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DJ Thwaites (Daniel) Plc Half-year Report

The company has benefitted from some excellent summer weather and a good 
football world cup run in the first half of the year. However, headwinds in the 
form of increasing costs and weakening corporate and consumer confidence linked 
to the political landscape have presented challenges as the year has 
Turnover for the period of GBP49.9m (2017: GBP48.0m) represents a 4% increase. 
Operating profit of GBP8.0m (2017: GBP7.7m) also represents an increase of 4%. 
The expectation that the bank base rate may increase in the short to medium 
term has again had a positive impact on the fair value of our interest rate 
swaps, leading to a reduction in the provision of GBP0.6m at the half year 
(2017: GBP1.4m) and this positive movement is shown in our profit and loss 
Net debt at 30 September 2018 was GBP70.2m (2017: GBP60.9m); increased as a 
result of the investments that we have made at the Beverley Arms and our new 
brewery, offices and stables. 
The construction of our new brewery, offices and stables is now finished and we 
were very pleased to move there in September. We have awarded the demolition 
contract for our old brewery site, which will take just over a year to 
Pubs and Inns 
Our tenanted pubs have had an excellent first half to the year - they are 
benefitting from sustained investment over a number of years and so were well 
positioned to take advantage of the heatwave experienced over the summer and 
the football world cup. 
Once again our average earnings per pub has risen, by 14%, with like for like 
turnover up by 5% and operating profit up by 7%. We have completed 12 
investment schemes in the first half of the year, investing GBP1.7m and 
continue to make good returns on our investments. 
Major refurbishment schemes have been carried out at The Red Lion, Wybunbury, 
The Millstone, Darwen, The Holcombe Tap, Ramsbottom and The Queen Anne in Bury. 
Our Inns have also had a good summer, with turnover up by 27% and operating 
profit up by 25%. They too are benefitting from investment and their premium 
positioning and are in fairly robust health. The major investments made last 
year at The Royal, Heysham; The Crown, Pooley Bridge; The Lister Barn, Malham; 
The Fleece, Cirencester and The Royal Oak, Keswick have all contributed to this 
strong performance. 
We opened The Beverley Arms in July, later than we would have hoped, but just 
in time to capture the latter part of the summer trading period. The property 
has 38 bedrooms, a bar and restaurant area, as well as a large outside trading 
I am pleased to report strong trading since opening, ahead of expectations and 
to positive local reviews. 
We have sold five poor quality pubs for GBP1.6m, generating a profit of 
Hotels & Spas 
In the hotels & spas sales for the first half of the year have grown by 1%, 
although on a like for like basis they have declined by 2% due to a softening 
in corporate demand. 
We have had to absorb some significant increases in government imposed costs; 
continued increases to the living wage, auto enrolment pension costs, business 
rates and renewable energy levies - these are outside our control and we have 
been unable to grow sales at a sufficient rate to absorb them. Inflation caused 
by the decline in the value of sterling has led to food and utility increases. 
Consequently, operating profits have decreased by 12% year on year. 
We have completed the reorganisation of our hotel management structure in the 
period to make efficiency gains and re-focus our operations teams. This will 
significantly shorten the span of control in our hotel teams which we believe 
will enhance our sales function and more importantly enrich the customer 
We have continued our ongoing refurbishment programme and have spent GBP2.8m in 
the half year.  The current refurbishment programme in our hotels is now 
largely complete. 
Brand Review 
During the period we undertook a review of the marketing of our inns and 
hotels, particularly to review how we encourage people to re-visit us across a 
number of different property types. 
As a result we have relaunched our properties under a new collective, which we 
have called The House of Daniel Thwaites. The purpose of this was not to build 
another hotel collection in a crowded market but to celebrate our family of 
highly individual, characterful properties, in a way that preserves their 
Our ethos is to offer guests in our managed properties rich experiences and 
build on our reputation for high quality places to eat, drink and relax where 
people can feel genuinely at home. 
An important part of this transition was to build new websites for each of our 
managed properties, which were completed and launched in July. We are pleased 
with the results and believe that it will allow us to market our properties in 
a new and different manner, helping us to appeal to a niche but discerning 
Funny Girls 
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 comprises a popular cabaret venue, a nightclub and several bars 
based in the historic art deco Odeon cinema in the heart of the town; it is an 
iconic part of Blackpool's nightlife. 
In September administrators were appointed to the business, which is now being 
marketed for sale. Since administration we have been operating the business 
under license, which may or may not become a longer term arrangement depending 
on the outcome of the sale process. 
Whilst it is our preference that a new owner be found to take the business 
forward, equally we are ready do so under our own stewardship should that be 
required. We expect that the position will be clearer by the end of the 
financial year. 
Change of Auditor 
The Board has conducted a review of the Group's audit arrangements and, 
following a tendering process, has decided to appoint BDO LLP to replace KPMG 
LLP for the financial year ending 31 March 2019. 
Earnings per Share 
The basic earnings per share for the period was 8.5p per share (2017: 9.0p). 
This movement is largely due to the year on year movement in the fair value of 
our interest rate swaps, which whilst again positive this year, is less so than 
The Board recommends an interim dividend of 1.10p (2017: 1.10p) to be paid on 3 
January 2019 to shareholders on the register on 7 December 2018. 
Board Changes 
John Barnes has decided to step down as a non-executive director on 31 December 
2018. I would like to thank John for his valuable contribution over the past 4 
years. His experience in many different hospitality and restaurant businesses 
has been invaluable to us as we have grown our managed operations. 
I am delighted to confirm that he will be replaced by Andrew Stothert who will 
join us from 1 January 2019. Andrew is the Chief Executive of Brand Vista, and 
one of its founding partners. 
Andrew has been an integral part in building Brand Vista into a highly regarded 
consumer brand consultancy and is passionate about helping his clients build 
genuinely differentiated brands that deliver a customer experience that becomes 
"irresistible". I am sure that his disciplined approach to what matters to the 
customer will help us remain focused and encourage us to evolve in a fast 
moving market. 
After 18 years as Chairman, I also intend to step down from that role at the 
end of the current financial year. I will be replaced by Rick Bailey, our Chief 
Executive, who, with the support of the rest of the board and our family 
shareholders, will become Executive Chairman. 
The Company is in good shape following a prolonged period of investment and our 
financial results have moved forward in a challenging market.  Our pubs, inns 
and hotels are now in a strong position to weather any further changes in the 
We have opened an exciting new property in Beverley, together with our new 
small and artisan brewery. We have a differentiated approach to the beer and 
pub market that is shaped around our ability to offer our own award winning 
beers for sale exclusively in our own properties. 
We have delivered on our goal to move from Blackburn town centre after over 200 
years to our new home at Mellor Brook.  This is a momentous change that should 
not be understated in our ambition to evolve our business for the future 
leaving behind our industrial past, whilst not failing to acknowledge its' 
place in our heritage. 
These past six months have cemented the delivery of a longer term plan and 
there is much to celebrate. However, there is no doubt that the second half of 
this year will be a challenge, particularly in our hotels business, which is 
having to absorb cost increases that we are struggling to recoup through sales 
Whilst I firmly believe that our business is in a strong position to move 
forward into the future, we face challenges to our trade, which are almost 
exclusively politically induced.  For the time being our focus must move to 
making the most of our assets and tightening our operational performance. We 
expect continued volatility and uncertainty in the negotiations around Brexit, 
so we maintain a cautious outlook and will be watchful. 
Mrs A J M Yerburgh 
13 November 2018 
Profit and Loss Account for the six months ended 30 September 2018 
                                                                                     Unaudited        Unaudited                                                                          Audited 
                                                                                       6 months        6 months                                                                  12 months ended 

(MORE TO FOLLOW) Dow Jones Newswires

November 13, 2018 04:00 ET (09:00 GMT)

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

                                                                                          ended           ended                                                                         31 March 
                                                                              30 September 2018    30 September                                                                             2018 
                                                                                        GBP'm              2017                                                                            GBP'm 
Turnover                                                                                   49.9            48.0                                                                             92.2 
Operating profit                                                                            8.0             7.7                                                                            12.9 
Property disposals                                                                          0.2               -                                                                              0.1 
                                                                                         ______          ______                                                                           ______ 
Profit before interest                                                                      8.2             7.7                                                                             13.0 
Net interest payable                                                                      (1.9)           (1.8)                                                                            (3.5) 
Gain on interest rate swaps measured at fair 
value                                                                                       0.6             1.4                                                                              1.3 
Finance charge on pension liability                                                       (0.5)           (0.5)                                                                            (1.0) 
                                                                                         ______          ______                                                                           ______ 
Profit on ordinary activities                                                               6.4             6.8                                                                              9.8 
before taxation 
Taxation (Note 2)                                                                         (1.4)           (1.5)                                                                            (1.7) 
                                                                                         ______          ______                                                                           ______ 
Profit on ordinary activities after taxation                                                5.0             5.3                                                                              8.1 
                                                                                         ______          ______                                                                           ______ 
Earnings per share                                                                         8.5p     9.0p                                                                                   13.8p 
Balance Sheet as at 30 September 2018 
                                                                   Unaudited     Unaudited      Audited 
                                                                30 September  30 September     31 March 
                                                                        2018          2017         2018 
                                                                       GBP'm         GBP'm        GBP'm 
Fixed assets 
Tangible assets                                                        297.2         287.7        289.5 
Investments                                                              3.2           3.0          3.1 
                                                                      ______        ______       ______ 
                                                                       300.4         290.7        292.6 
Current assets 
Stocks                                                                   0.6           0.6          0.6 
Trade and other debtors                                                 12.8          12.6         12.6 
Cash at bank and in hand                                                 2.3           2.6          2.8 
                                                                      ______        ______       ______ 
                                                                        15.7          15.8         16.0 
Creditors due within one year 
Trade and other creditors                                             (15.5)        (15.6)       (14.7) 
                                                                      ______        ______       ______ 
Net current assets                                                       0.2           0.2          1.3 
                                                                      ______        ______       ______ 
Total assets less current liabilities                                  300.6         290.9        293.9 
Creditors due after one year                                          (89.2)        (82.8)       (84.8) 
                                                                      ______        ______       ______ 
Net assets excluding pension liability                                 211.4         208.1        209.1 
Pension liability                                                     (34.2)        (38.5)       (34.9) 
                                                                      ______        ______       ______ 
Net assets including pension liability                                 177.2         169.6        174.2 
                                                                      ______        ______       ______ 
Capital and reserves 
Called up share capital                                                 14.7          14.7         14.7 
Capital redemption reserve                                               1.1           1.1          1.1 
Revaluation reserve                                                     77.3          78.3         77.5 
Profit and loss account                                                 84.1          75.5         80.9 
                                                                      ______        ______       ______ 
Equity shareholders' funds                                             177.2         169.6        174.2 
                                                                      ______        ______       ______ 
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 2018. 
2. Taxation 
The taxation charge is based on the estimated tax rate for the year. 

(END) Dow Jones Newswires

November 13, 2018 04:00 ET (09:00 GMT)