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Yates Group PLC (YTE)

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Wednesday 05 November, 2003

Yates Group PLC

Interim Results

Yates Group PLC
05 November 2003

5 November 2003

                                YATES GROUP PLC
           Interim results for the six months ended 28 September 2003

•  Group turnover of £74.9m falls 2.3%, after adjusting for the disposal 
   of the trade sales division, in challenging market conditions

•  Yates invested new format estate saw like for like sales grow 1.7%,
   offset by uninvested old format estate fall of 16.9%

•  Ha!Ha! brand sales increase by 27% with like for like sales increasing 6%

•  Gross margins and retail operating margins have risen and EBITDA
   maintained despite lower sales compared to the same period last year

•  11 Yates sites identified for disposal, exceptional provision for book
   loss of £6.5m

•  Aussie White trademark sold, exceptional profit of £0.7m

•  Dividends maintained at 1.65p reflecting Board's confidence despite
   continued difficult trading conditions

•  Yates investment programme due to be completed by end of this financial

Commenting, Yates' Chief Executive Mark Jones said:

'As we indicated in October, the trading environment, particularly on the high
street where the group has the majority of its branches, has remained difficult.
The poor performance of our old format Yates estate, branch closures for
investment, a lack of outside seating areas during the very hot weather in
August, and tough comparisons which included the World Cup and Jubilee last year
led to a reduction in Group sales and profits. Despite this, we have continued
to grow margins and improve brand operational gearing.

As we complete the investment programme at Yates, the second half of the year
will see less disruption to Yates brand sales from closures and the benefits
from the increasing number of branches in our new format estate will flow
through.  Internally the business is in good shape and the key to achieving full
year results, in line with our current expectations, will be the strength of
trading environment over the coming months'.


Mark Jones, Chief Executive
Yates Group PLC                            Tel: 020 7831 3113 (05.11.03)
                                           Tel: 01204 373737  (thereafter)
Tim Spratt / Michelle Morton
Financial Dynamics                         Tel: 020 7831 3113

         Photographs for the media are available at Visual Media Online
               020 7436 9595
                                Yates Group PLC

                              Chairman's Statement

                              Interim Report 2004


Although the group continued to operate in a difficult trading environment, its
financial performance held up well in the six months to 28 September 2003.
Group turnover was £74.9 million, a fall of 2.3% after adjusting for the
disposal of the trade sales division last year.  Profit before tax and
exceptional items was £4.6 million, compared with £5.0 million in the first half
of last year.

The Ha!Ha! brand has little exposure to the high street and its 23 branches are
mostly situated on sites characterised by their individuality.  The popularity
of the brand with its distinctive appeal to customers is reflected in its 6%
like for like sales growth in the first six months of the financial year.

The Yates brand strategy has been very much centred on the roll out of a new
21st Century format, which is being implemented by a major investment programme
launched some eighteen months ago.  In the first six months of the financial
year, the invested estate generated 1.7% like for like sales growth.

As already announced, like for like sales in Yates un-invested estate fell
16.9%, emphasising the ageing process and lack of new investment. These factors
accompanied by the very hot weather experienced in August, (which also adversely
affected other high street pub businesses) and tough comparisons, which included
the World Cup and Jubilee last year, caused a 5% fall in group like for like

The completion of the refurbishment programme is an overriding priority and the
33 branches completed in the first half of the financial year now bring the
total to 80.  Gradually therefore, the group's results will benefit from a
significant reduction in the number of lost trading weeks due to temporary
closures and a diminishing number of un-invested branches in the total estate.

There are 11 Yates sites which are unsuitable to accommodate the new 21st
Century Yates format and where the return on investment is unsatisfactory.  As
anticipated, it is now intended to dispose of these sites.  This decision gives
rise to an exceptional provision to cover expected book losses totalling £6.5
million, but will generate an estimated cash inflow of £2.6 million and improve
ongoing profitability by the elimination of loss making branches.

Two new Ha!Ha! sites in Nottingham and Staines opened in the first half-year and
both are trading in line with expectations.  Moreover, the Ha!Ha! management
team have made significant progress in their efforts to create a longer
pipeline, with the result that contracts have been exchanged for three new sites
and a further four are under negotiation.

Financial Results

Group turnover was £74.9 million, a fall of 2.3% after adjusting for the
disposal of the trade sales division last year.

Group operating profit was £6.8 million compared to £7.2 million for the same
period last year.

An encouraging feature of our trading activities is the ability to maintain
strong margins in the face of stiff competition.  The first six months of this
year again saw margins increase by 0.3% to 71.8% compared to 71.5% in the same
period last year.  In addition, significant cost savings in Yates branches
partly mitigated the loss of profit stemming from reduced sales. It was pleasing
both brands increased operating margins compared to the corresponding period
last year.

In summary, Ha!Ha! profits advanced by £0.4 million to £1.3 million, Yates fell
back by £0.5 million to £8.1 million, and central costs increased by £0.3
million to £2.5 million principally due to one off termination costs and higher
non retail property costs.

Profit before taxation and exceptionals was £4.6 million, down 8.7% compared to
the same period last year.  However, EBITDA (earnings before interest, tax and
depreciation) is in line with the comparative period last year.

The provision for exceptional losses arising from the disposal of 11 Yates
branches is £6.5 million.  The Aussie White trademark has been sold, generating
an exceptional profit of £0.7 million.

Pre-exceptional earnings per share were 4.6p compared to 5.4p in the
corresponding period last year.  This fall is partly explained by a higher tax
charge and more shares in issue as a result of scrip issues.

Capital expenditure during the period was £9.7 million which, apart from £1.2
million spent on new branches, mostly related to refurbished branches.

During the period the group paid £0.8 million to acquire outstanding deferred
shares in Ha!Ha! Bar & Canteen Ltd.

As envisaged, net borrowings increased slightly compared to the previous
year-end due to the weighting of capital expenditure to the first half of the
financial year.  As at 28 September, net borrowings were £63 million and gearing
was 55% compared to 59% at the end of the first half of last year.

Despite tough trading conditions, we remain confident in the future and
underpinned by strong cashflow, the dividend is maintained at 1.65 pence per
share which will be paid on 16 February 2004 to shareholders on the register on
12 December 2003.

Yates Brand

Yates is the main influence on group results.  The last eighteen months have
seen a major programme to modernise the brand image to offer greater appeal and
excitement to customers.  However, this has produced a knock-on effect on sales
from lost trading days with most branches being closed for more than a week
during their refurbishment.  This has been made worse by the continued
deterioration in branches awaiting refurbishment.

These factors, together with market conditions, were the primary causes of Yates
brand sales falling 6.6% to £62.6 million in the first half year, although there
is a distinct difference in the performance of refurbished branches which have
shown sales growth of 1.7% compared to a fall of 16.9% in the un-invested
estate.  Overall Yates brand like for like sales were down 6.9%.

Yates gross margins at 71.5% continue to be very strong.  Slight weakness in wet
margins was compensated for by improvements in food margins.

Looking ahead, there are another 20 Yates sites to be refurbished by the end of
the current financial year, taking the total to 100 in the 21st Century format.
Brand development continues, screen entertainment is the latest push: some 60
branches now have Yates's TV, which is a unique in-house multi media system
offering music, videos, sport and hot promotions through the latest plasma
screen technology.

Ha!Ha! Brand

Ha!Ha! is an increasing part of the group's growth strategy and is the primary
focus of investment in new sites.

The brand has enjoyed more success in the first half of the new financial year
with sales showing an increase of 27% over the corresponding period last year in
part buoyed by new branches. Like for like sales increased 6.0%.

Ha!Ha! continues to evolve with customers being offered a wider range of
products and activities.  This is very evident in the 5.7% increase in gross
average weekly sales to £26,100 supplemented by a 1.5% increase in gross margins
to 73.0% as against the same period last year.

Considerable efforts are being made to identify new sites, with particular
emphasis on outside drinking and eating, which has become one of the hallmarks
of the brand.  However, site selection is critical and proven criterion will not
be sacrificed in a dash for new sites.  This concern has limited the conversion
of Yates to Ha!Ha! to only two sites.


The business has done well to adapt over a long period of intense competition
and trading uncertainty.

The operational teams in both Yates and Ha!Ha! have made deep inroads in
streamlining historical structures and activities and imposing stricter controls
over, and accountability for,  costs.  Their success has generated significant
cost savings and enhanced operating margins.

I continue to be impressed by the determination and efforts made by all our
staff to improve the business and offer greater satisfaction to customers.  On
behalf of the board, I take this opportunity to place on record our thanks and


The second half of the year will see less disruption to Yates brand sales
emanating from closures, and the benefits from the increasing number of branches
in our new format.  Gross margins remain strong, and stringent cost control at
branch level is helping operational gearing and producing material savings.

Ha!Ha! continues to offer exciting results and a growing contribution to group

During the last five weeks actual group sales are at the same level as the
corresponding period last year.  On a like for like basis sales have continued
to decline, though at the slightly slower pace of 4.4%.

Internally the business is in good shape and the key to achieving full year
results in line with our current expectations will be the strength of the
trading environment over the coming months.

Group Profit and Loss Account
26 weeks ended 28 September 2003
                                                                   26 weeks      26 weeks      52 weeks
                                                                   28/09/03      29/09/02      30/03/03
                                                                  Unaudited     Unaudited       Audited
                                                       Note            £000          £000          £000

Turnover                                                  2          74,891        76,956       153,166
Net operating costs                                                (68,074)      (69,745)     (138,893)
Group operating profit                                    2           6,817         7,211        14,273
Share of associate's operating profits                                    -            50            50
Total operating profit                                                6,817         7,261        14,323
Exceptional items                                         3         (5,868)            26         (300)
Profit on ordinary activities before interest                           949         7,287        14,023
Net interest payable                                                (2,215)       (2,218)       (4,362)
(Loss)/profit on ordinary activities before tax                     (1,266)         5,069         9,661
Taxation                                                  4         (1,766)       (1,506)       (2,991)
(Loss)/profit after tax                                             (3,032)         3,563         6,670
Dividends                                                           (1,098)       (1,087)       (3,264)
(Loss absorbed)/retained profit                                     (4,130)         2,476         3,406

Earnings per share (excluding exceptionals)               5            4.6p          5.4p            10.6p
Earnings per share                                        5          (4.6)p          5.4p            10.1p

Earnings per share (excluding exceptionals)               5            4.6p          5.4p            10.6p
Earnings per share                                        5          (4.6)p          5.4p            10.1p
Dividend per share                                        6           1.65p         1.65p            4.95p

The results above relate to continuing activities.

Other than shown above, there were no other recognised gains or losses in the

Group Balance Sheet at 28 September 2003

                                                                 28/09/03     29/09/02     30/03/03
                                                                Unaudited    Unaudited      Audited
                                                                     £000         £000         £000
Fixed Assets
Tangible                                                          196,616      196,815      199,012
Investments                                                           143        3,923          143
                                                                  196,759      200,738      199,155
Current Assets
Stocks                                                              2,952        3,422        3,215
Debtors                                                             9,090        8,406        6,973
Cash at bank and in hand                                            4,116        3,948        4,022
                                                                   16,158       15,776       14,210
Creditors due within one year                                    (26,689)     (93,603)     (24,627)
Net current liabilities                                          (10,531)     (77,827)     (10,417)
Total assets less current liabilities                             186,228      122,911      188,738
Creditors due after one year                                     (66,750)        (403)     (65,679)
Provisions for liabilities and charges                            (5,753)      (5,308)      (5,717)
Net assets                                                        113,725      117,200      117,342
Capital and reserves
Called up share capital                                            16,614       16,473       16,473
Share premium account                                              18,586       18,201       18,202
Revaluation reserve                                                14,420       14,420       14,420
Profit and loss account                                            64,105       66,707       68,247
Deferred equity consideration                                           -        1,399            -
Equity shareholders' funds                                        113,725      117,200      117,342

Group Cash Flow
26 weeks ended 28 September 2003                                   26 weeks     26 weeks     52 weeks 
                                                                   28/09/03     29/09/02     30/03/03
                                                                  Unaudited    Unaudited      Audited
                                                                       £000         £000         £000

Net cash inflow from operating activities                            14,554        9,406       25,540
Returns on investments and servicing of finance                     (2,228)      (2,227)       (4,434)
Taxation                                                            (1,329)        (692)       (2,154)
Capital expenditure and financial investment                        (9,671)      (2,956)      (10,878)
Acquisitions and disposals                                            (769)            -         3,619
Equity dividends paid                                               (1,688)      (2,027)       (3,116)
Net cash (outflow)/inflow before financing                          (1,131)        1,504         8,577
Financing                                                             1,225      (3,367)      (10,366)
Increase/(decrease) in cash                                              94      (1,863)       (1,789)

Notes to cash flow statement

Reconciliation of operating profit to net cash flow from operating activities

                                                                26 weeks      26 weeks      52 weeks
                                                                28/09/03      29/09/02      30/03/03
                                                               Unaudited     Unaudited       Audited
                                                                    £000          £000          £000

Operating profit                                                   6,817         7,211        14,273
Depreciation                                                       5,542         5,096        10,766
Loss/(profit) on sale of plant and machinery                           2           (8)          (15)
Decrease in stocks                                                   263           366           573
(Increase)/decrease in debtors                                   (1,449)         (703)           691
Increase/(decrease) in creditors                                   3,379       (2,556)         (748)
Net cash inflow from operating activities                         14,554         9,406        25,540

Reconciliation of net cash flow to movement in net debt
                                                                26 weeks      26 weeks     52 weeks
                                                                28/09/03      29/09/02     30/03/03
                                                               Unaudited     Unaudited      Audited
                                                                    £000          £000         £000

Increase/(decrease) in cash in the period                             94       (1,863)      (1,789)
Cash (inflow)/outflow from (increase)/decrease in debt           (1,200)         3,450       10,450
Movement in net debt in the period                               (1,106)         1,587        8,661
Opening net debt                                                (61,931)      (70,592)     (70,592)
Closing net debt                                                (63,037)      (69,005)     (61,931)

Analysis of changes in net debt                                31/03/03    Cash Flow      28/09/03
                                                                   £000         £000          £000

Cash at bank and in hand                                          4,022           94         4,116
Bank loans                                                     (65,550)      (1,200)      (66,750)
Unsecured loan notes                                              (403)            -         (403)
                                                               (61,931)      (1,106)      (63,037)

Group statement of total recognised gains and losses
                                                                              26 weeks      26 weeks    52 weeks
                                                                              28/09/03      29/09/02    30/03/03
                                                                             Unaudited     Unaudited     Audited
                                                                                  £000          £000        £000

(Loss)/profit for the period after taxation                                    (3,032)         3,563       6,670
Total (losses)/profits recognised in the period                                (3,032)         3,563       6,670

Note of group historical cost profits and losses
                                                                              26 weeks      26 weeks    52 weeks
                                                                              28/09/03      29/09/02    30/03/03
                                                                             Unaudited     Unaudited     Audited
                                                                                  £000          £000        £000

Reported (loss)/profit before tax                                              (1,266)         5,069       9,661
Historical cost (loss)/profit on ordinary activities before taxation           (1,266)         5,069       9,661
Historical cost (loss)/profit retained after taxation and dividends            (4,130)         2,476       3,406

Reconciliation of movements in shareholders' funds
                                                                              26 weeks      26 weeks    52 weeks
                                                                              28/09/03      29/09/02    30/03/03
                                                                             Unaudited     Unaudited     Audited
                                                                                  £000          £000        £000

(Loss)/profit for the period                                                   (3,032)         3,563       6,670
Dividends                                                                      (1,098)       (1,087)     (3,264)
New shares issued                                                                  513           224         226
Goodwill written back                                                                -             -         609
Release of deferred equity                                                           -             -     (1,399)
Net (reduction)/addition to shareholders' funds                                (3,617)         2,700       2,842
Equity shareholders' funds at beginning of period                              117,342       114,500     114,500
Equity shareholders' funds at end of period                                    113,725       117,200     117,342

Notes to the accounts

1.    Accounting Policies

      The principal accounting policies of the group, set out in the
group's 2003 annual report and accounts, have remained unchanged in the first 26
weeks of the year.

2.    Segmental Analysis

                                     Turnover                             Group Operating Profit
                           26 weeks    26 weeks    52 weeks        26 weeks      26 weeks        52 weeks
                           28/09/03    29/09/02    30/03/03        28/09/03      29/09/02        30/03/03
                               £000        £000        £000            £000          £000            £000

Yates brand                  62,583      66,981     132,775           8,050         8,508          17,046
Ha!Ha! brand                 12,308       9,703      20,043           1,304           907           2,046
Total retail                 74,891      76,684     152,818           9,354         9,415          19,092
Trade sales                       -         272         348               -          (34)            (87)
Central Costs                     -           -           -         (2,537)       (2,170)         (4,732)
                             74,891      76,956     153,166           6,817         7,211          14,273

3.    Exceptional Items
                                                                 26 weeks     26 weeks      52 weeks
                                                                 28/09/03     29/09/02      30/03/03
                                                                     £000         £000          £000

Realised (loss)/profit on property transactions                      (37)           26          (60)
Provision for loss on property transactions                       (6,499)            -          (40)
Sale of Aussie White trademark                                        668            -             -
Loss on disposal of investment                                          -            -         (200)
                                                                  (5,868)           26         (300)

Provision for loss on property transactions relates to assets held by the group
which are being actively marketed for sale.

4.    Taxation
                                                                  26 weeks         26 weeks       52 weeks
                                                                  28/09/03         29/09/02       30/03/03
                                                                      £000             £000           £000

UK corporation tax                                                   1,530            1,495          2,790
UK corporation tax - exceptional items                                 200                -              -
Tax on share of profits of associate                                     -               15             15
Over provisions in previous years                                        -                -          (219)
Deferred taxation                                                       36              (4)            405
                                                                     1,766            1,506          2,991

5.    Earnings per share have been calculated on the earnings for
the period divided by the weighted average number of shares in issue using the
following data:
                                                                  26 weeks         26 weeks       52 weeks
                                                                  28/09/03         29/09/02       30/03/03
                                                                      £000             £000           £000

(Loss)/profit after tax                                            (3,032)            3,563          6,670
Profit for the financial year, excluding exceptional items,          3,036            3,537          6,970
net of taxation
Weighted average number of shares in issue                          65,927           65,727         65,780

6.    The dividend of 1.65p will be paid on 16 February 2004 to
shareholders on the register on 12 December 2003.  A scrip dividend alternative
will be available.

7.    During the period, 39,000 shares were issued on the exercise of
share options and 525,723 shares were issued in respect of the scrip dividend
alternative to the final dividend for the financial year ended 30 March 2003.

8.    The financial information above does not constitute statutory
accounts as defined by section 240 of the Companies Act 1985.  Statutory
accounts for the year ended 30 March 2003 have been delivered to the Registrar
of Companies.  The auditors' report on these accounts was unqualified and did
not contain a statement under section 237(2) or (3).

9.    This statement is being sent out to shareholders and copies are
available from the company's registered office, Peter Yates House, Manchester
Road, Bolton, BL3 2PY and on the company's web site,

                      This information is provided by RNS
            The company news service from the London Stock Exchange