TIDMYNGA
RNS Number : 8950O
Young & Co's Brewery PLC
04 June 2020
Young & Co.'s Brewery, P.L.C.
Preliminary results for the 52 weeks ended 30 MARCH 2020
2020 2020 2019 Change
post-IFRS pre-IFRS pre-IFRS pre-IFRS 16
16 16 illustrative 16 illustrative
GBPm GBPm(1) GBPm %
------------------------------------- ---------- ----------------- --------- -------------
Revenue 311.6 311.6 303.7 +2.6
Adjusted operating profit(2) 46.5 44.8 48.5 -7.6
Adjusted profit before tax(2) 37.7 38.5 43.4 -11.3
Adjusted EBITDA(2) 79.6 71.8 72.8 -1.4
Net debt 280.4 198.7 163.6 -21.5
Net debt to EBITDA 3.5x 2.8x 2.2x -0.6x
------------------------------------- ---------- ----------------- --------- -------------
Operating profit 37.9 36.2 44.6 -18.8
Profit before tax 29.1 29.9 39.5 -24.3
------------------------------------- ---------- ----------------- --------- -------------
Adjusted basic earnings per share(2) 60.18p 62.22p 72.13p -13.7
Basic earnings per share 39.37p 41.41p 64.36p -35.7
Dividend per share 10.57p 10.57p 20.78p -49.1
Net assets per share(3) 12.05p 12.06p 12.12p -0.5%
------------------------------------- ---------- ----------------- --------- -------------
All of the results above are from continuing operations.
(1) The 2020 results have been reported under IFRS 16. The 2019
comparatives have not been restated, as permitted by the accounting
standard. The 2020 pre-IFRS 16 results, which are for comparative
purposes only, have been presented on a non-statutory illustrative
basis excluding the impact of IFRS 16. Refer to the business and
financial review for details.
(2) Reference to an "adjusted" item means that item has been
adjusted to exclude non-underlying costs of GBP8.6 million (2019:
non-underlying costs of GBP3.9 million) (see note 4).
(3) Net assets per share are the group's net assets divided by
the shares in issue at the period end.
PERFORMANCE HIGHLIGHTS
(The 2020 highlights are shown on a pre-IFRS 16 basis for
comparative purposes)
-- The coronavirus pandemic has had a significant impact on
these results. Closure of our pubs for the final 10 days of the
financial year and the preceding downturn in trade resulted in an
estimated GBP13.0 million shortfall in revenue, with a
disproportionate impact on profits, estimated to be GBP7.7 million
due to the limited opportunity for mitigating actions;
-- Total group revenue up 2.6% to GBP311.6 million. Managed
house revenue up 3.0% to GBP299.1 million, supported by a
significant contribution from the Redcomb pubs following their
acquisition in January last year; like-for-like sales down
2.4%;
-- Managed house adjusted operating profits down 5.0% to GBP58.4
million; Ram Pub Company adjusted operating profit was GBP4.1
million, down by GBP0.9 million;
-- Total investment of GBP70.8 million including significant
upgrades to our existing estate as well as the acquisition of five
premium businesses in and around our south-west London heartland
and the Surrey suburbs;
-- Operating cash flow down to GBP64.7 million - net debt to
adjusted EBITDA is at 2.8 times despite downturn in trade due to
coronavirus, and timing of acquisitions late in the financial
year;
-- The Board decided it was not appropriate to recommend payment
of the final dividend given the focus on cash conservation in these
extraordinary times, resulting in a total dividend of 10.57 pence
(2019: 20.78 pence); and
-- Improved liquidity as a result of arranging GBP50.0 million
of additional funds and committed facilities. We have agreed with
our lending banks to replace existing covenant tests with a GBP20.0
million available liquidity test through to and including the
quarter end in June 2021.
Patrick Dardis, Chief Executive of Young's, commented:
"I am proud of the performance of our business this year despite
the unique challenges that we have faced. These results demonstrate
the continued strength of our strategy of operating a
differentiated, premium and well-invested pub estate."
"The purchase of five of the finest pubs in and around our
south-west London heartland and the Surrey suburbs was a real stand
out acquisition for us. Their premium offer is a perfect fit for
Young's."
"We are grateful for the positive moves made by the Chancellor,
extending the Job Retention Scheme to October and the GBP14.5
million relief we will receive from the business rates holiday to
ensure that great businesses like ours survive these particularly
tough times."
"We are confident with the steps we have taken to safeguard our
business from the immediate threat of coronavirus. The board
expects the business to be in a position to return to profitable
growth when this unprecedented period is at an end and conditions
allow, and we remain confident in our proven strategy."
For further information, please contact:
Young & Co.'s Brewery, P.L.C. 020 8875 7000
Patrick Dardis, Chief Executive
Mike Owen, Chief Financial Officer
MHP Communications 07551 170 451
Tim Rowntree/ Alistair de Kare-Silver/Robert
Collett-Creedy
PRELIMINARY RESULTS FOR THE 52 WEEKSED 30 MARCH 2020
Chief Executive's review
In recent years we have faced and overcome numerous challenges,
but none more threatening than the coronavirus pandemic that has
swept around the world in a matter of months. Following the
government's instruction in March, we, along with our colleagues in
the sector, shut the doors to our pubs. The 10 days of closure and
the gradual decline in trade that preceded it resulted in an
estimated GBP13.0 million shortfall in revenue and a
disproportionately negative impact on profits, estimated to be
GBP7.7 million. We recognise the importance of this closure of pubs
in helping stop the spread of the virus and protect our employees,
customers and the wider community as a whole.
In light of the unprecedented challenges posed in recent months,
we have strengthened our liquidity position, both on a long-term
basis and also in the short-term, to provide additional support.
Long-term, 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, we issued
GBP30.0 million in commercial paper under the Covid Corporate
Financing Facility ('CCFF') last month and also now have the
additional benefit of a new GBP20.0 million facility from NatWest.
Excluding our overdraft, Young's now has in place GBP285.0 million
of funds and committed facilities.
INVESTMENT DRIVES GROWTH
Our strategy is to operate premium, well-invested, individual
managed houses. We grow by investing in our pubs, by carefully
selected acquisitions and by nurturing, training and investing in
our staff. Total group revenue for the period was encouragingly up
2.6% to GBP311.6 million, an increase of GBP7.9 million, supported
by the acquisitions made in the previous year.
Like-for-like sales ended the period down on the previous year
by 2.4%, reflecting the challenges faced. The British weather often
played its part, starting with the tough comparatives of last
year's exceptional early summer sunshine. Whilst temperatures
improved through the later summer months, the remainder of the year
was dominated by rain, with the wettest winter on record dampening
people's spirits. In December, when our pubs should be at their
busiest as festive celebrations are in full swing, trade was
hampered by the month-long rail strikes in London, and the first
winter election since 1923.
The losses that followed from the unprecedented closures in the
final weeks were severe due to the limited opportunity for
mitigating action. Operating profit dropped by GBP8.4 million to
GBP36.2 million (post-IFRS 16 reported operating profit: GBP37.9
million). Once adjusted for non-underlying items, operating profit
was GBP44.8 million (post-IFRS 16 reported adjusted operating
profit: GBP46.5 million), down by GBP3.7 million, with an operating
margin of 14.4%.
Amidst the tougher weeks of March, there was a significant boost
with our purchase of five of the finest pubs in and around our
south-west London heartland and the Surrey suburbs, bringing our
period-end total pub count to 276 (2019: 269). These pubs are a
real standout acquisition for us: they are expected to deliver
sales and EBITDA above the average for our managed house estate.
Their premium offer is a perfect fit for Young's and presents us
with an opportunity to learn from their success. The Canbury Arms
(Kingston upon Thames), Crown (St Margaret's, Twickenham), Grantley
Arms (Wonersh), Onslow Arms (West Clandon) and the Wheatsheaf
(Esher) are run with a focus on great food, a quality drinks offer
and operational excellence from wonderful surroundings, and have
easily made the transition into the Young's estate. Unfortunately,
due to the coronavirus pandemic, we have not had the opportunity to
trade them for a period of time, but we remain excited for when
they get the chance to open their doors again.
During the period, we added a further five pubs to our managed
house division. In April 2019, we opened the Depot (Kidbrooke
Village) through our ongoing partnership with Berkeley Homes. In
mid-summer, we acquired the freehold of the White Bear (Tunbridge
Wells): this was a unique opportunity to add a high turnover pub in
an exciting new location for Young's. The New Inn (Ealing) was the
latest pub to transfer from the Ram Pub Company, finally
re-opening, albeit briefly, in early March following an extensive
redevelopment. We also completed on two fantastic sites for our
pipeline: Enderby House, a long-leasehold on the banks of the
Thames in Greenwich, and the Constitution (Camden), a freehold
sitting on Regent's Canal, nestled between the bustling nightlife
of Camden Town and the regeneration of King's Cross. There were two
managed house disposals in the period, as we exited the tied leases
at the Builder's Arms (Chelsea), a pub with Enterprise Inns, and
the Alphabet (Islington), a pub leased from Star Pubs & Bars.
We also sold the Bristol Ram at the tail of our tenanted
estate.
Within the existing estate, we have also made significant
investment. In February, after 14 months on-site, we completed a
multi-million-pound scheme at the Dog & Fox (Wimbledon Village)
adding 11 new boutique hotel rooms and the Coach House, a dedicated
and dynamic function space offering capacity for up to 300 people.
With further additions to our hotel room numbers, total managed
room stock now stands at 687 (2019: 668 rooms). Elsewhere, we have
invested heavily in the Redcomb pubs, bringing them in line with
the Young's estate and unlocking their potential. The coronavirus
shutdown has also impacted our investment plan, with a number of
our pubs unable to show themselves following refurbishment this
spring. There were also schemes on-site which we were forced to put
on standby until we are out the other side of the lockdown; we look
forward to completing these in the coming months.
RESILIENCE
We believe that one of the keys to our success is our ability to
recruit, train and retain the very best people in the industry, and
this is now more important than ever. The decision to retain all
our staff following the outbreak of the coronavirus crisis by
placing the vast majority on furlough not only helped safeguard the
cash flow of the business but also ensures we are in a strong
position when we re-open our doors.
Our pubs proudly form vital places in their local communities,
providing a place of sanctuary, whether that be somewhere to catch
up with friends, meet for a family celebratory meal or relax with a
quiet pint or two one sunny evening. During the recent uncertain
and worrying times, it was great to see the individual acts of
kindness across the estate, as our teams stepped up to help out the
most vulnerable in their local communities, gifting food parcels to
elderly neighbours, hospices and care homes, and delivering
pre-prepared meals to NHS staff and other key workers.
Our main priority is the safety and well-being of our people,
our customers and our suppliers at this difficult time. The initial
impact of declining volumes and subsequent full closure of our pubs
as the virus spread during March was evident on a daily basis.
However, predicting the extent of the damage that the coronavirus
will have on our business going forward is largely unknown. There
is no experience of such a crisis, no clear indicators as to how
long the pandemic or enforced shutdown will last and what, if any,
will be the lasting effects on consumers. At times like this, our
strong balance sheet, underpinned by our predominantly freehold and
long leasehold estate (2020: 83%), and combined with relatively
modest levels of debt, has never been so vital.
The speed at which our business was able to adapt was
commendable, switching our working practices to enable greater home
working, with all meetings held in a virtual environment. We have
taken decisions that will have an immediate and direct impact on
our ability to conserve cash in the short term. Our largest
expense, our wage cost, has been minimised with the decision to
furlough the majority of our employees, both in the pubs and at
Riverside House, combined with the board of directors taking a
temporary 20 per cent pay cut. Last month, we accessed GBP30.0
million of short-term financing from the Bank of England under the
CCFF, have further strengthened our long-term capital position and
replaced our existing covenant tests with a minimum available
liquidity requirement until June 2021.
On behalf of the board and all my colleagues at Young's, I want
to say a huge thank you and pay tribute to our wonderful NHS staff,
in particular, and also to all the critical workers out there doing
their very best to keep us safe and well.
OUTLOOK
One thing we can be sure of is that at some point the pandemic
will pass. The fabulous weather we have experienced so far this
spring has been a gentle reminder of the enormous opportunity our
business has to bounce back once it's safe for the government's
restrictions to be lifted. I am looking forward to all of our team
reuniting, opening the doors to our great pubs and welcoming back
our customers once we are through this.
Whilst the period of closure and any restrictions that may
remain are still unknown, there are many things to be excited by.
The five new pubs acquired late in March traded for only a matter
of days before they were forced to close; they offer an immediate
boost to both revenue and bottom line profit, with no additional
capital expenditure required. The significant investments we made
last year in our existing estate will give us further growth
potential as soon as we reopen our pubs - it was one of our most
exciting and biggest investment years and I'm looking forward to
seeing what our customers think. Optimistically, we are looking
forward to continuing our consistent growth records of previous
years but accept that it will take time for things to
normalise.
We are grateful for the positive moves made by the Chancellor to
ensure that great businesses like ours survive these particularly
tough times. Through extending the job retention scheme until
October he has given us a degree of certainty in uncertain times,
whilst the support of the business rates holiday will be a welcome
GBP14.5 million cost saving in the coming year.
We are confident with the steps we have taken to safeguard our
business from the immediate threat of coronavirus. The board
expects our pubs to have opened by 3 August and for trading in FY21
to be materially below average. We expect sales to return to more
normalised levels in FY22 when this unprecedented period is at an
end, and we remain confident in our proven strategy.
Business and financial review
MANAGED HOUSES
The past 12 months have provided many highlights for our managed
house division as trading was, for the most part, consistent and
encouragingly ahead of last year. The acquisition of the Redcomb
pubs in January last year has supported the growth achieved, with
total managed revenue up by 3.0%, to GBP299.1 million.
Unsurprisingly, the government's enforced closures late in March,
and the preceding weeks' decline in sales as the coronavirus
started to spread, had a significant impact, with like-for-like
sales finishing down by 2.4% (2019: up by 5.1%).
Each year presents itself with fresh challenges as we look to
continue our long-standing record of consistently growing profits
in our managed house division; this was no different. Despite
combating further external increases to our cost base, whether they
were business rates, the rising national living wage or from
elsewhere, it was the unexpected pub closures that had such a
disproportionate impact on profits, especially given the timing so
close to the year end. In total, managed adjusted operating profits
were down by 5.0%, to GBP58.4 million (post-IFRS 16 reported
adjusted operating profit: GBP59.9 million) .
Our focussed approach of adding hand-picked acquisitions in
great locations saw us add further to our managed estate, bringing
the total house count to 207 pubs, including 30 hotels, an increase
of six pubs over the year.
The standout purchase of five unique pubs in our heartland was a
real highlight. Their premium food offers, high-class drinks menus
and operational excellence are a perfect fit for Young's. These
high turnover pubs will increase our 'batting average' and add
further quality to our estate. It is a shame they were only open
for a short while before the forced closure, but they will prove to
be a great purchase in the coming years.
Elsewhere, it has been another period of extensive investment in
the managed estate with a number of eye-catching development
projects, an acceleration in our planned investment of the Redcomb
pubs and, further maximising our hotel room opportunities, the
addition of 19 rooms to our stock. The year culminated with the
completion of the multi-million-pound scheme at the Dog & Fox
hotel in Wimbledon Village.
Total drink sales were ahead of last year by 2.0%, but down on a
like-for-like basis, by 2.6%. With the endless days of beautiful
spring sunshine last year, it was always going to be a challenging
start to this period, then made even harder by the cooler and more
varied weather of the summer. The weather improved latterly in the
summer months, leading to record sales over the August bank
holiday, and the positives continued through September. As the
weather turned in autumn, the rain seemed to dominate the skies for
a sustained period and by the time we had reached Christmas it had
achieved fame as the wettest winter on record. Last December will
also be remembered for the first winter election since 1923 and a
month when train strikes struck down London commuters, severely
affecting peak trading. All of this came before the coronavirus
pandemic spread, culminating in the shutdown of pubs in March and
brutally impacting on sales growth comparatives this year.
Rugby autumn international fixtures at Twickenham, which form an
integral part of the sporting calendar in our heartland, were moved
from November to this summer as part of the preparations for the
rugby world cup. Held in Japan, the kick-off times for matches were
not ideal due to the time difference, but breakfast audiences in
our pubs grew with each round as England progressed all the way to
the final. These early morning games proved popular for pints of
Guinness, managing to offset the lost sales from the shift in
autumn fixtures, with sales of the rugby famed stout ahead of last
year by an impressive 11.7%.
Volumes of lager didn't fare as positively. They were competing
against tough comparatives with last year's sales boosted by the
sunshine start and an equally impressive performance from the men's
England football team at their world cup. In this period, lager
sales were down by 5.0%, with draught cider also down by 9.5%.
Ahead of autumn, we completed the rebranding of our much-loved
Young's beers, including the renamed Young's Original; this
extended to new livery on Young's dray lorries, further endorsing
our famous brands throughout our heartland. This was not enough to
halt the slide of cask ale sales; although cooler temperatures did
help boost volumes through the summer months, sales ended down on
last year by 4.9%.
Outside of draught lager, the top-selling product was Beavertown
Neck Oil, demonstrating the ever-increasing popularity of premium
brands to our customers, supported by continuing growth from the
keg ale category, where sales were up 4.7%. Premiumisation also
hasn't slowed within the wine and spirits categories. Despite the
closures preventing gin from breaking more records, the premium
priced serves of gin, the colourful selection of spritzers and our
growing cocktail range remained attractive to customers. Resurgent
rosé wine sales were ahead of last year by 1.7%; although popular
through summer months, sales have established themselves throughout
the year with the additional upsell opportunity of magnum bottles
proving a hit with customers.
In total, food sales were up 5.1%, but down 1.7% on a
like-for-like basis. Food sales, at the expense of drink, were the
beneficiary of the cooler weather at the start of the year, with
sales of Sunday roasts and classic pub dishes performing strongly.
At Christmas, pubs looked to maximise the premium offer, serving
our guests with stunning centrepieces where they were able to opt
for whole roasted turkeys, geese and ribs of beef. It continues to
be a challenging marketplace, never more so than now, but we remain
confident in our food strategy.
We have an expert team of executive chefs who work tirelessly to
ensure that British, seasonal and fresh produce are at the heart of
every dish we serve. Our five Young's classics and the ultimate
Sunday roasts remain at the core of our strategy. Outside of the
classics, chefs have the flexibility to create individual menus and
inspirational dishes that are unique to their business. We are
proud of the recognition our pubs receive for their food, none more
so than the Guinea (Mayfair) which was crowned 10(th) Best
Gastropub in the UK. This traditional and historic pub has built a
reputation as one of London's most acclaimed steakhouses,
specialising in serving premium dry aged British beef.
At Young's, it's not just our drink and food that delights our
customers and attracts new ones, but much also comes down to the
individuality of our pubs themselves. Last winter in Wandsworth,
the 'Chronicles of the County Arms' opened its magical doors.
Inspired by classic tales, customers were able to step through the
'wardrobe' into an outside trading area that had been creatively
transformed into a snow-filled winter forest with frost-covered
pine trees, snow-topped tables, woodland features and lanterns.
Wrapped in faux fur blankets on the throne-style seating, they were
able to enjoy seasonal winter cocktails, accompanied by a gooey
cheese fondue, in an enchanted winter garden.
The growth from new hotels in the past two years has driven the
rise in accommodation sales, up by 5.3% this year. Total room stock
has increased by 107 rooms in this two-year period, both through
acquisition and organically, maximising potential room capacity at
existing properties, bringing the year-end total room stock to 687.
This growth was unable to offset the lost sales from the lockdown
in March; like-for-like room sales were down by 3.1%. Total
occupancy rates were 70.5%, down by 2.4% pts on the previous year,
and RevPar decreased by GBP2.21, or 3.6%, to GBP59.23.
The designated capital investment set aside each year for hotels
has enabled us to raise more of our room stock to boutique
standard, modernising bathrooms and installing air conditioning, to
meet the long-term vision of our room quality. This year we have
upgraded room standards at the Seagate hotel (Appledore), added new
rooms at the established Bear (Esher) and City Gate (Exeter), and,
following its acquisition last year, transformed the Canford Hotel,
which sits on the cliffs on the south coast near the tourist
hotspot of Sandbanks.
INVESTMENT
We were excited to have added further to our managed portfolio,
in particular the acquisition of five fantastic premium businesses
in March. The Canbury Arms (Kingston upon Thames), Crown (St
Margarets in Twickenham), Grantley Arms (Wonersh), Onslow Arms
(West Clandon) and the Wheatsheaf (Esher) are a perfect fit, well
located in and around our existing managed estate. Elsewhere, we
made further major acquisitions, openings and transfers, all of
which are unique in their own way. These include:
-- the Depot, a new build in a recently opened development in
the regeneration area of Kidbrooke in south east London, and
another in the list of pubs opened in partnership with Berkeley
Homes;
-- the White Bear, a freehold purchase in an exciting new
territory for Young's in the commuter hub of Tunbridge Wells;
-- the New Inn (Ealing), capitalising on a further growth
opportunity from within our Ram Pub Company by transferring it to
our managed division; and
-- the Constitution (Camden) and Enderby House (Greenwich), both
of which add to our future pipeline and offer great potential for
the coming years.
A common theme in all of these is their superb location and
future potential, both fundamental factors in our investment
decisions.
During the course of the year, including acquisitions, we
invested GBP66.9 million in our managed estate across a number of
exciting schemes. After more than a year on-site at the Dog &
Fox hotel, our new multi-use function suite, the 'Coach House',
opened in January; an additional 11 bedrooms were completed later
in March, bringing the total available hotel rooms to 28.
Unfortunately, initial bookings have had to be postponed, including
what was expected to be its record-breaking Wimbledon tennis
fortnight. Once able to re-open after the lockdown, the pub will be
ready to capitalise on this investment, eager to show itself to our
returning customers.
Originally we had planned to invest in all of the Redcomb pubs
over a three-year period; however, we chose to accelerate this and
therefore brought forward investment in nine of the pubs during
this year, spending a total of GBP2.7 million. As part of this
plan, we have refurbished the Theodore Bullfrog (Charing Cross),
including its first floor trading space, undertaken major schemes
at the Bickley Arms (Chislehurst), Manor Arms (Streatham), Old
Manor (Potters Bar) and the Worplesdon Place (Guildford), and have
added two Burger Shacks.
As the country ground to a halt in March, so did the contractors
at the Green Man (Putney) where we were part way through
transforming the pub, creating additional internal dining covers to
complement the expansive external trading area and garden. We will
look to complete this project early in the new financial year once
restrictions have been lifted.
Alongside these, we have targeted investment in our core estate,
with major projects undertaken at the Adam & Eve (Fitzrovia),
Duchess of Kent (Islington), Duke's Head (Wallington), Grove
(Exmouth), Queen Adelaide (Wandsworth), Riverside (Vauxhall),
Waterfront (Wandsworth) and the White Hart (Barnes).
RAM PUB COMPANY
It has been a tough year for the Ram Pub Company, following the
highly successful period last year with the good early summer
weather and England's football world cup success which helped drive
barrelage growth. On a like-for-like basis, revenue fell by
4.1%.
In total, revenue within the Ram Pub Company was down by 6.9% or
GBP0.9 million, in part reflecting the net reduction in the number
of pubs and the impact from reduced beer volumes at key periods of
the year. As with our managed houses, all tenanted pubs were forced
to close towards the end of March due to the coronavirus
pandemic.
Total adjusted operating profit was GBP4.2 million, a decrease
of GBP0.8 million (post-IFRS 16 reported adjusted operating profit:
GBP4.3 million). This decline in profits is exaggerated somewhat
due to an onerous lease adjustment of GBP0.3 million in the
previous year.
In April last year, we transferred the New Inn (Ealing) to our
managed house division to maximise its potential further. Other
transfer opportunities do exist within the Ram Pub Company and we
will look to harvest these when the time is right for both us and
our tenants.
Midway through the financial period we opened the Ram Inn
(Wandsworth) on the corner of the old Ram Brewery site. This iconic
pub, restored back to its former glory , features a traditional bar
opening out onto the bustling high street and, on the first floor,
an indoor garden equipped with two shuffle-board lanes . We also
sold the Bristol Ram, a pub at the tail of the estate, for proceeds
of GBP0.9 million.
As a result of the above movements, the Ram Pub Company ended
the year with 69 pubs, down from 70 in the previous year.
Within our existing estate, we follow a structured and viable
investment programme to ensure that each tenanted pub is maintained
at an attractive standard to appeal to customers, current tenants
and future business partners. In the past year, we have completed
major developments at the Grapes (Wandsworth), Railway Telegraph
(Thornton Heath), Rattlebone Inn (Sherston) and the Waterman's Arms
(Richmond).
With the challenging end to the period resulting in closures
across the estate in March, we were the first pub company to
announce a three-month rent holiday for all our tenants, effective
from 16 March 2020, as part of a support package to help them
through this difficult period. For the majority of our tenants we
have extended this for a further month, and we continue to monitor
the ongoing situation.
OTHER KEY AREAS
PROPERTY
Our balance sheet strength is underpinned by our predominately
freehold estate in many highly desirable locations. 230 of our 276
pubs are freehold or are long-leaseholds with peppercorn rents. Our
total estate is now valued at GBP771.1 million (2019: GBP807.0
million) with a reduction in value of GBP56.4 million from last
year following the adoption of IFRS 16, which has been reclassified
to the right-of-use asset. We have continued to add value through
acquisitions, primarily focussing on freehold assets, and major
developments to improve our existing pub values.
Each year we revalue our pub estate to reflect current market
values. This year we have had to take into account the exceptional
circumstances resulting in all our pubs being forced to close
following the outbreak of the coronavirus pandemic. Savills, an
independent and leading commercial property adviser, has revalued
all our freehold properties, supported by Andrew Cox, MRICS, our
Director of Property and Tenancies. The valuation method used a
number of inputs of which the sustainable level of trade of each
pub was key. It incorporates the impact of coronavirus through
discounting pre-coronavirus property values by between 0% and 10%,
which contains material uncertainty given the lack of comparable
transactional activity since the onset of coronavirus and the
uncertainty over future trade at the valuation date.
In accordance with International Financial Reporting Standards,
individual increases in value have been reflected in the
revaluation reserve in the balance sheet (except to the extent that
they had previously been revalued downwards) and individual falls
in value below depreciated cost have been accounted for through the
income statement. None of these adjustments has a cash impact.
Prior to the outbreak of the coronavirus, the pub property
market in London and the surrounding areas had remained strong.
However, the market uncertainty arising from estate-wide closures
and the significant impact on our trading levels and achieved
profit resulted in a net downward revaluation movement of GBP14.6
million (2019: GBP25.2 million upward movement). This is comprised
of a downward movement of GBP9.3 million (2019: GBP25.3 million
upward movement) reflected in the revaluation reserve and a
downward movement of GBP5.3 million (2019: GBP0.1 million downward
movement) recognised as an adjusting item in the income
statement.
TREASURY
During the year we remained highly cash generative. Our
operating cash flow was GBP64.7 million (post-IFRS 16 reported
operating cash flow: GBP72.5 million) compared with GBP69.2 million
in 2019, with our premium business and predominantly freehold
estate performing strongly.
Total net debt has increased by GBP35.1 million to GBP198.7
million (post-IFRS 16 reported net debt: GBP280.4 million) as a
result of significantly reduced trading in March and the
investments made during the year, especially the purchase of six
pubs, falling in the last quarter. This resulted in an increase in
our net debt to adjusted EBITDA ratio, to 2.8 times (2019: 2.2
times), and in our gearing to 33.6% on a pre-IFRS 16 basis (2019:
27.6%).
GOING CONCERN
We have prepared our 2020 financial statements on a going
concern basis for the reasons set out below.
With the group's strong balance sheet, supplemented by the
actions below, the board of directors is confident that Young's has
sufficient liquidity to handle a prolonged period of closure of its
pubs.
As mentioned previously, it is not possible to predict the
extent of the damage that the coronavirus will have on our business
going forward. We have modelled a broad range of scenarios, with
our base model assuming our pubs will not re-open before August and
the business experiencing significant disruption throughout the
remainder of the financial year.
Considering the impact that coronavirus may have on the
business, we have moved forward on a number of areas, all
underpinning the basis of our business modelling. The rate at which
we use cash has been reduced significantly, achieved through a
combination of postponing all planned capital investment and
furloughing the vast majority of our pub and support teams,
combined with the business rates holiday announced by the
government. Forward-looking cash conservation measures such as the
cancellation of the final period dividend for the year ended and
limiting our operating expenses are inherent in our business
modelling.
We have strengthened both our short-term and long-term liquidity
position. As regards the short-term, we have partially accessed the
liquidity available to us under the HM Treasury and the Bank of
England's CCFF, issuing commercial paper with a nominal value of
GBP30.0 million and a maturity date of 13 May 2021. We have also
entered into a new GBP20.0 million bilateral revolving credit
facility with NatWest, we do not intend to draw on this facility
but instead retain it as available liquidity to help us meet the
liquidity test referred to below. This has a maturity date falling
in May 2021 and we have the option early next year to request an
extension of its maturity date by six months and can do the same
again later next year. So far as the long-term is concerned, we
have entered into a new GBP50.0 million syndicated facility with
NatWest and HSBC split evenly between them. This has an original
maturity date falling in May 2025; we have the option next year to
request an extension of the maturity date by a further year and can
do the same the following year. We have drawn down on this facility
and repaid in full the March 2021 GBP50.0 million syndicated
facility with the RBS and Barclays.
All our lending banks were supportive of us accessing additional
liquidity and strengthening our balance sheet further. In addition,
they have waived any technical 'cessation of business' breach of
our banking facilities as a result of our pubs being closed due to
the coronavirus pandemic, and our financial covenant tests at June,
September and December this year and at March next year have now
been replaced with an additional monthly liquidity test requiring
us to retain available liquidity of GBP20.0 million through to and
including June 2021. Given the uncertainty over both the timing of
the government's lifting of pub closures and the extent of
restrictions on the group's ability to trade, including social
distancing measures, the compliance with banking covenants beyond
12 months from these financial statements is a material
uncertainty. The group remains in regular dialogue with its lending
banks and, should such a scenario arise, the group would expect to
discuss potential remedies with its banks, including an extension
of the covenant changes agreed already, well in advance of June
2021.
Equally, under the more severe scenario where pubs remain closed
for longer or initial trade is weaker, we may need further access
to the CCFF. The Bank of England's standard terms for the CCFF
state that the Bank reserves the right, at its sole discretion, not
to provide further funds under the CCFF. This could represent a
material uncertainty that may cast doubt about the group's ability
to continue as a going concern. However, HM Treasury and the Bank
of England have publicly committed to keeping the CCFF open until
at least March 2021. On this basis, the board of directors believe
that liquidity under the CCFF would be available to the group
should it be required (see note 1).
As a result of the above, we have in place GBP285.0 million of
funds and committed facilities from our lending banks, private
placement lenders and under the CCFF. Our accessible liquidity is,
however, effectively limited to GBP265.0 million. In addition to
this, we have a GBP10.0 million overdraft with HSBC.
RETIREMENT BENEFITS
We have a defined benefit pension scheme which has been closed
to new entrants since 2003. During the course of the year our
pension deficit has decreased by GBP0.4 million to GBP8.2 million.
Compared with last year, the rate of inflation has decreased
considerably from 3.3% to 2.8% which has heavily contributed to a
decrease in total actuarial assumptions of GBP9.3 million. However,
this has been offset by a GBP10.0 million reduction in the return
on schemes' assets. We have continued our commitment with another
year of special contributions, totalling GBP1.2 million, and remain
fully committed to ensuring the pension scheme is adequately
funded.
ADJUSTING ITEMS
Excluding the GBP5.3 million net decrease in the property
valuation of our estate, as mentioned previously, the majority of
the GBP3.3 million adjusting items expenditure relates to property
and investment activity following the acquisitions made in the
period.
Direct acquisition costs associated with business combinations
of GBP1.0 million have dropped slightly this year (2019: GBP1.2
million), largely due to the higher cost associated with the
Redcomb purchase last period. Early lease termination costs were
agreed at the point of completion with the tenants of the White
Bear (Tunbridge Wells) and the Constitution (Camden) in order to
capitalise on the opportunity these pubs present within our managed
estate. There were additional compensation costs to terminate the
lease agreements early at the New Inn (Ealing) which transferred
from the Ram Pub Company last April, and an unlicensed property
which could form part of a potential exciting new head office
development at the rear of the Spread Eagle (Wandsworth). In total,
tenant compensation cost in the year of GBP1.7 million has been
included within adjusting items and expensed under IFRS.
The remaining GBP0.6 million of adjusting items relates to the
loss on disposal of properties during the period. We exited two
tied leases forming part of the managed business, the Builder's
Arms (Chelsea), a pub with Enterprise Inns, and the Alphabet
(Islington), a pub leased from Star Pubs & Bars, and we sold
the Bristol Ram from the Ram Pub Company.
TAX
Our corporation tax charge for the year was GBP9.8 million, with
an increase in our effective tax rate of 3.1% pts to 21.8%. This
included GBP1.6 million relating to the re-measurement of our
deferred tax liabilities as a result of the increase in the future
substantively enacted tax rates from 17.0% to 19.0%.
The group's tax strategy has been published on the Young's
website in accordance with recent UK tax law.
IFRS 16
The 2020 results have been reported under IFRS 16. The 2019
comparatives have not been restated, as permitted by the accounting
standard; for comparative purposes only, we have presented and
commented on the 2020 results on a non-statutory illustrative basis
to exclude the impact of IFRS 16. There was no impact on
revenue.
Under IFRS 16, removing the rental charge from the income
statement results in an increase to EBITDA. Therefore, reported
group adjusted EBITDA at GBP79.6 million would have been GBP7.8
million higher than the illustrative pre-IFRS 16 GBP71.8 million.
An additional depreciation charge of GBP6.1 million, largely driven
by the right-of-use assets, results in a net increase to our
reported adjusted operating profit of GBP1.7 million compared with
pre-IFRS 16 illustrative adjusted operating profit of GBP44.8
million.
With a further GBP2.5 million interest charge under IFRS 16 in
this year, our illustrative adjusted profit before tax of GBP38.5
million was GBP0.8 million higher than our reported adjusted profit
before tax of GBP37.7 million.
The adoption of IFRS 16 has had the greatest impact on our
managed houses division. Excluding this, the managed adjusted
operating profit was GBP58.4 million, GBP1.5 million lower than
reported profit. The remaining GBP0.2 million was equally split
between unallocated and the Ram Pub Company.
Net assets increased by GBP0.4 million on adoption of IFRS 16.
For further details on the balance sheet impact see note 2.
At the year-end, our debt level has risen by GBP116.8 million to
GBP280.4 million largely due to the introduction of GBP81.7 million
of lease liabilities onto the balance sheet. As a result, net debt
to EBITDA increased to 3.5 times (2019: 2.2 times) and gearing
increased to 47.5%.
SHAREHOLDER RETURNS
Having started life in 1831, Young's is a long-standing business
and we are determined to maintain our long-term, sustainable growth
story. We continue to deliver strong performances from our existing
estate and our hand-picked developments, focussing on both
immediate and maintainable gains.
Following the outbreak of the coronavirus and with our pubs
being closed, the focus of the business has been to prioritise cash
conservation. The board has therefore concluded that it is not
appropriate to recommend payment of a final dividend for the most
recent period.
Further, in view of the ongoing closure of our pubs, the
expected lower levels of trade when they re-open and the terms of
the new GBP20.0 million facility with NatWest, the Company will not
be paying an interim dividend for the current financial year ending
29 March 2021. The board is very mindful of the importance of
dividends to Young's shareholders and intends resuming dividend
payments as soon as is practicable, but no decisions have been made
about when that will be.
Our adjusted earnings per share now stand at 62.22 pence per
share, down 13.7% (post IFRS 16 reported adjusted earnings per
share: 60.18 pence). On an unadjusted basis, earnings per share
dropped to 39.37 pence.
Patrick Dardis
Chief Executive
3 June 2020
GROUP INCOME STATEMENT
For the 52 weeks ended 30 March 2020
2020 2019
Notes GBPm GBPm
---------------------------------------------- ----- ------- -------
Revenue 311.6 303.7
Operating cost before adjusting items (265.1) (255.2)
---------------------------------------------- ----- ------- -------
Adjusted operating profit 46.5 48.5
Adjusting items 4 (8.6) (3.9)
---------------------------------------------- ----- ------- -------
Operating profit 37.9 44.6
Finance costs (8.6) (5.0)
Finance charge for pension obligations (0.2) (0.1)
---------------------------------------------- ----- ------- -------
Profit before tax 29.1 39.5
Income tax expense 6 (9.8) (8.0)
---------------------------------------------- ----- ------- -------
Profit for the period attributable to shareholders
of the parent company 19.3 31.5
----------------------------------------------------- ------- -------
Pence Pence
------------------- --- ------------ -----
Earnings per 12.5p ordinary share
Basic 8 39.37 64.36
Diluted 8 39.35 64.31
------------------- --- ------------ -----
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the 52 weeks ended 30 March 2020
2020 2019
Notes GBPm GBPm
--------------------------------------------------- ----- ------ -----
Profit for the period 19.3 31.5
--------------------------------------------------- ----- ------ -----
Other comprehensive income
Items that will not be reclassified subsequently to
profit or loss:
Unrealised (loss)/gain on revaluation of
property 9 (9.3) 25.3
Remeasurement of retirement benefit schemes 11 (0.7) (1.2)
Tax on above components of other comprehensive
income (3.1) (3.2)
Items that will be reclassified subsequently to profit
or loss:
Fair value movement of interest rate swaps 0.4 0.5
Tax on fair value movement of interest rate
swaps - (0.1)
--------------------------------------------------- ----- ------ -----
(12.7) 21.3
--------------------------------------------------- ----- ------ -----
Total comprehensive income attributable to shareholders
of the parent company 6.6 52.8
---------------------------------------------------------- ------ -----
BALANCE SHEETS
At 30 March 2020
2020 2019
Notes GBPm GBPm
--------------------------------- ----- ------- -------
Non-current assets
Goodwill and intangible
assets 32.5 33.5
Property and equipment 9 771.1 807.0
Right-of-use assets 10 163.4 -
Deferred tax assets 8.3 7.4
Lease premiums - 12.9
----------------------------------- ----- ------- -------
975.3 860.8
--------------------------------- ----- ------- -------
Current assets
Inventories 3.3 3.7
Trade and other receivables 9.3 8.3
Income tax receivable 0.1 -
Lease premiums - 0.7
Cash 1.1 8.5
----------------------------------- ----- ------- -------
13.8 21.2
--------------------------------- ----- ------- -------
Asset held for sale 0.5 -
----------------------------------- ----- ------- -------
Total assets 989.6 882.0
----------------------------------- ----- ------- -------
Current liabilities
Borrowings (50.0) (7.9)
Lease liabilities 12 (5.3) (0.6)
Derivative financial instruments (2.4) (1.9)
Trade and other payables (33.3) (35.9)
Income tax payable - (4.8)
----------------------------------- ----- ------- -------
(91.0) (51.1)
--------------------------------- ----- ------- -------
Non-current liabilities
Borrowings (149.2) (163.6)
Lease liabilities 12 (77.0) -
Derivative financial instruments (3.3) (4.2)
Deferred tax liabilities (69.9) (60.6)
Retirement benefit schemes 11 (8.2) (8.6)
Other liabilities (0.2) (0.5)
----------------------------------- ----- ------- -------
(307.8) (237.5)
--------------------------------- ----- ------- -------
Total liabilities (398.8) (288.6)
----------------------------------- ----- ------- -------
Net assets 590.8 593.4
----------------------------------- ----- ------- -------
Capital and reserves
Share capital 6.1 6.1
Share premium 7.5 6.7
Capital redemption reserve 1.8 1.8
Hedging reserve (4.4) (4.8)
Revaluation reserve 248.4 295.1
Retained earnings 331.4 288.5
-------
Total equity 590.8 593.4
----------------------------------- ----- ------- -------
STATEMENTS OF CASH FLOW
For the 52 weeks ended 30 March 2020
2020 2019
Notes GBPm GBPm
------------------------------------------------------- ------- ------- -------
Operating activities
Net cash generated from operations 13 72.5 69.2
Tax paid (13.5) (9.2)
------------------------------------------------------- ------- ------- -------
Net cash flow from operating activities 59.0 60.0
------------------------------------------------------- ------- ------- -------
Investing activities
Proceeds from disposal of property
and equipment 1.0 1.3
Purchases of property, equipment and lease
premiums(1) (32.7) (33.9)
Business combinations, net of
cash acquired (35.3) (25.3)
Right-of-use assets acquired (0.2) -
Net cash used in investing activities (67.2) (57.9)
------------------------------------------------------- ------- ------- -------
Financing activities
Interest paid (8.6) (5.1)
Issued equity - 0.3
Equity dividends paid 7 (10.5) (9.9)
Payments of principal portion
of lease liabilities (8.1) -
Repayment of borrowings (8.5) (12.1)
Proceeds from borrowings 36.5 26.0
------------------------------------------------------- ------- ------- -------
Net cash flow used in financing
activities 0.8 (0.8)
-------------------------------------------------------- ------- ------- -------
(Decrease)/increase in cash (7.4) 1.3
Cash at the beginning of the period 8.5 7.2
------------------------------------------------------- ------- ------- -------
Cash at the end of the period 1.1 8.5
------------------------------------------------------- ------- ------- -------
(1) In the current period, in accordance with IFRS 16, there were no
investments in lease premiums.
GROUP STATEMENT OF CHANGES IN EQUITY
At 30 March 2020
Capital
Share redemption Hedging Revaluation Retained Total
capital(1) reserve reserve reserve earnings equity
Notes GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------------- ----------- ----------- ------- ----------- -------- ------
At 2 April 2018 11.8 1.8 (5.2) 273.3 267.5 549.2
Total comprehensive income
Profit for the period - - - - 31.5 31.5
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
Other comprehensive income
Unrealised gain on revaluation
of property 9 - - - 25.3 - 25.3
Remeasurement of retirement
benefit schemes 11 - - - - (1.2) (1.2)
Fair value movement of interest
rate swaps - - 0.5 - - 0.5
Tax on above components of
other comprehensive income - - (0.1) (3.5) 0.3 (3.3)
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
- - 0.4 21.8 (0.9) 21.3
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
Total comprehensive income - - 0.4 21.8 30.6 52.8
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
Transactions with owners recorded directly in equity
Share capital issued 1.0 - - - - 1.0
Dividends paid on equity shares 7 - - - - (9.9) (9.9)
Share based payments - - - - 0.3 0.3
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
1.0 - - - (9.6) (8.6)
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
At 1 April 2019 12.8 1.8 (4.8) 295.1 288.5 593.4
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
Impact of IFRS 16 transition 2 - - - (33.6) 34.0 0.4
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
Restated at 2 April 2019 12.8 1.8 (4.8) 261.5 322.5 593.8
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
Total comprehensive income
Profit for the period - - - - 19.3 19.3
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
Other comprehensive income
Unrealised loss on revaluation
of property 9 - - - (9.3) - (9.3)
Remeasurement of retirement
benefit schemes 11 - - - - (0.7) (0.7)
Fair value movement of interest
rate swaps - - 0.4 - - 0.4
Tax on above components of
other comprehensive income - - - (3.8) 0.7 (3.1)
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
- - 0.4 (13.1) - (12.7)
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
Total comprehensive income - - 0.4 (13.1) 19.3 6.6
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
Transactions with owners recorded directly in equity
Share capital issued 0.8 - - - - 0.8
Dividends paid on equity shares 7 - - - - (10.5) (10.5)
Share based payments - - - - 0.1 0.1
Tax on share based payments - - - - (0.3) (0.3)
Movement in shares held by
The Ram Brewery Trust II - - - - 0.3 0.3
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
0.8 - - - (10.4) (9.6)
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
At 30 March 2020 13.6 1.8 (4.4) 248.4 331.4 590.8
----------------------------------- --- ----------- ----------- ------- ----------- -------- ------
(1) Total share capital comprises the nominal value of the share capital
issued and fully paid of GBP6.1 million (2019: GBP6.1 million) and the
share premium account of GBP7.5 million (2019: GBP6.7 million). Share
capital issued in the period comprises the nominal value of GBPnil (2019:
GBPnil) and share premium of GBP0.8 million (2019: GBP1.0 million).
1. Accounts
This preliminary announcement was approved by the board on 3
June 2020. The financial statements in it are not the group's
statutory financial statements. The statutory financial statements
for the period ended 1 April 2019 have been delivered to the
Registrar of Companies. The auditor has reported on those financial
statements and on the statutory financial statements for the period
ended 30 March 2020, which are expected to be delivered to the
Registrar of Companies shortly. The report for the 2020 accounts
was (i) unqualified, (ii) contains a number of material
uncertainties in respect of going concern to which the auditor drew
attention by way of emphasis without modifying their opinion and
(iii) did not contain a statement under s.498(2) or (3) of the
Companies Act 2006. EY's report for the accounts of 2019 was (i)
unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying the reports and (iii) did not contain a statement under
s.498(2) or (3) of the Companies Act 2006.
The current period and prior period relate to the 52 weeks ended
30 March 2020 and the 52 weeks ended 1 April 2019 respectively.
The financial statements are presented in pounds sterling, which
is the functional currency of the parent company, and all values
are rounded to the nearest hundred thousand (GBP0.1 million) except
where otherwise indicated.
This preliminary announcement has been agreed with the company's
auditor for release.
The audited financial information in this statement has been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted for use in the European Union. The
accounting policies used have been consistently applied and are
described in full in the statutory financial statements for the
period ended 30 March 2020. The financial statements will also be
available on the group's website, www.youngs.co.uk .
Going concern
In response to coronavirus and the closure of all of the group's
pubs, management has taken actions to mitigate the consequential
and significant impact on both profit and cash flow of this
closure. These actions include reducing the group's cash outflows
in non-essential areas, accessing some of the government's support
packages in order to safeguard employment, agreeing that no final
dividend will be declared or paid for 2020 and strengthening both
short-term and long-term financing. A number of these actions were
taken post-year end and are therefore not reflected in the
financial statements at 30 March 2020.
At 30 March 2020, the group had cash of GBP1.1 million and
secured borrowing facilities of GBP235.0 million, of which GBP199.2
million was drawn down and of which GBP50.0 million expires in
March 2021. Since that date, further financing has been accessed
through the CCFF, whereby GBP30.0 million of commercial paper with
a maturity date of May 2021 has been 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 has been replaced
with a five-year facility expiring in 2025. As at the date of
approval of these financial statements, the group has cash of
GBP4.7 million and GBP285.0 million of funds and committed
facilities from its lending banks, private placement lenders and
under the CCFF. Of these, GBP235.0 million is available for at
least 12 months and GBP228.0 million is drawn down. In addition,
the group has access to further funding under the CCFF should it be
required.
The group has also considered the effects of its latest
forecasts on its compliance with bank covenants, which are tested
each quarter on a twelve month rolling basis. In anticipation of
covenant breaches arising due to the pub closures, the group has
agreed with its lending banks that the financial covenants have
been replaced by a minimum debt headroom covenant, requiring the
group to leave GBP20.0 million of its available facilities undrawn,
until the quarter ending June 2021.
The group has modelled several scenarios surrounding closure and
disruption periods as a result of coronavirus in its cash flow
forecasts for the coming year. A base case scenario includes
reopening some pubs from August 2020, with significantly lower
activity levels over the next eight months. More severe scenarios
have been modelled, in which either the pubs remain closed or
reopen and are then forced to close again. Under the base case,
there is headroom under the revised covenants through to June 2021
and there would be no need to access further debt under the CCFF.
However, under a more severe scenario where pubs remain closed for
longer or initial trade is weaker, we would still comply with
revised covenants to 31 May 2021 but may look to access the CCFF
further. The Bank of England's standard terms for the CCFF state
that the Bank reserves the right, at its sole discretion, not to
provide further funds under the CCFF. The Directors note that this
could represent a material uncertainty that may cast significant
doubt about the group's ability to continue as a going concern. We
have discussed this matter with the Bank of England and note that
this is the Bank's standard approach to all of its lending
facilities and that HM Treasury and the Bank of England have
publicly committed to keeping the CCFF open until at least March
2021. On this basis, the board of directors believes that further
liquidity under the CCFF would be available to the group should it
be required.
Whilst there is no material uncertainty about the group's
ability to comply with the revised banking covenants over the next
12 months, those covenants revert to the group's original financial
covenants for the 30 June 2021 covenant test. Under the base case
scenario, the group expects to comply with covenants at that date
but a more severe scenario under which pubs remain closed for
longer, or where trading once reopened is worse than forecast,
could result in a breach of those covenants at that date. Given the
uncertainty over both the timing of the government's lifting of pub
closures and the extent of restrictions on the group's ability to
trade, including social distancing measures, the compliance with
banking covenants beyond 12 months from these financial statements
for the 30(th) June 2021 test date and thereafter is a material
uncertainty that may cast significant doubt about the group's
ability to continue as a going concern. The group remains in
regular dialogue with its lending banks and, should such a scenario
arise, the group would expect to discuss potential remedies with
its banks, including an extension of the covenant changes agreed
already, well in advance of June 2021.
Based on these forecasts and sensitivities, the directors are
confident that, with the cash conservation plans in place and the
debt structure available, there are sufficient financial resources
to meet all liabilities as they fall due and comply with all
revised bank covenants for at least twelve months from the date of
approval of these financial statements. Accepting the two material
uncertainties that may cast significant doubt about the group's
ability to continue as a going concern, relating to the ability to
access further funds under the CCFF and compliance with banking
covenants beyond the first 12 months, the board has a reasonable
expectation that the group is able to manage its business risks and
to continue in operational existence for at least that period.
Accordingly, the board continues to adopt the going concern basis
in preparing the consolidated financial statements.
The financial statements do not contain the adjustments that
would result if the company was unable to continue as a going
concern.
2. Basis of preparation
IFRS 16: 'Leases', which replaced IAS 17, was effective for the
financial period that started on 2 April 2019. IFRS 16 removed the
distinction between operating leases and finance leases for the
lessee and resulted in most leases being recognised on the balance
sheet as a lease liability and a right-of-use asset. The group has
applied the modified retrospective method of adoption; under this
method, the standard has been applied retrospectively with the
cumulative effect of initially applying the standard recognised in
retained earnings at the date of initial application, being 2 April
2019.
The cumulative impact of the changes made to the group balance
sheet as at 2 April 2019 for the adoption of IFRS 16 is summarised
as follows:
Pre-IFRS Post-IFRS 16
16
at 1 April IFRS 16 at 2 April
2019 adjustment 2019
GBPm GBPm GBPm
---------------------------------- ----------- ----------- ------------
Non-current assets
Goodwill and intangible assets(1) 33.5 (3.9) 29.6
Property and equipment(2) 807.0 (56.4) 750.6
Right-of-use assets - 148.2 148.2
Lease premium 12.9 (12.9) -
Other non-current
assets 7.4 - 7.4
------------------------------------- ----------- ----------- ------------
Total non-current
assets 860.8 75.0 935.8
------------------------------------- ----------- ----------- ------------
Current assets
Lease premium 0.7 (0.7) -
Trade and other
receivables 8.3 (1.3) 7.0
Other current assets 12.2 - 12.2
------------------------------------- ----------- ----------- ------------
Total current assets 21.2 (2.0) 19.2
------------------------------------- ----------- ----------- ------------
Current liabilities
Lease liabilities - (5.0) (5.0)
Trade and other
payables (35.9) 1.2 (34.7)
Other current liabilities (15.2) - (15.2)
------------------------------------- ----------- ----------- ------------
Total current liabilities (51.1) (3.8) (54.9)
------------------------------------- ----------- ----------- ------------
Non-current liabilities
Lease liabilities (0.6) (69.0) (69.6)
Provisions and deferred income (0.5) 0.2 (0.3)
Other non-current
liabilities (236.4) - (236.4)
------------------------------------- ----------- ----------- ------------
Total current liabilities (237.5) (68.8) (306.3)
------------------------------------- ----------- ----------- ------------
Net assets 593.4 0.4 593.8
------------------------------------- ----------- ----------- ------------
Net debt (163.6) (74.0) (237.6)
------------------------------------- ----------- ----------- ------------
Equity
Retained earnings(3) 288.5 34.0 322.5
Other equity accounts(3) 304.9 (33.6) 271.3
------------------------------------- ----------- ----------- ------------
Total equity 593.4 0.4 593.8
------------------------------------- ----------- ----------- ------------
(1) The GBP3.9 million transition adjustment related to the
transfer of operating lease intangible assets into right-of-use
assets. There was no impact on goodwill.
(2) Property and equipment has been adjusted to transfer the
carrying value of long leasehold pubs into the right-of-use
assets.
(3) The equity adjustment transfers revaluation surplus from
long leasehold sites into retained earnings as the cost model is
being applied to the right-of-use assets going forwards.
3. Segmental reporting
The group is organised into the reporting segments referred to
below. These segments are based on the different resources and
risks involved in the running of the group. The executive board of
the group internally reviews each reporting segment's operating
profit or loss before 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. The 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.
Total segment revenue is derived externally with no intersegment
revenues between the segments in either period. The group's revenue
is derived entirely from the UK.
Income statement Managed Ram Pub Segments
houses Company total Unallocated Total
2020 GBPm GBPm GBPm GBPm GBPm
Sales of goods 284.5 8.8 293.3 - 293.3
Accommodation sales 14.0 - 14.0 - 14.0
------------------------------------------- ------- ------- -------- ----------- -----
Total revenue from contracts with
customers 298.5 8.8 307.3 - 307.3
Rental income 0.6 3.3 3.9 0.4 4.3
------------------------------------------- ------- ------- -------- ----------- -----
Total revenue recognised 299.1 12.1 311.2 0.4 311.6
------------------------------------------- ------- ------- -------- ----------- -----
Adjusted operating profit/(loss) 59.9 4.3 64.2 (17.7) 46.5
Adjusting items (7.0) (1.4) (8.4) (0.2) (8.6)
------------------------------------------- ------- ------- -------- ----------- -----
Operating profit/(loss) 52.9 2.9 55.8 (17.9) 37.9
------------------------------------------- ------- ------- -------- ----------- -----
2019
Sales of goods 276.4 9.7 286.1 - 286.1
Accommodation sales 13.3 - 13.3 - 13.3
------------------------------------------- ------- ------- -------- ----------- -----
Total revenue from contracts with
customers 289.7 9.7 299.4 - 299.4
Rental income 0.6 3.3 3.9 0.4 4.3
------------------------------------------- ------- ------- -------- ----------- -----
Total revenue recognised 290.3 13.0 303.3 0.4 303.7
------------------------------------------- ------- ------- -------- ----------- -----
Operating profit/(loss) before exceptional
items 61.5 5.0 66.5 (18.0) 48.5
Operating exceptional items (0.9) (0.5) (1.4) (2.5) (3.9)
------------------------------------------- ------- ------- -------- ----------- -----
Operating profit/(loss) 60.6 4.5 65.1 (20.5) 44.6
------------------------------------------- ------- ------- -------- ----------- -----
The following is a reconciliation of the operating profit to the profit
before tax:
2020 2019
GBPm GBPm
------------------------------------------- ------- ------- -------- ----------- -----
Operating profit 37.9 44.6
Finance costs (8.6) (5.0)
Finance charge for pension obligations (0.2) (0.1)
------------------------------------------- ------- ------- -------- ----------- -----
Profit before tax 29.1 39.5
------------------------------------------- ------- ------- -------- ----------- -----
4. Adjusting items
2020 2019
GBPm GBPm
--------------------------------------------------- ------ -----
Amounts included in operating profit:
Upward movement on the revaluation of properties
(1) (note 9) 1.7 3.4
Downward movement on the revaluation of properties
(1) (note 9) (7.0) (3.5)
Tenant compensation (2) (1.7) (0.5)
Acquisition costs (3) (1.0) (1.2)
Net (loss)/profit on disposal of properties (4) (0.6) 0.4
Guaranteed minimum pension equalisation (5) - (2.5)
--------------------------------------------------- ------ -----
(8.6) (3.9)
--------------------------------------------------- ------ -----
Tax on adjusting items:
Tax attributable to adjusting items (1.6) 0.1
Total adjusting items after tax (10.2) (3.8)
--------------------------------------------------- ------ -----
(1) The movement on the revaluation of properties is a non-cash
item that relates to the revaluation exercise that was completed at
the period end date. The revaluation was conducted at an individual
pub level and identified an upward movement of GBP1.7 million
(2019: GBP3.4 million) representing reversals of previous
impairments recognised in the income statement, and a downward
movement of GBP7.0 million (2019: GBP3.5 million), representing
downward movements in excess of amounts recognised in equity. These
resulted in a net downward movement of GBP5.3 million (2019: GBP0.1
million net downward) which has been recognised in the income
statement. The downward movement for the period ended 30 March 2020
was split between land and buildings of GBP5.3 million (2019:
GBP0.1 million downward) and fixtures and fittings of GBPnil (2019:
GBPnil). See note 3 for segmental information and note 9 for
information on the revaluation of properties.
(2) Tenant compensation of GBP1.7 million was paid to the
previous tenants of the New Inn (Ealing), White Bear (Tunbridge
Wells), Constitution (Camden) and an unlicensed property
(Wandsworth) to terminate their lease agreements early. During the
prior period, the group paid tenant compensation of GBP0.5 million
to the previous tenants of the Bear (Cobham) and the Bayee Village
(Wimbledon) to terminate their lease agreements early.
(3) The acquisition costs related to professional fees, stamp
duty and stamp duty land tax arising on the acquisition of Spring
Pub Limited, a group of 5 sites acquired on 12 March 2020, along
with the White Bear (Tunbridge Wells) and the Constitution
(Camden). The prior period acquisition costs related to the
purchase of Redcomb Pubs Limited, a corporate group with 15 sites
acquired on 23 January 2019, along with the People's Park Tavern
(Hackney) and the Plantation (Poole). They included legal and
professional fees and stamp duty land tax.
(4) 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 lease of the
Alphabet (Islington) and the sale of Bristol Ram (Bristol) and the
carrying value of their assets, including goodwill, at the dates of
disposal. The prior year profit on sale of properties related to
the difference between the cash, less selling costs, received from
the sale of the King's Arms (Mitcham) and the William IV
(Bletchingley) and the carrying value of the assets on the date of
sale.
(5) During the prior period a cost of GBP2.5 million related to
the Guaranteed Minimum Pension (GMP) which was the minimum pension
which a UK occupational pension scheme must provide for those
employees who were contracted out of the State Earnings-Related
Pensions Scheme between 6 April 1978 and 5 April 1997. Following
the ruling of the High Court of Justice of England and Wales on 26
October 2018, the need to equalise the effect of differences in
GMPs between males and females was made more certain and
consequently an allowance for the effect of GMP equalisation had
been made in the prior financial period. Although a number of
methodologies could have been used to determine the impact, the
group adopted method C2 to identify its best estimate of the
additional liabilities. These were charged as a past service cost
in the income statement as an adjusting item since the liabilities
related to employee service between 1990 and 1997 and they had no
link to the prior period business performance. The increase in
liabilities as at 1 April 2019 was estimated at GBP2.5 million,
assessed using market conditions at the date of the ruling as
required by IAS 19.
5. Other financial measures
The table below shows how adjusted group EBITDA, operating
profit and profit before tax have been arrived at. They exclude
adjusting items which due to their material or non-recurring nature
distort the group's performance. These alternative performance
measures have been provided to help investors assess the group's
underlying performance. Details of the adjusting items can be seen
in note 4. All the results below are from continuing
operations.
Post-IFRS 16 2020 2019
------------------------------- -------------------------------
Adjusting Adjusting
Unadjusted items Adjusted Unadjusted items Adjusted
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ ---------- --------- -------- ---------- --------- --------
EBITDA 76.3 3.3 79.6 69.0 3.8 72.8
Depreciation and net movement
on the revaluation of
properties (38.4) 5.3 (33.1) (23.5) 0.1 (23.4)
Amortisation of lease
premiums - - - (0.9) - (0.9)
------------------------------ ---------- --------- -------- ---------- --------- --------
Operating profit 37.9 8.6 46.5 44.6 3.9 48.5
Net finance costs (8.6) - (8.6) (5.0) - (5.0)
Finance charge for pension
obligation (0.2) - (0.2) (0.1) - (0.1)
------------------------------ ---------- --------- -------- ---------- --------- --------
Profit before tax 29.1 8.6 37.7 39.5 3.9 43.4
------------------------------ ---------- --------- -------- ---------- --------- --------
The 2020 results have been reported under IFRS 16 whereas the
2019 results have been reported under IAS 17, with no restatement,
as permitted by the accounting standard. The 2020 pre-IFRS 16
results, which are provided for comparative purposes only, have
been presented on a non-statutory illustrative basis below,
excluding the impact of IFRS 16:
Pre-IFRS 16 2020 2019
------------------------------- -------------------------------
Adjusting Adjusting
Unadjusted items Adjusted Unadjusted items Adjusted
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ ---------- --------- -------- ---------- --------- --------
EBITDA 68.5 3.3 71.8 69.0 3.8 72.8
Depreciation and net movement
on the revaluation of
properties (31.4) 5.3 (26.1) (23.5) 0.1 (23.4)
Amortisation of lease
premiums (0.9) - (0.9) (0.9) - (0.9)
------------------------------ ---------- --------- -------- ---------- --------- --------
Operating profit 36.2 8.6 44.8 44.6 3.9 48.5
Net finance costs (6.1) - (6.1) (5.0) - (5.0)
Finance charge for pension
obligation (0.2) - (0.2) (0.1) - (0.1)
------------------------------ ---------- --------- -------- ---------- --------- --------
Profit before tax 29.9 8.6 38.5 39.5 3.9 43.4
------------------------------ ---------- --------- -------- ---------- --------- --------
6. Taxation
The major components of income tax expense for the years ended
30 March 2020 and 1 April 2019 are:
2020 2019
Tax charged in the group income statement GBPm GBPm
--------------------------------------------------------- ----- -----
Current income tax
Current tax expense 8.6 9.3
Adjustment in respect of current income tax of prior
periods - (0.4)
--------------------------------------------------------- ----- -----
8.6 8.9
--------------------------------------------------------- ----- -----
Deferred tax
Relating to origin and reversal of temporary differences (0.4) (0.9)
Change in corporation tax rate 1.6 -
Adjustment in respect of deferred tax of prior periods - -
--------------------------------------------------------- ----- -----
1.2 (0.9)
--------------------------------------------------------- ----- -----
Income tax charged in the income statement 9.8 8.0
--------------------------------------------------------- ----- -----
Deferred tax in the group income statement
--------------------------------------------------------- ----- -----
Property revaluation and disposals 1.4 (0.1)
Capital allowances (1.2) (0.5)
Retirement benefit schemes 0.6 (0.2)
Share based payments 0.3 0.1
Trade losses 0.1 (0.2)
Deferred tax charged/(credited) in the income statement 1.2 (0.9)
--------------------------------------------------------- ----- -----
Deferred tax in the group statement of other comprehensive income
-----------------------------------------------------------------------
Property revaluation and disposals (1.5) 3.5
Retirement benefit schemes (0.1) (0.3)
Interest rate swaps 0.1 0.1
Change in corporation tax rate 4.6 -
--------------------------------------------------------- ----- -----
Deferred tax charged to other comprehensive income 3.1 3.3
--------------------------------------------------------- ----- -----
The deferred tax assets and liabilities at the balance sheet
date are calculated at the substantively enacted rate of 19%.
Previously, the substantively enacted rate for balances that will
be realised or settled after 1 April 2020 was 17%, however on 17
March 2020 a resolution having statutory effect was passed setting
the corporation tax rate at 19% from 1 April 2020.
7. Dividends on equity shares
2020 2019 2020 2019
Pence Pence GBPm GBPm
---------------------------------- ----- ----- ---- ----
Final dividend (previous period) 10.81 10.20 5.3 5.0
Interim dividend (current period) 10.57 9.97 5.2 4.9
---------------------------------- ----- ----- ---- ----
21.38 20.17 10.5 9.9
---------------------------------- ----- ----- ---- ----
The board has decided that it is not appropriate to recommend
payment of a final dividend in respect of the period ended 30 March
2020.
8. Earnings per ordinary share
(a) Earnings 2020 2020 2019
Post-IFRS Pre-IFRS Pre-IFRS
16 16 16
GBPm GBPm(1) GBPm
---------------------------------------------------- ---------- ---------- ----------
Profit attributable to equity shareholders of
the parent 19.3 20.3 31.5
Adjusting items 8.6 8.6 3.9
Tax attributable to above adjustments 1.6 1.6 (0.1)
Adjusted earnings after tax 29.5 30.5 35.3
---------------------------------------------------- ---------- ---------- ----------
Number Number Number
---------------------------------------------------- ---------- ---------- ----------
Basic weighted average number of ordinary shares
in issue 49,018,801 49,018,801 48,941,761
Dilutive potential ordinary shares from outstanding
employee share options 28,901 28,901 41,753
---------------------------------------------------- ---------- ---------- ----------
Diluted weighted average number of shares 49,047,702 49,047,702 48,983,514
---------------------------------------------------- ---------- ---------- ----------
(b) Basic earnings per share
Pence Pence Pence
---------------------------------------------------- ---------- ---------- ----------
Basic 39.37 41.41 64.36
Effect of adjusting items 20.81 20.81 7.77
---------------------------------------------------- ---------- ---------- ----------
Adjusted basic earnings per share 60.18 62.22 72.13
---------------------------------------------------- ---------- ---------- ----------
(c) Diluted earnings per share
Pence Pence Pence
---------------------------------------------------- ---------- ---------- ----------
Diluted 39.35 41.39 64.31
Effect of adjusting items 20.80 20.80 7.76
---------------------------------------------------- ---------- ---------- ----------
Adjusted diluted earnings per share 60.15 62.19 72.07
---------------------------------------------------- ---------- ---------- ----------
(1) The 2020 results have been reported under IFRS 16 whereas
the 2019 results have been reported under IAS 17, with no
restatement, as permitted by the accounting standard. The 2020
pre-IFRS 16 results, which are provided for comparative purposes
only, have been presented on a non-statutory illustrative basis,
excluding the impact of IFRS 16.
The basic earnings per share figure is calculated by dividing
the profit attributable to equity shareholders of the parent
company for the period by the weighted average number of ordinary
shares in issue during the period.
Diluted earnings per share have been calculated on a similar
basis taking into account 28,901 (2019: 41,753) dilutive potential
shares under the SAYE scheme.
Adjusted earnings per share are presented to eliminate the
effect of the adjusting items and the tax attributable to those
items on basic and diluted earnings per share.
9. Property and equipment
Fixtures,
fittings
Land & &
buildings equipment Total
GBPm GBPm GBPm
------------------------------------ --------- --------- ------
Cost or valuation
At 2 April 2018 695.6 134.2 829.8
Additions 10.1 23.8 33.9
Business combinations 23.5 5.8 29.3
Disposals (1.1) (0.3) (1.4)
Fully depreciated assets (0.2) (15.5) (15.7)
Revaluation (1)
- upward movement in valuation 34.0 - 34.0
- downward movement in valuation (10.4) - (10.4)
------------------------------------ --------- --------- ------
Cost at 1 April 2019 751.5 148.0 899.5
------------------------------------ --------- --------- ------
Transition to IFRS 16 (58.2) - (58.2)
------------------------------------ --------- --------- ------
Restated 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 (1)
- upward movement in valuation 19.1 - 19.1
- downward movement in valuation (29.3) - (29.3)
------------------------------------ --------- --------- ------
At 30 March 2020 714.1 160.7 874.8
------------------------------------ --------- --------- ------
Depreciation and impairment
At 2 April 2018 29.9 57.0 86.9
Depreciation charge 1.9 21.5 23.4
Disposals (0.4) (0.1) (0.5)
Fully depreciated assets (0.2) (15.5) (15.7)
Revaluation (1)
- downward movement in valuation 3.5 - 3.5
- upward movement in valuation (5.1) - (5.1)
------------------------------------ --------- --------- ------
Cost at 1 April 2019 29.6 62.9 92.5
------------------------------------ --------- --------- ------
Transition to IFRS 16 (1.8) - (1.8)
------------------------------------ --------- --------- ------
Restated 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 (1) -
- downward movement in valuation 7.0 - 7.0
- upward movement in valuation (2.6) - (2.6)
------------------------------------ --------- --------- ------
At 30 March 2020 32.0 71.7 103.7
------------------------------------ --------- --------- ------
Net book value
At 2 April 2018 665.7 77.2 742.9
------------------------------------ --------- --------- ------
At 1 April 2019 721.9 85.1 807.0
------------------------------------ --------- --------- ------
At 30 March 2020 682.1 89.0 771.1
------------------------------------ --------- --------- ------
(1) The group's net book value impairment during the period was
GBP14.6 million (2019: uplift of GBP25.2 million). This impairment
was recognised either in the revaluation reserve or the income
statement, as appropriate.
The impact of the revaluations was as follows:
2020 2019
GBPm GBPm
---------------------------------------------------------- ------ ------
Income statement
Revaluation loss charged as impairment (7.0) (3.5)
Reversal of past impairment 1.7 3.4
------------------------------------------------------------ ------ ------
Net impairment recognised in the income statement (5.3) (0.1)
------------------------------------------------------------ ------ ------
Revaluation reserve
Unrealised revaluation surplus 20.0 35.8
Reversal of past surplus (29.3) (10.5)
------------------------------------------------------------ ------ ------
Net (impairment)/uplift recognised in the revaluation
reserve (9.3) 25.3
------------------------------------------------------------ ------ ------
Net revaluation (decrease)/increase in property valuation (14.6) 25.2
------------------------------------------------------------ ------ ------
Savills, an independent and leading commercial property adviser,
has revalued all our freehold properties, supported by Andrew Cox,
MRICS, our Director of Property and Tenancies. The valuation method
used a number of inputs of which the sustainable level of trade of
each pub was key. It incorporates the impact of coronavirus through
discounting pre-coronavirus property values by between 0% and 10%,
which contains material uncertainty given the lack of comparable
transactional activity since the onset of coronavirus and the
uncertainty over future trade at the valuation date.
10. Right-of-use assets
Set out below are the carrying amounts of right-of-use assets
recognised and the movements during the period:
Motor Other
Property vehicles assets Total
GBPm GBPm GBPm GBPm
---------------------- -------- -------- ------ -----
As at 2 April
2019 147.8 0.3 0.1 148.2
-------------------------- -------- -------- ------ -----
Additions 2.8 0.2 - 3.0
Business combinations 15.0 - - 15.0
Lease amendments 4.7 - - 4.7
Depreciation (7.3) (0.2) - (7.5)
-------------------------- -------- -------- ------ -----
As at 30 March 2020 163.0 0.3 0.1 163.4
----------------------- -------- -------- ------ -----
11. Retirement benefit schemes
Movement in scheme deficits in the period
2020 2019
Health Health
Pension care Pension care
scheme scheme Total scheme scheme Total
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- -------- ------- ------ -------- ------- ------
Changes in the present value of the schemes are as follows:
Opening deficit (5.1) (3.5) (8.6) (2.4) (3.7) (6.1)
Current service cost (0.3) - (0.3) (0.3) - (0.3)
Past service costs - - - (2.5) - (2.5)
Contributions 1.4 0.2 1.6 1.4 0.2 1.6
Other finance charges (0.1) (0.1) (0.2) - (0.1) (0.1)
Remeasurement through other
comprehensive income (0.5) (0.2) (0.7) (1.3) 0.1 (1.2)
----------------------------- -------- ------- ------ -------- ------- ------
Closing deficit (4.6) (3.6) (8.2) (5.1) (3.5) (8.6)
----------------------------- -------- ------- ------ -------- ------- ------
12. Lease liabilities
Set out below are the carrying amounts of lease liabilities and
the movements during the period:
GBPm
----------------------- ------
As at 2 April 2019 74.6
------------------------ ------
Additions 2.8
Business combinations 8.3
Lease amendments 4.7
Accretions of interest 2.5
Payments (10.6)
------------------------ ------
As at 30 March 2020 82.3
------------------------ ------
Current 5.3
Non-current 77.0
------------------------ ------
13. Net cash generated from operations and analysis of net
debt
2020 2019
GBPm GBPm
------------------------------------------- ----- -----
Profit before tax on continuing operations 29.1 39.5
Net finance cost 8.6 5.0
Finance charge for pension obligation 0.2 0.1
--------------------------------------------- ----- -----
Operating profit on continuing operations 37.9 44.6
Depreciation of property and equipment 25.6 23.4
Amortisation of lease premiums - 0.9
Depreciation of right-of-use assets 7.5 -
Movement on revaluation of properties 5.3 0.1
Net loss/(profit) on disposal of property 0.6 (0.4)
Guaranteed minimum pension equalisation - 2.5
Difference between pension service cost
and cash contributions paid (1.3) (1.3)
Movement in other provisions - (0.7)
Share based payments 0.1 0.3
Movements in working capital
- Inventories 0.5 (0.4)
- Receivables (1.8) 2.4
- Payables (1.9) (2.2)
--------------------------------------------- ----- -----
Net cash generated from operations 72.5 69.2
--------------------------------------------- ----- -----
Analysis of net debt
2020 2020 2019
Post-IFRS Pre-IFRS Pre-IFRS
16 16 16
GBPm GBPm GBPm
---------------------------- --------- -------- --------
Cash 1.1 1.1 8.5
Current borrowings and loan
capital (50.0) (50.0) (8.5)
Current lease liability (5.3) - -
Non-current borrowings and
loan capital (149.2) (149.2) (163.0)
Non-current lease liability (77.0) (0.6) (0.6)
------------------------------- --------- -------- --------
Net debt (280.4) (198.7) (163.6)
------------------------------- --------- -------- --------
14. Post balance sheet events
In response to coronavirus and the closure of all of the group's
pubs, management has taken actions to mitigate the consequential
and significant impact on both profit and cash flow of this
closure. These actions include reducing the group's cash outflows
in non-essential areas, accessing some of the government's support
packages in order to safeguard employment, agreeing that no final
dividend will be declared or paid for 2020 and strengthening both
short-term and long-term financing. Further, in view of the ongoing
closure of our pubs, the expected lower levels of trade when they
re-open and the terms of the new GBP20.0 million facility with
NatWest, the company will not be paying an interim dividend for the
current financial year ending 29 March 2021. A number of these
actions were taken post-year end and are therefore not reflected in
the financial statements at 30 March 2020.
At 30 March 2020, the group had cash of GBP1.1 million and
secured borrowing facilities of GBP235.0 million, of which GBP199.2
million was drawn down and of which GBP50.0 million expires in
March 2021. Since that date, further financing has been accessed
through the Bank of England's CCFF, whereby GBP30.0 million of
commercial paper with a maturity date of May 2021 has been 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 has been
renewed with a five-year facility expiring in 2025. In anticipation
of covenant breaches arising due to the pub closures, the group has
agreed with its lending banks that the EBITDA covenants have been
replaced by a minimum debt headroom covenants, requiring the group
to leave GBP20.0 million of its available facilities undrawn, until
the quarter ending June 2021. See note 1 for further details on
going concern.
The group's assets and liabilities have been valued based on
information available at 30 March 2020. Post year-end, the
coronavirus pandemic has continued to evolve which could have an
impact on the value of both assets and liabilities, most notably
property valuations and the net pension deficit. These constitute
non-adjusting events in accordance with the applicable accounting
standard and any change in value will be reflected in the following
period's financial statements.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR ZZGGVMFZGGZZ
(END) Dow Jones Newswires
June 04, 2020 02:00 ET (06:00 GMT)
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