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November 22, 2012 8:52 am
Young & Co’s shrugged off wet weather in the early summer to make the most of the diamond jubilee and Olympic celebrations in London and achieve double-digit revenue growth.
The pub group’s first-half revenues climbed 10.7 per cent on the same period last year to £100.2m, giving it an 11.2 per cent uplift in adjusted pre-tax profit to £13.9m.
The momentum has continued into the third quarter, during which four pubs have been added to the estate, with like-for-like revenues for the first seven weeks up 6 per cent.
Young’s estate of nearly 250 pubs are located in London and the south of England, mostly freeholds or on long leases. Its interims are its first since selling its stake in Wells Young Brewing Co last August.
The number of Geronimo pubs increased to 35 and pushed revenues up by a third, including two in the Westfield shopping centre in Stratford at the gateway to the Olympic Park. Several pubs put on Olympic promotions.
Its 121 Young’s-managed houses achieved like-for-like sales growth of 5.7 per cent, the best performers being riverside pubs during the jubilee weekend and those near transport hubs where footfall increased thanks to Olympic crowds.
However, trading in other London pubs was quieter during the games.
Liquor sales were up 4.7 per cent, though food, which makes up 28.8 per cent of all revenues, rose 8 per cent. The small hotels business saw accommodation sales rise 5.3 per cent, and the group said it was looking at expansion opportunities.
Young’s has been converting some tenanted pubs into the managed estate, and selling off others, reducing the number of tenanted pubs to 81. This caused tenanted revenues to fall 14.2 per cent, though sales were flat on a like-for-like basis.
Stephen Goodyear, chief executive, said: ““These excellent results reflect some benefit from the extraordinary events we have seen in London this summer. They have also been achieved despite some periods of truly awful weather.”
Analysts gave Young’s positive reports. Nick Batram of Peel Hunt said that “the business clearly looks in good shape and the strategy to focus on a premium offering is delivering the goods”.
JPMorgan’s analysts raised its earnings per share forecast for 2013 by 1 per cent on the back of an assumed lower tax rate, and predicted like-for-like sales growth next year of 5 per cent.
Net debt was cut by £1m to £117.1m and £8.9m was invested in the managed pubs.
Adjusted basic earnings per share grew 18.2 per cent to 22.13p. The dividend was raised 5.1 per cent to 7.02p.
Shares closed up 3.82 per cent at £26.50.
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