Coronavirus Update

Daniel Thwaites - Annual Financial Report

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Annual Financial Report


The darkest days of the past year are now behind us and whilst the whole COVID-19 episode has been most unwelcome the Company is emerging from closure, lockdowns and restrictions intact, with its pubs, inns and hotels ready to make the most of the situation as a wave of pent-up demand is released once our personal liberty is restored.

Thwaites entered the COVID-19 pandemic in excellent shape, with well invested assets, a strong balance sheet and businesses orientated to attractive parts of the market. The company faced a year of accumulating losses, worrying uncertainty and immense challenge. However, the decisive actions that we took to control our cost base and safeguard the financial strength of the business ensured that we reopened on the front foot and were able to welcome back our customers, new and old, help them to feel at ease and enjoy themselves once more.

Whilst it would be too much to say that we are coming out of the past year stronger, we have minimised the financial scarring from being shut and have plenty of liquidity to get us back on our feet and consider how we re-establish the growth path that we had been on.

We guard our family values preciously; they provide a strong framework to guide us and have shone through during the past year. Our teams have been nothing short of outstanding and I am tremendously proud of the way that they have navigated the highs and lows, from the frantic days of Eat Out to Help Out and the strong trading of last summer, to closure and safeguarding our properties. We have asked much of them in the past year and the way that they have gone the extra mile to put us in good shape for the future is humbling.

The benefit of our freehold only philosophy has shown its’ strength and with no leaseholds we have avoided the fixed costs of rental payments in lockdown and the need to negotiate with landlords.

Last spring we had no expectation that this pandemic would cast such a long shadow for over a year; nor at our interim results did we contemplate that the winter lockdowns would be as persistent or as challenging as they have been. However, the storm has been weathered and the continuing long-term success of the Company is now at the forefront of our thoughts.


The business was not able to trade without some form of restrictions for a single day during the year to 31 March 2021. It was shut, other than to key workers, for 208 days, traded in the debilitating tier system for 55 days and was open inside with social distancing restrictions for only 102 days.

As a result the financial performance has been severely and adversely impacted, with turnover down 67% on the previous year at £32.2m (2020: 98.1m) and an operating loss of £9.4m compared to an operating profit of £12.6m to 31 March 2020, which also included a negative COVID-19 impact of £2.5m.  In total, the pandemic has lost the Company approximately £24m. The loss per share was 17.8p (2020: earnings per share 5.6p).

These results would have been significantly worse were it not for the financial support the government and the treasury have provided during the recent crisis.

Net debt at 31 March 2021 was £78.8m (2020: £65.4m), an increase of £12.2m since the interim results at 30 September 2020. Whilst this is clearly undesirable, the measures taken by the Company to mitigate controllable spend across the board means that this is as satisfactory a result as we could have hoped for.

Towards the end of the financial year the financial markets began to consider the unprecedented amounts of fiscal stimulus funded through central government debt and the likely impact that this would have on future interest rates. As a result, expectations that interest rates would increase sooner than had been thought saw an increase in the discount rate used to value the Company’s pension scheme and swap liabilities. This led to a decrease in these two liabilities of £11.9m at the 31 March 2021 – by chance this means that despite the trading losses incurred the profit and loss reserve ended the year unchanged at £85.9m.  Net asset value per share at the year end was £3.00 (2020: £3.02).

The Tenanted Pub Model

The tenanted pub model has attracted much criticism over recent years from detractors who would say that the relationship is unfairly balanced in the favour of the owner of the freehold property. Our consistent response to this has been that a model where interests are aligned in the success of a pub between the property owner and the publican promotes the long term success of the pub and allows good operators to succeed with confidence, partnered with a company that can invest in the pub and provide business support that a sole operator might not access on their own.

The past year has been a litmus test for the model and one which Daniel Thwaites and the rest of the industry has passed with flying colours. As a result of the scale and financial strength of our business we, like others in the industry, have supported our tenanted pubs as far as we have been able with both financial and business support. We provided more than £3.2m of direct financial support to our tenanted pubs at a time when the commercial property market is tying itself in knots over how to resolve unpaid rents.

The alignment of interests between us and our tenanted pub operators has made the decision to forgo rent an easy one. We are motivated to make sure that these small independent and previously successful businesses were ready to open and be profitable, without huge historic debts, when the time came. Likewise, that alignment has led the industry to ask government to support pubs, generating a voice that could otherwise have been drowned out. Government support has been an additional critical contribution in preventing mass pub failure and unemployment.

To those who have sought to destroy the tenanted pub model in the recent past, the experience of the last year is a salutary lesson in the strength of the model.

Acquisitions, Developments and Disposals

In March 2020 we put in place a freeze on returning capital investment and acquisitions, although we have continued to maintain our properties throughout the year at a normal rate. As a result, no acquisitions have been made during the past year. The Company has sold three bottom end pubs and two ancillary properties with proceeds of £0.8m.


The Board does not recommend the payment of any dividend, be it interim or final, and will not do so while the business is loss making and in receipt of the government’s financial assistance. The Board understands that the dividend plays an important role for shareholders and will look to reinstate a dividend as the business recovers and a dividend distribution is prudent and sustainable.


Our teams are the beating heart of our business and their commitment to the business underpins our success. The way that they have responded, both those that have worked through lockdowns and those who have supported the business, ready to return at the end of furlough has been outstanding. I would like to thank everyone for the way that they have approached the past year and their faith in the company.

The recruitment market has been impacted by the loss of overseas workers following Brexit and furlough. We have used our time over the past months to review our benefits package to make sure that we continue to offer a compelling proposition to new employees and maintain our position as an employer of choice in our local markets.

There have been no changes to the Board during the year

Once more I would like to thank our shareholders for their unwavering support as we come through this difficult period and rebuild the business.


The first rays of light are breaking through the clouds and the early signs of trading as we have reopened have been most encouraging. The decision to delay removing social distancing from 21 June is a critical one to the hospitality industry. We must now wait for the government’s next move.

One of the consequences of the past year has been to raise the profile of the pub with government and also with the general public, who have discovered that life without the pub is not as fun as it is when it is there.

In the medium term this bodes well, as the role that the pub plays in socialising and as the glue holding together local communities has been highlighted. At all levels of government there has been an awakening to the fact that community pubs are the biggest social outreach programme in the land, delivered by landlords and landladies free of charge. These precious assets need to be protected and nurtured and I have increasing confidence that the government will support that.

We have put considerable focus as we reopen on maintaining quality within our properties. This puts them in an excellent position to be the place of choice as our customers choose to trade up and treat themselves. We do not have many properties in city centre locations and our larger hotels are located on the motorway network away from public transport. We have good representation in rural locations and national parks, places that people will seek out. The corporate meeting and travel market for the moment is a little more opaque, but I am confident that it will recover in the coming months.

I have no doubt that there may be bumps along the road, but the strength of the business built up over many years has proven its worth over the past year. As we reopen we will closely observe what our customers now want from us, it may be that things have changed. If they have, we will respond with enthusiasm and agility.