Young & Co.'s Brewery, P.L.C. Class A · LSE:YNGA
Young & Co.'s Brewery, P.L.C. Class A — H1 FY2024 Earnings Presentation
36 slides from Young & Co.'s Brewery, P.L.C. Class A's earnings presentation, Nov 16, 2023
Slide 1: Interim Results
For the 26 weeks ended Interim Results FY24 H1 2 October 2023 1
Slide 2: Welcome
Welcome Simon Dodd CEO FY24 H1 2
Slide 3: Record profit performance
Record profit performance • Record interim profits (PBT) of £28.0 million; up by 12.0% • Sector-leading operating margin of 15.8%; up by 30 bps • Revenue up by 5.4% to a record of £196.5 million • Total investment of £39.1 million; • £20.3 million invested in our existing estate • £18.8 million spen
Slide 4: Well positioned for growth
Well positioned for growth • Completed on two freehold acquisitions after the period end; exchanged contracts on one other freehold pub • Continue to invest with exciting projects underway at Defector’s Weld (Shepherd’s Bush), Bedford Arms (Chenies) and the extension to the Guinea Grill (Mayfair) •
Slide 5: Financials
Financials Mike Owen CFO FY24 H1 5
Slide 6: Record interim profits
Record interim profits FY24 H1 FY23 H1 % £m £m change Revenue 196.5 186.5 +5.4% EBITDA* 47.9 45.0 +6.4% Operating profit* 31.0 29.0 +6.9% Operating margin* 15.8% 15.5% +0.3pts Profit before tax* 28.0 25.0 +12.0% Earnings per share* 36.08p 34.54p +4.5% Dividend per share 10.88p 10.26p +6.0% *Adjusted
Slide 7: Pub performance
Pub performance FY24 H1 FY23 H1 % £m £m change Revenue 196.2 186.1 +5.4% AWT per pub (£k) 33.4 32.4 +3.1% EBITDA* 59.0 55.6 +6.1% Operating profit* 42.8 40.0 +7.0% Profit margin* 21.8% 21.5% +0.3pts *Adjusted to exclude non-underlying items FY24 H1 7
Slide 8: Significant investment
Significant investment 45.0 40.0 35.0 Investment (£m) 30.0 25.0 £m 20.0 Total 15.0 investment 10.0 5.0 0.0 FY20 H1 FY21 H1 FY22 H1 FY23 H1 FY24 H1 Existing estate Acquisitions FY20 H1 FY21 H1 FY22 H1 FY23 H1 FY24 H1 £m £m £m £m £m Existing estate 13.8 3.8 11.5 14.5 20.3 Acquisitions 3.5 0.4 1.6 14.2
Slide 9: Acquisitions
Acquisitions White Hart Libertine White Lion (Ford) (Westbourne) (Tenterden) Stag Huntsman (Belsize Park) (Brockenhurst) April May June July August September FY24 H1 9
Slide 10: Investments in our estate
Investments in our estate Marquess of Anglesey Chelsea Ram (Chelsea) Lamb Inn (Hindon) Clapham North (Clapham) (Covent Garden) April May June July August September Porchester (Bayswater) Crown (Twickenham) Paternoster (St Paul’s) Coach & Horses (Isleworth) FY24 H1 10
Slide 11: Free cash flow
Free cash flow FY24 H1 FY23 H1 £m £m Adjusted EBITDA 47.9 45.0 Rent payments* (4.9) (3.5) Working capital (4.5) 5.0 Maintenance capex (8.9) (7.2) Interest (1.6) (2.4) Tax (7.0) (3.0) Pension and other (2.1) (1.7) Free cash flow 18.9 32.2 *In respect of leases held as right-of-use assets under IFRS 1
Slide 12: Net funds flow
Net funds flow Net funds flow FY24 H1 FY23 H1 £m £m Free cash flow 18.9 32.2 Share proceeds - 0.1 Dividends (6.0) (6.0) Development capex (11.4) (7.3) Acquisitions (18.8) (14.2) Disposals - - Net funds flow (17.3) 4.8 FY24 H1 12
Slide 13: Freehold rich estate
Freehold rich estate 40 Leasehold 192 Freehold 232 Total Managed 230 Managed 2 Other April 2023 226 232 Total Additions 4 • Year ended 3 April 2023 pub estate value of £842.5 million Transfers - • Purchase of five freehold pubs during the period Disposals - • 173 freeholds and 19 long leases with pe
Slide 14: Performance history
FY20 H1 FY21 H1 FY22 H1 FY23 H1 FY24 H1 Performance history £m £m £m £m £m Healthy operating cash generation 42.2 0.0 71.4 48.5 41.3 Adjusted PBT 26.6 (19.6)* 21.8* 25.0 28.0 Active investment strategy 17.3 4.2 13.1 28.7 39.1 Adjusted earnings per share** 42.85 (31.80)p* 28.22p* 34.54p 36.08p Divide
Slide 15: Operational Review
Operational Review Simon Dodd CEO FY24 H1 15
Slide 16: Relentless execution of a customer-led strategy
Relentless execution of a customer-led strategy Our pubs and Investment in our Our premium bedrooms are as existing estate offer is exciting, individual as the while adding pubs often colourful customers that with character and always we serve and heritage innovative Surprising and We develop and de
Slide 17: Targeting the right Young's customers
Targeting the right Young’s customers Demographic Propensity to consume Location Young’s database 57.0% 40.0% Young’s database 18-34: 49.2% 35-54: 35.9% 55+: 14.9% Average UK consumer / Young’s consumer Source: CGA BrandTrack Data H1 2023 (Sample 9,053/391) FY24 H1 17
Slide 18: Operational highlights
Operational highlights • Successfully mitigated cost headwinds; adjusted managed operating margin up by 30 bps to 21.8% • Sales up 5.4%, like-for-like sales up 3.6% • Our best performing area of the City & Central London continues to thrive, with sales ahead of last year by 8.0% • The Ram Agency wit
Slide 19: London leading the way
London leading the way FY24 H1 19
Slide 20: Drink sales
Drink sales Revenue Beer & cider Cocktails LFL +4.1% +8.5% +12.5% Total +5.5% +10.0% +13.6% • Added Asahi Super Dry and Beavertown Lunar Haze to our premium draught range; helping drive 2.2% volume growth • Our rugby themed cask ale ‘Drop Gold’ helped raise money for the Wooden Spoon charity during
Slide 21: Food sales
Food sales Revenue Sunday sales LFL +1.4% +4.3% Total +4.4% +7.5% • Positive sales growth despite challenging economic climate and slowdown in consumer spending • Focus on fresh, seasonal and locally sourced British ingredients with menus tailored to the individual pub • ‘Sunday best’ campaign launc
Slide 22: Rooms
Rooms Revenue £ ARR £ RevPAR LFL +10.1% +7.7% +7.9% Total +9.6% +8.0% +12.6% Total £112.12 £86.85 vs Last year +£8.34 +£9.74 • Total sales up 9.6%; RevPar of £86.85; Occupancy up 3.2% to 77.5% • Added 32 bedrooms, bringing total Young’s Rooms to 825 • Roll out of new booking engine to improve the gu
Slide 23: Our community
Our community • Commitment to become net zero across scope 1, 2 and 3 emissions by 2040 • Bedford Arms will be our first non-fossil fuel pub – all electricity coming from renewable sources • Aligning our sustainable reporting activities with the TCFD framework for April 2024 • We continue to work cl
Slide 24: Outlook
Outlook • Last six weeks sales up 5.8%, like-for-like sales up by 3.3% • Christmas bookings are strong as we look forward to delivering our first uninterrupted Christmas for four years • Completed on two freehold acquisitions: Crooked Billet (Clapton) and the Ship Inn (Noss Mayo, Devon) • Number of
Slide 25: Acquisition of City Pubs
Acquisition of City Pubs 2023 H1 1
Slide 26: Important notice: not for release or distribution
NOT FOR RELEASE, PRESENTATION, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION This presentation has been prepared by Young & Co.’s Brewery (“Young’s”) sol
Slide 27: Transaction summary
Transaction summary • Acquisition of City Pubs for £162m, satisfied by a combination of cash and new Young’s A shares • A highly complementary portfolio of 501 individualised and well-invested managed pubs and 240 bedrooms across London and the south of England • Predominantly freehold estate with a
Slide 28: Transaction rationale
Transaction rationale ✓ Rare opportunity to acquire a high-quality portfolio of scale o >20% increase to 2791 managed pubs and 1,000+ premium bedrooms ✓ Fits our strategy to operate premium, individual and differentiated pubs and bedrooms ✓ Expected cost-saving and efficiency benefits through purcha
Slide 29: City Pubs estate overview
City Pubs estate overview • City Pubs’ highly complementary managed pub and bedroom portfolio will enhance our high-quality offering across London and the South of England o 21 in London (o/w 6 Mosaic pubs) o 23 in the South of England o 3 Mosaic pubs in Birmingham LONDON o 3 in Wales • Predominantl
Slide 30: City Pubs format overview
City Pubs format overview High quality, predominantly wet-led pubs complemented by a strong food proposition, well invested outside spaces and premium bedrooms 2023 H1 6
Slide 31: City Pubs financials
City Pubs financials Illustrative Pub EBITDA components • City Pubs FY22 central costs of £5.6m Expected purchasing synergies • Acquired two pubs (Bateman and Plough) with an estimated combined EBITDA of £0.6m Expected other • Disposed of 3 loss-making pubs with a combined LTM Jun-23 EBITDA of £0.5m
Slide 32: Financing and financial impact
Financing and financial impact • £162m consideration, of which £122m paid in cash (debt funded) alongside an issuance of 3.6m1 Young's A shares worth £40m1 o 108.75 pence in cash and 0.0326581 new Young’s A shares per existing City Pubs Share • City Pubs net debt of £5.2m as at 25 Jun-23 • Acquisiti
Slide 33: Debt facilities
Debt facilities Key New facilities Pre-Transaction capital structure Post-Transaction capital structure Committed facilities of £205m Committed facilities of £335m Term loans RCF PP Term loans RCF PP Facility £20m £50m £100m £35m Facility Size £20m £110m £50m £120m £35m Size Maturity May-24 May-27 M
Slide 34: Key dates
Key dates • 16th November – Firm offer Rule 2.7 announcement • Within 28 days – posting of Scheme document • Mid-Jan – Court Meeting and General Meeting • Q1 2024 – Expected to become effective subject to Shareholder vote and satisfaction or waiver of conditions 2023 H1 10
Slide 35: Conclusion
Conclusion • Excellent opportunity to acquire a highly attractive predominantly freehold estate across London and the South of England • 50 premium, well-invested managed pubs1 and an additional 240 bedrooms to complement the portfolio • The culture of the two businesses are closely aligned • City P
Slide 36: Thank you
Premium Individual Well-invested FY24 H1 Thank you!!! 25
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