Normally when a CEO of listed pub company suggests a set of financial results are not really about the numbers, it would raise eyebrows.
But needless to say, this is no normal year, and Young’s boss Patrick Dardis’ suggestion is less sleight of hand, more a dose of realism.
The pub boss was speaking after the release of a set of half year numbers that would make accountants wince during the good times.
In the 26 weeks to 28 September, revenue fell 66% to £55.1m year on year. From a pre-tax profit of £24.3m in 2019, Young’s swung to a loss of £21.8m.
It would seem like a desperate position to be in if it weren’t the company’s sound financial management, which modelled a worst-case scenario lockdown lasting six-nine months.
According to Dardis, the only figure that actually matters is its banking facilities, which stand at £285m, with headroom of £160m.
This includes £30m via the Bank of England’s Covid Corporate Financing Facility (CCFF), and a £20m revolving credit facility from NatWest.
Young’s also raised £88m in a share placing, giving the company a platform to reinvest out of lockdown, rather than merely tread water and attempt to conserve cash.
“We would normally be talking about like for like sales, whether the summer was good or bad, whether there was big sporting occasions,” Dardis says. “But of course it’s all about covid-19 lockdown and survival
“The discussions in every boardroom around the UK is about cash, because cash is king, it surpasses everything at the moment.
“Do we have enough cash to survive the worst of times? Can Young’s see through the very worst of this?
“Absolutely… We’re going to see this through, and we’re seeing it through very comfortably.”
Having found a firm financial footing during the first lockdown, Dardis says Young’s is the first company to be in a position to kickstart an investment programme of this kind.
Seven sites have been under development in recent weeks, with five finished and reopened just before the recent lockdown, and two of last year’s acquisitions still being developed, with a view to opening in the new year.
With the pub sector mired in uncertainty, and companies like Young’s burning through millions a month, just how hard was it to persuade institutional investors to part with £88m?
While by no means easy, Dardis was able to rely on a demonstrable growth strategy.
“Timing is absolutely everything,” he says. “If we’d waited and done it later, possibly there would have been less appetite.
“But I think the story we were telling to shareholders was very much, we’re secure, we’re looking for this money to get back into a growth trajectory.
“We had demonstrated for many years our growth strategy. Investors had confidence and trust in the business model that Young’s had, and hopefully in the executive team.”
Young’s took its time to reopen in the summer, choosing July to get better prepared for operating under the new guidelines.
Despite a torrid year of disruption, when trade did restart, trade in July, August and September was on average over 80% of normal, giving him hope for the future.
The groundwork makes the second lockdown much easier to manage, he says.
“We’re very comfortable, very confident and looking forward to the future, beyond the pandemic,” Dardis says.
“We’ve spent enough time in the dark shallows, just working on the now but not necessarily looking forward to the future. The journey we’re on now is about looking forward.”
When it comes to reopening, Dardis is unequivocal about what the sector expects of government, top of list being to scrap the 10pm curfew.
“It doesn’t make sense. It achieves the opposite of what you want to achieve, so why do it?”
His compromise is to have last orders at 10pm but close at 11pm, allowing an orderly exit and for customers to finish their food without rushing.
He is also urging the government to ensure regions open in a lesser tier than what they went into.
“Otherwise what was the point of ruining the economy with a four-week lockdown if we can’t go back to better position than we arrived entered the lockdown?”
Vertical and wet-led venues have borne the brunt of the restrictive measures, and in Youngs’ case, draught beer has taken a hit in sales, while cocktails are up in popularity, as mobile ordering encourages upselling.
Some of these trends might be temporary, but alongside the acceleration of technology, Dardis reckons things like table service are here to stay.
“Table service, the app, tablets - they are now set in stone, they are now part of the furniture of operating pubs,” he says.
“There are a number of things that we have learned that through the pandemic that we will keep without doubt, going forward.”
Approaching its anniversary, the avuncular pub boss acknowledges the crisis is the worst the company has seen in its 189 years.
But he remains steadfastly optimistic for the future, hailing the prospect of a vaccine and mass testing as a “game changer” for the country, residents and pubs.
Young’s CEO Patrick Dardis: ’We’re going to see this through very comfortably’
Normally when a CEO of listed pub company suggests a set of financial results are not really about the numbers, it would raise eyebrows. But needless to say, this is no normal year, and Young’s boss Patrick Dardis’ suggestion is less sleight of hand, more a dose of realism. The pub boss was speaking after the release of a set of half year numbers that might well make accountants wince during good times. In the 26 weeks to 28 September, revenue fell 66% to £55.1m year on year. From a pre-tax profit of £24.3m in 2019, Young’s swung to a loss of £21.8m. But according to Dardis, the only figure that actually matters is its banking facilities, which stand at £285m, with headroom of £160m.