Young's reports a £10.7m write down in pub values

Young's, the London brewer and pub operator, has this morning announced a 64% drop in pre-tax profits, after a £10.7m write down against the value of some of its pubs.

The Aim-listed group, led by Stephen Goodyear, said that although it believed its estate was now worth more than the 1997 valuations carried on the group's balance sheet, it had made the non-cash adjustment against the value of some pubs in light of the current trading environment, leaving its estate valued at £262.5m.

Adjusted pre-tax profits were up 3.1% in the 52 weeks to 28 March 2009 on revenues up 3.2% to £126.1m.

Like-for-like sales at the group's 122-strong managed house arm were flat, although the group said the figure had declined 1.3% in the past 13 weeks since its year end.

Total sales at its managed houses were up 4.5%, reflecting the acquisition of four pubs for £12.1m during the year plus capital development projects totalling £9.9m.

Those pubs that had just completed 12 months of trading after developments were currently generating an incremental cash return of 17.1%.

While Young's had resisted discounting drinks prices it said promotions on food in January had proved popular, allowing it to capture the email addresses of a further 12,500 customers.

It now had a database of 240,000 people - an average of 2,900 for the 82 pubs that have their own websites.

The group said that in light of a deteriorating hotel market, it had put on ice plans to add a significant number of rooms to the division.

Operating profits at the managed arm were down £0.9m to £25.9m and ebitda was moreorless flat at £32.5m.

Young's said its 99-strong tenanted business had clearly been affected by difficult market conditions, with total revenues down 3.3% to £14.3m and operating profits down 2.7% to £5.8m.

Tenanted house ebitda was unchanged at £7.0m.

The group invested £2m during the year on a mix of projects within the tenanted division. It said it had sought to protect tenants by absorbing some of the duty increases from the past 12 months and delaying price increases until March 2009.

It had also delayed passing on duty increases arising from the April 2009 budget until July.

Its brewing joint venture with Charles Wells - Wells & Young's Brewing Company - made a contribution of £1.9m to Young's adjusted pre-tax profit figure of £19.2m, although own brewed beer volumes were down 3.8%.

The group has a whole produced £26.4m of cash during the year, with net debt rising from £50.0m to £65.3m. Interest was covered 5.4 times and gearing equated to 39.8%.

Goodyear concluded: "We have a cash generative business, well-invested estate, great pubs in great locations, robust balance sheet and strong brand.

"Along with a dedicated team, we are well positioned to meet the challenges of the year ahead."