Young's provides full measure

Young's evolution into a pure pubs group after the disposal of its brewing interests last year has put the board in a happy mood which even the recent dismal weather cannot spoil.

"The disposal of our stake in Wells & Young's has allowed us to focus on our core, premium pub strategy," claimed Stephen Goodyear, Chief Executive of Young's, as the group unveiled a 17.4% increase in underlying profit before tax.

Revenue in the 52 weeks to April 2nd rose to £179.0m from £142.6m the year before, boosted by a full year's contribution from Geronimo Inns as against just 16 weeks the year before, and ahead of market expectations of £173.7m.

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Underlying profit before tax of £21.3m was marginally ahead of expectations of £21.1m. The group registered a statutory loss before tax of £5.4m versus a profit of £15.8m the year before, as a result of a £29.1m exceptional charge relating to the revaluation of the group's pub and hotels estate. The loss is purely a paper one which the group is obliged by accounting regulations to recognise.

Adjusted earnings per share (EPS) rose 17.8% from the year before to 33.41p, topping expectations of EPS of 31.74p.

Managed estate boomingManaged house revenue rose 29.1% to £165.0m, with like-for-like sales up 6.0% on the previous year. Managed house operating profits were up 20.6% at £35.3m, and up 5.2% on a like-for-like (LFL) basis. However, the division's operating margin eased to 21.45 from 22.9%, reflecting Geronimo's lower operating margins and also the impact of what the group calls "immature sites" where higher than normal levels of staffing costs are expected in the early days of a new pub.

Booze sales were up 5.0% on a LFL basis, with traditional cask beer sales continuing to outperform the market. Food sales were up 7.2% on a LFL basis. Accommodation sales were up 15.4%.

Tenanted estate a bit flatterOn the tenanted side, LFL revenue was up by 0.6% while operating profit was up 4.1%. Total revenue was down 5.8% at £13.6m, and operating profit was down 1.9% at £5.3m, both reflecting the smaller number of pubs compared with last year, and particularly the fact that three of the largest sites were transferred to the managed operations. However, the average EBITDAR (earnings before interest, tax, depreciation, amortisation and rent) per pub improved 1.9% to £73,000.

The group's net debt was reduced by £4.5m to £118.1m at the end of the reporting period.

Goodyear predicts good yearPerformance in recent weeks has inevitably been affected by the dismal weather conditions, which contrasts markedly with the hot spell the UK enjoyed in the same period of 2011.

Managed house revenue in the first seven weeks of the year was up 3.9% in total but down 2.0% on a like-for-like basis.

"We are excited about the prospects that the Jubilee and Olympic summer will bring. Whilst the economy remains fragile, we believe that, with our focused and high-quality offering, we are well placed to continue to achieve growth," Goodyear said.

The board has proposed a final dividend of 7.25p, up 5.1% on the previous year's final divi. The full year pay-out moves up to 13.93p, up from 13.26p last year, and ahead of analysts' expectations of 13.74p.

JH