Young's reports a transformation year with revenue up 25%

Revenue for the year rose 25.5% to £178.9m, while adjusted pre-tax profit increased 17.4% to £21.3m. Adjusted operating profit stood at £26.1m, an increase of 20.3% on the previous year.
The group said that its performance in recent weeks had “inevitably been affected by the dismal weather conditions; the glorious weather we enjoyed in the same period in 2011 makes the year on year comparisons more challenging still”.
Managed house revenue in the first seven weeks of the year was up 3.9% in total but down 2% on a like-for-like basis. The group said that the like-for-like figure included Geronimo, which was acquired at the end of 2010 for £60m, as it had now traded within the business for a complete financial year.
During the year, the group opened three new pubs and acquired a further one. It also made eight disposals and, since the year end, has exchanged contracts on another. It said that six of these sales were from its tenanted estate, reflecting the company’s continued aim to retain a high quality but smaller tenanted estate alongside the managed operation that provides its core focus for growth.
It finished the year with 242 pubs, four fewer than last year, of which 187 were freehold and 13 were held on long leases at peppercorn rents.
The business generated a operating cash flow of £34.6m during the year which, together with the proceeds from the Wells & Young's share sale and pub disposals, allowed Young’s to invest £25.6m and reduce net debt by £4.5m. It said that its balance sheet remained “robust” with net debt at £118.1m, 3.1 times EBITDA, and gearing at 37.2%.
It sold its 40% stake in Wells & Young's for £15.1m last August.
At the year end, the group’s managed operation comprised 121 Young's pubs, 16 of which were hotels, and 33 Geronimo pubs.
Revenue for the year, which reflected a full year's contribution from Geronimo, was up 29.1% across its managed estate at £165m. Young's managed house operation reported like-for-like sales, which excludes Geronimo, up 6%. Geronimo's sales, which do not currently form part of the group’s total like-for-like sales, were up 9.8% compared with the corresponding year, the vast majority of which, pre-dated the company’s period of ownership.
Overall, it invested £24.2m across its managed houses during the year: of this, £4.7m was invested in four new sites.
Liquor sales in the managed estate were up 5% on a like-for-like basis, like-for-like food sales were up 7.2%, while accommodation sales were up 15.4%, with RevPAR increasing by 10.7% to £48.85.
Operating margin decreased from 22.9% to 21.4%, which the group said was due to Geronimo's lower operating margins as a result of the proportionately larger number of leases in its estate and the resultant larger rent element and, the impact of immature sites “which have generated very impressive sales but at the cost of higher than normal levels of staffing costs in their early months' trading”.
At the year end, following the disposal of six sites and the transfer of a further three to the managed operation, the company’s tenanted operation comprised 88 pubs. The disposals raised £4.5m.
Like-for-like revenue and operating profit were both up, by 0.6% and 4.1% respectively. Total revenue was down 5.8% at £13.6m, and operating profit was down 1.9% at £5.3m, which Young’s said reflected the smaller number of pubs compared with last year, and particularly the fact that three of its largest sites were transferred to the managed operations.
During the course of the year, the group invested £1.1m in its tenanted operation.
It said that whilst further disposals were possible from the division, it believed that it now had a tenanted operation “set for profitable growth”.
Stephen Goodyear, chief executive of Young's, said: “This has been a successful and transformational year for Young's. In the face of continued wider economic uncertainty, the group has delivered a strong set of results for the period, whilst driving forward our premium offering.

“The disposal of our stake in Wells & Young’s has allowed us to focus on our core, premium pub strategy and Geronimo Inns - acquired in December 2010 - has been successfully integrated, with both Young's and Geronimo's operations benefitting from the best practice being shared across the combined business.

“Young's is in very good shape. The start of the year has been affected by the generally dismal weather. Nevertheless sales for the first seven weeks were up 3.9%, but down 2.0% on a like-for-like basis. We are excited about the prospects that the Jubilee and Olympic summer will bring. Whilst the economy remains fragile, we believe that, with our focused and high-quality offering, we are well placed to continue to achieve growth.”