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Pub group's estate value nosedives

Published:  01 June, 2009

Pub group Young & Co has taken an £11 million hit to its finances after it decreased the value of some of its 219 pubs due to plummeting property prices.

Pub group Young & Co has taken an £11 million hit to its finances after it slashed the value of some of its 219 pubs due to plummeting property prices.

Announcing its annual results, the London based pub operator said that adjusted pre-tax profits rose 3.1% to £19.2million as revenues increased 3.2% to £126.1million.

But Young's also revealed a 63.7% drop in bottom-line pre-tax profits to £4.2million after a £10.7million non-cash write-down on the value of its pub estate

Shares also fell 3½p to 470p despite a rise in the final dividend to 6½p from 4.84p the previous year.

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

Young's 122 pub estate is now taking a more cautious approach to expansion after spending nearly £10m on upgrading existing and newly acquired pubs in 2008 and 2009.

Figures have also shown that food sales from promotional offers are driving business and now amount to more than a quarter of sales.

The company started promotions such as "2 dine with wine for £20," after a shift in consumer behaviour and in response to the economic downturn that has seen many pubs go out of business over the last few years.

Young & Co, which brews Courage, Bombardier and Young's Bitter in association with Wells, said that the food promotions and the fact that many of pubs are in prosperous parts of London has meant that it has weathered the downturn better than many.

Chief executive Stephen Goodyear said: "We have seen some consumer trends emerging in response to the credit crisis.

"Spending patterns are showing a more marked split between the beginning and end of the week as going out tends to become more of an occasion than an every day event.

"It helps that we have a cash-generative business, a well-invested estate, great pubs in great locations, a robust balance sheet and a very strong brand."

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