Budget to cost Young’s £11m
In the trading update, which covered the 26 weeks ending 30 September 2024, the pub group reported total revenue for the period was up more than a quarter (27.2%) to £250m.
Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) was up 23.2% to £59m with managed house EBITDA increasing 25.1% to £73.8m.
Like-for-like revenue grew by 4.4% (excluding a 5.2% Easter impact rise), set against challenging early spring and summer weather but supported by the Euros football tournament.
The business invested £21.7m, split between £19.4m into the existing estate with a further £2.3m in the City Pub Group estate, which it acquired earlier this year.
The integration was a success, according to Young’s, with head office synergies having already been realised with further food and drink margin benefits progressing in line with the acquisition plan.
Strong results
The value of the Young’s freehold estate as of 1 April 2024 was £1bn.
Moreover, the planned disposal of six pubs reduced the year-end net debt position by £12m to £255.8m (£346.5m including leases) with net debt EBITDA at 2.6 times (3.4 times including leases), in line with the company’s target post City Pub Group acquisition.
Young’s chief executive Simon Dodd said: “We’ve achieved a huge amount as a business in the past six months, reflected in another strong set of results.
“The City Pub Group integration has gone well, with the pub teams welcomed into the Young’s family and all operational control brought together under one leadership team. Our teams have done a fantastic job and I’m looking forward to seeing our pubs thrive together.
“I am very pleased with our performance and the progress we have made during the period, which has been achieved despite some challenges.
“The weather was frustrating yet again, with a wet spring and limited periods of prolonged sunshine during the summer months. However, Euro 2024 and England’s successful run to the final provided a welcome boost to drink sales with our pubs performing exceptionally well on match days.”
Business confidence
He outlined the financial impact that recent announcements from the Government will have on the business and called for change in the business rates system – something many in the sector have also been urging the Government to do.
Dodd added: “The new Government’s Budget will result in significant increased costs for our industry in the near term through rises in national minimum wage and employers’ national insurance payments. We expect the cost impact to be approximately £11m on an annualised basis from next April.
“We will work to see how we can mitigate these headwinds without passing on all the cost to our loyal customers.
“We would like to see certainty and delivery of real business rate reform, which will benefit all hospitality businesses.
“Given the quality of our estate and on-going strategy, we remain confident in our ability to deliver long-term growth, including achieving the planned synergies from the City Pub Group acquisition.”
