Young & Co.'s Brewery, P.L.C. Class A · LSE:YNGA
Young & Co.'s Brewery, P.L.C. Class A — FY2008 Earnings Presentation
37 slides from Young & Co.'s Brewery, P.L.C. Class A's earnings presentation, May 27, 2008
Slide 1: Results presentation for the 52 weeks ended 29 March 2008
Results presentation for the 52 weeks ended 29 March 2008
Slide 2: Agenda
Agenda 1. Results review 2. Retail operations 3. Wells & Young's Brewing Company 4. Strategy & outlook 1
Slide 3: Significant events and highlights
Significant events and highlights • First full year’s trading since the major transformation – Timing of brewery sale was excellent – Premium positioning helping performance • Strong results in testing conditions – Inflationary pressures and duty increases – Smoking ban – Poor summer weather – Consu
Slide 4: Retail highlights
Retail highlights Retail success from delighting customers with high service standards, quality food, market leading drinks and stylish pubs. • Good sales and strong profit growth in managed houses • Resilient sales within tenanted estate brings profit uplift • Strong period of investment continues,
Slide 5: Estate development
Estate development • £37.9M invested in the estate • Managed houses – £26.6M invested in acquisitions and their development – £9.4M invested in existing estate • Tenanted houses – £1.9M invested in tenanted houses – Of which eight (£0.8M) have had major refurbishments • Strong returns from prior yea
Slide 6: Acquisitions
Acquisitions • Rose & Crown, Farnborough Kent acquired in first half • Seven pubs acquired in Feb/Mar making little profit impact – Cock & Hen, Fulham – Mitre, Lancaster Gate – Porchester, Westbourne Grove – Stinging Nettle, Shepherds Bush – Marlborough, Richmond – Albion, City – Seven Stars, Bright
Slide 7: Managed - major developments
Managed - major developments • Albert, Kingston • Bell, Fetcham • Brewers Inn, Wandsworth • Bunch of Grapes, London Bridge • Chequers, Walton • Clock House, Peckham Rye • Devonshire, Balham • Flask, Hampstead • Greyhound, Carshalton • Halfway House, Earlsfield • King’s Arms, Fulham • Spotted Horse,
Slide 8: Tenanted - major developments
Tenanted - major developments • Black Lion, Surbiton • Castle, Battersea • Half Moon, Putney • O'Connors, Chelmsford • Old Sergeant, Wandsworth • Prince of Wales, Tooting • Red Cow, Richmond • Thatched House, Hammersmith 7
Slide 9: 1. Results review
YOUNGS’ 1. Results review
Slide 10: Strong underlying results
Strong underlying results +54.7% +50.3% +35.5% +33.8% +6.6% Revenue Op Profit* PBT* EPS* Dividend £122.1m £20.9m £18.6m 26.28p 12.50p All results on continuing activities and where marked * adjusted for exceptional items, premium paid on redemption of debenture and discount of site proceeds 8
Slide 11: Adjusted profits on continuing operations
Adjusted profits on continuing operations 2008 2007 £M £M Reported PBT (including associate) 10.8 8.7 Operating exceptional items (0.7) 1.2 Associate’s exceptional items 3.8 - Premium on redemption of debenture 6.8 - Discount of site proceeds (2.1) 2.1 Adjusted profit before tax 18.6 12.0 Tax (exclu
Slide 12: Exceptional items
Exceptional items 2008 2007 £M £M (a) Operating exceptional items Profit/(loss) on sales of properties and investments 1.3 (0.5) Impairment of property (1.4) - Capital gains tax on ESOP allocated shares 0.8 (0.5) Property valuation costs - (0.2) 0.7 (1.2) (b) Associate operating exceptional items Im
Slide 13: Period of significant investment
Period of significant investment 2008 2007 £M £M Cash inflow from operating activities 26.6 27.8 VAT owed on site disposal 10.3 - Interest, tax and dividends (10.1) (11.9) Free cash flow 26.8 15.9 Capital expenditure/acquisitions (38.1) (46.7) Investment in associate - (10.0) Exercise of share optio
Slide 14: Investment in the pub estate
Investment in the pub estate Total spend: £37.9M (2006/07: £45.3M) By division By nature of spend 12
Slide 15: Estate profile of trading pubs
Estate profile of trading pubs April + - Transfers March 2007 (net) 2008 Managed 114 8 (1) (5) 116 Tenanted 102 - (4) 5 103 Total 216 8 (5) - 219 Freehold 177 8 (1) - 184 The Brewery Tap, being closed has been excluded from managed numbers but included in freeholds The Beaufort in Hendon, opened i
Slide 16: Geographical split of Young's pubs
Geographical split of Young's pubs 14
Slide 17: Financing
Financing • Redemption of high coupon debenture • New £90m committed banking facilities with RBS – £50m long term finance (10-15yr) – £40m medium term finance (5yr) • Year end net debt of £50m – Interest cover of 4 – Net debt/EBITDA of 1.5 • Year end net debt of £60.3m, once adjusted for VAT – Net d
Slide 18: Capital structure
Capital structure 2008 2008 2007 Adjusted for VAT Net debt £60.3m £50.0m £101.5m Gearing 35.0% 29.0% 58.9% % of debt fixed 58.1% 70.0% 38.6% Debt/EBITDA 1.9 x 1.5 x 4.4 x Interest cover N/A 4.0 x 3.0 x Composite fixed rate 6.0% 6.0% 7.4% 16
Slide 19: Financial summary
Financial summary • Strong results in testing conditions • Proceeds of Brewery sale invested in the business • Extended banking facilities on favourable terms • Good cash generation and strong balance sheet • Disposed of Plough Clapham Junction and 4 leasehold sites • Share split 17
Slide 20: 2. Retail operations
2.2.Retail RetailOperations operations
Slide 21: Strong managed house performance
Strong managed house performance • Revenue up 8.1% • LFL revenue up 4.7% on same outlet basis, up 1.2% un- invested. • Food sales up 16.0% and now represent 25.4% of managed revenue, +1.8% points. • RevPAR up 4.7% to £42.04. • Operating profit up 19.7%, despite smoking ban, poor summer weather and e
Slide 22: Operating performance at outlet level
Operating performance at outlet level 2008 2007 Change Revenue £000’s £000’s % Managed 106,630 98,648 +8.1 Tenanted 14,818 14,698 +0.8 121,448 113,346 +7.1 EBITDAR* Managed 34,171 29,414 +16.2 Tenanted 7,710 6,978 +10.5 41,881 36,392 +15.1 * At outlet level, before interest, depreciation, rents paya
Slide 23: Like-for-like sales
Like-for-like sales Number of sites Sales £m change % Same Outlet Managed 96 92.0 + 4.7 Tenanted 86 12.5 - 2.0 182 104.5 + 3.8 Un-invested Managed 74 68.4 + 1.2 Tenanted 72 10.1 - 1.8 146 78.5 + 0.8 20
Slide 24: Key performance indicators of same outlet pubs
Key performance indicators of same outlet pubs Managed Average weekly revenue £18.4K +4.7% per pub Food Mix 23.9% +1.2% points Average EBITDAR £316K +9.3% Tenanted Average EBITDAR £75K +6.8% 21
Slide 25: Managed houses – key initiatives
Managed houses – key initiatives • Expanded consumer choice – Lagers: Pilsner Urquell, Amstel, Heineken, – Guest cask ale for first time – Deuchars 22
Slide 26: Managed houses – key initiatives
Managed houses – key initiatives • Cultivating loyalty – Consumer response with market leading mystery drinker survey results 90.1% (+6.4% points) – Staff where 75% of management changes are promoted from within – Academy Awards Dinner motivates and drives performance – Last year’s retail re-organis
Slide 27: Managed houses – key initiatives
Managed houses – key initiatives • Web based innovations – Websites now in over 70 (2007: 51) pubs – New web based Young’s wide hotel booking system – Database with more than 100,000 e-mail addresses 24
Slide 28: Resilient tenanted house performance
Resilient tenanted house performance • Revenue up 0.8% • LFL revenue down 2.0% on same outlet basis, down 1.8% un-invested. • Five transfers from management, sold a freehold and three leaseholds. – Plough Clapham Junction – Square Tavern – Lonsdale – RamBaBa • Operating profit up 14.6%, despite smok
Slide 29: Tenanted houses – key initiatives
Tenanted houses – key initiatives • Actively managing the estate – Variable tenure (3 – 20 years) but seeking to move to longer leases to drive profit performance – Stylish refurbishments to managed house standard • Sharing better buying terms through a newsletter sent to tenants six times each year
Slide 30: Tenanted houses – key initiatives
Tenanted houses – key initiatives • Training initiatives and support for our tenants – Induction/legislative compliance courses – Managed house training made available – Actually motivating and improving the quality of our tenants – Introduced payment plans to assist tenants with debt – BUT taking h
Slide 31: 3. Wells & Young's Brewing Company
3. Wells & Young’s Brewing Company
Slide 32: Wells & Young's – performance review
Wells & Young’s – performance review • Trading in line with expectations in difficult conditions – Raw materials and duty increase – Smoking ban and poor summer • Focusing on cask ale portfolio • £1.7m contribution to adjusted profit before tax – Share of exceptional items of £3.8m including impairm
Slide 33: 4. Strategy & outlook
4. Strategy & outlook
Slide 34: Active operational management
Active operational management • Focused quality retail pub business – 219 pubs in London and Southern England • Premium strategy to provide clear point of differentiation… – Premium end of the market - style, quality and individuality of a Young’s pub – Measure against best individual pub and restau
Slide 35: Active estate management
Active estate management Organic growth augmented by: • Improved returns from recent investments and developments • Ongoing investment in high returning projects • Optimising balance of the estate – Transfers between managed and tenanted – Transferring tenanted to long leases • Acquisitions – Prices
Slide 36: Outlook
Outlook • Challenging conditions and trading against strong April comparatives • Current trading is resilient – Revenue up 3.4% in 8 weeks to 24 May 2008 – LFL sales up 1.6% on a same outlet basis • Young’s business offers some resilience in difficult economic times • Improving comparatives – 1 July
Slide 37: Questions
YOUNGS: Questions
Young & Co.'s Brewery, P.l.c. — FY2008 Earnings Presentation on 6ix