Pubs group considering all options as it prepares to re-open under restrictions
Blackburn brewer Thwaites is considering accessing a Government loan as it awaits permission to re-open its pubs estate and start trading again.
In a stock exchange announcement today, the group explained its survival plan during lockdown, and said it is currently working on how to open up its pubs’ portfolio once more, but with social distancing restrictions in place.
No final dividend will be paid for the last fiscal year and future dividend payments are under review.
Thwaites closed all its pubs, inns and hotels on March 20, following the Government directive .
It then quickly took all possible steps to secure the business, protect cash flow and take advantage of the support measures put in place by the Government.
These include the furloughing of more than 90% of the workforce. It only allows staff in key roles and those securing is properties to work, which means that the business is operating and being safeguarded by a skeleton team.
The board and executive team has all taken pay cuts of up to 30%, while the business has taken advantage of business rate exemptions across its retail properties.
It is assisting pub tenants to claim grants across all the tenanted pub estate which will help the tenanted pubs to survive and come through the coronavirus crisis.
Thwaites is also claiming pub grants directly where they are available for the pubs that it operates on a managed basis and is negotiating either suspension of contracts with suppliers, or reduced costs during the period of disruption.
It is agreeing payment deferrals with HMRC for VAT and PAYE and temporarily paused deficit contributions to its defined benefit pension funds and is putting all non-essential capital expenditure on hold for the foreseeable future.
The company renewed its banking facilities in the first quarter of this year and at March 31 had net debt of £65.4m, with total facilities of £82m, giving headroom of more than £16m.
It said it is monitoring cash flow very closely and is also giving consideration to whether it is necessary to take advantage of one of the Government-backed loan schemes as a prudent measure to ensure that it has sufficient facilities to get through the recovery period and return to normal trading levels.
The preservation of cash is an absolute priority, it said, and, as a result the company has decided not to pay a final dividend for the year ending March 31, 2020. Future dividends will be reviewed when normal trading levels resume.
Today’s statement said: “The company was trading very strongly prior to this crisis and we hope to return to that level of trading in the future once our properties are allowed to open by the Government.
“It is working through its re-opening plans to prepare for an environment where restrictions will be in place.”
It added: “The company is committed to taking the difficult and necessary decisions to preserve the long-term future of the business and in the future once again flourish for the benefit of all its stakeholders.
“The company benefits from the fact that it owns the freeholds of all of its properties and is, therefore, not under pressure to pay third party landlords rent, as others in the industry are having to do. However, it does have financing obligations in the form of interest payments to its funders.”
The statement concluded: “The company has been through troubled times before and has a strong asset base and an experienced management team to assist in finding a pathway through the challenging times ahead.”