     31 March 
                                                                      2016          2015         2016 
                                                                     GBP'm         GBP'm        GBP'm 
 
 
Fixed assets 
Tangible assets                                                      257.6         252.5        255.8 
Investments                                                            3.3           3.9          3.4 
                                                                    ______        ______       ______ 
 
                                                                     260.9         256.4        259.2 
 
Current assets 
 
Stocks                                                                 0.6           0.6          0.6 
 
Trade and other debtors                                               12.5          12.1         11.7 
 
Cash at bank and in hand                                              10.1          15.9         10.9 
 
                                                                    ______        ______       ______ 
 
                                                                      23.2          28.6         23.2 
 
Creditors due within one year 
 
 
 
Trade and other creditors                                           (12.9)        (15.7)       (13.0) 
 
                                                                    ______        ______       ______ 
 
Net current assets                                                    10.3          12.9         10.2 
 
                                                                    ______        ______       ______ 
 
Total assets less current liabilities                                271.2         269.3        269.4 
 
Creditors due after one year                                        (71.0)        (63.8)       (66.2) 
 
                                                                    ______        ______       ______ 
 
Net assets excluding pension liability                               200.2         205.5        203.2 
 
Pension liability                                                   (32.6)        (27.9)       (33.3) 
 
                                                                    ______        ______       ______ 
 
Net assets including pension liability                               167.6         177.6        169.9 
 
                                                                    ______        ______       ______ 
 
Capital and reserves 
 
Called up share capital                                               14.7          14.9         14.7 
Capital redemption reserve                                             1.1           0.9          1.1 
 
Revaluation reserve                                                   78.9          80.8         79.2 
 
Profit and loss account                                               72.9          81.0         74.9 
 
                                                                    ______        ______       ______ 
 
Equity shareholders' funds                                           167.6         177.6        169.9 
 
                                                                    ______        ______       ______ 
 
 
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 2016. 
 
2. Taxation 
 
The taxation charge is based on the estimated tax rate for the year. 
 
 
 
END 
 

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