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THWAITES (DANIEL) PLC - Annual Financial Report

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Daniel Thwaites PLC · THW

21/06/2023 10:12

THWAITES (DANIEL) PLC - Annual Financial Report PR Newswire




This last year was our 216th year in business, and one in which the Company delivered a strong set of results against a backdrop of a disruptive war in Ukraine and higher inflation than we have seen for some time.

After a strong start in the first half of the year, the environment became significantly more difficult in the second half. Despite reasonably strong increases in top line sales, increased utility costs and rising prices across a broad spectrum of goods, together with a very poor Christmas, meant that it was a struggle to convert sales to profit during the quieter months.

In recent years the business has become more orientated towards the summer months and more weather reliant and last year that certainly played an important factor. The winter was overall mild, however late winter was characterised by a prolonged period of colder and wet weather which did not kick start the traditional spring uplift in business until after Easter.


In challenging conditions, the financial performance has been strong, with turnover increasing by 13.3% to £108.8m (2022: £96.0m) and an operating profit of £12.3m (2022: £13.3m).  The earnings per share was 21.9p (2022: 20.6p).

Net Debt at 31 March 2022 was £66.7m (2022: £61.6m), which is an increase since our interim results at 30 September 2022 as a result of investment in our properties.

The Bank of England has continued to respond to higher inflation by raising interest rates at an accelerated pace to 4.5%, their highest level since 2008. As I have detailed before, 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 decrease of £6.6m in our swap liabilities and a decrease in our pension liabilities of £21.1m.  Once more the pension scheme is in an actuarial surplus, now evaluated to be £32.2m and as a result the Company has for the time being ceased paying contributions.

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 £4.12 (2022: £3.62).

Acquisitions, Developments and Disposals

During the year we have not acquired any trading assets, although we have acquired a small number of houses for staff accommodation, a process that we believe is complete for the time being.

We have started to make significant investments after pausing during 2020 and 2021, which were disrupted by the pandemic and in the year invested £15.6m (2022: £13.5m).

The Company has sold four bottom end pubs and two ancillary properties with total proceeds of £3.1m (2022: £7.5m).


The Company reinstated the final dividend last year and was able to pay an interim dividend at the half year as its profits recovered. The Board has historically looked to maintain a dividend cover of more than two times underlying earnings per share, however the Company continues to face significant uncertainty and headwinds.

Notwithstanding that, we understand that the dividend is important to our shareholders and as a result the Company recommends a final dividend of 2.4p (2022: 2.2p).

Board changes

On November 2022, in line with the Yerburgh Family’s constitution, Oscar Yerburgh passed on the role of family non-executive director to his sister Rosy McKinley. I know that Oscar will continue to take an active interest in the business, and is hugely supportive of, and engaged in, its future development. I would like to thank him for his valuable perspective and contribution to our Board discussions over the past six years.


Daniel Thwaites is unbeatable when it harnesses the immense power of a family of teams working together, collectively we are more than the sum of our parts.

Our Pride of Daniel Thwaites Awards highlight all the outstanding efforts made by individuals and teams across the Company. This year’s Awards were our most successful yet, with over 700 nominations. All across the business, people called each other out for the amazing contributions being made by their colleagues, day in day out - there were many inspirational stories, crucial to the well-being and motivation of our friends and colleagues.

The last year has been a difficult one for many of our team members and their families as they have confronted the same inflation challenges that the business has faced and I would like to thank them all for the resilience and fortitude with which they have continued to support the Company.

I would also like to thank our shareholders, your support has helped to stabilise the business and put it on a stronger footing for the future.


It seems that inflation should ease this coming year, energy prices are dropping fast in the spot markets and we are seeing evidence of a plateauing in food and other costs. We have opportunities to convert price decreases into our own cost prices and will work hard to grow our sales whilst delivering margin recovery this year.

The factors that have shaken consumer confidence are going into reverse; for the moment recession has been avoided and employment numbers are strong. Our properties are well invested and better staffed than they have been for some time and the corporate and short break domestic leisure markets are showing good bookings for the summer. We are seeing strong performances in some of our pubs and as a result we look to the coming year with cautious but increasing confidence.

R A J Bailey
20 June 2023



There was much to be positive about in a year that was overshadowed by the war in Ukraine and a lot of media hype and fear about the cost of living crisis and potential recession. This had the potential to dampen customer demand for the pubs, hotels and inns, and whilst there was undoubtably an impact, it was pleasing that total sales moved forward by more than 13%.

Staffing of the teams across the whole business continued to be a challenge, with higher than inflation labour cost increases from the national minimum wage and shortages in some locations and certain roles. The measures that we have put in place over the past 18 months, including buying more staff accommodation, increasing the use of our sponsorship licence for foreign nationals, retention bonuses in some of the seasonal businesses and increasing our pay and benefits particularly for younger people helped to fill the majority of our vacancies.

A decline in other income, relating to furlough and government grants last year which ended in April, was reinforced by increases in our input costs, particularly on food, and later in the year on utilities. The joint effect of these cost increases was a particular challenge and we were unable to recoup all of the increases through our selling prices, consequently our margins have been eroded, at least in the short term. Pitching prices at the right level to be competitive, whilst setting at a level to address the rising cost base, required several different rounds of price adjustments over the course of the year.

We initiated a comprehensive review of our energy usage with the objective of reducing it by 20%, partly through investment and partly through better operating practices. We have invested in solar panels, although securing panels has been challenging, we have invested locally in more low voltage lighting, looked at voltage optimisation, re-examined older boilers, installed log burning fires in the pubs, installed EndoTherm – an energy saving heating system additive, addressed our property Building Management Systems to harmonise best practice as well a number of other localised initiatives. Energy usage has been a major focus and this will serve us well for the future, notwithstanding reductions in energy prices.

In addition, we are focused on minimising food wastage, and weigh and report the amount of food wastage in each of our managed properties on a daily basis. We are rolling out the learnings to our tenanted pubs.

This has been a very challenging year which has seen lower operating profits. However, the actions that we have taken, together with the decline in the oil and gas prices, means that as inflationary pressure ease we are well placed to move forward.

Financial results

Turnover for the year was £108.8m, (2022: £96.0m), an increase of 13.3%. The operating profit for the year was £12.3m, (2022: £13.3m). The profit before tax, which benefited from a mark to market gain on interest rate swaps was £15.1m (2022: £12.7m). Net debt increased to £66.7m, (2022: £61.6m) an increase of £5.1m. At the year end the company had banking facilities of £82m, giving headroom to its debt facilities of £15.3m.

Last year’s results 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 was of benefit to our tenanted pubs but our managed properties did not qualify.

Pubs and Inns

Understanding our Pubs

Our freehold estate of tenanted pubs numbers approximately 210 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, looking 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 turnover of our tenanted pubs increased year on year by 10%, with EBITDA and operating profit declining marginally in real terms.

This performance was achieved despite significant disruption in the estate from closed pubs and pubs that needed to be re-let, which numbered between 20-25 pubs throughout the year, higher than our historic average. We are continuing to receive high numbers of enquiries from new customers and are taking care to make sure that we match candidates to pubs that we believe will be successful for both parties.

In addition, we have an increasing number of pubs on our Way-Inn Franchise Agreement, which helps to keep pubs open when an operator leaves and we do not have an operator ready to take the pub on with a traditional brewery tenancy, these have increased to 15 pubs at the year end.

Beer volumes increased by 1% year on year with wines and spirits up by 4% and soft drinks 2% ahead. These results reflected an improving trend in the performance of the pubs as people rediscovered the pub over the year after the disruption in the previous two years. Our gross margin improved by 2%, reflecting an ongoing and well-established move towards more premium, higher margin products across all categories. Machine income was a highlight with good growth in the year as a result of an ongoing movement to more attractive digital machines.

The media coverage of the cost of living crisis, labour shortages and supply chain inflation, in addition to the well publicised increase in utility prices have all contributed to a general squeeze on the profitability from running a pub. Financial support was extended to smaller pubs by the government on business rates and also through the Energy Bill Relief Scheme. Despite this scheme, independent operators have suffered from dysfunctionality in the utility market and many have been trapped in high price contracts, as they were forced to contract for periods of up to a year by the utility companies at the very worst time in the last year’s utility price spike. Wherever possible we have stepped in to provide further financial support to good, proactive and talented tenants who have been asked to bear extremely high risk premiums on utility rates for the hospitality industry as well as the host of other pressures caused by inflation.

The investments that we have made to improve pub gardens and outdoor trading spaces over the past few years, have been very successful in maximising the opportunities when the weather permits. We have continued to invest in our pubs, although in the current environment the appetite to increase risk from pub tenants is reduced and so large investment schemes are more difficult to deliver. We have completed major schemes in the year at The Observatory, Blackburn, The Highlands, Blackpool and The Stamford Arms, Stalybridge.


Our craft brewery continues to go from strength to strength. It has won awards for the quality of its ales and the customer feedback on the beers is very positive, although the cask market has been challenged by changing habits.  We have received new design awards for our beer range during the year, including our Majestic Imperial IPA at the Craft Brewers Conference in Nashville.

We are in the final stages of developing and launching a new craft keg range which we believe will support the future of our brewery. Cask beers have struggled to maintain their appeal over recent years, as trend have shifted to world lagers and craft keg products. The ability to deliver a high quality cask range will continue to underpin our beer range and brewery for the future.

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

The turnover in the inns increased by 11% on the previous year, which was a creditable performance given that in the previous year we had benefitted from lower rates of VAT.  Despite this increase being at about the headline rate of inflation it was not sufficient to offset major increases in our labour and food costs and, later in the year, utilities. The combination of these factors meant that earnings dropped significantly year on year, a factor that we hope will reverse in the coming year. 

We continue to believe that the market for our inns is an attractive one, and when the conditions are right, they trade very well. The biggest scheme of the year was an upgrade of eleven bedrooms at the Manor House at The Red Lion, Burnsall. We acquired staff accommodation in Beverley and Settle, which will be of a significant benefit this coming year in helping us to recruit full teams.

Our sponsorship licence has been invaluable if assisting to build our teams by sponsoring foreign workers to join us. We have recruited people into both our kitchen and front of house teams for roles that we could not fill from within the United Kingdom.

We have applied for planning permission to convert Lendal House in York, which we acquired in October 2021, into bedrooms to complement The Judge’s Lodging and we hope to be able to make progress on this project in the coming year.

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

Turnover increased by 16%, with spa and health and beauty treatments performing extremely well, up 28% on the previous year. In addition, our corporate business rebounded strongly as the demand for meeting rooms, conferences and events increased by 56% compared to 2022.  As elsewhere in the business our sales were not able to keep up with the increases in the cost base and overall profits declined by 11% year on year.

In September 2022 we closed Langdale Chase for a major refurbishment and repositioning of the offer and have high expectations for its future. This is a major undertaking and the project is currently on budget and on time, with a planned reopening date for November 2023.

Despite a tough trading year we have continued to invest in our guest offer and experience, refurbishing rooms at Middletons Hotel, North Lakes Hotel and Spa and Kettering Hotel and Spa and feedback on our new bedrooms has been very positive. We also rolled out our second Fyr Restaurant at the Solent Hotel and Spa, after its success at the North Lakes, and have invested in the restaurant terrace at Thorpe Park Hotel and Spa.

Summary and future developments

The escalation of the war in Ukraine and the knock on impact to utilities and food prices, when taken with double digit increases in the minimum wage, made the past year a challenge, with the pub and hospitality industry particularly badly affected. Wherever possible we have sought to protect our profitability through efficiency gains and price rises, although we have worked had to mitigate these wherever possible.

On a like for like basis once the withdrawal of £1.7m of government support in the previous year has been taken into account the Company has held the line and placed itself in a strong position to rebuild profits over the next few years.

The redevelopment of Langdale Chase is an important and strategic development which we expect will make a worthwhile contribution in the coming years. Elsewhere, we continue to underpin the quality of our offering through continued innovation and investment.

We are seeing significant falls in utility prices, back towards their historic norms, and there is hope that this will now feed through in terms of lower price inflation or price decreases. It seems that much of the fear over the cost of living crisis should recede in the coming months and as it does we would expect consumer confidence to increase and our customers to spend more freely. The Company is in a good position to take advantage of this and its well invested property portfolio and premium positioning gives it the scope to be able to grow its margins and profits.

We are very positive about the prospects for our properties and are now focused on regaining the growth and momentum we had prior to the pandemic and growing our business and profits.

Financial Review


Turnover for the year ended 31 March 2023 increased by 13% to £108.8m (2022: £96.0m), whilst operating profit was 8% lower at £12.3m (2022: £13.3m)

The measurement of the interest rate swaps at fair value resulted in a credit to the profit and loss account of £6.6m (2022: £3.8m).

Profit before taxation for the year was £15.1m (2022: £12.7m).

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:

2023 2022
Group £m £m
Turnover 108.8 96.0
EBITDA 19.1 20.1
Depreciation 6.8 6.8
Operating profit   12.3 13.3
Profit before tax 15.1 12.7
Net debt 66.7 61.6
Earnings per share (pence) 21.9 20.6
Pubs and Inns £m £m
Turnover 57.7 52.1
EBITDA 17.6 18.8
Depreciation 3.2 3.2
Operating profit (before Group central charges) 14.4 15.6
Average number


Hotels & Spas £m £m
Turnover 51.1 43.9
EBITDA 9.3 10.1
Depreciation 3.1 3.1
Operating profit (before Group central charges) 6.2 7.0
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.


Utility consumption, room occupancy rates, customer ratings, health and safety incidents, spa memberships and wedding and event numbers.

Interest rate swaps measured at fair value

During the year the £10m of interest rate swaps were settled at a cost of £0.2m, leaving £45m of interest rate swaps at 31 March 2023, 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 these interest rate swaps, which resulted in a credit to the profit and loss account for the year ended 31 March 2023 of £6.6m (2022: £3.8m). See note 18 to the financial statements for further details.

Interest payable

Net interest payable increased slightly to £4.1m (2022: £4.0m) despite the increase in bank base rate during the year, as £45m of the debt is long term loans at fixed interest rates.


There is a tax charge of £2.2m on the profit for the year, an effective rate of 14.6%.

Earnings per share

Earnings per share of 21.9p (2022: 20.6p).


An interim dividend of 0.75p has been paid and the Board recommends a final dividend of 2.4p per share, which will make a total of 3.15p for 2023 (2022: 2.2p), an increase of 43%.

Cash ?ow and ?nancing

The Group’s net borrowing increased by £5.1m, from £61.6m at 31 March 2022 to £66.7m at 31 March 2023 due to capital expenditure.

The Group has £45m of long-term debt, £22m of bank loans, £1.7m of overdrafts and cash balances of £2.0m at 31 March 2023. The Group has three-year revolving credit bank facilities which were renewed in the first quarter of 2023.


The Group made contributions to the defined benefit pension schemes of £0.8m (2022: £1.3m). Whilst these schemes were closed in August 2009, the Group is committed to the long-term funding of the schemes. At the 31 March 2023 the schemes had a combined surplus, before tax, of £32.2m which was an increase of £22.1m from £10.1m, before tax, at 31 March 2022. Due to this surplus, the Group agreed with the Trustees to suspend paying contributions to the scheme from December 2022.

The increase in the surplus was due a significant fall in liabilities due to increases in bond yields during the year.


During the year we sold four pubs and two ancillary properties for a total of £3.1m generating a profit against book value, after disposal costs, of £1.4m.

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 £2.0m, of which £2.4m was added to the revaluation reserve and £0.4m 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 £45m where it is committed to pay the difference between SONIA and fixed interest rates. At 31 March 2023 a financial liability of £3.6m has been recognised in respect of these interest rate swap contracts.

Going Concern

At 31 March 2023 the Company had total borrowing facilities of £82m, which were made up of the long-term loan of £45m, revolving credit facilities of £35m, and overdraft facilities of £2m. When compared to net debt of £66.7m at 31 March 2023, this gave headroom of £15.3m.

The Company has generated positive operating cashflows over the period, such that it has invested £15.6m in capital expenditure 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 Directors therefore believe that the Company has the cash flows and facilities to meet its needs for the foreseeable future.

Kevin Wood

Finance Director

20 June 2023


31 MARCH 2023


Turnover 108.8 96.0
Cost of sales (85.2) (72.7)
Gross profit             23.6 23.3
Distribution costs (4.4) (3.3)
Administrative expenses (8.4) (9.4)
Other operating income 0.1 1.7
Operating profit before property disposals  10.9 12.3
Property disposals 1.4 1.0
Operating profit 12.3 13.3
Net interest payable
Gain on interest rate swaps measured at fair value
Finance income (charge) on pension liability 0.3 (0.4)
Profit on ordinary activities before taxation             15.1 12.7
Taxation on profit for the year (2.2)      (0.6)
Profit on ordinary activities after taxation             12.9 12.1
Earnings per share   21.9p 20.6p



At 31 March 2023


___________________________________________________________________________ _______ _______
Fixed Assets
Tangible assets 302.0 292.9
302.8 293.5
Current assets
Stocks 0.9 0.7
Trade and other debtors 5.9 5.5
Cash at bank and in hand
Creditors due within one year 8.8 11.6
Trade and other creditors (20.0) (20.6)
Loan capital and bank overdraft
      (21.7)      (42.6)

Net current liabilities


Total assets less current liabilities 289.9 262.5
Creditors due after one year

Net assets excluding pension asset



Pension asset


Net assets including pension asset
Capital and reserves
Called up share capital 14.7 14.7
Capital redemption reserve 1.1 1.1
Revaluation reserve 77.2 75.1
Profit and loss account 149.0 121.7
___________________________________________________________________________ _______ ________

Equity shareholders’ funds





For the year ended 31 March 2023


Cash flow from operating activities


Tax (paid) received (2.0) 1.4
Cash flow from financing activities (7.2) (17.9)
Cash flow from investing activities (12.7) (6.0)
Equity dividends paid

(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Loan capital
Net debt


Reconciliation of net cash flow to movement in net debt
(Decrease) increase in cash          5.1 5.7
Cash flow from decrease in debt
        (5.1) 17.2
Net debt at beginning of year

Net debt at end of year



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