Interim Results
Young & Co's Brewery PLC
11 November 2004
11 November 2004
INTERIM RESULTS
FOR THE 26 WEEKS TO 25 September 2004
Highlights
• Turnover increased to £60.9 million up 5.5%
• Operating profit up to £7.0 million* up 6.8%
• Adjusted profit before tax of £5.1 million* up 5.3%
• Profit before tax of £4.8 million down 4.3%
• Adjusted earnings per share of 29.48p* up 11.8%
• Dividend per share increased to 11.40p up 5.1%
*Excludes non-operating exceptional items and site review costs
• Managed pub division has continued to deliver, with turnover up by
6.0% and profits by 4.4%;
• The tenanted division saw an increase in turnover of 0.3%, despite two
high turnover pubs transferring from tenanted to managed;
• Total beer production in the first half was up 18.8% at 85,173
barrels;
• Young's cask ale volumes increased by 5.8% in the period compared with
a market decline;
• Total free trade has achieved another strong half year performance
with growth in every business channel delivering a total sales growth of 8.5%;
• Profit before tax held back by lower property profits and costs
relating to the site review.
John Young, Chairman, commented:
'The improvement in underlying performance is particularly pleasing against the
background of additional regulatory burdens, wage costs and the strong trading
comparatives driven by last summer's excellent weather.
'Looking to the rest of the year, we hope to build on the underlying progress
made in the first half. Christmas is an important trading period for Young's and
it remains to be seen whether the tough retail environment affects the festive
mood in London and particularly the City.
'We are, however, confident that our underlying performance continues to move in
the right direction and that the actions we are taking to develop the business
will deliver long term value for shareholders.'
For further information, please contact:
Young & Co.'s Brewery, P.L.C. 020 8875 7000
Stephen Goodyear, Chief Executive
Peter Whitehead, Finance Director
Hogarth Partnership 020 7357 9477
James Longfield / John Olsen
Chairman's statement
Turnover for the first half was up 5.5% at £60.9M and adjusted profit before tax
was up 5.3% to £5.1M. Adjusted earnings per share were 29.48p, an increase of
11.8%. This increase reflects both this year's improved performance and last
year's share buy-backs. Profit before tax after exceptional items and property
profits was £4.8M, a decrease of 4.3%. These exceptional items include £0.4M of
costs incurred in the period relating to the ongoing review of the Ram Brewery
site.
The improvement in underlying performance is particularly pleasing against the
background of the strong trading comparatives driven by last summer's excellent
weather and the additional regulatory and wage costs incurred in 2004. The Board
is therefore confident in declaring an increased interim dividend, up 5.1% to
11.40p. This will be paid on 10 December 2004 to shareholders on the register on
26 November 2004.
Managed pubs and inns
Trading over the summer months has been positive, particularly so given that we
did not enjoy a repeat of last year's long hot summer. Our managed division has
continued to deliver, with turnover up by 6.0% and profits by 4.4%. Like for
like turnover was up 1.5% and like for like profits up by 4.6%.
Last year's developments at the Crown, Chertsey and City Gate, Exeter led to a
strong performance from inns, which improved profits by 20.9%. Occupancy
improved in the first half with a marginal increase from 64.4% to 64.9%. However
competition remains intense and REVPAR was down 1.9% at £38.15 in the period.
The retail business has, once more, had to overcome extra legislative costs, in
particular the minimum wage, which is now 7.8% higher than it was over the
corresponding period last year. Other issues affecting us are licensing, the
Disability Act and smoking. Clean air has been an issue for a number of years
and Young's has invested heavily in new ventilation systems and providing
non-smoking areas in many of our pubs. We have signed up to the Industry Charter
in support of a progressive move towards all managed houses providing designated
non-smoking areas by 2005.
During the period we invested £3.8M in our managed estate. In addition to this
expenditure we also spent £1.1M on property repairs through the revenue account,
up £0.3M on last year. Two new pubs were acquired; the White Hart in Sherfield
on Loddon and the Lord Nelson in Barnet and two major developments were
completed at the Grove in Exmouth and the County Arms in Wandsworth. The Duke's
Head in Putney was transferred from tenancy to management at the beginning of
the year.
Four pubs were sold, the King's Head in Merton for office development and three
leasehold City wine bars, which were no longer making adequate returns, Bill
Bentley's Minories, Columbia Bar and Willy's Wine Bar. These and other property
related disposals resulted in a small non-operating exceptional profit in the
period.
The total number of pubs was 110 and the number of hotel rooms was 372.
Tenancies
The tenanted division saw an increase in turnover of 0.3%, despite two high
turnover pubs transferring from tenanted to managed.
On a like for like basis, sales increased 0.2% and profits were 3.3% ahead. Two
major developments took place during the period; at the Railway Telegraph,
Thornton Heath and the Old House at Home, Dorking.
Two tenanted pubs were acquired during the period for a total investment of
£1.4M, the Unicorn in Somerton and the Bell near Ilminster. The total number of
tenancies in the estate is now 97.
Brewing and brands
Total production in the first half was up 18.8% at 85,173 barrels. Young's cask
ale sales increased by 5.8% in the period compared with a market decline.
Contract brewing accounted for 37.1% of the total. Lower margin contract brewing
makes an important contribution towards the fixed costs of the brewery while we
seek to continue growing our own beer production.
We also continued to enjoy success in beer competitions, winning a silver award
for bottle conditioned Special London Ale in CAMRA's Great British Beer Festival
in August.
Total free trade has achieved another strong half year performance with growth
in every business channel delivering a total sales growth of 8.5%. Our drive
brand, Young's Bitter, is at the forefront of this sales growth.
Multiple pub group sales were up 1.5% and wholesale produced another robust
performance, up 31.1%, giving us wider geographical representation. Independent
free trade has also grown by 9.1%.
Building on this success, we launched our new advertising campaign 'This is a
Ram's World' in September. Focused on Greater London roadside poster sites and
at underground and railway stations, this is our biggest campaign to date. Plans
are in place to develop the campaign further in 2005 as we look to increase
listings and volumes outside our tied estate.
Take home grew by 4.1% in what is a highly competitive market. In April we
introduced Young's Bitter in a 660ml bottle format, a first for Young's, which
has had a strong reception and has already achieved listings in Tesco, Sainsbury
and Asda. The mainstay of our take home portfolio remains Waggledance, which is
already a top 10 take home brand.
Exports have continued their progress, with volumes up 8.2%. The appeal of our
beers in Scandinavian markets was recognised with a strong sales performance and
silver medals for Pilsner Lager and Double Chocolate Stout in the Stockholm Beer
and Whisky Festival.
Own branded sales outside the tied estate, always a testament to the quality of
our integrated model, now represent 65.5% of our total own brand production.
Cockburn & Campbell
Turnover in Cockburn & Campbell, our wines and spirits business was up 5.6%,
despite lower sales to our tied estate, as a result of last year's strong
summer.
Sales in the free trade were up 26.1%, of which wine showed volume growth of
26.9% through expanded distribution with regional wholesalers and brewers and
increased listings in the London on-trade.
Investment and finance
Our financial strategy is to provide asset backed sustainable dividend growth.
Our interim dividend this year has increased by 5.1% to 11.40p, more than double
the rate of inflation. Dividend growth can only be achieved by improving
earnings and management action has delivered an increase in adjusted earnings
per share of 46.2% over the last 5 years.
This year we have invested a total of £6.6M in our business, of which £5.8M is
on our pubs. Our strong cash flow has permitted this level of investment with
only a small increase in net debt in the period. Net debt stands at £56.8M,
giving gearing of 39.5% and interest cover of 3.6 times.
Our capital expenditure policy is focused towards enhancing value for
shareholders over the long term, either through acquisition of freehold pubs,
improving our existing estate or repurchasing shares depending on opportunities.
Our treasury policy supports this, with the majority of our borrowings long
dated and 70% on fixed interest terms.
Review of Ram Brewery site
We have continued to progress the review of the Ram Brewery site and incurred
fees and costs associated with this project of £0.4M in the period. The bulk of
this activity relates to drawing up reports and development plans with a view to
determining the potential development value of the site.
The Board has consistently made it clear to shareholders that all activity
connected with this review is designed to obtain the necessary facts and figures
needed to assess whether the redevelopment of the Ram Brewery site is in the
interests of the business and shareholders. Shareholders should note that there
is no certainty about what the outcome of this review will be and any decision
to proceed with redevelopment would be subject to shareholder approval.
Outlook
Since the period end, we have acquired two freehold managed pubs, the Penny
Black in Leatherhead and the Bell in Fetcham and one freehold tenanted pub, the
Two Doves in Bromley.
Looking to the rest of the year, we hope to build on the underlying progress
made in the first half. Christmas is an important trading period for Young's and
it remains to be seen whether the tough retail environment affects the festive
mood in London and particularly the City.
We are, however, confident that our underlying performance continues to move in
the right direction and that the actions we are taking to develop the business
will deliver long term value for shareholders.
YOUNG & CO.'S BREWERY, P.L.C.
Unaudited profit and loss account
For the 26 weeks ended 25 September 2004
26 weeks 26 weeks 52 weeks
to Sept 04 to Sept 03 to Mar 04
£000 £000 £000
----------------------------- -------- -------- --------
Turnover 60,858 57,663 111,982
Net operating costs before site review
costs (53,824) (51,079) (99,343)
----------------------------- -------- -------- --------
Operating profit before site review
costs 7,034 6,584 12,639
Site review costs (412) - -
----------------------------- -------- -------- --------
Operating profit after site review costs 6,622 6,584 12,639
Non-operating exceptional items 118 178 (129)
----------------------------- -------- -------- --------
Profit on ordinary activities before
interest 6,740 6,762 12,510
Net interest charge (1,953) (1,759) (3,626)
----------------------------- -------- -------- --------
Profit on ordinary activities before tax 4,787 5,003 8,884
Tax on profit on ordinary activities (1,702) (1,616) (3,014)
----------------------------- -------- -------- --------
Profit attributable to ordinary
shareholders 3,085 3,387 5,870
Ordinary dividends on equity shares (1,316) (1,325) (2,660)
----------------------------- -------- -------- --------
Retained profit for the financial period 1,769 2,062 3,210
----------------------------- -------- -------- --------
Pence Pence Pence
----------------------------- -------- -------- --------
Basic earnings per 50p ordinary share 26.92 27.83 48.95
Effect of site review costs 3.59 - -
Effect of non-operating exceptional items (1.03) (1.46) 1.16
----------------------------- -------- -------- --------
Adjusted earnings per 50p ordinary share 29.48 26.37 50.11
----------------------------- -------- -------- --------
Diluted basic earnings per 50p ordinary share 26.38 27.55 48.44
----------------------------- -------- -------- --------
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 25 September 2004
At Sept 04 At Sept 03 At Mar 04
£000 £000 £000
----------------------------- -------- -------- --------
Fixed assets 212,470 208,971 211,581
----------------------------- -------- -------- --------
Current assets and liabilities 4,048 4,444 4,221
Stocks 8,649 7,768 7,977
Debtors 718 - 1,005
Cash
----------------------------- -------- -------- --------
13,415 12,212 13,203
----------------------------- -------- -------- --------
Creditors: amounts falling due within
one year (17,611) (17,939) (18,213)
----------------------------- -------- -------- --------
Net current liabilities (4,196) (5,727) (5,010)
----------------------------- -------- -------- --------
Total assets less current liabilities 208,274 203,244 206,571
Creditors: amounts falling due after
more than one year (56,684) (49,113) (57,011)
Provisions for liabilities and charges (7,745) (7,475) (7,484)
----------------------------- -------- -------- --------
Net assets 143,845 146,656 142,076
Capital and reserves 6,028 6,378 6,028
Called-up share capital 1,330 1,352 1,341
Share premium account 87,734 88,094 88,094
Revaluation reserve 1,808 1,458 1,808
Capital redemption reserve 46,945 49,374 44,805
Profit and loss account
----------------------------- -------- -------- --------
Equity shareholders' funds 143,845 146,656 142,076
----------------------------- -------- -------- --------
YOUNG & CO.'S BREWERY, P.L.C.
Unaudited cash flow statement
For the 26 weeks ended 25 September 2004
26 weeks 26 weeks 52 weeks
to Sept 04 to Sept 03 to Mar 04
£000 £000 £000
----------------------------- -------- -------- --------
Net cash inflow from operating
activities 9,048 8,889 20,178
----------------------------- -------- -------- --------
Interest received 4 9 11
Interest paid (1,996) (1,640) (3,561)
----------------------------- -------- -------- --------
Returns on investments and servicing of
finance (1,992) (1,631) (3,550)
----------------------------- -------- -------- --------
Corporation tax paid (1,551) (1,173) (2,453)
----------------------------- -------- -------- --------
Purchases of tangible fixed assets (6,573) (5,922) (12,539)
Sales of tangible fixed assets 1,840 1,049 1,164
----------------------------- -------- -------- --------
Capital expenditure (4,733) (4,873) (11,375)
----------------------------- -------- -------- --------
Equity dividends paid (1,355) (1,361) (2,660)
----------------------------- -------- -------- --------
Cash (outflow)/inflow before financing (583) (149) 140
----------------------------- -------- -------- --------
(Decrease)/increase in loan capital (316) 1,718 9,632
Repurchase of share capital - - (5,728)
(Decrease) in lease finance (7) (7) (14)
----------------------------- -------- -------- --------
Financing (323) 1,711 3,890
----------------------------- -------- -------- --------
(Decrease)/increase in cash in period (906) 1,562 4,030
----------------------------- -------- -------- --------
YOUNG & CO.'S BREWERY, P.L.C.
Reconciliation of net cash flow to movement in net debt
For the 26 weeks ended 25 September 2004
26 weeks 26 weeks 52 weeks
to Sept 04 to Sept 03 to Mar 04
£000 £000 £000
----------------------------- --------- -------- --------
(Decrease)/increase in cash in period (906) 1,562 4,030
Decrease/(increase) in debt in period 323 (1,711) (9,618)
------------------------------ --------- -------- --------
(Increase) in net debt in period (583) (149) (5,588)
Opening net debt (56,176) (50,588) (50,588)
------------------------------ --------- -------- --------
Closing net debt (56,759) (50,737) (56,176)
------------------------------ --------- -------- --------
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 27 March
2004. The accounts present information about the company as an individual
undertaking. The auditors have neither audited nor reviewed the information
contained in this report.
The interim report does not amount to full accounts within the meaning of S.240
of the Companies Act 1985. Full accounts for the 52 weeks ended 27 March 2004,
including an unqualified auditors' report, have been delivered to the Registrar
of Companies.
(2) Site review costs
Site review costs comprise costs incurred to date relating to the possible
redevelopment of the company's sites in Wandsworth.
(3) Taxation
Corporation tax has been provided on the profits for the 26 weeks to 25
September 2004 at a rate of 30% (2003: 30%; for the 52 weeks to 27 March 2004:
30%).
(4) 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 11,461,154 (2003: 12,171,717; for the 52 weeks to
27 March 2004: 11,991,159).
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 11,693,822 (2003: 12,293,532; for
the 52 weeks to 27 March 2004: 12,116,939).
An adjusted earnings per share figure is presented to eliminate the effect of
the non-operating exceptional items and site review costs on basic earnings per
share.
(5) Ordinary dividends on equity shares
26 weeks 26 weeks 52 weeks
to Sept 04 to Sept 03 to Mar 04
Pence Pence Pence
----------------------------- -------- -------- --------
Interim dividend 11.40 10.85 10.85
Final dividend - - 11.65
----------------------------- -------- -------- --------
11.40 10.85 22.50
----------------------------- -------- -------- --------
The trustee of the Ram Brewery Trust has waived its rights in respect of the
dividends on the shares held in the trust on behalf of the directors' share
option scheme.
(6) Net cash inflow from operating activities
26 weeks 26 weeks 52 weeks
to Sept 04 to Sept 03 to Mar 04
£000 £000 £000
----------------------------- -------- -------- --------
Operating profit after site review costs 6,622 6,584 12,639
Depreciation 3,962 3,842 7,547
----------------------------- -------- -------- --------
Movements in working capital 173 (237) (14)
Stocks (672) (830) (1,039)
Debtors (1,037) (470) 1,045
Creditors
----------------------------- -------- -------- --------
Net cash inflow from operating
activities 9,048 8,889 20,178
----------------------------- -------- -------- --------
This information is provided by RNS
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