Preliminary results For the 52 weeks ended 1 st April 2019 FY19 1 - PowerPoint PPT Presentation

Preliminary results For the 52 weeks ended 1 st April 2019 FY19 1

Strategy and overview Patrick Dardis CEO FY19 2

Premium Individual Differentiated FY19 3

Results Revenue £303.7M +8.7% highlights Operating profit* £48.5M +3.4% PBT* £43.4M +5.9% EPS* 72.13p +6.5% Dividend 20.78p +6.0% *Adjusted to exclude exceptional items FY19 4

Performance history Consistent LFL sales growth and strong operating margins drive cash for investment FY15 FY16 FY17 FY18 FY19 Managed House LFL performance +6.5% +5.6% +4.7% +4.2% +5.1% Strong operating margins 16.6% 16.8% 17.1% 16.8% 16.0% Adjusted earnings per share 51.04p 58.44p 66.43p 67.74p 72.13p Healthy cash generation £50.6M £60.4M £63.5M £61.4M £69.2M Active investment strategy £50.9M £45.1M £38.3M £53.0M £67.1M FY19 5

Managed LFL Revenue £273.7M +5.1% performance AWT per pub £30.6K +5.1% EBITDA* £83.1M +3.2% Operating profit* £63.3M +3.1% Profit margin* 23.1% -0.5pts *Adjusted to exclude exceptional items FY19 6

Financial review Daniel Quint Interim CFO FY19 7

Operating performance Managed Houses* £61.5M +1.3% Ram Pub Co* £5.0M +13.6% Outlet profit* £66.5M +2.2% Operating profit* £48.5M +3.4% *Adjusted to exclude exceptional items FY19 8

Free cash flow FY19 £M FY18 £M EBITDA* 72.8 68.7 Working capital (0.2) (3.5) Maintenance capex (13.4) (13.7) Pension contributions (1.3) (1.2) Interest/tax/other (13.6) (14.9) Free cash flow 44.3 35.4 * Adjusted to exclude exceptional items FY19 9

Net funds flow FY19 £M FY18 £M Free cash flow 44.3 35.4 Share proceeds 0.3 - Dividends (9.9) (9.3) Development capex (14.7) (7.2) Acquisitions* (43.1) (32.8) Net funds flow (23.1) (13.9) *Including transfers and net of disposals FY19 10

Investment 60.0 Total investment £M 40.0 20.0 - FY15 FY16 FY17 FY18 FY19 Existing estate Acquisitions Other Existing estate £26.3M £27.8M £25.7M £20.5M £25.0M Acquisitions £24.3M £16.7M £12.0M £32.1M £41.9M Other £0.3M £0.6M £0.6M £0.4M £0.2M Total Investment £50.9M £45.1M £38.3M £53.0M £67.1M FY19 11

Freehold Total rich estate April 2018 181 74 255 Additions 18 1 19 Disposals - (5) (5) April 2019 199 70 269 • 200 freeholds and 22 long leases with peppercorn rents – 83% of our estate • Location is key – 80% of our pubs are within the M25 FY19 12

Financial Gearing Net debt to 27.6% EBITDA Loan to value profile 2.2 times 20.3% Conservative financial profile designed to create 5.0 100.0% Loan to Value & Gearing 4.5 and preserve long term value 90.0% Net debt to EBITDA 4.0 80.0% 3.5 70.0% 3.0 60.0% 2.5 50.0% 2.0 40.0% 1.5 30.0% 1.0 20.0% 0.5 10.0% - 0.0% FY15 FY16 FY17 FY18 FY19 Net debt to EBITDA LTV Gearing FY19 13

Finance £35.0M Current Future of loan notes Total Facilities Total Facilities at 3.30% for £200.0M £235.0M facilities 20 years* Current Net Debt £163.6M 120 £M 100 100 80 60 40 50 35 20 30 20 0 2019 2020 2021 2022 2023 2024 2039 Term Loans Revolving credit facility Private placement * Following the end of the financial year, we secured additional long term debt financing through a private placement. This will see us raise £35.0M in July 2019. FY19 14

IFRS 16 • Leases Primarily changes lease accounting for lessee eliminating distinction between finance leases and operating leases • Leases qualified under IFRS 16 will be captured on the balance sheet from the effective date of 2 nd April 2019 using the modified retrospective method • Prior comparative periods will not be restated under IFRS 16 • It will have no impact on the way Young’s does business • And there will be no effect on banking covenants FY19 15

IFRS 16 Estimated impact: Leases • Changes to Income Statement for the year ending 30 th March 2020 • EBITDA expected to increase by £7.0M - £9.0M as rent charge is eliminated • Adjusted operating profit to increase by £1.2M - £1.8M • Adjusted PBT will decrease by between £0.7M - £1.3M • Changes to Balance Sheet at opening date of 2 nd April 2019 • Gross up of liabilities and assets of £78.0M - £82.0M • This reflects the introduction of a right-of-use asset and new lease liability • Changes to Cash Flow Statement • No effect on the Group’s net cash flow • Separate disclosure of principal lease payments and interest, as rent no longer in operating activities FY19 16

Operational review Patrick Dardis FY19 17

Managed Operating Revenue profit up 1.3% Total +9.0% highlights to £61.5M LFL +5.1% • Profits increase despite cost headwinds • Invested £22.7M on our LFL estate • Acquired the Redcomb pub group consisting of 15 pubs including 4 hotels • Well placed to capitalise on key trading periods • Improved online presence with launch of new pub websites FY19 18

Managed Drink sales Draught Gin sales Total +9.6% sales up by up by drink sales LFL +6.5% 5.4% 35.2% • Lager sales up 6.2% on the back of warm summer and England’s World Cup success • Keg ale sales up 22.9%, outselling cask ale for first time • Quality and perfectly served cocktails grow by 32.1% • Premiumisation helping drive sales growth FY19 19

Managed food sales Food sales • Food sales affected by the warm weather particularly Total +6.1% impacting on our Ultimate Sunday Roasts LFL +1.6% • ‘Famous For’ food strategy encourages customer association and menu individuality Burger Shack sales up by • British, seasonal and fresh ingredients are at the heart of 29.1% every dish we produce FY19 20

Hotel LFL Room sales Occupancy Total +19.6% revenue at 75.5% LFL +5.4% • Five new hotels added; increased our room stock to 668 rooms, 258 of which are boutique • LFL average room rate up 4.0% to £87.88 • LFL RevPAR up to £66.39, an increase of 5.1% £66.39 £63.15 £60.84 £60.01 £ £56.88 FY15 FY16 FY17 FY18 FY19 LFL RevPAR FY19 21

Redcomb Pubs • Total of 15 pubs located in and around Central London and the South West • 7 freeholds and long leaseholds, 8 short leaseholds • Includes 4 hotels adding 80 rooms to our total room stock • Group generates run-rate EBITDA of approximately £4.0M FY19 22

Investment highlights Developing our existing estate - Transformed the garden oasis at King’s Arms (Wandsworth) - Added an outdoor mezzanine at Wheatsheaf (Borough Market) - Increased trading space at Hand in Hand (Wimbledon Village) Maximising hotel opportunities - Transformed pub and dining areas at the Park (Teddington) and the Bridge (Chertsey) - Designated investment to meet long term vision of room quality Opportunity led acquisitions - Acquisition of the 15 Redcomb pubs - Transferred the Bear (Cobham) - Addition of People’s Park Tavern (Hackney) to the Ram Pub Co - Acquisitions remain an integral part of our strategy FY19 23

Ram Pub Co Barrelage Beer sales Total +0.8% Total +4.9% LFL +2.7% LFL +6.3% • Total sales up by 3.2% and up by 5.0% on a LFL basis • LFL operating profits up by £0.7M to £4.9M • Invested £2.9M in existing estate with a focus on external improvements and outside trading space • Acquired the freehold of the People’s Park Tavern (Hackney) • Disposed of four sites at the end of the estate for £1.3M FY19 24

Outlook • Managed house revenue for the last thirteen weeks is up 9.4% in total and 2.6% on a LFL basis • Tough short-term comparatives from amazing weather in summer of 2018 and England’s World Cup success • Full year benefit from the 15 Redcomb pubs and the other four additions made in the previous year • Since the period end the Depot (Kidbrooke Village) has opened and New Inn (Ealing) transferred from Ram Pub Co • Confident in our winning strategy and our expectations remain unchanged FY19 25

Questions FY19 30