Thu 16th Nov 2017 - Thwaites reports turnover up 9% in first half Thwaites reports turnover up 9% in first half: North west brewer and retailer Daniel Thwaites has reported turnover increased 9% to £48.0m for the six months ended 30 September 2017 compared with £44.0m the previous year. Operating profit was up 4% to £7.7m compared with £7.4m the year before, which the company said was underpinned by the investments made in its properties last year, in particular the Lister Barn at Malham, and the Boot and Shoe at Lancaster, together with the acquisition of Middletons Hotel in York and Langdale Chase, Windermere. Pre-tax profit increased to £6.8m compared with a loss of £300,000 the previous year. Net debt as of 30 September was £60.9m compared with £34.9m the year before, which increased due to the acquisition of Middletons Hotel and Langdale Chase together with a number of investment projects that have either been completed or are currently under way. The company said it had a further £14m of capex committed and under way. The construction of offices, brewery and stables is “progressing well” and Thwaites expects to move in next summer. The board recommended an interim dividend of 110p (2016: 110p) to be paid on 2 January 2018 to shareholders on the register on 1 December 2017. Chairman Ann Yerburgh said: “The company has had an excellent first half of the year. Sales growth was very strong in the first few months, but slowed in the pubs towards the end of August and through September with very poor, wet weather providing a marked contrast to last year. These strong results have been achieved despite that poor summer weather as well as having to absorb significant cost pressures from increases in the National Living Wage, business rates and high levels of food cost inflation. 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 1% in the first half of the year, with operating profits in line year-on-year. We have sold six poor quality pubs for £0.9m, at valuations that were broadly in line with their net book values. We have spent £2.7m on pub investment projects in the first half, including the completion of The Royal, in the old village of Heysham on the Lancashire coast, which has been fully refurbished to include 11 letting bedrooms and a large outdoor trading area with bar, pizza oven and grill. The property opened in May and traded very strongly over the summer, exceeding our expectations. Major refurbishment schemes have been carried out at the Lindley Tap in Lindley near Huddersfield, the Black Dog in Oswaldtwistle and The Cock and Bottle in Tarleton. In the inns, sales have increased by 18% compared with last year, aided by a number of major refurbishment schemes. Operating profits have increased by 12%, but have been held back by the increase in the National Living Wage from 1 April 2017, as well as increases in business rates and food cost inflation. The Lister Arms at Malham has continued to go from strength to strength following the completion of ‘The Lister Barn’ in November 2016, which provides eight letting bedrooms, a communal area for families and large groups, and some staff accommodation. The development of The Crown Inn, Pooley Bridge, was completed in April and opened just before the Easter holiday. It has 17 letting bedrooms, a riverside dining room and a roof terrace overlooking Ullswater, and the strength of sales over the summer since opening has been very reassuring. We have also carried out a major refurbishment of The Fleece at Cirencester, where we have incorporated the adjacent Starbucks into the main dining and bar area. At the Toll House in Lancaster and the Royal Oak in Keswick we have recently finished the refurbishment of all of the bedrooms. Work is well under way on the complete renovation of the Beverley Arms, Beverley, which we expect to open in the spring of 2018, when finished this will have 38 bedrooms and a large bar and restaurant. In the hotels and spas, sales for the first half of the year have grown by 14%, which includes the benefit of the acquisitions we have made and major development projects we have carried out. Operating profits have increased by 16% year-on-year. In March we acquired Middleton’s Hotel in York, a 56-bedroom property close to the city centre. It has been successfully integrated into our business and has traded very well over the half year. We have plans to invest in the hotel and are in the process of developing these so that we are in a position to upgrade some of the rooms in 2018. In April 2017 we acquired Langdale Chase, a 29-bedroom hotel on the shores of Lake Windermere. While we have begun the process of putting together development plans for this site, due to the size of the site and potential development options, together with the planning requirements within the national park it may be some time before works start. Our new 54-bedroom lodge, which is on part of the site at the Solent Hotel & Spa, Fareham, was completed in July and opened in August. We also fully refurbished the adjacent ‘Parson’s Collar Pub’, which opened at the same time as the lodge. Elsewhere in the hotels we have continued with our ongoing refurbishment programmes and have spent £2.8m in the half year. The groundwork has been laid over the past few years to deliver this good set of half-year results and we are hopeful that this success will carry through into the second half of the year. A number of investment projects were completed in the first half, which will contribute to continued growth. There continues to be uncertainty in the market, with consumer spending slowing in areas and some initial signs of distress in parts of the casual dining market. We are vigilant to these trends, however, we have a well-invested business that is in a strong position to weather any economic or political storms and take advantage of further opportunities as they arise.”