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Morning Briefing Strap Line
Tue 20th Nov 2012 - Breaking News
Thwaites reports wet summer has adversely affected half-year performance; residual interest rate swaps hit by low rates of LIBOR: Blackburn-based brewer and retailer Thwaites has reported its performance has been adversely impacted by the very wet weather conditions which have had a significant effect on summer trading. Group turnover for the six months to 30 September was £71.1m (2011: £70.9m) and is broadly flat compared to the same period last year but operating profit (before exceptional items) of £6.6m (2011: £7.6m) is down 13 per cent on last year. Chairman Ann Yerburgh said: “We continue to act decisively in response to the current market conditions and we are committed to creating a prosperous and sustainable business for the future. The announcement of our intention to relocate our brewery operations to a new site has had an impact on contract volumes, and therefore we have taken steps to restructure our brewery operations to reduce our costs, which resulted in an exceptional provision for redundancy costs of £400,000 during the period. At 31 March 2012 we made provision to settle up to £50m of interest rate swap contracts, and so far we have paid £9m to settle £40m of these swaps. Interest costs are now reducing as a result of this decision, although the unprecedented low rate of LIBOR is having an adverse impact on the residual swaps cost.” The settlement of the swaps and the share buyback has resulted in net debt increasing to £62.7m (2011: £45.8m), still well within its banking facilities. Operating profit in the beer company and pubs was £4m in the first half of the year (2011: £5.0m), a decrease of 20 per cent. The company said continued poor weather has particularly impacted on seasonal pubs in rural and seaside locations, and free trade supply to sporting clubs, as many cricket, golf and other sporting fixtures have been cancelled. Thwaites completed 19 refurbishment projects at a cost of £600,000, acquired three good quality tenanted pubs and sold seven pubs from the bottom end of the estate. Operating profit in the hotels and inns division remains consistent at £3.1m (2011: £3.1m). The company said: “We continue to experience steady recovery in the performance of the hotels with increases in occupancy and food and beverage sales. However, room rates remain competitive and recovery of increasing cost inflation is challenging.” The company added: “The first half of the year gave us many achievements, but we have certainly felt the impact of the challenging consumer environment, and the wettest summer for 100 years. Whilst the decisions that we have taken during the first half, to restructure brewery operations, settle £40m of interest rate swaps and cancel 3.5m shares have impacted our financial performance, they put us in a stronger position. We continue to work with Sainsbury’s and Blackburn with Darwen Council to plan for the development of our existing brewery site and are carrying out feasibility studies on potential new sites. We remain positive about our medium term prospects and are taking actions to underpin them in the second half of the year.”

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