Young & Co's Brew. - Final Results
25/05/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230525:nRSY5762Aa&default-theme=true
RNS Number : 5762A Young & Co's Brewery PLC 25 May 2023
Young & Co.'s Brewery, P.L.C.
Preliminary results for the 53 weeks ended 3 APRIL 2023
A strong performance and well positioned for future growth
Financial Highlights
2023 2022
Change
53 weeks 52 weeks
£m £m %
Revenue 368.9 309.0 +19.4
Adjusted operating profit((1)) 52.4 51.4 +1.9
Adjusted profit before tax((1)) 45.2 41.8 +8.1
Adjusted EBITDA((1)) 85.5 82.5 +3.6
Net debt 165.2 173.8 -4.9
Net debt to adjusted EBITDA 1.9x 2.1x +0.2x
Operating profit 43.4 51.7 -16.1
Profit before tax 36.2 42.1 -14.0
Net assets 724.2 699.7 +3.5
Net cash generated from operations 83.8 107.0 -21.7
Adjusted basic earnings per share((1)) 64.29p 56.26p +14.3
Basic earnings per share 50.78p 58.83p -13.7
Dividend per share 20.52p 18.81p +9.1
(interim and recommended final)
Net assets per share((2)) £12.38 £11.97 +3.4
All of the results above are from continuing operations.
(1) Reference to an "adjusted" item means that item has been adjusted to
exclude a non-underlying cost of £9.0 million (2022: non-underlying credit of
£0.3 million). The main adjusting item relates to a £7.0 million impairment
on property valuations. The total value of the estate increased by £8.2
million, with an increase of £15.2 million taken through revaluation reserves
and an impairment of £7.0 million through the income statement (see note 3
for adjusting items and note 9 for earnings per share).
(2) Net assets per share are the group's net assets divided by the shares
in issue at the period end.
PERFORMANCE HIGHLIGHTS
· Total revenue for the period was £368.9 million, up 19.4%
against the prior year. Managed pub like-for-like revenue up by 12.9% on a
52-week basis.
· Despite facing considerable cost headwinds and prior year covid
one-offs, which included the reduced VAT rate (£12.3 million) and business
rates relief (£6.0 million), adjusted profit before tax was up 8.1% to £45.2
million, and adjusted operating profit up 1.9% to £52.4 million.
· Our strong financial position, driven by healthy operating free
cashflow has enabled us to continue to invest significantly, with total
investment of £58.4 million, £24.0 million on acquisition investment,
including six new pubs and £34.4 million across pubs in our existing estate.
· Net debt (including lease liabilities) has reduced by £8.6
million to £165.2 million and, with our adjusted EBITDA of £85.5 million,
net debt to EBITDA is conservative at 1.9 times. Including cash balances this
leaves us with £110.7 million of headroom on our committed bank facilities
for future flexibility and ongoing investment.
· We are pleased to recommend a final dividend of 10.26 pence,
resulting in a total dividend for the year of 20.52 pence, up by 9.1%.
· Sales since the period end performed well, managed pub
like-for-like sales for the last seven weeks up by 4.8%.
Simon Dodd, Chief Executive of Young's, commented:
"I am honoured and privileged to lead such a great company with its wonderful
heritage. Young's is a business that places investment in its people and pubs
at the heart of its decision making. These results are testament to the hard
work of our teams over the past few years."
"The positive trading momentum of the first half continued throughout the
period, with unwavering customer demand for our outstanding pubs and the
unrivalled Young's experience. The negative impact of the rail strikes did not
stand in the way of us achieving numerous record weeks, as sales were boosted
by glorious summer sunshine and the first ever winter FIFA World Cup."
"We were pleased to see a further increase in people visiting our City and
Central London pubs alongside positive Christmas trading. Our performance last
year was even more impressive given the cost headwinds facing the industry and
we are encouraged that some of these pressures are starting to ease."
"It's been a good start to the new financial year with sunny weather over
Easter and the early May bank holiday. There is also huge excitement for the
Rugby World Cup later this year. We are confident our premium, well-invested
predominantly freehold pub estate, alongside our healthy balance sheet, will
continue to deliver superior returns for our shareholders."
For further information, please contact:
Young & Co.'s Brewery, P.L.C. 020 8875 7000
Simon Dodd, Chief Executive Officer
Mike Owen, Chief Financial Officer
MHP Communications 020 3128 8742 / 8147
Tim Rowntree/Robert Collett-Creedy
PRELIMINARY RESULTS FOR THE 53 WEEKS ENDED 3 APRIL 2023
chief EXECUTIVE'S STATEMENT
I am very pleased to announce such a positive set of results. We have built on
the momentum of the resumption of normal trading and the strong start we made
in the first half of this financial year. The past few years have been tough
for our industry as a whole and these results are a testament to the quality
and dedication of our people, and the value added by recent and consistent
investment. It demonstrates that our strategy of running premium, individual
and differentiated pubs continues to deliver.
Despite the ongoing challenges and prior year comparatives supported by
reduced VAT rates, total revenue was up by 19.4% to £368.9 million (2022:
£309.0 million) for the 53-week period, underpinned by our managed pub
like-for-like performance, up by 12.9% on a 52-week basis, alongside the
continued investment in our existing estate and strategically selected
acquisitions.
We have not been immune to the increasing cost of food, consumables, and the
rise in the National Living Wage, however, our foresight to fix utility rates
until March 2024 has minimised the full impact of higher energy prices.
Despite these headwinds, our adjusted operating profit was £52.4 million
(2022: £51.4 million), with adjusted profit before tax up by 8.1% to £45.2
million (2022: £41.8 million). Total profit before tax was £36.2 million
(2022: £42.1 million) down largely due to a small movement in our property
revaluation. Our adjusted operating margin remained resilient at 14.2%, down
as expected from the prior period margin of 16.6%, which was heavily bolstered
by government covid support through business rate reductions, lower VAT rates
and grants. Our business remains highly profitable and over the coming months,
as inflation is predicted to soften, we are confident that margins will
improve.
Our strong financial position, driven by healthy operating free cashflow, has
enabled us to continue to invest significantly, with total investment of
£58.4 million in the period (2022: £73.7 million), whilst still reducing our
net debt position. At the period end, we remain conservatively financed, with
net debt (including lease liabilities) of £165.2 million, being 1.9 times our
adjusted EBITDA.
It has been another active year on the acquisition front as we added six new
pubs: the Bedford Arms (Chenies), Carpenter's Arms (Tonbridge), Half Moon
(Windlesham), Merlin's Cave (Chalfont St Giles), Wild Duck (near Cirencester)
and the award-winning Griffin Inn (Fletching) in East Sussex. Across our
existing estate, we invested £34.4 million with notable projects at the Bull
(Streatham), Hare & Hounds (East Sheen), Crown (Bow) and the Elgin
(Notting Hill). We continue to explore opportunities to maximise our trading
areas through underutilised space, with two beautiful examples at Hort's
Townhouse, where we added 19 boutique bedrooms in central Bristol, and the new
roof terrace at the Marquess of Anglesey (Covent Garden), which is due to open
next month.
We continue to have one eye on the future, ensuring we have a steady pipeline
of new openings. In the second half of the year, we transferred two of the
remaining tenancies back into our managed estate, Bishop's Vaults
(Bishopsgate) and the Clapham North (Clapham). The latter was completed just
days before the period end, closing immediately for
an investment and will reopen later this summer. Elsewhere, exciting projects
are due to get underway at the Constitution (Camden), Wild Duck purchased
earlier this year, and the old bank site in Farnham, Surrey, acquired back in
2018.
OUR GREAT PUBS OPERATED BY THE BEST PEOPLE
Our success as a business is dependent on having great pubs with the best
people to operate them. I continue to be impressed by the quality of the teams
we have in place. 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. Across our pubs, 73% of general manager
appointments have been internal promotions. In September, I was pleased to
welcome Mark Loughborough to the board following his promotion to Retail
Director, having been a valued member of the Young's team for 11 years in a
number of senior roles. I look forward to seeing many more of our valued team
throughout the business progressing their careers in the months and years to
come.
OUR ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) STRATEGY
As a group, we are passionate about building a sustainable company, committed
to driving a positive Environmental, Social, and Governance agenda. During the
year, taking advice from our partners at Savills Earth, we have grouped our
properties based on age, condition, servicing and heritage status, which will
guide our net zero implementation plans. In May, we launched the 'Save While
You Sleep' initiative in partnership with the Zero Carbon Forum, to guide and
encourage energy saving opportunities through operational best practice. The
Ram Agency, our own internal recruitment platform which caters for the desire
to work flexibly, continues to grow and our digital career pathway, which was
launched in May, has increased employee engagement and enabled management to
identify key talent for succession planning. The board and leadership team
fully support our evolving sustainability strategy and we will continue to
find ways to reduce our carbon footprint and improve the wellbeing of both our
teams and our customers.
CURRENT TRADING AND OUTLOOK
Since the period end, trading has been positive with managed like-for-like
sales up by 4.8% despite the unseasonably cooler and wetter start to spring,
as we were able to capitalise on the well-timed Easter and bank holiday
sunshine. While the additional bank holiday for the Coronation gave us minimal
upside, it was fantastic to see our customers and pubs celebrating with local
events, highlighting the important role our pubs play in their communities.
Last month we completed on the freehold purchase of the Stag (Belsize Park),
located close to Hampstead Heath in North London, adding further to our
presence in the capital.
We find ourselves living in challenging times, including headwinds from high
inflation and the resumption of train strikes, but there is plenty for us to
be excited about in the period ahead. This autumn, the Rugby World Cup
provides a fantastic opportunity given our rugby heritage and we are hopeful
that further rail strike disruption will be limited. The investments and
acquisitions made in the last two years, alongside our future pipeline,
provide tremendous growth potential. The business is completely aligned to
take Young's forward, and we are confident in our ability to deliver superior
returns for our shareholders.
Business review
This year has been a historic one, with many notable events that have shaped
our nation. Over two additional bank holidays, customers gathered in our pubs
to raise a glass and celebrate the Queen's Jubilee. A few months later, they
joined together to pay their respects on the day of the Queen's funeral. Our
pubs play a pivotal role in their communities, providing a unique and
welcoming environment, helping to bring people together in all kinds of
circumstances.
Total managed house revenue was up 19.6% for the 53 weeks to £368.0 million
(2022: £307.7 million), and up 12.9% on a like-for-like basis over 52 weeks
(VAT adjusted like-for-like sales up 17.6% on a 52-week basis). Trading
initially peaked during the summer months as our exceptional gardens and
outdoor spaces helped us capitalise on the prolonged periods of hot weather
when temperatures reached record levels. Later in the year, the build up to
the festive period was supported by the first winter FIFA World Cup. This
provided additional opportunities for external areas to boost revenues, as
customers gathered to support the home nations. The negative effect from rail
strikes in the Christmas period did not stand in our way of achieving record
festive bookings, which were also significantly ahead of the same period in
2019. Unfortunately, the industrial action wasn't only focused on December,
with the estimated £3.7 million impact on revenue felt throughout the past
year.
Overall, the return to normal trading has been extremely positive for our
business. Central London and City areas continue to bounce back as workers and
tourists return to the capital. While working patterns have changed, with
fewer people commuting into the office full-time, the condensed working week
has resulted in increased sales for our pubs in the capital across Tuesday to
Thursday.
We continue to embrace some of the behavioural changes that were accelerated
by the pandemic. Technology is an important part of this, as it helps to drive
bookings and planned events. The Young's On Tap app still plays a key role in
our pub gardens, and we see this as an important tool to help manage payroll
costs and drive top-line growth. To constantly improve the quality of our
database and connect better with our customers, we need to increase the number
of channels through which we communicate with them. This will allow us to
tailor and target our communications more effectively, using both traditional
and social media channels.
CELEBRATING THE PUB WITH A NEW EXCITING RANGE OF DRINKS
The return to a normal pub environment has also given us the opportunity to
drive our core business, with drink sales ahead of last period by 21.5%, and
up by 17.0% on a like-for-like basis over 52 weeks. In April we launched our
new draught beer and cider range bringing fresh and exciting products to our
bars through several strategic partnerships. We had huge success evolving the
range with Pravha, our new entry level lager, as well as adding Beavertown
Young Sun, Brooklyn Pilsner and most recently Asahi Super Dry, to ensure our
bars remain relevant and offer choice to our customers while maintaining our
drive for premiumisation. Meanwhile, popularity and success among our
established brands continues to grow, with Guinness volume up 30.9%, now very
much seen as a drink for all seasons, having risen into the list of our top
three best sellers.
Our 'Summer Infusion' campaign generated great interest and delivered volume
growth across our spirit and alcohol-free categories. Premium spirits were
paired with high-quality mixers and elevated garnishes, giving our customers
an alternative to a regular spirit serve. Ahead of Christmas, to capitalise on
the continued growing market trend of cocktails, we relaunched our 'Cocktail
Collective', an innovative new menu including the very popular 'Gingerbread
Martini', winner of our cocktail competition.
We continue to review our wine lists regularly, introducing new and
interesting wines each year, offering greater premium options for those
customers who wish to trade up. In April, we introduced Nyetimber, widely
regarded as England's finest sparkling wine, replacing our grand marque
Champagne, helping drive 9.0% growth in the premium sparkling category.
Elsewhere, we extended our range of rosé wine giving customers increased
choice and the premium option capitalising on its 'gin-like' renaissance, with
sales up this year by more than 20%.
In recent years, there has been a growing trend of people abstaining from
alcohol, not just in January. In fact, one in three visits to the pub now
involves no alcohol. This trend is driven by several factors, including people
wanting to moderate their alcohol intake. To help meet this trend we have been
launching new and exciting drinks in our Lo/No category. Last year we launched
our first alcohol-free draught lager, Estrella Free Damm. We also moved most
of our mixers to low-sugar options and created several alcohol-free cocktails.
While the category still represents a very small proportion of our sales, we
are committed to meeting the needs of our customers who are looking for
healthier and more mindful drinking options.
FOOD-LED EVENTS ENHANCING THE PUB EXPERIENCE
Food sales continue to be an important part of our business, and as a mix of
sales have increased to 33% compared to pre-pandemic (2019: 30%), as the pub
environment evolves into an all-round destination. Encouragingly, total food
sales grew by 9.1% (53 weeks) against the tough prior year comparatives due to
the lower VAT rate, and were up by 1.7% on a like-for-like 52-week basis (VAT
adjusted like-for-like sales up 12.2% on 52-week basis).
One of the key successes to maintaining the high standards of our food offer
has been ensuring that our classics remain classic. To help maintain that
consistency we launched the 'Young's Digital Recipe Book', a tool to showcase
premium quality and inspire our teams, highlighting the best-in-class produce
available. Updated every quarter, it contains more than 150 recipes aimed at
helping with the challenges posed by rising food inflation and seasonality to
achieve stronger margins. The quarterly chef forums, held in our new training
and development kitchen located at Copper House (Wandsworth), allow us to
engage with all head chefs from across the business and provides an important
opportunity to communicate our premium food vision.
At Young's we also take great pride in our food, offering distinctive dishes
and unique food-led experiences that capture the customers' imagination.
During the year we hosted a collection of 'Food for Thought' dinners,
showcasing the best of underutilised British produce such as unfamiliar
species and foraged ingredients. The Oyster Shed (Bank) was recognised with
its first AA rosette for culinary excellence, and its head chef, Natalie
Coleman, picked up the award for 'Pub chef of the year' at the Great British
Pub Awards.
STRONG ROOMS PERFORMANCE IN A BUOYANT MARKET
Total accommodation revenue was up 78.0% for the 53-week period, in part
reflecting the slower opening up of the hotel market in the prior year as well
as the growth in our number of bedrooms through recent investment and
acquisitions. On a like-for-like basis over 52 weeks, accommodation revenue
was up by 46.1%, despite the prior period benefitting from reduced VAT rates.
While our like-for-like occupancy increased to 72.0% (2022: 60.1%), the growth
in average room rates to £105.95 (2022: £98.65) demonstrated a demand for
our premium room offer and the positives of returning business travel,
particularly in our London pubs with rooms. Resulting like-for-like RevPAR was
£76.29 compared with £59.25 last year.
MANAGING OUR COSTS
Like so many businesses, the high inflationary environment has negatively
impacted operating margins this period, though we have worked hard to mitigate
this. While our drink costs are largely fixed, based on contractual
agreements, food prices fluctuate from month to month and our executive chefs
work tirelessly with their pubs to combat the sharpest rises in food costs.
The central consolidation of food suppliers we undertook earlier this year,
into a one-stop shop model, has helped alleviate cost increases and reduce our
carbon footprint.
Recruitment remains a challenge for the whole industry, compounded by
significant wage inflation driven by some of the highest increases to the
National Living Wage since its introduction. Investment in our people has
never been so important. Through training and development and access to the
Young's career pathway, we are able to provide our teams with the necessary
skills to help them reach their career goals. The Ram Agency, now with more
than 350 active employees, plays an important role, firstly by giving team
members added flexibility to choose shifts that suit their requirements, but
also helping us manage our cost base, reducing the reliance on agency staff.
The in-house agency brings together people with the necessary skills across a
range of roles, from general managers to chefs, front and back of house team
members, trained in the Young's way of working.
The energy crisis has affected almost all businesses and although we have
fixed our utility rates until March 2024, the big rises in energy costs meant
that we still spent an additional £5.5 million in the year, an increase of
82% on last year. The cost headwinds we faced this period have been compounded
by government support in the prior year, where in addition to the lower VAT
rate (£12.3 million), we benefitted from business rates relief, which
resulted in an additional cost of £6.0 million this period. Despite these
headwinds, total managed house adjusted operating profit was up 1.7% to £73.3
million (2022: £72.1 million).
INVESTMENT
During the year, we spent £34.4 million on our existing estate to ensure that
our pubs remain premium, individual and well-invested. The focus on restoring
our pubs has seen us complete investments in a total of 34 pubs, with standout
schemes at the Crown (Bow), Coborn (Mile End), Crown (Lee), Bull (Streatham),
Brook Green and Hammersmith Ram (both in Hammersmith), Halfway House
(Earlsfield) and the East Hill (Wandsworth).
The final quarter of the year was a key period of investment, we were onsite
with six major projects, where exciting schemes looked to capitalise on
previously underutilised space within pubs to provide fantastic growth
potential for the upcoming years. In Bristol, having been closed for most of
the year, the upper parts of Hort's Townhouse were transformed to create a
stunning 19 bedroom 'pub with rooms'. At the Hare & Hounds (East Sheen),
extensive work to the large garden has created more than 200 covers in the
various huts and pergolas. Finally, in Central London, we are currently onsite
at the Marquess of Anglesey (Covent Garden), where the full repositioning will
include a stunning new roof terrace, allowing customers the opportunity to
escape the densely populated streets below. This project is due to complete
and reopen next month in time for peak summer trade.
On the acquisition front, we added six new pubs in the period. All our new
additions are individual and unique businesses located in affluent commuter
towns that present Young's with the opportunity to gain a foothold in a
previously unrepresented geography. In total we added 40 bedrooms, with 18
bedrooms at the characterful Bedford Arms (Chenies), 9 bedrooms at the
Carpenter's Arms (Tonbridge) and 13 bedrooms at the Griffin Inn (Fletching) in
East Sussex. After acquiring both the Merlin's Cave (Chalfont St Giles) and
the Half Moon (Windlesham) we went onsite to complete investment schemes to
take these pubs to the next level. Their locations in picturesque village
settings make these businesses perfect Young's pubs and they will both play an
important part in our future. Our acquisition of the Wild Duck (near
Cirencester), adds further to the future growth pipeline. In recent years,
this impressive site has been closed as part of a monumental back-to-brick
renovation, and following our extensive investment, will reopen as another
premium Young's pub with rooms in the heart of the Cotswolds.
During the period we transferred two of the remaining tenanted pubs to our
managed estate. In the heart of the City, we invested and opened Bishop's
Vaults (Bishopsgate) with a premium wine bar located in the vaults. In March,
we took back the Clapham North, which immediately closed and will reopen later
this summer after a major investment.
Following the disposal of the Bridge Hotel (Greenford) in March 2023, we
finished the period with a total of 227 pubs (2022: 222), including 39 pubs
providing a total of 793 bedrooms.
OTHER KEY AREAS
PROPERTY
Our balance sheet strength is underpinned by our predominantly freehold estate
in many highly desirable locations. 187 of our 227 pubs are freehold or are
long leaseholds with peppercorn rents. Our total estate, including freehold
and fixtures and fittings on leaseholds, is now valued at £842.5 million
(2022: £808.0 million). The carrying value of property leases, including long
leaseholds, is separately recognised as right-of-use assets in note 11. We
have continued to add value through major developments to improve our existing
pubs and strategic acquisitions, primarily focussing on freehold assets.
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 International Financial Reporting 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 our return to profitable trade, the impact of the last few years has
been considerable for individual pubs as they continue to build back to
pre-pandemic levels. Pub property market sentiment has remained positive,
reflected by the level of activity and property prices; as a result, we have
seen a net upward revaluation movement of £8.2 million. This is comprised of
an upward movement of £15.2 million (2022: £28.7 million upward movement)
reflected in the revaluation reserve and a downward movement of £7.0 million
(2022: £0.8 million upward movement) recognised as an adjusting item in the
income statement.
TREASURY AND GOING CONCERN
At 3 April 2023, the group had cash in bank of £10.7 million and committed
borrowing facilities of £205.0 million having elected not to renew the £30.0
million facility with NatWest in March 2023 given the current headroom. The
£105.0 million of drawn facilities are all fully interest rate hedged, and in
addition to these we maintain a £10.0 million overdraft with HSBC.
We are highly cash generative and despite another year of significant
investment, our net debt including lease liabilities has fallen to £165.2
million (2022: £173.8 million), with net debt to adjusted EBITDA ratio
conservative at 1.9 times (2022: 2.1 times).
Whilst our pubs continue to trade extremely well, it remains prudent to
recognise a small degree of uncertainty ahead due to any potential slowdown in
consumer spending influenced by the 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
several scenarios for the going concern period, ending 1 July 2024. The base
case model assumes we continue to trade as now whilst reflecting the
inflationary environment that currently exists, with trade continuing to build
in line with Young's growth strategy. The general reduction in trade scenario
looks at a decline of 20% in sales and 25% 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
8% increase in the food cost base and 10% increase in general pub operating
costs for the period with no retail price increases. Utility pricing has been
held at the base case rates given the group has forward bought utilities to
March 2024. We have 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.
The impact of climate change on going concern has been considered and
determined that there is no impact on the business during the going concern
period. Aligned with the group's developing ESG strategy this will continue to
feature in future assessments, as the group determines the potential wider
impact on the asset base, capital expenditure and cost of compliance.
While the group expects to have available facilities of £205.0 million during
the going concern period, the plan to renegotiate the £20.0 million term
loan, due May 2024, falls within this period. However, given that those
negotiations have yet to take place, for going concern purposes, the group has
assumed that available facilities will be £185.0 million at the end of the
going concern period. Further details are set out in note 1 of the attached
financial statements.
Based on these forecasts and sensitivities, coupled with the current debt
levels and the revised debt structure, the board is confident that the group
is able to manage its business risks and to continue in operational existence.
Accordingly, the board continues to adopt the going concern basis in preparing
the consolidated financial statements. Further details are set out in note 1
of the attached 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 £8.5
million to £3.7 million, driven by a decrease in the return on the scheme's
assets and an increase in the discount rate applied. 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 £9.0 million in the period (2022: credit of £0.3
million), and as previously mentioned, the majority relates to the net
downward movement in property revaluation for the period of £7.0 million.
Purchase costs relating to the six acquisitions were £1.1 million and there
was an additional £0.6 million of tenant compensation for Bishop's Vaults
(Bishopsgate) and an unlicensed property (Ealing). The remaining £0.3 million
relates to restructuring costs following a reorganisation at Copper House, our
corporate head office.
TAX
A tax charge of £6.5 million (2022: £17.5 million charge) was recognised for
the year. The effective tax rate was 18.0% (2022: 33.7%) compared to the
statutory rate of 19.0% with the difference primarily driven by the
remeasurement of deferred tax assets as a result of the increase in the future
substantively enacted tax rates from 19.0% to 25.0%. Further detail can be
found in note 7.
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 was at 64.29
pence (2022: 56.26 pence). On an unadjusted basis, the earnings per share was
50.78 pence (2022: 58.83 pence). As a result, we are pleased to recommend a
final dividend of 10.26 pence and, if approved by shareholders, this will give
a total dividend for the year of 20.52 pence (2022: 18.81 pence).
Simon Dodd
Chief Executive
24 May 2023
GROUP INCOME STATEMENT
For the 53 weeks ended 3 April 2023
2023 2022
53 weeks 52 weeks
Notes £m £m
Continuing operations
Revenue 5 368.9 309.0
Other income 6 - 5.0
Operating costs before adjusting items (316.5) (262.6)
Adjusted operating profit 52.4 51.4
Adjusting items 3 (9.0) 0.3
Operating profit 43.4 51.7
Finance income 0.1 -
Finance costs (7.6) (9.5)
Finance income/(charge) for pension obligations 12 0.3 (0.1)
Profit before tax from continuing operations 36.2 42.1
Income tax expense 7 (6.5) (17.2)
Profit for the period from continuing operations 29.7 24.9
Profit for the period from discontinued operations - 9.5
Profit for the period attributable to shareholders of the parent company 29.7 34.4
Pence Pence
Earnings per 12.5p ordinary share
Basic 9 50.78 58.83
Diluted 9 50.74 58.80
Earnings per 12.5p ordinary share for continuing operations
Basic 9 50.78 42.58
Diluted 9 50.74 42.56
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the 53 weeks ended 3 April 2023
2023 2022
53 weeks 52 weeks
Notes £m £m
Profit for the period 29.7 34.4
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Unrealised gain on revaluation of property 10 15.2 28.7
Remeasurement of retirement benefit schemes 12 (10.1) 17.2
Tax on above components of other comprehensive income 7 (1.2) (25.3)
Items that will be reclassified subsequently to profit or loss:
Fair value movement of interest rate swaps 3.1 5.2
Tax on fair value movement of interest rate swaps (0.8) (1.1)
6.2 24.7
Total comprehensive income attributable to shareholders of the parent company
35.9 59.1
Total comprehensive income attributable to shareholders of the parent company
from continuing operations
35.9 49.6
Total comprehensive income attributable to shareholders of the parent company
from discontinued operations
- 9.5
GROUP BALANCE SHEET
At 3 April 2023
Group
Restated Restated
2023 2022 2021
Notes £m £m £m
Non-current assets
Goodwill 32.5 32.5 32.5
Property and equipment 10 842.5 808.0 773.7
Right-of-use assets 11 142.9 147.0 158.0
Derivative financial instruments 2.3 2.2 -
Retirement benefit schemes 12 5.4 14.3 -
1,025.6 1,004.0 964.2
Current assets
Inventories 5.4 4.7 2.6
Trade and other receivables 9.5 8.9 10.4
Income tax receivable - 6.2 5.8
Derivative financial instruments 2.7 - -
Cash 10.7 34.0 4.7
28.3 53.8 23.5
Asset held for sale - - 1.2
Total assets 1,053.9 1,057.8 988.9
Current liabilities
Borrowings - (30.0) (29.8)
Lease liabilities 13 (4.8) (4.9) (4.9)
Income tax payable (0.9) - -
Derivative financial instruments - (0.3) (1.8)
Trade and other payables (46.6) (43.7) (15.8)
(52.3) (78.9) (52.3)
Non-current liabilities
Borrowings (104.2) (103.8) (143.4)
Lease liabilities 13 (66.9) (69.1) (75.3)
Derivative financial instruments - - (1.4)
Deferred tax liabilities (104.6) (104.2) (65.0)
Retirement benefit schemes 12 (1.7) (2.1) (6.1)
(277.4) (279.2) (291.2)
Total liabilities (329.7) (358.1) (343.5)
Net assets 724.2 699.7 645.4
Capital and reserves
Share capital 7.3 7.3 7.3
Share premium 7.8 7.7 7.6
Capital redemption reserve 1.8 1.8 1.8
Hedging reserve 4.0 1.7 (2.4)
Revaluation reserve 260.9 249.4 253.6
Retained earnings 442.4 431.8 377.5
Total equity 724.2 699.7 645.4
COMPANY BALANCE SHEET
At 3 April 2023
Company
Restated Restated
2023 2022 2021
Notes £m £m £m
Non-current assets
Goodwill 31.0 31.0 31.0
Property and equipment 10 838.5 803.5 769.1
Right-of-use assets 11 135.8 139.4 149.2
Investments in subsidiaries 14.3 14.3 14.3
Derivative financial instruments 2.3 2.2 -
Retirement benefit schemes 12 5.4 14.3 -
1,027.3 1,004.7 963.6
Current assets
Inventories 5.4 4.7 2.6
Trade and other receivables 9.5 9.7 11.3
Income tax receivable - 6.3 6.0
Derivative financial instruments 2.7 - -
Cash 10.7 34.0 4.7
28.3 54.7 24.6
Asset held for sale - - 1.2
Total assets 1,055.6 1,059.4 989.4
Current liabilities
Borrowings - (30.0) (29.8)
Lease liabilities 13 (4.0) (4.1) (4.1)
Income tax payable (0.8) - -
Derivative financial instruments - (0.3) (1.8)
Trade and other payables (56.2) (55.8) (27.5)
(61.0) (90.2) (63.2)
Non-current liabilities
Borrowings (104.2) (103.8) (143.4)
Lease liabilities 13 (61.9) (63.6) (69.1)
Derivative financial instruments - - (1.4)
Deferred tax liabilities (104.4) (104.0) (64.8)
Retirement benefit schemes 12 (1.7) (2.1) (6.1)
(272.2) (273.5) (284.8)
Total liabilities (333.2) (363.7) (348.0)
Net assets 722.4 695.7 641.4
Capital and reserves
Share capital 7.3 7.3 7.3
Share premium 7.8 7.7 7.6
Capital redemption reserve 1.8 1.8 1.8
Hedging reserve 4.0 1.7 (2.4)
Revaluation reserve 252.0 240.2 244.4
Retained earnings 449.5 437.0 382.7
Total equity 722.4 695.7 641.4
STATEMENTS OF CASH FLOW
For the 53 weeks ended 3 April 2023
Group Company
2023 2022 2023 2022
53 weeks 52 weeks 53 weeks 53 weeks
Notes £m £m £m £m
Operating activities
Net cash generated from operations 14 83.8 107.0 82.6 106.3
Tax paid (0.9) (5.1) (0.9) (5.1)
Net cash flows from operating activities 82.9 101.9 81.7 101.2
Investing activities
Proceeds from disposal of property and equipment(1)
6.1 59.7 6.1 59.7
Purchase of property and equipment 10 (40.2) (36.9) (40.2) (36.9)
Business combinations, net of cash acquired (18.2) (36.9) (18.2) (36.9)
Net cash used in investing activities (52.3) (14.1) (52.3) (14.1)
Financing activities
Interest paid (6.9) (9.7) (6.6) (9.5)
Issued equity, net of transaction costs 0.1 0.1 0.1 0.1
Equity dividends paid (12.0) (5.0) (12.0) (5.0)
Payment of principal portion of lease liabilities (5.1) (4.1) (4.2) (3.6)
Repayment of borrowings(2) (30.0) (39.8) (30.0) (39.8)
Net cash flows used in financing activities (53.9) (58.5) (52.7) (57.8)
Net increase in cash (23.3) 29.3 (23.3) 29.3
Cash at the beginning of the period 34.0 4.7 34.0 4.7
Cash at the end of the period 10.7 34.0 10.7 34.0
( )
(1) During the current period to 3 April 2023, £6.1 million related to the
sale of the Bridge Hotel (Greenford). During the prior period to 28 March
2022, £53.0 million related to the sale of 56 tenanted pubs. The remaining
balance relates to other disposals of tenanted sites.
(2) During the current period to 3 April 2023 the group repaid the £30.0
million bilateral term loan with NatWest. During the prior period to 28 March
2022 the group repaid the £30.0 million Covid Corporate Financing Facility
debt (net of £0.2 million fees) and the £10.0 million Revolving Credit
Facility debt.
GROUP STATEMENT OF CHANGES IN EQUITY
At 3 April 2023
Capital
Share redemption Hedging Revaluation Retained Total
capital(1) reserve reserve reserve earnings equity
Notes £m £m £m £m £m £m
At 29 March 2021 14.9 1.8 (2.4) 253.6 377.5 645.4
Total comprehensive income
Profit for the period - - - - 34.4 34.4
Other comprehensive income
Unrealised gain on revaluation of property 10 - - - 28.7 - 28.7
Remeasurement of retirement benefit schemes 12 - - - - 17.2 17.2
Net movement of interest rate swaps - cash flow hedge - - 5.2 - - 5.2
Tax on above components of other comprehensive income
- - (1.1) (22.8) (2.5) (26.4)
- - 4.1 5.9 14.7 24.7
Total comprehensive income - - 4.1 5.9 49.1 59.1
Transactions with owners recorded directly in equity
Share capital issued 0.1 - - - - 0.1
Dividends paid on equity shares - - - - (5.0) (5.0)
Revaluation reserve realised on disposal of properties - - - (10.1) 10.1 -
Share based payments - - - - 0.1 0.1
0.1 - - (10.1) 5.2 (4.8)
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 10 - - - 15.2 - 15.2
Remeasurement of retirement benefit schemes 12 - - - - (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
1 Total share capital comprises the nominal value of the share capital issued
and fully paid of £7.3 million (2022: £7.3 million) and the share premium
account of £7.8 million (2022: £7.7 million). Share capital issued in the
period comprises the nominal value of £nil million (2022: £nil million) and
share premium of £0.1 million (2022: £0.1 million).
NOTES TO THE FINANCIAL STATEMENTS
For the 53 weeks ended 3 April 2023
1. General information
This preliminary announcement was approved by the board on 24 May 2023. The
financial statements in it are not the group's statutory financial statements.
The statutory financial statements for the period ended 28 March 2022 have
been delivered to the Registrar of Companies. The auditor has reported on
those financial statements and on the statutory financial statements for the
period ended 3 April 2023, which are expected to be delivered to the Registrar
of Companies shortly. 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. EY's report for the accounts
of 2022 was (i) unqualified, (ii) contained a material uncertainty in respect
of going concern 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 current period and prior period relate to the 53 weeks ended 3 April 2023
and the 52 weeks ended 28 March 2022 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 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 3 April 2023. The financial statements will
also be available on the group's website, www.youngs.co.uk
(http://www.youngs.co.uk) .
Restatement of prior periods
In accordance with the requirements of IAS 1 Presentation of Financial
Statements and IAS 12 Income Taxes, management have restated the deferred tax
assets as at 28 March 2022 and 29 March 2021 to be presented net against the
deferred tax liabilities. The impact on the group balance sheet at 28 March
2022 is a reduction in the deferred tax asset of £4.1 million to £nil and a
decrease in the deferred tax liability of £4.1 million to £104.2 million.
This reduces the non-current asset subtotal by £4.1 million to £1,004.0
million and the non-current liability subtotal by £4.1 million to £279.2
million. The total assets are reduced by £4.1 million to £1,057.8 million
and the total liabilities are reduced by £4.1 million to £358.1 million.
The impact on the group balance sheet at 29 March 2021 is a reduction in the
deferred tax asset of £8.6 million to £nil and a decrease in the deferred
tax liability of £8.6 million to £65.0 million. This reduces the non-current
asset subtotal by £8.6 million to £964.2 million and the non-current
liability subtotal by £8.6 million to £291.2 million. The total assets are
reduced by £8.6 million to £988.9 million and the total liabilities are
reduced by £8.6 million to £343.5 million. The overall impact on net assets
in both prior periods is £nil. There is no impact to the income statement or
cash flow statement in either prior period as a result of this adjustment.
The impact on the company balance sheet at 28 March 2022 is a reduction in the
deferred tax asset of £4.1 million to £nil and a decrease in the deferred
tax liability of £4.1 million to £104.0 million. This reduces the
non-current asset subtotal by £4.1 million to £1,004.7 million and the
non-current liability subtotal by £4.1 million to £273.5 million. The total
assets are reduced by £4.1 million to £1,059.4 million and the total
liabilities are reduced by £4.1 million to £363.7 million.
The impact on the company balance sheet at 29 March 2021 is a reduction in the
deferred tax asset of £8.6 million to £nil million and a decrease in the
deferred tax liability of £8.6 million to £64.8 million. This reduces the
non-current asset subtotal by £8.6 million to £963.6 million and the
non-current liability subtotal by £8.6 million to £284.8 million. The total
assets are reduced by £8.6 million to £989.4 million and the total
liabilities are reduced by £8.6 million to £348.0 million. The overall
impact on net assets in both prior periods is £nil. There is no impact to the
income statement or cash flow statement in either prior period as a result of
this adjustment.
Amendments to accounting standards
Amendments to accounting standards applied for the first time during the
period were as follows:
(1 ) Amendments to IAS 16 - Property, Plant and Equipment: Proceeds
before Intended Use;
(2 ) Amendments to IAS 37 - Onerous Contracts: Cost of Fulfilling a
Contract; and
(3 ) Amendments to IFRS 3 Business Combinations - Reference to the
Conceptual Framework.
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 3 April 2023, the group had cash in bank of £10.7 million and committed
borrowing facilities of £205.0 million, of which £105.0 million was drawn
down. The group expects, by 1 July 2024 (the 'going concern' period), to have
available facilities of £205.0 million, with the plan to renegotiate the
£20.0 million term loan that is due May 2024. However, given that those
negotiations have yet to take place, for going concern purposes the group has
assumed that available facilities will be £185.0 million at the end of the
going concern period. In addition to these committed facilities, the group has
a £10.0 million overdraft 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 three sensitised
scenarios for the going concern period. The base case is the board approved
budget to March 2024 as well as the board approved strategic plan covering
April to June 2024. The key judgements applied are the extent of any influence
on trade because of the economic downturn and its impact on consumers, and the
inflationary 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
20% in sales and 25% 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 8% increase in
the food cost base and 10% increase in general pub operating costs for the
period with no retail price increases. Utility pricing has been held at the
base case rates, given the group has forward bought utilities to March 2024.
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). Consequentially there would need to be a sales reduction of
c.40% and profit reduction of c.60% between April 2023 and 2024 compared to
the base case, a reduction far in excess of those experienced historically
(with the exception of 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.
The group has also considered the impact of climate change on going concern
and has determined that there is no impact on the business during the going
concern period. Aligned with the group's developing ESG strategy this will
continue to feature in future assessments, as the group determines the
potential wider impact on the asset base, capex spend and cost of compliance.
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 is able to manage its business risks and therefore continue in
operational existence for the foreseeable future. For this reason, the group
continues to adopt the going concern basis in preparing its financial
statements.
2. Segmental reporting
The group historically had two operating segments: managed houses and tenanted
houses. The managed house segment operates pubs. Revenue is derived from sales
of drink, food and accommodation. The tenanted house segment consisted of pubs
owned or leased by the company and leased or subleased to third parties.
Revenue was derived from rents payable by, and sales of drink made to,
tenants. Unallocated related to head office income and costs, and unlicensed
properties. During the prior period, most of the pubs within the tenanted
house segment were disposed of and classified as a discontinued operation.
Since the disposal of the majority of the tenanted house segment, 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. On this
basis, the group now reports on one operating segment, with the remaining
tenanted houses grouped together with the unallocated segment and reported as
'all other segments'. In line with this approach, prior period comparatives
for tenanted houses and unallocated have been grouped together under 'all
other segments'.
Total segment revenue is derived externally, with no intersegment revenues
between the segments in the prior period. The group's revenue is derived
entirely from the UK.
Income statement 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
from continuing operations 366.5 0.3 366.8
Other income 1.5 0.6 2.1
Total revenue recognised from continuing operations 368.0 0.9 368.9
Adjusted operating profit/(loss) from continuing operations 73.3 (20.9) 52.4
Adjusting items (8.5) (0.5) (9.0)
Operating profit/(loss) from continuing operations 64.8 (21.4) 43.4
Managed All other
houses segments Total
52 weeks 52 weeks 52 weeks
2022 £m £m £m
Drink sales 188.5 0.5 189.0
Food sales 105.9 - 105.9
Accommodation sales 12.3 - 12.3
Total revenue from contracts with customers
from continuing operations 306.7 0.5 307.2
income 1.0 0.8 1.8
Total revenue recognised from continuing operations 307.7 1.3 309.0
Adjusted operating profit/(loss) from continuing operations 72.1 (20.7) 51.4
Adjusting items (0.4) 0.7 0.3
Operating profit/(loss) from continuing operations 71.7 (20.0) 51.7
3. Adjusting items
The table below shows adjusting items from continuing operations.
During the period, the cash flow impact of adjusting items was £3.9 million
(2022: £3.8 million), of which £3.0 million related to investing activities
and £0.9 million related to operating activities (2022: £3.6 million and
£0.2 million respectively).
2023 2022
53 weeks 52 weeks
£m £m
Amounts included in operating profit:
Upward movement on the revaluation of properties (note 10)(1) 4.8 5.5
Downward movement on the revaluation of properties (note 10)(1) (11.8) (4.7)
Purchase costs(2) (1.1) (2.7)
Tenant compensation(3) (0.6) (0.2)
Restructuring costs(4) (0.3) -
Net profit on disposal of properties(5) - 2.4
(9.0) 0.3
Tax on adjusting items:
Tax attributable to adjusting items 1.2 (0.6)
Impact of change in corporation tax rate(6) (0.1) (6.9)
1.1 (7.5)
Total adjusting items after tax (7.9) (7.2)
(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 £4.8 million (2022: £5.5 million)
representing reversals of previous impairments recognised in the income
statement, and a downward movement of £11.8 million (2022: £4.7 million),
representing downward movements in excess of amounts recognised in equity.
These resulted in a net downward movement of £7.0 million (2022: an upward
movement of £0.8 million) which has been recognised in the income statement.
The downward movement for the period ended 3 April 2023 was split between land
and buildings of £7.0 million (2022: £0.8 million upward) and fixtures and
fittings of £nil (2022: £nil). See note 10 for information on the
revaluation of properties.
(2 ) 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). In the prior period, the costs related to the
purchase of the Bull (Ditchling), Pheasant Inn (Lambourn), the White Horse
(Hascombe), the freehold of the Lamb (Bloomsbury) and the Lucky Onion group, a
group of six sites acquired on 21 February 2022. This also included lease
extensions of the Cherry Tree (Dulwich), East Hill (Wandsworth) and Riverside
House (Wandsworth). The prior period costs included legal and professional
fees and stamp duty land tax (note 7).
(3 ) Tenant compensation of £0.6 million was paid to the
previous tenants of an unlicensed property (Ealing) and the Bishop's Vaults
(Bishopsgate) to terminate their lease agreements early. During the prior
period, tenant compensation of £0.2 million was paid to previous tenants of
the Grand Junction Arms (Harlesden) to terminate their lease agreement early.
(4 ) 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.
(5 ) During the current period, the group disposed of the
Bridge Hotel (Greenford) and no profit or loss was recognised on the disposal.
In the prior period, the profit on disposal of properties related to the
difference between cash, less disposal costs, received from the sale of the
Grove House (Camberwell) and Lord Wargrave (Marylebone) and the carrying value
of their assets, including goodwill, at the dates of disposal, and the
surrender premium related to the lease of Prince William Henry (Southwark).
(6 ) 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. This has 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 (2022: £6.9 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 has been
recognised as an exceptional item in the tax charge for the period as it is
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. All the results below are from
continuing operations.
2023 2022
53 weeks 52 weeks
Adjusting Adjusting
Unadjusted items Adjusted Unadjusted items Adjusted
£m £m £m £m £m £m
EBITDA 83.5 2.0 85.5 82.0 0.5 82.5
Depreciation and net movement on the revaluation of properties (40.1) 7.0 (33.1) (30.3) (0.8) (31.1)
Operating profit 43.4 9.0 52.4 51.7 (0.3) 51.4
Finance income 0.1 - 0.1 - - -
Finance costs (7.6) - (7.6) (9.5) - (9.5)
Finance charge for pension obligations 0.3 - 0.3 (0.1) - (0.1)
Profit before tax 36.2 9.0 45.2 42.1 (0.3) 41.8
During the period, £105.2 million (2022: £102.2 million) of adjusted EBITDA
related to managed houses and £0.5 million (2022: £0.6 million) related to
tenanted houses. Adjusted negative EBITDA of £20.2 million (2022: negative
£20.3 million) related to head office costs and was unallocated.
5. Revenue
The recognition of revenue from continuing operations under each of the
group's material revenue streams is
as follows:
2023 2022
53 weeks 52 weeks
£m £m
Drink sales 229.4 189.0
Food sales 115.5 105.9
Accommodation sales 21.9 12.3
Total revenue from contracts with customers 366.8 307.2
Other income 2.1 1.8
Total revenue recognised 368.9 309.0
6. Government grants and assistance
During the prior period, the group was eligible for a number of government
grant schemes which were introduced to mitigate the impact of covid-19. The
impact of each scheme on the income statement was as follows:
2023 2022
53 weeks 52 weeks
Government grant scheme Income statement line impacted £m £m
Government grant income Other income - 5.0
Coronavirus Job Retention Scheme ('CJRS') Operating costs before adjusting items - 2.2
Total government grants received - 7.2
All government grants received were in respect of continuing operations.
During the prior period, the group continued to take advantage of the business
rate holiday, saving £3.7 million, further business rate relief under the
expanded retail discount, saving £2.0 million, and reduced 5% VAT on eligible
sales until 30 September 2021, followed by 12.5% VAT up until 31 March 2022.
Cash flows from grants received were included in cash flows from operations.
7. Taxation
The major components of income tax expense for the periods ended 3 April 2023
and 28 March 2022 are:
2023 2022
53 weeks 52 weeks
Tax charged in the group income statement £m £m
Current income tax
Current tax expense 7.3 4.8
Adjustment in respect of current income tax of prior periods 0.9 (0.1)
8.2 4.7
Deferred tax
Relating to origin and reversal of temporary differences (0.3) 6.7
Adjustment in respect of deferred tax of prior periods (1.1) (0.8)
Deferred tax measured at higher rate (0.3) -
Change in corporation tax rate - 6.9
(1.7) 12.8
Income tax charged in the income statement(1) 6.5 17.5
(1) During the current period, all income tax charged relates to continuing
operations. During the prior period, income tax charged related to £17.2
million from continuing operations and £0.3 million from discontinued
operations.
2023 2022
53 weeks 52 weeks
Deferred tax in the group income statement £m £m
Property revaluation and disposals (1.8) 2.3
Capital allowances (0.5) 2.4
Retirement benefit schemes 0.4 0.2
Share based payments 0.1 -
Trade losses - 1.0
Adjustment in respect of deferred tax of prior periods 0.4 -
Deferred tax measured at higher rate (0.3) -
Change in corporation tax rate - 6.9
Deferred tax (credited)/charged in the income statement (1.7) 12.8
Deferred tax in the group statement of other comprehensive income
Property revaluation and disposals 3.7 4.8
Retirement benefit schemes (2.5) 3.3
Interest rate swaps - cash flow hedge 0.8 1.0
Change in corporation tax rate - 17.3
Deferred tax charged to other comprehensive income 2.0 26.4
8. Dividends on equity shares
2023 2022 2023 2022
53 weeks 52 weeks 53 weeks 52 weeks
Pence per share Pence per share £m £m
Final dividend (previous period) 10.26 - 6.0 -
Interim dividend (current period) 10.26 8.55 6.0 5.0
20.52 8.55 12.0 5.0
The table above sets out dividends paid. In addition, the board is proposing a
final dividend in respect of the period ended 3 April 2023 of 10.26 pence per
share at a cost of £6.0 million. If approved, it is expected to be paid on 13
July 2023 to shareholders who are on the register of members at the close of
business on 9 June 2023.
9. Earnings per ordinary share
(a) Weighted average number of shares 2023 2022
53 weeks 52 weeks
Number Number
Basic weighted average number of ordinary shares in issue 58,483,336 58,476,259
Dilutive potential ordinary shares from outstanding employee share options 51,928 30,877
Diluted weighted average number of shares 58,535,264 58,507,136
(b) Earnings attributable to the shareholders of the parent company
£m £m
Profit for the period 29.7 34.4
Adjusting items 9.0 (9.3)
Tax attributable to above adjustments (1.1) 7.8
Adjusted earnings after tax 37.6 32.9
Basic earnings per share
Pence Pence
Basic 50.78 58.83
Effect of adjusting items 13.51 (2.57)
Adjusted basic earnings per share 64.29 56.26
Diluted earnings per share
Pence Pence
Diluted 50.74 58.80
Effect of adjusting items 13.49 (2.57)
Adjusted diluted earnings per share 64.23 56.23
(c) Earnings from continuing operations
£m £m
Profit for the period 29.7 24.9
Adjusting items 9.0 (0.3)
Tax attributable to above adjustments (1.1) 7.5
Adjusted earnings after tax 37.6 32.1
Basic earnings per share
Pence Pence
Basic 50.78 42.58
Effect of adjusting items 13.51 12.31
Adjusted basic earnings per share 64.29 54.89
Diluted earnings per share
Pence Pence
Diluted 50.74 42.56
Effect of adjusting items 13.49 12.31
Adjusted diluted earnings per share 64.23 54.87
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 51,928 (2022: 30,877) dilutive potential shares under the SAYE and
LTIP schemes.
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.
10. 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 29 March 2021 717.9 156.2 874.1 717.6 150.1 867.7
Additions 11.5 25.4 36.9 11.5 25.3 36.8
Business combinations 35.3 1.5 36.8 35.3 1.5 36.8
Disposals(1) (44.2) (10.8) (55.0) (44.2) (10.8) (55.0)
Fully depreciated assets (0.5) (18.3) (18.8) (0.5) (18.2) (18.7)
Revaluation(2)
- upward movement in valuation 40.3 - 40.3 40.3 - 40.3
- downward movement in valuation (10.7) - (10.7) (10.7) - (10.7)
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)
Revaluation(2)
- 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
Depreciation and impairment
At 29 March 2021 23.7 76.7 100.4 23.2 75.4 98.6
Depreciation charge 1.6 22.8 24.4 1.5 22.7 24.2
Disposals(1) (5.2) (5.3) (10.5) (5.2) (5.3) (10.5)
Fully depreciated assets (0.5) (18.3) (18.8) (0.5) (18.2) (18.7)
Revaluation(2)
- upward movement in valuation (4.6) - (4.6) (4.6) - (4.6)
- downward movement in valuation 4.7 - 4.7 4.7 - 4.7
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)
Revaluation(2)
- 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
Net book value
At 29 March 2021 694.2 79.5 773.7 694.4 74.7 769.1
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
(1) During the prior period, the majority of the disposals related to the sale
of 56 tenanted pubs.
(2) The group's net book value uplift during the period was £8.2 million
(2022: £29.5 million). This uplift was recognised either in the revaluation
reserve or the income statement, as appropriate.
The impact of the property revaluation exercise was as follows:
Group Company
2023 2022 2023 2022
53 weeks 52 weeks 53 weeks 52 weeks
£m £m £m £m
Income statement
Revaluation loss charged as impairment (11.8) (4.7) (11.8) (4.7)
Reversal of past impairment 4.8 5.5 4.8 5.5
Net (impairment)/uplift recognised
in the income statement (7.0) 0.8 (7.0) 0.8
Revaluation reserve
Unrealised revaluation surplus 37.4 39.5 37.4 39.5
Reversal of past surplus (22.2) (10.8) (21.9) (10.8)
Net uplift recognised
in the revaluation reserve 15.2 28.7 15.5 28.7
Net revaluation increase
in property 8.2 29.5 8.5 29.5
11. 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 29 March 2021 157.8 0.2 - 158.0 148.9 0.3 - 149.2
Additions 0.8 0.2 - 1.0 0.8 0.2 - 1.0
Business combinations 0.2 - - 0.2 0.2 - - 0.2
Lease amendments 0.1 - - 0.1 0.3 - - 0.3
Depreciation (6.9) (0.2) - (7.1) (6.0) (0.1) - (6.1)
Disposals (5.2) - - (5.2) (5.2) - - (5.2)
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)
At 3 April 2023 142.5 0.4 - 142.9 135.2 0.6 - 135.8
12. Retirement benefit schemes
Movement within the schemes in the period
Changes in the present value of the schemes are as follows:
Group and Company
2023 2022
Health Health
Pension care Pension care
scheme scheme Total scheme scheme Total
£m £m £m £m £m £m
Opening surplus/(deficit) 14.3 (2.1) 12.2 (2.2) (3.9) (6.1)
Current service cost (0.3) - (0.3) (0.4) - (0.4)
Contributions 1.4 0.2 1.6 1.4 0.2 1.6
Other finance income/(charge) 0.4 (0.1) 0.3 - (0.1) (0.1)
Remeasurement through other
comprehensive income (10.4) 0.3 (10.1) 15.5 1.7 17.2
Closing surplus/(deficit) 5.4 (1.7) 3.7 14.3 (2.1) 12.2
13. Lease liabilities
Set out below are the carrying amounts of lease liabilities and the movements
during the period:
Group Company
£m £m
At 29 March 2021 80.2 73.2
Additions 1.0 1.0
Business combinations 0.2 0.2
Lease amendments 0.1 0.3
Accretions of interest 2.5 2.3
Payments (6.6) (5.9)
Lease disposals (3.4) (3.4)
At 28 March 2022 74.0 67.7
Current 4.9 4.1
Non-current 69.1 63.6
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
14. Net cash generated from operations and analysis of net debt
Group Company
2023 2022 2023 2022
53 weeks 52 weeks 53 weeks 52 weeks
£m £m £m £m
Profit before tax from continuing operations 36.2 42.1 38.2 42.0
Profit before tax from discontinued operations - 9.8 - 9.8
Profit before tax 36.2 51.9 38.2 51.8
Net finance cost 7.5 9.5 7.3 9.6
Finance charge for pension obligations (0.3) 0.1 (0.3) 0.1
Operating profit 43.4 61.5 45.2 61.5
Depreciation of property and equipment (note 10) 26.2 24.4 26.0 24.2
Depreciation of right-of-use assets (note 11) 6.9 7.1 6.0 6.1
Movement on revaluation of properties (note 10) 7.0 (0.8) 7.0 (0.8)
Net profit on disposal of property - (11.4) - (11.4)
Difference between pension service cost and cash contributions paid (1.3) (1.2) (1.3) (1.2)
Share based payments (0.5) (0.1) (0.5) (0.1)
Movements in working capital
- Inventories (0.7) (2.0) (0.7) (2.0)
- Receivables (0.6) 1.5 0.2 1.6
- Payables 3.4 28.0 0.7 28.4
Net cash generated from operations 83.8 107.0 82.6 106.3
Analysis of net debt Group Company
2023 2022 2023 2022
£m £m £m £m
Cash 10.7 34.0 10.7 34.0
Current borrowings and loan capital - (30.0) - (30.0)
Current lease liability (4.8) (4.9) (4.0) (4.1)
Non-current borrowings and loan capital (104.2) (103.8) (104.2) (103.8)
Non-current lease liability (66.9) (69.1) (61.9) (63.6)
Net debt (165.2) (173.8) (159.4) (167.5)
15. Post balance sheet events
There were two post balance sheet events: the exchange of contracts and
completion of the Stag (Belsize Park) for a total cash consideration of £3.3
million, and the final extension of the £50.0 million syndicated facility
with NatWest and HSBC by a further year (the second year of a two-year option
to extend) to 19 May 2027.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR USAKROSUVUAR