Young & Co's Brewery

London pub operator Young & Co’s emphasis on maintaining its premium image and avoiding cost cutting has served it well of late, unveiling a resilient set of interim results for the year to September.

The AIM-quoted outfit grew pre-tax profits 4% to £11.9m on turnover of £67.7m (2009: £67.2m), also reporting a 2% hike in its interim dividend to 6.36p. CEO Stephen Goodyear said that ‘despite the difficult environment’ Young’s had stuck to its strategy of not adopting heavy discounting measures, instead focusing on ‘maintaining our premium position within the marketplace.’

Goodyear, who has worked at the pub operator since joining as sales director in 1995, told Growth Company Investor that the company’s plan for its future was to focus on doing ‘more of the same’, noting that it had recently opened two new sites in Woolwich and Richmond, with the pub operator recently disclosing that it had entered into negotiations to acquire London pub company Geronimo.

For the year to March 2011, analyst Paul Hickman of KBC Peel Hunt is forecasting adjusted pre-tax profits to grow by £400,000 to £19.8m on revenue up 1.8% to £129.8m, with an expected dividend of 13.3p, a yield of 2.3% on the current price, with the shares currently trading at just under 20 times earnings. 

Growth Company Investor last tipped shares in the London pub operator at 537p, and they have put on 8.5% since, to today’s 582.5p. Offering a respectable dividend yield and some short-term growth prospects, we think the shares are well worth hanging on to for the time being.