Young & Co's pub values fall £11m after writedown

Young & Co, the London-based pub operator, said it had lopped nearly £11m off the value of its pub estate, following an internal review.

Announcing its annual results today, Young's said that while it believed the overall value of its estate was higher than the 1997 values carried on its books, it had taken the decision to write down the values of a number of individual pubs by £10.7m, leaving the book value of its estate at £262.5m.

As a result of this "non-cash adjustment" and other exceptional items, pre-tax profit was £4.2m, Young's said, down nearly 64 per cent on the previous year.

Overall group turnover for the year to March 28, 2009, rose 3.2 per cent to £126.1m, with operating profit slightly lower than last year at £20.5m.

Adjusted pre-tax profit was 3.1 per cent higher at £19.2m, and the group would be recommending a final dividend of 6.63p a share, two per cent higher than last year.

Young's said revenues across its managed pubs rose 4.5 per cent to £111.4m, "reflecting the acquisitions and investments made in the business over recent years".

The group said same outlet like-for-like sales were flat compared with last year, with margins predictably hit by rising costs and increases in excise duty.

Young's 122-strong managed pub estate saw operating profit for the year at £25.9m, nearly £1m lower than in 2008, while its earnings before interest, tax, depreciation and amortisation (EBITDA) was little changed at £32.5m.

After spending nearly £10m on upgrading existing and newly acquired pubs in 2008/09, Young's said it planned to scale back capital investment in the coming year.

Young's tenanted pub business saw revenues down 3.3 per cent at £14.3m and operating profit 2.7 per cent lower at £5.8m. Tenanted pub EBITDA was unchanged at £7m.

Young's 40 per cent stake in Wells & Young's, its brewing joint venture with Bedford brewer Charles Wells, contributed £1.9m to Young's adjusted pre-tax profit, a figure the group said was "in line with our expectations".

Group net debt was up £15.3m on the year, at £65.3m.

Stephen Goodyear, Young's, chief executive, said the group had produced a "good performance in very challenging conditions".

Market conditions remained difficult, he added, thanks to rising unemployment and increases in excise duty.

Sales within Young's managed pubs in the last 13 weeks were three per cent ahead of last year, "albeit 1.3 per cent behind on a same outlet like-for-like basis", Goodyear said.

Noting the potential for another government-backed probe into the beer tie, Goodyear said Young's "did not believe that there is any justification for yet another expensive and distracting enquiry, particularly in these difficult times".