Young & Co.'s Brewery, P.L.C. Class A · LSE:YNGA
Young & Co.'s Brewery, P.L.C. Class A — FY2007 Earnings Presentation
46 slides from Young & Co.'s Brewery, P.L.C. Class A's earnings presentation, May 29, 2007
Slide 1: Results Presentation
Results Presentation for the 52 weeks ended 31 March 2007 1
Slide 2: Agenda
Agenda 1. Results review 2. Retail operations 3. Wells & Young's Brewing Company 4. Strategy & outlook 2
Slide 3: Significant events and highlights
Significant events and highlights • Period of enormous change – Formation of Wells & Young’s Brewing Co. – Sale of Ram Brewery site – Death of John Young and other Board changes – Move to new head office in Wandsworth • Strong retail performance (particularly H2) – H2 turnover up 17.9% and operating
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Slide 6: Retail Highlights
Retail Highlights Retail success from delighting customers with high service standards, quality food, market leading drinks and stylish pubs • Strong sales and profit growth in managed houses • Over 50% of the managed estate redeveloped in past 2 years -generating strong returns • Strong period of i
Slide 7: Estate development
Estate development • £45.3M invested in the estate • Acquired 8 managed pubs • £4.5M invested in major refurbishments on existing sites targeting broader customer base – Many sites have re-opened as non-smoking venues • Opened 3 riverside pubs – Riverside (Vauxhall), Waterside (Fulham) and Waterfron
Slide 8: 1. Results Review
1. Results Review 8
Slide 9: Strong underlying results
Strong underlying results +50.0% +28.3% +18.5% +13.9% +2.2% Turnover Op Profit* PBET* EPS* Dividend £126.6m £15.4m £12.0m 75.36p 37.35p * - before exceptional items 9
Slide 10: Adjusted profits
Adjusted profits 2007 2006 £M £M Reported PBT (including associate) 46.3 7.5 Operating exceptional items 0.7 2.1 Non-operating exceptional items (37.1) 0.5 Discount of site proceeds 2.1 - Adjusted profit before tax 12.0 10.1 Tax (excluding exceptionals) (3.3) (3.3) Adjusted profit after tax 8.7 6.8
Slide 11: Exceptional items
Exceptional items £M Operating CGT on ESOP allocated shares 0.5 Property valuations 0.2 Total operating exceptional costs 0.7 Non-operating Proceeds from Wandsworth sites 69.0 Less: Book value of assets sold (22.4) Gain on disposal of Wandsworth sites 46.6 Loss on sale of other properties (0.4) 46.2
Slide 12: Restructuring and head office move
Restructuring and head office move • Final phase of Group restructuring • Accelerated from original plan • Headcount reduced by 23 to 66 • New offices – April 2007 – 20 year lease with 5 year tenant’s break – Rent of £254K p.a – Soft operating benefits • Exceptional cost of £0.8M • Annualised saving
Slide 13: Period of significant investment
Period of significant investment 2006/07 2005/06 £M £M Cash inflow from operating activities* 24.4 20.8 Working capital movements 4.0 1.5 Interest, tax and dividends (11.9) (9.9) Free cash flow 16.5 12.4 Capital expenditure/acquisitions (46.8) (13.5) Investment in associated undertaking (10.0) - Dis
Slide 14: Investment in the pub estate
Investment in the pub estate Total spend: £45.3M (2005/06: £11.9M) By division By nature of spend 14
Slide 15: Estate profile
Estate profile 1 April 31 March Transfers 06 + - 07 (net) Managed 112 8 (1) (5)* 114 Tenanted 96 6 (5) 5** 102 Total 208 14 (6) - 216 Freehold 164 14 - (1) 177*** *The Brewery Tap, closed during the year and has been excluded from these numbers **A new tenanted outlet has been created out of an exis
Slide 16: Riverside pubs
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Slide 17: Geographical split of Young's pubs
Geographical split of Young's pubs 17
Slide 18: ‘POSTHORSES,
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Slide 19: Property Revaluation
Property Revaluation • Revaluation by Fleurets in November 2006 • Valuation of £399.0m vs book value of £225.0m at time of valuation in November 2006 • This is not a portfolio valuation; the Board believes that the value of the estate as a single entity would be significantly higher • Valuation not
Slide 20: Capital structure
Capital structure 2007 2006 Net debt £101.2m £54.4m Gearing 50.7% 38.1% % of debt fixed 38.7% 72.2% Debt/EBITDA 4.2 x 2.5 x Interest cover 3.0 x 3.5 x Composite rate 6.7% 7.1% 20
Slide 21: Financial summary
Financial summary • Restructuring completed • Investment in estate of £45m • Strong balance sheet – Proceeds from Wandsworth Sites of £69m by January 2008 – Debenture redemption – Improved flexibility of financing structure • In addition to like for like growth, further profit uplift – Full year of
Slide 22: 2. Retail Operations
2. Retail Operations 22
Slide 23: Strong Managed house performance
Strong Managed house performance • Sales up 18.1% • LFL sales up 10.5% on same outlet basis, up 6.9% un-invested • Food sales up 33.0% and now represent 23.6% of managed turnover • Operating profit up 17.6%, despite increased wages, utility costs and rates across the business • RevPAR up 10.3% at £4
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Slide 25: Like-for-like sales
Like-for-like sales FY 07 Number Sales of sites £M change % Same Outlet Managed 98 87.7 + 10.5 Tenanted 87 12.6 - 0.4 185 100.3 + 9.0 Uninvested Managed 80 68.0 + 6.9 Tenanted 79 11.4 - 0.7 159 79.4 + 5.7 25
Slide 26: KPI's of same outlet pub estate
KPI’s of same outlet pub estate 2007 % increase Managed Average turnover per pub £894K + 10.5 Food Mix 22.3% +1.1 % points Average EBITDAR per pub £273K + 13.8 Tenanted Average EBITDAR per pub £70K +5.7 26
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Slide 28: Operating performance at outlet level
Operating performance at outlet level % 2007 2006 Turnover change £000’s £000’s Managed 98,648 83,551 +18.1 Tenanted 14,698 14,790 -0.6 113,346 98,341 +15.3 EBITDAR* Managed 28,587 24,310 +17.6 Tenanted 7,089 6,634 +6.9 35,676 30,944 +15.3 * At outlet level, before interest, depreciation, rents paya
Slide 29: Managed houses – Key initiatives
Managed houses – Key initiatives • Websites in over 50 pubs – 120K hits last month alone – 80K live database – Customer targeted marketing activity – Privilege Card benefits to members • Imagine – customer service surveys • Re-structured retail team – new recruits • Improved ale/lager portfolio in a
Slide 30: Dog & Fox pub website
HOME | FOOD | DRINKS | BOOK ATABLE | BEPART OFTHETEAM | CONTACTUS | GALLERY (ai) DOG & FOX Wy j . WELCOME The Dog and Fox is 3 landmark public house right in the heart of leafy Wimbledon Village, SW19. As the closest pub to the All England Lawn Tennis Club the pub has become synonymous with the tenn
Slide 31: Customer focused locals
Customer focused locals Managed estate targeted at 3 key customer segments (same outlet) Favourite Prestige Gourmet Key financials Key financials Key financials Outlets 51 Outlets 35 Outlets 12 Sales: £763K Sales: £1,055K Sales: £985K EBITDAR: £236K EBITDAR: £327K EBITDAR: £276K Conversion Conversio
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Slide 33: Tenanted houses – Key initiatives
Tenanted houses – Key initiatives • New training programme – Licensing – Food development / presentation – Beer quality – Marketing – Web Site support • Introduction of new promotional support packages • Expanding the portfolio of cask ale and lagers • Learning from managed house investment programm
Slide 34: Tenanted houses
Tenanted houses • Significant opportunity for growth • Commenced five year refurbishment – To raise the standard of the tenanted estate – £0.8 million invested on 8 tenanted pubs in 06/07 • Seeking to move more tenancies to long leases to drive profit performance – Reduction in repair liability – In
Slide 35: Smoking Ban – England and Wales
Smoking Ban – England and Wales Short term issue - longer term opportunity Managed estate is ready for the ban: • Action plan completed for every pub • 25% are already non-smoking – positive response to date • 95% have usable outside space • All have developed quality food offer • £2.3M CAPEX specif
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Slide 37: 3. Wells & Young's Brewing Company
3. Wells & Young’s Brewing Company 37
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Slide 39: Integration complete
Integration complete • Successful integration: – Transfer of sales & marketing teams – Successful beer matching – Relocation and installation of specialist brewing equipment – Portfolio review & customer presentations • Acquisition of Courage brands from S&N • Commenced decommissioning of Ram Brewer
Slide 40: Financial contribution from Wells & Young's ("associate")
Financial contribution from Wells & Young’s (“associate”) • Treated as an associate in Young’s financial statements • £0.1m contribution to adjusted profit before tax – Young’s share of associate turnover £30.9m (from 1 October 2006) – £0.3m share of operating profit (before exceptional items) – £0.
Slide 41: Ongoing relationship
Ongoing relationship • A highly focused drinks business run at arm’s length from its two shareholders • Board representation and shareholder protection rights • Dividend policy – 80% of profits, post pension contributions • Early days, but encouraged by progress 41
Slide 42: 4. Strategy & outlook
4. Strategy & outlook 42
Slide 43: Active operational management
Active operational management • Focused quality retail pub business – 216 pubs in London and Southern England • Premium strategy to provide clear point of differentiation… – Premium end of the market - style, quality and individuality of a Young’s pub – Measure against best individual pub and restau
Slide 44: Active estate management
Active estate management Organic growth augmented by: • Benefits from recent investments and developments • Ongoing investment in existing estate on high returning projects • Transfers from tenancies to leased • Acquisitions: Individual pubs or packages that maintain the quality of Young’s estate
Slide 45: Strategy is Delivering
Strategy is Delivering • Widening differentiation of Young’s pubs • Strong like for like sales growth • High returns from recent redevelopments • Improved beer supply terms • Other productivity and purchasing gains • Strong growth in food driving outlet EBITDA growth 45
Slide 46: Outlook
Outlook • Near term risks from smoking ban and pressure on consumer spending • Offset by full year effects of restructuring, acquisitions and developments • Improving contribution from Wells & Youngs • Strong current trading – Sales up 25.1% in 8 weeks to 26 May 2007 – LFL sales up 9.6% on an uninve
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