Young's - COVID-19 and Dividend Update
27 March 2020
Young's provides a further update in light of the ongoing Covid-19 situation. This follows the Government's order, on 20 March 2020, that all pubs in the UK had to close that same day and that the country would be entering into a three-week period of lockdown. The Company's previous update was on 19 March 2020.People
The Company is accessing the Government's Coronavirus Job Retention Scheme (the "Scheme"). Through the Scheme, HMRC will reimburse 80% of the wages, up to £2,500 per month, of those individuals who would otherwise be laid off during this crisis. As such, those individuals, known as 'furloughed workers', will be kept on the Group's payroll but will stop working.
As a result, the vast majority of the Group's employees (including over 4,500 weekly and monthly paid staff in the Group's pubs) have been designated as 'furloughed workers'. 29 'key workers' have not been furloughed; they have essential roles to play and will carry on working from home while this crisis continues and the Group's pubs are closed.
Recognising that Young's would be nothing without its people, the Board has agreed that the Group will, on top of the monies received from the Government, fund the wages of all its furloughed workers whose annual salary was more than £30,000 so that they will continue to receive 80% of their normal pay.
These arrangements apply for April, are designed to protect jobs for the longer term and will be reviewed again as necessary before the end of next month.
Final dividend for the year ended 30 March 2020
As part of its focus on prioritising cash conservation, the Board has concluded that it is not appropriate to recommend payment of a final dividend for the Company's financial year ended on 30 March 2020.
Committed facilities and cash management
The Company has in place £235 million of committed facilities from its banks and private placement lenders. The Company's net debt to EBITDA covenant is set at 5x.
The Company is continuing to take other appropriate measures to help reduce costs so as to conserve cash, optimise working capital and protect the Company's financial position. All capex has been put on hold, resulting in a significant reduction in capex for FY2020/21. That, alongside not paying a final dividend for the year ended 30 March 2020, plus a £7 million VAT deferral until March 2021 and a £14.5 million business rates holiday, provides the Group with further headroom to put it in a strong position to weather this crisis.
The Company continues to have a very strong balance sheet supported by a predominantly freehold estate. It has one of the lowest gearing ratios in the industry at 25.7% (as reported at the Group's Interim Results in November 2019).
In addition, the Company remains in ongoing discussions with its banks, which are collectively very supportive, and is seeking to ensure additional covenant headroom. The Board is also in the process of understanding whether it can access the Bank of England's Covid-19 Corporate Financing Facility.
Taking all of this into account, the Board believes that Young's has sufficient headroom to deal with an extended period of closure.
Preliminary results announcement
The Board expects to release the Company's preliminary results announcement for the year ended 30 March 2020 on 21 May 2020.
Patrick Dardis, Chief Executive of Young's, commented further: "In a business like Young's, people are vital. We undoubtedly have some of the most fantastic, creative, entrepreneurial, hard-working and caring people in the industry and I'm therefore pleased that, with support from the Government, we are able to retain all of them and keep their pay at not less than 80% of what they would normally be getting. The Board has also agreed to take a 20% reduction in basic pay.
"The way in which our people have handled the closures of 'their' pubs and supported their colleagues makes me very proud. The Board, along with the others at Riverside House entrusted with the safekeeping of the business, is very much up for this challenge.
"As I said previously, this crisis will be temporary. I am therefore looking forward to all our team reuniting, opening the doors to our great pubs and welcoming back our customers once we are through this. We remain confident in our strategy for the business."
