TIDMYNGA
RNS Number : 3009F
Young & Co's Brewery PLC
13 November 2020
Young & Co.'s Brewery, P.L.C.
(the "Company")
Correction Announcement
Shareholders are referred to the Company's Interim Results
announcement released yesterday morning at 7.00am. The announcement
erroneously reported, in note 6, the Company's basic weighted
average number of ordinary shares in issue as 58,460,695; the
figure should have been 53,774,655. As a result:
-- the Company's adjusted basic loss per share for the 26 weeks
ended 28 September 2020 should have been stated as being -31.06p
(rather than -28.57p); and
-- the Company's basic loss per share for the 26 weeks ended 28
September 2020 should have been stated as being -35.70p (rather
than -32.84p).
Subject to these corrections being made throughout the
announcement, the remainder of the information contained in the
announcement is correct and is disclosed again on the following
pages. The same corrections apply in respect of the Company's
Interim Report, which has been updated and remains available on the
Company's website (
https://www.youngs.co.uk/youngs/uploads/sites/2/2020/11/2020-interim-report.pdf
).
Anthony Schroeder
Company Secretary
Friday, 13 November 2020
Tel: 020 8875 7000
YOUNG & CO.'S BREWERY, P.L.C.
INTERIM RESULTS FOR THE 26 WEEKSED 28 SEPTEMBER 2020
2020 2019
GBPm GBPm
-------------------------------------------- -------- ------
Revenue 55.1 168.2
Adjusted EBITDA(1) 2.9 47.2
Adjusted operating (loss)/profit(1) (14.3) 30.9
Adjusted (loss)/profit before tax(1) (19.2) 26.6
Net debt 203.8 227.2
Net debt to EBITDA(2) 5.8x 2.7x
-------------------------------------------- -------- ------
Operating (loss)/profit (16.9) 28.6
(Loss)/profit before tax (21.8) 24.3
-------------------------------------------- -------- ------
Adjusted basic (loss)/earnings per share(1) (31.06)p 42.85p
Basic (loss)/earnings per share (35.70)p 38.16p
Interim dividend per share - 10.57p
-------------------------------------------- -------- ------
All of the results above are from continuing operations.
(1) Reference to an "adjusted" item means that item has been
adjusted to exclude non-underlying items (see note 3).
(2) Net debt to EBITDA has been calculated based on the last 12
months' actual EBITDA of GBP35.3 million (see note 3).
PERFORMANCE SUMMARY
-- Total revenue for the period was GBP55.1 million, with an
adjusted EBITDA of GBP2.9 million; managed house EBITDA for the
period was GBP8.0 million
-- Lengthy period of closure had significant impact on results;
adjusted operating loss of GBP14.3 million, and adjusted loss
before tax was GBP19.2 million
-- Total revenue for the 10 weeks since opening on 20 July was encouragingly 84% of last year
-- Adjusted operating profit for August and September was GBP5.9
million with an operating margin of 12.1% and positive cash flow;
like-for-like sales for 10 weeks trading was 81%
-- Placing of new shares in June raised net proceeds of GBP84.8
million which allowed us to strengthen our balance sheet and kick
start our 18-month investment programme this autumn (with five pubs
completed and back on-site at a further two pubs)
-- Net debt has improved by GBP76.6 million to GBP203.8 million
since the year-end; with bank headroom of GBP159.8 million, we have
liquidity in place to weather further restrictions including the
current four-week circuit breaker
-- The company announced in May that in view of the ongoing
closure of the company's pubs, the expected lower levels of trade
when they re-opened and the terms of the new GBP20.0 million
revolving credit facility with NatWest, the company would not be
paying an interim dividend
-- Despite the introduction of curfew restrictions and London's
Tier 2 status, since the period end, the trading of our managed
house division had been encouraging at 73% of last year until all
our pubs closed on 5 November
Patrick Dardis, Chief Executive of Young's, commented:
"Our business recently celebrated 189 years and the last six
months has been one of the toughest periods in that incredible
journey.
The resilience of our customers has truly amazed us. The
cautious approach we adopted and the safe environment we provided
were key reasons why our customers flocked back in large numbers.
The continued efforts of our pub staff to go above and beyond in
protecting our customers in these challenging conditions is a
testament to our wonderful people.
As a business we benefitted from the Government's "Eat Out to
Help Out" campaign throughout August, which boosted midweek
footfall with diners attracted by the headline 50% discount. We
also made use of the Government's much welcomed furlough scheme
which enabled us to protect the jobs of nearly 5,000 employees.
Despite the challenges presented to us, our rural pubs and
hotels, particularly those in the South West and in coastal
regions, have delivered like-for-like growth against last year
benefitting from the staycations and weekend visitors. These
tougher times have also demonstrated our strength in controlling
our cost base in a very efficient manner.
Whilst we were hoping that a further lockdown could have been
avoided, the second lockdown with the financial support available
from the Government will be considerably less damaging to our
business than the potential move to Tier 3 in the areas that we
operate. We remain positive at the prospect of trading in
December."
For further information, please contact:
Young & Co.'s Brewery, P.L.C. 020 8875 7000
Patrick Dardis, Chief Executive
Michael Owen, Chief Financial Officer
MHP Communications 020 3128 8742 / 8147
Tim Rowntree/Alistair de Kare-Silver/Robert Collett-Creedy
INTERIM STATEMENT
Born in 1831, our business recently celebrated 189 years and the
last six months have been one of the toughest periods in that
incredible journey.
After closing in March 2020, our pubs remained shut for the
majority of the first four months of the period. Although the
Government relaxed restrictions on our sector from 4 July, we
decided to take a more cautious approach, to take more time, and
re-open all our managed houses on 20 July. For the period, total
revenue was GBP55.1 million, with adjusted EBITDA of GBP2.9
million, down from GBP47.2 million.
The lengthy 16 weeks' closure has had a significant impact on
our results, and the business had an initial cash burn between
GBP4.0 million to GBP5.0 million a month. It was the closure period
that solely contributed to an operating loss of GBP16.9 million,
and a loss before tax of GBP21.8 million. When excluding our GBP2.6
million of adjusting items, we recognised an adjusted operating
loss of GBP14.3 million and an adjusted loss before tax of GBP19.2
million. During lockdown, a lot of hard work went into streamlining
our business so that upon re-opening we were in a strong position;
this was demonstrated by the full trading periods of August and
September when our operating margin was at 12.1% with an adjusted
operating profit of GBP5.9 million.
The decision to delay the re-opening of our pubs by three weeks,
until 20 July, allowed us to put in place all the necessary
covid-19 safety protocols without compromising on the great Young's
pub experience. Our managers had the time to thoroughly re-train
our returning teams, dust away any cobwebs from the shuttered
summer months and prepare our wonderful pubs ready to welcome back
our loyal customers.
During our time away, we set about future proofing our business
and a lot of the good work that went on during the lockdown weeks
was evident when we re-opened. Our Young's app, which we began
developing 5 years ago, was further improved with added
functionality allowing customers to browse menus, order food and
drinks to their table, and split pay their bills.
Soon after the year-end, we strengthened our liquidity position
by refinancing the GBP50.0 million term loan due to expire in 2021
and replaced it with a longer-term five-year facility. We also
accessed GBP30.0 million from the Bank of England under the Covid
Corporate Financing Facility ("CCFF"), secured a further GBP20.0
million revolving credit facility with NatWest and re-negotiated
the covenants with our banks and the holders of our senior secured
notes for the period up until June 2021.
The placing of new shares in June raised net proceeds of GBP84.8
million and provides vital funding for the short term,
strengthening our balance sheet as we continue to live in uncertain
times, as well as allowing us to look forward towards longer term
plans. This has enabled us to kick off our 18-month investment
programme from this autumn, with projects at five pubs already
completed and works restarted at two recent acquisitions. It also
provides sufficient headroom if the right acquisition opportunities
were to present themselves.
We were grateful for the initial level of support provided by
the Government and took advantage of available schemes where
possible to minimise disruption to our business. The furlough
scheme helped us retain a large proportion of our near 5,000 strong
workforce whilst our pubs remained shut. The business rates holiday
saved us GBP7.7 million in the period and sat alongside the receipt
of some business rate grants. The "Eat Out to Help Out" campaign,
which was hugely successful for many businesses in our sector,
including ourselves, encouraged customers back into pubs and
restaurants throughout August. Unfortunately, despite all our hard
work over the last few months the latest restrictions and tiered
system are hugely disappointing for our sector.
BUSINESS REVIEW
MANAGED HOUSES
Total revenue for the period was GBP52.1 million. For the ten
weeks of trading, our managed house like-for-like revenue was at
80.7% of last year. The adjusted operating loss for the period was
GBP7.5 million, down from a profit of GBP38.0 million in the
comparative period. Confident in our customers' appetite to return,
we decided to trade all our managed houses, setting the tone that
"Young's was open for business".
After a slow start, customer confidence improved, reflecting the
safety measures introduced and accompanied by our popular social
media marketing, the "Responsible Arms, socialising responsibly
since 1831", which set the scene on what a visit to the pub would
look like. As a business we benefitted from the Government funded
"Eat Out to Help Out" campaign, serving over 370,000 customers
during August, which boosted midweek footfall with diners attracted
by the headline 50% discount. Supported by some glorious summer
weather, we were able to maximise the use of our generous outdoor
trading areas and sales for the month were at approximately 90% of
last year on a like-for-like basis.
In September, messaging from the Government changed: it went
from "eat out on us" to the introduction of restrictions on group
numbers, full table service, requirements on face coverings to be
worn by staff and customers and a 10pm curfew, all of which
negatively affected trading to approximately 80% of last year.
Location has also played its part, with sales across our estate
varying dramatically based on a pub's geography. Our pubs and
hotels in the South West have delivered growth against last year,
whether they be in Devon, by the coast or in the Cotswolds, all
benefitting from the staycation and weekend visitors keen to take
their 2020 summer holidays in this country. For those pubs in the
London suburbs and commuter towns, sales have been on average down
by 15% on last year. But there have been positives, we have
welcomed new customers with more people around in the week looking
for an escape from their home office or for an evening trip to the
pub. Much has been written about the impact from the dramatic
decline in the numbers of office workers, commuters, and tourists,
particularly in Central London and the City; our many pubs here
have been hit exceptionally hard, with sales only averaging around
half the levels of last year.
The decline of trade in London has also been affected by the
restrictions on vertical drinking which contributed to a 23.2%
decline in like-for-like drink sales for the ten weeks of trade.
This has had a considerable effect on all draught categories with
volumes tracking 25% down on last year. One area in growth has been
cocktails, up around 20%, as customers can now browse menus on
their smartphones from the comfort of their chair and trade up from
traditional spirits.
The pandemic has accelerated changes in the great British pub
and the customer journey. Although previously adopted at some pubs,
customers are now greeted by a friendly host upon arrival, shown to
their table and asked to log personal details for track and trace.
To help reduce contact further, they are also invited to download
the updated Young's app which now allows customers to view our
menus and order a Young's classic burger, or a daily chef special
alongside a post dinner cocktail, all from their phones, with
delivery direct to their tables.
The decline of our food sales has not been as marked as drink,
and like-for-like sales were only down 4.7% for ten weeks. "Eat Out
to Help Out" was a huge boost in driving footfall through the early
midweek days in August and our head chefs looked to capitalise
during this time by enticing customers to trade up with a wonderful
selection of premium dishes such as "posh surf & turf", rack of
Dorset lamb and Beef Wellington on offer to share. With the
Government having introduced a reduced VAT rate on food and soft
drinks, we made the decision to pass on this price benefit to our
customers throughout the trading period up until the end of
September, equating to sales and profit of GBP2.9 million.
Geography has also played its part in the demand for hotel rooms
and has varied greatly across the estate. With more than 50% of our
hotel room stock located in London boroughs where occupancy was
just 27.0%, the decline of footfall in the city has had a
significant impact on the overall performance of our room sales.
This is in stark contrast to our staycation friendly locations such
as Burnham-On-Sea, Canford, Instow and Stow-on-the-Wold where the
average occupancy was up at 83.2%. The remaining rooms in the Home
Counties saw occupancy levels of 49.4%. Overall, for the ten weeks
of trading, our accommodation sales were down by 46.7%, with an
average room rate of GBP78.92 and RevPAR of GBP33.13.
During the period, we invested GBP3.7 million in our existing
estate, primarily focussed on projects forced to close down back in
March. This summer, we completed schemes at the Green Man (Putney),
Seagate Hotel (Appledore), City Gate (Exeter) and the Bear Hotel
(Esher), all of which opened only a couple of weeks later than the
rest of the estate.
At the start of the period, we transferred the Spread Eagle
(Wandsworth) and the Royal Oak (Bethnal Green) from our tenanted
division. Following our exit from the lease of the Surprise
(Chelsea), we ended the period with 208 managed houses (including
30 hotels), up from 200 at the end of the same period last
year.
THE RAM PUB COMPANY
For our tenanted division, it has also been an extremely
challenging period, with all businesses unable to start trading
until 4 July when the Government lifted restrictions. We were one
of the first pub companies to confirm support for our tenants, with
rent holiday periods dating from 16 March until the point of
re-opening in early July. Unlike rent deferrals, this gave our
tenants rent-free periods without the worry of paying this back in
the future. For the majority of our tenanted businesses, the latest
round of restrictions will have significant implications on the way
they operate given the limited personal contact permitted inside
hospitality venues and the lack of opportunities for wet led pubs
with limited external trading space. We continue to work with them
to address their particular challenges.
In the period, Ram Pub Company total sales were GBP2.8 million,
down from GBP6.4 million, resulting in an adjusted operating profit
of GBP0.6 million, compared to an adjusted operating profit last
year of GBP2.4 million.
We continue to review our tenanted estate exiting unfavourable
leases and offloading freehold properties where we feel the pub's
sustainability is in question. During the period, we exercised the
break clause on the lease of the Black Cat (Catford), decided not
to renew an expired lease at the Greyhound (Hendon) and sold the
freehold of the Horse Pond Inn (Castle Cary). At the start of the
financial year, we transferred the Spread Eagle (Wandsworth) and
Royal Oak (Bethnal Green) to our managed houses, reducing the Ram
Pub Company to an estate of 64 pubs.
Whilst all investment in the Ram Pub Company was put on hold at
the start of lockdown, we were able to complete projects at the
Rising Sun (Epsom) and the Watermans Arms (Richmond). Even in the
unprecedented times we find ourselves in, continued investment
remains vitally important to ensure our pubs are maintained to a
high standard to attract and retain the right tenants.
INVESTMENT AND FINANCE
Period adjusting items totalled a cost of GBP2.6 million,
compared with a cost of GBP2.3 million last year. There were
anticipated group reorganisation costs of GBP1.4 million relating
to stamp duty and legal costs incurred when transferring the
business and assets of Spring Pub Company Limited, a group of five
pubs acquired last year, into the Young's business. In line with
our strategy of investing for future growth, GBP0.5 million related
to tenant compensation for the Royal Oak (Bethnal Green).
Restructuring costs of GBP0.5 million related to the reorganisation
of head office functions in light of the covid-19 pandemic, and the
remaining GBP0.2 million was a loss on disposal from the Horse Pond
Inn (Castle Cary), a Ram Pub Company property classified as an
asset held for sale at the year-end.
At the start of the period, it became evident that the covid-19
pandemic would present us with significant and unprecedented
challenges. We moved quickly to improve our financial position both
on a long-term and short-term basis. We refinanced the GBP50.0
million term loan that was due to expire in March 2021, with a new
five-year facility that takes us to 2025. This facility also has
two one-year extension options that could take it out to 2027. On a
short-term basis, Young's issued GBP30.0 million in commercial
paper under the CCFF and we also obtained an additional new GBP20.0
million committed facility from NatWest. This gave us GBP285.0
million of committed facilities, of which GBP235.0 million are
committed beyond 12 months. Aligned to the additional banking
facilities, we have worked with our banks and note holders on
replacing the quarterly covenant tests with a monthly GBP20.0
million liquidity test through to the end of June 2021.
In June, we also completed an equity issue raising net proceeds
of GBP84.8 million. The primary purposes were to provide us with
the financial flexibility to kickstart our investment programme in
our estate this year, whilst also further strengthening our
liquidity and the ability to pursue opportunistic acquisitions.
Our net debt since the year-end reduced by GBP76.6 million to
GBP203.8 million as a result of the proceeds from the equity issue,
offset by investment in the estate which was at lower levels than
planned; cash generation was also reduced due to the pandemic. At
the period end, we had cash of GBP39.8 million and drawn down
banking facilities of GBP165.0 million, giving us bank debt
headroom of GBP159.8 million.
The additional liquidity headroom that we have in place provides
us with a degree of security in the face of further extended
closure periods or significant reductions in trade due to the
pandemic. We have modelled a number of scenarios ranging from the
current disruption of a four week lockdown from 5 November followed
by a return to trade with restrictions, through to periods of
extended Government enforced closure. The first lockdown period,
where our pubs were shut for four months, demonstrated our ability,
with support primarily via the furlough scheme and the business
rates holiday, to limit our monthly cash burn to between GBP4.0
million and GBP5.0 million. This gives us the confidence that, with
similar levels of Government support, such as the now extended
furlough scheme, we have the liquidity headroom to see us through
any further enforced lengthy closure periods.
Whilst we are confident of our liquidity headroom for the
foreseeable future, given the uncertainty over trade, particularly
with the four-week circuit breaker, compliance with the "original"
covenants with our banks and the holders of our senior secured
notes for the June 2021 test date and beyond remains a material
uncertainty. The group is in regular dialogue with its lenders and,
should such a scenario arise, the group would expect to discuss
potential remedies with them, including an extension of the
covenant changes agreed already, well in advance of June 2021.
The company announced in May that in view of the ongoing closure
of the company's pubs, the expected lower levels of trade when they
re-opened and the terms of the new GBP20.0 million revolving credit
facility with NatWest, the company would not be paying an interim
dividend.
CURRENT TRADING AND OUTLOOK
Since the period end and prior to the latest lockdown, trading
had been encouraging, with the business achieving 73% of last
year's sales, despite additional Government restrictions and
introduction of Tier 2 status for London which affected 80% of our
managed estate.
Following the latest national lockdown introduced last week, all
our pubs closed on 5 November. Whilst we were hoping that a further
lockdown could have been avoided, the second lockdown with the
financial support available from the Government will be
considerably less damaging to our business than the potential move
to Tier 3. For the four-week closure we would expect a cash burn of
between GBP4.0 million and GBP5.0 million, achieved by the
reintroduction of the Coronavirus Job Retention Scheme. We are
hopeful that when we re-open on 3 December, we will see the back of
the 10pm curfew and London moves to Tier 1.
We remain positive at the prospect of trading in December.
Unfortunately, the typical excitement of the festive period and the
opportunities this usually brings us has been replaced with
uncertainty. At this time, we would usually have 90% of bookings
already in the diary; without the prospect of hosting large group
get togethers, corporate Christmas parties and spontaneous festive
drinks, the outlook for this December is far from certain.
The resilience of our customers has truly amazed us. The
cautious approach we adopted on re-opening and the safe environment
we provided were key reasons why our customers flocked back in
large numbers, even with the heightened restrictions. This gives us
confidence in the future of our pubs, our business and our
long-term strategy.
Patrick Dardis
Chief Executive
11 November 2020
INDEPENT REVIEW REPORT TO THE MEMBERS OF YOUNG & CO.'S
BREWERY, P.L.C.
For the 26 weeks ended 28 September 2020
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the interim report for the 26 weeks
ended 28 September 2020 which comprises the group statement of
comprehensive income, the group balance sheet, the group statement
of changes in equity, the group statement of cash flow and the
related explanatory notes. We have read the other information
contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the interim report in accordance with AIM Rules issued by
the London Stock Exchange which require that it is presented and
prepared in a form consistent with that which will be adopted in
the company's annual accounts having regard to the accounting
standards applicable to such annual accounts.
As disclosed in note 1, the annual financial statements of the
company are prepared in accordance with IFRS's as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with AIM Rules issued by the London Stock Exchange.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the interim report for the 26 weeks ended 28 September 2020 is
not prepared, in all material respects, in accordance the
accounting policies outlined in note 1, which comply with IFRS's as
adopted by the European Union, and in accordance with AIM Rules
issued by the London Stock Exchange.
Emphasis of matter - material uncertainty relating to going
concern
We draw attention to note 1 of the condensed set of financial
statements, which indicates that the ongoing coronavirus pandemic
results in an uncertainty as to whether the group will be able to
comply with its banking covenants from 30 June 2021 onwards. As
stated in note 1, this event or condition, along with other matters
as set out in note 1, indicates that a material uncertainty exists
that may cast significant doubt on the group's ability to continue
as a going concern. Our opinion is not modified in respect of this
matter.
Emphasis of matter - material valuation uncertainty on the fair
value of the freehold pub estate
In forming our opinion on the condensed set of financial
statements, which is not modified, we considered the adequacy of
the disclosure made in note 9 of the condensed set of financial
statements concerning the material valuation uncertainty in the
assessment of fair value of the freehold pub estate. Our conclusion
is not modified in respect of this matter.
Ernst & Young LLP
London
11 November 2020
Group income statement
For the 26 weeks ended 28 September 2020
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
to 28 Sep to 30 Sep to 30 Mar
2020 2019 2020
Notes GBPm GBPm GBPm
------------------------------------------ ----- --------- --------- ---------
Revenue 2 55.1 168.2 311.6
Other income 4 0.3 - -
Operating costs before adjusting
items (69.7) (137.3) (265.1)
------------------------------------------ ----- --------- --------- ---------
Adjusted operating (loss)/profit 2 (14.3) 30.9 46.5
Adjusting items 3 (2.6) (2.3) (8.6)
------------------------------------------ ----- --------- --------- ---------
Operating (loss)/profit (16.9) 28.6 37.9
Finance costs (4.8) (4.2) (8.6)
Finance charge for pension obligations 11 (0.1) (0.1) (0.2)
------------------------------------------ ----- --------- --------- ---------
(Loss)/profit before tax (21.8) 24.3 29.1
Income tax credit/(expense) 5 2.6 (5.6) (9.8)
------------------------------------------ ----- --------- --------- ---------
(Loss)/profit for the period attributable
to shareholders of the parent company (19.2) 18.7 19.3
------------------------------------------ ----- --------- --------- ---------
Pence Pence Pence
-------------------- --- ------------------ ----- -----
(Loss)/earnings per 12.5p ordinary share
Basic 6 (35.70) 38.16 39.37
Diluted 6 (35.70) 38.13 39.35
-------------------- --- ------------------ ----- -----
All of the results above are from continuing operations.
Group statement of comprehensive income
For the 26 weeks ended 28 September 2020
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
to 28 Sep to 30 Sep to 30 Mar
2020 2019 2020
Notes GBPm GBPm GBPm
--------------------------------------------- ----- ---------- ---------- ----------
(Loss)/profit for the period (19.2) 18.7 19.3
--------------------------------------------- ----- ---------- ---------- ----------
Other comprehensive income
Items that will not be reclassified
subsequently to profit or loss:
Unrealised loss on revaluation of
property - - (9.3)
Remeasurement of retirement benefit
schemes 11 (9.2) (4.9) (0.7)
Tax on above components of other
comprehensive income 5 1.8 0.9 (3.1)
Items that will be reclassified subsequently
to profit or loss:
Fair value movement of interest rate
swaps 0.1 (0.2) 0.4
Tax on fair value movement of interest
rate swaps 5 - 0.1 -
--------------------------------------------- ----- ---------- ---------- ----------
(7.3) (4.1) (12.7)
Total comprehensive (loss)/income attributable
to shareholders of the parent company (26.5) 14.6 6.6
---------------------------------------------------- ---------- ---------- ----------
Group balance sheet
At 28 September 2020
Unaudited Unaudited Audited
at 28 Sep at 30 Sep at 30 Mar
2020 2019 2020
Notes GBPm GBPm GBPm
--------------------------------- ----- --------- --------- ---------
Non-current assets
Goodwill 32.5 29.2 32.5
Property and equipment 9 762.0 755.0 771.1
Right-of-use assets 10 159.9 145.4 163.4
Deferred tax assets 10.5 8.3 8.3
--------------------------------- ----- --------- --------- ---------
964.9 937.9 975.3
--------------------------------- ----- --------- --------- ---------
Current assets
Inventories 3.7 3.9 3.3
Trade and other receivables 8.2 8.8 9.3
Income tax receivable 2.1 - 0.1
Cash 39.8 9.3 1.1
--------------------------------- ----- --------- --------- ---------
53.8 22.0 13.8
--------------------------------- ----- --------- --------- ---------
Asset held for sale - - 0.5
--------------------------------- ----- --------- --------- ---------
Total assets 1,018.7 959.9 989.6
--------------------------------- ----- --------- --------- ---------
Current liabilities
Borrowings (29.8) - (50.0)
Lease liabilities (5.0) (5.0) (5.3)
Derivative financial instruments (2.2) (2.1) (2.4)
Trade and other payables (33.9) (33.2) (33.3)
Income tax payable - (6.1) -
--------------------------------- ----- --------- --------- ---------
(70.9) (46.4) (91.0)
--------------------------------- ----- --------- --------- ---------
Non-current liabilities
Borrowings (133.3) (163.7) (149.2)
Lease liabilities (75.5) (67.8) (77.0)
Derivative financial instruments (3.4) (4.2) (3.3)
Deferred tax liabilities (69.8) (60.5) (69.9)
Retirement benefit schemes 11 (16.8) (13.0) (8.2)
Other liabilities (0.1) (0.3) (0.2)
--------------------------------- ----- --------- --------- ---------
(298.9) (309.5) (307.8)
--------------------------------- ----- --------- --------- ---------
Total liabilities (369.8) (355.9) (398.8)
--------------------------------- ----- --------- --------- ---------
Net assets 648.9 604.0 590.8
--------------------------------- ----- --------- --------- ---------
Capital and reserves
Share capital 12 7.3 6.1 6.1
Share premium 12 7.5 7.4 7.5
Capital redemption reserve 1.8 1.8 1.8
Hedging reserve (4.3) (4.9) (4.4)
Revaluation reserve 248.5 295.2 248.4
Retained earnings 388.1 298.4 331.4
--------------------------------- ----- --------- --------- ---------
Total equity 648.9 604.0 590.8
--------------------------------- ----- --------- --------- ---------
Group statement of changes in equity
For the 26 weeks ended 28 September 2020
Share Capital
capital redemption Hedging Revaluation Retained Total
Notes and premium reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- ------------ ----------- -------- ----------- --------- -------
At 30 March 2020 13.6 1.8 (4.4) 248.4 331.4 590.8
--------------------------------- ------------ ----------- -------- ----------- --------- -------
Total comprehensive income
Loss for the 26 week period - - - - (19.2) (19.2)
--------------------------------- ------------ ----------- -------- ----------- --------- -------
Other comprehensive income
Remeasurement of retirement
benefit schemes 11 - - - - (9.2) (9.2)
Fair value movement of interest
rate swaps - - 0.1 - - 0.1
Tax on above components of other
comprehensive income 5 - - - 0.1 1.7 1.8
--------------------------------- ------------ ----------- -------- ----------- --------- -------
Total comprehensive loss - - 0.1 0.1 (26.7) (26.5)
--------------------------------- ------------ ----------- -------- ----------- --------- -------
Transactions with owners recorded directly in equity
Issued equity(1) 12 1.2 - - - 83.6 84.8
Share-based payments - - - - (0.2) (0.2)
1.2 - - - 83.4 84.6
At 28 September 2020 14.8 1.8 (4.3) 248.5 388.1 648.9
--------------------------------- ------------ ----------- -------- ----------- --------- -------
At 2 April 2019 12.8 1.8 (4.8) 261.5 322.5 593.8
--------------------------------- ------------ ----------- -------- ----------- --------- -------
Total comprehensive income
Profit for the 26 week period - - - - 18.7 18.7
--------------------------------- ------------ ----------- -------- ----------- --------- -------
Other comprehensive income
Remeasurement of retirement
benefit schemes 11 - - - - (4.9) (4.9)
Fair value movement of interest
rate swaps - - (0.2) - - (0.2)
Tax on above components of other
comprehensive income 5 - - 0.1 0.1 0.8 1.0
--------------------------------- ------------ ----------- -------- ----------- --------- -------
Total comprehensive income - - (0.1) 0.1 14.6 14.6
--------------------------------- ------------ ----------- -------- ----------- --------- -------
Transactions with owners recorded directly in equity
Issued equity 12 0.7 - - - - 0.7
Dividends paid on equity shares - - - - (5.3) (5.3)
Share-based payments - - - - 0.1 0.1
Movement in shares held by Ram
Brewery Trust II - - - - 0.2 0.2
Tax on share based-payments - - - - (0.1) (0.1)
--------------------------------- ------------ ----------- -------- ----------- --------- -------
0.7 - - - (5.1) (4.4)
--------------------------------- ------------ ----------- -------- ----------- --------- -------
At 30 September 2019 13.5 1.8 (4.9) 261.6 332.0 604.0
--------------------------------- ------------ ----------- -------- ----------- --------- -------
(1) During the period, the group raised proceeds of GBP84.8
million, net of transaction costs. A cash box structure was used in
such a way that merger relief was available under Companies Act
2006, section 612, and thus no share premium was recorded. As the
redemption of the cash box entity's preference shares was in the
form of cash, the transaction was treated as qualifying
consideration and the premium is therefore considered to be a
realised profit.
Group statement of cash flow
For the 26 weeks ended 28 September 2020
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
to 28 Sep to 30 Sep to 30 Mar
2020 2019 2020
Notes GBPm GBPm GBPm
------------------------------------------- ----- --------- --------- ---------
Operating activities
Net cash generated from operations 8 - 42.2 72.5
Tax paid - (4.5) (13.5)
------------------------------------------- ----- --------- --------- ---------
Net cash flow from operating activities - 37.7 59.0
------------------------------------------- ----- --------- --------- ---------
Investing activities
Proceeds from disposal of property
and equipment 0.4 0.1 1.0
Purchases of property and equipment 9 (4.2) (14.4) (32.7)
Business combinations, net of cash
acquired 9 - (2.9) (35.3)
Right-of-use assets acquired - - (0.2)
------------------------------------------- ----- --------- --------- ---------
Net cash used in investing activities (3.8) (17.2) (67.2)
------------------------------------------- ----- --------- --------- ---------
Financing activities
Issued equity, net of transaction
costs 12 84.8 - -
Interest paid (4.6) (3.0) (8.6)
Equity dividends paid - (5.3) (10.5)
Payments of principal portion of
lease liabilities (2.2) (3.9) (8.1)
Repayments of borrowings 1 (115.5) (42.5) (8.5)
Proceeds from borrowings 1 80.0 35.0 36.5
------------------------------------------- ----- --------- --------- ---------
Net cash flow used in financing activities 42.5 (19.7) 0.8
------------------------------------------- ----- --------- --------- ---------
Increase/(decrease) in cash 38.7 0.8 (7.4)
Cash at the beginning of the period 1.1 8.5 8.5
------------------------------------------- ----- --------- --------- ---------
Cash at the end of the period 39.8 9.3 1.1
------------------------------------------- ----- --------- --------- ---------
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTS
This interim report was approved by the board on 11 November
2020. The interim financial statements are unaudited and are not
the group's statutory accounts as defined in s.434 of the Companies
Act 2006.
The consolidated interim financial statements have been prepared
under IFRS's as adopted by the European Union and on the basis of
the accounting policies set out in the statutory accounts of Young
& Co.'s Brewery, P.L.C. for the period ended 30 March 2020. The
financial statements have not been prepared (and are not required
to be prepared) in accordance with IAS 34: "Interim Financial
Reporting", with the exception of note 5, taxation, where the tax
charge for the half year to 28 September 2020 has been calculated
using an estimate of the full year effective tax rate, in line with
the principles of IAS 34. The accounting policies have been applied
consistently throughout the group for the purposes of preparation
of this financial information.
The interim report is presented in pounds sterling and all
values are shown in millions of pounds (GBPm) rounded to the
nearest GBP0.1 million, except where otherwise indicated.
Statutory accounts for the period ended 30 March 2020 have been
delivered to the Registrar of Companies. The auditor's report on
those accounts (i) was unqualified and (ii) contained two material
uncertainties in respect of going concern to which the auditor drew
attention by way of emphasis without modifying their opinion. That
report did not contain a statement under s.498(2) or (3) of the
Companies Act 2006.
This interim report has been prepared in accordance with the AIM
Rules issued by the London Stock Exchange.
NEW ACCOUNTING STANDARDS
Covid-19 Related Rent Concessions - Amendment to IFRS 16
Amendments were made to IFRS 16 Leases to provide relief to
lessees from applying the IFRS 16 guidance on lease modifications
to rent concessions arising as a direct consequence of the covid
pandemic.
As a practical expedient, the group elected not to assess
whether covid-related rent concessions from a lessor were a lease
modification; this resulted in 21 property leases becoming within
scope of the amendment due to payment holidays or rent deferrals
being granted directly as a result of the covid pandemic.
Adoption of the amendment has been applied retrospectively,
however had no material impact on opening retained earnings, the
opening lease liabilities or the opening right-of-use assets due to
the timing of the rent concessions. The accounting treatment
applied varied on a lease-to-lease basis dependent upon the
specific conditions of each rent concession. In general, rent
concessions were treated as a contingency that fixed previously
variable lease payments. In such cases, the lease liabilities were
remeasured, using the remeasured consideration, with a
corresponding adjustment to the right-of-use assets. Where rent
deferrals were agreed with only short-term timing differences, no
changes were made to the lease liability payment schedule. In these
cases, the lease liabilities and right-of-use assets remained
unchanged, however a separate payable was reflected within trade
and other payables in the balance sheet.
Other amendments to accounting standards applied from 31 March
2020 were as follows:
-- Definition of Material - amendments to IAS 1 and IAS 8;
-- Definition of a Business - amendments to IFRS 3;
-- Revised Conceptual Framework for Financial Reporting; and
-- Interest Rate Benchmark Reform - amendments to IFRS 9, IAS 39 and IFRS 7.
The application of these did not have a material impact on the
group's accounting treatment and has therefore not resulted in any
material changes.
EXPANSION TO ACCOUNTING POLICY
During the period, the group has expanded on the following
accounting policy, previously stated in the statutory accounts for
the 52 weeks ended 30 March 2020:
Government grants
Government grants represent monetary and non-monetary resources
transferred to the group by the Government, government agencies or
similar bodies. These are recognised at fair value when the group
has reasonable assurance that it will comply with any conditions
attached to the grant and that the grant will be received.
Government grants are recognised in the income statement, on a
systematic basis, over the same period during which the expenses,
for which the grant was intended to compensate, are recognised.
Grants relating to assets are presented as deferred income. See
note 4.
Coronavirus Job Retention Scheme ('CJRS')
Under this scheme, HMRC reimburses up to 80% of the wages of
certain employees who have been furloughed. The scheme is designed
to compensate for staff costs, so amounts received are recognised
in the income statement over the same period as the costs to which
they relate. In the income statement, operating costs are shown net
of grant income received.
Eat Out to Help Out
From 3 to 31 August, HMRC offered a 50% discount of food and
non-alcoholic drinks, capped to GBP10 per person, when dining out
between Monday and Wednesday. The group took advantage of this
scheme. In the income statement, revenue includes amounts
reimbursed from HMRC in respect of the scheme.
Business rates
Businesses in the retail, hospitality and leisure sectors in
England do not have to pay business rates for the 2020 to 2021 tax
year. No business rate charge has therefore been recognised in the
income statement for the period ending 28 September 2020.
Additionally, sites with a rateable value between GBP15,000 and
GBP51,000 are eligible for a GBP25,000 grant with no further
qualifying conditions. Income relating to the business rate grants
has been recognised in other income in the income statement.
Covid Corporate Financing Facility ('CCFF')
One-year commercial paper issued to the Bank of England at a
favourable yield is deemed to constitute a government grant. The
debt has been recognised within current borrowings on the balance
sheet at fair value, with the grant element, reflecting the
favourable yield, recognised as deferred income within trade and
other payables. On amortisation, the grant element has been
recognised within finance costs, consistent with where the cost is
recognised, as the group's policy is to present the income as a
deduction from the related expense.
GOING CONCERN
As reported in June 2020, the group's financing position has
been strengthened through both raising further debt and equity.
Additional debt facilities have been obtained through accessing the
CCFF, whereby GBP30.0 million of commercial paper with a maturity
date of May 2021 was secured, alongside a new revolving credit
facility of GBP20.0 million with NatWest for an initial period of
one year to May 2021. Longer-term, the GBP50.0 million term loan
due to expire in March 2021 was replaced with a five-year facility
expiring in 2025. In June 2020, the group also completed an equity
issue raising net proceeds of GBP84.8 million in the period,
discussed in note 12.
At 28 September 2020, the group had cash of GBP39.8 million and
committed borrowing facilities of GBP285.0 million, of which
GBP165.0 million was drawn down. Facilities of GBP235.0 million are
available through the going concern period to the end of November
2021, with no significant repayments immediately beyond that
period. In addition, the group has access to further funding under
the CCFF should it be required, although as this is not committed
it has been excluded from the going concern assessment.
The group has also considered the effects of its latest
forecasts on its compliance with bank covenants, which are tested
each quarter on a 12 month rolling basis. In anticipation of
covenant breaches arising due to the pub closures, the group agreed
with its lenders that the financial covenants would be replaced by
a monthly minimum debt headroom covenant, requiring the group to
have GBP20.0 million of its available facilities undrawn at each
month end until the quarter ending June 2021. In addition, they
have waived any technical "cessation of business" breach of our
banking facilities as a result of pubs being closed due to the
coronavirus pandemic through to the quarter end June 2021. Although
there is no material uncertainty about the group's ability to
comply with the minimum debt headroom covenant, those banking
covenants revert to the group's original financial covenants for
the June 2021 covenant test.
Whilst the group's entire pub estate had re-opened by 20 July
2020 following an extended period of government enforced closure in
response to covid, there remains a degree of uncertainty ahead,
particularly given the Government's most recent enforced closures
from 5 November 2020. As part of the directors' consideration of
the appropriateness of adopting the going concern basis, the group
has modelled several scenarios for the period to the end of
November 2021. The key judgements applied are the extent of
disruption to trading as a result of both the November forced
closure, including the length of this closure, and the time period
over which trading recovers once pubs can re-open again. The base
model assumes that pubs re-open in early December 2020, followed by
similar disruption to trading as was seen during the autumn. The
more severe scenario includes further forced closures during
January and February 2021 re-opening in March 2021. We have assumed
no significant structural changes to the business will be needed in
any of the scenarios modelled.
In the base case scenario, there is significant headroom under
the revised minimum debt headroom covenant through to June 2021
and, if covenants were to revert back to the group's original
financial covenants from June 2021 onwards, the covenants would be
fully complied with through the going concern period. However,
under the more severe scenario where pubs may be required to close
for prolonged periods, the group would still comply with revised
covenants to June 2021, but on reversion back to the original
banking covenants from June 2021 onwards certain performance-based
covenants would risk being breached and the group would not be
compliant at the quarter ending June or September 2021.
Given the uncertainty over trade, particularly throughout the
winter, the compliance with the original banking covenants for the
June and September 2021 test dates remains a material uncertainty
that casts significant doubt about the group's ability to continue
as a going concern. The group is in regular dialogue with its
lenders and, should such a scenario arise, the group is confident
that it would be able to agree remedies, including an extension of
the covenant changes agreed already, well in advance of June
2021.
Based on these forecasts and sensitivities, together with the
potential remedies should a covenant breach occur as described
above, the directors are confident that with the current debt
levels, the ongoing debt structure in place and the recent equity
raise, there are sufficient financial resources to meet all
liabilities as they fall due until at least the end of November
2021. Accepting the material uncertainty that may cast doubt about
the group's ability to continue as a going concern relating to the
banking covenants from 30 June 2021, the board has a reasonable
expectation that the group is able to manage its business risks and
to continue in operational existence until at least the end of
November 2021. Accordingly, the board continues to adopt the going
concern basis in preparing the consolidated interim statements.
The interim statements do not contain the adjustments that would
result if the company were unable to continue as a going
concern.
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 group's executive
board internally reviews each reporting segment's operating profit
or loss before adjusting items for the purpose of deciding on the
allocation of resources and assessing performance.
The group has two operating segments: managed houses and Ram Pub
Company. The managed house segment operates pubs. Revenue is
derived from sales of drink, food and accommodation. Ram Pub
Company consists of pubs owned or leased by the company and leased
or subleased to third parties. Revenue is derived from rents
payable by, and sales of drink made to, tenants. Unallocated
relates to head office income and costs and unlicensed
properties.
26 weeks 26 weeks 52 weeks
to 28 Sep to 30 Sep to 30 Mar
2020 2019 2020
GBPm GBPm GBPm
----------------------------------------- ---------- ---------- ----------
Managed houses 52.1 161.3 298.5
Ram Pub Company 1.5 4.7 8.8
----------------------------------------- ---------- ---------- ----------
Revenue recognised under contracts with
customers 53.6 166.0 307.3
Managed houses - 0.3 0.6
Ram Pub Company 1.3 1.7 3.3
----------------------------------------- ---------- ---------- ----------
Rental income 1.3 2.0 3.9
Unallocated income 0.2 0.2 0.4
----------------------------------------- ---------- ---------- ----------
Total revenue 55.1 168.2 311.6
----------------------------------------- ---------- ---------- ----------
Adjusted operating (loss)/profit
Managed houses (7.5) 38.0 59.9
Ram Pub Company 0.6 2.4 4.3
----------------------------------------- ---------- ---------- ----------
Adjusted operating (loss)/profit before
unallocated expense (6.9) 40.4 64.2
Unallocated expense (7.4) (9.5) (17.7)
----------------------------------------- ---------- ---------- ----------
Adjusted operating (loss)/profit (14.3) 30.9 46.5
----------------------------------------- ---------- ---------- ----------
Adjusting items
Managed houses (1.5) (2.2) (7.0)
Ram Pub Company (0.6) - (1.4)
Unallocated (0.5) (0.1) (0.2)
----------------------------------------- ---------- ---------- ----------
Operating (loss)/profit (16.9) 28.6 37.9
Finance costs (4.8) (4.2) (8.6)
Finance charge for pension obligations (0.1) (0.1) (0.2)
----------------------------------------- ---------- ---------- ----------
(Loss)/profit before tax (21.8) 24.3 29.1
----------------------------------------- ---------- ---------- ----------
GBP0.2 million of unallocated income (2019: GBP0.2 million) is rental
income derived from unlicensed properties.
3. ADJUSTING ITEMS AND OTHER FINANCIAL MEASURES
26 weeks 26 weeks 52 weeks
to 28 Sep to 30 Sep to 30 Mar
2020 2019 2020
GBPm GBPm GBPm
--------------------------------------------------- ---------- ---------- ----------
Amounts included in operating (loss)/profit
Group reorganisation(1) (1.4) - -
Covid restructuring(2) (0.5) - -
Tenant compensation(3) (0.5) (1.5) (1.7)
Loss on disposal of properties(4) (0.2) (0.5) (0.6)
Acquisition costs(5) - (0.3) (1.0)
Upward movement on the revaluation of properties
(note 9)(6) - - 1.7
Downward movement on the revaluation of properties
(note 9)(6) - - (7.0)
--------------------------------------------------- ---------- ---------- ----------
(2.6) (2.3) (8.6)
--------------------------------------------------- ---------- ---------- ----------
Tax on adjusting items
Tax attributable to adjusting items 0.1 - (1.6)
--------------------------------------------------- ---------- ---------- ----------
Total adjusting items after tax (2.5) (2.3) (10.2)
--------------------------------------------------- ---------- ---------- ----------
1. The group reorganisation costs of GBP1.4 million related to
the stamp duty land tax and associated legal and professional fees
incurred on the transfer of the business and assets of Spring Pub
Company Limited, a group of five sites acquired on 12 March 2020,
to Young's. The cost was foreseen at the time of the acquisition in
March 2020, but did not crystalise until the transfer happened in
September 2020.
2. Covid restructuring costs of GBP0.5 million related to a
reorganisation of the group's head office functions. These were
largely made up of severance costs.
3. Tenant compensation of GBP0.5 million was paid to the
previous tenants of the Royal Oak (Bethnal Green) and an unlicensed
property (Wandsworth) to terminate their lease agreements early.
During the previous 52 week period to 30 March 2020, tenant
compensation of GBP1.7 million was paid to the previous tenants of
the White Bear (Tunbridge Wells), New Inn (Ealing), Constitution
(Camden) and an unlicensed property (Wandsworth) to terminate their
lease agreements early.
4. The loss on disposal of properties related to the difference
between cash, less disposal costs, received from the sale of the
Horse Pond Inn (Castle Cary), the lease expiry of the Black Cat
(Catford) and the lease expiry of the Surprise (Chelsea) and the
carrying value of their assets, including goodwill, at the dates of
disposal. In the prior period, the carrying value of the Horse Pond
Inn was previously derecognised from property and equipment and
instead classified as an asset held for sale. Proceeds of GBP0.4
million were recognised in respect of the sale of the Horse Pond
Inn in the current period. During the previous 52 week period to 30
March 2020, the loss on disposal of properties related to the
difference between cash, less disposal costs, received from the
lease expiry of the Builder's Arms (Chelsea), termination of the
lease of the Alphabet (Islington) and the sale of the Bristol Ram
(Bristol) and the carrying value of their assets, including
goodwill, at the dates of disposal.
5. During the previous 52 week period to 30 March 2020, the
acquisition costs related to professional fees, stamp duty and
stamp duty land tax arising on the acquisition of Spring Pub
Company Limited, along with the White Bear (Tunbridge Wells) and
the Constitution (Camden).
6. The net downward movement on the revaluation of properties in
the previous 52 week period to 30 March 2020 related to net
downward movements in excess of amounts recognised in equity. See
note 9(1) in the statutory accounts for the period ended 30 March
2020 for further details.
Other financial measures
The table below shows how adjusted EBITDA, operating profit and
profit before tax have been arrived at. These alternative
performance measures have been provided as the board believes that
they give useful additional measures of the group's underlying
performance and are the measures that the board uses to assess the
group's performance.
26 weeks 26 weeks 52 weeks
to 28 Sep to 30 Sep to 30 Mar
2020 2019 2020
GBPm GBPm GBPm
--------------------------------------- ---------- --------- ----------
(Loss)/profit before tax (21.8) 24.3 29.1
Adjusting items 2.6 2.3 8.6
Adjusted (loss)/profit before
tax (19.2) 26.6 37.7
Net finance costs 4.8 4.2 8.6
Finance charge for pension obligations 0.1 0.1 0.2
Adjusted operating (loss)/profit (14.3) 30.9 46.5
Depreciation and amortisation 17.2 16.3 33.1
--------------------------------------- ---------- --------- ----------
Adjusted EBITDA 2.9 47.2 79.6
--------------------------------------- ---------- --------- ----------
4. GOVERNMENT GRANTS
During the period, the group was eligible for a number of government
grant schemes which were introduced to mitigate the impact of covid.
The impact of each scheme on the income statement for the 26 weeks to
28 September 2020 was as follows:
26 weeks
to 28 Sep
Income statement 2020
Government grant scheme line impacted GBPm
----------------------------------- --------------------------------- ----------
Eat Out to Help Out Revenue 2.4
Business rate grant Other income 0.3
Coronavirus Job Retention Scheme Operating costs before adjusting
('CJRS') items 21.9
Covid Corporate Financing Facility
('CCFF') Finance costs 0.1
----------------------------------- --------------------------------- ----------
Total government grants received 24.7
---------------------------------------------------------------------- ----------
At 28 September 2020, GBP29.8 million has been recognised within
current borrowings in the balance sheet representing the fair value
of the CCFF, with a further GBP0.2 million recognised within trade
and other payables as deferred income, representing the favourable
conditions granted by the Government. In respect of the CJRS,
GBP1.5 million remained outstanding at 28 September 2020, which has
been recognised within trade and other receivables.
The group additionally took advantage of the business rate
holiday, saving GBP7.7 million in the period, reduced 5% VAT on
eligible sales and deferral of VAT payments for the tax year ending
2021. See note 1 (Expansion to accounting policy) for further
information.
5. TAXATION
The taxation charge for the 26 weeks ended 28 September 2020 has
been calculated by applying an estimate of the effective tax rate
before adjusting items for the 52 weeks ending 29 March 2021 at
10.1% (2019: 21.1%).
26 weeks 26 weeks 52 weeks
to 28 Sep to 30 Sep to 30 Mar
2020 2019 2020
Tax charged in the group income statement GBPm GBPm GBPm
------------------------------------------------------ ---------- ---------- ----------
Current tax
Corporation tax (credit)/expense (2.0) 5.9 8.6
Adjustment in respect of current tax of prior
periods - (0.1) -
----------------------------------------------------- ---------- ---------- ----------
(2.0) 5.8 8.6
----------------------------------------------------- ---------- ---------- ----------
Deferred tax
Origination and reversal of temporary differences (0.6) (0.3) (0.4)
Change in corporation tax rate - - 1.6
Adjustment in respect of prior periods - 0.1 -
(0.6) (0.2) 1.2
----------------------------------------------------- ---------- ---------- ----------
Tax (credit)/charge in the income statement (2.6) 5.6 9.8
------------------------------------------------------ ---------- ---------- ----------
Deferred tax in the group income statement
------------------------------------------------------ ---------- ---------- ----------
Property revaluation and disposals - (0.1) 1.4
Retirement benefit schemes 0.1 0.1 0.6
Capital allowances (0.8) (0.4) (1.2)
Share-based payments 0.1 0.2 0.3
Trade losses - - 0.1
------------------------------------------------------ ---------- ---------- ----------
Tax (credit)/charge in the income statement (0.6) (0.2) 1.2
------------------------------------------------------ ---------- ---------- ----------
Deferred tax in the group statement of comprehensive
income
------------------------------------------------------ ---------- ---------- ----------
Interest rate swaps - (0.1) 0.1
Retirement benefit schemes (1.7) (0.8) (0.1)
Property revaluation and disposals (0.1) (0.1) (1.5)
Change in corporation tax rate - - 4.6
------------------------------------------------------ ---------- ---------- ----------
Tax (credit)/charge in other comprehensive income (1.8) (1.0) 3.1
------------------------------------------------------ ---------- ---------- ----------
The deferred tax assets and liabilities at the balance sheet
date are calculated at the substantively enacted rate of 19%.
The effective full year tax rate of 10.1% is down from 21.1% in
the prior year due to the decrease in full year forecast
results.
6. (LOSS)/EARNINGS PER ORDINARY SHARE
(a) (Loss)/earnings
26 weeks 26 weeks 52 weeks
to 28 Sep to 30 Sep to 30 Mar
2020 2019 2020
GBPm GBPm GBPm
------------------------------------------- ---------- ---------- ----------
(Loss)/profit for the period (19.2) 18.7 19.3
Adjusting items 2.6 2.3 8.6
Tax attributable to above adjustments (0.1) - 1.6
------------------------------------------- ---------- ---------- ----------
Adjusted (loss)/earnings after tax (16.7) 21.0 29.5
------------------------------------------- ---------- ---------- ----------
Number Number Number
------------------------------------------- ---------- ---------- ----------
Basic weighted average number of ordinary
shares in issue 53,774,655 49,003,822 49,018,801
Dilutive potential of ordinary shares from
outstanding employee share options - 41,744 28,901
------------------------------------------- ---------- ---------- ----------
Diluted weighted average number of shares 53,774,655 49,045,566 49,047,702
------------------------------------------- ---------- ---------- ----------
(b) Basic (loss)/earnings per share
Pence Pence Pence
------------------------------------------- ---------- ---------- ----------
Basic (35.70) 38.16 39.37
Effect of adjusting items 4.64 4.69 20.81
------------------------------------------- ---------- ---------- ----------
Adjusted basic (31.06) 42.85 60.18
------------------------------------------- ---------- ---------- ----------
(c) Diluted (loss)/earnings per share
Pence Pence Pence
------------------------------------------- ---------- ---------- ----------
Diluted (35.70) 38.13 39.35
Effect of adjusting items 4.64 4.69 20.80
------------------------------------------- ---------- ---------- ----------
Adjusted diluted (31.06) 42.82 60.15
------------------------------------------- ---------- ---------- ----------
The basic (loss)/earnings per share figure is calculated by
dividing the net (loss)/profit for the period attributable to
equity shareholders of the parent by the weighted average number of
ordinary shares in issue during the period. Diluted (loss)/earnings
per share are calculated on a similar basis taking into account
dilutive potential shares under our SAYE scheme. There were no
potentially dilutive shares in the period ended 28 September 2020
(2019: 41,744).
Adjusted (loss)/earnings per share are presented to eliminate
the effect of the adjusting items on basic and diluted
(loss)/earnings per share.
7. DIVIDS ON EQUITY SHARES
26 weeks 26 weeks 52 weeks
to 28 Sep to 30 Sep to 30 Mar
2020 2019 2020
Pence Pence Pence
---------------------------------- --------- --------- ---------
Final dividend (previous period) - 10.81 10.81
Interim dividend (current period) - - 10.57
---------------------------------- --------- --------- ---------
- 10.81 21.38
---------------------------------- --------- --------- ---------
The table above sets out dividends that have been paid. The
board has decided that it is not appropriate to recommend payment
of an interim dividend in respect of the period ended 28 September
2020.
8. NET CASH GENERATED FROM OPERATIONS AND ANALYSIS OF NET
DEBT
26 weeks 26 weeks 52 weeks
to 28 Sep to 30 Sep to 30 Mar
2020 2019 2020
GBPm GBPm GBPm
-------------------------------------------- --------- --------- ---------
(Loss)/profit before tax (21.8) 24.3 29.1
Finance costs 4.8 4.2 8.6
Finance charge for pension obligations 0.1 0.1 0.2
-------------------------------------------- --------- --------- ---------
Operating (loss)/profit (16.9) 28.6 37.9
Depreciation of property and equipment 13.3 12.6 25.6
Depreciation of right-of-use assets 3.9 3.7 7.5
Movement on the revaluation of properties - - 5.3
Net loss on disposal of properties 0.2 0.5 0.6
Difference between pension service cost and
cash contributions paid (0.7) (0.6) (1.3)
Share-based payments (0.2) 0.1 0.1
Movements in working capital
- Inventories (0.4) (0.2) 0.5
- Receivables 1.0 (1.9) (1.8)
- Payables (0.2) (0.6) (1.9)
-------------------------------------------- --------- --------- ---------
Net cash generated from operations - 42.2 72.5
-------------------------------------------- --------- --------- ---------
Analysis of group net debt
At 28 Sep At 30 Sep At 30 Mar
2020 2019 2020
GBPm GBPm GBPm
------------------------------------------- ---------- ---------- ---------
Cash 39.8 9.3 1.1
Current borrowings and loan capital (29.8) - (50.0)
Current lease liabilities (5.0) (5.0) (5.3)
Non-current borrowings and loan capital (133.3) (163.7) (149.2)
Non-current lease liabilities (75.5) (67.8) (77.0)
------------------------------------------- ---------- ---------- ---------
Net debt (203.8) (227.2) (280.4)
------------------------------------------- ---------- ---------- ---------
See note 1 for further details on refinancing activities in the current
period.
9. PROPERTY AND EQUIPMENT
Fixtures,
fittings
Land & &
buildings equipment Total
Cost or valuation GBPm GBPm GBPm
--------------------------------------------- --------- --------- ------
At 2 April 2019 693.3 148.0 841.3
--------------------------------------------- --------- --------- ------
Additions 6.6 26.1 32.7
Business combinations 27.1 2.6 29.7
Disposals (1.7) (0.8) (2.5)
Transfer out to asset held for sale (0.8) (0.4) (1.2)
Fully depreciated assets (0.2) (14.8) (15.0)
Revaluation
- effect of upward movement in property
valuation 19.1 - 19.1
- effect of downward movement in property
valuation (29.3) - (29.3)
--------------------------------------------- --------- --------- ------
At 30 March 2020 714.1 160.7 874.8
Additions 0.5 3.7 4.2
Disposals - (0.2) (0.2)
Fully depreciated assets (7.4) (9.2) (16.6)
--------------------------------------------- --------- --------- ------
At 28 September 2020 707.2 155.0 862.2
--------------------------------------------- --------- --------- ------
Depreciation and impairment
--------------------------------------------- --------- --------- ------
At 2 April 2019 27.8 62.9 90.7
--------------------------------------------- --------- --------- ------
Depreciation charge 1.6 24.0 25.6
Disposals (1.0) (0.3) (1.3)
Transfer out to asset held for sale (0.6) (0.1) (0.7)
Fully depreciated assets (0.2) (14.8) (15.0)
Revaluation
- effect of downward movement in property
valuation 7.0 - 7.0
- effect of upward movement in property
valuation (2.6) - (2.6)
--------------------------------------------- --------- --------- ------
At 30 March 2020 32.0 71.7 103.7
Depreciation charge 0.9 12.4 13.3
Disposals - (0.2) (0.2)
Fully depreciated assets (7.4) (9.2) (16.6)
--------------------------------------------- --------- --------- ------
At 28 September 2020 25.5 74.7 100.2
--------------------------------------------- --------- --------- ------
Net book value
--------------------------------------------- --------- --------- ------
At 2 April 2019 665.5 85.1 750.6
--------------------------------------------- --------- --------- ------
At 30 March 2020 682.1 89.0 771.1
--------------------------------------------- --------- --------- ------
At 28 September 2020 681.7 80.3 762.0
--------------------------------------------- --------- --------- ------
9. PROPERTY AND EQUIPMENT (continued)
Revaluation of property and equipment
The values of the group's freehold land, buildings and fixtures
and fittings were reviewed in light of current market factors by
management and by Savills, who perform a desktop review based upon
information provided by the group, pursuant to the group's
accounting policy. The group considers that the valuation reached
at 30 March 2020, after the onset of covid, still represents the
best estimate of the fair value of the estate at 28 September
2020.
The year-end valuation incorporated the impact of covid through
discounting pre-covid property values by between 0% and 10%
dependent on factors including, but not limited to, location,
segment and performance of each site. The valuation discount
applied contained material uncertainty given the lack of comparable
transactional activity since the onset of covid and the uncertainty
over future trade at the valuation date. In light of the
post-year-end trading performance of the group, along with wider
market activity, the covid discount applied at year-end has been
re-assessed, with input from Savills, and is considered to continue
to represent the properties' highest and best value at 28 September
2020.
Details of the methodology used in determining the group's
property values are discussed in the group's audited accounts for
the 52 weeks ended 30 March 2020. The key inputs are EBITDA, a
multiplier and, in some cases, underlying property values. A
sensitivity analysis has been conducted on the property estate to
give an indication of the impact of movements in the most sensitive
assumption, EBITDA. The analysis considers this single change with
the other assumptions unchanged. In practice, changes in one
assumption may be accompanied by changes in another. Changes in
market values may also occur at the same time as any changes in
assumptions. This information should not be taken as a projection
of likely future valuation movements. Decreasing or increasing the
EBITDA used in the revaluation by 10% would decrease/increase the
valuation by GBP59.1 million.
10. LEASE LIABILITIES, RIGHT-OF-USE-ASSETS AND GOODWILL
Set out below are the carrying amounts of the group's right-of-use assets
and lease liabilities and the movements during the period:
Lease
Right-of-use
assets liabilities
GBPm GBPm
-------------------------------------- ------------------- -----------------
As at 2 April 2019 148.2 74.6
Additions 3.0 2.8
Business combinations 15.0 8.3
Lease amendments 4.7 4.7
Depreciation expense (7.5) -
Accretion of interest - 2.5
Capital repayment - (10.6)
--------------------------------------- ------------------- -----------------
As at 30 March 2020 163.4 82.3
--------------------------------------- ------------------- -----------------
Lease amendments 0.4 0.4
Depreciation expense (3.9) -
Accretion of interest - 1.3
Capital repayment - (3.5)
--------------------------------------- ------------------- -----------------
As at 28 September 2020 159.9 80.5
--------------------------------------- ------------------- -----------------
Right-of-use assets predominantly relate to leasehold
properties, along with motor vehicles and IT equipment.
Cash flow benefits arising from rent concessions totalled GBP0.8
million in the period. This includes GBP0.4 million of rent
holidays which have been offset against GBP0.8 million of upward
lease amendments in the period. The impact on the income statement
during the period was immaterial and there was a GBP0.2 million
increase in trade and other payables in the balance sheet as a
result of rent deferrals for which the original lease liability was
not amended.
As a lessor, the group offered a rent-free period to the
majority of its tenanted estate from 16 March 2020 to 4 July 2020
and negotiated further concessions in the period to 28 September
2020. These concessions were treated as modifications to the
operating leases and treated as new leases from date of
modification. The concessions are being recognised over the
remaining lease term, resulting in foregone rental income of GBP0.3
million for the period.
Impairment considerations
Impairment indicators were identified to groups of cash
generating units with associated right-of-use assets and/or
goodwill following the loss of trade as a result of covid. The
inputs to both the impairment models for the right-of-use assets
and goodwill are consistent and, in both cases, no impairment has
been recognised in the current period.
All impairment tests are based on individual site 24-month cash
flow forecasts initially, taking into account expected disruption
from covid, followed by 2.0% long-term annual growth in projected
future cash flows (2020: 2.0%), with the exception of Smiths of
Smithfield Limited where growth rates increase over a five year
period to reflect the anticipated arrival of Crossrail in 2022 and
the opening of the Museum of London in 2024 before reverting to a
2.0% long-term growth rate. The pre-tax discount rate applied to
all cash flow projections was 8.1% (2020: 7.7%).
The impairment calculation is most sensitive to the pre-tax
discount rate and EBITDA assumptions. The board has performed a
sensitivity analysis on the impairment tests. Although not
considered probable, if trade continued at the current year level
with no long-term future growth, an impairment loss to all cash
generating units with associated right-of-use assets and/or
goodwill, with the exception of Geronimo, would be recognised.
Further, if the discount rate was to increase by 1% an impairment
would be recognised on the right-of-use assets and to the goodwill
of Smiths of Smithfield Limited and Spring Pub Company Limited.
11. RETIREMENT BENEFIT SCHEMES
The table below summarises the movement in the retirement
benefit schemes' deficit in the period:
26 weeks 26 weeks 52 weeks
to 28 Sep to 30 Sep to 30 Mar
2020 2019 2020
GBPm GBPm GBPm
------------------------------------------ ---------- ---------- ----------
Changes in the present value of the retirement benefit schemes are as
follows:
Opening deficit (8.2) (8.6) (8.6)
Current service cost (0.1) (0.2) (0.3)
Contributions 0.8 0.8 1.6
Finance charge for pension obligations (0.1) (0.1) (0.2)
Remeasurement through other comprehensive
income (9.2) (4.9) (0.7)
------------------------------------------ ---------- ---------- ----------
Closing deficit (16.8) (13.0) (8.2)
------------------------------------------ ---------- ---------- ----------
The GBP9.2 million remeasurement through other comprehensive income is
largely driven by a decrease in the discount rate to 1.6% (2020: 2.4%)
along with an increase in RPI inflation to 3.0% (2020: 2.8%).
12. SHARE CAPITAL
Total share capital comprises the nominal value of the share
capital issued and fully paid of GBP7.3 million (2020: GBP6.1
million) and the share premium account of GBP7.5 million (2020:
GBP7.5 million). Share capital issued in the period comprises a
nominal value of GBP1.2 million (2020: GBPnil) and a share premium
of GBPnil (2020: GBP0.8 million).
In June 2020, the group completed an equity issue raising gross
proceeds of GBP88.4 million in the period. The equity issue
comprised the placing of 4,513,393 new A shares and 4,910,755 new
non-voting shares. The new A shares were issued at 1,160p per share
and the new non-voting shares were issued at 735p per share. The
allotment and issue of the new shares was effected by way of a
placing of new A shares and new non-voting shares for non-cash
consideration: J.P. Morgan Securities plc subscribed for ordinary
shares and redeemable preference shares in Project Uppercase No. 1
Limited, a Jersey incorporated wholly owned subsidiary, for an
amount approximately equal to the net proceeds of the placing, and
the company allotted and issued the new shares on a non-pre-emptive
basis to placees in consideration for the transfer of the ordinary
shares and redeemable preference shares in Project Uppercase No. 1
Limited that were issued to J.P. Morgan Securities plc.
A cash box structure was used in such a way that merger relief
was available under Companies Act 2006, section 612, and thus no
share premium was recorded. As the redemption of the cash box
entity's preference shares was in the form of cash, the transaction
was treated as qualifying consideration and the premium is
therefore considered to be a realised profit. Transaction costs
incremental to the equity issue totalled GBP3.6 million and have
been recorded directly in retained earnings, resulting in net
realised profit recorded in retained earnings of GBP83.6 million.
Including the nominal share capital of GBP1.2 million, total net
equity raised was GBP84.8 million.
13. POST BALANCE SHEET EVENTS
Following the latest national lockdown introduced last week, all
our pubs closed on 5 November. Whilst we were hoping that a further
lockdown could have been avoided, the second lockdown with the
financial support available from the Government will be
considerably less damaging to our business than the potential move
to Tier 3. For the four-week closure we would expect a cash burn of
between GBP4.0 million and GBP5.0 million, achieved by the
reintroduction of the Coronavirus Job Retention Scheme. We are
hopeful that when we re-open on 3 December, we will see the back of
the 10pm curfew and London moves to Tier 1.
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