Final Results - 53 Weeks to 1 April 2000

Young & Co's Brewery PLC 8 June 2000 YOUNG & CO.'S BREWERY, P.L.C. Preliminary results For the 53 weeks to 1 April 2000 Key highlights: * Turnover increased to £91.7 million up 9.9% * Operating profit increased to £9.9 million up 10.5% * Profit before tax increased to £8.5 million up 15.2% * Basic earnings per share of 48.59p up 19.5% * Adjusted earnings per share of 40.25p** up 10.9% * Dividend per share increased to 18.10p up 6.5% * Assets per share increased to £10.86 up 3.3% * Total beer production up 26% and own beer production up 5.6% * New cask ale (Triple 'A') launched in April - aimed at younger market * £12.3m invested in pub acquisitions and refurbishments during the year * Gearing at 22% provides plenty of scope for further investment ** Adjusted to exclude profit on sale of property in 1999 and 2000. Commenting on the results, John Young, Chairman of Young's Brewery said: 'This is our third successive year of double-digit growth at Young's and is the result of our strategy of maximising returns on existing assets, disposing of our under-performing ones, making strategic investments against consistent selection criteria, developing sales through all trade channels and minimising the cost base of the brewery. We have increased beer production and most notably are bucking the market trend with healthy increases in our own beer brands. The recent launch of Triple 'A' will further assist this process and introduce a new generation of beer drinkers to Young's beers. We have plenty of scope for further investment, which, together with operational improvements, give us confidence for continued progress in the coming year.' For further information: Pat Read, Chief Executive 020 8875 7000 Peter Whitehead, Finance Director Young & Co's Brewery James Longfield, 020 7357 9477 Hogarth Partnership YOUNG & CO.'S BREWERY, P.L.C. Preliminary results FOR THE 53 WEEKS TO 1 APRIL 2000 Operational review The year finished with profits before tax up 15.2% at £8.5m, basic earnings per share up 19.5% at 48.59p and, once adjusted for property sales, increased by 10.9%. This is the third successive year of double-digit growth at Young's and is the result of our strategy of maximising returns on existing assets, disposing of under-performing ones, making strategic investments against consistent selection criteria, developing sales through all trade channels and minimising the cost base of the brewery. Our results show sustained progress as the actions taken by management continue to deliver volume, turnover and profit growth. The annual general meeting on 18 July will be asked to approve a final dividend of 9.40p, a 6.8% increase over last year, payable on 20 July to shareholders on the register on 23 June 2000. This will give an 18.10p dividend for the year, up 6.5% on last year. Brewing and brands Total beer sales increased 19% by volume. Beer production was up 26%, largely due to brewing contracts, which has brought about a welcome reduction in unit costs. This contract beer forms part of a strategic partnership with major brewers, a partnership that in turn provides our pubs with high profile lager brands. Significantly, the production of our own beers was up 5.6%, defying market trends. We have always recognised that the long-term success of the brewery depends on the performance of our own established brands and on developing new ones. In this regard, we are delighted to announce that we have launched Triple 'A', a new cask ale aimed at a new generation of beer drinkers. Young's Triple 'A' is designed to attract younger pub-goers to traditional draught ale. It is brewed at 4.0% alcohol by volume, is served cool, has a smooth, creamy flavour and a slightly fruity nose. Triple 'A' was successfully tested in a number of our pubs over a four month period before being launched through our estate in April, with initial sales at encouraging levels. It is already available in some pub groups and will become nationally available through the free trade and other pub chains during the summer. We continue to retain focus on tight control of costs within the brewery and at the end of the year we reduced manning levels once more through automation leading to voluntary redundancies. The resulting savings will arise in the current year. Our beers continue to win awards. In this year's Brewing Industry International Awards, which were contested by 732 beers from 40 countries, we took two world championships, four gold medals and two silvers - the best performance by any single brewery. We won the International Speciality Beers championship and gold medal with Young's Double Chocolate Stout, which also won a gold medal in its class. Young's Bitter won the International Keg Ales championship and gold medal, plus a gold medal in its class. Silver medals went to Young's Triple 'A' and to Young's Oatmeal Stout. Young's won four prizes in the British Bottlers' Institute awards: a gold medal for Special and diplomas for Light Ale, Old Nick and Special London Ale, which had earlier been voted Champion Bottle Conditioned Beer of the Year at the Campaign for Real Ale's Great British Beer Festival. Young's Double Chocolate Stout also won a gold medal in the International Beer and Cider competition, sponsored by the publishers of Off Licence News and The Grocer. Managed houses and hotels We have maintained our beer volumes whilst wines and spirits volume is up by 9% and food by 11%. Total sales in the managed estate were up 8% with profits up by 3%. This was achieved despite the impact on trading of pub closures for refurbishment and the costs associated with new openings. Five new managed houses were bought during the year for a total investment of £4.2m. They were the Red Lion, Radlett with 13 bedrooms, the Ship, East Grinstead, the Cock Inn, Boughton Monchelsea near Maidstone, the Bar Verve, Slough, and Finch's, Chelmsford. This brings our total managed estate to 118. The Master Gunner near St Paul's has been sold, but will in due course reopen as part of the new Paternoster Square development. Investment in our managed pubs and hotels continues and during the year we spent a further £5.2m on refurbishment at nine managed pubs and extensive redevelopments at three pub/hotels. By July we will have a total of 281 rooms (up 84), with planning permission granted for a further 96. Occupancy rates at our hotels were slightly down on last year because some of the new ones are not yet fully established, but the average spend was up 3%. Congratulations to Richard Williamson, manager of the Rose and Crown, Wimbledon, who was a regional winner and one of the national finalists in the Innkeeper of the Year competition, organised by the British Institute of Innkeeping. Tenanted houses Over the last year we have entered into several joint partnership investment schemes with our tenants. Some examples of these are: The Duke of Cambridge, Battersea, The Clock House, Peckham, The Thatched House, Hammersmith and The Red Cow, Richmond. We have purchased the Court House, Dartford, which brings our total tenanted estate to 68. Beer volumes in our tenanted houses were down by 2% with wines and spirits up 9%. Profits were unchanged. The Duke of Cambridge, Battersea, was runner-up in the Times 1999 National Pub of the Year competition. Congratulations to our tenant, Rupert Clevely, and all his staff. Retail generally During the year we spent £12.3m developing our estate with six new acquisitions and 34 refurbishments ensuring our pubs remain the best in the country. Our total estate now stands at 186 pubs and hotels, of which 148 are freehold. Our investment policy regarding new sites is always location driven. We also seek to take a long-term view on our pub portfolio and wherever possible, seek to acquire freeholds. In order to comply with new accounting standards, we have for the first time provided £0.2m for the depreciation of freehold property. We at Young's retain our belief in the benefit of running pubs on an individual basis, where the licencees are encouraged to use their skills to meet their customers' requirements. This has led to the rich diversity of our pubs which is becoming increasingly popular with customers. Free trade Free trade has enjoyed an excellent year with overall volumes up 13% and own beer volumes up 14%. The acquisition of the Waggle Dance brand has assisted in continued and rapid growth in take home trade, building on an already well established brand portfolio which enjoys national status and as already mentioned has received many awards. The strength of our brands and the first class service we have been able to offer our customers have strengthened our overall presence in the free trade stretching from Land's End to Inverness. Exports Overall exports increased by 35% in volume, with a particularly strong performance in America, where the increase was 42%. Exports now comprise 5.5% of our own branded production. Marketing Our latest advertising featuring our Ram has been displayed on poster sites throughout London. This campaign has strengthened the Young's brand, appealing to existing and new drinkers in our tied and free trade. The development of Triple 'A' is a step towards ensuring that the next generation of drinkers enjoy real ale. Continued press and poster campaigns supporting Triple 'A' in addition to the rest of the Young's product range will run throughout the next year. Cockburn & Campbell Profits from our wines and spirits division rose by 17%, the result of increases in volume and more competitive buying opportunities presented by the weak euro. Young's own whisky, The Royal & Ancient, won the gold medal for blended whiskies in the 1999 International Wine and Spirit competition. Outlook In spite of a year of high capital expenditure, gearing at the end of the year is 22% with interest cover at 4.1 times. This provides us with an excellent platform for targeted expansion in our London heartland, the Home Counties and in particular the commuter towns. This room for investment, together with further developments in our existing estate and operational improvements, give us confidence for further progress in the coming year. YOUNG & CO.'S BREWERY, P.L.C. GROUP PROFIT AND LOSS ACCOUNT For the 53 weeks ended 1 April 2000 2000 1999 £000 £000 ------------------------------------------------------------------ Turnover 91,652 83,372 Net operating costs (81,729) (74,395) ------------------------------------------------------------------ Operating profit 9,923 8,977 Profit on sales of properties 1,035 713 ------------------------------------------------------------------ Profit on ordinary activities before interest 10,958 9,690 Net interest charge (2,416) (2,272) ------------------------------------------------------------------ Profit on ordinary activities before tax 8,542 7,418 Tax on profit on ordinary activities (2,402) (2,231) ------------------------------------------------------------------ Profit on ordinary activities after tax 6,140 5,187 Preference dividends on non-equity shares (113) (107) ------------------------------------------------------------------ Profit attributable to ordinary shareholders 6,027 5,080 Ordinary dividends on equity shares (2,264) (2,201) ------------------------------------------------------------------ Retained profit for the financial period 3,763 2,879 ------------------------------------------------------------------ Pence Pence ------------------------------------------------------------------ Basic earnings per 50p ordinary share 48.59 40.66 Diluted basic earnings per 50p ordinary share 48.12 40.48 ------------------------------------------------------------------ Adjusted earnings per 50p ordinary share 40.25 36.30 ================================================================== YOUNG & CO.'S BREWERY, P.L.C. BALANCE SHEETS At 1 April 2000 Group Company ------------------------------------------------------------------- 2000 1999 2000 1999 £000 £000 £000 £000 ------------------------------------------------------------------- Fixed assets Tangible fixed assets 175,460 167,251 175,460 166,551 Investments 1,983 1,300 2,025 2,100 ------------------------------------------------------------------- 177,443 168,551 177,485 168,651 ------------------------------------------------------------------- Current assets and liabilities Stocks 4,637 4,438 4,637 4,384 Debtors 6,862 5,816 6,862 5,218 Cash 651 4,035 651 4,021 ------------------------------------------------------------------- 12,150 14,289 12,150 13,623 ------------------------------------------------------------------- Creditors: amounts falling due within one year 17,792 14,729 17,834 17,191 ------------------------------------------------------------------- Net current liabilities (5,642) (440) (5,684) (3,568) ------------------------------------------------------------------- Total assets less current liabilities 171,801 168,111 171,801 165,083 Creditors: amounts falling due after more than one year 30,224 30,341 30,224 30,341 Provisions for liabilities and charges 5,565 5,521 5,565 5,498 ------------------------------------------------------------------- 136,012 132,249 136,012 129,244 =================================================================== Capital and reserves Called-up share capital: equity 6,475 6,475 6,475 6,475 non-equity 1,361 1,361 1,361 1,361 Share premium account 1,425 1,450 1,425 1,450 Revaluation reserve 91,544 91,587 88,831 88,874 Profit and loss account 35,207 31,376 37,920 31,084 ------------------------------------------------------------------- Equity shareholders' funds 134,651 130,888 134,651 127,883 Non-equity shareholders' funds 1,361 1,361 1,361 1,361 ------------------------------------------------------------------- 136,012 132,249 136,012 129,244 =================================================================== YOUNG & CO.'S BREWERY, P.L.C. GROUP CASH FLOW STATEMENT For the 53 weeks ended 1 April 2000 2000 1999 £000 £000 ------------------------------------------------------------------ Net cash inflow from operating activities 18,164 14,591 Interest received 130 70 Interest paid (2,645) (2,405) Non-equity dividends paid (113) (107) ------------------------------------------------------------------ Returns on investments and servicing of finance (2,628) (2,442) ------------------------------------------------------------------ Corporation tax paid (2,349) (1,734) ------------------------------------------------------------------ Purchase of tangible fixed assets (15,563) (10,112) Sales of tangible fixed assets 1,804 2,707 Purchase of investments (478) - ------------------------------------------------------------------ Capital expenditure (14,237) (7,405) ------------------------------------------------------------------ Equity dividends paid (2,227) (2,137) ------------------------------------------------------------------ Cash (outflow)/inflow before the use of liquid resources and financing (3,277) 873 (Decrease)/increase in loan capital (87) 2,347 (Decrease) in lease finance (20) (20) ------------------------------------------------------------------ (Decrease)/increase in cash in period (3,384) 3,200 ================================================================== GROUP RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT For the 53 weeks ended 1 April 2000 2000 1999 £000 £000 ------------------------------------------------------------------ (Decrease)/increase in cash in period (3,384) 3,200 Decrease/(increase) in debt in period 107 (2,327) ------------------------------------------------------------------ (Increase)/decrease in net debt in period (3,277) 873 Opening net debt (26,437) (27,310) ------------------------------------------------------------------ Closing net debt (29,714) (26,437) ------------------------------------------------------------------ GROUP NET CASH INFLOW FROM OPERATING ACTIVITIES For the 53 weeks ended 1 April 2000 ------------------------------------------------------------------ 2000 1999 £000 £000 ------------------------------------------------------------------ Operating profit 9,923 8,977 Profit on sales of properties 1,035 713 ------------------------------------------------------------------ 10,958 9,690 Depreciation 5,980 5,279 Profit disposal of tangible fixed assets (1,224) (721) (Increase)/decrease in working capital Stocks (199) (428) Debtors (1,046) (1,744) Creditors 3,695 2,515 ------------------------------------------------------------------ Net cash inflow from operating activities 18,164 14,591 NOTES 1. Recognised gains and losses The results above are all in respect of the continuing operations of the group. There are no recognised gains or losses other than those disclosed above. 2. Taxation Corporation tax has been provided at a rate of 30% (1999: 31%) on the profits for the period ended 1 April 2000. 3. Earnings and dividends on equity shares 2000 1999 Pence Pence ------------------------------------------------------------------ Basic earnings per 50p ordinary share 48.59 40.66 Effect of profit on sales of properties (8.34) (4.36) ------------------------------------------------------------------ Adjusted earnings per 50p ordinary share 40.25 36.30 ================================================================== The weighted average number of ordinary shares in issue is 12,403,737 (1999: 12,493,423). Diluted earnings per ordinary share are calculated by adjusting basic earnings per ordinary share to reflect the notional exercise of the weighted average number of ordinary share options outstanding during the year. The resulting weighted average number of ordinary shares is 12,525,792 (1999: 12,550,676). 2000 1999 Pence Pence ------------------------------------------------------------------ Interim dividend 8.70 8.20 Proposed final dividend 9.40 8.80 ------------------------------------------------------------------ 18.10 17.00 ================================================================== 4. Accounts The above financial information does not amount to full accounts within the meaning of S.240 of the Companies Act 1985. Full accounts for the period ended 27 March 1999, including an unqualified auditors' report, have been delivered to the Registrar of Companies. The statutory accounts for the period ended 1 April 2000, including an unqualified auditors report, will be delivered to the Registrar of Companies. This preliminary announcement is prepared on the basis of the same accounting policies as set out in the previous annual accounts.
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