INTERIM RESULTS FOR THE SIX MONTHS ENDED
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 progressed.
Turnover for the period of
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
Net debt at
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 complete.
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
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,
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 space.
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
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 experience.
We have continued our ongoing refurbishment programme and have spent
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
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 audience.
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
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 last.
The Board recommends an interim dividend of 1.10p (2017: 1.10p) to be paid on
I am delighted to confirm that he will be replaced by
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
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 market.
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
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 growth.
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
Profit and Loss Account for the six months ended
Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 March 30 September 2018 30 September 2017 2018 GBP’m GBP’m 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 (0.5) (0.5) (1.0) liability ______ ______ ______ Profit on ordinary 6.4 6.8 9.8 activities before taxation Taxation (Note 2) (1.4) (1.5) (1.7) ______ ______ ______ Profit on ordinary 5.0 5.3 8.1 activities after taxation ______ ______ ______ Earnings per share 8.5p 9.0p 13.8p
Balance Sheet as at
Unaudited Unaudited Audited 30 September 2018 30 September 2017 31 March GBP’m GBP’m 2018 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 300.6 290.9 293.9 liabilities Creditors due after one year (89.2) (82.8) (84.8) ______ ______ ______ Net assets excluding pension 211.4 208.1 209.1 liability Pension liability (34.2) (38.5) (34.9) ______ ______ ______ Net assets including pension 177.2 169.6 174.2 liability ______ ______ ______ 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
The taxation charge is based on the estimated tax rate for the year.