REG - Young & Co's Brew. - Final Results
19/06/2024 07:00
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RNS Number : 0213T Young & Co's Brewery PLC 19 June 2024
YOUNG & CO.'S BREWERY, P.L.C.
UNAUDITED RESULTS FOR THE 52 WEEKS ENDED 1 APRIL 2024
A STRONG PERFORMANCE DELIVERING INDUSTRY-LEADING PROFITABILITY
INTEGRATION OF CITY PUB GROUP ON TRACK
2024 2023
52 weeks 53 weeks(1) %
Unaudited results £m £m change
Revenue 388.8 368.9 +5.4
Adjusted operating profit(2) 57.3 52.4 +9.4
Adjusted profit before tax(2) 49.4 45.2 +9.3
Adjusted EBITDA(2) 92.2 85.5 +7.8
Adjusted operating margin(2) 14.7% 14.2% +0.5%
Net debt 359.6 165.2 +117.7
Net debt to adjusted EBITDA 3.9x 1.9x +2.0x
Statutory profit before tax 20.7 36.2 -42.8
Net assets 775.2 724.2 +7.0
Adjusted basic earnings per share(2) 62.97p 64.29p -2.1
Basic earnings per share 18.89p 50.78p -62.8
Dividend per share(3) 21.76p 20.52p +6.0
(Interim and recommended final)
Net assets per share(4) £12.48 £12.38 +0.8
1 Previous year results for 2023 include an extra trading week for a 53-week
period.
2 Reference to an "adjusted" item means that item has been adjusted to exclude
a non-underlying cost of £28.7 million (2023: non-underlying cost of £9.0
million) The three main adjusting items relate to a small net downward
movement in property revaluation of £12.8 million, purchase costs relating to
the acquisition of the City Pub Group totalling £6.2 million, and an
impairment of £5.5 million.
3 The dividend, in respect of the period ended 1 April 2024, is expected to be
paid on 2 August 2024 (see note 7).
4 Net assets per share are the group's net assets divided by the shares in
issue at the period end.
PERFORMANCE HIGHLIGHTS
· Total revenue on a comparable 52-week basis up 7.4% to £388.8
million and on a like-for like 52-week basis was up 3.4% against strong
results in 2023, in line with historical trends
· Adjusted EBITDA up 7.8% to £92.2 million; managed house adjusted
EBITDA for the period up 7.1% to £112.7 million
· Adjusted operating profit up 9.4% to £57.3 million, with a
sector leading margin of 14.7%, up 50 bps on last year
· Adjusted profit before tax growth of 9.3% to a record £49.4
million for the period, despite the impact of continued cost inflation,
demonstrating the strength of Young's proven strategy
· Completed the acquisition of The City Pub Group on 4(th) March,
with the integration progressing as planned. The acquisition contributed
£7.2 million revenue and EBITDA of £1.7 million for the 4 weeks of ownership
in the period
· Strong balance sheet and cash generation supported £84.5 million
of investment in the Young's estate, including £36.5 million on eight
individual acquisitions and £48.0 million invested in existing pubs
· We are pleased to recommend a final dividend of 10.88 pence,
resulting in a total dividend for the year of 21.76 pence, up 6.0%, reflecting
our strong profit performance and positive outlook
· Managed house revenue for the last 9 weeks was ahead of last year
by 24.4% including City Pub Group; and up by 2.4% on a like-for-like basis
Simon Dodd, Chief Executive of Young's, commented:
"In a landmark year for Young's, we have reported another excellent financial
performance with industry leading profitability. This is once again testament
to the excellent work and energy of our teams and our proven strategy of
operating premium, individual, differentiated and well-invested pubs and
bedrooms."
"We were delighted to complete on our acquisition of The City Pub Group in
March, a real milestone for Young's. We welcome the City team to the Young's
family and respect the many initiatives that have brought them so much
success. I look forward to working with the talented teams to evolve the
business over the coming years."
"Our investment for future growth didn't stop with The City Pub Group
acquisition, during the period we acquired eight great pubs, made further
investments in our existing estate, and upgraded our technology to enhance the
customer experience and realise productivity gains."
"Looking ahead, we face some challenges, but there is plenty for us to be
excited about this year. We are heading into a feast of summer sporting
events, starting with EURO 24, Wimbledon and the Olympics. Then we look
forward to making the most from the return of the Autumn rugby internationals
which provides a fantastic opportunity given our rugby heritage."
"Our belief in Young's long-term growth potential remains as good as ever, and
we are confident of our performance in the year ahead."
For further information, please contact:
Young & Co.'s Brewery,
P.L.C.
020 8875 7000
Simon Dodd, Chief Executive
Michael Owen, Chief Financial Officer
MHP
Communications
07736 464749
Tim Rowntree/ Eleni Menikou/ Robert Collett-Creedy
PRELIMINARY RESULTS FOR THE 52 WEEKS ENDED 1 APRIL 2024
chief EXECUTIVE'S STATEMENT
Once again, I am pleased to announce a positive set of results, driven by our
well-invested, premium estate that operates at the highest level in the
industry. We continue to evolve and lead the market, delivering a landmark
year in which we completed the acquisition of The City Pub Group plc (City Pub
Group), despite a challenging macroeconomic landscape.
We were delighted to finalise the City Pub Group acquisition in March, for a
total consideration of £158.0 million, the largest in Young's history. This
is a significant milestone for Young's, accelerating its expansion and
providing a platform for future growth. Following the acquisition, we grew our
estate by 55 pubs to 288 pubs, an increase of more than twenty percent, and
added 240 new bedrooms an increase of more than twenty five percent, to 1,066.
City's predominantly freehold portfolio of individual, premium and
well-invested pubs & bedrooms, located in affluent towns and cities, is
highly complementary to Young's existing estate. It also strategically expands
our presence in high-footfall areas across London and the south of England.
There will be additional operational and financial benefits from the
transaction. These are achieved through purchasing and overhead synergies
delivering improved margins, combined with operational benefits at a pub level
through leveraging our best-in-class operating practices, booking platforms
and digital technology.
As we continue to grow through acquisition and investment in our pubs, it is
important that we remain equally focused on our heritage. We are privileged at
Young's to have almost 200 years of history to look back on and reflect how
the stories of our past have made us the family of people and pubs that we are
today. There is real pride in our heritage, and it is very important that
every team member in the Young's family understands where Young's has come
from and how this supports where we are heading.
On a comparable 52-week basis, total revenue was up 7.4% to £388.8 million,
underpinned by a solid like-for-like performance of 3.4%, driven by continued
investment in our existing estate, complementary individual acquisitions and
four weeks' revenue of City Pub Group. Despite the ongoing challenges related
to inflation, consumer uncertainty and significant increases in the National
Living Wage, our adjusted operating profit was up 9.4% to £57.3 million
(2023: £52.4 million), with adjusted profit before tax up by 9.3% to £49.4
million (2023: £45.2 million). Total profit before tax was £20.7 million
(2023: £36.2 million) primarily due to transaction costs related to the City
Pub Group acquisition and a small movement in our annual property revaluation.
Adjusted operating margin remained strong at 14.7%, (2023: 14.2%), which we
are confident will improve further over the coming period as the scale
benefits of the City Pub Group acquisition materialise.
Young's is a business that continues to place investment in its people and
pubs at the heart of its decision making. We are committed to maintaining a
premium estate and our strong financial position has enabled us to invest a
total of £84.5 million across our existing pubs and eight individual
acquisitions outside of the City Pub Group transaction. During the period we
were delighted to welcome The Crooked Billet (Clapton), Ship Inn (Noss Mayo),
Tattenham Corner (Epsom Downs), Libertine (Westbourne), White Hart (Ford),
White Lion (Tenterden), Huntsman (Brockenhurst) and the Stag (Belsize Park).
Within our existing estate we invested £48.0 million, including
transformational projects at the Clapham North (Clapham), Bedford Arms
(Chenies) and The Constitution (Camden). We also opened our new roof terrace
at the Marquess of Anglesey (Covent Garden), introduced new outside space at
the Defector's Weld (Shepherd's Bush), and doubled the size of one of our
most-loved pubs, the Guinea Grill (Mayfair) by acquiring and knocking through
to the site next door.
GREAT PUBS OPERATED BY THE BEST PEOPLE
Our success is ultimately down to our people. Our amazing managers, chefs and
their teams are the beating heart of our operations, reinforcing and
maintaining the vital position they hold at the heart of their communities.
That's why it's so important for us to have the best possible people working
throughout the group. We focus on providing high-quality training programmes
and development opportunities to give our people the chance to flourish and
further their careers within Young's, and I am extremely proud of the fact
that, across our pubs, 65% of general managers and 62% of chefs are developed
internally.
As well as nurturing and developing our people, we are committed to making a
lasting and positive contribution to the communities we operate in by
respecting and protecting the environment. Not only is this vital to our
future success, but it will also enable us to deliver long-term value for all
our stakeholders. Some of the most impactful initiatives last year included
starting the roll out of EV chargers, moving all urinals to waterless systems,
removing our gas garden heating systems, and launching our first all-electric
pub, the Bedford Arms (Chenies).
CURRENT TRADING AND OUTLOOK
Since the period end, trading has been positive with total sales for the last
9 weeks up 24.4% with the inclusion of City Pub Group and like-for-like sales
up by 2.4%, this is against the backdrop of last year's excellent late spring
and early summer weather which delivered a strong comparative period and
little in the way of reasonable weather so far this year. It is also expected
that the net debt to adjusted EBITDA ratio will fall back to more historical
levels by the end of FY25 once a full year of the additional EBITDA from the
City Pub Group acquisition is included.
We are making good progress integrating the brilliant teams from City Pubs,
work that has already begun in earnest. As they join the Young's family, we
will also reflect on the many things that have brought them success so far and
take learnings for the wider Young's estate. I look forward to getting to know
all the teams better and working with them to enhance the business over the
coming years.
I'd like to take this opportunity, on behalf of everyone at Young's, to extend
my thanks and congratulations to our wonderful Chairman, Steve Goodyear, who
will be standing down at our upcoming AGM. Steve is a legend in our industry
who has led our business for over 20 years and overseen its dramatic
transformation, characterised by many considerable successes, including the
recent City Pub acquisition. On a personal note, I would like to say a huge
thank you to Steve for his wise counsel and support. All at Young's wish him
the very best in his retirement, and I expect to find him occasionally
enjoying a pint of Young's Original at the Bull's Head in Chislehurst.
I'd also like to welcome our new Chairman, Steve Cooke, who joined us from
Slaughter and May solicitors where he was most recently senior partner. Steve
spent more than 40 years with the firm, where he advised a wide range of
businesses including those in the hospitality sector and led its mergers and
acquisitions practice for 15 years. Having joined as a Non-Executive Director
in November, he has already brought invaluable experience and an external
perspective to the board and will take over as Chairman in July following our
AGM.
Looking ahead, there is plenty for us to be excited about. This summer we have
a festival of sport, starting with EURO 24, Wimbledon and the Olympics,
followed by the return of the Autumn rugby internationals which provides a
fantastic opportunity given our rugby heritage. The recent investments,
acquisitions and City Pub Group transaction provide incredible long-term
growth potential.
We remain focused on maintaining our premium position within the pub sector
and are confident in our winning strategy of operating premium, individual and
well-invested managed pubs and bedrooms, crucial to our continued success and
the delivery of achieving superior returns for our loyal shareholders.
BUSINESS REVIEW
It has been a strong year for Young's and having achieved the remarkable feat
of exceeding pre-pandemic profit levels last financial year, we have further
accelerated our performance with another record adjusted profit before tax of
£49.4 million, an increase of 9.1%. The other significant milestone achieved
during the period was completing on our acquisition of the City Pub Group on 4
March, adding 55 wet-led pubs and 240 bedrooms to our estate, the largest
transaction in our history. We were delighted to welcome a portfolio so
closely aligned with our own and are excited to see what we can achieve
together in the years ahead.
On a comparable 52-week basis, total managed house revenue was up 7.5% to
£388.2 million (2023: £361.1 million), and up 3.4% on a like-for-like basis.
It was a strong start to the year, with the King's coronation adding an extra
bank holiday in May and customers flocking to our gardens and outdoor spaces
to make the most of an exceptionally hot June. However, disappointing weather
and further rail strikes put a dampener on the rest of the summer months,
despite the excitement of Wimbledon and the Lionesses' progress in the Women's
World Cup. Following this, sales were boosted by the return of the Rugby World
Cup in September, which was supported in great numbers by our customers,
especially in our heartland of south-west London.
The Christmas period saw both our best week ever for sales just before
Christmas itself, and our best ever single day on 15 December. We dusted off
the January blues by delivering a strong performance throughout the Guinness
Six Nations in February and Cheltenham festival in March, and topped things
off at the end of March with the second Easter weekend of the financial
year.
SUPPORTING GROWTH THROUGH INNOVATION
During the period we continued to invest significantly in digital and
technology within the business, ultimately aiming to improve understanding of
our customers and making it easier and more rewarding for them to engage with
us. We now have more than 4.4 million customers registered on our internal
database and continue to evolve our use of our Acteol system to better
understand customer behaviour. We started the journey on converting all our
pubs to a new 'headless' website template which seeks to reinforce the
individuality of our pubs, resulting in strong visit and conversion uplifts,
already showing a 3-percentage point improvement on conversion rates. The
Young's Rooms booking journey, and ultimately the guests experience when
arriving at our pubs with rooms, has been improved greatly with the
introduction of Guestline (a hotel property management system) and Profitroom
booking platform.
In addition, we are now using an online reputation management tool to measure
and assess our customer feedback across popular platforms including Google
Reviews and Tripadvisor, giving us further valuable new customer insights. By
the end of the period 135 Young's pubs had a reputation score of 800 or
higher, which is considered gold standard, with the industry average sitting
at around 710.
STRONG ROOMS PERFORMANCE
Total room revenue on a comparable 52-week basis was up 10.2% for the period
to £23.7 million. On a like-for-like basis over 52 weeks, room revenue was up
by 7.7%, while our like-for-like occupancy increased by 0.5% points and
average room rates grew by £3.89. In total, RevPar (revenue per available
room) was up £7.00 to £78.40. Accommodation has become a major revenue
driver for Young's and by adding City Pubs to our estate, we now have 1,066
rooms, with a presence in new geographical areas including Norwich and
Cambridge, affluent student towns where we have not previously played. At the
start of the period, we launched our new 'Young's Rooms' strategy, yet again
leading the way in how to celebrate the enjoyment and unique experience of
staying in a pub. This strategy has landed well with our guests, and we also
plan to launch a new loyalty programme for our rooms, to further strengthen
our relationship with our guests. We have now published three editions of our
in-room newspaper, The Fold, which showcases our range of beautifully designed
rooms at pubs across our estate.
CONTINUING TO EVOLVE OUR FOOD AND DRINK
During the period, our drink sales continued to perform well, ahead of last
year by 8.0% on a comparable 52-week basis, and up by 3.9% on a like-for-like
basis over 52 weeks. We strive to be at the forefront of innovation,
introducing new and exciting beers while staying true to our cask heritage. We
have added new beers including Beavertown Lunar Haze, Deya Steady Rolling Man
and Jubel peach beer, whilst continuing with our 'local hero' casks such as
Harvey's Sussex Best Bitter that sit alongside our excellent Young's Original
and Young's Special.
We launched our rugby-themed cask ale, 'Drop Gold', to coincide with the Rugby
World Cup and our 'The Rugby Love' marketing campaign in partnership with the
inspiring Wooden Spoon charity, further strengthening our affiliation with
rugby and giving back to our communities throughout an exciting year of
tournament opportunities. We wanted to fundraise £150,000 through locally
supported initiatives, and in the 200th year of rugby as a sport and Wooden
Spoon's 40th anniversary year, we smashed that target by raising more than
£200,000. Activity throughout the year included hosting events with key
players and commentators and getting involved in volunteering opportunities.
The growth in Guinness, no longer seen as just a rugby fans' drink, continues
to lead the way in our overall sales growth. Always a strong performer in the
winter months, and this year no different as it made up 10% of all drinks
sales for the Christmas period. Guinness defied the impact of seasonality by
maintaining its popularity year-round, with sales up by 29% on last year,
overtaking top sellers like Estrella and Peroni.
The seasonal Summer Spritz campaign, rolled out earlier than usual this year
in May, championed the trend of premium long cocktails with a spritz twist.
From the fresh and herbaceous G&T to the spicy and vibrant Margarita
spritz, we capitalised on the booming cocktail trend, resulting in a 14.5%
increase in sales. Summer classics like Aperol Spritz also remained popular,
with sales increasing by 23.2% while also boosting sales of its alcohol-free
sibling, the Amalfi Spritz, which ranked among our best-selling spritzes.
Our food sales continue to grow, up 5.9% for the comparable 52 weeks and 1.5%
on a like-for-like 52-week basis. Our Executive Chef team continues to support
our pubs, helping to mitigate food inflation, delivery and distribution costs
as far as possible by taking a proactive approach to using seasonal and
locally sourced British ingredients. We have continued to see this pressure
ease, with recent food costs flat versus this time last year and, because we
are flexible with our menus based on location and local tastes, we have
managed to further reduce costs.
A major focus this year was the 'Sunday best' campaign which saw pubs pushing
to improve the quality of traditional Sunday roasts. Inspiring our teams to go
above and beyond for our guests to deliver an exemplary offer, from the
best-in-class double egg yorkies, goose fat roasties and premium cuts of meat
to complimentary Yorkshire puddings & gravy. The shining example was the
Alma (Wandsworth) with the introduction of their sharing roasts, which has
captured our guest's attention, particularly with the TikTok influencer,
Eating with Tod, and his review of the Alma roast receiving over 2 million
views. We also launched our new reworked Burger Shack menu for the summer.
Focusing on bold flavours, new additions included the buttermilk fried chicken
'Hot Chick' burger, and the Louisiana 'Hot Beef' burger plus exciting new
sides and our first sweet treat, delicious mini cinnamon doughnuts. Whilst the
core of the offer remains consistent across the estate our pubs adapt the
offer to include bespoke evolving specials in-line with the pub's
individuality and the Burger Shack brand ethos.
Our strength in both food and drink was once again recognised by the wider
industry, with the Guinea Grill (Mayfair) maintaining its place in Estrella
Damm's Top 50 Gastropubs and winning a spot in the World's 101 Best Steak
Restaurants, the Oyster Shed (Bank) winning City Pub of the Year for the
second year running at the National Pub & Bar Awards as well as retaining
its AA rosette, Smiths of Smithfield (Farringdon) also retained its AA
rosette, and finally the Lamb (Bloomsbury) featuring in TimeOut's Top 50
London Pubs.
Investment in our people has never been so important. Through training and
development, and access to the Young's career pathway, we can provide our
teams with the necessary skills to help them reach their career goals. The Ram
Agency, which gives team members added flexibility to choose shifts that suit
their requirements, while helping us manage our cost base by reducing our
reliance on agency staff, is playing an important role. Launched in 2022, the
in-house agency brings together people with the necessary skills across a
range of roles, from general managers to chefs, front-Young's and
back-of-house team members, trained in the Young's way of working and now has
more than 500 active employees.
We have also introduced a new, two-year graduate programme. The two graduates
started at our head office in September 2023 and will rotate around our
different departments, including marketing, finance, food and property,
getting the most comprehensive experience of what it means to work at Young's.
Our apprenticeship scheme has been running since 2015 and we now have 97
apprentices in teams across both our head office and our pubs.
INVESTMENT
Our focus on maintaining, developing and enhancing our pubs continues and it
has been one of our busiest years in this respect, with an investment of
£48.0 million in our existing Young's estate, ensuring our pubs remain
premium, individual and well-invested. Projects were completed in a total of
35 pubs, with standout schemes at the iconic Clarence (Whitehall), the Clapham
North (Clapham), the Bedford Arms (Chenies) and The Constitution (Camden)
where we have restored iconic features while simultaneously enhancing its
trading space with the addition of a roof terrace. We are committed to
elevating every Young's pub to the very highest standard and have completed
other eye-catching smaller schemes at the Crown (Twickenham), the Mitre
(Shaftesbury), the Paternoster (St Paul's), the Coach & Horses (Isleworth)
and the Chelsea Ram (Chelsea). All are fine examples of what can be achieved
on a smaller scale.
We finished our major refurbishment of the Marquess of Anglesey (Covent
Garden), which reopened in May with a stunning new roof terrace adding 40
covers, allowing customers the opportunity to escape the densely populated
streets below. This project was the brainchild of the general manager, who
spotted the potential for the previously unused roof area, and this investment
has paid off, with sales up 65% this year.
The Guinea Grill (Mayfair) reopened in February with a capacity double its
previous size including two new private dining rooms, developed with a deep
sensitivity in staying close to the original look and feel of the pub. In
negotiating our lease for a further 30 years we took on the adjacent art
studio, allowing us to expand the iconic 500-year-old pub that is truly a
cornerstone of our estate. We also introduced a transformational new design at
the Defector's Weld (Shepherd's Bush), investing £2.3 million in making
better, more relevant use of outside space for the locality.
Besides our acquisition of the City Pub Group, our biggest ever acquisition
for a total consideration of £158.0 million (see note 13), we added eight new
pubs in the period, a mixture of new geographies, new bedrooms and much-loved
pubs in our heartland. In London we added the iconic Crooked Billet (Clapton),
The Stag (Belsize Park) and Tattenham Corner (Epsom Downs), a stone's throw
from the Epsom Downs racecourse and currently undergoing a major refurbishment
before its planned reopening later this year. We also acquired four strongly
performing pubs from Marston's: the Libertine (Westbourne), the White Hart
(Ford), the White Lion (Tenterden) and the Huntsman (Brockenhurst), another
new location for Young's, finally our acquisition of the beautiful Ship Inn
(Noss Mayo) gives us a prime location on the south Devon coast, right on the
waterfront.
Including the acquisition of the City Pub Group, we finished the period with a
total of 288 pubs (2023: 227), including 56 pubs providing a total of 1,066
bedrooms.
OTHER KEY AREAS
PROPERTY
Our balance sheet strength continues to underpin the ongoing development of
our predominantly freehold estate in many highly desirable locations across
London and the South of England. We have continued to add value to this estate
during the year, through a record number of major projects at existing sites
as well as a number of individual freehold acquisitions. The acquisition of
the City Pub Group towards the end of the period brings the value of our total
freehold estate to £1,036.9 million (2023: £842.5 million).
231 of our 288 pubs are freehold or are long leaseholds with peppercorn rents.
The carrying value of property leases, including long leaseholds, is
separately recognised as right-of-use assets in note 10.
Each year we revalue our pub estate to reflect current market values. Savills,
an independent and leading commercial property adviser, has revalued all our
freehold properties. The valuation method used several inputs and the
sustainable level of trade of each pub remained key.
In accordance with UK adopted international accounting standards, individual
increases in value have been reflected in the revaluation reserve on the
balance sheet (except to the extent that they had previously been revalued
downwards) and individual falls in value below depreciated cost have been
accounted for through the income statement. None of these adjustments have a
cash impact.
Despite the ongoing challenges facing the industry, the pub property market
has remained buoyant, as evidenced by the level of activity through the year
and current property prices. As a result of this, and the strong year of trade
within the Young's estate, we have seen a net upward revaluation movement of
£10.1 million (2023: upward revaluation movement of £8.2 million). This
comprises an upward movement of £22.9 million (2023: £15.2 million)
reflected in the revaluation reserve, and a downward movement of £12.8
million (2023: £7.0 million) as a result of movements in pub EBITDA
multiples, recognised as an adjusting item in the income statement.
TREASURY AND GOING CONCERN
At 1 April 2024, the group had cash in bank of £16.9 million and committed
borrowing facilities of £335.0 million, and in addition to these we maintain
a £10.0 million overdraft facility with HSBC. Our net debt including lease
liabilities has risen to £359.6 million (2023: £165.2 million) as a result
of the additional funding obtained in relation to the acquisition of the City
Pub Group, on the back of this, our net debt to adjusted EBITDA ratio has
risen to 3.9 times (2023: 1.9 times).
While our pubs continue to trade well, it remains prudent to recognise a small
degree of uncertainty ahead due to any potential slowdown in consumer spending
influenced by ongoing cost of living increases and to acknowledge the impact
of the current cost inflation that could influence future profitability. As
part of the directors' consideration of the appropriateness of adopting the
going concern basis, the group has modelled a base case and two sensitised
scenarios for the going concern period (12 months ending 30 June 2025). The
key judgements applied are the extent of any influence on trade because of the
economic uncertainty and its impact on consumers, and the cost pressures that
the hospitality industry is continuing to face.
The base case model assumes the group continues to trade as now whilst
reflecting the inflationary environment that currently exists across the going
concern period. The general reduction in trade scenario looks at a decline of
15% in sales and c.30% in profit across the period. This aims to capture the
potential slowdown in consumer spending influenced by the ongoing cost of
living crisis. The cost inflation scenario includes an average 5% increase in
the food cost base, c.5% increase in labour and 10% increase in general pub
operating costs for the period with no retail price increases. The group has
assumed capital expenditure levels will continue at historical levels and no
structural changes to the business will be needed in any of the scenarios
modelled.
In the base case; general reduction in trade; and cost inflation scenarios
there continues to be significant headroom on the group's debt facilities, and
all banking covenants are fully complied with throughout the going concern
period.
The reverse stress test focused on the decline in sales and profit that the
group would be able to absorb before breaching any financial covenants or
indeed any liquidity issues (the former being the main stress point given the
debt headroom). There would need to be a sales reduction of c.33% and profit
reduction of c.47% between May 2024 and June 2025 compared to the base case, a
reduction far more than those experienced historically (except for the
restricted covid-19 period) before there is a breach of financial covenants in
the period and is calculated before reflecting any mitigating actions such as
reduced capital expenditure.
Based on these forecasts and sensitivities, coupled with the current debt
levels and the ongoing debt structure in place, the board is confident that
the group as a whole and the parent company, can manage its business risks and
therefore continue in operational existence for the foreseeable future. For
these reasons, the directors continue to adopt the going concern basis for the
preparation of these consolidated and company financial statements.
RETIREMENT BENEFITS
We have a defined benefit pension scheme which has been closed to new entrants
since 2003. During the year our pension scheme surplus has decreased by £3.6
million to £0.1 million, driven by a decrease in the return on the scheme's
assets. We have continued our commitment with another year of special
contributions, totalling £1.2 million, and remain fully committed to ensuring
the pension scheme is adequately funded.
ADJUSTING ITEMS
Total adjusting items were £28.7 million in the period (2023: £9.0 million),
which relates to a small net downward movement in property revaluation of
£12.8 million, and purchase costs relating to the acquisition of the City Pub
Group totalling £6.2 million. Purchase costs relating to other individual
acquisitions within the period were £2.2 million, and an impairment charge of
£5.5 million related to both goodwill and right-of-use assets, £1.3 million
related to the disposal of one freehold property and three leasehold
properties during the period, with the leasehold properties signing new
replacement leases, and the remaining £0.7 million is tenant compensation and
restructuring costs.
TAX
A tax charge of £9.6 million (2023: £6.5 million) was recognised for the
year. The effective tax rate was 46.6% (2023: 18.0%) compared to the statutory
rate of 25%, with the difference primarily driven by adjusting items not
deductible for tax purposes. Further detail can be found in note 6.
SHAREHOLDER RETURNS
Having started life in 1831, Young's is a long-standing business, and we are
determined to maintain our long-term, sustainable growth story.
Our top-line trading performance has flowed through to strong profit
conversion and cash generation. Our adjusted earnings per share is 62.97 pence
(2023: 64.29 pence). On an unadjusted basis, the earnings per share was 18.89
pence (2023: 50.78 pence). Reflecting our strong profit performance and
positive outlook, we are pleased to recommend a final dividend of 10.88 pence
and, if approved by shareholders, this will give a total dividend for the year
of 21.76 pence, up 6% on last year (2023: 20.52 pence).
Simon Dodd
Chief Executive
18 June 2024
GROUP INCOME STATEMENT
For the 52 weeks ended 1 April 2024 (unaudited)
2024 2023
52 weeks 53 weeks
Notes £m £m
Revenue 5 388.8 368.9
Operating costs before adjusting items (331.5) (316.5)
Adjusted operating profit 57.3 52.4
Adjusting items 3 (28.7) (9.0)
Operating profit 28.6 43.4
Finance income - 0.1
Finance costs (8.1) (7.6)
Finance income for pension obligations 11 0.2 0.3
Profit before tax 20.7 36.2
Income tax expense 6 (9.6) (6.5)
Profit for the period attributable to shareholders of the parent company 11.1 29.7
Pence Pence
Earnings per 12.5p ordinary share
Basic 8 18.89 50.78
Diluted 8 18.88 50.74
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the 52 weeks ended 1 April 2024 (unaudited)
2024 2023
52 weeks 53 weeks
Notes £m £m
Profit for the period 11.1 29.7
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Unrealised gain on revaluation of property 9 22.9 15.2
Remeasurement of retirement benefit schemes 11 (5.3) (10.1)
Tax on above components of other comprehensive income (6.1) (1.2)
Items that will be reclassified subsequently to profit or loss:
Fair value movement of interest rate swaps (2.1) 3.1
Tax on fair value movement of interest rate swaps 0.5 (0.8)
9.9 6.2
Total comprehensive income attributable to shareholders of the parent company
21.0 35.9
BALANCE SHEETS
At 1 April 2024 (unaudited)
Group
2024 2023
Notes £m £m
Non-current assets
Goodwill 77.4 32.5
Property and equipment 9 1,036.9 842.5
Investment properties 4.3 -
Right-of-use assets 10 183.2 142.9
Derivative financial instruments 2.9 2.3
Retirement benefit schemes 11 1.8 5.4
1,306.5 1,025.6
Current assets
Inventories 6.5 5.4
Trade and other receivables 15.9 9.5
Income tax receivable 5.0 -
Derivative financial instruments 0.2 2.7
Cash 16.9 10.7
44.5 28.3
Asset held for sale 2.2 -
46.7 28.3
Total assets 1,353.2 1,053.9
Current liabilities
Borrowings (71.5) -
Lease liabilities 12 (6.8) (4.8)
Income tax payable - (0.9)
Trade and other payables (69.7) (46.6)
(148.0) (52.3)
Non-current liabilities
Borrowings (213.2) (104.2)
Lease liabilities 12 (85.0) (66.9)
Derivative financial instruments (0.2) -
Deferred tax liabilities (129.9) (104.6)
Retirement benefit schemes 11 (1.7) (1.7)
(430.0) (277.4)
Total liabilities (578.0) (329.7)
Net assets 775.2 724.2
Capital and reserves
Share capital 7.8 7.3
Share premium 7.8 7.8
Other reserves 38.0 1.8
Hedging reserve 2.4 4.0
Revaluation reserve 277.6 260.9
Retained earnings 438.0 442.4
771.6 724.2
Non-controlling interests 13 3.6 -
Total equity 775.2 724.2
Approved by the board of directors and signed on its behalf by:
Simon Dodd Chief Executive
Michael Owen Chief Financial Officer
18 June 2024
BALANCE SHEETS
At 1 April 2024 (unaudited)
Company
2024 2023
Notes £m £m
Non-current assets
Goodwill 29.3 31.0
Property and equipment 9 900.1 838.5
Right-of-use assets 10 145.1 135.8
Investment in subsidiaries 164.5 14.3
Derivative financial instruments 2.9 2.3
Retirement benefit schemes 11 1.8 5.4
Trade and other receivables 22.2 -
1,265.9 1,027.3
Current assets
Inventories 5.3 5.4
Trade and other receivables 10.6 9.5
Income tax receivable 5.0 -
Derivative financial instruments 0.2 2.7
Cash 5.5 10.7
26.6 28.3
Asset held for sale 2.2 -
28.8 28.3
Total assets 1,294.7 1,055.6
Current liabilities
Borrowings (71.5) -
Lease liabilities 12 (4.0) (4.0)
Income tax payable - (0.8)
Trade and other payables (60.1) (56.2)
(135.6) (61.0)
Non-current liabilities
Borrowings (212.2) (104.2)
Lease liabilities 12 (67.2) (61.9)
Derivative financial instruments (0.2) -
Deferred tax liabilities (110.9) (104.4)
Retirement benefit schemes 11 (1.7) (1.7)
(392.2) (272.2)
Total liabilities (527.8) (333.2)
Net assets 766.9 722.4
Capital and reserves
Share capital 7.8 7.3
Share premium 7.8 7.8
Other reserves 38.0 1.8
Hedging reserve 2.4 4.0
Revaluation reserve 268.8 252.0
Retained earnings 442.1 449.5
Total equity 766.9 722.4
The company's profit after tax for the period was £8.2 million (2023: £31.6
million).
Approved by the board of directors and signed on its behalf by:
Simon Dodd Chief Executive
Michael Owen Chief Financial Officer
18 June 2024
Young & Co.'s Brewery, P.L.C. Registered in England number 32762.
STATEMENTS OF CASH FLOW
For the 52 weeks ended 1 April 2024 (unaudited)
Group Company
2024 2023 2024 2023
52 weeks 53 weeks 52 weeks 52 weeks
Notes £m £m £m £m
Operating activities
Net cash generated from operations 14 86.0 83.8 71.2 82.6
Tax paid (12.6) (0.9) (12.6) (0.9)
Net cash flows from operating activities 73.4 82.9 58.6 81.7
Investing activities
Proceeds from disposal of property and equipment(1)
3.3 6.1 - 6.1
Purchase of property and equipment 9 (48.5) (40.2) (47.9) (40.2)
Business combinations, net of cash acquired (144.5) (18.2) (25.8) (18.2)
Direct costs incurred in acquisition of leases (9.9) - (9.9)
Acquisition of subsidiaries - - (134.8) -
Net cash used in investing activities (199.6) (52.3) (218.4) (52.3)
Financing activities
Interest paid (7.5) (6.9) (7.3) (6.6)
Issued equity, net of transaction costs - 0.1 - 0.1
Equity dividends paid (12.4) (12.0) (12.4) (12.0)
Payment of principal portion of lease liabilities (6.1) (5.1) (5.2) (4.2)
Repayment of borrowings(2) (41.1) (30.0) (20.0) (30.0)
Transaction costs incurred on borrowings (2.0) - (2.0) -
Proceeds from borrowings(3) 201.5 - 201.5 -
Net cash flows used in financing activities 132.4 (53.9) 154.6 (52.7)
Net increase in cash 6.2 (23.3) (5.2) (23.3)
Cash at the beginning of the period 10.7 34.0 10.7 34.0
Cash at the end of the period 16.9 10.7 5.5 10.7
(1) During the current period to 1 April 2024, £3.3 million related to the
sale of the Salt Room (Islington). During the prior period to 3 April 2023,
£6.1 million related to the sale of the Bridge (Greenford).
(2) During the current period to 1 April 2024, the group repaid their £20.0
million term loan with Barclays and HSBC, and the City Pub Group's £21.1
million term loan. During the prior period to 3 April 2023, the group repaid
the £30.0 million bilateral term loan with NatWest.
(3) During the current period to 1 April 2024, the group entered into a new
£110.0 million term loan with HSBC, NatWest, and Barclays. The group also
drew down £91.5 million on the Revolving Credit Facility.
GROUP STATEMENT OF CHANGES IN EQUITY
For the 52 weeks ended 1 April 2024 (unaudited)
Non-controlling
Share Other Hedging Revaluation Retained Total
capital(1) reserves reserve reserve earnings interests equity
Notes £m £m £m £m £m £m £m
At 28 March 2022 15.0 1.8 1.7 249.4 431.8 - 699.7
Total comprehensive income
Profit for the period - - - - 29.7 - 29.7
Other comprehensive income
Unrealised gain on revaluation of property
9 - - - 15.2 - - 15.2
Remeasurement of retirement benefit schemes
11 - - - - (10.1) - (10.1)
Net movement of interest rate swaps - cash flow hedge - - 3.1 - - - 3.1
Tax on above components of other comprehensive income
- - (0.8) (3.7) 2.5 - (2.0)
- - 2.3 11.5 (7.6) - 6.2
Total comprehensive income - - 2.3 11.5 22.1 - 35.9
Transactions with owners recorded directly in equity
Share capital issued 0.1 - - - - - 0.1
Dividends paid on equity shares - - - - (12.0) - (12.0)
Share based payments - - - - 0.5 - 0.5
0.1 - - - (11.5) - (11.4)
At 3 April 2023 15.1 1.8 4.0 260.9 442.4 - 724.2
Total comprehensive income
Profit for the period - - - - 11.1 - 11.1
Other comprehensive income
Unrealised gain on revaluation of property 9 - - - 22.9 - - 22.9
Remeasurement of retirement benefit schemes -
11 - - - - (5.3) - (5.3)
Net movement of interest rate swaps - cash flow hedge - - (2.1) - - - (2.1)
Tax on above components of other -
comprehensive income - - 0.5 (6.1) - - (5.6)
- - (1.6) 16.8 (5.3) - 9.9
Total comprehensive income - - (1.6) 16.8 5.8 - 21.0
Transactions with owners recorded directly in equity
Share capital issued(2) 0.5 - - - - - 0.5
Other reserves(2) - 36.2 - - - - 36.2
IFRIC 14 adjustment - - - - 1.4 - 1.4
Non-controlling interests on acquisition of subsidiary 3.6 3.6
Dividends paid on equity shares - - - - (12.4) - (12.4)
Revaluation reserve realised on disposal of properties
- - - (0.1) 0.1 - -
Share based payments - - - - 0.7 - 0.7
0.5 36.2 - (0.1) (10.2) 3.6 30.0
At 1 April 2024 15.6 38.0 2.4 277.6 438.0 3.6 775.2
(1) Total share capital comprises the nominal value of the share capital
issued and fully paid of £7.8 million (2023: £7.3 million) and the share
premium account of £7.8 million (2023: £7.8 million). Share capital issued
in the period comprises the nominal value of £0.5 million (2023: £nil
million) and share premium of £nil (2023: £0.1 million).
(2) During the period, 3,612,240 shares were issued as part of the acquisition
of the City Pub Group. The group recognised £0.5 million increase in share
capital. As the acquisition was eligible for merger relief, £36.2 million was
recognised in other reserves to reflect the value of the share premium that
would otherwise have been generated on the issuing of the shares.
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
For the 52 weeks ended 1 April 2024 (unaudited)
Share Other Hedging Revaluation Retained Total
capital(1) reserves reserve reserve earnings equity
Notes £m £m £m £m £m £m
At 28 March 2022 15.0 1.8 1.7 240.2 437.0 695.7
Total comprehensive income
Profit for the period(2) - - - - 31.6 31.6
Other comprehensive income
Unrealised gain on revaluation of property 9 - - - 15.5 - 15.5
Remeasurement of retirement benefit schemes 11 - - - - (10.1) (10.1)
Net movement of interest rate swaps - cash flow hedge - - 3.1 - - 3.1
Tax on above components of other comprehensive income - - (0.8) (3.7) 2.5 (2.0)
- - 2.3 11.8 (7.6) 6.5
Total comprehensive income - - 2.3 11.8 24.0 38.1
Transactions with owners recorded directly in equity
Share capital issued 0.1 - - - - 0.1
Dividends paid on equity shares - - - - (12.0) (12.0)
Share based payments - - - - 0.5 0.5
0.1 - - - (11.5) (11.4)
At 3 April 2023 15.1 1.8 4.0 252.0 449.5 722.4
Total comprehensive income
Profit for the period(2) - - - - 8.2 8.2
Other comprehensive income
Unrealised gain on revaluation of property 9 - - - 22.9 - 22.9
Remeasurement of retirement benefit schemes 11 - - - - (5.3) (5.3)
Net movement of interest rate swaps - cash flow hedge - - (2.1) - - (2.1)
Tax on above components of other comprehensive income - - 0.5 (6.1) - (5.6)
- - (1.6) 16.8 (5.3) 9.9
Total comprehensive income - - (1.6) 16.8 2.9 18.1
Transactions with owners recorded directly in equity
Share capital issued(3) 0.5 - - - - 0.5
Other reserves(3) - 36.2 - - - 36.2
IFRIC 14 adjustment - - - - 1.4 1.4
Dividends paid on equity shares - - - - (12.4) (12.4)
Share based payments - - - - 0.7 0.7
0.5 36.2 - - (10.3) 26.4
At 1 April 2024 15.6 38.0 2.4 268.8 442.1 766.9
(1) Total share capital comprises the nominal value of the share capital
issued and fully paid of £7.8 million (2023: £7.3 million) and the share
premium account of £7.8 million (2023: £7.8 million). Share capital issued
in the period comprises the nominal value of £0.5 million (2023: £nil) and
share premium of £nil (2023: £0.1 million).
(2) The company's profit after tax from operations for the period was £8.2
million (2023: £31.6 million).
(3) During the period, 3,612,240 shares were issued as part of the acquisition
of the City Pub Group. The group recognised £0.5 million increase in share
capital. As the acquisition was eligible for merger relief, £36.2 million was
recognised in other reserves to reflect the value of the share premium that
would otherwise have been generated on the issuing of the shares.
NOTES TO THE FINANCIAL STATEMENTS
For the 53 weeks ended 3 April 2023
1. General information
This unaudited preliminary announcement was approved by the board on 18 June
2024. The financial statements in it are not the group's statutory financial
statements. The statutory financial statements for the period ended 3 April
2023 have been delivered to the Registrar of Companies. The report for the
2023 accounts was (i) unqualified, (ii) did not contain any matter to which
the auditor drew attention by way of emphasis without modifying its opinion
and (iii) did not contain a statement under s.498(2) or (3) of the Companies
Act 2006. The statutory financial statements for the period ended 1 April 2024
will be delivered to the Registrar of Companies in due course.
The current period and prior period relate to the 52 weeks ended 1 April 2024
and the 53 weeks ended 3 April 2023 respectively.
The financial statements are presented in pounds sterling, which is the
functional currency of the parent company, and all values are rounded to the
nearest hundred thousand (£0.1 million), except where otherwise indicated.
This unaudited preliminary announcement has been agreed with the company's
auditor for release.
The group and parent company financial statements have been prepared in
accordance with UK adopted international accounting standards and the
requirements of the Companies Act 2006. The accounting policies used have been
consistently applied and are described in full in the statutory financial
statements for the period ended 1 April 2024. The financial statements will
also be available on the group's website, www.youngs.co.uk
(https://protect.checkpoint.com/v2/___http:/www.youngs.co.uk___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzozYTZiYzgwZWIyMjBiMDk1MjkyMzI2MDc1MWY0NTBjNTo2OjRkN2E6ZjUwM2I5Nzc5MDJhNWQyNGY3Y2MyZTc3NjE3NjAzMTQ5ZWUxMjMwZmEzOWUxYjI3NmQzY2QyZGJiYTczNGZmYjpwOkY)
.
Amendments to accounting standards
Amendments to accounting standards applied for the first time during the
period were as follows:
(· ) Amendments to IAS 12 - International Tax Reform -
Pillar Two Model Rules.
The application of these did not have a material impact on the group's
accounting treatment and has therefore not resulted in any material changes.
Going concern
At 1 April 2024, the group had cash in bank of £16.9 million and committed
borrowing facilities of £335.0 million, of which £287.5 million was drawn
down, net of arrangement fees totalling £2.8 million. The group expects, by
30 June 2025 (the 'going concern' period), to have available facilities of
£335.0 million. In addition to these committed facilities, the group has a
£10.0 million overdraft facility with HSBC, which is not committed, and is
therefore not assumed to continue for the purpose of this assessment.
As part of the directors' consideration of the appropriateness of adopting the
going concern basis, the group has modelled a base case and two sensitised
scenarios for the going concern period. The base case is the board approved
budget to March 2025 as well as the board approved strategic plan covering
April to June 2025. The key judgements applied are the extent of any influence
on trade because of the economic uncertainty and its impact on consumers, and
the cost pressures that the hospitality industry is continuing to face.
The base case model assumes the group continues to trade as now whilst
reflecting the inflationary environment that currently exists across the going
concern period. The general reduction in trade scenario looks at a decline of
15% in sales and c.30% in profit across the period. This aims to capture the
potential slowdown in consumer spending influenced by the ongoing cost of
living crisis. The cost inflation scenario includes an average 5% increase in
the food cost base, c.5% increase in labour and 10% increase in general pub
operating costs for the period with no retail price increases. The group has
assumed capital expenditure levels will continue at historical levels and no
structural changes to the business will be needed in any of the scenarios
modelled.
In the base case; general reduction in trade; and cost inflation scenarios
there continues to be significant headroom on the group's debt facilities, and
all banking covenants are fully complied with throughout the going concern
period.
The reverse stress test focused on the decline in sales and profit that the
group would be able to absorb before breaching any financial covenants or
indeed any liquidity issues (the former being the main stress point given the
debt headroom). There would need to be a sales reduction of c.33% and profit
reduction of c.47% between May 2024 and June 2025 compared to the base case, a
reduction far more than those experienced historically (except for the
restricted covid-19 period) before there is a breach of financial covenants in
the period and is calculated before reflecting any mitigating actions such as
reduced capital expenditure.
Based on these forecasts and sensitivities, coupled with the current debt
levels and the ongoing debt structure in place, the board is confident that
the group as a whole and the parent company, can manage its business risks and
therefore continue in operational existence for the foreseeable future. For
these reasons, the directors continue to adopt the going concern basis for the
preparation of these consolidated and company financial statements.
2. Segmental reporting
In line with the requirements of IFRS 8 Operating Segments, the group is
organised into one reporting segment, that of operating managed houses. This
is in line with the internal reporting to the executive board of the group for
the purpose of deciding on the allocation of resources and assessing
performance. The remaining tenanted houses are grouped together with the
unallocated segment and reported as 'all other segments'.
Total segment revenue is derived externally, with no intersegment revenues
between the segments in the period. The group's revenue is derived entirely
from the UK.
Income statement Managed All other
houses segments Total
52 weeks 52 weeks 52 weeks
2024 £m £m £m
Drink sales 242.9 - 242.9
Food sales 120.1 - 120.1
Accommodation sales 23.7 - 23.7
Total revenue from contracts with customers 386.7 - 386.7
Other income 1.5 0.6 2.1
Total revenue recognised 388.2 0.6 388.8
Adjusted operating profit/(loss) 79.1 (21.8) 57.3
Adjusting items (28.6) (0.1) (28.7)
Operating profit/(loss) 50.5 (21.9) 28.6
Managed All other
houses segments Total
53 weeks 53 weeks 53 weeks
2023 £m £m £m
Drink sales 229.1 0.3 229.4
Food sales 115.5 - 115.5
Accommodation sales 21.9 - 21.9
Total revenue from contracts with customers 366.5 0.3 366.8
Other income 1.5 0.6 2.1
Total revenue recognised 368.0 0.9 368.9
Adjusted operating profit/(loss) 73.3 (20.9) 52.4
Adjusting items (8.5) (0.5) (9.0)
Operating profit/(loss 64.8 (21.4) 43.4
3. Adjusting items
During the period the cash flow impact of adjusting items was £5.8 million
(2023: £3.9 million), of which £5.1 million related to investing activities
and £0.7 million related to operating activities (2023: £3.0 million and
£0.9 million respectively).
2024 2023
52 weeks 53 weeks
£m £m
Amounts included in operating profit:
Upward movement on the revaluation of properties (note 17)(1) 2.9 4.8
Downward movement on the revaluation of properties (note 17)(1) (15.7) (11.8)
Purchase costs - City Pub Group(2) (6.2) -
Impairment loss(3) (5.5) -
Purchase costs(4) (2.2) (1.1)
Net loss on disposal of properties(5) (1.3) -
Tenant compensation(6) (0.6) (0.6)
Restructuring costs(7) (0.1) (0.3)
(28.7) (9.0)
Tax on adjusting items:
Tax attributable to adjusting items 2.8 1.2
Impact of change in corporation tax rate(8) - (0.1)
2.8 1.1
Total adjusting items after tax (25.9) (7.9)
(1 ) The movement on the revaluation of properties is a non-cash
item that relates to the revaluation exercise that was completed at the period
end date. The revaluation was conducted at an individual pub level and
identified an upward movement of £2.9 million (2023: £4.8 million)
representing reversals of previous impairments recognised in the income
statement, and a downward movement of £15.7 million (2023: £11.8 million),
representing downward movements in excess of amounts recognised in equity.
These resulted in a net downward movement of £12.8 million (2023: a net
downward movement of £7.0 million) which has been recognised in the income
statement. The downward movement for the period ended 1 April 2024 was split
between land and buildings of £12.8 million (2023: £7.0 million downward)
and fixtures and fittings of £nil (2023: £nil). See note 2 for segmental
information and note 9 for information on the revaluation of properties.
(2 ) Purchase costs related to professional fees and stamp duty
land tax arising on the acquisition of City Pub Group. These included legal
and professional fees and stamp duty land tax.
(3 ) Impairment losses were recognised in relation to goodwill and
right-of-use assets (£1.7 million and £3.8 million respectively).
(4 ) Purchase costs related to professional fees and stamp duty
land tax arising on the acquisition of the Libertine (Westbourne), White Hart
(Ford), White Lion (Tenterden), Huntsman (Brockenhurst), Ship Inn (Noss Mayo)
and the Tattenham Corner (Epsom). In the prior period, costs related to
professional fees and stamp duty land tax arising on the purchase of the
Bedford Arms (Chenies), Merlin's Cave (Chalfont St Giles), Half Moon
(Windlesham), Griffin Inn (Fletching) and the Carpenter's Arms (Tonbridge).
These included legal and professional fees and stamp duty land tax.
(5 ) The profit on disposal of properties related to the difference
between cash, less disposal costs, received from the sale of the Salt Room
(Islington) and the carrying value of its assets, including goodwill, at the
date of disposal. In addition, the loss on disposal of properties related to
the difference between the value of right-of-use assets and lease liabilities
of the old leases of the Guinea Grill (Mayfair), Wheatsheaf (Esher), Coat
& Badge (Putney) and the Fellow (King's Cross), which were replaced with
new leases in the period. The profit on disposal of properties also included
the loss on reclassification of two properties to asset held for sale (see
note 9).
(6 ) Tenant compensation was paid to the tenants of the Clapham
North (Clapham) and the King's Head Theatre (Islington) and related to the
termination of their leases. In the prior period, tenant compensation of £0.6
million was paid to previous tenants of an unlicensed property (Ealing) and
the Bishop's Vaults (Bishopsgate) to terminate their lease agreements early.
(7 ) Restructuring costs related to severance costs paid to
employees of one of the acquired business combinations. In the prior period,
restructuring costs of £0.3 million related to a one-off reorganisation of
the group's head office functions. These were largely made up of severance
costs.
(8 ) An increase in the corporation tax rate from 19% to 25%, with
effect from 1 April 2023, was announced in the March 2021 Budget, and
substantively enacted on 24 May 2021. In the prior period, this resulted in an
increase in the deferred tax liabilities and assets of the group at the
balance sheet date, with a net charge of £0.1 million associated with the
rate change. The £0.1 million is equal to the net of a £0.4 million
adjustment in respect of deferred tax of prior periods, and a £0.3 million
credit in respect of deferred tax measured at a higher rate. This was
recognised as an exceptional item in the tax charge for the prior period as it
was unrelated to the underlying trading activities of the group.
4. Other financial measures
The table below shows how adjusted group EBITDA, operating profit and profit
before tax have been arrived at. They exclude adjusting items which due to
their material or non-recurring nature do not form part of the group's
underlying operations. These alternative performance measures have been
provided to help investors assess the group's underlying performance. Details
of the adjusting items can be seen in note 3.
2024 2023
52 weeks 53 weeks
Adjusting Adjusting
Unadjusted items Adjusted Unadjusted items Adjusted
£m £m £m £m £m £m
EBITDA 76.3 15.9 92.2 83.5 2.0 85.5
Depreciation and net movement on the revaluation of properties (47.7) 12.8 (34.9) (40.1) 7.0 (33.1)
Operating profit 28.6 28.7 57.3 43.4 9.0 52.4
Finance income - - - 0.1 - 0.1
Finance costs (8.1) - (8.1) (7.6) - (7.6)
Finance charge for pension obligations 0.2 - 0.2 0.3 - 0.3
Profit before tax 20.7 28.7 49.4 36.2 9.0 45.2
During the period, £112.9 million (2023: £105.2 million) of adjusted EBITDA
related to managed houses and £0.4 million (2023: £0.5 million) related to
tenanted houses. Adjusted negative EBITDA of £21.1 million (2023: negative
£20.2 million) related to head office costs and was unallocated.
5. Revenue
The recognition of revenue under each of the group's material revenue streams
is as follows:
2024 2023
52 weeks 53 weeks
£m £m
Drink sales 242.9 229.4
Food sales 120.1 115.5
Accommodation sales 23.7 21.9
Total revenue from contracts with customers 386.7 366.8
Other income 2.1 2.1
Total revenue recognised 388.8 368.9
6. Taxation
The major components of income tax expense for the periods ended 1 April 2024
and 3 April 2023 are:
2024 2023
52 weeks 53 weeks
Tax charged in the group income statement £m £m
Current income tax
Current tax expense 8.4 7.3
Adjustment in respect of current income tax of prior periods (1.4) 0.9
7.0 8.2
Deferred tax
Relating to origin and reversal of temporary differences 1.5 (0.3)
Adjustment in respect of deferred tax of prior periods 1.1 (1.1)
Deferred tax measured at higher rate - (0.3)
2.6 (1.7)
Income tax charged in the income statement(1) 9.6 6.5
7. Dividends on equity shares
2024 2023 2024 2023
52 weeks 53 weeks 52 weeks 53 weeks
Pence per share Pence per share £m £m
Final dividend paid (previous period) 10.26 10.26 6.0 6.0
Interim dividend paid (current period) 10.88 10.26 6.4 6.0
21.14 20.52 12.4 12.0
The table above sets out dividends that have been paid. In addition, the board
is proposing a final dividend in respect of the period ended 1 April 2024 of
10.88 pence per share at a cost of £6.8 million. If approved, it is expected
to be paid on 2 August 2024 to shareholders who are on the register of members
at the close of business on 5 July 2024.
8. Earnings per ordinary share
(a) Weighted average number of shares 2024 2023
Number Number
Basic weighted average number of ordinary shares in issue 58,762,467 58,483,336
Dilutive potential ordinary shares from employee share options 36,547 51,928
Diluted weighted average number of shares 58,799,013 58,535,264
(b) Earnings attributable to the shareholders of the parent company
£m £m
Profit for the period 11.1 29.7
Adjusting items 28.7 9.0
Tax attributable to above adjustments (2.8) (1.1)
Adjusted earnings after tax 37.0 37.6
Basic earnings per share
Pence Pence
Basic earnings per share 18.89 50.78
Effect of adjusting items 44.08 13.51
Adjusted basic earnings per share 62.97 64.29
Diluted earnings per share
Pence Pence
Diluted earnings per share 18.88 50.74
Effect of adjusting items 44.05 13.49
Adjusted diluted earnings per share 62.93 64.23
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 36,547 (2023: 51,928) dilutive potential shares under the SAYE and
LTIP schemes (see notes 9(e) and 30).
Adjusted earnings per share are presented to eliminate the effect of the
adjusting items and the tax attributable to those items on basic and diluted
earnings per share.
9. Property and equipment
Group Company
Fixtures, Fixtures,
Land & fittings & Land & fittings &
buildings equipment Total buildings equipment Total
Cost or valuation £m £m £m £m £m £m
At 28 March 2022 749.6 154.0 903.6 749.3 147.9 897.2
Additions 9.5 30.7 40.2 9.5 30.7 40.2
Business combinations 15.8 2.4 18.2 15.8 2.4 18.2
Disposals (6.1) (0.7) (6.8) (6.1) (0.7) (6.8)
Fully depreciated assets (0.2) (24.2) (24.4) (0.2) (24.2) (24.4)
Revaluation(1)
- upward movement in valuation 37.7 - 37.7 37.7 - 37.7
- downward movement in valuation (22.2) - (22.2) (21.9) - (21.9)
At 3 April 2023 784.1 162.2 946.3 784.1 156.1 940.2
Additions 8.3 40.2 48.5 8.2 39.7 47.9
Business combinations 146.3 22.7 169.0 22.9 2.9 25.8
Disposals (3.0) (0.4) (3.4) - (0.3) (0.3)
Transfers from subsidiary companies - - - 6.7 1.0 7.7
Transfers out to asset held for sale (2.5) (0.5) (3.0) (2.5) (0.5) (3.0)
Fully depreciated assets (2.3) (21.9) (24.2) (2.3) (21.8) (24.1)
Revaluation(1)
- upward movement in valuation 42.8 - 42.8 42.8 - 42.8
- downward movement in valuation (20.4) - (20.4) (20.4) - (20.4)
At 1 April 2024 953.3 202.3 1,155.6 839.5 177.1 1,016.6
Depreciation and impairment
At 28 March 2022 19.7 75.9 95.6 19.1 74.6 93.7
Depreciation charge 1.7 24.5 26.2 1.6 24.4 26.0
Disposals (0.5) (0.4) (0.9) (0.5) (0.4) (0.9)
Fully depreciated assets (0.2) (24.2) (24.4) (0.2) (24.2) (24.4)
Revaluation(1)
- upward movement in valuation (4.8) - (4.8) (4.8) - (4.8)
- downward movement in valuation 12.1 - 12.1 12.1 - 12.1
At 3 April 2023 28.0 75.8 103.8 27.3 74.4 101.7
Depreciation charge 1.6 26.0 27.6 1.5 25.8 27.3
Disposals - (0.1) (0.1) - - -
Transfers from subsidiary companies - - - 0.5 0.1 0.6
Transfers out to asset held for sale (0.5) (0.2) (0.7) (0.5) (0.2) (0.7)
Fully depreciated assets (2.3) (21.9) (24.2) (2.3) (21.8) (24.1)
Revaluation(1)
- upward movement in valuation (3.4) - (3.4) (3.4) - (3.4)
- downward movement in valuation 15.7 - 15.7 15.7 - 15.7
At 1 April 2024 39.1 79.6 118.7 38.3 78.2 116.5
Net book value
At 28 March 2022 729.9 78.1 808.0 730.2 73.3 803.5
At 3 April 2023 756.1 86.4 842.5 756.8 81.7 838.5
At 1 April 2024 914.2 122.7 1,036.9 801.2 98.9 900.1
(1) The group's net book value uplift during the period was £10.1 million
(2023: £8.2 million). This uplift was recognised either in the revaluation
reserve or the income statement, as appropriate.
(2) Included within disposals are £3.0 million in relation to assets
classified as held for sale and disposed of before the period end date.
( )
( )
The impact of the property revaluation exercise was as follows:
Group Company
2024 2023 2024 2023
52 weeks 53 weeks 52 weeks 53 weeks
£m £m £m £m
Income statement
Revaluation loss charged as impairment (15.7) (11.8) (15.7) (11.8)
Reversal of past impairment 2.9 4.8 2.9 4.8
Net impairment recognised
in the income statement (12.8) (7.0) (12.8) (7.0)
Revaluation reserve
Unrealised revaluation surplus 43.3 37.4 43.3 37.4
Reversal of past surplus (20.4) (22.2) (20.4) (21.9)
Net uplift recognised
in the revaluation reserve 22.9 15.2 22.9 15.5
Net revaluation increase
in property 10.1 8.2 10.1 8.5
10. Right-of-use assets
Set out below are the carrying amounts of right-of-use assets recognised and
the movements during the period:
Group Company
Motor Other Motor Other
Property vehicles assets Total Property vehicles assets Total
£m £m £m £m £m £m £m £m
At 28 March 2022 146.8 0.2 - 147.0 139.0 0.4 - 139.4
Additions - 0.4 - 0.4 - 0.4 - 0.4
Lease amendments 2.4 - - 2.4 2.0 - - 2.0
Depreciation (6.7) (0.2) - (6.9) (5.8) (0.2) - (6.0)
Disposals - - - - - - - -
At 3 April 2023 142.5 0.4 - 142.9 135.2 0.6 - 135.8
Additions 22.9 0.9 - 23.8 22.9 0.9 - 23.8
Business combinations 33.5 - - 33.5 - - - -
Lease amendments 1.4 - - 1.4 1.4 - - 1.4
Impairments (3.8) - - (3.8) (3.8) - - (3.8)
Lease terminations (7.2) (0.1) - (7.3) (5.8) (0.1) - (5.9)
Depreciation (7.0) (0.3) - (7.3) (5.9) (0.3) - (6.2)
At 1 April 2024 182.3 0.9 - 183.2 144.2 0.9 - 145.1
11. Retirement benefit schemes
Movement within the schemes in the period
Changes in the present value of the schemes are as follows:
Group and company
2024 2023
Health Health
Pension care Pension care
scheme scheme Total scheme scheme Total
£m £m £m £m £m £m
Opening surplus/(deficit) 5.4 (1.7) 3.7 14.3 (2.1) 12.2
Current service cost (0.1) - (0.1) (0.3) - (0.3)
Contributions 1.4 0.2 1.6 1.4 0.2 1.6
Other finance income/(charge) 0.3 (0.1) 0.2 0.4 (0.1) 0.3
Remeasurement through other
comprehensive income (4.6) (0.1) (4.7) (10.4) 0.3 (10.1)
2.4 (1.7) 0.7 5.4 (1.7) 3.7
IFRIC 14 adjustment (0.6) - (0.6) - - -
Closing surplus/(deficit) 1.8 (1.7) 0.1 5.4 (1.7) 3.7
12. Lease liabilities
Set out below are the carrying amounts of lease liabilities and the movements
during the period:
Group Company
£m £m
At 28 March 2022 74.0 67.7
Additions 0.4 0.4
Lease amendments 2.4 2.0
Accretions of interest 2.5 2.4
Payments (7.6) (6.6)
At 3 April 2023 71.7 65.9
Current 4.8 4.0
Non-current 66.9 61.9
At 3 April 2023 71.7 65.9
Additions 13.9 13.9
Business combinations 16.7 -
Lease amendments 1.4 1.4
Accretions of interest 2.8 2.5
Payments (8.9) (7.7)
Lease terminations (5.8) (4.8)
At 1 April 2024 91.8 71.2
Current 6.8 4.0
Non-current 85.0 67.2
13. Business combinations
Acquisitions in 2024
City Pub Group
On 4 March 2024, the group acquired the entire issued share capital of The
City Pub Group plc ('City Pub Group'); a premium pub and hotel operator. The
total consideration was £158.0 million, of which £121.3 million was paid in
cash and £36.7 million was settled in shares. The City Pub Group operates a
predominantly freehold portfolio of individual, premium, and well-invested
pubs and bedrooms located in affluent towns and cities, complementing the
group's existing estate and expanding its presence in London and the south of
England.
The final fair values of identifiable assets and liabilities as at the
acquisition date were as follows:
Fair value
£m
Identifiable assets and liabilities
Property and equipment (note 9) 135.9
Investment properties 4.3
Inventories 1.2
Right-of-use assets (note 10) 33.5
Trade and other receivables 7.0
Cash 9.9
Trade and other payables (19.6)
Borrowings (21.9)
Lease liabilities (note 12) (16.7)
Deferred tax on fair value adjustments (18.6)
Net assets 115.0
Goodwill 46.6
Non-controlling interests (3.6)
Total consideration on acquisition of the City Pub Group 158.0
Goodwill of £46.6 million was recognised on the acquisition. Goodwill relates
to the expected synergies that will arise in future periods due to the
acquisition.
The fair value of freehold property and equipment acquired was valued
externally by Savills, independent chartered surveyors, taking into account
the properties' highest and best value. The valuation was based on information
such as current and historical levels of turnover, gross profit, wages and
overheads and resultant EBITDA. The valuers then applied an appropriate
multiplier to the EBITDA.
For the leasehold sites, the group measured the acquired lease liabilities
using the present value of the remaining lease payments at the date of
acquisition. The right-of-use assets were measured at an amount equal to the
lease liabilities and adjusted to reflect the favourable terms of the lease
relative to the market.
The fair values of trade and other receivables, and other classes of assets,
and their gross contractual amount are the same.
The group incurred £6.2 million of costs associated with the acquisition,
which were recorded within operating adjusting items (note 9).
In the period between the date of acquisition and the balance sheet date, City
Pub Group contributed £7.2 million of revenue and £1.2 million of operating
profit. If the acquisition had taken place at the beginning of the period,
group revenue would have been expected to increase by £75.6 million and group
operating profit would have been expected to increase by £1.0 million. This
includes adjusting items of £7.0 million as disclosed in the City Pub Group's
financial statements for the year ended 31 December 2023.
An £18.6 million deferred tax liability was recognised on acquisition of the
City Pub Group. None of the goodwill recognised is expected to be deductible
for income tax purposes.
Crooked Billet
On 31 October 2023, the group acquired the entire issued share capital of
Crooked Billet Limited, a subsidiary company which owns and operates the
Crooked Billet (Clapton) for a total cash consideration of £7.3 million. The
Crooked Billet (Clapton) is a popular pub in East London, with a large outside
trading space, and the site complements the group's existing London presence.
The final fair values of identifiable assets and liabilities as at the
acquisition date were as follows:
Fair value
£m
Identifiable assets and liabilities
Property and equipment (note 9) 7.3
Inventories -
Right-of-use assets (note 10) -
Lease liabilities (note 12) -
Net assets 7.3
Goodwill -
Cash consideration on acquisition of the Crooked Billet 7.3
No goodwill was recognised on the acquisition as the fair value of the net
assets acquired was equal to the cash consideration exchanged.
The group incurred £0.7 million of costs associated with the acquisition,
which have been recorded within adjusting items (see note 9).
Between the date of acquisition and the balance sheet date, the Crooked Billet
contributed £0.9 million of revenue and £0.2 million of operating profit. If
the acquisition had taken place at the beginning of the period, group revenue
would have been expected to increase by £1.9 million and group operating
profit would have increased by £0.6 million.
Other business combinations
During the period, the group acquired the Libertine (Westbourne), White Hart
(Ford), White Lion (Tenterden), Huntsman (Brockenhurst), Ship Inn (Noss Mayo)
and the Tattenham Corner (Epsom), which formed business combinations for a
total cash consideration of £25.8 million, which was settled during the
period. Each pub was purchased individually and did not form part of a group
acquisition.
When assets are acquired, management determines whether the assets form a
business combination. Business combinations must involve the acquisition of a
business, which generally has three elements: input, process and output. The
final aggregated fair value of the identifiable assets and liabilities of the
acquired businesses were property and equipment of £25.8 million. The group
incurred £1.5 million of costs associated with the acquisitions, which have
been recorded within adjusting items (see note 9). No goodwill was recognised
on the acquisitions as the fair value of the net assets acquired were equal to
the cash consideration exchanged.
Between the date of acquisition and the balance sheet date, the Libertine,
White Hart, White Lion, Huntsman, Ship Inn and the Tattenham Corner
contributed £3.9 million of revenue and £nil to the operating profit of the
group. If the acquisitions had been completed at the beginning of the period,
group revenue for the period would have been expected to increase by £2.2
million and group operating profit would have been expected to decrease by
£0.2 million.
Acquisitions in 2023
In the prior period, the group acquired the Bedford Arms (Chenies), Merlin's
Cave (Chalfont St Giles), Half Moon (Windlesham), Carpenter's Arms (Tonbridge)
and the Griffin Inn (Fletching), which formed business combinations for a
total cash consideration of £18.2 million, which was settled during the prior
period. The final aggregated fair value of the identifiable assets and
liabilities of the acquired businesses were property and equipment of £18.2
million. The group incurred £1.1 million of costs associated with the
acquisitions, which have been recorded within adjusting items (see note 9).
In the prior period between the date of acquisition and the balance sheet
date, the Bedford Arms, Merlin's Cave, Half Moon, Carpenter's Arms and the
Griffin Inn contributed £3.3 million of revenue and a £0.7 million loss to
the operating profit of the group. If the acquisitions had been completed at
the beginning of the period, group revenue for the period would have been
expected to increase by £7.2 million and group operating profit would have
been expected to increase by £1.0 million.
Cash flow from business combinations
2024 2023
52 weeks 53 weeks
£m £m
City Pub Group (111.4) -
Crooked Billet (7.3) -
Other business combinations (25.8) (18.2)
Total net cash outflow (144.5) (18.2)
14. Net cash generated from operations and analysis of net debt
Group Company
2024 2023 2024 2023
52 weeks 53 weeks 52 weeks 53 weeks
£m £m £m £m
Profit before tax 20.7 36.2 17.3 38.2
Net finance cost 8.1 7.5 7.7 7.3
Finance income for pension obligations (0.2) (0.3) (0.2) (0.3)
Operating profit 28.6 43.4 24.8 45.2
Depreciation of property and equipment 27.6 26.2 27.3 26.0
Depreciation of right-of-use assets 7.3 6.9 6.2 6.0
Impairment of goodwill and right-of-use assets 5.5 - 5.5 -
Investment impairment - - 21.3 -
Movement on revaluation of properties 12.8 7.0 12.8 7.0
Net loss on disposal of property 1.3 - 1.6 -
Difference between pension service cost and cash contributions paid (1.4) (1.3) (1.4) (1.3)
Share based payments (0.7) (0.5) (0.7) (0.5)
Movements in working capital
- Inventories 0.1 (0.7) 0.1 (0.7)
- Receivables 0.5 (0.6) (23.3) 0.2
- Payables 4.4 3.4 (3.0) 0.7
Net cash generated from operations 86.0 83.8 71.2 82.6
Group Company
2024 2023 2024 2023
£m £m £m £m
Cash 16.9 10.7 5.5 10.7
Current borrowings and loan capital (71.5) - (71.5) -
Current lease liability (6.8) (4.8) (4.0) (4.0)
Non-current borrowings and loan capital (213.2) (104.2) (212.2) (104.2)
Non-current lease liability (85.0) (66.9) (67.2) (61.9)
Net debt (359.6) (165.2) (349.4) (159.4)
15. Post balance sheet events
There was one post balance sheet event: the sale of the Plough (Beddington)
for a total cash consideration of £1.1 million, which was classified as asset
held for sale at the period end date.
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