Interim Results
Young & Co's Brewery PLC
13 November 2003
13 November 2003
INTERIM RESULTS
FOR THE 26 WEEKS TO 27 SEPTEMBER 2003
Highlights
• Turnover increased to £57.7 million up 4.0%
• Operating profit up to £6.6 million up 4.2%
• Profit before tax up to £5.0 million up 7.1%
• Adjusted profit before tax of £4.8 million* up 3.3%
• Basic earnings per share of 27.83p up 11.9%
• Adjusted earnings per share of 26.37p* up 6.1%
• Dividend per share increased to 10.85p up 5.3%
* Adjusted to exclude non-operating exceptional items
• Interim results show benefits of the summer weather, especially in our
garden and riverside pubs;
• Managed pubs turnover was up 7.2% and profits were up 6.7%, excluding
the 12 pubs transferred to tenancy in the period. These transfers helped
tenanted turnover increase by 22.9% and profit by 11.4%;
• Own beer volumes were up 4.9%, with our core business of cask ale sales up
3.9% against a market decline of 8%. Young's Bitter was the star
performer, with volumes up 7.3%.
• Total beer volumes were up 1.6%, with a strong performance from factored
beers, predominantly lager, offset by a reduction in contract beer volumes;
• Free trade continues strong growth in a competitive market place, with
volumes up 9.9%, with the biggest increases coming from the wholesale
channel and free independents. Young's Bitter is now available at all
central London railway stations, which we hope will provide a good antidote
to commuter stress;
John Young, Chairman, commented:
'The summer weather provided a welcome change after several difficult years and
the benefit of the sunshine shows through clearly in these results, particularly
in our retail estate. England's progress in the Rugby World Cup has continued
this positive trading environment.
'It is also pleasing to note some signs of improving economic conditions in our
London heartland, although these are tempered by the possibility of further
interest rate rises, which could hinder any recovery, and the fact that our
industry continues to bear the burden of many government imposed increases in
operating costs.
'With all these mixed signals, it is difficult to predict the outcome for the
year as a whole and much will depend on trade over Christmas. Nevertheless, we
are continuing to improve the performance of the business and are confident that
we can continue to deliver progress.'
For further information, please contact:
Stephen Goodyear, Chief Executive Young & Co.'s Brewery, P.L.C. 020 8875 7000
Peter Whitehead, Finance Director Young & Co.'s Brewery, P.L.C. 020 8875 7000
James Longfield / Chelsea Hayes Hogarth Partnership 020 7357 9477
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Chairman's statement
Profit before tax was up 7.1% at £5.0M, and by 3.3% once adjusted for
non-operating exceptional profits. This resulted in basic earnings per share
growing by 11.9% and adjusted earnings per share by 6.1%; faster than the
underlying profit, reflecting the effect of share repurchases last year.
Turnover increased by 4%, benefiting from the summer weather. Operating profit
increased by 4.2%, which would have been higher were it not for further
increases in employee, tax and regulatory costs.
The Board believes that dividend increases are an integral part of delivering
shareholder value and is confident in declaring an interim dividend of 10.85p up
5.3%. This will be paid on 12 December 2003 to shareholders on the register on
21 November 2003.
Managed pubs and inns
In what was one of the best summers for many years, the retail estate performed
well, especially in our garden and riverside pubs which account for a large part
of the estate. There are a number of city pubs that did not benefit from this
long period of hot weather. Excluding the 12 pubs transferred to tenancy and
disposals, managed house turnover and profits were up 7.2% and 6.7%. Like for
like houses, which additionally exclude those where significant capital has been
invested, were up 3.3% in terms of both profits and sales.
During the period we invested £4.4 million in our managed estate. Three major
developments were completed, the Duke of Devonshire in Balham, the Lock Keeper
in Keynsham and the City Gate in Exeter, which had 15 rooms added. The total
number of rooms in our estate is now 368 with a further 19 under development at
the Crown, Chertsey.
Two prime retail sites at St Paul's and in Putney are currently under
development and will be opened in the second half, but opportunities to acquire
quality sites at economic prices remain scarce. The total number of pubs under
management including the two under development is 111.
Inn profits were ahead 9.4%, led by food and drink sales rather than
accommodation, which continues to suffer from lower tourism rates. Room rates
were reduced further to support occupancy which fell by 0.8% to 64.4%.
Consequently REVPAR in our inns was down to £38.89, a fall of 1.9%m. However we
are confident that the investment we are making in our inns is for the long term
benefit of the company.
Tenancies
Tenanted turnover was up by 22.9% on last year and profit was up by 11.4%.
Excluding the additional pubs transferred from managed houses, turnover was up a
more modest 4.9% and profits down 0.6% due to large repair expenditure in the
half. We invested £0.3 million in our tenanted pubs during the summer and sold
the Pickwick at Eton Wick. The total number of tenancies in the estate is now
95.
Brewing and brands
Own beer volumes were up 4.9%, with our core business of cask ale sales up 3.9%
in a market down 8%, largely driven by Young's Bitter which was up 7.3%.
Factored beers, predominantly lagers, benefited from the hot weather, with
volumes up 7.6%.
Total beer volumes were up only 1.6% as contract beer volumes have fallen.
Contract beer now comprises 27% of production, providing a valuable contribution
to overheads, but the focus remains on building volume in Young's own brands.
Our main contracts are with Interbrew and Scottish Courage.
Advertising during the period focused on the key fixtures in the domestic and
international cricket calendar with Young's Bitter featured in the sports
sections of many broadsheet newspapers. More recently, Young's Rugby World Cup
supporters' packs have been used by over 400 pubs (both tied and free trade) to
promote Young's beers and the pub as the place to watch the action from
Australia.
Free trade and exports
Free trade has shown strong growth in a competitive market place with volumes up
9.9%. This has been led by strong increases in the wholesale channel where
volumes have increased by 69.4%. Multiple pub groups are up 2.6% with continued
growth within the key pub groups providing vital exposure for our cask beers.
The free independent trade channel continues to perform well with volumes up
9.4%. Tied in to our focus on cricket, Young's Bitter is available at Lord's
cricket ground. It is also now available at all central London railway
stations, which we hope will help ease commuter stress. Take home volumes stood
up well in what is a very competitive market.
Exports have enjoyed considerable increases in our main market, the United
States and recent growth has continued in Italy, Finland and Sweden. Exports at
the end of the period accounted for 7.3% of our own beer production.
Free trade and exports further increased their share of total own beer volumes,
accounting for 63.6% of the total compared with 60.8% at the full year.
Cockburn & Campbell
Turnover was up by 6% for Cockburn & Campbell, our wines and spirits business,
with wine sales to our own pubs particularly strong. The hot summer has caused a
move away from red wine to white, sparkling and in particular rose, which saw
sales increase 50%. Outside the tied estate, business increased substantially
around the UK, particularly in the north of England, helped by the successful
launch of Museum, our new Spanish range. Due to the strong euro net profit for
the division was down by 5%.
Investment and finance
Capital expenditure for the six months was £5.9 million, of which £4.7 million
was spent on the retail estate. Net debt at the end of September was £50.7
million and gearing was 34.6%. The increase in profit provides interest cover
of 3.7 times. This provides plenty of scope for further expansion or the
repurchase of shares as appropriate and depending on the opportunities that
present themselves.
Management
In July 2003, Stephen Goodyear assumed the role of Chief Executive from Patrick
Read, as previously reported. Additionally in August we welcomed Patrick Dardis
to the Board as Retail Director. Patrick joined Young's in November 2002 and
brings a wealth of pub retail experience from over twenty years in the trade,
latterly as director of retail operations at Wolverhampton and Dudley Breweries.
Outlook
The uplift in trade has clearly been helped by the good summer but there are
also emerging signs that give cause for improved confidence, particularly in
relation to the London economy. This confidence is tempered by the expectation
of further interest rate rises, which could hinder any recovery.
Our industry continues to bear the burden of many government policies, with
increases in national insurance, licensing reforms and proposed changes to stamp
duty, in particular on leases, which are effectively a new stealth tax on
growth, all of which are certain to increase our operating costs.
On the plus side, England's progress in the Rugby World Cup is most welcome and
has had a positive impact on our retail trade. We wish the team continued
success in the closing stages of the competition.
With all these mixed signals, it is difficult to predict the outcome for the
year as a whole and much will depend on the Christmas trade. However, we are
continuing to improve the performance of the business and are confident that we
can continue to deliver growth in the future.
YOUNG & CO.'S BREWERY, P.L.C.
Unaudited profit and loss account
For the 26 weeks ended 27 September 2003
26 weeks 26 weeks 52 weeks
to Sept 03 to Sept 02 to Mar 03
£000 £000 £000
Turnover 57,663 55,448 107,828
Net operating costs (51,079) (49,128) (95,875)
Operating profit 6,584 6,320 11,953
Non-operating exceptional items 178 - 757
Profit on ordinary activities before interest 6,762 6,320 12,710
Net interest charge (1,759) (1,649) (3,343)
Profit on ordinary activities before tax 5,003 4,671 9,367
Tax on profit on ordinary activities (1,616) (1,565) (2,768)
Profit on ordinary activities after tax 3,387 3,106 6,599
Preference dividends on non-equity shares - (56) (113)
Profit attributable to ordinary shareholders 3,387 3,050 6,486
Ordinary dividends on equity shares (1,325) (1,288) (2,643)
Retained profit for the financial period 2,062 1,762 3,843
Pence Pence Pence
Basic earnings per 50p ordinary share 27.83 24.86 52.98
Effect of non-operating exceptional items (1.46) - (6.59)
Adjusted earnings per 50p ordinary share 26.37 24.86 46.39
Diluted basic earnings per 50p ordinary share 27.55 24.66 52.63
The results above are all in respect of continuing operations of the company.
There are no recognised gains and losses other than those disclosed above.
YOUNG & CO.'S BREWERY, P.L.C.
Unaudited balance sheet
At 27 September 2003
At Sept 03 At Sept 02 At Mar 03
£000 £000 £000
Fixed assets 208,971 206,865 207,739
Current assets and liabilities
Stocks 4,444 4,631 4,207
Debtors 7,768 7,592 6,938
12,212 12,223 11,145
Creditors: amounts falling due within one year (17,939) (19,423) (19,652)
Net current liabilities (5,727) (7,200) (8,507)
Total assets less current liabilities 203,244 199,665 199,232
Creditors: amounts falling due after more than one year (49,113) (46,914) (47,409)
Provisions for liabilities and charges (7,475) (7,066) (7,229)
146,656 145,685 144,594
Capital and reserves
Called-up share capital: equity 6,378 6,475 6,378
non-equity - 1,361 -
Share premium account 1,352 1,375 1,363
Capital redemption reserve 1,458 - 1,458
Revaluation reserve 88,094 88,646 87,911
Profit & loss account 49,374 47,828 47,484
Equity shareholders' funds
146,656 144,324 144,594
Non-equity shareholders' funds
- 1,361 -
146,656 145,685 144,594
YOUNG & CO.'S BREWERY, P.L.C.
Unaudited cash flow statement
For the 26 weeks ended 27 September 2003
26 weeks 26 weeks 52 weeks
to Sept 03 to Sept 02 to Mar 03
£000 £000 £000
Net cash inflow from operating activities 8,889 9,034 19,623
Interest received 9 5 13
Interest paid (1,640) (1,694) (3,524)
Non-equity dividends paid - (56) (124)
Returns on investments and servicing of finance (1,631) (1,745) (3,635)
Corporation tax paid (1,173) (728) (2,358)
Purchases of tangible fixed assets (5,922) (10,166) (16,486)
Sales of tangible fixed assets 1,049 134 2,883
Capital expenditure (4,873) (10,032) (13,603)
Equity dividends paid (1,361) (1,313) (2,595)
Cash outflow before financing (149) (4,784) (2,568)
Increase in loan capital 1,718 1,444 1,889
Repurchase of share capital - - (3,172)
(Decrease)/increase in lease finance (7) (6) 61
Financing 1,711 1,438 (1,222)
Increase/(decrease) in cash in period 1,562 (3,346) (3,790)
YOUNG & CO.'S BREWERY, P.L.C.
Reconciliation of net cash flow to movement in net debt
For the 26 weeks ended 27 September 2003
26 weeks 26 weeks 52 weeks
to Sept 03 to Sept 02 to Mar 03
£000 £000 £000
Increase/(decrease) in cash in period 1,562 (3,346) (3,790)
Increase in debt in period (1,711) (1,438) (1,950)
Increase in net debt in period (149) (4,784) (5,740)
Opening net debt (50,588) (44,848) (44,848)
Closing net debt (50,737) (49,632) (50,588)
Notes to the accounts
(1) Accounts
The interim accounts have been prepared on the basis of the accounting policies
set out in the company's statutory accounts for the 52 weeks ended 29 March
2003. The accounts present information about the company as an individual
undertaking.
The interim report is unaudited and does not amount to full accounts within the
meaning of S.240 of the Companies Act 1985. Full accounts for the 52 weeks
ended 29 March 2003, including an unqualified auditors' report, have been
delivered to the Registrar of Companies.
(2) Taxation
Corporation tax has been provided on the profits for the 26 weeks to 27
September 2003 at a rate of 30% (2002: 30%; for the 52 weeks to 29 March 2003:
30%).
(3) Earnings per share
Earnings per share are calculated by dividing the profit attributable to
ordinary shareholders by the weighted average number of ordinary shares in
issue.
The weighted average number of ordinary shares in issue, which exclude the
investment in own shares, is 12,171,717 (2002: 12,268,839; for the 52 weeks to
29 March 2003: 12,241,918).
Diluted earnings per ordinary share are calculated by adjusting basic earnings
per ordinary share to reflect the notional exercise of the weighted average
number of ordinary share options outstanding during the period. The resulting
weighted average number of ordinary shares is 12,293,532 (2002: 12,367,894; for
the 52 weeks to 29 March 2003: 12,322,681).
An adjusted earnings per share figure is presented to eliminate the effect of
the non-operating exceptional items on basic earnings per share.
(4) Ordinary dividends on equity shares
26 weeks 26 weeks 52 weeks
to Sept 03 to Sept 02 to Mar 03
Pence Pence Pence
Interim dividend 10.85 10.30 10.30
Final dividend - - 11.10
10.85 10.30 21.40
The trustees of the Ram Brewery Trust have waived their rights to dividends on
shares held within the Ram Brewery Trust General Fund on behalf of the
directors' share option schemes.
(5) Net cash inflow from operating activities
26 weeks 26 weeks 52 weeks
to Sept 03 to Sept 02 to Mar 03
£000 £000 £000
Operating profit 6,584 6,320 11,953
Depreciation 3,842 3,701 7,382
Movements in working capital
Stocks (237) (127) 297
Debtors (830) (1,145) (491)
Creditors (470) 285 482
Net cash inflow from operating activities 8,889 9,034 19,623
This information is provided by RNS
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