TIDMYNGA
RNS Number : 9162Z
Young & Co's Brewery PLC
23 May 2019
Young & Co.'s Brewery, P.L.C.
Preliminary results for the 52 weeks ended 1 April 2019
2019 2018 %
GBPm GBPm change
Revenue 303.7 279.3 +8.7
Adjusted operating profit(1) 48.5 46.9 +3.4
Operating profit 44.6 43.5 +2.5
Adjusted profit before tax(1) 43.4 41.0 +5.9
Profit before tax 39.5 37.6 +5.1
Net cash generated from operations 69.2 61.4 +12.7
Adjusted basic earnings per share(1) 72.13p 67.74p +6.5
Basic earnings per share 64.36p 61.60p +4.5
Dividend per share 20.78p 19.61p +6.0
(interim and recommended final)
Net assets per share(2) GBP12.12 GBP11.24 +7.8
All of the results above are from continuing operations.
(1) Reference to an "adjusted" item means that item has been
adjusted to exclude exceptional items (see notes 3 and 4).
(2) Net assets per share are the group's net assets divided
by the shares in issue at the period end.
PERFORMANCE HIGHLIGHTS
-- Another highly successful year, despite a challenging market
backdrop, with total revenue up 8.7% to GBP303.7 million;
-- Total managed house revenues up 9.0% to GBP290.3 million,
underpinned by like-for-like sales growth of 5.1%; adjusted managed
operating profits of GBP61.5 million;
-- The Ram Pub Company performed strongly with like-for-like revenues up 5.0%;
-- Total investment of GBP67.1 million on acquisitions,
including 15 Redcomb pubs, and upgrades to our existing estate;
-- Record cash generation, with operating cash flow up 12.7% to
GBP69.2 million - net debt to adjusted EBITDA remains conservative
at 2.2 times, underpinned by our strong balance sheet, giving us
opportunities to pursue our acquisition strategy;
-- Proposed 6.0% increase in final dividend to 10.81 pence,
resulting in a total dividend of 20.78 pence (2018: 19.61 pence);
22nd consecutive year of dividend growth;
-- Managed house revenue in the last thirteen weeks was up 9.4%
in total, and up 2.6% on a like-for-like basis, reflecting strong
prior year comparatives.
Patrick Dardis, Chief Executive of Young's, commented:
"I am very pleased to announce such a strong set of results
which are a testament to the quality of our incredible people who
bring our premium positioned pubs to life. These results
demonstrate that our strategy continues to deliver.
"The addition of the 15 Redcomb pubs complements the existing
Young's managed house estate and presents tremendous opportunities
for future growth. We have continued to invest in our existing
estate as well as upgrading our technology, and are excited to
realise this potential.
"It has been a tough start to the year against very strong
comparatives with the only good weather coming in the Easter bank
holiday this year. Looking ahead, the amazing weather throughout
the summer of 2018 and England's World Cup success sets a high
benchmark for the coming months. However, we remain confident that
we will continue our strong growth story in the coming year."
For further information, please contact:
Young & Co.'s Brewery, P.L.C. 020 8875 7000
Patrick Dardis, Chief Executive
MHP Communications 020 3128 8742
Tim Rowntree/Alistair de Kare-Silver/Robert
Collett-Creedy
PRELIMINARY RESULTS FOR THE 52 WEEKSED 1 april 2019
chief EXECUTIVES STATEMENT
I am delighted to announce another strong set of results, driven
by our well-invested, premium managed house estate that continues
to operate at the highest standards in the industry. Our riverside
locations, beautiful gardens and growing number of roof terraces
meant the business was well placed to take advantage of the
fabulous summer weather and the performance of the England football
team at the FIFA World Cup. The Christmas trading period was also
very strong, with Young's pubs packed full of seasonal cheer and
merriment.
Total revenue was up 8.7% to GBP303.7 million, yet again
underpinned by our managed house like-for-like performance,
enhanced by complementary, eye-catching acquisitions. Through
strong conversion, profit before tax was up 5.1% to GBP39.5 million
or up 5.9% to GBP43.4 million once adjusted for exceptional
items.
Group operating margins of 16.0% were maintained once again at a
high level for the industry, albeit slightly lower than last year
(2018: 16.8%). This reflects a significant amount of investment
over the past 18 months for long-term growth, both in our existing
estate and acquisitions, including the recently added Redcomb pubs,
as well as the external cost pressures facing the industry.
ESTABLISHED, EXPANDING AND CONSISTENT
The main driver of the group performance was our managed house
division, which now makes up 95.6% of turnover, where like-for-like
sales in the period were up 5.1%. This represents the eighth
consecutive year of increases over 4.2% and is a great indicator of
our strength and resilience over a sustained period of time. Our
strong results are a testament to the quality of our incredible
people who bring our premium pubs to life and demonstrate that our
strategy continues to deliver.
In January we acquired 15 pubs through our purchase of the
Redcomb pub group. They complement the existing Young's managed
house estate both in and around London, as well as build on a
growing presence in the South West. Each of the pubs has a premium
offering and distinct personality that differentiates it in its
local market. All with individual qualities, the pubs possess
tremendous opportunities for future growth through expanding the
trading space, improved operational excellence and by introducing
the unique Young's style.
We acquired three more pubs during the year. Through our ongoing
partnership with Berkeley Homes we opened the Naturalist (Hackney),
a long leasehold, along with two freehold purchases: the Plantation
(Poole), which also contributed to our growing bedroom stock with
ten bedrooms, and the People's Park Tavern (Hackney), which will be
'warehoused' in the Ram Pub Company and in the future provides a
fantastic opportunity for a managed pub. Following these
investments, our total pub count at the end of the year stood at
269, split with 199 of those as managed houses and the remaining 70
operating under the Ram Pub Company. At the same time, we have
increased our managed room stock by 88, or 15.2%, to 668 rooms.
Within the existing estate, we have also made significant
investment. The two hotels acquired at the end of the last
financial year, the Park (Teddington) and the Bridge (Chertsey),
have both recently completed transformational refurbishments to
their pub offer, bringing them in line with the Young's standard.
We also started on site at the Dog & Fox (Wimbledon Village)
where work has begun on adding 11 new hotel rooms and a dedicated
function space, and close to my heart, in March we re-opened the
Hand in Hand (Wimbledon Village), the pub where I pulled my first
pint. Amongst many others, these great projects will make
significant contributions in the year ahead.
Strong performance in a challenging environment
The current economic and political climate remains a challenge,
and with each year the costs to our business increase; I am
delighted, despite this, that the Young's team has delivered these
results. Total adjusted operating profits are at a record high of
GBP48.5 million, up by 3.4%, with an operating margin for the year
of 16.0%. In the last year our managed and tenanted businesses both
performed strongly and we have once again delivered results at the
forefront of the industry.
In our pubs it is our general managers and their teams who
deliver premium value for our customers. They are some of the very
best people in the industry and really understand how to run
differentiated pubs within a supportive framework. Forever the face
of our business, we are constantly looking to increase the amount
of time they spend coaching their teams and focussing on our
customers. Managers in offices don't grow profitable sales; it's
managers interacting with customers, working on the atmosphere and
the quality of our offer, ensuring we deliver outstanding service
who do.
INVESTMENT IN TECHNOLOGY
To match the investment in our pubs we are continually upgrading
our technology to improve our offer and productivity. Following
last year's successful roll out of our new till software across the
estate, we have gained a greater understanding of what our
customers want. We have re-launched our app, "Young's On Tap",
which included new bar tab features to add to the experience of a
Young's pub. Online, our websites play an important role in the
customer journey and we have made significant developments
enhancing their functionality and improving the interaction with
our customers. We have seen an increase in organic traffic, reached
new customers and improved booking conversions through the new
concierge style events functionality. We will continue to evolve
our digital offer to ensure we are serving our customers most
effectively.
OUTLOOK
We have welcomed a warm Easter and Varsity Boat Race, both
falling in April this year, as we were up against a very positive
start to last year when temperatures during April and the early May
Bank Holiday reached 30 degrees. For the last thirteen weeks our
total sales were up 9.4%, and like-for-like sales were up 2.6%
reflecting the tough comparatives.
The two new hotels added last year, the Park and the Bridge, are
open and trading strongly following their recent investment. We
will be investing in a number of the newly acquired Redcomb pubs
over the course of the year, although the focus for now is on
ensuring a smooth operational transition.
Since the year-end we have opened the Depot (Kidbrooke Village)
which is a roaring success with locals, another pub as part of our
successful partnership with Berkeley Homes. In April, we
transferred the New Inn (Ealing) from the Ram Pub Company into the
managed house division; the true benefit of this will come later in
the year following a planned refurbishment.
Looking ahead, the amazing weather throughout the summer of 2018
and England's World Cup success sets a high benchmark. It has been
a busy period of acquisitions and investment in our estate, and we
are excited about the opportunities to unlock that potential.
PROGRESSIVE DIVID POLICY
Given these strong results, we are pleased to recommend raising
the final dividend for the 22nd consecutive year, once again by
6.0%, this time to 10.81 pence. If approved by shareholders, this
will give a total dividend for the year of 20.78 pence (2018: 19.61
pence), representing a real income increase from Young's shares.
The final dividend is expected to be paid on 11 July 2019 to
shareholders who are on the register of members at the close of
business on 7 June 2019.
business and financial review
MANAGED HOUSES
For our managed houses it has been a standout year. Maintaining
such high performance only gets harder with each year, but our
impressive like-for-like sales growth of 5.1% (2018: 4.2%)
demonstrates the bedrock of consistency on which we pride
ourselves. Over the last eight years our managed houses have
averaged like-for-like sales growth of 5.4%.
An increase in our acquisition activity in the past 18 months
has helped add to our total revenue growth, and as a result total
revenue for the year was up 9.0%, to GBP290.3 million. The exciting
purchase of Redcomb's 15 pubs has added prime locations with
tremendous opportunities for sales growth. They have also brought
further geographical diversity into the estate with two new
locations in the South West. We also added the Plantation, a small
hotel with 10 rooms on the south coast near Poole, Dorset. Aligned
with our strategy of targeted quality acquisitions in the South of
England, these pubs further extend the Young's reach. This now
takes our managed estate to 199 pubs, including 30 hotels, and is
an increase of 18 pubs compared with the previous year.
Continuing to drive and support the pubs and their teams to
outperform the market is a relentless pursuit, but it's one that we
embrace wholeheartedly. Our longstanding record of consistently
raising the bar in our offer and accompanying results creates its
own challenges, but our ambition and work ethic gives us that extra
spring in our step to continue to excel.
REVENUE AND PROFITS
Sales in the first half of the year were given the perfect start
as our riverside locations and beautiful gardens provided ideal
locations as customers looked to bask in the sunshine for the
hottest British summer on record. For many, the summer of 2018 will
also be fondly remembered as football fever gripped the nation, and
it wasn't just Gareth Southgate who liked to enjoy a pint of
Young's Bitter, as England's success helped boost pub footfall
during the five-week tournament period. At the half year we had
achieved like-for-like sales growth of 5.2%, which was maintained
during the second half thanks to another exceptional Christmas
season for Young's and some welcome early spring sunshine;
together, this saw us close out the year with a like-for-like sales
increase of 5.1%.
Through those early summer months, pubs were once again the
focus for social gatherings and it was our drink sales which
benefitted most. Craft lager and ale continue to grow in
popularity, with craft keg ale sales increasing by 22.9%. Again,
the premium choice of customers is the driving force, with the two
key brands of Camden and Beavertown being the success stories, and
their sales have now matched those of all cask ale. For the year,
total drinks sales were up 9.6% and up 6.5% on a like-for-like
basis.
Cask ale remains a key part of our heritage and reputation and
this year we were particularly excited to work alongside St Austell
Brewery which now sees Proper Job sit perfectly alongside our
existing Young's portfolio and our established 'local hero'
products. Young's pubs offer the environment for our customers to
enjoy a perfect pint of cask ale and it is important that it
maintains its presence on bar in the ever-changing pub market. To
ensure the premium quality of our cask ale we closely manage our
throughputs and control cellar temperatures, whilst our 'Hop
Masters' training programme focuses on all things beer; from the
history and process of brewing to the latest in beer trends.
At the start of the year we launched our latest gin campaign,
'Spring into Gin', where the focus and innovation were on flavour,
both in the gins and mixers, adding further interest and colour.
Its success alongside the popularity of the 'ginspired' premium
serve balloon glass kept the Young's gin revolution rolling on, as
sales rose by 35.2%, making it the sixth consecutive year with
sales growth of over 20%. Our sales of gin are 34.5% of total
spirit sales, and compared with the market we are over-indexed,
highlighting our premium standing from this resurgent product.
We have also taken on a more premium position with our wine
offer as training and marketing activity is aimed towards a 'Super
6' and 'Focus' range as part of our partnership with Berkmann Wine
Cellars. We continue to benefit from their expertise, a wider range
of new world wines and a more engaged workforce through the jointly
run 'Grape Masters' programme. Our customers have, in turn, enjoyed
the journey from traditional house wines to more complex grape
varieties, most recently the rosé revolution.
Our now established 'Cocktail Collective', which focuses on
delivering a selective range of quality, perfectly served
cocktails, has played a significant part in another year of
outstanding cocktail growth, with sales up 32.1% (2018: 46.1%). The
most popular cocktail for a second successive year has been Aperol
Spritz which has seen a boom of 70.0% (2018: 85.0%). Overall,
spirit sales grew by 14.4%.
We remain confident in our food strategy in what continues to be
a challenging marketplace. Our expert team of executive chefs work
tirelessly to ensure that British, seasonal and fresh produce are
at the heart of every dish we produce. With our menus continually
changing with the seasons, this year we introduced the 'Famous For'
strategy which allows each pub to find that something different
that customers can associate them with. A fine example of this is
the Windmill (Mayfair) with a nod to 'proper pub grub'; its hand
crafted and traditional British seasonal pies made with homemade
pastry are winners with its customers, and last year their venison
pie came highly commended at the prestigious Annual Pie Awards
finishing in the top 3 of the specialty meat class. Our five
Young's classics and the ultimate Sunday lunches remain at the core
of our strategy. In total, food sales were up 6.1%, and up 1.7% on
a like-for-like basis. With no Easter bank holidays falling in the
financial year, this had a negative 0.6% pts impact on our
like-for-like food sales; excluding this period they were up
2.3%.
Nowadays, in such a competitive market, consumers are spoilt for
choice and expect a unique customer experience that sets itself
apart from the crowd. A great example of this is the Devonshire
(Balham), which, following on from last year, flipped more than
burgers as it turned the successful "Balham Peaks" on its head, as
the popular pop-up became the "Balham Beach Club" during the summer
months. Decked out with sand, beach hut cabanas and deck chairs,
customers enjoyed summer-themed cocktails and Aperol Spritz,
alongside freshly cooked burgers straight from the Burger Shack
garden grill.
Hotel room sales have also had another successful year, up 5.4%
on a like-for-like basis. Occupancy rates were 75.5%, up by 0.8%
pts on the previous year, and RevPar increased by GBP3.24 or 5.1%
to GBP66.39. Total accommodation revenue has increased by a
considerable 19.6%, largely driven by the two hotels acquired at
the end of the last financial year. Split across five new hotels,
we have also added 88 rooms in the last twelve months, bringing our
total room stock to 668. Another key part of our premium offer is
the high standard of our hotel rooms. With designated capital
investment set aside each year for an average of 5 hotels,
improvements are made to meet the long term vision of our room
quality. Projects focus on improving specifications to boutique
standard, modernising bathrooms and installing air conditioning.
This investment has gone a long way to helping support such healthy
like-for-like sales growth.
It has been another year where we have had to combat further
increases to our cost base. The well-publicised cost headwinds such
as business rates, another year's instalment of the national living
wage and the apprenticeship levy have added significantly to our
operating costs. Over the past 18 months we have invested
significantly on acquisitions, some of which are taking their time
to achieve their expected returns. Despite these factors, our
managed house adjusted operating profit grew by 1.3% to GBP61.5
million.
INVESTMENT
In the year, we were extremely excited to acquire Redcomb Pubs,
the owner and operator of 15 sites in prime locations in and around
London and in the South West, increasing our coastal presence and
further enhancing the Young's brand. They fit well with our
strategy, which focusses on adding high quality managed houses
where our premium offer will work extremely well.
Elsewhere we made other major acquisitions, openings and
transfers, all of which are unique in their own way yet still at
the premium end of the market. The highlights include:
-- the Naturalist, a new waterside development in the
regeneration area of Woodberry Down (Hackney), and another in the
list of pubs opened in partnership with Berkeley Homes;
-- the Plantation, further increasing our hotel room stock with
the addition of 10 rooms at Canford Cliffs Beach, near to the
well-known Sandbanks in Poole; and
-- the Bear, now a stunning refurbished 18(th) century country
inn, in Cobham in the heart of Surrey, transferred from the Ram Pub
Company late in the financial year.
A common theme in all these acquisitions is their superb
locations and future potential, both fundamental factors in our
investment decisions.
During the course of the year, including acquisitions, we
invested GBP52.2 million in our managed estate.
Significant investment was made in two of last year's
acquisitions, the Park and the Bridge, with the pub and dining
areas at both transformed, elevating these businesses to show the
best in class, premium standards of Young's. Alongside these, we
have targeted investment in our core estate, designed to update or
increase trading areas with major projects undertaken at the Bull
(Westfield Shepherd's Bush), Cow (Westfield Stratford), Coach &
Horses (Kew), Hand in Hand, Red Barn (Lingfield), Waterside
(Fulham), Wheatsheaf (Borough Market) and the White Hart
(Sherfield).
CUSTOMER ENGAGEMENT
Technology is such an important part of the customer experience,
from the start to the end of their interaction with the pub, and we
understand how vital it is to our success. This year we have
re-launched our corporate website onto an updated platform to offer
customers a visually more impactful experience and a smoother
customer journey, as well as driving search optimisation. We are
seeing the benefit of modernising our individual pub websites,
resulting in above industry-average booking conversion rates and
significant growth in online bookings across the pubs.
Elsewhere we have launched our new hotel booking system,
facilitating a seamless customer journey. Its 7 stage booking
process allows guests to tailor their stay to the occasion, whether
it be adding a bottle of something bubbly in the room, reserving a
table for dinner or arranging tickets for a local event.
Now in its third year, 'Young's On Tap' was re-launched with a
simpler mobile payment process to enhance the customer journey and
drive revenue. Our new bar tab functionality allows customers to
create a digital tab via the app, order at the bar or to their
table and invite guests to join their tab. When it's time to leave,
payment and bill splitting can all be done through the app, giving
customers flexibility while taking pressure off staff, leaving them
more time to serve customers. The latest update is now able to
support our centralised marketing campaigns by providing targeted
treats for users with accompanying push notifications to encourage
repeat visits.
The customer journey wouldn't be complete without the
interaction with our teams and the pubs themselves. This year we
completed the roll out of our new enhanced till system which allows
for a more interactive experience for staff as well as the
infrastructure that connects with multiple third party platforms,
reflecting our belief that trading is only likely to become ever
more reliant on technology.
RAM PUB COMPANY
It has been a strong year for the Ram Pub Company, with focus on
good estate management as well as building on the opportunities
that we can help to develop and support through healthy working
relationships with our tenants.
We sold two pubs at the tail of the estate for combined proceeds
of GBP1.3 million: the William IV (Bletchingley) and the King's
Arms (Mitcham), whilst also exiting from our lease agreement at the
Queen's Head (Stepney Green).
In early 2019, we transferred the Bear, acquired last year, to
our managed house division in order to maximise its potential
further, returning it to its former glory as a fantastic, local
village pub. Other transfer opportunities do exist within the Ram
Pub Company which we will look to harvest when the time is right
for both us and our tenants.
As a result of the above movements, the Ram Pub Company ended
the year with 70 pubs down from 74 in the previous year.
REVENUE AND PROFITS
In total, revenue within the Ram Pub Company was up by 3.2%,
reflective of the net reduction in pubs. On a like-for-like basis,
revenue growth was up 5.0%; the highest in over a decade, with
growth driven from both increased beer sales as well as the rents
we receive from our tenants.
Our increasing like-for-like sales, improving margins and
continued investment have resulted in total adjusted operating
profit of GBP5.0 million, an increase of GBP0.6 million or 13.6%.
Our average pub EBITDA was GBP96.4K (2018: GBP80.6K) and remains
one of the highest in the sector.
With the good year for the Ram Pub Company, it now represents
7.5% of adjusted operating profit at pub level whilst its share of
total group revenue has fallen to 4.3%.
INVESTMENT
In December 2018, we welcomed the People's Park Tavern and its
tenant into the Ram Pub Company. This attractive freehold pub has
an extensive garden which backs onto the edge of Victoria Park in
East London and, in time, will become another exciting future
managed opportunity. Within our existing estate, we follow a
structured and viable investment programme to ensure that each
tenanted pub is maintained at an attractive standard to appeal to
customers, current tenants and future business partners.
In the past year we've completed major developments at the
Calthorpe Arms (Bloomsbury), Grand Junction Arms (Harlesden),
Surprise (Lambeth), Swan Inn (Sidmouth) and the White Hart
(Witley). In addition to these projects we are currently underway
with the exciting development of the Ram Inn (Wandsworth) on the
site of the old Ram Brewery, which will see this iconic pub
restored back to its former glory. Completion and opening of the
pub is due early in the new financial year.
TENANT ENGAGEMENT
Our tenanted model is focussed upon developing and maintaining
businesses that offer a sustainable income for individual tenants
and sustainable profits for Young's. It's a partnership built on
trust and a common goal. By reflecting industry codes of practice,
rents can move down as well as up. Our entrepreneurial tenants,
supported by our own experienced in-house team, continue to operate
bespoke offerings, tailored to attract customers in the communities
they serve under the strapline "Everyone's local".
PROPERTY, TREASURY, GOING CONCERN, RETIREMENT BENEFITS,
EXCEPTIONAL ITEMS AND TAX
PROPERTY
Our balance sheet strength is underpinned by our predominately
freehold estate in many highly desirable locations. 222 of our
total 269 pubs are freehold or long leaseholds with peppercorn
rents. Our total estate is now valued at GBP807.0 million (2018:
GBP742.9 million). The increased value has been driven by
acquisitions, major developments and improving existing pub values,
especially in our London heartland, assisted by our growing
trade.
Each year we undertake an exercise to revalue our pub estate to
reflect current market values. Savills, an independent and leading
commercial property adviser, revalued 20% of our estate, while an
internal review of the remaining 80% was led by Andrew Cox, MRICS,
our Director of Property and Tenancies. The valuation method used a
number of inputs of which the sustainable level of trade of each
pub is key.
In accordance with International Financial Reporting Standards,
individual increases in value have been reflected in the
revaluation reserve in the balance sheet (except to the extent that
they had previously been revalued downwards) and individual falls
in value below depreciated cost have been accounted for through the
income statement. None of these adjustments have a cash impact.
The pub property market in London and the surrounding areas has
remained strong throughout the period, which, coupled with our
continued trading performance, has resulted in a net upward
revaluation movement of GBP25.2 million (2018: GBP29.5 million).
This is comprised of an upward movement of GBP25.3 million (2018:
GBP29.2 million) reflected in the revaluation reserve and a
downward movement of GBP0.1 million (2018: GBP0.3 million reversal
of downward movement) recognised in the income statement under
exceptional items.
TREASURY
We remain highly cash generative. Our operating cash flow was
GBP69.2 million (2018: GBP61.4 million) with our premium business
and predominantly freehold estate outperforming the market.
Following the acquisition of Redcomb pubs, our total net debt
has increased by GBP23.1 million to GBP163.6 million. The leverage
ratio impact of the Redcomb acquisition was slightly exaggerated
due to the completion date falling in the last quarter of the year.
Nevertheless, our net debt to adjusted EBITDA ratio remains
conservative at 2.2 times (2018: 2.0 times) underpinned by our
strong balance sheet, giving us opportunities to pursue our
acquisition strategy. Gearing is 27.6% (2018: 25.6%).
During the year, we utilised the accordion mechanism in our
revolving credit facility, extending it from GBP75 million to
GBP100 million and thus bringing our year-end funding facilities to
GBP200 million. Taken out in March 2018, the revolving credit
facility, split evenly between HSBC and Barclays, initially ran
until 2023. We extended the facility to 2024; a further one year
option to extend to 2025 remains. All of our remaining facilities
are unamended. Of our drawn debt, 61.0% is on fixed interest
rates.
After the end of the financial year we secured additional
long-term debt financing through a private placement. This will see
us raise GBP35 million in July 2019, with Barings receiving senior
secured notes at a fixed interest rate of 3.30% for 20 years.
GOING CONCERN
Given our long-term facilities, our freehold estate, significant
free cash flow and the conservative financial ratios referred to
above, we have prepared our 2019 financial statements on a going
concern basis.
RETIREMENT BENEFITS
We have a defined benefit pension scheme which has been closed
to new entrants since 2003. During the course of the year our
pension deficit has increased by GBP2.5 million to GBP8.6 million.
Compared with last year, the rate of inflation has remained flat
whilst we have continued our commitment with another year of
special contributions, totalling GBP1.2 million, and we remain
fully committed to ensuring the pension scheme is adequately
funded.
A recent High Court judgement handed down regarding the Lloyds
Banking Group's defined benefit pension scheme will affect many
pension schemes in the UK, including the company's scheme. The
judgement concluded that schemes should be amended to ensure that
members who have guaranteed minimum pensions receive the same
benefits regardless of their gender. This change impacts on
guaranteed minimum pension benefits accrued between 1990 and 1997.
The trustee of the company's scheme is considering the impact of
the judgement on scheme liabilities and individual members, and at
1 April 2019 this work is ongoing.
In consultation with independent actuaries, the company has
estimated that the financial effect of equalising benefits is to
increase the company's accounting pension deficit in the balance
sheet by GBP2.5 million. This is required to be accounted for as a
benefit change, and a non-cash charge has been recognised as a past
service cost.
EXCEPTIONAL ITEMS
Due to the size and nature of the guaranteed minimum pension
charge, the GBP2.5 million has been presented as an exceptional
item in the income statement, making up the majority of the total
GBP3.9 million of exceptional items.
It was another busy year on the acquisition front and the
associated costs related to business combinations were GBP1.2
million (2018: GBP1.2 million). The most significant investment
decision of the year was the acquisition of the Redcomb group, and
there were further costs relating to the People's Park Tavern. The
Bear was the latest pub to transfer across to managed following its
acquisition in the prior year. An early termination was also agreed
with the tenant of the Bayee Village (Wimbledon Village) as part of
the project at the Dog & Fox. Compensation payable to terminate
their lease agreements early is expensed under IFRS, with the cost
in the year of GBP0.5 million included within exceptional
items.
The remaining exceptional items are a charge relating to the
revaluation of the pub estate of GBP0.1 million, as mentioned
previously, along with a profit on disposal of two tenanted pubs of
GBP0.4 million.
TAX
Our corporation tax charge for the year was GBP8.0 million, with
a fall in our effective corporation tax rate for the year, adjusted
for exceptional items, of 0.6% pts to 18.7%. The headline UK
corporation tax rate remained at 19.0% and is set to reduce in
future years to 17.0% from April 2020 impacting on deferred tax
balances.
The group's tax strategy has been published on the Young's
website in accordance with recent UK tax law.
SHAREHOLDER RETURNS
Having started life in 1831, Young's is a long-standing business
and we are determined to continue our long-term, sustainable growth
story. We continue to deliver strong performances from our existing
estate and our hand-picked developments, focussing on both
immediate and maintainable gains.
Our strong and sustainable cash flows support our acquisition
and development programs to maintain our pubs at the premium end of
the market, maximise future returns, maintain net debt at
acceptable levels and help continue our proud record of consecutive
dividend increases.
This year, we are pleased to recommend raising the final
dividend for the 22nd consecutive year, once again by 6.0%, this
time to 10.81 pence. If approved by shareholders, this will give a
total dividend for the year of 20.78 pence (2018: 19.61 pence),
representing a real income increase from Young's shares.
Our adjusted earnings per share now stands at 72.13 pence per
share, up 6.5%. On an unadjusted basis, earnings per share rose by
4.5% to 64.36 pence. These earnings per share figures result in a
healthy dividend cover of 3.5 times and 3.1 times respectively.
Patrick Dardis
Chief Executive
22 May 2019
GROUP INCOME STATEMENT
For the 52 weeks ended 1 April 2019
2019 2018
Notes GBPm GBPm
---------------------------------------------- ----- ------- -------
Revenue 303.7 279.3
Operating costs before exceptional items (255.2) (232.4)
---------------------------------------------- ----- ------- -------
Operating profit before exceptional items 48.5 46.9
Operating exceptional items 3 (3.9) (3.4)
---------------------------------------------- ----- ------- -------
Operating profit 44.6 43.5
Finance costs (5.0) (5.6)
Other finance charges (0.1) (0.3)
---------------------------------------------- ----- ------- -------
Profit before tax 39.5 37.6
Taxation 5 (8.0) (7.5)
---------------------------------------------- ----- ------- -------
Profit for the period attributable to shareholders
of the parent company 31.5 30.1
----------------------------------------------------- ------- -------
Pence Pence
------------------- --- ------------ -----
Earnings per 12.5p ordinary share
Basic 7 64.36 61.60
Diluted 7 64.31 61.56
------------------- --- ------------ -----
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the 52 weeks ended 1 April 2019
2019 2018
Notes GBPm GBPm
-------------------------------------------------- ----- ----- -----
Profit for the period 31.5 30.1
-------------------------------------------------- ----- ----- -----
Other comprehensive income
Items that will not be reclassified subsequently
to profit or loss:
Unrealised gain on revaluation of property 8 25.3 29.2
Remeasurement of retirement benefit schemes 9 (1.2) 5.8
Tax on above components of other comprehensive
income (3.2) (4.5)
Items that will be reclassified subsequently to profit
or loss:
Fair value movement of interest rate swaps 0.5 4.3
Tax on fair value movement of interest rate
swaps (0.1) (0.7)
-------------------------------------------------- ----- ----- -----
21.3 34.1
-------------------------------------------------- ----- ----- -----
Total comprehensive income for shareholders of the
parent company 52.8 64.2
--------------------------------------------------------- ----- -----
BALANCE SHEETS
At 1 April 2019
2019 2018
Notes GBPm GBPm
--------------------------------- ----- ------- -------
Non-current assets
Goodwill and intangible assets 33.5 19.7
Property and equipment 8 807.0 742.9
Investment in subsidiaries - -
Deferred tax assets 7.4 6.4
Lease premiums 12.9 13.6
--------------------------------- ----- ------- -------
860.8 782.6
--------------------------------- ----- ------- -------
Current assets
Inventories 3.7 3.0
Trade and other receivables 8.3 7.0
Lease premiums 0.7 0.8
Cash 8.5 7.2
--------------------------------- ----- ------- -------
21.2 18.0
--------------------------------- ----- ------- -------
Total assets 882.0 800.6
--------------------------------- ----- ------- -------
Current liabilities
Borrowings (8.5) (10.0)
Derivative financial instruments (1.9) (1.9)
Trade and other payables (35.9) (30.9)
Income tax payable (4.8) (4.3)
--------------------------------- ----- ------- -------
(51.1) (47.1)
--------------------------------- ----- ------- -------
Non-current liabilities
Borrowings (163.6) (137.7)
Derivative financial instruments (4.2) (4.7)
Deferred tax liabilities (60.6) (54.6)
Retirement benefit schemes 9 (8.6) (6.1)
Other liabilities (0.5) (1.2)
--------------------------------- ----- ------- -------
(237.5) (204.3)
--------------------------------- ----- ------- -------
Total liabilities (288.6) (251.4)
--------------------------------- ----- ------- -------
Net assets 593.4 549.2
--------------------------------- ----- ------- -------
Capital and reserves
Share capital 6.1 6.1
Share premium 6.7 5.7
Capital redemption reserve 1.8 1.8
Hedging reserve (4.8) (5.2)
Revaluation reserve 295.1 273.3
Retained earnings 288.5 267.5
Total equity 593.4 549.2
--------------------------------- ----- ------- -------
GROUP STATEMENTS OF CASH FLOW
For the 52 weeks ended 1 April 2019
2019 2018
Notes GBPm GBPm
-------------------------------------------- ----- ------ ------
Operating activities
Net cash generated from operations 10 69.2 61.4
Tax paid (9.2) (9.1)
-------------------------------------------- ----- ------ ------
Net cash flow from operating activities 60.0 52.3
-------------------------------------------- ----- ------ ------
Investing activities
Sale of property and equipment 1.3 2.1
Purchases of property, equipment and lease
premiums (33.9) (30.4)
Business combinations, net of cash acquired (25.3) (23.0)
Investment in subsidiaries - -
-------------------------------------------- ----- ------ ------
Net cash used in investing activities (57.9) (51.3)
-------------------------------------------- ----- ------ ------
Financing activities
Interest paid (5.1) (5.3)
Issued equity 0.3 -
Equity dividends paid 6 (9.9) (9.3)
Repayment of borrowings (12.1) (20.0)
Proceeds from borrowings 26.0 34.2
-------------------------------------------- ----- ------ ------
Net cash flow used in financing activities (0.8) (0.4)
--------------------------------------------------- ------ ------
Increase in cash 1.3 0.6
Cash at the beginning of the period 7.2 6.6
-------------------------------------------- ----- ------ ------
Cash at the end of the period 8.5 7.2
-------------------------------------------- ----- ------ ------
GROUP STATEMENT OF CHANGES IN EQUITY
At 1 April 2019
Capital
Share redemption Hedging Revaluation Retained Total
capital(1) reserve reserve reserve earnings equity
Notes GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- ---------- ---------- ------- ----------- -------- ------
At 3 April 2017 11.3 1.8 (8.8) 247.7 241.0 493.0
Total comprehensive income
Profit for the period - - - - 30.1 30.1
-------------------------------- ---------- ---------- ------- ----------- -------- ------
Other comprehensive income
Unrealised gain on revaluation
of property 8 - - - 29.2 - 29.2
Remeasurement of retirement
benefit schemes 9 - - - - 5.8 5.8
Fair value movement of interest
rate swaps - - 4.3 - - 4.3
Tax on above components of
other comprehensive income - - (0.7) (3.5) (1.0) (5.2)
-------------------------------- ---------- ---------- ------- ----------- -------- ------
- - 3.6 25.7 4.8 34.1
-------------------------------- ---------- ---------- ------- ----------- -------- ------
Total comprehensive income - - 3.6 25.7 34.9 64.2
-------------------------------- ---------- ---------- ------- ----------- -------- ------
Transactions with owners recorded directly in equity
Share capital issued 0.5 - - - - 0.5
Dividends paid on equity shares - - - - (9.3) (9.3)
Revaluation reserve realised
on disposal of properties - - - (0.1) 0.1 -
Share based payments - - - - 0.6 0.6
Movement in shares held by
The Ram Brewery Trust II - - - - 0.2 0.2
-------------------------------- ---------- ---------- ------- ----------- -------- ------
0.5 - - (0.1) (8.4) (8.0)
-------------------------------- ---------- ---------- ------- ----------- -------- ------
At 2 April 2018 11.8 1.8 (5.2) 273.3 267.5 549.2
-------------------------------- ---------- ---------- ------- ----------- -------- ------
Total comprehensive income
Profit for the period - - - - 31.5 31.5
-------------------------------- ---------- ---------- ------- ----------- -------- ------
Other comprehensive income
Unrealised gain on revaluation
of property 8 - - - 25.3 - 25.3
Remeasurement of retirement
benefit schemes 9 - - - - (1.2) (1.2)
Fair value movement of interest
rate swaps - - 0.5 - - 0.5
Tax on above components of
other comprehensive income - - (0.1) (3.5) 0.3 (3.3)
- - 0.4 21.8 (0.9) 21.3
-------------------------------- ---------- ---------- ------- ----------- -------- ------
Total comprehensive income - - 0.4 21.8 30.6 52.8
-------------------------------- ---------- ---------- ------- ----------- -------- ------
Transactions with owners recorded directly in equity
Share capital issued 1.0 - - - - 1.0
Dividends paid on equity shares - - - - (9.9) (9.9)
Share based payments - - - - 0.3 0.3
1.0 - - - (9.6) (8.6)
-------------------------------- ---------- ---------- ------- ----------- -------- ------
At 1 April 2019 12.8 1.8 (4.8) 295.1 288.5 593.4
-------------------------------- ---------- ---------- ------- ----------- -------- ------
(1) Total share capital comprises the nominal value of the share capital
issued and fully paid of GBP6.1 million (2018: GBP6.1 million) and the
share premium account of GBP6.7 million (2018: GBP5.7 million). Share
capital issued in the period comprises the nominal value of GBPnil (2018:
GBPnil) and share premium of GBP1.0 million (2018: GBP0.5 million).
1. Accounts
This preliminary announcement was approved by the board on 22
May 2019. The financial statements in it are not the group's
statutory financial statements. The statutory financial statements
for the period ended 2 April 2018 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 1 April 2019, which are expected to be delivered to the
Registrar of Companies shortly. Both audit reports were
unqualified, did not include a reference to any matters to which
the auditor drew attention by way of emphasis without qualifying
the reports and did not contain any statement under s.498(2) or (3)
of the Companies Act 2006.
The current period and prior period relate to the 52 weeks ended
1 April 2019 and 2 April 2018 respectively. The financial
statements are presented in pounds sterling and all values are
rounded to the nearest hundred thousand (GBP0.1 million) except
where otherwise indicated.
This preliminary announcement has been agreed with the company's
auditor for release.
The audited financial information in this statement has been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted for use in the European Union. The
accounting policies used have been consistently applied and are
described in full in the statutory financial statements for the
period ended 1 April 2019, which are expected to be mailed to
shareholders on or before 12 June 2019. The financial statements
will also be available on the group's website,
www.youngs.co.uk.
2. Segmental reporting
The group is organised into the reporting segments referred to
below. These segments are based on the different resources and
risks involved in the running of the group. The executive board of
the group internally reviews each reporting segment's operating
profit or loss before exceptional items for the purpose of deciding
on the allocation of resources and assessing performance.
The group has two operating segments: Young's managed houses and
the Ram Pub Company. Young's managed houses operate pubs with
revenue derived from sales of drink, food and the provision of
accommodation. The Ram Pub Company consists of pubs owned or leased
by the company and leased or sub leased to third parties. Revenue
is derived from rents payable by, and sales of drink made to,
tenants. Unallocated income and costs relate to head office.
Total segment revenue is derived externally with no intersegment
revenues between the segments in either period. The group's revenue
is derived entirely from the UK.
Income statement Managed Ram Pub Segments Unallocated Total
houses Company total
2019 GBPm GBPm GBPm GBPm GBPm
------------------------------------------- ------- ------- -------- ----------- -----
Sales of goods 276.4 9.7 286.1 - 286.1
Accommodation sales 13.3 - 13.3 - 13.3
------------------------------------------- ------- ------- -------- ----------- -----
Revenue recognised under contracts
with customers 289.7 9.7 299.4 - 299.4
Rental income 0.6 3.3 3.9 0.4 4.3
------------------------------------------- ------- ------- -------- ----------- -----
Total revenue recognised 290.3 13.0 303.3 0.4 303.7
------------------------------------------- ------- ------- -------- ----------- -----
Operating profit/(loss) before exceptional
items 61.5 5.0 66.5 (18.0) 48.5
Operating exceptional items (0.9) (0.5) (1.4) (2.5) (3.9)
------------------------------------------- ------- ------- -------- ----------- -----
Operating profit/(loss) 60.6 4.5 65.1 (20.5) 44.6
------------------------------------------- ------- ------- -------- ----------- -----
2018
------------------------------------------- ------- ------- -------- ----------- -----
Sales of goods 254.7 9.3 264.0 - 264.0
Accommodation sales 11.2 - 11.2 - 11.2
------------------------------------------- ------- ------- -------- ----------- -----
Revenue recognised under contracts
with customers 265.9 9.3 275.2 - 275.2
Rental income 0.5 3.3 3.8 0.3 4.1
Total revenue recognised 266.4 12.6 279.0 0.3 279.3
------------------------------------------- ------- ------- -------- ----------- -----
Operating profit/(loss) before exceptional
items 60.7 4.4 65.1 (18.2) 46.9
Operating exceptional items (4.0) 0.6 (3.4) - (3.4)
------------------------------------------- ------- ------- -------- ----------- -----
Operating profit/(loss) 56.7 5.0 61.7 (18.2) 43.5
------------------------------------------- ------- ------- -------- ----------- -----
The following is a reconciliation of the operating profit to the profit
before tax:
2019 2018
GBPm GBPm
------------------------------------------- ------- ------- -------- ----------- -----
Operating profit 44.6 43.5
Finance costs (5.0) (5.6)
Other finance charges (0.1) (0.3)
------------------------------------------- ------- ------- -------- ----------- -----
Profit before tax 39.5 37.6
------------------------------------------- ------- ------- -------- ----------- -----
3. Exceptional items
2019 2018
GBPm GBPm
------------------------------------------------------------ ----- -----
Amounts included in operating profit:
Upward movement on the revaluation of properties(1)
(note 8) 3.4 2.1
Downward movement on the revaluation of properties(1)
(note 8) (3.5) (1.8)
Guaranteed minimum pension equalisation(2) (note
9) (2.5) -
Tenant compensation(3) (0.5) (2.8)
Acquisition costs(4) (1.2) (1.2)
Net profit on sale of properties(5) 0.4 0.3
Loss on disposal of property(6) - (0.5)
Onerous lease provision released on disposal of property(6) - 0.5
(3.9) (3.4)
------------------------------------------------------------ ----- -----
Exceptional tax:
Tax attributable to above adjustments 0.1 0.4
0.1 0.4
------------------------------------------------------------ ----- -----
Total exceptional items after tax (3.8) (3.0)
------------------------------------------------------------ ----- -----
(1) The movement on the revaluation of properties is a non-cash
item that relates to the revaluation exercise that was completed
based on the period end date. The revaluation was conducted at an
individual pub level and identified an upward movement of GBP3.4
million (2018: GBP2.1 million) representing reversals of previous
impairments recognised in the income statement, and a downward
movement of GBP3.5 million (2018: GBP1.8 million), representing
downward movements in excess of amounts recognised in equity. These
resulted in a net downward movement of GBP0.1 million (2018: GBP0.3
million net upward) which has been recognised in the income
statement. The downward movement for the period ended 1 April 2019
was split between land and buildings of GBP0.1 million downward
(2018: GBP0.3 million upward) and fixtures and fittings of GBPnil
(2018: GBPnil). See note 5 for segmental information.
(2) The Guaranteed Minimum Pension (GMP) is the minimum pension
which a UK occupational pension scheme must provide for those
employees who were contracted out of the State Earnings-Related
Pensions Scheme between 6 April 1978 and 5 April 1997. Following
the ruling of the High Court of Justice of England and Wales on 26
October 2018, the need to equalise the effect of differences in
GMPs between males and females was made more certain and
consequently an allowance for the effect of GMP equalisation has
been made in the current financial period. Although a number of
methodologies could be used to determine the impact, the group has
adopted method C2 to identify its best estimate of the additional
liabilities. These are charged as a past service cost in the income
statement as an exceptional item since the liabilities relate to
employee service between 1990 and 1997 and they have no link to
current business performance. The increase in liabilities (note 9)
as at 1 April 2019 is estimated at GBP2.5 million, assessed using
market conditions at the date of the ruling as required by IAS
19.
(3) Tenant compensation of GBP0.5 million was paid to the
previous tenants of the Bear (Cobham) and the Bayee Village
(Wimbledon Village) to terminate their lease agreements early.
During the prior period, the group paid tenant compensation of
GBP2.8 million to the previous tenants of the Hope & Anchor
(Brixton), Grove (Camberwell) and the King's Arms (Wandsworth).
(4) The acquisition costs relate to the purchase of Redcomb Pubs
Limited, a corporate group with 15 sites acquired on 23 January
2019, along with the People's Park Tavern (Hackney) and the
Plantation (Poole). They include legal and professional fees and
stamp duty land tax. The prior period acquisition costs related to
the Chequers Inn (Hanham Mills), Smiths of Smithfield (Smithfield
Market), Smiths (Cannon Street), Park (Teddington) and the Bridge
(Chertsey).
(5) The profit on sale of properties relates to the difference
between the cash, less selling costs, received from the sale of the
King's Arms (Mitcham) and the William IV (Bletchingley) and the
carrying value of the assets on the date of sale. In the prior
period there was a profit from the sale of the King's Arms
(Epsom).
(6) The prior year loss on disposal of properties relates to the
difference between cash, less selling costs, received from the sale
of the Court House (Dartford) and the carrying value of the net
assets at the date of sale. Previously an onerous lease was
recognised in respect of the property which was subsequently
released on disposal.
4. Other financial measures
The table below shows how adjusted group EBITDA, operating
profit and profit before tax have been arrived at. They exclude
exceptional items which due to their material or non-recurring
nature distort the group's performance. These alternative
performance measures have been provided to help investors assess
the group's underlying performance. Details of the exceptional
items can be seen in note 3. All the results below are from
continuing operations.
2019 2018
--------------------------------- ---------------------------------
Exceptional Exceptional
Unadjusted items Adjusted Unadjusted items Adjusted
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- ---------- ----------- -------- ---------- ----------- --------
EBITDA 69.0 3.8 72.8 65.0 3.7 68.7
Depreciation and net
movement on the revaluation
of properties (23.5) 0.1 (23.4) (20.8) (0.3) (21.1)
Amortisation of lease
premiums (0.9) - (0.9) (0.7) - (0.7)
----------------------------- ---------- ----------- -------- ---------- ----------- --------
Operating profit 44.6 3.9 48.5 43.5 3.4 46.9
Net finance costs (5.0) - (5.0) (5.6) - (5.6)
Other finance charges (0.1) - (0.1) (0.3) - (0.3)
----------------------------- ---------- ----------- -------- ---------- ----------- --------
Profit before tax 39.5 3.9 43.4 37.6 3.4 41.0
----------------------------- ---------- ----------- -------- ---------- ----------- --------
Any reference to 'like-for-like' means excluding the impact of
any acquisitions or disposals in the financial period.
5. Taxation
2019 2018
Tax charged in the group income statement GBPm GBPm
------------------------------------------------------ ----- -----
Current tax
Current tax expense 9.3 8.7
Adjustment in respect of current tax of prior periods (0.4) -
------------------------------------------------------ ----- -----
8.9 8.7
------------------------------------------------------ ----- -----
Deferred tax
Origination and reversal of temporary differences (0.9) (1.2)
(0.9) (1.2)
------------------------------------------------------ ----- -----
Tax expense 8.0 7.5
------------------------------------------------------ ----- -----
Deferred tax in the group income statement
------------------------------------------------------ ----- -----
Property revaluation and disposals (0.1) (0.5)
Capital allowances (0.5) (0.9)
Retirement benefit schemes (0.2) 0.2
Share based payments 0.1 -
Trade losses (0.2) -
Tax credit (0.9) (1.2)
------------------------------------------------------ ----- -----
Deferred tax in the group statement of comprehensive income
--------------------------------------------------------------------
Property revaluation and disposals 3.5 3.5
Retirement benefit schemes (0.3) 1.0
Interest rate swaps 0.1 0.7
Tax charge 3.3 5.2
------------------------------------------------------ ----- -----
Changes to the UK corporation tax rate from 20% to 19%
(effective from 1 April 2017) and then to 17% (effective from 1
April 2020) were substantively enacted into law on 6 September
2016. Deferred tax balances that will be realised or settled
between 3 April 2018 and 1 April 2020 have been measured at 19%,
with the remainder remeasured at 17%.
6. Dividends on equity shares
2019 2018 2019 2018
Pence Pence GBPm GBPm
---------------------------------- ----- ----- ---- ----
Final dividend (previous period) 10.20 9.62 5.0 4.7
Interim dividend (current period) 9.97 9.41 4.9 4.6
---------------------------------- ----- ----- ---- ----
20.17 19.03 9.9 9.3
---------------------------------- ----- ----- ---- ----
In addition, the board is proposing a final dividend in respect
of the period ended 1 April 2019 of 10.81 pence per share at a cost
of GBP5.3 million. If approved, it is expected to be paid on 11
July 2019 to shareholders who are on the register of members at the
close of business on 7 June 2019.
7. Earnings per ordinary share
(a) Earnings 2019 2018
GBPm GBPm
---------------------------------------------------- ---------- ----------
Profit attributable to equity shareholders of the
parent 31.5 30.1
Operating exceptional items 3.9 3.4
Tax attributable to above adjustments (0.1) (0.4)
Adjusted earnings after tax 35.3 33.1
---------------------------------------------------- ---------- ----------
Number Number
---------------------------------------------------- ---------- ----------
Basic weighted average number of ordinary shares
in issue 48,941,761 48,862,927
Dilutive potential ordinary shares from outstanding
employee share options 41,753 33,413
---------------------------------------------------- ---------- ----------
Diluted weighted average number of shares 48,983,514 48,896,340
---------------------------------------------------- ---------- ----------
(b) Basic earnings per share
Pence Pence
---------------------------------------------------- ---------- ----------
Basic 64.36 61.60
Effect of exceptional items and other adjustments 7.77 6.14
---------------------------------------------------- ---------- ----------
Adjusted basic 72.13 67.74
---------------------------------------------------- ---------- ----------
(c) Diluted earnings per share
Pence Pence
---------------------------------------------------- ---------- ----------
Diluted 64.31 61.56
Effect of exceptional items and other adjustments 7.76 6.13
---------------------------------------------------- ---------- ----------
Adjusted diluted 72.07 67.69
---------------------------------------------------- ---------- ----------
The basic earnings per share figure is calculated by dividing
the profit attributable to equity shareholders of the parent for
the period by the weighted average number of ordinary shares in
issue during the period.
Diluted earnings per share have been calculated on a similar
basis taking into account 41,753 (2018: 33,413) dilutive potential
shares under the SAYE scheme.
Adjusted earnings per share are presented to eliminate the
effect of the exceptional items and the tax attributable to those
items on basic and diluted earnings per share.
8. Property and equipment
Fixtures,
Land & fittings &
buildings equipment Total
GBPm GBPm GBPm
------------------------------------------- --------- ---------- ------
Cost or valuation
At 3 April 2017 647.3 121.3 768.6
Additions 9.3 20.7 30.0
Business combinations 12.7 3.5 16.2
Disposals (1.0) - (1.0)
Fully depreciated assets (0.7) (11.3) (12.0)
Transfers from lease premiums 0.4 - 0.4
Transfers from subsidiary companies - - -
Revaluation(1)
-effect of upward movement in property
valuation 32.5 - 32.5
-effect of downward movement in property
valuation (4.9) - (4.9)
At 2 April 2018 695.6 134.2 829.8
Additions 10.1 23.8 33.9
Business combinations 23.5 5.8 29.3
Disposals (1.1) (0.3) (1.4)
Fully depreciated assets (0.2) (15.5) (15.7)
Revaluation(1) -
-effect of upward movement in property
valuation 34.0 - 34.0
-effect of downward movement in property
valuation (10.4) - (10.4)
------------------------------------------- --------- ---------- ------
At 1 April 2019 751.5 148.0 899.5
------------------------------------------- --------- ---------- ------
Depreciation and impairment
At 3 April 2017 30.5 49.0 79.5
Depreciation charge 1.8 19.3 21.1
Disposals - - -
Fully depreciated assets (0.7) (11.3) (12.0)
Transfers from lease premiums 0.2 - 0.2
Transfers from subsidiary companies - - -
Revaluation(1)
-effect of downward movement in property
valuation 1.8 - 1.8
-effect of upward movement in property
valuation (3.7) - (3.7)
At 2 April 2018 29.9 57.0 86.9
Depreciation charge 1.9 21.5 23.4
Disposals (0.4) (0.1) (0.5)
Fully depreciated assets (0.2) (15.5) (15.7)
Revaluation(1) -
-effect of downward movement in property
valuation 3.5 - 3.5
-effect of upward movement in property
valuation (5.1) - (5.1)
------------------------------------------- --------- ---------- ------
At 1 April 2019 29.6 62.9 92.5
------------------------------------------- --------- ---------- ------
Net book value
At 3 April 2017 616.8 72.3 689.1
------------------------------------------- --------- ---------- ------
At 2 April 2018 665.7 77.2 742.9
------------------------------------------- --------- ---------- ------
At 1 April 2019 721.9 85.1 807.0
------------------------------------------- --------- ---------- ------
(1) The group's net book value uplift during the period was
GBP25.2 million (2018: GBP29.5 million). This uplift was recognised
either in the revaluation reserve or the income statement, as
appropriate. The impact of the revaluations was as follows:
2019 2018
GBPm GBPm
--------------------------------------- ------ -----
Income statement
Revaluation loss charged as impairment (3.5) (1.8)
Reversal of past impairment 3.4 2.1
--------------------------------------- ------ -----
(0.1) 0.3
--------------------------------------- ------ -----
Revaluation reserve
Unrealised revaluation surplus 35.8 34.1
Reversal of past surplus (10.5) (4.9)
--------------------------------------- ------ -----
25.3 29.2
--------------------------------------- ------ -----
Net revaluation increase in property 25.2 29.5
--------------------------------------- ------ -----
IFRS 16: Leases, replacing IAS 17, is effective for the
financial period starting 2 April 2019. It removes the distinction
between operating and finance leases and will result in most leases
being recognised on the balance sheet as a lease liability and a
right-of-use asset. The impact for the period to 30 March 2020 is
that EBITDA will increase by between GBP7.0 million and GBP9.0
million, adjusted operating profit will increase by between GBP1.2
million and GBP1.8 million, adjusted profit before tax will
decrease by between GBP0.7 million and GBP1.3 million.
At the opening balance sheet date of 2 April 2019, total assets
and total liabilities are both expected to increase by between
GBP78.0 million and GBP82.0 million. This is the result of the
introduction of a lease liability and a right-of-use asset.
9. Retirement benefit schemes
Movement in scheme deficits in the period
2019 2018
Health Health
Pension care Pension care
scheme scheme Total scheme scheme Total
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- ----------- -------- ------- -------- ------- -------
Changes in the present value of the schemes are as follows:
Opening deficit (2.4) (3.7) (6.1) (8.8) (4.0) (12.8)
Current service costs (0.3) - (0.3) (0.3) - (0.3)
Past service costs (2.5) - (2.5) - - -
Contributions 1.4 0.2 1.6 1.3 0.2 1.5
Other finance charges - (0.1) (0.1) (0.3) (0.1) (0.3)
Remeasurement through OCI (1.3) 0.1 (1.2) 5.6 0.2 5.8
Closing deficit (5.1) (3.5) (8.6) (2.4) (3.7) (6.1)
----------------------------------- ----------- -------- ------- -------- ------- -------
10. Net cash generated from operations and analysis of net
debt
2019 2018
GBPm GBPm
---------------------------------------- ----- -----
Profit before tax on continuing
operations 39.5 37.6
Net finance cost 5.0 5.6
Other finance charges 0.1 0.3
---------------------------------------- ----- -----
Operating profit on continuing
operations 44.6 43.5
Depreciation 23.4 21.1
Amortisation of lease premiums 0.9 0.7
Goodwill impairment - 0.2
Movement on revaluation of properties 0.1 (0.3)
Profit on sales of property (0.4) (0.3)
Loss on disposal - 0.5
Guaranteed minimum pension equalisation 2.5 -
Difference between pension service
cost and cash contributions paid (1.3) (1.2)
Movement in other provisions (0.7) 0.1
Share based payments 0.3 0.6
Movements in working capital
- Inventories (0.4) (0.2)
- Receivables 2.4 0.4
- Payables (2.2) (3.7)
---------------------------------------- ----- -----
Net cash generated from operations 69.2 61.4
---------------------------------------- ----- -----
Analysis of net debt
2019 2018
GBPm GBPm
------------------------------------------ ------- -------
Cash 8.5 7.2
Current borrowings - current borrowings
and loan capital (8.5) (10.0)
Non-current borrowings - loan capital and
finance lease (163.6) (137.7)
------------------------------------------ ------- -------
Net debt (163.6) (140.5)
------------------------------------------ ------- -------
11. Post balance sheet events
There were no post balance sheet events except for completion of
a private placement debt facility; after the end of the financial
year the group secured additional long-term debt financing through
a private placement. This will see the group raise GBP35 million in
July 2019, with Barings receiving senior secured notes at a fixed
interest rate of 3.30% for 20 years.
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 or visit www.rns.com.
END
FR UUVWRKAAVUAR
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May 23, 2019 02:00 ET (06:00 GMT)
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