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Questor: Young’s is in good shape despite lockdowns with cash flow set to be positive by May

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Pub worker pulling a pint -  AFP
Pub worker pulling a pint - AFP

A loss of 8pc on a share tipped three and a half years ago doesn’t sound like much of a result – until you remember that for much of the past year the business has been unable to operate.

The company in question may be called Young & Co’s Brewery but it brews no beer: since 2011, when it sold its brewery operations, it has been solely a pubs business and has therefore been all but dormant during the various lockdowns.

Last week it told investors that it planned to open about 140 of its self-managed (as opposed to tenanted) pubs with outdoor space on or around April 12, the date on which the Government has said the current restriction should end. As of September last year the firm had 208 managed pubs and 64 tenanted ones.

Assuming the “roadmap” is followed, the rest of its managed pubs should open on or around May 17 with restricted indoor trading, “ultimately leading to the company operating under more normal trading conditions from June 21”, it said. It added that if the reopening schedule proceeded as planned, it expected to deliver positive cash flow in May.

If achieved, this will in Questor’s book be a creditable result.

The group has also agreed with its lenders an extension until next March of a revised way to assess its financial position: instead of being judged on its (currently non-existent) earnings Young’s will simply have to keep its debts below £230m. By next March we can hope it will have been trading normally for several months and will have no problems passing the earnings-based test.

As part of its agreement with its lenders it will pay (as opposed to declare) no more than £5m in total in dividends in the financial year that begins on Tuesday. This would equate to 8.6p a share. The full-year dividend in 2019 was 21p. To pay any dividend in the circumstances would be quite an achievement in this column’s view.

Young’s said it would repay in May £30m borrowed through the Covid Corporate Financing Facility, another welcome sign of financial health.

It appears that the firm is well placed to emerge from the pandemic in good shape. It may even be in a position to buy up cheaply any pubs put on the market by less fortunate owners in need of cash.

Questor says: hold

Ticker: YNGN

Share price at close: 945p

Young & Co’s Brewery
Young & Co’s Brewery

Update: Anpario

It’s more than two years since we last updated readers on Anpario, which makes food supplements for animals, and in that time the shares have risen by about 126pc, although the gain since their addition to the Inheritance Tax Portfolio in June 2018 is a less spectacular 16pc.

They did shed about 5pc on Wednesday last week when the company announced its annual results, even though the board described the firm’s operating performance as its “best to date”.

No doubt some investors had expected even more, but the 5pc rise in sales to £30.5m, the 22pc increase in profits before tax to £5.4m and the 12.5pc lift to the annual dividend to 9p, assuming that shareholders approve the 6.25p final, were hardly the stuff of nightmares.

Net cash at the year end rose from £13.8m last year to £15.8m, despite the £1m the firm spent to buy back its own shares. Conversion of profits into cash was roughly 100pc – normally a healthy sign in this column’s eyes.

The strength of the results can be attributed in part to the company’s strategy in recent years to set up local subsidiaries and sales teams in overseas markets. It said this approach had proved its worth: growth had been strongest through these channels, “which have been able to fully support end customers throughout the pandemic”.

In China a ban on the use of antibiotic growth promoters in animal feed also helped sales of Anpario’s Orego-Stim product.

The firm said the current financial year had also started well.

Analysts at Peel Hunt, the stockbroker, said: “We see good momentum in the business as producers focus on improving animal health, particularly as use of antibiotics has become more restricted. We have increased our target price from 650p to 685p to reflect the enhanced prospects.”

Questor says: hold

Ticker: ANP

Share price at close: 565p

Read the latest Questor column on telegraph.co.uk every Sunday, Tuesday, Wednesday, Thursday and Friday from 6am.

Get in touch | How to contact Questor
Get in touch | How to contact Questor