Hydes agrees £9.5m refinancing deal
Reporting its full-year accounts, Hydes said that in light of the continuing low interest rate environment, there was a “strong business case to close out the existing cap and collar hedging arrangement and pay back costs of £187k as part of a wider financial restructure”.
“We have refinanced a £9.5m revolving credit facility with an expiry date of 31 December 2014 and entered into an interest rate swap agreement, which hedges £4.5m of that new facility until expiry.
“The company’s interest costs have been fixed at the swap rate of 1.08% plus the agreed lending margin and less stringent banking covenants have been established.”
Hydes reported a full-year loss before tax and interest of £2.7m after incurring costs totalling £4.1m following its reorganisation and the loss of its freetrade business.
The company, which last year reported a pre-tax and interest profit of £1.2m, saw turnover fall £600k to £23.2m in the year to 1 April 2012 mainly due to the sale of its freetrade business to Daniel Thwaites in January 2012.
Like-for-like sales at its managed houses increased from £9.76m to £9.89m and profits in the division grew 5% to £2.59m, although like-for-like profits in the tenanted division fell 6.8% to £1.54m.
Operating profit before exceptionals was “in line with budget” but declined £168k to £1.4m, mainly to be the fall in contract brewing incomes as its contract with AB InBev moved to its conclusion, plus a lower profit contribution from tenancies.
Hydes confirmed plans to move from its Queen’s Brewery in Moss Side to a new site in Salford Quays in autumn 2012. Its accounts include a £3.1m write-down in the book value of its listed building and plant. Other exceptional items include £471,733 in staff redundancy costs, alongside other costs such as early termination of contracts (£105,464) and £153,372 loss of equipment from its freetrade business.
The company also wrote down the value of its pub estate by £729,135 (2011: £222,975) after a routine review of its assets.
Hydes said the changes “simplify the business and focus resources on our pub estate, which has been our most profitable area of the business for many years”. They also saw managing director Chris Hopkins personally lead the retail team.
Meanwhile, the board has reduced from 10 to seven. Andrew Kitchen left last January to join Thwaites and Paul Mercer stood down as a director in February, but will stay at Hydes with responsibility for the tenanted estate. David Stevenson’s tenure as non-executive director ended in June.
Hydes bought a pub in the year - the Queen of Hearts in Fallowfield, which was rebranded as 256 Wilmslow Road and the Joseph Whitworth. The company converted two to tenancies and sold three in the year for total gross consideration of £1.1m. It has accepted an offer for the sale of the Four Heatons for alternative use, subject to planning consent.
Hydes said: “There is no doubt that the tenanted estate is a very challenging area of the business and the pendulum has swung back in favour of managed houses.
“Our initiatives to beat the downturn include a detailed business review with our tenant each week, offering financial support where appropriate and low cost trade build support.
“We are assisting tenants with price points to improve gross margins and endeavouring to ensure that our pubs are sustainable businesses in their local communities.”
Hydes reported a profits at its managed sites the Wilmslow Lodge and the Joshua Bradley up 30.6% and 29.9% respectively.
In relation to Thwaites’ acquisition of the freetrade arm, Hydes said about 90% of its freetrade loan book and related freetrade debt was sold at book value. It realised £87k from the disposal of technical services equipment at the 287 freetrade accounts taken by Thwaites, against a book value of £240k.
Net debt at the year end was £5.12m (2011: £5.5m).
