Top story
Pub group Young’s has raised over £88m from its investors via a share placing to boost its balance sheet ahead of the reopening of its pub estate and “pursue opportunistic acquisitions”.
The company placed a total of 4,263,453 placing shares at 1,160p per share and 4,900,000 non-voting placing shares at 735p per share to raise £85.5m from institutional investors.
It raised a further £2.7m through a retail offer.
In total the new shares represent in aggregate approximately 19.2% of the total existing issued ordinary share capital of Young’s prior to the placing.
Young’s had intended to raise a maximum of £100m from the exercise.
Young’s said the placing will provide it with the financial flexibility to “continue to invest to drive its future success and faster growth”.
It said the net proceeds will be used to restart investments in Young’s estate – with the company expecting to continue its investments at a rate of approximately £40m per annum in the medium term.
The funds also strengthen the company’s balance sheet as at the end of its most recent financial year net debt increased to £199m implying a significantly higher net debt to EBITDA ratio than its historic average.
Finally, the funds will enable Young’s to target selective opportunistic acquisitions are part of Young’s achieving its growth strategy.
It said acquisitions are focused on the locations of the pubs as well attractive economics, with investment criteria targeting at least a 10% return on acquisitions
Young’s had previously raised £30m from the Bank of England-backed Covid Corporate Financing Facility and £70m in bank lending.
The vast majority of its workforce were furloughed under the government’s coronavirus job retention scheme as its pubs were forced to close in March, with pubs now set to re-open on 4 July.
Morning update
Ahead of its AGM this morning Science in Sport has reassured investors over the health of its business despite a slump in retail sales during the coronavirus crisis.
It said current trading is in line with the base scenario developed as part of its contingency planning around the impact of the coronavirus.
Retail sales in all markets remain adversely affected compared with normal levels. However, it said it is making very strong progress with our e-commerce business, with its own PhD and SiS platforms performing well, and its Amazon business outperforming.
Pricing improvements and supply chain synergies are delivering an improved gross margin.
“This, together with planned COVID-19 cost cutting measures now implemented, is protecting our strong cash position,” said chairman, John Clarke.
SIS added that the company’s financial position remains robust given performance in line with its base scenario. The proceeds from the £4.5 million placing in April 2020 means the company has substantial headroom and can exit the current trading environment well placed to deliver on its long-term growth strategy, it stated.
Clarke added: “Despite the continued high degree of uncertainty from the COVID-19 pandemic and associated economic impact, our strategy remains unchanged, focusing on science-led innovation, building brand equity, taking our share of e-commerce business and developing global markets.
“On behalf of the Board, I would like to thank all employees of the Group for their commitment to the Company in the face of the challenges presented by the COVID-19 pandemic. As a result of their dedication and professionalism, we have continued to serve customers throughout the first half of the year without interruption.”
Elsewhere, English wine producer Gusbourne has grown annual revenues by 31% as sales increased both in the UK and internationally.
Sales rose from £1.26m to £1.65m during the year as it expanded its customer base both in the UK and overseas.
Revenues were held back by limited stock availability at this time, but they do represent continuing like for like growth in the sale of Gusbourne wines since 2013.
Gross profit margin has increased from 17% in 2014 to 56% in 2019, reflecting economies of scale in respect of the group’s increased production volumes.
Adjusted EBITDA for the year was a loss of £1.29m up from £907k last year, with pre-tax losses rising to £2.6m from £1.7m.
Gusbourne said these losses continue to be in line with expectations and the long-term development strategy of the group which is based on continuing sales growth of the Gusbourne wines, supported by increasing wine stocks, and which is planned to provide a positive cashflow during the course of the next few years.
The company has also experienced a strong start to trading in the first three months of the year, with revenue performance ahead of directors’ expectations.
Since the end of March 2020, the company’s distribution channels have been impacted by COVID-19, although the company has taken steps to mitigate this impact.
On the production side, both vineyard and winery operations have continued to work through the lockdown with appropriate safety protocols put in place. The company has furloughed a number of staff members, particularly in the sales function and taken various steps to reduce costs at this time.
“Whilst the immediate outlook for sales remains uncertain, the directors remain confident about the group’s longer-term prospects beyond COVID-19,” the company stated.
On the markets this morning, the FTSE 100 has fallen a further 1% on top of yesterday’s sharp losses to 6,063pts.
Early risers include McBride, up 3.4% to 62.9p, Nichols, up 2% to 1,415p and Premier Foods, up a further 1% to 69.2p.
Fallers include Marston’s, down 4.5% to 60.5p, Applegreen, down 3.9% to 331.5p, Compass Group, down 3.3% to 1,076p and Naked Wines, down 3.3% to 387p.
Yesterday in the City
The FTSE 100 slumped 3.1% to 6,123.7pts yesterday as the growing number of coronavirus cases, particularly in the US, led to fears over the continued impact of the virus on the global economy in 2020.
Premier Foods defied the market gravity to jump 14.9% to a six year high of 68.5p on the release of its annual results and announcement that 2020/21 would exceed current market expectations.
Naked Wines gained 8.7% to 400p after posting its own annual results and detailing how its online sales have grown during the coronavirus crisis.
Other risers included Science in Sport, up 3.2% to 32p and McColl’s, up 1.8% to 43.3p.
Amongst the heavy fallers yesterday were AG Barr, down 7.1% to 447p ahead of its annual results this morning.
Travel and food to go retailers were hit over Covid fears as WH Smith fell 6.1% to 1,049p, Greencore dropped 5.7% to 128.9p, Compass Group fell 5.4% to 1,113p, SSP Group dropped 5.4% to 259.2p and Marks & Spencer fell 5.3% to 103.2p.
Other fallers included DS Smith, down 5.2% to 324.1p, PayPoint, down 4.9% to 666p, Glanbia, down 4.7% to €10.26 and Bakkavor, down 4.4% to 71.5p.
No comments yet