Young & Co's Brewery Regulatory News (YNGA)

10 Nov 2005 07:00

Young & Co's Brewery PLC10 November 2005 10 November 2005 INTERIM RESULTS for the 26 weeks to 1 October 2005 Highlights • Turnover increased to £62.5 million up 2.7% • Operating profit up to £7.2 million* up 0.7% • Adjusted profit before tax of £5.5 million* up 3.3% • Profit before tax of £4.9 million down 3.3% • Adjusted earnings per share of 31.80p* up 2.5% • Dividend per share increased to 12.00p up 5.3% *Excludes exceptional items • Good performance from the retail estate, driven by 6.1% higher food sales and the benefits of previous investments coming through; • Profits from managed and tenanted estate up 10.8% and 16.2% respectively, despite the impact of increased costs, the July bombings and weak consumer demand; • Continued growth of Young's cask ale, with volumes up by 1.3% against a market decline; • Good performance in take-home and wholesale markets, but total beer production down 7.1% reflecting lower levels of contract brewing in the period; • Profits before tax impacted by exceptional costs reflecting major corporate activity during the period including simplifying the company's share structure and transfer of its shares to trading on AIM; • Progress continues on Wandsworth site review, though the Board estimates that a conclusion to the process remains some time away. John Young, Chairman, commented: "The first half has seen a considerable amount of change at Young's with a majorsimplification of our share structure and the transfer of our shares to tradingon AIM. Without doubt we are one of the largest and oldest companies trading onthis young and vibrant market. "Trading has been solid, particularly given the pressures in London over thesummer months and the continuing regulatory and government imposed costincreases facing all parts of our business. "Reductions in consumer spending will make for a challenging second half andwith the important Christmas trading period still to come, it remains too earlyto predict the outcome for the year as a whole." For further information, please contact: Young & Co.'s Brewery, P.L.C. 020 8875 7000Stephen Goodyear, Chief ExecutivePeter Whitehead, Finance Director Hogarth Partnership 020 7357 9477James Longfield / John Olsen Chairman's statement The first half has seen a considerable amount of change at Young's with a majorsimplification of our share structure and the transfer of our shares to tradingon AIM. We are one of the largest and oldest companies trading on this young andvibrant market. Turnover for the first half was up 2.7% at £62.5 million. Adjusted profit beforetax was £5.5 million and adjusted earnings per share were 31.80p up 3.3% and2.5% respectively. This continued improvement in underlying performance has ledthe Board to decide to pay an increased interim dividend, up 5.3% to 12.00p.This will be paid on 9 December 2005 to shareholders on the register on 25November 2005. Profit before tax after exceptional items, which principally relate to the moveto AIM, the continuing costs associated with the Wandsworth site review andother property related costs, was £4.9 million, a decrease of 3.3%. Managed pubs and inns This first half has seen growth in sales as the benefits of past investments inthe retail estate have borne fruit. The positive start to the summer was cutshort by the horrendous bombings in July followed by disappointing weather inAugust and the general slowdown in consumer spending. Despite this, our manageddivision has seen an increase in turnover of 2.0% and in profits of 10.8%. Foodsales have led the way with growth of 6.1%. Like for like turnover increased1.7% and like for like profits increased 1.9%. Across both pubs and inns the increase in operating profit was achieved in theface of increased costs arising from the minimum wage, utilities, the new ratingsystem and preparation for the new licensing laws, which come into force laterthis month. They create an unwelcome and costly distraction for our pubmanagement teams, compounded by the fact that there has been very littleconsistency in the way each council has interpreted the laws. The proposed smoking ban provides Young's next legislative hurdle. It is clearlydifficult to judge how much trade will be affected and we are planning tominimise this. 84 of our 109 managed pubs have significant outdoor space andfood is a growing part of our business. In the meantime we are increasingnon-smoking areas ahead of the likely ban. Despite strong competition and difficult market conditions in London, our inndivision has proved quite resilient in the period with occupancy slightly lowerthan last year and room rates up at £61.49, leaving REVPAR at £39.35, a 3.1%increase. During the period we invested £3.7 million in our managed estate. Majorrefurbishments have been completed at the Spread Eagle in Camden, the QueenAdelaide, the Duke on the Green (formerly the Duke of Cumberland) and the OrangeTree. These have all seen sales growth, especially food. In addition we haveexchanged contracts on a prime riverside site in a new development in Vauxhall. Our excellent pub environments, coupled with quality products and high servicestandards, will provide some protection from the difficult trading times ahead.In addition we have the advantage of running both managed and tenanted houseswhich allows us the flexibility to operate the estate to the best effect. During the summer the Coopers Arms and the Grove in Balham returned tomanagement, while the Rattlebone was transferred to tenancy and we relinquishedthe lease on the Bath Arms at Longleat. The total number of pubs in our managedestate at the end of the period was 109 with 366 letting rooms. Tenancies Turnover in the tenanted division was up 5.6% and profits by 16.2%. On a likefor like basis sales were up 1.6% and profits up 6.4%. As with the managedestate a considerable amount of management time has been expended in assistingtenants with the new licensing laws. Major refurbishment works were carried out to the Bull's Head in Barnes tomaintain the music area, despite issues with the local council. Several othersmaller refurbishments have also taken place and we have disposed of Next Doorin Oxford. The total number of tenancies is 97. Brewing and brands We are pleased with the performance of Young's Bitter, our flagship brand, inthe period, which saw cask sales up 1.3%, continuing its recent trend of buckingthe market decline. Young's Bitter is the fourth most popular cask ale in Londonand is in the top ten nationally (AC Nielsen 2005). Against this success for Young's Bitter, our total beer sales and productionwere down 7.1% in the first half, accounted for by less contract beer beingbrewed and the anticipated continued decline of Light Ale sales. We saw good growth in the off-trade, up 5.4%. The star performer was SpecialLondon Ale, the UK's number one bottle conditioned beer, which secured severalkey distribution gains amongst the major supermarkets. In the on-trade, Young's Bitter has increased its presence amongst the major pubmultiples, with sales up 13% on a national basis, which has partly offset theongoing decline in Young's Light Ale sales, leaving pub multiple sales down 7%.The wholesale channel has performed well with volumes up 9.8% and particularsuccesses noted with the national distributors. This sector grows in importanceyear on year and is a vital part of delivering our cask ale strategy. Volumes inour regional independent free trade remain little changed on last year;nonetheless this remains an important and highly profitable part of ourbusiness. Export volumes are up 1.2% with a particularly strong performance inScandinavia. Our ales have won prizes at the Great British Beer Festival, the BrewingIndustry International Awards and the Tesco Beer Awards. Cockburn & Campbell Cockburn & Campbell had a good first half with turnover up 5.7% but, withmargins under pressure due to suppliers' rising costs and a competitive marketnot prepared to accept price increases, profits were little changed. Wine volumes were up 7.5% with free trade leading the way, up 14.8%. This wasassisted by additions to the product range, especially Terra Mater from Chile,Churton from New Zealand and a range of new wines from Italy. Investment and finance We invested £5 million in our business, mainly on developments in our existingretail estate. Strong operating cash flow has allowed this to be achieved withonly a modest change in net debt to £53.1 million. Gearing at the end of theperiod was 37.1% and operating profit before exceptional costs covered interestby 3.7 times. Review of Ram Brewery site The review of the development potential of the Ram Brewery site continues tomake progress. As previously stated, identifying, understanding and resolvingthe complex issues relating to the future use of this major town centre site wasalways expected to be a time consuming process. Our relationship with WandsworthCouncil has been invaluable in this process and is a key factor in maximisingthe site's potential value. We shall continue to keep shareholders informed aswe progress. Outlook Further reductions in consumer spending and the apparently ever increasingmargin pressures will make for a challenging second half. With the importantChristmas trading period still to come, it remains too early to predict theoutcome for the year as a whole. Nonetheless we are confident that our actionswill provide long-term sustainable growth for our shareholders. YOUNG & CO.'S BREWERY, P.L.C. Unaudited profit and loss account For the 26 weeks ended 1 October 2005 Restated Restated 26 weeks to 26 weeks to 53 weeks to 1 Oct 05 25 Sept 04 2 Apr 05 £000 £000 £000 ------------------------------ --------- --------- --------Turnover 62,528 60,858 119,532Net operating costs beforeexceptional items (55,368) (53,751) (105,856)------------------------------ --------- --------- --------Operating profit beforeexceptional items 7,160 7,107 13,676Operating exceptional items (561) (412) (485)------------------------------ --------- --------- --------Operating profit 6,599 6,695 13,191Non-operating exceptional items (72) 118 362------------------------------ --------- --------- --------Profit on ordinary activitiesbefore interest 6,527 6,813 13,553Net interest charge (1,920) (1,953) (3,969)Other finance income 267 179 364------------------------------ --------- --------- --------Profit on ordinary activitiesbefore tax 4,874 5,039 9,948Tax on profit on ordinary activities (1,845) (1,777) (3,135)------------------------------ --------- --------- --------Profit attributable to ordinaryshareholders 3,029 3,262 6,813Ordinary dividends on equity shares (1,414) (1,355) (2,671)------------------------------ --------- --------- --------Retained profit for the financialperiod 1,615 1,907 4,142------------------------------ --------- --------- -------- Pence Pence Pence------------------------------ --------- --------- --------Basic earnings per 50p ordinary share 26.30 28.46 59.48Effect of operating exceptional items 4.87 3.59 4.23Effect of non-operating exceptionalitems 0.63 (1.03) (5.12)------------------------------ --------- --------- --------Adjusted earnings per 50p ordinaryshare 31.80 31.02 58.59------------------------------ --------- --------- --------Diluted basic earnings per 50p ordinary share 25.71 27.90 58.29------------------------------ --------- --------- -------- The results above are all in respect of continuing operations of the company. The comparative figures have been restated for the effects of the adoption ofFRS 17 Retirement benefits and FRS 21 Events after the balance sheet date. Theimpact of these changes is detailed in note 7. YOUNG & CO.'S BREWERY, P.L.C. Unaudited balance sheet at 1 October 2005 Restated Restated At At At 1 Oct 05 25 Sept 04 2 Apr 05 £000 £000 £000------------------------------ --------- --------- --------Fixed assets 213,240 210,143 212,455------------------------------ --------- --------- --------Current assets and liabilitiesStocks 4,364 4,048 4,018Debtors 7,003 8,459 6,247Cash 2,174 718 1,028------------------------------ --------- --------- -------- 13,541 13,225 11,293------------------------------ --------- --------- --------Creditors: amounts falling due within one yearShort term borrowings (183) (793) (177)Other creditors (17,371) (15,988) (17,613)------------------------------ --------- --------- -------- (17,554) (16,781) (17,790)------------------------------ --------- --------- --------Net current liabilities (4,013) (3,556) (6,497)------------------------------ --------- --------- -------- Total assets less current liabilities 209,227 206,587 205,958 Creditors: amounts falling due after morethan one year (55,058) (56,684) (53,806)Provisions for liabilities and charges (6,503) (6,500) (6,238)------------------------------ --------- --------- --------Net assets excluding retirement benefitliability 147,666 143,403 145,914Retirement benefit liability (4,790) (5,392) (8,436)------------------------------ --------- --------- --------Net assets 142,876 138,011 137,478------------------------------ --------- --------- -------- Capital and reservesCalled-up share capital 6,028 6,028 6,028Share premium account 1,307 1,330 1,319Revaluation reserve 87,139 87,734 87,139Capital redemption reserve 1,808 1,808 1,808Investment in own shares (2,861) (3,418) (3,267)Profit and loss account 49,455 44,529 44,451------------------------------ --------- --------- --------Equity shareholders' funds 142,876 138,011 137,478------------------------------ --------- --------- -------- The comparative figures have been restated for the effects of the adoption ofFRS 17 Retirement benefits and FRS 21 Events after the balance sheet date. Theimpact of these changes is detailed in note 7. YOUNG & CO.'S BREWERY, P.L.C. Unaudited cash flow statement For the 26 weeks ended 1 October 2005 26 weeks to 26 weeks to 53 weeks to 1 Oct 05 25 Sept 04 2 Apr 05 £000 £000 £000----------------------------- --------- --------- --------Net cash inflow from operatingactivities 9,762 9,278 24,705----------------------------- --------- --------- --------Interest received 5 4 22Interest paid (2,002) (1,996) (4,340)----------------------------- --------- --------- --------Returns on investmentsand servicing of finance (1,997) (1,992) (4,318)----------------------------- --------- --------- --------Corporation tax paid (1,503) (1,551) (2,983)----------------------------- --------- --------- --------Purchases of tangible fixed assets (5,022) (6,573) (15,526)Sales of tangible fixed assets 62 1,840 4,382----------------------------- --------- --------- --------Capital expenditure (4,960) (4,733) (11,144)----------------------------- --------- --------- --------Equity dividends paid (1,414) (1,355) (2,671)----------------------------- --------- --------- --------Cash(outflow)/inflow beforefinancing (112) (353) 3,589----------------------------- --------- --------- --------Increase/(decrease) in loancapital 1,270 (316) (3,183)(Decrease) in lease finance (12) (7) (15)Employee benefit trust shareredemptions - (230) (368)----------------------------- --------- --------- --------Financing 1,258 (553) (3,566)----------------------------- --------- --------- --------Increase/(decrease) in cashin period 1,146 (906) 23----------------------------- --------- --------- -------- YOUNG & CO.'S BREWERY, P.L.C. Reconciliation of net cash flow to movement in net debt For the 26 weeks ended 1 October 2005 26 weeks to 26 weeks to 53 weeks to 1 Oct 05 25 Sept 04 2 Apr 05 £000 £000 £000----------------------------- --------- --------- --------Increase/(decrease) in cashin period 1,146 (906) 23(Increase)/decrease in debtin period (1,258) 323 3,198----------------------------- --------- --------- --------(Increase)/decrease in netdebt in period (112) (583) 3,221Opening net debt (52,955) (56,176) (56,176)----------------------------- --------- --------- --------Closing net debt (53,067) (56,759) (52,955)----------------------------- --------- --------- -------- YOUNG & CO.'S BREWERY, P.L.C. Statement of total recognised gains and losses For the 26 weeks ended 1 October 2005 Restated Restated 26 weeks to 26 weeks to 53 weeks to 1 Oct 05 25 Sept 04 2 Apr 05 £000 £000 £000------------------------------- --------- --------- --------Profit for the financial period 3,029 3,262 6,813Actuarial gain/(loss) on retirementbenefit schemes 4,825 2,068 (2,656)Deferred tax on actuarial gain/(loss) (1,448) (620) 797------------------------------- --------- --------- --------Total recognised gains for thefinancial period 6,406 4,710 4,954------------------------------- --------- --------- -------- YOUNG & CO.'S BREWERY, P.L.C. Reconciliation of movements in shareholders' funds For the 26 weeks ended 1 October 2005 Restated Restated 26 weeks to 26 weeks to 53 weeks to 1 Oct 05 25 Sept 04 2 Apr 05 £000 £000 £000------------------------------ ----------- --------- --------Profit attributable to ordinaryshareholders 3,029 3,262 6,813Dividends (1,414) (1,355) (2,671)Movement in own shares:Employee benefit trust redemptions - (230) (368)Employee benefit trust allocations 406 - 677Actuarial gain/(loss) on retirement benefit schemes, net of deferred tax 3,377 1,448 (1,859)------------------------------ ----------- --------- --------Net addition to shareholders' funds 5,398 3,125 2,592------------------------------ ----------- --------- -------- Opening shareholders' fundsas previously reported 137,478 139,249 139,249Prior year adjustmentsFRS 17 Pension deficit (see note7) - (5,718) (5,718)FRS 21 Dividend (see note 7) - 1,355 1,355------------------------------ ----------- --------- --------Opening shareholders' fundsas restated 137,478 134,886 134,886Net addition to shareholders' funds (see above) 5,398 3,125 2,592------------------------------ ----------- --------- --------Closing shareholders' funds 142,876 138,011 137,478------------------------------ ----------- --------- -------- The comparative figures have been restated for the effects of the adoption ofFRS 17 Retirement benefits and FRS 21 Events after the balance sheet date. Theimpact of these changes is detailed in note 7. Notes to the accounts (1) AccountsThe interim accounts, which are unaudited, have been prepared on the basis ofthe accounting policies set out in the company's statutory accounts for the 53weeks ended 2 April 2005, except as described in note 7 below. The accountspresent information about the company as an individual undertaking. These interim accounts do not constitute statutory accounts within the meaningof S.240 of the Companies Act 1985. Statutory accounts for the 53 weeks ended 2April 2005 have been delivered to the Registrar of Companies. The auditors'report on those accounts was unqualified and did not contain any statement underS.237 of the Companies Act 1985. (2) Operating exceptional itemsOperating exceptional items of £561,000 (2004: £412,000; for the 53 weeks to 2April 2005: £485,000) principally comprise costs incurred to date relating tothe Wandsworth site review and the costs incurred in moving the company's sharelisting to AIM. (3) TaxationCorporation tax has been provided on the profits for the 26 weeks to 1 October2005 at a rate of 30% (2004: 30%; for the 53 weeks to 2 April 2005: 30%). (4) Earnings per shareEarnings per share are calculated by dividing the profit attributable toshareholders by the weighted average number of shares in issue. An adjustedearnings per share figure is presented to eliminate the effect of theexceptional items on basic earnings per share. The weighted average number of shares in issue, which excludes the investment inown shares, is 11,517,202 (2004: 11,461,154; for the 53 weeks to 2 April 2005:11,453,672). Diluted earnings per share are calculated by adjusting basicearnings per share to reflect the notional exercise of the weighted averagenumber of share options outstanding during the period. The resulting weightedaverage number of shares is 11,781,459 (2004: 11,693,822; for the 53 weeks to 2April 2005: 11,687,302). (5) Ordinary dividends on equity shares Restated Restated 26 weeks to 26 weeks to 53 weeks to 1 Oct 05 25 Sept 04 2 Apr 05 £000 £000 £000----------------------------- --------- --------- --------Final dividend (previous year) 12.25 11.65 11.65Interim dividend (current year) - - 11.40----------------------------- --------- --------- -------- 12.25 11.65 23.05----------------------------- --------- --------- -------- The trustee of the Ram Brewery Trust has waived its rights in respect of thedividends on the shares held in the trust on behalf of the directors' shareoption scheme. (6) Net cash inflow from operating activities Restated Restated 26 weeks to 26 weeks to 53 weeks to 1 Oct 05 25 Sept 04 2 Apr 05 £000 £000 £000 ----------------------------- --------- --------- -------- Operating profit 6,599 6,695 13,191Depreciation 4,103 3,962 8,127Employeebenefit trustshareallocations 406 - 677 Movements in working capitalStocks (346) 173 203Debtors (756) (513) 1,650Creditors (244) (1,039) 857----------------------------- --------- --------- --------Net cashinflow fromoperatingactivities 9,762 9,278 24,705----------------------------- --------- --------- -------- (7) Changes in accounting policies The company has adopted the following accounting standards in the year.Comparative figures at 25 September 2004 and 2 April 2005 have been restated. FRS 17 Retirement benefits - requires changes to the accounting treatment ofdefined benefit pension arrangements. The company now includes the fair value ofassets and liabilities of these arrangements in the balance sheet. Current andpast service costs together with financial returns are included in the profitand loss account. Actuarial gains and losses are recognised in the statement oftotal recognised gains and losses. FRS 21 Events after the balance sheet date - includes the requirement thatdividends be recognised when declared, not when proposed. This information is provided by RNS The company news service from the London Stock Exchange