Final Results

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 weeks1	%
Unaudited results	£m	£m	change
Revenue	388.8	368.9	+5.4
Adjusted operating profit2	57.3	52.4	+9.4
Adjusted profit before tax2	49.4	45.2	+9.3
Adjusted EBITDA2	92.2	85.5	+7.8
Adjusted operating margin2	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 share2	62.97p	64.29p	-2.1
Basic earnings per share	18.89p	50.78p	-62.8
Dividend per share3 (Interim and recommended final)	21.76p	20.52p	+6.0
Net assets per share4	£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 equipment1
		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 borrowings2		(41.1)	(30.0)	(20.0)	(30.0)
Transaction costs incurred on borrowings		(2.0)	-	(2.0)	-
Proceeds from borrowings3		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
		capital1	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 issued2		0.5	-	-	-	-	-	0.5
Other reserves2		-	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
		capital1	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 period2		-	-	-	-	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 period2		-	-	-	-	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 issued3		0.5	-	-	-	-	0.5
Other reserves3		-	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.

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 Group2	(6.2)	-
Impairment loss3	(5.5)	-
Purchase costs4	(2.2)	(1.1)
Net loss on disposal of properties5	(1.3)	-
Tenant compensation6	(0.6)	(0.6)
Restructuring costs7	(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 rate8	-	(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 statement1	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) Revaluation1    - 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) Revaluation1    - 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) Revaluation1    - 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) Revaluation1    - 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.

 

END