Young’s has today announced the successful completion of an equity issue raising gross proceeds of £88.4m.
Young’s has historically delivered strong and profitable growth, fuelled by significant and value driven investments. The Placing will provide Young’s with the financial flexibility to continue to invest to drive its future success and faster growth
The net proceeds will be used to:
1. Restart investments in Young’s estate
· Continued investment in our estate enables industry-leading growth, having achieved an average 5% like-for-like growth over the period FY 2011 – FY 2019 from managed houses
· The proceeds from the Placing will allow the Company to re-start such investments once our pub estate reopens
· In the medium term, the Company expects to continue its investments at a rate of approximately £40 million per annum in the medium term, with a targeted return on capital deployed of no less than 15%
2. Strengthen the balance sheet
· Over the last five years, Young’s leverage was maintained at a low 2x net debt / EBITDA
· Despite cash conservation measures Young’s continued to see a cash outflow during the period in which the Covid-19 pandemic has forced its pubs to close
· At the end of FY 2020, the Company’s net debt increased to £199 million, implying a leverage ratio of 2.8x net debt / EBITDA - significantly higher than its historical average
3. Pursue opportunistic acquisitions
· Selective opportunistic acquisitions are part of Young’s achieving its growth strategy.
· Acquisitions are focused on the locations of the pubs as well attractive economics, with investment criteria targeting at least a 10% return on acquisitions