TIDMYNGA
RNS Number : 6436W
Young & Co's Brewery PLC
16 November 2017
YOUNG & CO.'S BREWERY, P.L.C.
INTERIM RESULTS FOR THE 26 WEEKSED 2 OCTOBER 2017
INDUSTRY-LEADING PERFORMANCE DRIVEN BY CUSTOMER FOCUSSED
APPROACH
2017 2016 %
GBPm GBPm change
Revenue 144.1 136.0 +6.0
Adjusted operating profit(1) 27.8 25.2 +10.3
Operating profit 25.0 24.9 +0.4
Adjusted profit before tax(1) 24.9 22.4 +11.2
Profit before tax 22.1 22.1 -
Adjusted basic earnings
per share(1) 41.15p 36.3p +13.4
Basic earnings per share 35.62p 38.35p -7.1
Interim dividend per share 9.41p 8.88p +6.0
All of the results above are from continuing operations.
(1) Reference to an "adjusted" item means that
item has been adjusted to exclude exceptional
items (see note 3).
PERFORMANCE HIGHLIGHTS
-- Another period of strong performance with total revenue up 6.0% to GBP144.1 million;
-- Well-invested and premium positioned managed houses delivered
a 6.8% increase in total revenue and a 4.6% rise in like-for-like
sales;
-- Ram Pub Company (tenanted division) outperformed the market
with like-for-like sales up 1.6%; total tenanted sales were
impacted by a number of transfers to our managed house
division;
-- Investment of GBP14.3 million into a number of significant
redevelopments in the estate as well as the additions of the Bull
(Bracknell) and the Chequers (Hanham Mills);
-- Acquisition of the iconic 'SMITHS' of Smithfield site, and
its sister venue in Cannon Street, completed this week;
-- Cash generation remained strong at GBP33.2 million, with net
debt reduced by 7.0% to GBP117.7 million, improving our net debt to
adjusted EBITDA ratio to 1.7 times;
-- 21(st) consecutive year-on-year interim dividend increase with a 6.0% rise to 9.41 pence;
-- Strong trading in the first six weeks of the second half,
with managed house revenue up 7.0% in total and 4.9%
like-for-like.
Patrick Dardis, Chief Executive of Young's, commented:
"We are very pleased with our excellent performance during the
period, which once again underlines the strength and effectiveness
of a consistent, premium strategy and customer-focussed
approach.
"The pub is still the go-to place in Britain for drinking and
eating out and, while much has been written about the challenges
facing the pub industry, we believe that providing customers with
well-invested pubs, a quality offer and outstanding customer
service is key to our success.
"Despite the continuing unpredictability of our trading
environment, we have made a strong start to the second half of the
year. We are delighted to have acquired the iconic 'SMITHS' of
Smithfield, which sits in the heart of the City, as well as its
sister venue in Cannon Street, since the period end. Both sites are
a fantastic fit with our portfolio of premium managed sites, with
their focus on world class steaks, breakfasts, craft beer and
quality drinks and we are very excited about the potential for us
to build upon their existing offer going forward."
"Our expectations for the full year remain unchanged and we are
confident about our long-term prospects thanks to our premium
offer, well-invested and prime located pubs, and the talented teams
we have in place across our business."
For further information, please contact:
Young & Co.'s Brewery, P.L.C.
Patrick Dardis, Chief Executive
Steve Robinson, Chief Financial
Officer 020 8875 7000
MHP Communications
James White / Gina Bell 020 3128 8100
INTERIM STATEMENT
I am delighted to announce these excellent results following
another strong period of trading for us.
Total revenue for the 26 weeks ended 2 October 2017 was up 6.0%
to GBP144.1 million, led once again by our well-invested and
premium positioned managed houses which delivered a 4.6% increase
in like-for-like sales.
Our performance for the period speaks volumes about the efforts
of all our staff who work tirelessly to execute our growth
strategy. The pub is still the go-to place in Britain for drinking
and eating out and, while much has been written about the
challenges facing the industry, we believe that providing customers
with well invested pubs, a quality offer and outstanding customer
service is key to our success.
By embracing current trends, ranging from our customers'
ever-growing interaction with social media to behavioural changes
in what and when they eat and drink, we are confident that our pubs
will continue to be the venue of choice for our experience-driven
society.
Total Group adjusted operating profit increased to GBP27.8
million, up 10.3%. Including one-off exceptional items, our
operating profit was slightly up at GBP25.0 million. Our adjusted
interim basic earnings per share was up 13.4% to 41.15 pence. We
remain a highly cash-generative business, with an operating cash
flow of GBP33.2 million in the six months, enabling us to reduce
net debt to GBP117.7 million (April 2017: GBP126.6 million) and
improve our net debt to adjusted EBITDA ratio to 1.7 times (April
2017: 1.9 times).
In line with our long-standing, progressive dividend policy, the
board has raised the interim dividend by 6.0% to 9.41 pence, the
21(st) consecutive year-on-year increase.
BUSINESS REVIEW
MANAGED HOUSES
Over many years now, we have outperformed the market with
consistently strong like-for-like sales and profit growth. Our
managed estate, which comprises 177 pubs (including 23 hotels),
again outperformed the sector, with revenue up 6.8% and up 4.6% on
a like-for-like basis, resulting in adjusted operating profit
growth of 11.1%.
During these six months, we benefitted from very warm early
summer weather in June but, predictably, poor weather followed in
August and September. These swings are not unusual and, overall,
the British summer of 2017 was fairly typical and simply a reverse
of 2016 when warmer conditions in August and September made up for
a wetter June and July.
This summer, London was tragically affected by terror attacks.
Once again though, Londoners and visitors to our capital showed
their resilience in the face of such adversity. As a nation, we
stand together to oppose such acts and our spirit remains undented.
Similarly, our staff, some of whom found themselves caught up in
the attack at London Bridge, remained steadfast in their
responsibility to our customers and each other, and I am immensely
proud of each and every one of them.
Overall, drink sales were up 7.5% in total and 4.6% on a
like-for-like basis during the period. Our "Great Hop Expedition"
initiative, which saw us team up with global and local craft
brewers to challenge customers to be daring with their beer
choices, helped sales of keg ales increase by 28.3%. We also saw
huge growth in rosé wines up 31.9% and cocktails which were up
56.1%, the latter being driven by the ongoing enthusiasm of our
Cocktail Collective offer which ensures we maintain a complete
range of the most popular cocktails, served perfectly every
time.
Food sales increased by 5.3% in total and 4.1% on a
like-for-like basis and they now represent 30% of our revenue mix.
Despite cost pressures on food, we've worked hard with our local
suppliers to source the finest quality ingredients. Our highly
talented and skilled kitchen teams are always learning through the
power of our "Vegucation" programme, where we aim to bring unusual
and lesser known ingredients to the fore each month, challenging
chefs to use and interpret ingredients in their own style on their
respective menus to ensure that our dishes remain authentic, fresh,
natural and seasonal.
In recent years our hotel division has grown significantly and
now stands at 486 rooms with over half of these now being boutique
standard. The hotel estate, which has benefited from refurbishments
completed in the previous year, delivered a strong performance that
saw average room rates rise 5.7% from GBP81.19 to GBP85.85 while
maintaining a consistent level of occupancy. As a result, our
RevPAR increased by an impressive 6.6% to GBP68.01. Further growth
opportunities for Young's hotels have been identified and are
planned in the years to come.
We added four pubs to our managed house portfolio during the six
month period. We acquired the Chequers (Hanham Mills) in July,
transferred the Hope and Anchor (Brixton) and the King's Arms
(Wandsworth) from our tenanted division, the Ram Pub Company, and,
in conjunction with a GBP240 million regeneration of Bracknell town
centre, opened the Bull, a grade II listed landmark that dates back
to the 15(th) century. The heritage of the Bull has been restored
and we've tastefully combined old and new elements, including a
large south-facing terrace and a contemporary glass fronted
extension to the rear.
Including new sites, we invested GBP12.0 million during the
first six months of the year, a slight reduction on the previous
year due to the timing of major developments with greater capital
spend planned for the remainder of the year.
During the period, we redeveloped the Alexander Pope
(Twickenham), Duke of Clarence (Chelsea), Elgin (Ladbroke Grove),
Mitre (Bayswater) and the Princess of Wales (Clapton). We also gave
the Spotted Horse (Putney) a new vibrant lease of life with a
botanical feel throughout and a completely new rooftop bar, the
"Juniper Terrace". It is equally pleasing to see that some of our
longer-term investments are progressing as planned: the Nine Elms
Tavern, which opened in 2015, is a great example and should
flourish even further when the American Embassy opens shortly in
Battersea.
I was very pleased for Young's to gain "employer provider"
status which enables us to be an official training provider for
apprentices. Being 186 years old, training our own staff is nothing
new to us, but the role we play in society in providing careers and
nurturing talent is now formally recognised. Our in-house training
team will now deliver two exciting new chef academy programmes to
70 apprentices over the next 18 months whilst being able to draw
down on the funds created by April's introduction of the
Apprenticeship Levy. For us, the levy is an opportunity to help
fund the growth of our own talent pool.
Young's On Tap, our own App, is growing in both its popularity
and functionality and we've now had over 60,000 downloads. Its
users are able to do everything from book tables and stays in our
hotels to pay their bills and even request their favourite
song.
THE RAM PUB COMPANY
Our smaller tenanted division, the Ram Pub Company, produced a
resilient like-for-like performance with sales up 1.6%.
The contribution of our tenanted business has been impacted by
three transfers into our managed houses and three disposals. In
October 2016, our largest tenanted pub at the time, the Woolpack
(Bermondsey), transferred into our managed house estate and was
followed by the Hope and Anchor (Brixton) and King's Arms
(Wandsworth) in May 2017. We also sold three small tenancies which
sat at the tail of our estate for combined proceeds of GBP2.1
million: the Bell (Illminster), Court House (Dartford) and the
King's Arms (Epsom). As a result, total sales were down 8.5% and
adjusted operating profit was down GBP0.3 million to GBP2.4
million.
We operate a continual investment programme that ensures our
pubs are maintained to a high standard to attract and retain
entrepreneurial tenants. In the past six months we've completed
major developments at the Gardeners (Wandsworth), Grand Junction
Arms (Harlesden), Heartbreakers (Southampton) and the Robin Hood
(Sutton).
INVESTMENT AND FINANCE
Our healthy balance sheet provides a strong core and the
financial muscle to maximise opportunities both within and outside
our current estate. Our net debt has reduced by GBP8.9 million to
GBP117.7 million driven by the combination of an increased
operating cash generation of GBP33.2 million and a lower investment
of GBP14.3 million. Net debt as a multiple of the last twelve
months' adjusted EBITDA has fallen to 1.7 times (April 2017: 1.9
times) and gearing now stands at 23.0% (April 2017: 25.7%), two of
the strongest ratios in the sector.
The majority of the GBP2.8 million exceptional item expenditure
in the period relates to the investment decision to bring two
tenanted pubs into our managed house estate. The agreed
compensation to terminate the tenants' lease agreements early,
under IFRS, has been expensed and is included within exceptional
items.
Compared with the last full year, the past six months has
witnessed a slight increase in corporate bond yields, the rate at
which our pension liabilities are discounted. This has resulted in
our retirement benefit deficit decreasing on an accounting basis by
GBP4.9 million to GBP7.9 million. The coming year-end sees the end
of the current triennial review and we are working together with
the pension trustee to ensure the pension scheme is appropriately
funded.
As a consequence of these results we have increased our interim
dividend for the 21(st) consecutive year, this time by 6.0% to 9.41
pence per share. This is expected to be paid on 8 December 2017 to
shareholders on the register at close of business on 24 November
2017.
CURRENT TRADING AND OUTLOOK
In recent trading, over the last six weeks, we have continued to
perform strongly with sales up 7.0% in total and up 4.9% on a
like-for-like basis. The remainder of the year will benefit from
the recent acquisitions and transfers including the Lord Palmerston
(Tufnell Park) which transferred into managed houses in October and
also the acquisition of the iconic 'SMITHS' of Smithfield site and
its sister site in Cannon Street, which completed this week.
'SMITHS' of Smithfield is a perfect fit with our premium food and
drink offering and will immediately become our largest venue with
an average weekly take of over GBP100,000. Both 'SMITHS' of
Smithfield and the Cannon Street site are leasehold properties with
32 years and 24 years tenure remaining respectively and we are
confident that their focus on world class steaks, breakfast and
craft beer will perfectly complement our existing estate. We
continue to look actively for further opportunities to invest in
the business, either by investing further in our existing estate or
through our acquisition pipeline throughout the South.
Despite the strong start to the second half of our financial
year, we continue to monitor trading conditions closely. The
political environment remains unpredictable and this ongoing
uncertainty is unhelpful when it comes to the strength of the
broader economy. In particular, we remain concerned around the
impact that the Brexit negotiations are having on the pub industry,
especially in relation to attracting and retaining the best people
in our pubs.
Nonetheless, our expectations for the full year remain unchanged
and we remain confident about our long-term prospects thanks to our
premium offer, well-invested and prime located pubs, and the
talented teams we have in place across our business.
Patrick Dardis
Chief Executive
15 November 2017
Independent review report to Young & Co.'s Brewery,
P.L.C.
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the Interim Report for the 26 weeks
ended 2 October 2017 which comprises the group income statement,
the group statement of comprehensive income, the group balance
sheet, the group statement of changes in equity, the group
statement of cash flow and the related explanatory notes. We have
read the other information contained in the Interim Report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company for our work, for this report or for the conclusions we
have formed.
Directors' Responsibilities
The Interim Report is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the Interim Report in accordance with the AIM Rules
issued by the London Stock Exchange which require that it is
presented and prepared in a form consistent with that which will be
adopted in the company's annual accounts having regard to the
accounting standards applicable to such annual accounts.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRS as adopted by the
European Union. The condensed set of financial statements included
in this Interim Report has been prepared in accordance with the AIM
Rules issued by the London Stock Exchange.
Our Responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the Interim Report
based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK and Ireland) "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Interim Report for the 26 weeks ended 2 October 2017 has not
been prepared, in all material respects, in accordance with the
accounting policies outlined in note 1, which comply with IFRS as
adopted by the European Union, and in accordance with the AIM Rules
issued by the London Stock Exchange.
Ernst & Young LLP
London
15 November 2017
Group income statement
For the 26 weeks ended 2 October 2017
Unaudited Unaudited Audited
26 weeks 26 weeks 53 weeks
to 2 to 26 to 3
Oct Sep Apr
2017 2016 2017
Notes GBPm GBPm GBPm
------------------------------------ ------ ---------- ---------- ---------
Revenue 144.1 136.0 268.9
Operating costs before exceptional
items (116.3) (110.8) (222.8)
------------------------------------ ------ ---------- ---------- ---------
Adjusted operating profit 27.8 25.2 46.1
Operating exceptional items 3 (2.8) (0.3) (3.4)
------------------------------------ ------ ---------- ---------- ---------
Operating profit 25.0 24.9 42.7
Finance costs (2.7) (2.7) (5.5)
Other finance charge 9 (0.2) (0.1) (0.2)
------------------------------------ ------ ---------- ---------- ---------
Profit before tax 22.1 22.1 37.0
Taxation 4 (4.7) (3.4) (7.0)
Profit for the period attributable
to shareholders of the parent company 17.4 18.7 30.0
-------------------------------------------- ---------- ---------- ---------
Pence Pence Pence
------------------- ---- ------------ ------ ------
Earnings per 12.5p ordinary share
Basic 5 35.62 38.35 61.51
Diluted 5 35.59 38.33 61.47
------------------- ---- ------------ ------ ------
The results and earnings per share measures above are all from
continuing operations.
Group statement of comprehensive income
For the 26 weeks ended 2 October 2017
Unaudited Unaudited Audited
26 weeks 26 weeks 53 weeks
to 2 to 26 to 3
Oct Sep Apr
2017 2016 2017
Notes GBPm GBPm GBPm
--------------------------------------- ------ ---------- ---------- ---------
Profit for the period 17.4 18.7 30.0
--------------------------------------- ------ ---------- ---------- ---------
Other comprehensive income
Items that will not be reclassified
subsequently to profit or loss:
Unrealised gain on revaluation
of property - - 23.1
Remeasurement of retirement
benefit schemes 9 4.4 (17.8) (7.7)
Tax on above components of other
comprehensive income 4 - 5.4 1.2
Items that will be reclassified
subsequently to profit or loss:
Fair value movement of interest
rate swaps 2.4 (1.9) 1.3
Tax on fair value movement of
interest rate swaps 4 (0.4) 0.2 (0.3)
--------------------------------------- ------ ---------- ---------- ---------
6.4 (14.1) 17.6
Total comprehensive income for shareholders
of the parent company 23.8 4.6 47.6
----------------------------------------------- ---------- ---------- ---------
Group balance sheet
At 2 October 2017
Unaudited Unaudited Audited
At 2 At 26 At 3
Oct Sep Apr
2017 2016 2017
Notes GBPm GBPm GBPm
---------------------------------- ------ ---------- ---------- --------
Non current assets
Goodwill 19.7 20.6 19.9
Property and equipment 8 692.1 660.2 689.1
Deferred tax assets 6.5 9.1 7.4
Lease premiums 7.4 7.9 7.6
---------------------------------- ------ ---------- ---------- --------
725.7 697.8 724.0
---------------------------------- ------ ---------- ---------- --------
Current assets
Inventories 3.0 2.8 2.8
Trade and other receivables 7.1 6.0 7.2
Lease premiums 0.6 0.6 0.6
Cash 5.4 2.3 6.6
---------------------------------- ------ ---------- ---------- --------
16.1 11.7 17.2
---------------------------------- ------ ---------- ---------- --------
Assets held for sale - - 1.3
------------------------------------------ ---------- ---------- --------
Total assets 741.8 709.5 742.5
---------------------------------- ------ ---------- ---------- --------
Current liabilities
Borrowings (9.0) - (28.5)
Derivative financial instruments (2.3) (3.4) (2.9)
Trade and other payables (32.9) (33.4) (35.3)
Income tax payable (5.7) (4.9) (4.7)
---------------------------------- ------ ---------- ---------- --------
(49.9) (41.7) (71.4)
---------------------------------- ------ ---------- ---------- --------
Non current liabilities
Borrowings (114.1) (129.6) (104.7)
Derivative financial instruments (6.1) (10.5) (7.9)
Deferred tax liabilities (50.4) (49.3) (51.6)
Retirement benefit schemes 9 (7.9) (23.4) (12.8)
Provisions (0.6) (1.1) (1.1)
---------------------------------- ------ ---------- ---------- --------
(179.1) (213.9) (178.1)
---------------------------------- ------ ---------- ---------- --------
Total liabilities (229.0) (255.6) (249.5)
---------------------------------- ------ ---------- ---------- --------
Net assets 512.8 453.9 493.0
---------------------------------- ------ ---------- ---------- --------
Capital and reserves
Share capital 10 6.1 6.1 6.1
Share premium 10 5.7 5.1 5.2
Capital redemption reserve 1.8 1.8 1.8
Hedging reserve (6.8) (11.5) (8.8)
Revaluation reserve 248.3 227.2 247.7
Retained earnings 257.7 225.2 241.0
---------------------------------- ------ ---------- --------
Total equity 512.8 453.9 493.0
---------------------------------- ------ ---------- ---------- --------
Group statement of changes in equity
For the 26 weeks ended 2 October 2017
Share
capital Capital
and redemption Hedging Revaluation Retained Total
Notes premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
At 3 April 2017 11.3 1.8 (8.8) 247.7 241.0 493.0
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
Total comprehensive
income
Profit for the 26
week period - - - - 17.4 17.4
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
Other comprehensive
income
Unrealised gain on 8 - - - - - -
revaluation of property
Remeasurement of retirement
benefit schemes 9 - - - - 4.4 4.4
Fair value movement
of interest rate swaps - - 2.4 - - 2.4
Tax on above components
of other comprehensive
income 4 - - (0.4) 0.7 (0.7) (0.4)
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
- - 2.0 0.7 3.7 6.4
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
Total comprehensive
income - - 2.0 0.7 21.1 23.8
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
Transactions with owners recorded
directly in equity
Issued equity 10 0.5 - - - - 0.5
Dividends paid on
equity shares - - - - (4.7) (4.7)
Revaluation reserve
realised on disposal
of properties - - - (0.1) 0.1 -
Share based payments - - - - 0.3 0.3
Tax on share based
payments - - - - (0.1) (0.1)
-----------------------------
0.5 - - (0.1) (4.4) (4.0)
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
At 2 October 2017 11.8 1.8 (6.8) 248.3 257.7 512.8
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
At 28 March 2016 10.2 1.8 (9.8) 224.6 225.7 452.5
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
Total comprehensive
income
Profit for the 26
week period - - - - 18.7 18.7
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
Other comprehensive
income
Unrealised gain on - - - - - -
revaluation of property
Remeasurement of retirement
benefit schemes 9 - - - - (17.8) (17.8)
Fair value movement
of interest rate swaps - - (1.9) - - (1.9)
Tax on above components
of other comprehensive
income 4 - - 0.2 2.7 2.7 5.6
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
- - (1.7) 2.7 (15.1) (14.1)
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
Total comprehensive
income restated - - (1.7) 2.7 3.6 4.6
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
Transactions with owners recorded
directly in equity
Issued equity 10 1.0 - - - - 1.0
Dividends paid on
equity shares - - - - (4.4) (4.4)
Revaluation reserve
realised on disposal
of properties - - - (0.1) 0.1 -
Share based payments - - - - 0.2 0.2
Tax on share based - - - - - -
payments
-----------------------------
1.0 - - (0.1) (4.1) (3.2)
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
At 26 September 2016 11.2 1.8 (11.5) 227.2 225.2 453.9
----------------------------- --- --------- ------------ --------- ------------ ---------- --------
Group statement of cash flow
For the 26 weeks ended 2 October 2017
Unaudited Unaudited Audited
26 weeks 26 weeks 53 weeks
to 2 to 26 to 3
Oct Sep Apr
2017 2016 2017
Notes GBPm GBPm GBPm
--------------------------------------- ------ ---------- ---------- ---------
Operating activities
Net cash generated from operations 7 33.2 33.1 63.5
Tax paid (4.6) (3.1) (7.6)
--------------------------------------- ------ ---------- ---------- ---------
Net cash flow from operating
activities 28.6 30.0 55.9
--------------------------------------- ------ ---------- ---------- ---------
Investing activities
Sales of property and equipment 2.1 0.4 0.4
Purchases of property, equipment
and lease premiums 8 (11.9) (15.0) (34.5)
Business combinations, net of
cash acquired 8 (2.4) (5.4) (3.8)
--------------------------------------- ------ ---------- ---------- ---------
Net cash used in investing activities (12.2) (20.0) (37.9)
--------------------------------------- ------ ---------- ---------- ---------
Financing activities
Issued equity - 0.1 0.2
Interest paid (2.9) (2.6) (5.7)
Equity dividends paid (4.7) (4.4) (8.7)
Repayments of amounts borrowed (10.0) (14.0) (10.4)
--------------------------------------- ------ ---------- ---------- ---------
Net cash flow used in financing
activities (17.6) (20.9) (24.6)
--------------------------------------- ------ ---------- ---------- ---------
Decrease in cash (1.2) (10.9) (6.6)
Cash at the beginning of the
period 6.6 13.2 13.2
--------------------------------------- ------ ---------- ---------- ---------
Cash at the end of the period 5.4 2.3 6.6
--------------------------------------- ------ ---------- ---------- ---------
NOTES TO THE FINANCIAL STATEMENTS
1. Accounts
This interim report was approved by the board on 15 November
2017. The interim financial statements are unaudited, and are not
the group's statutory accounts as defined in s. 434 of the
Companies Act 2006.
The consolidated interim financial statements have been prepared
under IFRS as adopted by the European Union and on the basis of the
accounting policies set out in the statutory accounts of Young
& Co.'s Brewery, P.L.C., for the period ended 3 April 2017. The
financial statements have not been prepared (and are not required
to be prepared) in accordance with IAS 34: 'Interim Financial
Reporting', with the exception of Note 4, taxation, where the tax
charge for the half year to 2 October 2017 has been calculated
using an estimate of the full year effective tax rate, in line with
the principles of IAS 34. The accounting policies have been applied
consistently throughout the group for the purposes of preparation
of this financial information. There are no IFRS, IAS amendments or
IFRIC interpretations effective for the first time for the period
ending 2 April 2018 that have had a material impact on the
group.
For the financial period starting on or around 31 March 2019,
the directors intend to adopt IFRS 16: Leases, which will replace
IAS 17 and requires lessees to recognise a lease liability
reflecting future lease payments and a right-of-use-asset in
respect of virtually all leases currently classified as operating
leases. The balance sheet will effectively be 'grossed up' but with
no impact to net assets at the inception of each lease. The group
income statement impact will contain a new interest charge, a lower
rent charge and an increase in depreciation charge recognised on
the right-of-use-asset. Early adoption is permitted. The group is
yet to assess the full impact of the new standard.
IFRS 15: Revenue from Contracts with Customers will be effective
for periods commencing on or after 1 January 2018. The core
principle is that an entity will recognise revenue at an amount
that reflects the consideration to which the entity expects to be
entitled in exchange for transferring goods or service to a
customer. The group's revenue streams are not based on a number of
performance obligations within a contract but at a point of sale,
or rent over a lease term or accrued interest using the effective
interest method. It does not enter into common arrangements and,
although disclosure requirements are more extensive, the adoption
of IFRS 15 is not expected to have material impact on the group's
financial performance.
IFRS 9: Financial instruments will be effective for periods
commencing on or after 1 January 2018. The new standard will impact
classification, measurement and disclosure of financial assets and
financial liabilities. Adoption is not anticipated to have a
material impact on the group's financial performance or financial
position.
The interim report is presented in pounds sterling and all
values are shown in millions of pounds (GBPm) rounded to the
nearest GBP0.1m, except where otherwise indicated.
Statutory accounts for the period ended 3 April 2017 have been
delivered to the Registrar of Companies. The auditor's report on
those accounts was unqualified and did not contain any reference to
any matters to which the auditor drew attention by way of emphasis
without qualifying the report. Further, that report did not contain
a statement under s. 498(2) or (3) of the Companies Act 2006
(adequate accounting records not kept, returns inadequate, accounts
not agreeing with records and returns, or failure to obtain
necessary information and explanations).
This interim report has been prepared in accordance with the AIM
Rules issued by the London Stock Exchange.
2. Segmental reporting
The group is organised into the reporting segments referred to
below. These segments are based on the different resources and
risks involved in the running of the group. The group's executive
board internally reviews each reporting segment's operating profit
or loss before exceptional items for the purpose of deciding on the
allocation of resources and assessing performance.
The group has three operating segments: Young's managed houses,
Geronimo managed houses and Ram Pub Company. Both Young's and
Geronimo managed houses operate pubs. Revenue is derived from sales
of drink, food and also, for Young's managed houses, accommodation.
Management has reported the group's managed houses as a single
reportable segment since they are affected by common economic
factors (market trends and consumer demand, taste, disposable
income and propensity to spend), have similar product offerings and
are measured against the same key performance indicators. Ram Pub
Company consists of pubs owned or leased by the company and leased
or sub leased to third parties. Revenue is derived from rents
payable by, and sales of drink made to, tenants. Unallocated
relates to head office income and costs.
26 weeks 26 weeks 53 weeks
to 2 to 26 to 3
Oct Sep Apr
2017 2016 2017
GBPm GBPm GBPm
---------------------------------- --------- --------- ---------
Revenue
Managed houses 137.5 128.7 254.8
Ram Pub Company 6.5 7.1 13.8
---------------------------------- --------- --------- ---------
Segment revenue 144.0 135.8 268.6
Unallocated income 0.1 0.2 0.3
---------------------------------- --------- --------- ---------
Total revenue 144.1 136.0 268.9
---------------------------------- --------- --------- ---------
Adjusted operating profit
Managed houses 35.0 31.5 59.7
Ram Pub Company 2.4 2.7 5.1
---------------------------------- --------- --------- ---------
Adjusted operating profit before
unallocated expense 37.4 34.2 64.8
Unallocated expense (9.6) (9.0) (18.7)
---------------------------------- --------- --------- ---------
Adjusted operating profit 27.8 25.2 46.1
---------------------------------- --------- --------- ---------
Operating exceptional items
Managed houses (3.1) (0.3) (4.7)
Ram Pub Company 0.3 - 1.3
---------------------------------- --------- --------- ---------
Operating profit 25.0 24.9 42.7
Finance costs (2.7) (2.7) (5.5)
Other finance charge (0.2) (0.1) (0.2)
---------------------------------- --------- --------- ---------
Profit before tax 22.1 22.1 37.0
---------------------------------- --------- --------- ---------
3. Exceptional items and other financial measures
26 weeks 26 weeks 53 weeks
to 2 to 26 to 3
Oct Sep Apr
2017 2016 2017
GBPm GBPm GBPm
-------------------------------------- --------- --------- ---------
Amounts included in operating profit
Tenant compensation(1) (2.8) - (2.0)
Profit on sales of properties(2) 0.3 - -
Net acquisition costs(3) (0.3) (0.3) (0.2)
Loss on disposal of properties(4) (0.5)
Onerous lease provision released 0.5 - -
on disposal of property(4)
Goodwill disposal(5) - - (0.7)
Upward movement on the revaluation
of properties (note 8)(6) - - 3.0
Downward movement on the revaluation
of properties (note 8)(6) - - (3.5)
(2.8) (0.3) (3.4)
-------------------------------------- --------- --------- ---------
Exceptional tax
Change in corporation tax rate - 1.0 0.9
Tax attributable to exceptional
items 0.1 0.3 0.1
-------------------------------------- --------- --------- ---------
0.1 1.3 1.0
-------------------------------------- --------- --------- ---------
Total exceptional items after tax (2.7) 1.0 (2.4)
-------------------------------------- --------- --------- ---------
(1) During the period, the group paid GBP2.8 million to the
previous tenants of the Hope & Anchor (Brixton), Grove
(Camberwell) and the King's Arms (Wandsworth) to terminate their
lease agreements early.
(2) The profit on sales of properties related to the difference
between cash, less selling costs, received from the sale of the
King's Arms (Epsom) and the carrying value of the assets at the
date of sale.
(3) The acquisition costs related to the purchase of the
Chequers Inn (Hanham Mills). They include legal and professional
fees and stamp duty land tax.
(4) The loss on disposal of properties related to the difference
between cash, less selling costs, received from the sale of the
Court House (Dartford) and the carrying value of the net assets at
the date of sale. Previously an onerous lease was recognised in
respect of the property which was subsequently released on
disposal.
(5) In the prior period, the goodwill disposal was a non-cash
item that related to the Three Bells (Heathrow Airport) and the
Five Tuns (Heathrow Airport) whose leases expired during the prior
period. The Three Bells and Five Tuns formed part of the Geronimo
group of cash generating units (which are the pubs trading under
the Geronimo concept) and fell within the Geronimo managed houses
operating segment.
(6) The upward movement on the revaluation of properties in the
previous period related to a reversal of previous downward
valuations in the income statement and the downward movement on the
revaluation of properties related to an impairment charge.
Other financial measures
The table below shows how adjusted group EBITDA, operating
profit and profit before tax have been arrived at. These
alternative performance measures have been provided as the board
believes that they give useful additional measures of the group's
underlying performance.
26 weeks 26 weeks 53 weeks
to 2 to 26 to 3
Oct Sep Apr
2017 2016 2017
GBPm GBPm GBPm
------------------------------- --------- --------- ---------
Profit before tax 22.1 22.1 37.0
Operating exceptional items 2.8 0.3 3.4
Adjusted profit before tax 24.9 22.4 40.4
Net finance costs 2.7 2.7 5.5
Other finance charges 0.2 0.1 0.2
Adjusted operating profit 27.8 25.2 46.1
Depreciation and amortisation 10.8 9.9 20.4
------------------------------- --------- --------- ---------
Adjusted EBITDA 38.6 35.1 66.5
------------------------------- --------- --------- ---------
4. Taxation
The taxation charge for the 26 weeks ended 2 October 2017 has
been calculated by applying an estimate of the effective tax rate
before exceptional items for the 52 weeks ending 2 April 2018 at
19.3% (2017: 21.0%).
26 weeks 26 weeks 53 weeks
to 2 to 26 to 3
Oct Sep Apr
2017 2016 2017
Tax charged in the group income
statement GBPm GBPm GBPm
---------------------------------------- --------- --------- ---------
Current tax
Corporation tax expense 5.6 4.8 8.9
Adjustment in respect of current
tax of prior periods - - 0.2
--------------------------------------- --------- --------- ---------
5.6 4.8 9.1
--------------------------------------- --------- --------- ---------
Deferred tax
Origination and reversal of temporary
differences (0.9) (0.1) (0.7)
Change in corporation tax rate - (1.0) (0.9)
Adjustment in respect of deferred
tax of prior periods - (0.3) (0.5)
(0.9) (1.4) (2.1)
--------------------------------------- --------- --------- ---------
Tax expense 4.7 3.4 7.0
---------------------------------------- --------- --------- ---------
Deferred tax in the group income
statement
---------------------------------------- --------- --------- ---------
Property revaluation and disposals (0.6) (1.2) (1.4)
Retirement benefit schemes 0.1 - 0.1
Capital allowances (0.5) (0.1) (0.7)
Share based payments 0.1 (0.1) (0.1)
Tax credit (0.9) (1.4) (2.1)
---------------------------------------- --------- --------- ---------
Deferred tax in the group statement
of comprehensive income
---------------------------------------- --------- --------- ---------
Interest rate swaps 0.4 (0.3) 0.2
Retirement benefit schemes 0.7 (3.2) (1.4)
Property revaluation and disposals (0.7) (0.5) 2.0
Change in corporation tax rate - (1.6) (1.7)
---------------------------------------- --------- --------- ---------
Tax expense / (credit) 0.4 (5.6) (0.9)
---------------------------------------- --------- --------- ---------
The reduction in the headline rate of corporation tax from 18%
to 17% applicable from 1 April 2020 was substantively enacted on 15
September 2016. Accordingly, the deferred tax balances have been
measured at 17% to reflect the new rate.
5. Earnings per ordinary share
(a) Earnings
26 weeks 26 weeks 53 weeks
to 2 Oct to 26 to 3 Apr
Sep
2017 2016 2017
GBPm GBPm GBPm
-------------------------------------------- ----------- ----------- -----------
Profit attributable to equity shareholders
of the parent 17.4 18.7 30.0
Operating exceptional items 2.8 0.3 3.4
Tax attributable to above adjustments (0.1) (0.3) (0.1)
Change in corporation tax rate - (1.0) (0.9)
-------------------------------------------- ----------- ----------- -----------
Adjusted earnings after tax 20.1 17.7 32.4
-------------------------------------------- ----------- ----------- -----------
Number Number Number
-------------------------------------------- ----------- ----------- -----------
Basic weighted average number of
ordinary shares in issue 48,851,159 48,757,952 48,774,457
Dilutive potential ordinary shares
from outstanding employee share options 35,615 25,640 26,331
-------------------------------------------- ----------- ----------- -----------
Diluted weighted average number of
shares 48,886,774 48,783,592 48,800,788
-------------------------------------------- ----------- ----------- -----------
(b) Basic earnings per share Restated
Pence Pence Pence
-------------------------------------------- ----------- ----------- -----------
Basic 35.62 38.35 61.51
Effect of exceptional items and other
adjustments listed above 5.53 (2.05) 4.92
-------------------------------------------- ----------- ----------- -----------
Adjusted basic 41.15 36.30 66.43
-------------------------------------------- ----------- ----------- -----------
(c) Diluted earnings per share Restated
Pence Pence Pence
-------------------------------------------- ----------- ----------- -----------
Diluted 35.59 38.33 61.47
Effect of exceptional items and other
adjustments listed above 5.53 (2.05) 4.92
-------------------------------------------- ----------- ----------- -----------
Adjusted diluted 41.12 36.28 66.39
-------------------------------------------- ----------- ----------- -----------
The basic earnings per share figure is calculated by dividing
the net profit for the period attributable to equity shareholders
of the parent by the weighted average number of ordinary shares in
issue during the period. Diluted earnings per share have been
calculated on a similar basis taking into account 35,615 (2016:
25,640) dilutive potential shares under our SAYE scheme.
Adjusted earnings per share are presented to eliminate the
effect of the exceptional items and the change in corporation tax
rate on basic and diluted earnings per share.
6. Dividends on equity shares
26 weeks 26 weeks 53 weeks
to 2 to 26 to 3
Oct Sep Apr
2017 2016 2017
Pence Pence Pence
----------------------------------- --------- --------- ---------
Final dividend (previous period) 9.62 9.07 9.07
Interim dividend (current period) - - 8.88
----------------------------------- --------- --------- ---------
9.62 9.07 17.95
----------------------------------- --------- --------- ---------
The table above sets out dividends that have been paid. The
interim dividend, in respect of the period ended 2 October 2017, of
9.41 pence per share at a cost of GBP4.6 million is expected to be
paid on 8 December 2017 to shareholders on the register at the
close of business on 24 November 2017.
7. Net cash generated from operations and analysis of net
debt
26 weeks 26 weeks 53 weeks
to 2 to 26 to 3
Oct Sep Apr
2017 2016 2017
GBPm GBPm GBPm
----------------------------------------- --------- --------- ---------
Profit before tax 22.1 22.1 37.0
Finance costs 2.7 2.7 5.5
Other finance charge 0.2 0.1 0.2
----------------------------------------- --------- --------- ---------
Operating profit 25.0 24.9 42.7
Depreciation 10.3 9.6 19.8
Amortisation of lease premium 0.3 0.3 0.6
Movement on the revaluation of property - - 0.5
Goodwill disposal 0.2 - 0.7
Net loss / (profit) on sales of
property 0.2 (0.1) -
Movement on onerous leases (0.5) - 0.1
Difference between pension service
cost and cash contributions paid (0.7) (0.8) (1.4)
Share based payments 0.3 0.2 0.4
Movements in working capital
- Inventories (0.2) (0.2) (0.3)
- Receivables 0.1 0.4 (0.8)
- Payables (1.8) (1.2) 1.2
----------------------------------------- --------- --------- ---------
Net cash generated from operations 33.2 33.1 63.5
----------------------------------------- --------- --------- ---------
Analysis of group net debt
At 2 At 26 At 3
Oct Sep Apr
2017 2016 2017
GBPm GBPm GBPm
--------------------------------------- -------- -------- --------
Cash 5.4 2.3 6.6
Current borrowings and loan capital (9.0) - (28.5)
Non-current borrowings - loan capital
and finance lease (114.1) (129.6) (104.7)
--------------------------------------- -------- -------- --------
Net debt (117.7) (127.3) (126.6)
--------------------------------------- -------- -------- --------
8. Property and equipment
Fixtures,
Land fittings
& &
buildings equipment Total
GBPm GBPm GBPm
----------------------------------------- ---------- ---------- -------
Cost or valuation
At 28 March 2016 623.8 118.8 742.6
Additions 9.4 25.0 34.4
Business combinations 3.0 0.8 3.8
Disposals (0.3) (0.2) (0.5)
Transfer out to assets held for
sale (1.6) (0.3) (1.9)
Fully depreciated assets (6.5) (22.8) (29.3)
Revaluation
- effect of upward movement in property
valuation 27.0 - 27.0
- effect of downward movement in
property valuation (7.5) - (7.5)
----------------------------------------- ---------- ---------- -------
At 3 April 2017 647.3 121.3 768.6
Additions 2.1 9.8 11.9
Business combinations 1.9 0.5 2.4
Disposals (1.0) - (1.0)
Fully depreciated assets (0.5) (5.7) (6.2)
Revaluation
- effect of upward movement in property
valuation - - -
- effect of downward movement in
property valuation - - -
----------------------------------------- ---------- ---------- -------
At 2 October 2017 649.8 125.9 775.7
----------------------------------------- ---------- ---------- -------
Depreciation and impairment
At 28 March 2016 38.9 53.9 92.8
Depreciation charge 1.6 18.2 19.8
Disposals - (0.1) (0.1)
Transfer out to assets held for
sale (0.4) (0.2) (0.6)
Fully depreciated assets (6.5) (22.8) (29.3)
Revaluation
- effect of downward movement in
property valuation 3.6 - 3.6
- effect of upward movement in property
valuation (6.7) - (6.7)
----------------------------------------- ---------- ---------- -------
At 3 April 2017 30.5 49.0 79.5
Depreciation charge 0.9 9.4 10.3
Disposals - - -
Fully depreciated assets (0.5) (5.7) (6.2)
Revaluation
- effect of downward movement in
property valuation - - -
- effect of upward movement in property
valuation - - -
----------------------------------------- ---------- ---------- -------
At 2 October 2017 30.9 52.7 83.6
----------------------------------------- ---------- ---------- -------
Net book value
At 28 March 2016 584.9 64.9 649.8
----------------------------------------- ---------- ---------- -------
At 3 April 2017 616.8 72.3 689.1
----------------------------------------- ---------- ---------- -------
At 2 October 2017 618.9 73.2 692.1
----------------------------------------- ---------- ---------- -------
8. Property and equipment (continued)
Revaluation of property and equipment
The values of the group's freehold land, freehold and long
leasehold buildings and fixtures and fittings were reviewed in
light of current market factors (but have not been updated as at 2
October 2017 from their year-end market values as there has been no
material change in the current period) by Andrew Cox MRICS, the
group's director of property and tenancies and a Chartered
Surveyor, pursuant to the group's accounting policy. This review
was carried out in accordance with the provisions of the RICS
Valuation - Professional Standards January 2014 ('the Red Book'),
which takes account of each property's highest and best use
value.
Each individual pub is valued as a fully equipped operational
entity after taking into account its trading potential, location,
tenure, size and condition and other factors such as recent market
transactions. Changes in these variables and assumptions could
materially impact the valuations.
These values and the assumptions used to derive these values
were discussed and reviewed with Andrew Cox and the board. The
highest and best use of its properties does not differ materially
from their current use.
These techniques are consistent with the principles in IFRS 13:
Fair Value Measurement and use significant unobservable inputs such
that the fair value measurement of each property within the
portfolio has been classified as Level 3 (2017: Level 3) in the
fair value hierarchy.
The key inputs to valuation are consistent with those set out in
the group's audited accounts for the 53 weeks ended 3 April
2017.
9. Retirement benefit schemes
The table below summarises the movement in the retirement
benefit schemes' deficit in the period.
26 weeks 26 weeks 53 weeks
to 2 to 26 to 3
Oct Sep Apr
2017 2016 2017
GBPm GBPm GBPm
------------------------------------------- --------- --------- ---------
Changes in the present value of the retirement benefit
schemes are as follows:
Opening deficit (12.8) (6.3) (6.3)
Current service cost (0.2) (0.2) (0.3)
Contributions 0.9 1.0 1.7
Other finance charge (0.2) (0.1) (0.2)
Remeasurement through other comprehensive
income 4.4 (17.8) (7.7)
------------------------------------------- --------- --------- ---------
Closing deficit (7.9) (23.4) (12.8)
------------------------------------------- --------- --------- ---------
10. Share capital
Total share capital comprises the nominal value of the share
capital issued and fully paid of GBP6.1 million (2017: GBP6.1
million) and the share premium account of GBP5.7 million (2017:
GBP5.2 million). Share capital issued in the period comprises a
nominal value of GBPnil (2017: GBPnil) and a share premium of
GBP0.5 million (2017: GBP1.0 million).
The shares issued in the current period relate to directors' and
senior management's share awards and the exercise of share options
under our SAYE scheme.
11. Post balance sheet events
There were no post balance sheet events apart from the purchase
of the freehold of the Phoenix (Chelsea) and the entire issued
share capital of Smiths of Smithfield Limited.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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