Young’s reports strong first half benefitting from capex programme and pent-up demand

Pub group Young’s has reported strong trading for the first half of its financial year, benefitting from its capex programme last year and pent-up demand.

The group says it has sufficient funds to invest and capitalise on acquisition opportunities following the sale of the majority of its tenanted pubs over the summer.

Young’s sold 56 of its tenanted businesses to Punch Pubs & Co this summer for a total cash consideration of £53m and said its group strategy for the future was entirely focused on the development of well-invested, premium managed pubs and hotels in the south of England.

In a trading update for the 26 weeks ended 27 September 2021, total revenue for the period from continuing operations was £149.6m, up 183.9%, with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £42.7m.

The group said it benefited from its major capex programme largely undertaken in the last financial year, having invested £13.1m in its pubs, hotels and outdoor areas.

Net debt reduced by £108.4m to £140.3m since the year end. Following the reopening of its pubs and positive cash generation in the period, the board decided to resume dividends, with payment of an interim dividend of 8.55 pence per share.

However, the group acknowledged that challenges remained in consumer confidence, recruitment and staffing challenges, as well as uncertainty in the supply chain.

Patrick Dardis, chief executive of Young’s, said: “The proceeds from the sale of the tenanted pubs further strengthens our balance sheet, ensuring we have sufficient funds to invest further in our current estate and capitalise on any attractive acquisition opportunities that present themselves.

“Following the disposal, we are now a focused operator of well-invested, premium managed pubs and hotels. We expect to benefit further in future years from the planned capex programme due to kick start in the second half and are well-positioned to deliver long-term sustainable growth.”

He added: “With excitement for the festive season building week on week, there is potential for a very good second half. There is now a real sense of enthusiasm and anticipation across the business for the months and years to come.”

Young’s ended the period with 211 managed houses (including 30 hotels), up from 210 at the end of the last period, and just five tenanted pubs.