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Morning Briefing for pub, restaurant and food wervice operators

Thu 25th May 2023 - Update: Young’s, Cineworld and Fever-Tree
Young’s reports like-for-like sales up 4.8% in last seven weeks with ‘plenty to be excited about for period ahead’, full-year revenue increases 19.4%: Young’s has reported managed like-for-like sales since 3 April 2023 are up 4.8%% compared with last year. The company stated: “Despite the unseasonably cooler and wetter start to spring, we were able to capitalise on the well-timed Easter and bank holiday sunshine. While the additional bank holiday for the Coronation gave us minimal upside, it was fantastic to see our customers and pubs celebrating with local events, highlighting the important role our pubs play in their communities. Last month we completed on the freehold purchase of the Stag in Belsize Park, north London, adding further to our presence in the capital. We find ourselves living in challenging times, including headwinds from high inflation and the resumption of train strikes, but there is plenty for us to be excited about in the period ahead. This autumn, the Rugby World Cup provides a fantastic opportunity given our rugby heritage and we are hopeful that further rail strike disruption will be limited. The investments and acquisitions made in the last two years, alongside our future pipeline, provide tremendous growth potential. The business is completely aligned to take Young’s forward, and we are confident in our ability to deliver superior returns for our shareholders.” It comes as the business reported total revenue for the 52 weeks to 3 April 2023 was up 19.4% to £368.9m (2022: £309m. Managed pub like-for-like revenue up by 12.9% on a 52-week basis. Total group adjusted operating profit was £52.4m (2022: £51.4m). Adjusted pre-tax profit increased 8.1% to £45.2m (2022: £41.8m). Adjusted Ebitda was up 3.6% to £85.5m (2022: £82.5m). During the year, it invested £34.4m in its existing estate, and £24m on acquisitions, adding six new pubs. Net debt (including lease liabilities) has reduced by £8.6m to £165.2m and, with adjusted Ebitda of £85.5m, net debt to Ebitda is conservative at 1.9 times. Including cash balances, this leaves the company with £110.7m of headroom on its committed bank facilities “for future flexibility and ongoing investment”. Drink sales were ahead of last period by 21.5%, and up by 17.0% on a like-for-like basis over 52 weeks. Food sales “continue to be an important part of our business”, and as a mix of sales have increased to 33% compared with pre-pandemic (2019: 30%), “as the pub environment evolves into an all-round destination”. Total food sales grew by 9.1% (53 weeks) against the “tough” prior year comparatives due to the lower VAT rate, and were up by 1.7% on a like-for-like 52-week basis (VAT adjusted like-for-like sales up 12.2% on 52-week basis). The company stated: “Overall, the return to normal trading has been extremely positive for our business. Central London and City areas continue to bounce back as workers and tourists return to the capital. While working patterns have changed, with fewer people commuting into the office full-time, the condensed working week has resulted in increased sales for our pubs in the capital across Tuesday to Thursday. We continue to have one eye on the future, ensuring we have a steady pipeline of new openings. In the second half of the year, we transferred two of the remaining tenancies back into our managed estate, Bishop’s Vaults (Bishopsgate) and the Clapham North (Clapham). The latter was completed just days before the period end, closing immediately for an investment and will reopen later this summer. Elsewhere, projects are due to get underway at the Constitution (Camden), Wild Duck purchased earlier this year, and the old bank site in Farnham, Surrey, acquired in 2018.” Chief executive Simon Dodd said: “The positive trading momentum of the first half continued throughout the period, with unwavering customer demand for our outstanding pubs and the unrivalled Young’s experience. The negative impact of the rail strikes did not stand in the way of us achieving numerous record weeks, as sales were boosted by glorious summer sunshine and the first ever winter FIFA World Cup. We were pleased to see a further increase in people visiting our City and Central London pubs alongside positive Christmas trading. Our performance last year was even more impressive given the cost headwinds facing the industry and we are encouraged that some of these pressures are starting to ease. It’s been a good start to the new financial year with sunny weather over Easter and the early May bank holiday. There is also huge excitement for the Rugby World Cup later this year. We are confident our premium, well-invested predominantly freehold pub estate, alongside our healthy balance sheet, will continue to deliver superior returns for our shareholders.”

One day to go before release of updated Premium Database of Multi-Site Companies, 21 businesses being added: A total of 21 new multi-site companies, operating 144 sites, have been added to the next edition of the Propel Premium Database of Multi-Site Companies, which will be released tomorrow (Friday, 26 May), at midday. The updated Propel Multi-Site Database, which is produced in association with Virgate, includes regional restaurant operators, growing café brands, and expanding franchise operators. Premium subscribers will also receive a 1,300-word report on the new additions to the database. The comprehensive database is updated monthly and provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different. The database now features 2,853 companies. Premium subscribers will also receive the next edition of the New Openings Database on Friday, 2 June, at midday. It focuses on newly announced openings and upcoming launches in the sector and is updated every month. The next edition also includes a 5,000-word report on the new additions to the database. Premium subscribers also receive access to three other databases: the Propel Turnover & Profits Blue Book; the UK Food and Beverage Franchisor Database; and the Who’s Who of UK Food and Beverage. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription. Premium subscribers are also to be given exclusive access to the recording and slides to Propel Multi-Club Conferences. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before; regular video content and regular exclusive columns from Propel group editor Mark Wingett.

Cineworld expecting to emerge from Chapter 11 proceedings in July: Cineworld has reported it expects to emerge from its Chapter 11 proceedings in July after reaching agreement with lenders over its proposed restructuring. The company stated: “Cineworld is pleased to announce additional lenders under the group’s term loans due 2025 and 2026 and revolving credit facility due 2023 acceded to amended and restated versions of the restructuring support agreement and the backstop commitment agreement (BCA), each of which was originally filed with the United States Bankruptcy Court for the Southern District of Texas, Houston Division on 2 April 2023. As a result of this, the proposed restructuring of the group now has the support of lenders holding and controlling approximately 99% of the legacy facilities and at least 69% of the outstanding indebtedness under the debtor-in-possession facility of Cineworld and certain of its subsidiaries. In addition, following a hearing on 2 May 2023, the Bankruptcy Court approved the terms of the BCA and authorised the relevant group Chapter 11 companies to implement those terms, including raising the exit facility contemplated by the BCA and the payment of relevant fees and expenses in connection therewith. This order marked another positive step taken by the group Chapter 11 companies towards implementation of the proposed restructuring. As previously announced, in light of the level of existing debt that is proposed to be released under the group Chapter 11 companies’ plan of reorganisation, the proposed restructuring does not provide for any recovery for holders of Cineworld’s existing equity interests. The group Chapter 11 companies now expect to emerge from the Chapter 11 cases in July 2023. The group Chapter 11 companies remain committed to emerging from the Chapter 11 cases as expeditiously as possible. During the restructuring process, Cineworld continues to operate its global business and cinemas as usual without interruption. Cineworld and its brands around the world – including Regal, Cinema City, Picturehouse and Planet – are continuing to welcome customers to cinemas as usual. The group continues to honour the terms of all existing customer membership programmes, including Regal Unlimited and Regal Crown Club in the United States and Cineworld Unlimited in the UK.”

Fever-Tree records highest ever first-quarter value share in UK on-trade: Fever-Tree, the premium tonic maker, has said it recorded its highest ever value share in the UK on-trade during a first quarter trading period in the first quarter of 2023 – circa 6% higher than its share in the first quarter of 2020. Ahead of its annual general meeting (AGM) today (Thursday, 25 May), the company stated: “We look forward to the key summer trading period, with multiple activations planned across our portfolio and are seeing an encouraging performance from our new adult soft range. We continue to innovate and broaden our portfolio of drinks, launching our range of cocktail mixers across both channels at the beginning of the second quarter, with strong interest from our customers and activations planned over the summer.” Fever-Tree said it has made a ‘good’ start to the year and trading in-line with the expectations set out at its FY22 results. It added: “We are confident the brand will continue to deliver strong revenue growth as we start our key summer trading period and therefore reiterate our top-line guidance range as set out in March at £390m to £405m. While inflationary cost pressures remain elevated, the group continues to be focused on delivering initiatives to mitigate these costs and expects to drive margin improvements as we progress through the year, which means we’re on-track to deliver Ebitda in-line with our guidance range of £36m to £42m for 2023.” Fever-Tree also announced Coline McConville is stepping down later this year, having served nine years as a non-executive director. Following the conclusion of today’s AGM, McConville will be succeeded as senior independent director by Kevin Havelock who joined the board in January 2018. Laura Hagan, who joined the board and the remuneration committee in May 2021, will take over from McConville as chair of the remuneration committee. Fever-Tree has also announced the appointment of Clare Swindell as an independent non-executive director and chair of the audit committee following the conclusion of today’s AGM. Fever-Tree stated: “Clare is a qualified chartered accountant and has extensive experience within the consumer brand sector. She is currently Co-chief executive at Camelot, operator of The National Lottery, having joined as chief financial officer in 2017 before being appointed to the board in 2019. Prior to that she was group chief financial officer at dunnhumby, having previously spent more than 17 years at Tesco where she worked across a wide range of operational and financial positions, including chief financial officer for Tesco.com and group audit director.”

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