Young’s, the London-based pub operator, has this morning reported a rise in half-year sales on the back of its acquisition of Geronimo Inns last December, good trading in its existing estate and strong growth in profits across it hotels. Revenue for the half-year to 3 October rose 33.6% to £90.46m, while operating profit was up 21.2% to £15.006m. However, the company made a pre-tax loss of £16.1m during the year on the back of a £29.1m non-cash charge relating to the revaluation of its property portfolio. The group’s estate was revalued at £497.4m, resulting in a net uplift of £174m to its book value. The group said it now had a revaluation reserve of £203.1m (£157.5n when net of deferred tax). Adjusted profit before tax and exceptional items increased 10.5% to £12.5m. The group invested £12.2m in its estate during the year, which was part funded by disposals and cash generated from operations. At the period end Young’s operated an estate of 245 pubs: 152 managed and 93 tenanted. It said that total managed house revenue was up 37.9% to £83.08m and operating profit was up 23.1% at £18.78m, driven by the acquisition of Geronimo and the “good performance of the underlying business”. Managed house like-for-like sales, which exclude Geronimo, were up 4%. Geronimo like-for-like sales, which will not form part of the group’s total like-for-like sales until its next financial year, were up 12.6% compared with the corresponding period. The company said that the performance of its managed operation, which comprises 106 Young's pubs, 16 hotels and 30 Geronimo pubs, was set against a mixed backdrop of excellent weather at the start and end of the period, the Royal Wedding weekend, the London riots in August and the continued challenging economic conditions. It said that overall sales growth, combined with tight cost control, had mitigated some of the additional rates and utility cost burden, and raw material inflation which increased its cost of goods. During the period, it invested £11.6m across its managed estate, with £3.2m spent on three new outlets: the Cow in the new Westfield shopping centre in Stratford, and the Lion and Unicorn, a freehold in Kentish Town, which were both opened under the Geronimo offer, while the Plough at Clapham Junction, a new design format, was added to the Young's estate. At the same time, it disposed of the George in Fulham, as it was not achieving an appropriate return. It said that the Half Moon in Putney, which was transferred from its tenanted operation at the end of the period, was due to reopen under its Geronimo offer next week. £8.4m was invested in the existing estate - £3.5m being allocated to Young's and £4.9m to Geronimo. The group said that like-for-like liquor and food sales were both “comfortably ahead” of last year and that its hotel business saw strong growth during the six months. It said that rebranding, investment in a new booking system and improvements in its links to third party sites helped increase revenue by 21.9% across its hotels, with RevPAR up by 14.3% to £52.79 for the period. Like-for-like sales in its tenanted division, which accounts for 8% of the group’s total revenue, were flat in the period. With four fewer pubs, total sales were down 1.1% to £7.208m but operating profit increased 5.2% to £2.838m. For the six months, the average ebitdar per pub was £37,300. Young’s said that in line with its competitors, its tenanted pubs have faced difficult trading conditions over recent years and this had resulted in the group taking a long-term, strategic look at the future of the tenanted estate. It believes that a smaller and better invested estate is the way forward and as a result, sold the Bricklayers Arms in Sydenham, the Charlie Butler in Mortlake and the Castle in Battersea for a total of £2.5m. It said it would make additional disposals from its tenanted estate during the second half of the year. Net debt at the period end was £124.5m, interest cover was 5.2 times and the company’s gearing, following the large increase in value resulting from the revaluation, was 40.1%. In September, the group pulled out of brewing to focus on its pub estate after announcing that it had sold its 40% stake in Wells & Young’s to Charles Wells, for £15.1m. The group said that trading since the period end has been “very positive”. Managed house revenue in the first seven weeks of the second half was up 45.1% in total and 5.4% on a like-for-like basis (which excludes Geronimo's 6.8% like-for-like sales growth). It said that the backdrop of wider economic uncertainty, increased pressures on disposable income and rising unemployment continued to have a negative impact on consumer sentiment. However, it said that its “premium London-orientated strategy” helped insulate it in part against the worst of any downturn and the group believes that it is therefore well placed to continue the positive momentum achieved in the first half of the year. It said the Oyster Shed, on the riverside near Cannon Street in London, is due to open under the Geronimo offer in January and, in line with its strategy of having a smaller and better invested tenanted estate, it has already disposed of two tenancies, the Queen Dowager and the Britannia Tap. Stephen Goodyear, chief executive of Young's, said: “This has been an extremely encouraging six months for Young's. Our estate has traded very well, the acquisition of Geronimo is proving to be every bit the success we expected, and our hotels business has shown further strong growth. "Our decision to focus on an estate of premium managed houses, primarily in London and the south of England, is clearly paying off and will help to insulate us against the worst of any further economic downturn. We anticipate a healthy pipeline of opportunities, using our balance sheet strength, to grow further in line with this strategy. "Trading performance in the early weeks of the second half has continued in a positive vein, and we remain confident in our ability to deliver further long term growth in shareholder value."