Final Results

RNS Number : 8480N

Young & Co's Brewery PLC

21 May 2015

 

Young & Co.'s Brewery, P.L.C.

Preliminary results for the 52 weeks ended 30 March 2015

	2015	2014	%
	£m	£m	change
Revenue	227.0	210.8	+7.7
Adjusted operating profit(1)	37.4	33.2	+12.7
Operating profit	41.5	32.6	+27.3
Adjusted profit before tax(1)	32.0	27.2	+17.6
Profit before tax	36.1	26.6	+35.7
Adjusted basic earnings per share(1)	50.62p	42.88p	+18.1
Basic earnings per share	55.17p	45.78p	+20.5
Dividend per share	16.46p	15.52p	+6.1
(interim and recommended final)
Net assets per share(2)	£8.40	£7.86	+6.9
All of the results above are from continuing operations.
(1) Reference to an "adjusted" item means that item has been adjusted to exclude exceptional items (see notes 3 and 4).
(2) Net assets per share are the group's net assets divided by the shares in issue at the period end

          Highlights

·     A further year of strong performance with growth across Young's, Geronimo and The Ram Pub Company, reflecting the quality and appeal of our well invested estate of premium pubs and hotels;

·     Managed houses:  total revenue up 7.6%, and up 6.5% like-for-like - representing fourth year of consistently high like-for-like growth; adjusted operating profit up 11.3% to £50.1 million;

·     Further growth in hotels with 76 new hotel rooms added, increasing total number of rooms across the estate to 476; average room rate, occupancy and revenue per available room all increased;

·     Ram Pub Company (re-branded tenanted business):  returned to growth with revenues up 9.6% (3.0% like-for-like), and adjusted operating profit up 13.2% to £4.3 million;

·     Investment of £50.9 million, including acquisition of eight pubs alongside upgrades to the existing estate and hotel developments;

·     Group remains conservatively financed with net debt of £129.0 million (2014: £112.0 million) equating to 2.47 times EBITDA; 

·     Continued appetite for further acquisitions, alongside our existing estate and extending into southern cities and market towns that suit our premium offering;

·     Proposed 6.1% increase in final dividend to 8.56 pence, resulting in a total dividend of 16.46 pence (2014: 15.52 pence); 18^th consecutive year of dividend growth;

·     Positive trading since the period end; managed house revenue in first seven weeks of current financial year up 8.1% in total, and 5.6% like-for-like.

Stephen Goodyear, Chief Executive of Young's, commented:

"Young's has had another extremely good year, with further robust profit growth driven by increased revenue and strong operational management, reaping the rewards of our consistently high levels of investment in our estate over many years.  

We have added eight pubs, 76 new hotel rooms, invested significantly in our estate, and we remain actively in the market for further acquisitions - of pubs and hotels that complement our premium positioning either where we currently trade or in market towns and cities in the south of England.  We have ample financial resources to continue to pursue this proven growth strategy.  

Trading in the current year has started promisingly, with managed house revenue in the first seven weeks up 8.1% in total and 5.6% like-for-like.  We have a number of new pubs to come on stream this year, and we look forward to this autumn's Rugby World Cup drawing people into Young's pubs in south west London and beyond.  Whilst the strength of last year's performance sets the bar ever higher, we are confident that we can make further progress."

For further information, please contact:

Young & Co.'s Brewery, P.L.C.	020 8875 7000
Stephen Goodyear, Chief Executive
Peter Whitehead, Finance Director
MHP Communications	020 3128 8100
John Olsen/James White/Gina Bell/Jennifer Iveson

 

PRELIMINARY RESULTS FOR THE 52 WEEKS ENDED 30 MARCH 2015

Another successful year for Young's with profit before tax up 35.7% and once adjusted for exceptional items by 17.6%. Adjusted basic earnings per share increased 18.1% to 50.62 pence. This profit increase was created by the combination of strong revenue growth and an improving operating performance driven by operational excellence and cost discipline.

Revenue was up 7.7% to £227.0 million, primarily the result of an industry leading like-for-like performance, up 6.5%, from our managed houses. This represents the fourth year of consistently high managed house like-for-like sales growth, following increases of 6.0%, 4.6% and 6.7% in the previous three years. Adjusted operating profit increased 12.7% to £37.4 million as a result of both the sales performance and an improved margin.

WELL-INVESTED, WELL-POSITIONED AND PERFORMING WELL YEAR AFTER YEAR

Our three distinct formats, Young's and Geronimo, which comprise our managed house division, and the Ram Pub Company, our tenanted division, are all growing well. In each market, our absolute and like-for-like performance was underpinned by: our continued investment in growth projects; strong operational delivery; focus on our London and south east heartland and our clear positioning at the premium end of the market; not to mention a warm and dry summer last year.

At the year-end we had 166 managed pubs (including 22 hotels) and 80 tenancies, spanning a mixture of vibrant London destinations including Borough Market, Covent Garden, Mayfair, the Southbank and Westminster in central London alongside affluent London neighbourhoods such as Islington, Richmond, Wandsworth and Wimbledon. In turn, these locations are complemented by pubs in picturesque cities and market towns like Stow on the Wold, Shaftesbury, Chichester and Guildford. Amidst this variety, the common strand remains premium, well-invested pubs which seek to play a pivotal role in their communities, run by teams who maintain traditional values in an environment that appeals to today's consumers.

We invested £24.3 million in acquisitions. In the summer we acquired the Fox & Anchor pub and hotel in Smithfield Market and the White Bear in Kennington. In October we purchased the 580 Group for £10.4 million, adding four large London pubs in attractive locations where we were looking to grow our presence; all are performing excellently. In January we acquired the Bell at Stow, another pub and hotel, in the heart of the Cotswolds and the Trafalgar Arms in Tooting, which is due to open in early autumn after an extensive redevelopment.

Over the course of the year, we also invested £26.3 million in our existing estate. As part of our strategy to maximise the potential of our pubs and to develop, where appropriate, a premium, boutique hotel offering, we have added 76 bedrooms and undertaken some transformative developments elsewhere.

SOUNDLY FINANCED, ASSET BACKED WITH A PROGRESSIVE DIVIDEND POLICY

We are a highly focussed, successful premium pub company with a progressive dividend policy and a balance sheet underpinned by freehold property, predominantly in London. Helped by our strong operating performance and sound investment, our total property value has increased to £617.3 million (2014: £559.2 million).

We have debt facilities of £175 million with the Royal Bank of Scotland and Barclays repayable between 2018 and 2023. At the year-end we had net debt of £129.0 million representing a 2.47 multiple of EBITDA, gearing of 31.7%, with interest covered 7.2 times by adjusted operating profit. As a result we are well placed to expand and enhance our estate further. We continue to seek out opportunities either alongside our existing estate or by extending our trading area into those cities and market towns in the south where our premium offering finds a natural home. We focus on pubs that add to the depth, richness and variety that already exists within our estate.

We are committed to our progressive dividend policy. As a consequence of these strong results the Board is recommending, for the eighteenth consecutive year, an increase in the final dividend, this time by 6.1% to 8.56 pence, resulting in a total dividend for the year of 16.46 pence (2014: 15.52 pence). If approved, this is expected to be paid on 9 July 2015 to shareholders on the register at the close of business on 12 June 2015.

MANAGED HOUSES

Our managed estate, which at the year-end comprised 129 Young's pubs (including 22 hotels) and 37 Geronimo pubs, has had another excellent year. Our managed pubs follow a straightforward strategy; they are community-led, well-invested with market leading products and high levels of customer service and are all designed to exceed our customers' expectations.

This strategy, coupled with our commitment to provide our highly motivated team with the freedom and opportunity to perform, has driven strong revenue growth, on both an absolute (7.6%) and like-for-like basis (6.5%), and a higher operating margin (23.4%, 2014: 22.6%), the combination of which has resulted in a 11.3% increase in adjusted operating profit to £50.1 million.

·     REVENUE AND PROFITS

Total drink sales increased by 7.1% and by 5.6% on a like-for-like basis. Draught lager sales grew by 5.5%, as once again our consumers' tastes shifted to the more premium ranges. The launch of Young's London Stout alongside a fine range of craft beers, with an emphasis on local brewing, has clearly met popular demand for variety and choice, leading to a 6.3% increase in draught ale and stout sales. The excellent summer helped sales of cider, rosé and white wine. Sparkling wine was up over 25% in volume for the second year in a row. Spirit sales were up 12.3% supported by the shift into premium brands and promotions, which drove 26.1% volume growth in gin.

Our food strategy remains steadfastly focussed on freshly prepared, seasonal British pub food, whilst serving best-in-class classics and the ultimate Sunday roasts. As a result food sales grew by 6.9% and now comprise 31.5% of our drink:food sales mix.

We have been consistently increasing our accommodation profile over recent years, and this year we invested £10.8 million in our 22 hotels on a combination of 76 extra bedrooms and raising the standard of 75 existing ones. We have added 17 bedrooms at the Dog & Fox (Wimbledon Village), 13 at the Orange Tree (Richmond) and 13 rooms to the Windmill (Clapham Common), acquired the Fox & Anchor (Smithfield Market) and the Bell at Stow (Stow on the Wold) and have taken the Lamb Inn (Hindon) back into managed operations. We have upgraded rooms at the Alexander Pope (Twickenham), Coach and Horses (Kew) and Rose and Crown (Wimbledon Village) to our premium, boutique standard. Despite the disruption these investments have contributed to increases in average room rate (£4.77), occupancy (1.8% points) and RevPAR (£4.80). We now have a total of 476 bedrooms across our hotel business.

In addition, we have made some exciting improvements to a number of pubs, most notably the Castle (Tooting) where we have transformed the car park into a 78 seater orangery, with the warmth of a central fireplace in the winter and concertina windows that open into a beautiful garden in the summer. We also added a roof terrace at the Windmill (Mayfair) and an eye-catching new conservatory at the Richard the First (Greenwich). In addition we have now embarked upon a two-year roll out of our new signage across all Young's managed pubs. This refreshed corporate identity, with contemporary illustrative pictorials, is designed to capture the individuality of our pubs, embrace our heritage and truly reflect the modernity of each pub's offer.

Geronimo's rate of growth, both like-for-like and total, was adversely affected by events at Heathrow. The closure of Terminal 1 resulted in the loss of the Tin Goose in October. Airline changes at Terminal 3 saw reduced passenger numbers visiting the Three Bells. Our Geronimo business is now well established and reinvigorating its growth is a priority for the year ahead. With three new openings scheduled for the current year and the full year benefit of the Owl & Pussycat (Shoreditch) and the Fellow (King's Cross) the overall Geronimo footprint continues to expand. 

·     INVESTMENT

During the course of the year we have invested £48.5 million in our managed estate.

We invested £27.7 million in Young's pubs. We acquired the White Bear (Kennington), Defector's Weld (Shepherds Bush) and the John Salt (Islington), the latter two acquired through the purchase of the 580 Group. Major developments were carried out at the Britannia (Kensington), Coborn (Bow), Crooked Billet (Wimbledon), Crown (Lee), Duke on the Green (Fulham), Finch's (formerly the Master Gunner, Finsbury Square), Halfway House (Earlsfield), Porchester (Paddington), Richard the First (Greenwich) and the Spring Grove (Kingston).

Our hotels benefitted from a £10.8 million investment, as we added an extra 76 bedrooms through a combination of converting existing space into rooms, two acquisitions and transfers between our tenanted and managed operations.

We have invested £10.0 million in our Geronimo estate, which includes the purchase of the Owl & Pussycat (Shoreditch) and the Fellow (King's Cross), also as part of the 580 Group acquisition. Major developments were completed at the Betjeman Arms (St Pancras) and the Bull (Westfield in Shepherd's Bush).

·     CUSTOMER ENGAGEMENT

We continue to strengthen our e-marketing platform to deliver enhanced local engagement, maximise consumer loyalty and position pubs right at the heart of their communities. We are using new technology within our pubs to improve the face-to-face communication with customers.

Over one third of the estate is now using tablet technology to facilitate our "you stay there and we'll look after you" service proposition. Together, we and our customers are seeing the benefit of these tablets across a wide range of pubs from the Lamb Tavern (Leadenhall Market), delivering exceptional service through their "Thirst Aiders", to our many pubs with large gardens, where regularly over 30% of their sales are delivered through the use of tablets. Our new virtual hotel hot desk ensures that guests unable to get through to their desired hotel first time are transferred to an available hotel receptionist, who will be able to attend to their booking or enquiry on behalf of any hotel within our estate.

Events in our pubs have gone from strength to strength with many creating bespoke occasions to inspire, involve and connect our customers. Last spring we launched 'Ginspiration', our festival of gin, while also running a series of highly successful cider versus wine taste matching dinners.

Our innovative, individual pubs are also creating new ways of engaging with their local communities, and in September we were delighted when Barbara Smith from the Grange (Ealing Common) won the Publican and Morning Advertiser national award for Best Community Pub. Barbara and the Grange typify what we try to achieve across all of our pubs, namely to be the community's hub, with business savvy and digitally minded ideas attracting a wide range of customers: from parents with their babies, local business people, salsa and quiz night enthusiasts, all alongside the more traditional regulars. They even cater to pets, with weekly 'play dates' for customers' dogs. Elsewhere, initiatives range from the White Hart's (Barnes) '#TweetYourStreet' campaign offering one-off deals to residents of a different street every week, giving those residents a chance to 'meet their neighbours', to mouth-watering food quizzes at the Castle (Tooting).

As autumn arrived we celebrated Young's Day, now an annual tradition, which provides us with an opportunity to thank our customers for their loyalty. Over 13,000 of them took up our offer to enjoy a free pint to celebrate our 183^rd birthday. Meanwhile within Geronimo we held harvest food festivals, linking up with City Farms, and raising funds to enable city children to experience a taste of rural life.

As winter set in we had one of the most exciting Rugby Six Nations tournaments, providing the perfect backdrop for this autumn's Rugby World Cup. Our pubs are perfectly placed to take advantage of these events.

RAM PUB COMPANY

The benefits of strategic initiatives implemented over the last few years, which culminated in the launch of the Ram Pub Company, are now evident. Our tenanted operation has returned to revenue and profit growth both on a total and a like-for-like basis.

·     REVENUE AND PROFITS

Total revenue was up 9.6%, the result of 3.0% like-for-like growth, the full year benefit of last year's acquisitions (the Clapham North, New Inn (Ealing) and the Royal Oak (Bethnal Green)) and a net three transfers from our managed operations over the last year (the Marquess Tavern (Islington), Riverside (Chelmsford), King's Arms (Epsom) and the Butcher's Hook (formerly the Thatched House, Hammersmith) with the Lamb Inn (Hindon) moving in the opposite direction). Adjusted operating profits increased by 13.2% and by 7.2% on a like-for-like basis. Our 80 tenanted pubs (2014: 79), represent 5.5% of our group revenue (2014: 5.4%) and 7.9% of group adjusted operating profit at outlet level (2014: 7.8%).

·     INVESTMENT

We invested £2.1 million in our tenanted business, with major developments at the Butcher's Hook, Dog & Bull (Croydon), Grand Junction Arms (Harlesden), Grey Horse (Kingston), Hope (Norwood), Horse Pond (Castle Cary), Riverside (Chelmsford) and the Unicorn (Somerton). The external appearance of all our tenanted pubs has, where appropriate, been rebranded with the Ram Pub Company signage. These investments have been partly funded by the sale of the Tamworth Arms (Croydon) and the Bunch of Grapes (Bradford-on-Avon).

·     TENANT ENGAGEMENT

The Ram Pub Company is small enough to provide flexible agreements with plenty of choice, financial backing for trade-building initiatives and, together with marketing and operational support, is a model designed to attract and harness the entrepreneurial flair of today's business partners.

This year's re-branding, new website and strengthened support team has provided a new impetus to the division, allowing us to market ourselves more successfully to a wider audience and to have more effective communication with our existing tenants.

The Small Business, Enterprise and Employment Bill, which will alter the relationship some businesses have with their tenants through the introduction of a Statutory Code of Practice, received Royal Assent at the end of March. Importantly, due to our size, we will not be required to offer our tenants a free of tie option. We will continue to operate our code of practice and expect to update this as and when a new pub industry framework code of practice on how tied agreements should operate in the pub trade is introduced. The new law is not expected to have a material impact on the Ram Pub Company's operations.

PROPERTY AND TREASURY

·     PROPERTY

CBRE, an independent and leading commercial property and real estate services adviser, revalued 20% of our estate as at the year-end. The remaining 80%, as permitted by International Accounting Standards and in common with other listed pub groups, was revalued internally. This internal review, which was led by Andrew Cox MRICS, our Director of Property and Tenancies, used updated trading results together with management's knowledge of each pub.

Improving pub values, especially in our London and south east heartland, once coupled with our improving trade, have driven a net upward revaluation of £23.8 million. The total estate is now valued at £617.3 million. In accordance with International Financial Reporting Standards, individual increases in value have been reflected in the revaluation reserve in the balance sheet (except to the extent that they had previously been revalued downwards) and individual falls in value below cost have been accounted for through the income statement, but these have no cash impact.

·     TREASURY

This has been another year of record operating cash flow (£50.6 million, 2014 - £47.3 million) driven by 7.7% revenue growth which in turn increased EBITDA, before exceptional items, by 14.2% to £52.2 million. This cash flow helped finance £50.9 million of capital expenditure including eight new pubs. As a result of this investment, net debt increased by £17.0 million to £129.0 million. Despite this, fixed charge cover improved to 3.9 times (2014: 3.2 times), interest cover increased to 7.2 times (2014: 5.6 times), annualised net debt to EBITDA was little changed at 2.47 times and gearing was 31.7% (2014: 29.5%).

We have debt facilities of £175 million with the Royal Bank of Scotland and Barclays repayable between 2018 and 2023, which provide us with capacity to expand and enhance our business further. With these committed facilities, our freehold-backed balance sheet and the benefit of the conservative financial ratios outlined above, these financial statements, as usual, have been prepared on a going concern basis.

We believe it is important to have some protection from adverse movements in interest rates and have over the years entered into interest rate swaps. Presently £80 million of our £129.0 million net debt is fixed through these swaps. These swaps, the bank's margin and other costs result in a combined rate of just below 4.8%. In addition we have entered into a forward starting £30 million swap, which runs from the expiry of one for the same amount in December 2016 for the remaining life of our term loan. As a consequence, in 2016 we expect to have an interest rate of 5.1% on the hedged element of our bank debt. These swaps are valued each year at market rates, have maturities that match the underlying liabilities and have been designated as cash flow hedges for accounting purposes. As a result the £3.6 million adverse movement (2014: £5.6 million improvement) in their market value has been recorded in the statement of other comprehensive income.

·     RETIREMENT BENEFITS

The deficit on our final salary defined benefit scheme, which closed to new entrants in 2003, has increased by £7.1 million to £13.1 million. The fair value of the scheme assets increased by £10.4 million to £115.7 million, which was principally the result of investment performance. However this performance, with the additional benefit of lower inflationary expectations, only partially offset the impact of lower long-dated corporate bond yields on the schemes liabilities. It's these yields, now at unprecedented lows, that are used by our actuary to determine the rate at which our liabilities are discounted. The present value of the scheme's liabilities has increased by £17.5 million to £128.8 million.

CORPORATE AND SOCIAL RESPONSIBILITY

We pride ourselves on being at the heart of the community, and recognise the importance of operating a responsible and sustainable business. Our recycling efforts have gone up a gear and last year we recycled 4,481 tonnes (2014: 3,065 tonnes). Recycled waste now represents 64% of our total waste (2014: 57%) with just 2% going to landfill and 163,000 litres of waste cooking oil being converted to bio-diesel. We have now switched practically all our managed pubs to LED lighting which has saved around 2,900,000 kWh of electricity and in turn has prevented 1,570 tonnes of CO2 emissions being released into the atmosphere.

In recognition of Geronimo's own ongoing commitment to sustainability, it once more received a three star award from the Sustainable Restaurant Association, the highest award available.

In the year of the Rugby World Cup we are proud to announce our association with Wooden Spoon, the children's charity of rugby. Together we will raise money to support local disadvantaged and disabled children.

SHAREHOLDER RETURNS

This year's performance, as in previous years, is the result of a clear strategy to deliver earnings and dividend growth. Revenue growth of 7.7% and an extra 0.8% points added to our operating margin when coupled with lower net finance charges has resulted in adjusted profit before tax increasing by 17.6% to £32.0 million and by 35.7% to £36.1 million on an unadjusted basis. Earnings per share increased by 20.5% to 55.17 pence and our adjusted EPS was up 18.1% at 50.62 pence.

Our strategy continues to deliver shareholder value and strong revenue and earnings growth, while allowing us to invest £50.9 million this year to create the platform for future growth and enabling us to maintain our balance sheet strength.

OUTLOOK

Last year's strong sales performance has continued into the current period and with the uncertainty surrounding the general election behind us, we should continue to benefit from the improving economy and consumer confidence. Managed house revenue in the first seven weeks of the new financial year was up 8.1% in total and 5.6% on a like-for-like basis.

Next year will benefit from the eight new acquisitions made during the year and the large investments made in our estate elsewhere. These will provide a helpful tailwind as we compete against the strong comparatives we have set ourselves. In addition, already this year we have opened, after longer than expected planning delays, the Bull & Gate (Kentish Town) and have acquired and opened the Canonbury, an iconic Islington pub. Three other pubs currently under development are due to open in the late summer/autumn: the Nine Elms Tavern, the Trafalgar (Tooting) and the Guard House (Woolwich). We have sold the Seven Stars (Brighton) and exchanged contracts for the sale of the New Town (Sutton) for a total of £3.4 million. Furthermore, we can look forward to the Rugby World Cup this autumn, an event we would expect to draw a lot of people into Young's pubs in south west London and beyond.

As a result we are confident that, through our long-standing strategy, the talent, commitment and passion of my colleagues, our strong financial profile and our progressive dividend policy, we will continue to deliver superior returns to our shareholders.

Stephen Goodyear

Chief Executive

20 May 2015

GROUP INCOME STATEMENT

For the 52 weeks ended 30 March 2015

		2015	2014
	Notes	£m	£m
Revenue		227.0	210.8
Operating costs before exceptional items		(189.6)	(177.6)
Operating profit before exceptional items		37.4	33.2
Operating exceptional items	3	4.1	(0.6)
Operating profit		41.5	32.6
Finance costs		(5.2)	(5.9)
Finance revenue		-	0.3
Other finance charges		(0.2)	(0.4)
Profit before tax		36.1	26.6
Taxation	5	(9.4)	(4.5)
Profit for the period attributable to shareholders of the parent company		26.7	22.1

		Pence	Pence
Earnings per 12.5p ordinary share
Basic	7	55.17	45.78
Diluted	7	55.09	45.72

All of the results above are from continuing operations.

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the 52 weeks ended 30 March 2015

					2015		2014
				Notes	£m		£m
Profit for the period					26.7		22.1
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Unrealised gain on revaluation of property				8	19.6		21.9
Remeasurement of retirement benefit schemes				9	(9.1)		3.0
Tax on above components of other comprehensive income					(0.7)		0.9
Items that will be reclassified subsequently to profit or loss:
Fair value movement of interest rate swaps					(3.6)		5.6
Tax on fair value movement of interest rate swaps					0.7		(1.6)
					6.9		29.8
Total comprehensive income for shareholders of the parent company					33.6		51.9

All of the results above are from continuing operations.

GROUP BALANCE SHEET

At 30 March 2015

				2015	2014
			Notes	£m	£m
Non-current assets
Goodwill				20.9	20.4
Property and equipment			8	617.3	559.2
Investment in subsidiaries				-	-
Deferred tax assets				7.7	4.8
				645.9	584.4
Current assets
Inventories				2.7	2.6
Trade and other receivables				5.5	5.9
Cash				0.2	2.4
				8.4	10.9
Total assets				654.3	595.3
Current liabilities
Borrowings				(5.0)	-
Trade and other payables				(29.2)	(29.2)
Income tax payable				(4.0)	(3.2)
				(38.2)	(32.4)
Non-current liabilities
Borrowings				(124.2)	(114.4)
Derivative financial instruments				(12.0)	(8.4)
Deferred tax liabilities				(59.8)	(54.4)
Retirement benefit schemes			9	(13.1)	(6.0)
				(209.1)	(183.2)
Total liabilities				(247.3)	(215.6)
Net assets				407.0	379.7
Capital and reserves
Share capital				6.1	6.0
Share premium				2.7	1.7
Capital redemption reserve				1.8	1.8
Hedging reserve				(9.6)	(6.7)
Revaluation reserve				209.6	193.1
Retained earnings				196.4	183.8
Total equity				407.0	379.7

GROUP STATEMENT OF CASH FLOW

For the 52 weeks ended 30 March 2015

		2015	2014
	Notes	£m	£m
Operating activities
Net cash generated from operations	10	50.6	47.3
Tax paid		(7.1)	(6.1)
Net cash flow from operating activities		43.5	41.2
Investing activities
Sale of property and equipment		3.3	-
Sale of discontinued operations		-	5.0
Purchases of property and equipment	8	(32.4)	(22.8)
Business combinations, net of cash acquired	8	(18.5)	(10.8)
Net cash used in investing activities		(47.6)	(28.6)
Financing activities
Interest paid		(4.9)	(5.5)
Equity dividends paid	6	(7.7)	(7.3)
Increase/(decrease) in borrowings		9.5	(3.5)
Increase in short term borrowings		5.0	-
Net cash flow used in financing activities		1.9	(16.3)
Decrease in cash		(2.2)	(3.7)
Cash at the beginning of the period		2.4	6.1
Cash at the end of the period		0.2	2.4

Analysis of net debt
	£m	£m
Cash	0.2	2.4
Loan capital and finance leases	(129.2)	(114.4)
Net debt	(129.0)	(112.0)

GROUP STATEMENT OF CHANGES IN EQUITY

At 30 March 2015

		Share capital(1) £m	Capital Redemption Reserve £m	Hedging Reserve £m	Revaluation Reserve £m	Retained Earnings £m	Total Equity £m
	Notes
At 1 April 2013		7.3	1.8	(10.7)	168.9	167.2	334.5
Total comprehensive income
Profit for the period		-	-	-	-	22.1	22.1
Other comprehensive income
Unrealised gain on revaluation of property	8	-	-	-	21.9	-	21.9
Remeasurement of retirement benefit schemes	9	-	-	-	-	3.0	3.0
Fair value movement of interest rate swaps		-	-	5.6	-	-	5.6
Tax on above components of other comprehensive income		-	-	(1.6)	2.3	(1.4)	(0.7)
		-	-	4.0	24.2	1.6	29.8
Total comprehensive income		-	-	4.0	24.2	23.7	51.9
Share capital issued		0.4	-	-	-	-	0.4
Dividends paid on equity shares		-	-	-	-	(7.3)	(7.3)
Share based payments		-	-	-	-	0.1	0.1
Tax on share based payments		-	-	-	-	0.1	0.1
		0.4	-	-	-	(7.1)	(6.7)
At 31 March 2014		7.7	1.8	(6.7)	193.1	183.8	379.7
Total comprehensive income
Profit for the period		-	-	-	-	26.7	26.7
Other comprehensive income
Unrealised gain on revaluation of property	8	-	-	-	19.6	-	19.6
Remeasurement of retirement benefit schemes	9	-	-	-	-	(9.1)	(9.1)
Fair value movement of interest rate swaps		-	-	(3.6)	-	-	(3.6)
Tax on above components of other comprehensive income		-	-	0.7	(2.5)	1.8	-
		-	-	(2.9)	17.1	(7.3)	6.9
Total comprehensive income		-	-	(2.9)	17.1	19.4	33.6
Share capital issued		1.1	-	-	-	-	1.1
Dividends paid on equity shares		-	-	-	-	(7.7)	(7.7)
Revaluation reserve realised on disposal of properties		-	-	-	(0.6)	0.6	-
Share based payments		-	-	-	-	0.2	0.2
Tax on share based payments		-	-	-	-	0.1	0.1
		1.1	-	-	(0.6)	(6.8)	(6.3)
At 30 March 2015		8.8	1.8	(9.6)	209.6	196.4	407.0

(1) Total share capital comprises the share capital issued and fully paid of £6.1 million (2014: £6.0 million) and the share premium account of £2.7 million (2014: £1.7 million). Share capital issued in the period comprises the nominal value of £0.1 million (2014: £0.0 million) and share premium of £1.0 million (2014: £0.4 million).

NOTES TO THE FINANCIAL STATEMENTS

1.  Accounts

This preliminary announcement was approved by the board on 20 May 2015.  The financial statements in it are not the group's statutory financial statements.  The statutory financial statements for the period ended 31 March 2014 have been delivered to the Registrar of Companies.  The auditor has reported on those financial statements (and on the statutory financial statements for the period ended 30 March 2015, which are expected to be delivered to the Registrar of Companies shortly).  Both audit reports were unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the reports and did not contain any statement under s.498(2) or (3) of the Companies Act 2006.

The current period and prior period relate to the 52 weeks ended 30 March 2015 and 31 March 2014 respectively.  The financial statements are presented in pounds sterling and all values are rounded to the nearest hundred thousand (£0.1m) except where otherwise indicated.

This preliminary announcement has been agreed with the company's auditor for release.

The audited financial information in this statement has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union.  The accounting policies used have been consistently applied and are described in full in the statutory financial statements for the period ended 30 March 2015, which are expected to be mailed to shareholders on or before 10 June 2015.  The financial statements will also be available on the group's website, www.youngs.co.uk.

2.  Segmental reporting

The group is organised into the reporting segments referred to below. These segments are based on the different resources and risks involved in the running of the group. The executive board of the group internally reviews each reporting segment's operating profit or loss before exceptional items for the purpose of deciding on the allocation of resources and assessing performance.

The group has three operating segments: Young's managed houses, Geronimo managed houses and the Ram Pub Company. Both Young's and Geronimo managed houses operate pubs. Revenue is derived from sales of drink, food and the provision of accommodation. Due to common economic characteristics, similar product offerings and customers, the Young's managed houses and Geronimo managed houses operating segments have been reported below as a single reportable segment, managed houses. The Ram Pub Company consists of pubs owned or leased by the company and leased or sub leased to third parties. Revenue is derived from rents payable by, and sales of drink made to, tenants. Unallocated relates to head office costs.

Total segment revenue is derived externally with no intersegment revenues between the segments in either period. The group's revenue is derived entirely from the UK.

Income statement	Managed	Ram Pub	Segments	Unallocated	Total
	houses	Company	total
2015	£m	£m	£m	£m	£m
Total segment revenue	214.2	12.5	226.7	0.3	227.0
Operating profit/(loss) before exceptional items	50.1	4.3	54.4	(17.0)	37.4
Operating exceptional items	3.4	0.7	4.1	-	4.1
Operating profit/(loss)	53.5	5.0	58.5	(17.0)	41.5
2014
Total segment revenue	199.0	11.4	210.4	0.4	210.8
Operating profit/(loss) before exceptional items	45.0	3.8	48.8	(15.6)	33.2
Operating exceptional items	-	(0.3)	(0.3)	(0.3)	(0.6)
Operating profit/(loss)	45.0	3.5	48.5	(15.9)	32.6
The following is a reconciliation of the operating profit to the profit before tax:
				2015	2014
				£m	£m
Operating profit				41.5	32.6
Finance costs				(5.2)	(5.9)
Finance revenue				-	0.3
Other finance charges				(0.2)	(0.4)
Profit before tax				36.1	26.6

3.  Exceptional items

	2015	2014
	£m	£m
Amounts included in operating profit:
Upward movement on the revaluation of properties (Note 8)	6.4	3.8
Downward movement on the revaluation of properties (Note 8)	(2.2)	(3.5)
Acquisition costs	(1.0)	(0.6)
Capital gains tax on ESOP Trust allocated shares	(0.2)	(0.3)
Net profit on sale of properties	0.9	-
Pension settlement gain (Note 9)	0.2	-
	4.1	(0.6)
Exceptional tax:
Tax attributable to above adjustments	(1.9)	(0.5)
Change in corporation tax rate	-	2.5
	(1.9)	2.0
Total exceptional items after tax	2.2	1.4

The movement on the revaluation of properties relates to the revaluation exercise that was completed during the period. The revaluation was conducted at an individual pub level and identified a net upward movement of £4.2 million (2014: £0.3 million net upward) which has been taken to the income statement. The upward movement for the period ended 30 March 2015 was split between land and buildings (£4.5 million upward) and fixtures and fittings (£0.3 million downward). In the previous period the upward movement was all within land and buildings. See note 2 for segmental information.

The acquisition costs relate to the freehold purchases of the Bull & Gate (Kentish Town), Fox & Anchor (Smithfield Market) and the White Bear (Kennington); and the corporate acquisitions of 580 Limited and The Bell at Stow Limited. They include legal and professional fees and stamp duty.

The prior period acquisition costs related to the purchase of the Clapham North, New Inn (Ealing), Royal Oak (Bethnal Green), Weyside (Guildford) and the King's Head (Islington).

The profit on sale of properties relates to the difference between the cash, less selling costs, received from the sale or lease termination of the Elephant (City of London), Tin Goose (Heathrow Airport), Tamworth Arms (Croydon) and the Bunch of Grapes (Bradford upon Avon) and the carrying value of the assets on the date of sale. There were no sales of properties in the prior period.

The pension settlement gain relates to members who have left the scheme.

The capital gains tax on ESOP Trust allocated shares relates to shares held within the Ram Brewery Trust II on behalf of the closed profit sharing scheme. A liability is recognised at each balance sheet date for the potential capital gains tax that could arise on the disposal of shares to the members of the scheme on retirement.

4.  Other financial measures

The table below shows how adjusted group EBITDA, operating profit and profit before tax has been arrived at. These alternative performance measures have been provided as the board believes that they give useful additional measures of the group's underlying performance. Details of the exceptional items can be seen in note 3. All the results below are from continuing operations.

		2015			2014
		Exceptional			Exceptional
	Unadjusted	items	Adjusted	Unadjusted	items	Adjusted
	£m	£m	£m	£m	£m	£m
EBITDA	52.1	0.1	52.2	44.8	0.9	45.7
Depreciation and net movement on the revaluation of properties	(10.6)	(4.2)	(14.8)	(12.2)	(0.3)	(12.5)
Operating profit	41.5	(4.1)	37.4	32.6	0.6	33.2
Net finance costs	(5.2)	-	(5.2)	(5.6)	-	(5.6)
Other finance charges	(0.2)	-	(0.2)	(0.4)	-	(0.4)
Profit before tax	36.1	(4.1)	32.0	26.6	0.6	27.2

5.  Taxation

	2015	2014
Tax charged in the group income statement	£m	£m
Current tax
Current tax expense	7.6	6.9
Adjustment in respect of current tax of prior periods	0.3	(0.1)
	7.9	6.8
Deferred tax
Origination and reversal of temporary differences	1.6	0.2
Change in corporation tax rate	-	(2.6)
Adjustment in respect of deferred tax of prior periods	(0.1)	0.1
	1.5	(2.3)
Tax expense	9.4	4.5
Deferred tax in the group income statement
Property revaluation and disposals	1.8	(0.8)
Fair value gains on acquisition of subsidiaries	-	(1.0)
Capital allowances	(0.3)	0.1
Retirement benefit schemes	0.2	(0.6)
Other tax provisions	-	0.1
Share based payments	(0.2)	(0.1)
Tax expense/(credit)	1.5	(2.3)
Deferred tax in the group statement of comprehensive income
Property revaluation and disposals	2.5	3.6
Retirement benefit schemes	(1.8)	0.7
Interest rate swaps	(0.7)	1.3
Change in corporation tax rate	-	(4.9)
Tax expense	-	0.7

The change in the UK corporation tax rate from 21% to 20%, which was effective from 1 April 2015, was substantively enacted in the prior year.  Accordingly, the deferred tax balances have been measured at 20%.

6. Dividends on equity shares

	2015	2014	2015	2014
	Pence	Pence	£m	£m
Final dividend (previous period)	8.07	7.61	3.9	3.7
Interim dividend (current period)	7.90	7.45	3.8	3.6
	15.97	15.06	7.7	7.3

In addition, the board is proposing a final dividend in respect of the period ended 30 March 2015 of 8.56p per share at a cost of £4.1 million. If approved, it is expected to be paid on 9 July 2015 to shareholders who are on the register of members at the close of business on 12 June 2015.

7. Earnings per ordinary share

(a) Earnings	2015	2014
	£m	£m
Profit attributable to equity shareholders of the parent	26.7	22.1
Operating exceptional items	(4.1)	0.6
Tax attributable to above adjustments	1.9	0.5
Change in corporation tax rate	-	(2.5)
Adjusted earnings after tax	24.5	20.7
	Number	Number
Basic weighted average number of ordinary shares in issue	48,397,275	48,275,784
Dilutive potential ordinary shares from outstanding employee share options	69,303	60,685
Diluted weighted average number of shares	48,466,578	48,336,469
(b) Basic earnings per share
	Pence	Pence
Basic	55.17	45.78
Effect of exceptional items and other adjustments	(4.55)	(2.90)
Adjusted basic	50.62	42.88
(c) Diluted earnings per share
	Pence	Pence
Diluted	55.09	45.72
Effect of exceptional items and other adjustments	(4.54)	(2.90)
Adjusted diluted	50.55	42.82

The basic earnings per share figure is calculated by dividing the profit attributable to equity shareholders of the parent for the period 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 69,303 (2014: 60,685) dilutive potential shares under the SAYE scheme.

Adjusted earnings per share are presented to eliminate the effect of the exceptional items and the tax attributable to those items on basic and diluted earnings per share.

8. Property and equipment

		Fixtures,
	Land &	fittings &
	buildings	equipment	Total
	£m	£m	£m
Cost or valuation
At 1 April 2013	523.5	85.9	609.4
Additions	7.5	15.3	22.8
Business combinations	9.7	1.1	10.8
Fully depreciated assets	-	(8.9)	(8.9)
Revaluation(1)
-effect of upward movement in property valuation	27.8	-	27.8
-effect of downward movement in property valuation	(5.9)	-	(5.9)
At 31 March 2014	562.6	93.4	656.0
Additions	10.7	21.7	32.4
Business combinations	17.0	1.5	18.5
Disposals	(2.0)	(0.1)	(2.1)
Fully depreciated assets	(0.8)	(9.7)	(10.5)
Revaluation(1)
-effect of upward movement in property valuation	24.9	-	24.9
-effect of downward movement in property valuation	(5.3)	-	(5.3)
At 30 March 2015	607.1	106.8	713.9
Depreciation and impairment
At 1 April 2013	45.0	48.5	93.5
Depreciation charge	2.1	10.4	12.5
Fully depreciated assets	-	(8.9)	(8.9)
Revaluation(1)
-effect of downward movement in property valuation	3.5	-	3.5
-effect of upward movement in property valuation	(3.8)	-	(3.8)
At 31 March 2014	46.8	50.0	96.8
Depreciation charge	2.3	12.5	14.8
Disposals	(0.2)	(0.1)	(0.3)
Fully depreciated assets	(0.8)	(9.7)	(10.5)
Revaluation(1)
-effect of downward movement in property valuation	1.9	0.3	2.2
-effect of upward movement in property valuation	(6.4)	-	(6.4)
At 30 March 2015	43.6	53.0	96.6
Net book value
At 1 April 2013	478.5	37.4	515.9
At 31 March 2014	515.8	43.4	559.2
At 30 March 2015	563.5	53.8	617.3

⁽¹⁾ The group's net book value uplift due to revaluation of £23.8 million (2014: £22.2 million) comprises an upward movement of £19.6 million (2014: £21.9 million) shown in the statements of comprehensive income plus a reversal of previous downward revaluations of £4.2 million (2014: £0.3 million) in the income statement.

9. Retirement benefit schemes

Movement in scheme deficits in the period

		2015			2014
		Health			Health
	Pension	care		Pension	care
	scheme	scheme	Total	scheme	scheme		Total
	£m	£m	£m	£m	£m		£m
Changes in the present value of the schemes are as follows:
Opening deficit	(1.5)	(4.5)	(6.0)	(4.2)	(4.6)		(8.8)
Current service cost	(0.6)	-	(0.6)	(0.7)	-		(0.7)
Settlement gain	0.2	-	0.2	-	-		-
Contributions	2.4	0.2	2.6	0.7	0.2		0.9
Other finance charges	-	(0.2)	(0.2)	(0.2)	(0.2)		(0.4)
Reassessment through other comprehensive income	(9.1)	-	(9.1)	2.9	0.1		3.0
Closing deficit	(8.6)	(4.5)	(13.1)	(1.5)	(4.5)		(6.0)

10. Net cash generated fromoperations

	2015	2014
	£m	£m
Profit before tax on continuing operations	36.1	26.6
Net finance cost	5.2	5.6
Other finance charges	0.2	0.4
Operating profit on continuing operations	41.5	32.6
Depreciation	14.8	12.5
Movement on revaluation of properties	(4.2)	(0.3)
Net profit on sales of property and associated goodwill	(0.9)	-
Pension scheme settlement gain	(0.2)	-
Difference between pension service cost and cash contributions paid	(2.0)	(0.2)
Share based payments	0.2	0.1
Provision for capital gains tax on ESOP Trust allocated shares	0.2	0.3
Movements in working capital
- Inventories	(0.1)	(0.1)
- Receivables	0.4	(1.7)
- Payables	0.9	4.1
Net cash generated from operations	50.6	47.3

11. Post balance sheet events

There were no post balance sheet events apart from the acquisition of the Canonbury (Islington) and the disposal of the Seven Stars (Brighton). We have also exchanged contracts for the sale of the New Town (Sutton).

 

END

 

 

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