Young & Co.'s Brewery plc
Annual Report 2012

Plain-text annual report

A WINNING YEAR 2012 ANNUAL REPORT B  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 Our strategy is very clear: we are focused  on developing and growing an estate of  premium pubs, primarily in London and  the South East, with a clear emphasis on  managed operations.  We will continue to invest in the existing  estate to maintain our premium positioning  and to grow our hotel business. We are  looking to acquire further managed houses,  either packages or individual sites, to  increase the size of both the Young’s and  Geronimo operations further. CONTENTS Independent auditor’s report Chairman’s statement Chief Executive’s report 2  5  13  The board of directors 14  Directors’ report 21  22  Group income statement 23  Statements of comprehensive income 24  Balance sheets 25  Statements of cash flow 26  Group statement of changes in equity 27  Parent company statement of changes   in equity 28  Notes to the financial statements 57  Notice of meeting 61  Explanatory notes to the notice of meeting 62  Five year review 63  Senior personnel, committees and advisers 63  Shareholder information 64  Young’s pubs and hotels     FINANCIAL HIGHLIGHTS YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  1 2012 2011 % change Revenue 178,964 142,597 +25.5 Adjusted operating profit* 26,162 21,746 +20.3 Adjusted profit before tax* 21,333 18,177 +17.4 Net cash generated from operations 34,601 29,743 +16.3 Adjusted basic earnings per share* 33.41p 28.36p +17.8 Dividend per share 13.93p 13.26p +5.1 (interim and recommended final) Net assets per share £6.59 £3.76 +75.3 * Throughout this report, reference to an “adjusted” item means that item has been adjusted to exclude exceptional items   (see notes 9 and 15). The principal adjustment this period relates to the revaluation described below. (Loss)/profit before tax** (7,494) 13,294 -156.4 Basic earnings per share** -11.13p 32.89p -133.8 ** The group’s property estate has been revalued giving rise to a net uplift in fixed assets of £174.0 million. The upward  movement of £203.1 million was recognised in equity, while the downward movement of £29.1 million was taken to the  income statement as exceptional, resulting in the current period loss before tax (see notes 2 and 18). All of the results above are from continuing operations. 2  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 2  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 CHAIRMAN’S STATEMENT “ This has been a transformational year for Young’s. Having successfully integrated the Geronimo business acquired in late 2010 and exited from our brewing associate, we are clearly focused on delivering profitable growth through our estate of premium, well invested pubs and hotels, primarily in London and the South East”. Our pubs have performed very strongly over the  past year and our sound financial position enables  us to continue investing in our existing estate and  expanding it through further acquisitions. Revenue for the year rose 25.5% to £179.0 million,  adjusted profit before tax was up 17.4% at £21.3  million and adjusted basic earnings per share  increased 17.8% to 33.41 pence. In what has been  a very challenging climate, these results reflect both  a strong like-for-like performance from the Young’s  managed estate and the whole year impact of last  year’s Geronimo acquisition. We continued to invest  in our estate but still reduced net debt over the year  by £4.5 million. We therefore had a robust balance  sheet with sound long term financing arrangements  in place.  The Geronimo acquisition was a significant strategic  move which expanded our managed house estate  and provided us with an additional concept to  develop alongside Young’s. Growth through a strong  and expanding estate of managed houses is where  the most attractive future lies for the group. The  decision therefore to exit Wells & Young’s, whilst  emotive as it ended our 180 year history of brewing,  was the correct one as it allows us to focus our  investment and energies accordingly.  After glorious April weather a year ago, the first  weeks of the current financial year have been  something of a wash-out and this has made for more  subdued trading in a number of our pubs. As a result,  managed house revenue in the first seven weeks of  the year was up 3.9% in total, and down 2.0% on a  like-for-like basis. Overall, our premium and London  and South East-orientated strategy should continue  to help insulate us against the wider economic  unease. We are looking forward to the Diamond  Jubilee celebrations and Olympic Games which will  undoubtedly benefit both London and ourselves.  Nicholas Bryan Chairman Revenue (£m) £178,964 126,091 127,539 142,597 +25.5% 178,964 2009 2010 2011 2012 Adjusted profit before tax (£m) £21,333 17,265 17,463 18,177 +17.4% 21,333 2009 2010 2011 2012 YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  3 YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  3 Total dividend per share (p) (recommended) 13.93p +5.1% With a healthy pipeline of investment opportunities and  maturing recent investments, we are confident that the current  year will be another positive one for Young’s. 13.93 13.26 13.00 12.75 2009 2010 2011 2012 Net assets per share (£) £6.59 +75.3% 6.59 3.42 3.50 3.76 2009 2010 2011 2012 The regulatory and taxation regime to which we are subject  remains unhelpful; this is in spite of constant lobbying on the  part of the industry. I am convinced that responsibly run pubs  are a genuine force for good in our society and deserve greater  support and recognition from the Government than is currently  the case. For our part, we expect and encourage our pubs to act  as good neighbours; they actively support local charities and  projects, and promote responsible consumption of alcohol by  providing a safe and healthy environment in which to do so. Rewarding the support of shareholders remains important to  the Board. Following our strong performance last year and  in line with our long term strategy for consistent progressive  dividend growth, we are pleased to be recommending a 5.1%  increase in the final dividend to 7.25 pence per share, resulting  in a total dividend for the year of 13.93 pence (2011: 13.26  pence). The final dividend, if approved, will be paid on 12 July  2012 to shareholders on the register at the close of business  on 8 June 2012. This would represent the fifteenth consecutive  year of dividend increase for Young’s shareholders. I would like to finish by thanking everyone involved in Young’s  – our customers, our managers, our tenants, our staff and,  of course, our shareholders – for their continued support and  contribution to our success.  I look forward to meeting many of you at my first AGM as  chairman on 10 July 2012 in the Civic Suite in Wandsworth  Town Hall, London SW18. Nicholas Bryan Chairman 23 May 2012 4  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 4  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 CHIEF EXECUTIVE’S REPORT YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  5 YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  5 OVERVIEW This year has been a very productive and successful one for Young’s which, following on from the acquisition of Geronimo in December 2010, has seen the completion of our transformation into a focused pubs business. Geronimo has been smoothly and successfully  integrated, with the benefits of the sharing of best  practice already being felt. Halfway through the year, we took the decision to  exit from our brewing interests with Charles Wells.   Having been involved in brewing since 1831, this  was an historically significant step. However, from  a strategic point of view it allows us to focus all  our resources – both managerial and financial – on  developing our high quality pub estate yet further.  In addition, we decided to dispose of a number of  tenanted pubs that did not fit with our future plans  for the tenanted operation.   Our strategy is very clear: we are focused on  developing and growing an estate of premium pubs,  primarily in London and the South East, with a clear  emphasis on managed operations. A high quality food  offering is increasingly an integral part of what we are  about. Nonetheless the nature of our estate is that we  run pubs as opposed to restaurants since they are a  more consistent source of profits. We will continue to  invest in the existing estate to maintain our premium  positioning and to grow our hotel business. We are  looking to acquire further managed houses, either as  bolt on packages or individual sites, to increase the size  of both the Young’s and Geronimo operations further.  Alongside this strategic progress, we achieved strong  revenue and profit growth. Revenues increased  by 25.5% to £179.0 million and, whilst this was  significantly enhanced by a full year’s contribution  from Geronimo (compared with 16 weeks last year),  we also delivered strong like-for-like managed house  growth across both Young’s and Geronimo.  Operating profit before exceptional items increased  20.3%. Profit before tax and exceptional items was  up 17.4% at £21.3 million. Adjusted basic earnings  per share increased 17.8% to 33.41 pence. Reported  profits have been significantly impacted by largely  non-recurring property related exceptional items which  are described below. Stephen Goodyear Chief Executive Adjusted operating profit (£m) £26,162 20,546 20,307 21,746 +20.3% 26,162 2009 2010 2011 2012 Adjusted basic earnings per share (pence) 33.41p +17.8% 33.41 28.36 23.09 24.92 2009 2010 2011 2012 Net cash generated from operations £34,601 +16.3% 34,601 26,438 26,940 29,743 2009 2010 2011 2012 6  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 CHIEF EXECUTIVE’S REPORT (Continued) Our estate was revalued last autumn at £497.4 million,  a large net uplift of £174.0 million to book value. As  previously reported and as required by accounting  standards, this has been reflected in our accounts as  a £203.1 million balance sheet credit for the property  values that have increased and a £29.1 million  exceptional charge to the income statement where  they have fallen. The result of this and certain other  exceptional items is a reported loss before tax of £7.5  million, and a basic loss per share of 11.13 pence.  During the year, we opened three new pubs and  acquired a further one. We also made eight disposals  and, since the year end, have exchanged contracts  on another. Six of these sales were from our tenanted  estate, reflecting our aim to retain a high quality  but smaller tenanted estate alongside the managed  operation that provides our core focus for growth. We  therefore finished the year with 242 pubs, four fewer  than last year, of which 187 were freehold and 13  were held on long leases at peppercorn rents.   The business generated a strong operating cash flow  of £34.6 million which, together with the proceeds  from the Wells & Young’s share sale and pub disposals,  allowed us to invest £25.6 million and reduce net debt  by £4.5 million. Our balance sheet therefore remains  robust with net debt at £118.1 million, 3.1 times  EBITDA, and gearing at 37.2%.  None of this year’s success could have been achieved  without the tireless effort and commitment of our  management and their teams both in the pubs and at  head office. I am, as ever, most grateful to them all. BUSINESS REVIEW MANAGED HOUSES At the year end, the managed operation comprised  121 Young’s pubs, 16 of which were hotels, and 33  Geronimo pubs. Revenue for the year, which reflects a full year’s  contribution from Geronimo, was up 29.1% at £165.0  million. Our Young’s managed house operation  generated industry leading underlying growth with  like-for-like sales, which excludes Geronimo, up 6.0%.  Geronimo’s sales, which do not currently form part of  our total like-for-like sales, were up 9.8% compared  with the corresponding year, the vast majority of which,  pre-dated our period of ownership.  This performance was achieved against a mixed trading  backdrop. We had good weather early and late in the  year, the Royal Wedding weekend in April and Young’s  180th birthday celebrations in September. At the same  time, the difficult economic climate continued and there  were the dreadful London riots in August.   YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  7 The strong revenue growth, combined with tight cost  control, mitigated some of the additional rates and  utility cost burden and raw material inflation which  increased our cost of goods. As a result, managed  house operating profits were up 20.6% at £35.3  million, and up 5.2% on a like-for-like basis.  Our operating margin decreased from 22.9% to  21.4%, reflecting two factors: first, Geronimo’s lower  operating margins as a result of the proportionately  larger number of leases in its estate and the resultant  larger rent element and second, the impact of  immature sites which have generated very impressive  sales but at the cost of higher than normal levels of  staffing costs in their early months’ trading. Our Geronimo estate, with its large central London  managed houses, has played an important part in  increasing our average EBITDAR (earnings before  interest, tax, depreciation and rent) per managed  house, which was up 12.1% at £345,000. Liquor sales were up 5.0% on a like-for-like basis. Cask  beer continues to outperform the market and we are  well positioned to benefit from this resurgence. Beer  and cider festivals continue to offer customers a diverse  range of quality cask products, bringing new and  younger drinkers into the category. With the addition  of London craft beers such as Meantime, craft spirits  such as Sipsmiths, innovative wine lists and premium  soft drinks, our drinks range has been developed in  tandem with the quality of the food and décor in our  pubs, hence the successful premium pub offer.  Like-for-like food sales were up 7.2%, reflecting a  continuing emphasis on high quality food, locally  sourced and prepared in-house which has captured  growth in demand for eating out with restaurant  quality food in a relaxed pub atmosphere. This  approach, coupled with the acquisition of Geronimo,  has increased food sales as a proportion of the whole  from 27.5% to 29.1%. This percentage reflects our  commitment to striking the right balance of having a  quality food offering whilst retaining the proper feel  of a pub.  Accommodation sales were up 15.4%. This  demonstrates the continued success of our growing  hotel operation and, in particular, the benefits of  last year’s investments at the Alma (Wandsworth)  and the Red Lion (Radlett). RevPAR (revenue per  available room) rose strongly by 10.7% to £48.85.  We are continuing to improve our hotel offering,  with ten rooms having been added at the Bull’s  Head (Chislehurst), the interior at the Duke’s  Head (Wallington) being redeveloped and a new  17 bedroom hotel opening at the Foley Arms  (Claygate) this autumn. 8  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 CHIEF EXECUTIVE’S REPORT (Continued) We have increased the level of support provided to  our pubs, particularly through the recruitment of five  additional Operations Managers. This allows us to  deliver even better customer service and standards  which in turn drives superior profit growth.  Overall, we invested £24.2 million in our managed  houses during the year: • Of this, £4.7 million was invested in four new sites.  The Cow in the new Westfield shopping centre in  Stratford next to the Olympic Park, the Oyster Shed  on the north bank of the Thames by London Bridge,  and the Lion & Unicorn, a freehold in Kentish  Town, all opened as Geronimo pubs. The Plough  at Clapham Junction, a New York inspired bar and  kitchen, was added to the Young’s estate.  • £9.6 million was invested in the existing managed  estate including the Home Cottage (Redhill), which  underwent a transformational redevelopment,   the Hollywood Arms (Chelsea), the Founder’s Arms  (alongside the Tate Modern) and the Cock   Tavern (Fulham).   • In addition, we acquired the freeholds of the  Clarence (Whitehall), the Fentiman Arms (Vauxhall),  the Kings Head (Winchmore Hill) and the Kings Head  (Roehampton) for £9.1 million. • After last year’s successful conversion of the Coach  and Horses (Isleworth) to a managed house, we  moved a further three sites over from tenancy and  invested £0.8 million in them. The iconic music  venue in Putney, the Half Moon, and the Chelsea  Ram have transferred to our Geronimo operation  whilst the Shaftesbury (Richmond) has moved into  our Young’s one.  We disposed of the George (Fulham) and the Stinging  Nettle (Shepherd’s Bush), both pubs that failed to  make an acceptable return on capital.  We continue to develop sales and marketing  initiatives that are designed to build loyalty and  communicate directly with customers, rather than  simply buying custom through discounting. Our  primary customer communication tool remains  our e-marketing database, which has over 500,000  individual addresses for our managed estate. With  an email being sent on average once a month to  each registered address, this gave us some 6.5  million touch points across the year. Our integrated  social media strategy, using Facebook and Twitter  to widen our consumer reach, is also proving  increasingly successful. All our pubs and hotels are easily accessible online  and in the past year we received over five million hits  across our websites. In the last quarter alone, we have  received over 10,000 online bookings. In April 2011, we celebrated the Royal Wedding with a  commemorative brew, Young’s Prince of Ales, and local  “street parties” at many pubs. In September 2011, we  marked 180 years of Young’s with a big Birthday Party  in all our Young’s pubs, with selected beers, including our  specially brewed 1831 Anniversary Ale. These community  celebrations will continue throughout 2012 across what  will be a very busy summer with the Queen’s Diamond  Jubilee festivities and the London Olympics. Also during the year, 32 of our pubs participated in the  London Restaurant Festival, celebrating the diversity  of London restaurants and, through our continued  participation in Taste of London, we show-cased our  premium food and drink offer to over 50,000 Londoners. Other initiatives include our “Perfect Sundays”  campaign which has been launched through the pubs,  Facebook and the press. The campaign has promoted  Young’s pubs as the perfect place to spend part of your  weekend and offered customers the opportunity to  engage with us to win their own Perfect Sunday. The year finished with recognition from the trade  of what has been a very good year. At the Publican  Awards 2012, we picked up the trophies for Best  Managed Pub Company (150+ sites) and Best  Accommodation Operator. In addition, as always,  one of the highlights of the year for the operations  team was our own annual award ceremony which  recognises the enormous talent we have within our  managed operations. This year’s winners were Mick  and Sarah Dore at the Alexandra in Wimbledon. The  Alexandra goes from strength to strength after a major  refurbishment last year and Mick and Sarah play a  major role in developing new initiatives and young  talent within both their pub and Young’s as a whole. TENANTED HOUSES At the year end, following the disposal of six sites  and the transfer of a further three to the managed  operation, the tenanted operation comprised 88 pubs.  These disposals, which in aggregate raised £4.5 million  in proceeds, reflect our strategy of concentrating on  an estate of fewer but higher quality tenanted houses.  Contracts have been exchanged on the sale of a  further property. Whilst further disposals are possible,  we believe that we now have a tenanted operation set  for profitable growth. YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  9 10  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 CHIEF EXECUTIVE’S REPORT (Continued) Like-for-like revenue and operating profit were both  up, by 0.6% and 4.1% respectively. Total revenue  was down 5.8% at £13.6 million, and operating profit  was down 1.9% at £5.3 million, both reflecting the  smaller number of pubs compared with last year, and  particularly the fact that three of the largest sites were  transferred to the managed operations. However, the  average EBITDAR per pub improved 1.9% to £73,000. During the course of the year, we invested £1.1  million in our tenanted operation, in pubs such  as the Bell (Broadway), Grand Junction Arms  (Willesden), White Hart (Whitley), Old Sergeant  (Wandsworth), Lord Nelson (Sutton) and the  Waggon and Horses (Surbiton). We believe in the traditional tenancy model  which remains an effective way of harnessing  entrepreneurial talent, especially in an environment  where raising money for business start-ups is so  difficult. Our tenancy agreements are built on  the principle of partnership, and we were one of  the first pub companies to introduce its own code  of practice. Within this “partnership”, we offer  tenants a wide range of training courses focusing  on customer service, marketing and social media,  product knowledge, and compliance with the ever- changing regulatory environment. INVESTMENT AND FINANCE At the year end, following the disposal of eight pubs,  group revenue was up 25.5% at £179.0 million, and  our operating profit before exceptional items was  up 20.3% at £26.2 million. Despite the challenging  consumer environment, we improved gross profit  margins across the business. The operating margin, at  14.6%, was down from 15.2% last year, due primarily  to the larger leasehold element within our Geronimo  business and also to the lower initial margins  generated by new sites.  Adjusted profit before tax increased by 17.4% to  £21.3 million, reflecting last year’s acquisition of  Geronimo, market leading like-for-like sales growth  in the managed business, and the continued strong  performance of our hotels. This year’s reported results are significantly distorted  by the following exceptional items and in particular  the decision to change our accounting policy to take  account of the estate revaluation which we feel  reflects the value of our property portfolio better: • A revaluation reserve movement of £203.1 million  and a £29.1 million non-cash valuation adjustment  via our income statement. This resulted from  Colliers (Chartered Surveyors) revaluing our estate  as at October 2011 at £497.4 million, comprising  a large net uplift of £174.0 million to book value.  Individual uplifts in value have been reflected  in the revaluation reserve in the balance sheet;  individual falls in value below cost have been  accounted for through the income statement as  required under international accounting standards.  • Acquisition costs of £0.5 million, including legal and  professional fees and stamp duty, incurred on the  purchase of the freehold interests of the Clarence  (Whitehall), Fentiman Arms (Vauxhall) and the  King’s Head (Winchmore Hill).  • A £1.3 million profit on the disposal of eight pubs.  • £0.4 million in compensation payments to  terminate three leases so that these pubs could be  brought into managed operations. • A £0.2 million capital gains tax provision for the  shares held in the Employee Share Ownership  Scheme. A liability is recognised at each balance  sheet date for the potential capital gains tax  that could arise on the disposal of shares to the  members of the scheme on retirement. Finance costs at £6.1 million were £2.1 million higher  than last year, the consequence of this year’s increased  average debt, due principally to the £60.0 million  acquisition of Geronimo in December 2010. Interest  costs are covered 4.3 times by operating profits. We are recommending a 5.1% increase in the final  dividend to 7.25 pence per share, making a total  dividend for the year of 13.93 pence. The dividend is  covered 2.4 times by our adjusted earnings.  In August 2011 we sold our 40% stake in Wells &  Young’s for £15.1 million. As a result, Wells & Young’s  has been treated as a discontinued operation and our  comparatives have been restated accordingly. £5.1  million of the proceeds were received in February and  the remaining £10.0 million is payable in two equal  amounts in February 2013 and February 2014. The  disposal has resulted in a £0.4 million loss (£1.7 million  when taking account of a £1.3 million implied cost  of the deferred consideration). This implied cost will  be unwound through the income statement over the  deferment period.  In addition, we disposed of eight pubs for a total  of £7.0 million. These pubs were not achieving  acceptable returns on capital and we believed that  the capital would be better invested elsewhere.  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  11 Furthermore, our financial position is such that we are  able to continue to acquire managed houses, either as  bolt on packages or individual sites, and recently we  have seen an improvement in the number of attractive  opportunities becoming available. We continue to capitalise on the development  opportunity across our estate to add more  accommodation. 23 rooms have been added over the  last two years and a further 27 are planned or are due  to be developed over the next year. Our performance in recent weeks has inevitably been  affected by the dismal weather conditions; the glorious  weather we enjoyed in the same period in 2011 makes  the year on year comparisons more challenging still.  Managed house revenue in the first seven weeks of the  year was up 3.9% in total, but down 2.0% on a like- for-like basis. This like-for-like figure includes Geronimo  as it has now traded within the business for a complete  financial year. We can’t do anything about the weather but  our premium strategy, well-invested estate and  management focus should continue to drive superior  like-for-like growth over normal comparative periods.   Our orientation towards London and the South East  continues to help insulate us in part against the  worst of the economic uncertainty and its pressure  on consumers. This positioning will be of particular  benefit in the coming months as London celebrates  the Queen’s Diamond Jubilee and as the Olympic  Games come to town. As a sign of activity to come,  our advance hotels bookings are already up on the  number of rooms actually sold last year and our five  most central sites already having bookings in excess  of 90% of their capacity over the Olympic weeks.  We are clearly focused on generating profitable  growth from our pub estate and on maximising value  for shareholders. With a clear strategy in place, we  look forward to this year and the longer term future  with confidence. Stephen Goodyear Chief Executive 23 May 2012 The business generated a strong operating cash flow  of £34.6 million which, together with these disposals,  allowed us to invest £25.6 million and reduce net debt  by £4.5 million. Net debt at the year end was £118.1  million, 3.1 times EBITDA.  Following the large increase  in the valuation of the estate arising from the October  revaluation, gearing at the year end was 37.2%.  None of our debt needs to be refinanced until  December 2015. £100 million of our net debt has  been fixed at just below 5.0%. Longer term interest  rates have fallen over the year and as a result we are  enjoying lower rates on our variable debt. Where we  have taken the decision to fix interest rates, there has  been an £8.2 million adverse movement in our interest  rate swap valuation which has been charged to equity. The £8.3 million retirement benefit scheme deficit  deteriorated by £0.7 million during the year. Pension  liabilities increased as a result of falling bond yields  and their adverse impact on the discount rate applied  to valuing future commitments. This, coupled with  improving life expectancy, offset gains made from  the investments held and the extra contributions the  company made during the year. Having taken account of the recent estate valuation,  which excludes the benefit of a lotting premium, our  net assets per share at the year end were £6.59 post  deferred tax and £7.71 pre deferred tax. CURRENT TRADING AND OUTLOOK We enter the current year in excellent shape, now  wholly focused on a large and expanding premium  managed pub estate and a smaller, high quality  tenanted one; both of these are well invested  and capable of generating attractive profitable  growth going forward. The combined talent from  the Young’s and Geronimo teams is being brought  to bear energetically to maximise the potential of  these operations.   Trading in the current year will benefit from the  full year impact of last year’s investments reaching  maturity, including both new pubs – such as the Cow,  the Oyster Shed and the Plough – and the three sites  recently transferred from tenancy.  The current pipeline of openings is encouraging, with  the Calf in Westfield (Stratford) opening in June for  seven months and the King’s Head (Roehampton) and  the Wheatsheaf (Borough Market), both opening in  the autumn.   12  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 “ Like-for-like food sales were up 7.2%, reflecting a continuing emphasis on high quality food, locally sourced and prepared in-house” THE BOARD OF DIRECTORS YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  13 STEPHEN GOODYEAR CHIEF EXECUTIVE Joined in 1995 as sales director.  Appointed to the board in 1996  as sales and marketing director.  Appointed chief executive in   2003. Previously worked for   Courage Ltd (1974-95) in a   number of senior roles, most  recently business unit director.  Aged 56. TORQUIL SLIGO-YOUNG HUMAN AND INFORMATION RESOURCES Joined in 1985. Held a number of  senior positions in different areas of  the company before being appointed  to the board in 1997. Has overall  responsibility for personnel, health  and safety and the company’s  technological needs. Previously  worked for stockbrokers Bell, Lawrie,  Macgregor & Co. Aged 52. PETER WHITEHEAD, F.C.A. FINANCE Joined the company and the board  as finance director in 1997. Qualified  as a chartered accountant with KPMG  in 1988, becoming a fellow of the  Institute of Chartered Accountants  in 1998. Previously worked for Fuller,  Smith & Turner P.L.C. (1990-97).  Aged 50. NICHOLAS BRYAN, B.A., F.C.A. NON-EXECUTIVE CHAIRMAN Appointed to the board in 2006  and as non-executive chairman in  2011. Member and chairman of  the company’s audit committee as  well as a member of the company’s  remuneration committee. Co-founder  and chief executive of the Innserve  Group. Has particular expertise in  the hospitality, property and brewing  sectors gained through various  positions within Courage (including  managing director of Courage UK  (1992-95)). Has held other chairman  and non-executive director roles while  a management committee member  of Investcorp (1995-2001). Began  his career in finance as a chartered  accountant and with positions at  Lonrho and Hanson. Aged 59. PATRICK DARDIS RETAIL Joined in 2002 and appointed  to the board in 2003. Has overall  responsibility for the operation of  the Young’s managed estate as  well as Young’s managed house  pub acquisitions and developments.  Previous positions have included  director of retail operations at  Wolverhampton & Dudley PLC,  business development with Guinness  Brewing and retail management with  Whitbread PLC and Courage Ltd.  Aged 53. RUPERT CLEVELY MANAGING DIRECTOR GERONIMO INNS Joined the company and the board  in 2010. Has overall responsibility for  the management and development  strategy of Geronimo Inns which  he co-founded and where he has  driven the business for the past 12  years. Previously worked at Veuve  Clicquot Champagne where he held  the position of worldwide marketing  director and managing director UK  (1990-2000). Aged 54. DAVID PAGE NON-EXECUTIVE Appointed to the board in 2008  and as chairman of the company’s  remuneration committee in 2011.  Also a member of the company’s  audit committee. His current  restaurant portfolio includes Rocca,  Franco Manca and The Real Greek.  Co-founder of The Clapham House  Group, owner of Gourmet Burger  Kitchen and other restaurant brands.  Prior to founding Clapham House,  spent 27 years with Pizza Express  plc; initially as managing director  of the largest franchisee group,  becoming chief executive of the  holding company in 1993, chairman  in 1998 and returning to the post of  chief executive in 2002. Aged 59. ROGER LAMBERT, M.A. NON-EXECUTIVE AND SENIOR INDEPENDENT DIRECTOR Appointed to the board in 2008 and  as senior independent director in  2011. Member of the company’s  audit and remuneration committees.  Chairman of Corporate Broking,  Canaccord Genuity. Previously worked  for 26 years in corporate finance at  JPMorgan Cazenove where he was  a senior managing director with  responsibilities for corporate client  coverage of the consumer sector.  Has a wealth of relevant expertise in  brewing, drinks and hospitality, having  acted for over 25 companies in the  sector. Was involved in many of the  major transactions that changed the  industry in recent years and developed  considerable advisory expertise in the  area of small, family and medium sized  companies. Aged 53. 14  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 DIRECTORS’ REPORT The directors present their annual report, and the audited  financial statements, for the financial period ended   2 April 2012. • EBITDAR This is the EBITDA detailed above, but with rent   added back. In this report, reference to the “company” or to “Young’s”  is to Young & Co.’s Brewery, P.L.C., and reference to the  “group” is to the group of companies of which Young’s is  the parent company. The Chairman’s statement (on pages 2 and 3) and the  Chief Executive’s report (on pages 5 to 11) both form part  of this report. PRINCIPAL ACTIVITIES The group’s principal activities are described in the Chief  Executive’s report. BUSINESS REVIEW A review of the group’s business is contained in the  Chairman’s statement and in the Chief Executive’s report. KEY PERFORMANCE INDICATORS The board measures the development, performance  and position of the group’s business by reference to the  following factors: • Adjusted profit before tax This is the profit before tax on continuing operations only,  adjusted to exclude any exceptional items for the group.  See note 15. • Adjusted earnings per share This is the adjusted profit before tax detailed above, but  after tax has been deducted, divided by the weighted  average number of ordinary shares in issue; it provides a  useful statistic to compare with a share price or dividend,  for instance. See note 16(c). • Like-for-like revenue This is same outlet like-for-like revenue growth for  this period (364 days) compared with the last period  (adjusted from 371 to 364 days) for the pubs and hotels  that traded throughout both periods.  • RevPAR This is the group’s revenue per available bedroom; it  is the average room rate achieved multiplied by the  occupancy percentage. • EBITDA This is the adjusted earnings before interest, taxes,  depreciation and amortisation by business segment. It  provides useful information in determining the value of  the underlying assets. • Interest cover This is the group’s adjusted operating profit divided  by the finance costs. • Gearing This is the group’s net debt divided by the group’s   net assets. Both interest cover and gearing are useful tools in  determining whether the business can maintain its current  level of debt or its capacity to increase that level. The performance of the business, measured by reference to  these factors, is shown in the Chief Executive’s report and in  the financial highlights on page 1.  PROFIT AND DIVIDENDS The loss for the period attributable to shareholders was   £6.5 million. The directors recommend a final dividend  for the period of 7.25p per share. Subject to approval at  the AGM, this is expected to be paid on 12 July 2012 to  shareholders on the register at the close of business on   8 June 2012. When added to the interim dividend of 6.68p  per share, this will produce a total dividend for the period  of 13.93p per share. ANNUAL GENERAL MEETING Notice convening the AGM and an explanation of the  resolutions being proposed are set out on pages 57 to 61. IMPORTANT EVENTS SINCE THE END OF THE PERIOD The Chief Executive’s report contains particulars of  important events affecting the group which have occurred  since the end of the period. LIKELY FUTURE DEVELOPMENTS An indication of likely future developments in the group’s  business is contained in the Chief Executive’s report. PRINCIPAL RISKS AND UNCERTAINTIES The principal risks and uncertainties facing the group are  listed below. It is not an exhaustive list of all significant risks  and uncertainties. Some risks may currently be unknown  and other risks, currently regarded as immaterial, could turn  out to be material. YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  15 • Reduced consumer spending • Licensing The group’s revenue is largely dependent on consumer  spending which can be affected in numerous ways;  examples include the general economic environment  and terrorist activity. Attitudes to various social  factors are relevant too, as is consumers’ heightened  awareness of a healthy lifestyle and the potential adverse  health consequences associated with misuse of alcohol.  Consumers also have a wide range of choice of where to  spend their money, whether this is at the group’s pubs  and hotels, at those of its competitors or at off licences,  supermarkets and takeaways, or at competing leisure  attractions such as cinemas. Focusing on the individuality of  each of the group’s outlets and being located throughout  London and Southern England helps mitigate this risk to  a degree; the group also seeks to minimise this risk further  with its customer focused designs, high service standards  and quality food and market leading drinks. Spending in  the group’s pubs and hotels is also affected by the weather;  traditionally, they tend to be busier in the summer and  on warm, sunny days, especially those with outside areas.  Holiday periods such as Christmas, New Year and bank  holidays also tend to be better for trade. Recognising  this, the group seeks to exploit its excellent locations and  offerings to address the impact of seasonality, wherever  possible, by capturing demand in busy periods and  encouraging customers to visit in quieter periods. • Suppliers: drink, food and utilities The group relies on a number of suppliers for drink, food  and other services to its pubs and hotels. Part of the group  has an exclusive agreement with its former associate,  Wells & Young’s, for the supply of drinks to its pub estate.  The group also has a number of arrangements with food  suppliers, including its majority owned subsidiary, Sticky  Fingers Food Limited. In terms of both drink and food, the  group remains exposed to the risk of price increases and  to the risk of interruption or failure of suppliers resulting  in products not being delivered on time or to the standard  expected. It attempts to mitigate this risk by entering  into fixed price arrangements, by regularly reviewing the  suppliers it uses, by having informal arrangements in place  such that substitute suppliers or products could be used  if required and by having safety measures in place which  seek to ensure product integrity is maintained wherever  possible. The group uses a large amount of electricity and  gas and is therefore particularly subject to fluctuations  in their cost. To help counter this, the group’s needs  and price changes in the market are reviewed regularly  and, where appropriate, it makes forward purchases; it  is also continually looking at ways of promoting further  efficiencies in energy consumption. If they believe that any of the Government’s licensing  objectives is being compromised, local residents, the  police and other relevant agencies can ask the local  authority to review a premises licence; local health bodies  can also instigate a review. This could result in a range  of possible outcomes, including further conditions being  attached to a licence, trading hours being reduced,  a change in the pub’s management being called for  or ultimately a licence being suspended or revoked.  Penalties for non observance of certain aspects of  the licensing laws can also be severe, and include the  possibility of a licence being suspended. The group has  training programmes in place which have been designed  to achieve compliance with these laws and to have the  group’s pubs and hotels run in a responsible manner,  thereby minimising some of these risks. • Other regulation Changes in regulation can have a significant impact  upon the group’s business. In addition to those already  mentioned, other examples include increases in the  minimum wage and proposed improvements in glass  safety. The group seeks to mitigate these through  continual consideration of operating procedures to ensure  any cost increases arising from such changes can be  mitigated through increases in productivity. As a member  of the British Beer and Pub Association (“BBPA”), it also  seeks to ensure that the impact of any new legislation is  considered well in advance of its introduction and that  plans are put in place to address any required changes in  advance of any implementation date. In addition, it works  with an outside third party in ensuring changes in health  and safety practices and procedures are incorporated into  the business and reviewed on a regular basis. • Taxation A number of tax related matters affect the group,  including business taxes, duty on alcoholic beverages  and property rates. Again, as a member of the BBPA, the  group seeks to ensure that appropriate action is taken  to minimise tax related risks. It also regularly reviews  its operating procedures to identify ways in which the  impact of tax related cost increases can be lessened  through productivity increases and cost reductions.  • Pensions The group operates a defined benefit scheme: the Young  & Co.’s Brewery, P.L.C. Pension Scheme. Its operation  gives rise to various funding risks, the main one of which  is the variability of the amount of contributions required  to be paid to it by the group in order to account for past  service benefit deficits and future service benefit accruals.  These, in turn, are impacted at any point in time by  changes in life expectancy assumptions, the performance 16  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 DIRECTORS’ REPORT (Continued) of the stock market and bond yields. The scheme has  been closed to new entrants for a number of years and  the group makes additional contributions over and above  regular service contributions in order to address previous  funding deficits. The group also maintains a close  dialogue with the scheme’s trustee. • People People play a key part in helping the group maintain its  premium position within the pub sector. This, and the  group’s ability to achieve its strategic and operational  objectives, could therefore be affected if the group is unable  to attract, retain, develop and motivate the best people  with the right capabilities throughout the organisation,  whether that be in the pubs, hotels or head office.  Therefore, significant investment is made in recruitment,  remuneration packages are competitive, reward policies are  in place and comprehensive training is provided to ensure  that the group’s people have the right skills to perform their  jobs successfully and achieve their full potential. • IT and telecoms The group, and particularly its managed estate, is reliant  on IT systems for communication, sales transaction  recording, stock management, purchasing, accounting  and reporting and many of its internal controls. Any  failure of these systems would cause some degree of  disruption to the business and any extended period  of downtime, loss of backed up information or delay  in recovering information could affect performance  significantly. To help protect against this, information is  routinely backed up and arrangements are in place with  third party providers to assist with data recovery and  business continuity. The group also regularly monitors the  needs of the business and invests in new technology and  services as necessary. • Finance Note 24, starting on page 47, contains an indication of  the group’s exposure to certain financial risks. • Regulation of tied pubs The Government has been urged to review, in autumn  2012, the progress of toughened self regulation in the  pubco/tenant relationship. At this stage, it is not possible  to predict whether a review will take place and how any  outcome may affect the company’s tenanted division. If  self regulation is found to have failed, a statutory code of  practice could be the result, possibly to include a free- of-tie option combined with an open market rent review  for any new or existing tenant. From the company’s  perspective, further regulation would be disappointing;  the company’s tenancy agreements already address the  perceived industry issues and the company operates a  legally binding code that meets the requirements of the  UK pub industry framework code of practice on how tied  agreements should operate in the pub trade. FINANCIAL INSTRUMENTS AND RELATED MATTERS The group’s financial risk management objectives and  policies are set out in note 24, starting on page 47. PAYMENT OF SUPPLIERS The company’s policy is to pay those persons who are or  may become its suppliers promptly at the end of the month  following the month in which invoices are received, provided  all trading terms and conditions have been complied with.  As at 2 April 2012, the aggregate amount owing to trade  creditors (see note 23 on page 47) was equivalent to 35  days’ average purchases from suppliers (2011: 59 days). GOING CONCERN This report contains a review of the group’s business,  together with a list of principal risks and uncertainties  facing the group. The financial position of the group,  its cash flows, liquidity position and borrowing facilities  are described within the financial statements. Note 24,  starting on page 47, summarises the group’s capital  management and principal treasury objectives and some  tools it uses to monitor and manage its exposure to  certain financial risks (including credit risk and liquidity  and cash flow risk). The group has a predominantly  freehold backed balance sheet and committed facilities of  £150 million in place, none of which need to be renewed  until December 2015. The directors believe that the group  is well placed to manage its business risks successfully  despite the current uncertain economic outlook and they  have a reasonable expectation that the company and the  group have adequate resources to continue in operational  existence for the foreseeable future. Accordingly, they  continue to adopt the going concern basis in preparing  the annual report and financial statements. YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  17 DIRECTORS Names and brief biographical details The names and brief biographical details of the current directors are on page 13. All of them were directors throughout the  period and, apart from Christopher Sandland who retired in July 2011, no other person was a director during the period. Length of appointments Each of the executive directors has been appointed for an indefinite period. The period of notice required to be given to  terminate his appointment is as follows: Name  Stephen Goodyear  Torquil Sligo-Young  Peter Whitehead  Patrick Dardis  Rupert Clevely  Minimum period of notice from Young’s Minimum period of notice from the executive one year  one year  one year  one year  six months six months six months one year one year to be given on or after  1 July 2012  one year to be given on or after  1 July 2012  No compensation is payable by Young’s for early termination. Each of the non-executive directors is part way through a three year term: Nicholas Bryan’s expires on 11 July 2014 and  both Roger Lambert’s and David Page’s on 31 July 2014. Re-appointment Under the company’s articles of association, at every AGM the following automatically retire from office but may offer  themselves for re-appointment: •  any director who held office at the time of the two preceding AGMs but did not retire at either of them – this applies to  Torquil Sligo-Young, Peter Whitehead, Roger Lambert and David Page at this year’s AGM; and •  any director appointed by the board since the last AGM – this does not apply to any director at this year’s AGM. Each of Torquil Sligo-Young, Peter Whitehead, Roger Lambert and David Page is seeking re-appointment and his brief  biographical details are on page 13. Remuneration Details of each director’s remuneration appear in note 8(b) on page 36. No director is involved in deciding his own  remuneration. The remuneration of the executive directors is determined by the company’s remuneration committee; the  remuneration of the non-executive directors is determined by the executive committee. None of the executive directors  receives remuneration as a non-executive director elsewhere.  Qualifying indemnity provisions The company’s articles of association contains an indemnity provision in favour of the directors; this provision, which is a  qualifying third party indemnity provision, was in force throughout the period and is in force at the date of this report.  Additional indemnity provisions in favour of Rupert Clevely are described in note 29 on page 54; these provisions, which are  qualifying third party indemnity provisions, were in force throughout the period and are in force at the date of this report.     18  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 18  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 DIRECTORS’ REPORT (Continued) DIRECTORS’ HOLDINGS AND INTERESTS The holdings and interests of the directors who held office at the period end (and their immediate families) in the share  capital of the company are shown in the table below. Any accrued entitlement to A shares under the company’s closed  profit sharing scheme is shown separately in note 8(d) on page 37. Nicholas Bryan  Beneficial and family  Stephen Goodyear  (i), (ii)  Beneficial and family   Torquil Sligo-Young  (i), (ii)  Beneficial and family   Trustee  Peter Whitehead  (i), (ii)  Beneficial and family   Patrick Dardis (i), (ii)  Beneficial and family   Rupert Clevely (i)  Beneficial and family   Roger Lambert  David Page  Also interested in: Beneficial and family   Beneficial and family   (i)  762,284 (2011: 869,412) A shares held in trust by RBT II Trustees Limited (ii)  702,769 (2011: 726,906) A shares held in trust by Young’s Pension Trustees Limited.  As at  A shares  2 April 2012  4 April 2011  2 April 2012  4 April 2011  2 April 2012  4 April 2011  2 April 2012  4 April 2011  2 April 2012  4 April 2011  2 April 2012  4 April 2011  2 April 2012  4 April 2011  2 April 2012  4 April 2011  2 April 2012  4 April 2011  8,505 8,505  111,004 111,004  240,971 240,971  3,317,972 3,317,972  50,000 50,000  7,869 12,280  80,756 80,756  1,000 1,000  3,278 3,278  Non-voting shares – – – – 14,000 14,000 111,436 111,436 – – – – – – 1,000 1,000 – – CORPORATE GOVERNANCE The board is committed to good corporate governance in  the management and operation of the group’s business. the effective running of the board) and the Chief Executive  (who has overall responsibility for the running of the  business). The board The business and management of the group is the collective  responsibility of the board. At each meeting, the board  considers and reviews the group’s financial and trading  performance. It has a formal written schedule of matters  reserved for its review and approval; this includes matters  such as strategy, long term objectives and major financial  and key operational issues. The board meets every two  months with additional meetings arranged as required; it  met six times during the period and also passed a written  resolution in place of a meeting. Formal agendas and  reports are provided to the board on a timely basis, along  with other information to enable it to discharge its duties.  All directors have access to independent professional advice  at the company’s expense and to the advice and services  of the Company Secretary. There is a clear division of  responsibility between the Chairman (who is responsible for  Independence The board regards all three of its non-executive directors as  independent; the board views independence as an attitude  of mind and a matter of strength of character. Committees The board has four standing committees: executive, audit,  remuneration and disclosure. • Executive committee This comprises the executive directors and is chaired by  Stephen Goodyear, the Chief Executive. It usually meets  on a weekly basis and is responsible for the daily running  of the group and the execution of approved policies and  the business plan. Members of the company’s senior  management are invited to attend as appropriate.                                                   YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  19 • Audit committee This comprises Nicholas Bryan, who chairs it, Roger  Lambert and David Page. It assists the board in fulfilling  its oversight responsibilities; its primary functions are  to monitor the integrity of the company’s financial  statements and internal control systems (including risk  management), to oversee the company’s relationship  with its external auditor and to review the effectiveness  of the audit process. The committee’s terms of reference,  which set out in full its responsibilities, can be found in  the investor relations section of www.youngs.co.uk.  • Remuneration committee This comprises David Page, who chairs it, Nicholas Bryan  and Roger Lambert. Its primary function is to determine,  on behalf of the board, the remuneration packages of the  executive directors. The committee’s terms of reference,  which set out its other responsibilities, can be found in the  investor relations section of www.youngs.co.uk.  • Disclosure committee This comprises the executive directors and is  chaired by Peter Whitehead, the Finance Director. It  assists the company in making timely and accurate  disclosure of information required to be disclosed in  order to meet legal and regulatory obligations. The  committee’s terms of reference, which set out its other  responsibilities, can be found in the investor relations  section of www.youngs.co.uk. • Nomination committee In practice, the Chairman and the Chief Executive lead  on the board nomination and appointment process. They  consider the balance of skills, knowledge and experience  on the board and make appropriate recommendations  for consideration by the board. This formal but unwritten  process has been used effectively for a number of years  and has led the board to remain of the view that it should  continue to operate in this way rather than through a  more formal nomination committee. Internal control The board has overall responsibility for the internal control  system and for reviewing its effectiveness. The executive  directors implement and maintain the risk management  and internal control systems. The audit committee assists  the board in fulfilling its oversight responsibilities by  monitoring the system’s integrity. The system of control  has been designed to manage risk; it cannot eliminate it  and therefore provides reasonable, not absolute, assurance  against material misstatement or loss. Relations with shareholders and investors Copies of the annual report and the financial statements  and the interim report are sent to all shareholders and  copies are available at www.youngs.co.uk. The company’s  website also provides other information for shareholders  and interested parties. Written or e-mailed enquiries are  handled by the Company Secretary. Shareholders are  given the opportunity to ask questions and raise issues at  the AGM; this can be done formally during the meeting or  informally with the directors after it. The Chief Executive  and the Finance Director meet with institutional investors  and analysts after the announcement of the interim and  year end results. Additional meetings with institutional  investors and/or analysts are arranged from time to time. EMPLOYEES Considerable importance is placed on communications  with employees and so, within the limitation of commercial  confidentiality and security, Young’s provided them with  information concerning trading, development and other  appropriate matters. It did this at many levels throughout the  business on both a formal and informal level, including through  management presentations. It also consulted regularly with  employees and their representatives, thereby enabling the  board to have regard to their views when making decisions  likely to affect their interests; in connection with this, Young’s  continued to operate an information and consultation  committee, with its members being drawn from departments  based at its head office in Wandsworth. The company’s  integrated appraisal and development process, designed  to improve communications and company performance,  remained in place, and the company continued to operate a  bonus scheme for eligible employees. Young’s maintained its  policy of giving full and fair consideration to all applications for  employment, including those made by disabled people, taking  account of the applicant’s particular aptitude and ability; of  seeking to continue to employ anyone who becomes disabled  while employed by the company and arranging training in a  role appropriate to the person’s changed circumstances; and  of giving all employees, including disabled employees, equal  opportunities for training, career development and promotion.   DONATIONS The group made £11,336 of charitable donations. In  addition, throughout the year, the group’s customers, pub  managers and other members of staff were involved in a  variety of initiatives and fundraising activities. No political  donations were made. PUBLIC HEALTH RESPONSIBILITY DEAL The company has pledged its support to the Government’s  public health responsibility deal, an initiative established  to tap into the potential for businesses and other  organisations to improve public health and tackle health  inequalities through their influence over such things as  alcohol and health in the workplace. This saw the company  agreeing to ensure effective action is taken in its managed  pubs to reduce and prevent under-age sales of alcohol  (primarily through the rigorous application of Challenge 21).  20  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 20  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 DIRECTORS’ REPORT (Continued) The company also committed to maintain its financial  and in-kind support for Drinkaware and the “Why let the  Good times go bad?” campaign and to ensure alcohol  advertising is undertaken by the company’s managed pubs  in accordance with industry codes on advertising and is not  placed on any outdoor poster site within 100 meters of a  school. Recognising the impact chronic conditions can have,  guides (developed through the public health responsibility  deal’s health at work network) were embedded within the  company’s HR procedures to ensure that those with chronic  conditions at work are managed in the best way possible  with reasonable flexibilities and workplace adjustments. any material departures disclosed and explained in the  financial statements) and present information, including  accounting policies, in a manner that provides relevant,  reliable and comparable information. The directors are  responsible for keeping accounting records which disclose  with reasonable accuracy, at any time, the financial  position of the group and the company at that time   and enable them to ensure that the financial statements  comply with the Companies Act 2006. They are also  responsible for safeguarding the assets of the group and  the company and hence for taking reasonable steps for the  prevention and detection of fraud and other irregularities. DISCLOSURE OF INFORMATION TO THE AUDITOR Each of Nicholas Bryan, Stephen Goodyear, Torquil Sligo- Young, Peter Whitehead, Patrick Dardis, Rupert Clevely,  Roger Lambert and David Page, being the persons who  were directors at the time when this report was approved,  has confirmed that, so far as he was aware, there was  no information needed by the company’s auditor  in connection with preparing its report of which the  company’s auditor was unaware. Each of those individuals  has also confirmed that he took all the steps that he ought  to have taken as a director to make him aware of any such  information and to establish that the company’s auditor  was aware of it. This paragraph is to be interpreted in  accordance with section 418 of the Companies Act 2006. PREPARATION AND DISCLAIMER This annual report and the financial statements for the  year ended 2 April 2012 have been drawn up and presented  for the purpose of complying with English law. Any liability  arising out of or in connection with them will also be  determined in accordance with English law. By order of the board Anthony Schroeder Company Secretary  23 May 2012 NOTIFICATIONS OF MAJOR HOLDINGS OF VOTING RIGHTS As at 2 April 2012, the company had been notified of the  following holdings of 3% or more of the voting rights in the  company:  Guinness Peat Group plc  Thomas Young  James Young  Torquil Sligo-Young  Lindsell Train Limited  15.05% 14.31% 13.81% 11.99% 5.28% El Oro and Exploration Company plc  3.10% No changes in those holdings, and no other holdings of  3% or more of the voting rights in the company, had been  notified to the company between 3 April 2012 and 21 May  2012, both dates inclusive. STATEMENT OF CERTAIN RESPONSIBILITIES IN RELATION TO THE FINANCIAL STATEMENTS AND OTHERWISE For each financial period, the directors are required to  prepare an annual report and financial statements. The  latter must be prepared in accordance with International  Financial Reporting Standards (“IFRS”) and applicable law  and must present fairly the financial position of the group  and the financial performance and cash flows of the group  for the relevant period. The directors have also elected to  prepare the company’s financial statements under IFRS. In  preparing the statements, the directors must select suitable  accounting policies and then apply them consistently,  state that the group has complied with IFRS (subject to  INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF YOUNG & CO.’S BREWERY, P.L.C. YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  21 YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  21 We have audited the financial statements of Young & Co.’s Brewery, P.L.C. for the period ended 2 April 2012 which comprise the Group Income  Statement, the Group and Parent Company Statements of Comprehensive Income, the Group and Parent Company Balance Sheets, the Group  and Parent Company Statements of Cash Flow, the Group and Parent Company Statements of Changes in Equity and the related notes 1 to 33.  The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards  (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the  provisions of the Companies Act 2006. This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit  work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s  report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the  company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.  Respective responsibilities of directors and auditor As explained more fully in the Directors’ Responsibilities Statement set out on page 20, the directors are responsible for the preparation of  the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the  financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to  comply with the Auditing Practices Board’s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that  the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the  accounting policies are appropriate to the group’s and the parent company’s circumstances and have been consistently applied and adequately  disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial  statements. In addition, we read all the financial and non financial information in the Annual Report to identify material inconsistencies with  the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications  for our report. Opinion on financial statements In our opinion: •  the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 2 April 2012 and of  the group’s loss for the period then ended; •  the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; •  the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as  applied in accordance with the provisions of the Companies Act 2006; and •  the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ report for the financial period for which the financial statements are prepared is consis- tent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: •  adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from  branches not visited by us; or •  the parent company financial statements are not in agreement with the accounting records and returns; or •  certain disclosures of directors’ remuneration specified by law are not made; or •  we have not received all the information and explanations we require for our audit. Iain Wilkie (Senior statutory auditor)  for and on behalf of Ernst & Young LLP, Statutory Auditor  London  23 May 2012 Notes: 1.  The maintenance and integrity of the Young & Co.’s Brewery, P.L.C. web site is the responsibility of the directors; the work carried out by the auditors does not  involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements  since they were initially presented on the web site. 2.  Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.  22  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 GROUP INCOME STATEMENT For the 52 weeks ended 2 April 2012 Continuing operations Revenue  Operating costs before exceptional items  Operating profit before exceptional items  Operating exceptional items  Operating (loss)/profit Finance costs  Finance revenue  Other finance income  (Loss)/profit before tax Taxation  Taxation on property revaluation  Recognition of rollover claim  (Loss)/profit for the period from continuing operations Discontinued operations (Loss)/profit for the period from discontinued operations  (Loss)/profit for the period  Attributable to Shareholders of the parent   Non controlling interest  (Loss)/profit for the period 2012  52 weeks £000 2011 53 weeks £000 Notes 6  7  9  10  10  26  11  11  11  12  178,964  (152,802) 142,597 (120,851) 26,162 (28,827) (2,665) (6,135) 537 769  (7,494) (3,540)  5,640  –  (5,394) 21,746 (4,883) 16,863 (4,015) 9 437 13,294 (2,390) – 4,945 15,849 (1,117)  (6,511)  1,964 17,813 (6,484) (27)  17,827 (14) (6,511) 17,813 Pence  Pence Earnings per 12.5p ordinary share Basic and diluted from continuing operations Basic and diluted from continuing and discontinued operations 16 16 (11.13) (13.45) 32.89 36.97 All discontinued operations are attributable to the shareholders of the parent. The notes on pages 28 to 56 form part of these financial statements. The independent auditor’s report is set out on page 21.                       STATEMENTS OF COMPREHENSIVE INCOME For the 52 weeks ended 2 April 2012 YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  23   Group   Company 2012  52 weeks  £000  2011  53 weeks  £000  2012  52 weeks  £000  2011 53 weeks £000 Notes  (Loss)/profit for the period (6,511) 17,813  (9,623) 9,916 Other comprehensive income  Actuarial (loss)/gain on retirement benefit schemes  Hedging reserve fair value movement of interest rate swap  Unrealised gain on revaluation of property  Tax on above components of other comprehensive income  Discontinued operations’ actuarial loss (net of deferred tax) on  retirement benefit schemes  26  24  18  11  (4,088)  (8,215)  203,065 (41,222) (377)  3,228  282  –  (1,455)  (678)  (4,088) (8,215) 203,065 (41,222) –  3,228 282 – (1,455) – 149,163  1,377  149,540 2,055 Total comprehensive income 142,652 19,190 139,917 11,971 Attributable to Shareholders of the parent   Non controlling interest  Total comprehensive income 142,679  (27)  19,204  (14)  139,917 –  142,652 19,190 139,917 11,971 – 11,971 All discontinued operations are attributable to the shareholders of the parent. The notes on pages 28 to 56 form part of these financial statements. The independent auditor’s report is set out on page 21.                                                   24  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 BALANCE SHEETS At 2 April 2012 Non current assets Goodwill  Property and equipment  Investment in subsidiaries  Investment in associate  Other financial asset  Current assets Inventories  Other financial asset  Trade and other receivables  Cash  Non current assets classified as held for sale  Total assets Current liabilities Borrowings  Trade and other payables  Income tax payable  Non current liabilities Borrowings  Derivative financial instruments  Deferred tax  Retirement benefit schemes  Total liabilities  Net assets Capital and reserves Share capital  Share premium  Capital redemption reserve  Hedging reserve  Revaluation reserve  Retained earnings  Equity attributable to equity shareholders of the parent  Non controlling interest  Total equity Approved by the board of directors and signed on its behalf by: Nicholas Bryan  Peter Whitehead   23 May 2012 Chairman Finance Director The notes on pages 28 to 56 form part of these financial statements. The independent auditor’s report is set out on page 21.   Group   Company Notes  2012  £000  2011  £000  2012  £000  2011 £000 17  18  19  12  12  20  12  21  22  24  23  24  24  25  26  27  20,426  502,042  –  –  4,463  526,931  2,342  4,749  4,445  3,914  15,450  755  20,426  320,204  –  15,273  600  356,503  2,143  –  4,887  2,332  9,362  –  –  450,191  24,254  –  4,463  478,908  1,887  4,749  32,029  2,577  41,242  755  – 267,137 25,620 11,303 600 304,660 1,824 – 37,220 112 39,156 – 543,136 365,865 520,905 343,816 (5)  (26,140)  (2,469)  (28,614)  (2,672)  (26,181)  (1,758)  (30,611)  (5)  (24,256)  (2,204)  (26,465)  (2,672) (22,528) (1,758) (26,958) (121,978)  (12,223)  (54,388)  (8,290)  (122,275)  (4,008)  (19,862)  (7,592)  (121,978)  (12,223)  (47,156)  (8,290)  (122,275) (4,008) (11,558) (7,592) (196,879)  (153,737)  (189,647)  (145,433) (225,493)  (184,348)  (216,112)  (172,391) 317,643 181,517 304,793 171,425 6,028  1,274  1,808  (9,290)  158,731  159,134  317,685  (42)  317,643 6,028  1,274  1,808  (2,966)  –  175,388  181,532  (15)  181,517 6,028  1,274  1,808  (9,290)  158,731  146,242  304,793  –  304,793 6,028 1,274 1,808 (2,966) – 165,281 171,425 – 171,425                                               STATEMENTS OF CASH FLOW For the 52 weeks ended 2 April 2012 YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  25 Operating activities Net cash generated from operations Interest received  Tax paid  Notes  28   Group   Company 2012  52 weeks  £000  2011  53 weeks  £000  2012  52 weeks  £000  2011 53 weeks £000 34,601 5  (3,885)  29,743 9  (4,357)  31,235 768  (3,885)  25,832 419 (4,357) Net cash flow from operating activities 30,721  25,395 28,118 21,894 Investing activities  Sales of property and equipment  Sale of discontinued operations  Purchases of property and equipment  Business combinations, net of cash acquired  Net cash used in investing activities Financing activities  Interest paid  Equity dividends paid  (Decrease)/increase in borrowings  (Decrease)/increase in short term borrowings  12  18  13  14  7,033 5,100 (25,605)  –  3,316  –  (18,614)  (60,000)  7,033 5,100 (22,119)  –  3,316 – (15,193)  (62,140) (13,472) (75,298) (9,986) (74,017) (6,154) (6,549) (300) (2,664) (3,753)  (6,327)  58,073  2,667  (6,154) (6,549) (300) (2,664) (3,753) (6,327) 58,073 2,667 Net cash flow (used in)/from financing activities (15,667) 50,660 (15,667) 50,660 Increase in cash  Cash at the beginning of the period  Cash at the end of the period 1,582 2,332  3,914 757  1,575  2,332 2,465 112  2,577 (1,463) 1,575 112 The notes on pages 28 to 56 form part of these financial statements. The independent auditor’s report is set out on page 21.                                               26  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 GROUP STATEMENT OF CHANGES IN EQUITY At 2 April 2012 Capital  Share  redemption  Hedging  Revaluation   reserve  £000  reserve  £000  reserve  £000  capital (1)  £000  Notes    Total equity    attributable  Retained  earnings  shareholders  £000  Non   to equity  controlling  interest  £000  £000  Total equity £000 At 30 March 2010 7,302 1,808 (3,089) – 162,593 168,614 – 168,614 –  –  17,827  17,827  (14)  17,813 Total comprehensive income Profit/(loss) for the period  Other comprehensive income Actuarial gain on retirement benefit schemes   Fair value movement of interest rate swap  Tax on above components of other  comprehensive income  Discontinued operations’ actuarial loss   (net of deferred tax) on retirement benefit schemes  26  24  11  Total comprehensive income Transactions with owners recorded directly in equity Dividends paid on equity shares  14  Share based payments by discontinued operations  Acquisition of businesses  –  –  –  –  –  – – –  –  –  –  –  –  –  –  –  –  –  –  –  –  –  –  282  (159)  –  123 123 –  –  –  –  At 4 April 2011 7,302 1,808 (2,966) –  –  –  –  –  –  –  –  –  –  – 3,228  –  3,228  282  (1,296)  (1,455)  (678)  (678)  1,254  1,377  –  –  –  –  –  3,228 282 (1,455) (678) 1,377 19,081  19,204  (14)  19,190 (6,327)  41  –  (6,327)  41  –  (6,286)  (6,286)  –  –  (1)  (1)  (6,327) 41 (1) (6,287) 175,388 181,532 (15) 181,517 Total comprehensive income Loss for the period  Other comprehensive income Actuarial loss on retirement benefit schemes   Fair value movement of interest rate swap  Unrealised gain on revaluation of property  Tax on above components of other   comprehensive income  Discontinued operations’ actuarial loss   (net of deferred tax) on retirement benefit schemes  26   24   18  11  Total comprehensive income Transactions with owners recorded directly in equity Dividends paid on equity shares  Revaluation reserve realised on disposal of properties  Share based payments by discontinued operations  14  –  –  –  –  –  –  – – –  –  –  –  –  –  –  –  –  –  –  –  –  –  –  –  –  –  (6,484)  (6,484)  (27)  (6,511) –  (8,215)  –  –  –  203,065  (4,088)  –  –  (4,088)  (8,215)  203,065  1,891  (43,702)  589  (41,222)  –  –  (377)  (377)  (6,324) 159,363  (3,876)  149,163  –  –  –  –  –  –  (4,088) (8,215)  203,065  (41,222) (377) 149,163 (6,324) 159,363  (10,360)  142,679  (27)  142,652 –  –  –  –  –  (632)  –  (6,549)  632  23  (6,549)  –  23  (632)  (5,894)  (6,526)  –  –  –  –  (6,549) – 23 (6,526) At 2 April 2012 7,302 1,808 (9,290) 158,731 159,134 317,685 (42) 317,643 (1) Total share capital comprises the share capital issued and fully paid of £6,028,000 (2011: £6,028,000) and the share premium account of  £1,274,000 (2011: £1,274,000). The notes on pages 28 to 56 form part of these financial statements. The independent auditor’s report is set out on page 21.                                                           PARENT COMPANY STATEMENT OF CHANGES IN EQUITY At 2 April 2012 YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  27 At 30 March 2010 7,302 1,808 (3,089) – 159,760 165,781 Capital  Share  redemption  reserve  £000  capital (1)  £000  Notes  Hedging  Revaluation   reserve  £000  reserve  £000  Retained  earnings  £000  Total equity £000 Total comprehensive income Profit for the period  Other comprehensive income Actuarial gain on retirement benefit schemes   Fair value movement of interest rate swap  Tax on above components of other comprehensive income  Total comprehensive income Transactions with owners recorded directly in equity Dividends paid on equity shares  At 4 April 2011 Total comprehensive income Loss for the period  Other comprehensive income Actuarial loss on retirement benefit schemes   Fair value movement of interest rate swap  Unrealised gain on revaluation of property  Tax on above components of other comprehensive income  Total comprehensive income Transactions with owners recorded directly in equity Dividends paid on equity shares  Revaluation reserve realised on disposal of properties  26  24  11  14  26  24  18  11  14  –  –  –  –  – – –  –  –  –  –  – – –  –  –  282  (159)  123 123 –  7,302 1,808 (2,966) –  –  –  –  –  –  –  – 9,916  9,916 3,228  –  (1,296)  3,228 282 (1,455) 1,932  2,055 11,848  11,971 (6,327)  (6,327) 165,281 171,425 –  –  –  –  –  – – –  –  – –  –  –  –  –  – – –  –  – –  –  (9,623)  (9,623) –  (8,215)  –  1,891  –  –  203,065  (43,702)  (4,088)  –  –  589  (4,088) (8,215) 203,065 (41,222) (6,324) 159,363  (3,499)  149,540 (6,324) 159,363  (13,122)  139,917 –  –  – –  (632)  (6,549)  632  (6,549) – (632)  (5,917)  (6,549) At 2 April 2012 7,302 1,808 (9,290) 158,731 146,242 304,793 (1) Total share capital comprises the share capital issued and fully paid of £6,028,000 (2011: £6,028,000) and the share premium account of  £1,274,000 (2011: £1,274,000). The notes on pages 28 to 56 form part of these financial statements. The independent auditor’s report is set out on page 21.                       28  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS For the period ended 2 April 2012 1. GENERAL INFORMATION The group and parent company financial statements of Young & Co.’s Brewery, P.L.C. for the period ended 2 April 2012 were authorised for issue by  the board of directors on 23 May 2012. Young & Co.’s Brewery, P.L.C. is a public limited company incorporated and domiciled in England and Wales.  The company’s shares are listed on the Alternative Investment Market of the London Stock Exchange. The nature of the group’s operations and its  principal activities are set out in note 5 and in the directors’ report on pages 14 to 20. The current period relates to the 364 days ended 2 April 2012; the prior period relates to the 371 days ended 4 April 2011. The financial statements are presented in pounds sterling and all values are rounded to the nearest thousand pounds (£000) except where  otherwise indicated. 2. BASIS OF PREPARATION The consolidated financial statements of the group have been prepared in accordance with International Financial Reporting Standards  (IFRS) as adopted for use in the European Union. IFRS includes the application of International Financial Reporting Standards including  International Accounting Standards (IAS) and related Interpretations of the International Financial Reporting Interpretations Committee (IFRIC)  and Interpretations of the Standing Interpretations Committee (SIC). During the period, new IFRS, amendments to existing IFRS and new  Interpretations were issued by the International Accounting Standards Board (IASB). The impact and, if applicable, the adoption of these policies is  described below in “New Accounting Standards, Amendments and Interpretations”. No separate income statement is presented for the company, as permitted by section 408(3) of the Companies Act 2006. The company’s loss after  tax for the period was £9,623,000 (2011: £9,916,000 profit). Property and equipment As permitted by IAS 16: Property Plant and Equipment, the group has changed its accounting policy on valuing property and equipment from the  cost model to the revaluation model. This change in accounting policy has been applied in accordance with IAS 8: Accounting Policies, Changes in  Accounting Estimates and Errors.  Since the adoption of IFRS in 2007, properties have been measured at cost (or for pre 1997 acquired properties, deemed cost) less accumulated  depreciation and impairment. For property acquired before 1997, deemed cost was derived from its 1997 valuation less accumulated depreciation  up to the adoption of IFRS.  During the current period, the directors of the group concluded that the cost model no longer represented a relevant value of properties within the  estate so adopted the revaluation model. The directors consider the revaluation model to provide users of the financial statements with a better  understanding of the potential value of the group’s property portfolio. Properties, including land and buildings, and fixtures, fittings and equipment  are now held at fair value, and will be revalued by qualified valuers on a sufficiently regular basis using open market value so that the carrying value  of an asset does not differ significantly from its fair value at the balance sheet date. Surpluses which arise from the revaluation exercise are included  within other comprehensive income (in the revaluation reserve) unless they are reversing a revaluation adjustment which has been recognised in the  income statement previously. Where the revaluation exercise gives rise to a deficit, this is reflected directly in other comprehensive income (in the  revaluation reserve) to the extent that a surplus exists against the same asset. Any further decrease in value is recognised in the income statement  as an exceptional expense.  In the current period, an amount of £203,065,000 has been recognised within other comprehensive income to reflect these surpluses and an amount  of £29,110,000 has been recognised in the income statement to reflect the deficits. This has resulted in a net uplift to the carrying value of property  and equipment of £173,955,000. The change in accounting policy to the revaluation method is to be accounted for prospectively so has no impact  on prior periods. In addition, the group has changed its estimate of useful life for a small number of leasehold properties. This change is also permitted by IAS 16, and  in accordance with IAS 8, has been accounted for prospectively. In the current period and going forward, the useful lives of leasehold properties is the  shorter of the useful life or the lease term. Previously, leasehold buildings were depreciated over 50 years, or the lease term if shorter. New Accounting Standards, Amendments and Interpretations The group has adopted the following new accounting standards and interpretations during the period.  IFRS 1: Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards: The amendment allows first time adopters of  IFRSs a limited exemption from IFRS 7 Disclosures. The group considers the amendment to have no impact as it has adopted IFRS 7 in full.  IAS 24: Related Party Disclosures (Revised): The revised standard was effective for accounting periods beginning on or after 1 January 2011. The  definition of a related party has been clarified to simplify the identification of related party relationships. The group has considered the definition  and concluded that there is no impact to its related party disclosures.  IFRIC 14: Amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement: The amendments are effective for accounting periods  beginning on or after 1 January 2011. The amendment provides further guidance on assessing the recoverable amount of a net pension asset.  The adoption of the amendment has had no impact on the group. IFRIC 19: Extinguishing Financial Liabilities with Equity Instruments: The interpretation was effective for accounting periods beginning on or after  1 July 2010. The interpretation clarifies the treatment of equity instruments issued to creditors. The group did not issue any equity instruments  during the period and therefore this amendment is not applicable to the group.  IFRS 3: Amendments to IFRS 3 Business Combinations: The amendments are effective for accounting periods beginning on or after 1 July 2010.  The amendment states that only holders of non controlling interests which are entitled to a proportionate share of net assets upon liquidation  can measure their interests as a proportionate share of the net identifiable assets or at fair value. If this is not stated then the interests should be  measured at fair value. The adoption of the amendment is considered by the group to have no impact on the non controlling interest’s share of its  net assets, which are measured at fair value. YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  29 At the date of authorisation of these financial statements, the following Standards, Amendments and Interpretations, which have not been applied  in these financial statements, were in issue but not yet effective: IFRS 1  IFRS 1  IFRS 7  IFRS 7  IFRS 9  IFRS 10, IAS 27  IFRS 11, IAS 28  IFRS 12  IFRS 13  IAS 1  IAS 12  IAS 19  IAS 32  Severe Hyperinflation and Removal of Fixed Dates for   First time Adopters (Amendment) Government Loans (Amendment)  Financial Instruments: Disclosures (Amendment)  Effective date 1 July 2011  1 January 2013 1 July 2011 Offsetting Financial Assets and Financial Liabilities (Amendment)   1 January 2013 Financial Instruments: Classification and Measurement  1 January 2015 Consolidated Financial Statements, Separate Financial Statements  1 January 2013 Joint Arrangements, Investments in Associates and Joint Ventures  1 January 2013 Disclosure of Interests in Other Entities  Fair Value Measurement  Presentation of Items of Other Comprehensive Income  (Amendment) Income Taxes (Amendment) – Deferred Taxes:   Recovery of Underlying Assets Employee Benefits (Revised)  Offsetting Financial Assets and Financial Liabilities   (Amendment) 1 January 2013 1 January 2013 1 July 2012 1 January 2012  1 January 2013 1 January 2014  IFRIC 20  Stripping Costs in the Production Phase of a Surface Mine  1 January 2013 The directors intend to adopt the above Standards, Amendments and Interpretations when they become effective. The directors do not expect  that the adoption of these Standards, Amendments and Interpretations in future periods will have a material impact on the financial statements  of the group or company. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies adopted are set out below and, except as noted above, have been applied consistently in presenting the group  and parent company financial information. (a) Basis of consolidation The group’s financial statements consolidate the financial statements of Young & Co.’s Brewery, P.L.C. with the entities it controls, its subsidiaries,  and a special purpose entity, drawn up to the period end. Control exists where the company has the power to govern the financial and operating  policies of the investee entity so as to obtain benefits from its activities. The special purpose entity is an Employee Share Ownership Plan (ESOP) Trust. The results of subsidiaries acquired or disposed of during the period are included in the group income statement from the effective date of  acquisition or up to the effective date of disposal, as appropriate. The financial statements of the subsidiaries and special purpose entity are consolidated on a comparable period basis, using consistent accounting  policies. All inter company balances and transactions, including unrealised profits arising on them, are eliminated. For non wholly owned subsidiaries, a share of the profit for the financial period and the net assets is attributed to the non controlling interests as  shown in the group income statement, the group other comprehensive income statement and the group balance sheet. (b) Investment in associate During the current period, the group disposed of its entire 40% share in Wells & Young’s Brewing Company Limited, its brewing associate. In the  prior period, the group’s interest in its associate, being an entity over which the group had significant influence, was accounted for using the equity  method of accounting. Under the equity method, the investment in the associate is carried in the balance sheet at cost (net of deferred tax) plus post acquisition changes  in the group’s share of net assets, less distributions received and any impairment in value of the investment. The group’s income statement reflects  the share of the associate’s results after tax, disclosed within discontinued operations. The group’s statement of comprehensive income reflects the  group’s share of any income or expense recognised by the associate outside the income statement. The group’s statement of changes in equity  reflects the group’s share of any transactions not included in the group’s income statement or the group’s statement of comprehensive income. (c) The parent company’s investments in subsidiaries and associate In its separate financial statements, the parent company recognises its investments in its subsidiaries and associate on the basis of the direct equity  interest. Income is recognised from these investments in relation to distributions received.             30  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS (Continued) (d) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, VAT and other sales taxes.  The following criteria must also be met before revenue is recognised: Sale of goods Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Rental income Rental income arising from operating leases on properties is accounted for on a straight line basis over the lease term. Interest income Revenue is recognised as interest accrues (using the effective interest method). Dividends Revenue is recognised when the company’s right to receive payment is established. (e) Exceptional items Exceptional items, as disclosed on the face of the income statement, are items which due to their material and non recurring nature have been  classified separately in order to draw them to the attention of the reader of the financial statements. They are included in the adjustments that,  in management’s judgement, are required in order to show more accurately the business performance of the group in a consistent manner and to  reflect how the business is managed and measured on a day to day basis. (f) Business combinations and goodwill Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration  transferred, measured at acquisition date fair value and the amount of any non controlling interest in the acquiree. The non controlling interest is  measured as the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in operating  exceptional items. Goodwill arising on acquisition represents the excess of the cost of acquisition over the fair value of the net identifiable assets acquired and liabilities  assumed at the date of acquisition. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or  loss on disposal. (g) Property and equipment Properties, including land and buildings, and fixtures, fittings and equipment are held at fair value, and are revalued by qualified valuers on a sufficiently  regular basis using open market values so that the carrying value of an asset does not differ significantly from its fair value at the balance sheet date.  Surpluses which arise from the revaluation exercise are included within other comprehensive income (in the revaluation reserve) unless they are reversing a  revaluation adjustment which has been recognised in the income statement previously. Where the revaluation exercise gives rise to a deficit, this is reflected  directly in other comprehensive income (in the revaluation reserve) to the extent that a surplus exists against the same asset. Any further decrease in value is  recognised in the income statement as an exceptional expense. The carrying amount of an asset, less any residual value, is depreciated on a straight line basis over the asset’s useful life or lease term if shorter. The  residual value, useful life and depreciation method applied to each asset are reviewed annually. Freehold land is not depreciated. Useful lives:     Freehold and long leasehold buildings      Short leasehold buildings      Fixtures, fittings and equipment   50 years  Shorter of the estimated useful life and the lease term  3-10 years An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated  recoverable amount (note 3(h)). The gain arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of   the asset, and is recognised in the income statement. Pub fixtures and fittings are treated as disposals in the period following completion of their  write down. (h) Impairment of assets The carrying values of investments, property and equipment are reviewed for impairment if events or changes in circumstances indicate the carrying  value may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The  recoverable amount is the higher of an asset’s fair value less costs to sell, and the value in use. Value in use is assessed by reference to the estimated future  cash flows, which are discounted to present value using an appropriate pre tax discount rate. Impairment losses are recognised in the income statement. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so  that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for  the asset in prior periods. A reversal of an impairment loss is recognised immediately in the group income statement unless the impairment loss related to  goodwill in which case it is not reversed. Impairment is assessed on the basis of either each individual asset, each individual cash generating unit (an individual pub), or, in the case of goodwill, the  group of cash generating units associated with it. The fair value of the asset is assumed to be the market value of the property. Goodwill is mandatorily  assessed for impairment on an annual basis or more frequently if there are indications that the carrying value is impaired. For the purpose of impairment  testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the group’s cash generating units (or groups of  cash generating units) that are expected to benefit from the combination.   YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  31 (i) Leases (1) Where the group is the lessee Assets held under finance leases, which transfer to the group substantially all the risks and benefits incidental to ownership of the leased item, are  capitalised at the inception of the lease, with a corresponding liability being recognised for the lower of the fair value of the leased asset and the  present value of the minimum lease payments. Lease payments are apportioned between the reduction of the lease liability and finance charges in the income statement so as to achieve a constant  rate of interest on the remaining balance of the liability. Leases where the lessor retains a significant portion of the risks and benefits of ownership of the asset are classified as operating leases and rentals  payable are charged in the income statement on a straight line basis over the lease term. (2) Where the group is the lessor Assets leased out under operating leases are included in property and equipment and depreciated over their estimated useful lives. Rental income,  including the effect of lease incentives, is recognised on a straight line basis over the lease term. (j) Non current assets held for sale Assets whose carrying amounts will be recovered principally by sale rather than continuing use are classified separately as assets held for sale. Assets  are classified as held for sale when management has committed to their sale, the asset is available for immediate sale and a sale is highly probable.  Assets held for sale are measured at their carrying value or if lower fair value less costs of disposal. (k) Inventories Inventories are valued at the lower of cost and net realisable value. Cost includes all costs of purchase, costs of conversion and other costs incurred in  bringing the inventories to their present location and condition. The cost formula used is equivalent to a ‘First in, First out’ method. (l) Cash Cash in the balance sheet comprises cash at banks and in hand. For the purpose of the group and parent cash flow statements, cash is net of  outstanding bank overdrafts. Cash and cash equivalents include only deposits which mature in less than three months. (m) Trade and other payables Trade payables are recognised initially at fair value and subsequently at amortised cost. When applicable, trade and other payables are analysed  between current and non current liabilities on the face of the balance sheet, depending on when the obligation to settle will crystallise. (n) Interest bearing loans and borrowings All loans and borrowings are initially recognised at fair value. Directly attributable transaction costs are capitalised and amortised, using the effective  interest method through finance expense, over the life of the facility. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. (o) Taxation The tax expense or credit for the period comprises current and deferred tax. The current tax expense is recognised in the income statement unless it  relates to items that are credited or charged to equity, in which case it is charged or credited directly to equity.  The current tax payable is measured at the amount expected to be paid to the taxation authorities, based on tax rates and laws that are enacted or  substantively enacted by the balance sheet date. Deferred tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts, with the  following exceptions: •  where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business  combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; •  in respect of taxable temporary differences associated with investments in subsidiaries or associates, where the timing of the reversal of the  temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and •  deferred income tax assets are recognised only to the extent that it is probable that taxable profits will be available against which the deductible  temporary differences, carried forward tax credits or tax losses can be utilised. Where capital gains have been rolled over for tax purposes, a deferred tax liability is recorded on the rolled over gain to reflect the tax that may be  due on this amount at a future date. Where there has been an upward revaluation of an asset, a deferred tax liability is recorded based on the difference between the indexed cost of the  asset less any capital gains which have been rolled over against the asset and the revalued amount. Deferred tax is measured on an undiscounted basis at the rates that are expected to apply on reversal of the underlying temporary differences, based  on tax rates and laws enacted or substantively enacted at the balance sheet date. 32  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS (Continued) (p) Provisions A provision is recognised when the group has a legal or constructive obligation as a result of a past event and it is probable that an outflow   of economic benefits will be required to settle the obligation. The expense relating to any provision is presented in the income statement net   of any reimbursement. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those  cash flows. If the effect is material, the present value of those cash flows is discounted using a pre tax rate that reflects, where appropriate, the risks  specific to the liability. (q) Accounting for the ESOP Trust In 2009, the unallocated shares of the Ram Brewery Trust General Fund, investment in own shares, were treated as a deduction from capital and  reserves in the group balance sheet. No such shares were held at the end of the current period. Allocations of shares to employees under the closed  profit sharing scheme are treated as disposals. The capital gains tax liability that may arise on the allocated shares in the Ram Brewery Trust II when they are transferred to employees on  retirement is recognised as a provision in the financial statements. (r) Derivative financial instruments and hedging The group uses derivative financial instruments such as interest rate swaps to hedge its risk associated with interest rate fluctuations. From 1  April 2006, derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are  subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value   is negative. The fair value of interest rate swap contracts is determined by reference to market values for similar instruments. For those derivatives designated as hedges and for which hedge accounting is desired, the hedging relationship is documented at its inception. This  documentation identifies the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how its effectiveness will  be measured throughout its duration. Such hedges are expected at inception to be highly effective. Where cash flow hedge accounting is not applied, the movement in the fair value of the derivative is recognised immediately in the income statement.  Where cash flow hedge accounting is applied, as in the case of the interest rate swaps held by the group, the effective portion of the gain or loss on the  hedging instrument is recognised in the statement of comprehensive income, while the ineffective portion is recognised in the income statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked,  amounts previously recognised in equity remain in equity until the forecast transaction occurs, at which point they are transferred to the income  statement. If the related transaction is not expected to occur, the amount held in equity is recognised immediately in the income statement. (s) Pensions and other post retirement benefits The group operates a defined contribution pension scheme, a defined benefit pension scheme and a post retirement health care scheme. Contributions to the defined contribution scheme are recognised in the income statement in the period in which they become due. The group’s accounting policy for recognising actuarial gains and losses is to recognise these immediately through the statement of  comprehensive income. For the defined benefit scheme, the cost of providing benefits is determined using the projected unit credit method, which attributes entitlements  to benefits to the current period (to determine current service cost) and to the current and prior periods (to determine the present value of defined  benefit obligations) and is based on actuarial advice. Past service costs are recognised in the income statement on a straight line basis over  the vesting period or immediately if the benefits have vested. When a settlement (eliminating all obligations for benefits already accrued) or a  curtailment (reducing future obligations as a result of a material reduction in the scheme membership or a reduction in the future entitlement)  occurs, the obligation and related scheme assets are re-measured using current actuarial assumptions and the resultant gain or loss is recognised in  the income statement during the period in which the settlement or curtailment occurs. The interest element of the defined benefit cost represents the change in present value of scheme obligations resulting from the passage of time,  and is determined by applying the discount rate to the opening present value of the benefit obligations, taking into account material changes in the  obligations during the period. The expected return on scheme assets is based on an assessment made at the beginning of the period of long term  market returns on scheme assets, adjusted for the effect on the fair value of scheme assets of contributions received and benefits paid during the  period. The difference between the expected return on scheme assets and the interest cost is recognised in the income statement as other finance  income or expense. Actuarial gains and losses are recognised in full in the statement of comprehensive income in the period in which they occur. The defined benefit pension liability in the balance sheet comprises the present value of the defined benefit obligations (using a discount rate based  on high quality corporate bonds), less any past service cost not yet recognised and less the fair value of scheme assets out of which the obligations  are to be settled directly. Fair value is based on market price information and in the case of quoted securities is the published bid price. The value of  a net pension benefit asset is restricted to the sum of any unrecognised past service costs and the present value of any amount the group expects to  recover by way of refunds from the scheme or reductions in the future contributions. Post retirement health care benefits are provided for certain employees and certain directors (together, the “members”). Entry to the scheme is on a  discretionary basis. The annual premium for providing cover is determined by BUPA. This information is taken by qualified actuaries who then assess  the reserve required to provide this benefit for members’ future lifetimes, using IAS 19 assumptions. The liability for new entrants is recognised  through the income statement in the period in which the benefit is granted. Actuarial gains and losses arising from experience adjustments, and  changes in actuarial assumptions, are recognised in full directly in the statement of comprehensive income. YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  33 (t) Trade and other receivables Trade receivables are recognised and carried at the lower of their original invoice value and recoverable amount. A provision for impairment is made  when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the group will not be  able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through use of an  allowance account. Impaired debts are derecognised when they are assessed as irrecoverable. (u) Use of estimates The preparation of financial information in conformity with IFRS requires management to make certain judgements, estimates and assumptions  that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Although these estimates are based on  management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. Estimates and underlying  assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in  any future period affected. The areas involving a higher degree of judgement or complexity, or where the most sensitive estimates and assumptions are significant to the  financial statements, are set out in note 4. 4. KEY ACCOUNTING ESTIMATES AND JUDGEMENTS The following are the key judgements that management have made in the process of applying the group’s accounting policies and that have the  most significant effect on the amounts recognised in the financial statements. (a) Estimated valuation of property and equipment The group is required to value property and equipment on a sufficiently regular basis using open market values to ensure the current carrying value  does not differ significantly from the fair value. The valuation, performed by qualified valuers, is based on market observations and estimates on the  selling price in an arms’ length transaction, and includes estimates of future income levels and trading potential for each pub, as well as taking into  account other factors such as location, tenure and current income levels. (b) Estimated impairment of goodwill The group considers annually whether goodwill has suffered any impairment in accordance with the accounting policy set out in note 3(h). The  recoverable amounts of cash generating units have been determined based on value in use calculations. This calculation requires the use of estimates  including growth rates, capital maintenance expenditure and pre tax discount rates. See notes 3(h) and 17. (c) Business combinations When assets are acquired, management determines whether the assets form a business combination. A fair value exercise of both the consideration  and the net assets acquired is performed once it is determined that a business combination has taken place. If the fair value of the consideration is in  excess of the fair value of the net assets acquired, the difference is recognised as goodwill. If the opposite occurs, the difference is recognised in the  income statement. The group makes judgements and estimates in relation to the fair value of the consideration and of the net assets acquired. See  notes 3(f) and 13. (d) Depreciation Depreciation is provided so as to write down the assets to their residual values over the estimated useful lives. The selection of these residual values  and estimated lives requires the exercise of management’s judgement. See notes 3(g) and 18. (e) Defined benefit pension obligations Measurement of defined benefit pension obligations requires an estimate of future changes in salaries and inflation, as well as mortality rates, the  expected return on assets and the selection of a suitable discount rate. These have been determined on advice from the group’s qualified actuary.  See notes 3(s) and 26. (f) Taxation Judgement is required when determining the provision for taxes as the tax treatment of some transactions cannot be finally determined until a  formal resolution has been reached with the tax authorities. Tax benefits are not recognised unless it is probable that they will be obtained. Tax  provisions are made if it is probable that a liability will arise. The group reviews each significant tax liability or benefit to assess the appropriate  accounting treatment. See notes 3(o), 11 and 25. 34  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS (Continued) 5. SEGMENTAL REPORTING The group is organised into the reporting segments referred to below. These segments are based on the different resources and risks involved in the  running of the group. The executive board of the group internally reviews each reporting segment’s operating profit or loss before exceptional items  for the purpose of deciding on the allocation of resources and assessing performance.  The group has three operating segments: Young’s managed houses, Geronimo managed houses and tenanted houses. Both Young’s and Geronimo  managed houses operate pubs. Revenue is derived from sales of drink, food and, also for Young’s managed houses, accommodation. Due to common  economic characteristics, similar product offerings and customers, the Young’s managed houses and Geronimo managed houses operating segments  have been reported below as a single reportable segment, managed houses. Tenanted houses consists of pubs owned or leased by the company and  leased or sub leased to third parties. Revenue is derived from rents payable by, and sales of drink made to, tenants. There were intersegment revenues of £473,000 between the segments in the current period (2011: £95,000), which have been eliminated on  consolidation. Intersegment sales are charged at current market prices. The group’s revenue is derived entirely from the UK. Income statement 2012 – 52 weeks External revenue Intersegment revenue  Total segment revenue Depreciation and amortisation Operating profit before exceptional items 2011 – 53 weeks External revenue  Intersegment revenue  Total segment revenue  Depreciation and amortisation  Operating profit before exceptional items  Managed houses £000 164,999 – 164,999 (10,158) 35,257 127,836  –  127,836  (8,353)  29,228  Tenanted houses £000 13,555 – 13,555 (1,222) 5,286 14,392  –  14,392  (1,223)  5,387  Segment total £000 178,554 – 178,554 (11,380) 40,543 142,228  –  142,228  (9,576)  34,615  The following is a reconciliation of the operating profit before exceptional items to the profit before tax: Operating profit before exceptional items  Operating exceptional items  Finance costs  Finance revenue  Other finance income  (Loss)/profit before tax from continuing operations  Balance sheet 2012 Segment assets Other financial asset Cash  Total assets Managed houses £000 470,741 – – 470,741 Tenanted houses £000 52,449 – – 52,449 Segment total £000 523,190 – – 523,190 Unallocated £000 6,820 9,212 3,914 19,946 Other segmental information Additions to non current assets Downward movements in property valuation 24,185 21,066 1,144 7,902 25,329 28,968 276 142 25,605 29,110 2011 Segment assets  Investment in associate  Other financial asset  Cash  Total assets  Other segmental information Additions to non current assets Impairment of properties  292,008   –  –  –  292,008   51,584   –  –  –  51,584   343,592   –  –  –  343,592   4,068  15,273   600  2,332  22,273  347,660  15,273 600 2,332  365,865   87,227  1,642  2,329  240  89,556  1,882  220  –  89,776 1,882  Unallocated £000 410 473 883 (460) (14,381) 369  95  464  (455)  (12,869)  2012  £000  26,162 (28,827) (6,135) 537 769 (7,494) Total £000 178,964 473 179,437 (11,840) 26,162 142,597 95 142,692 (10,031) 21,746 2011 £000 21,746 (4,883) (4,015) 9  437 13,294 Total £000 530,010 9,212 3,914 543,136                                                                                                  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  35 6. REVENUE Sales of goods  Rental income  Revenue  Finance revenue  Revenue shown above is from continuing operations. 7. OPERATING COSTS BEFORE EXCEPTIONAL ITEMS Changes in inventories of finished goods and raw materials  Raw materials, consumables and finished goods used  Employment costs (note 8(a))  Depreciation (note 18)  Other operating costs  Other operating costs include: Operating lease rentals:  minimum lease payments  sublease payments  Auditor’s remuneration to main group auditor:  audit of the group financial statements   audit of subsidiaries’ accounts  audit related assurance services  taxation advisory services  corporate finance services  Auditor’s remuneration to other auditor:  other audit services  taxation advisory services  all other services  2012  52 weeks  £000  167,985 10,979 178,964 537  2011 53 weeks £000 132,203 10,394 142,597  9 179,501 142,606 2012  52 weeks  £000  2011 53 weeks £000 (199) 49,239 54,879 11,840 37,043 (438) 39,734 43,221  10,031 28,303 152,802 120,851 5,549 500 6,049 137 21 32 4 – 194 8 5 – 13 3,092 404 3,496 177 28 31 26 205 467 49 14 12 75                                                                                                                                                             36  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS (Continued) 8. EMPLOYMENT (a) Costs and employee numbers Wages and salaries  Social security  Pension and health care schemes  Employment costs before exceptional items Employment costs in exceptional items: capital gains tax on ESOP allocated shares  The average monthly number of employees was 2,985 (2011: 2,335). (b) Directors’ emoluments Basic salary and fees £ 66,363 23,198 304,292 120,290 212,076 220,745 216,732 36,333 36,333 Benefits £ – 6,259 22,293 26,291 20,499 Bonus £ – – 200,000 70,000 140,000 3,605 140,000 23,717 200,000 – – – – Nicholas Bryan  Christopher Sandland  Stephen Goodyear  Torquil Sligo –Young  Peter Whitehead  Patrick Dardis  Rupert Clevely  Roger Lambert  David Page  Total 2012  Total 2011  1,236,362 102,664 750,000 2,089,026 1,092,109  90,700  168,474  1,351,283 Notes: The amounts shown in the “Benefits” column relate primarily to the provision of private medical insurance and car related benefits.  2012  52 weeks  £000  2011 53 weeks £000 49,816 4,096 967 54,879 152 38,765 3,223 1,233 43,221 166 55,031 43,387 Total excluding  pension  costs  2012  52 weeks  £  66,363 29,457 526,585 216,581 372,575 364,350 440,449 36,333 36,333 Total  excluding pension  costs 2011 53 weeks £ 38,000  84,751 384,300 172,739 266,477 267,767  67,249  35,000  35,000                                                                                                                        YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  37 (c) Retirement benefits The company operates one pension scheme, namely the Young & Co.’s Brewery, P.L.C. Pension Scheme. All individuals in the pension scheme  contribute to it, with contributions being at the rate of 5.0% of pensionable earnings. The pension scheme is a defined benefit scheme investing  largely in managed funds. As at 2 April 2012, only two directors, Peter Whitehead and Patrick Dardis, were accruing benefits under the pension  scheme in respect of qualifying service. The company bears the cost of post retirement health care premia for certain employees and ex-employees. The company accounts for retirement benefits in accordance with IAS 19. Detailed disclosures are set out in note 26. 1  Increase in accrued  pension during  the period  (excluding inflation)  £  1,399  1,494  3,218  2   Transfer value of  increase  (net of member  contributions)  £  (75,585)  46,957  47,451  3   Accumulated total    accrued pension  as at  2 April 2012  £  50,354  50,798  28,958  4  Transfer value of  accrued pension  benefits as at  4 April 2011  £  1,629,927  735,839  325,960  5  Transfer value of  accrued pension   benefits as at  2 April 2012  £   1,744,137  900,187  437,668  6 Increase in transfer  value during the period  (net of member contributions)  £ 110,430 157,868 105,228 Stephen Goodyear  Peter Whitehead  Patrick Dardis  Notes: (i)  Subject to note (ii), the pension entitlement shown in column 3 is that which would be paid  annually on retirement under the terms of the  relevant director’s service agreement based on  service to 2 April 2012. As Peter Whitehead was appointed before 6 April 1997, he is entitled to a  pension payable without reduction at the earliest age permissible by HM Revenue and  Customs; this has been allowed for in the calculation of his  transfer values shown above. (ii)  Stephen Goodyear began to draw his pension from 1 November 2011, whilst remaining in  employment as a director. He exchanged part of his  pension for tax-free cash. The figure in  column 3 is based on his post-commutation pension in payment, whilst the figures in  columns 2, 5 and 6  allow for the tax-free cash taken. (iii)  Torquil Sligo-Young began to draw his pension during the period ended 29 March 2010. He  therefore has no further defined benefit accrual and  has not therefore been included in the  above table. (d) Profit sharing scheme This scheme was abandoned during the company’s financial period ended 29 March 2010. Share allocations made up to and including those for the company’s financial period that ended in 2 April 2005, which were based on a member’s  individual entitlement after deductions of income tax and national insurance, are held in the Ram Brewery Trust II. On retirement, the member  receives their accrued entitlement to shares. If they leave the company’s employment before reaching normal retirement age, they continue to  receive the income accruing to them by virtue of their membership of the scheme prior to them leaving, and their allocation to the date of leaving is  held on their behalf until normal retirement age. The accrued entitlement to A shares under the scheme of each of the directors who served during the period is as follows: Stephen Goodyear (22,680),  Torquil Sligo-Young (31,412), Peter Whitehead (20,816) and Patrick Dardis (6,696). None of Nicholas Bryan, Rupert Clevely, Roger Lambert and David  Page has an accrued entitlement under the scheme. 9. EXCEPTIONAL ITEMS Amounts included in operating profits: Movement on the revaluation of properties (note 18)  Acquisition costs  Profit on sales of properties  Compensation to terminate leases  Capital gains tax on ESOP allocated shares  Impairment of properties (note 18)  Integration costs  Hotel project fees written off  2012  52 weeks  £000  2011 53 weeks £000 (29,110)  (489)  1,306  (382)  (152)  –  –  –  – (2,040) 542  –  (166)  (1,882) (1,142) (195) (28,827) (4,883)                                                                                     38  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS (Continued) 9. EXCEPTIONAL ITEMS (CONTINUED) Exceptional tax: Movement on the revaluation of properties  Change in corporation tax rate  Tax attributable to above adjustments   Recognition of rollover claim  Total exceptional items after tax 2012  52 weeks  £000  2011 53 weeks £000 5,640  1,746  (39)  –  7,347 (21,480) – 1,394 729 4,945 7,068 2,185 The movement on the revaluation of properties relates to the revaluation exercise which was completed during the period. The revaluation was  conducted at an individual pub level and identified a downward movement of £29,110,000 which has been taken to the income statement. The  movement is split between land and buildings at £26,534,000 and fixtures and fittings at £2,576,000. See notes 2 and 3(g) for further details on the  change in accounting policy to the revaluation model, and note 5 for segmental information. The acquisition costs include legal fees and stamp duty incurred on the purchase of the freeholds of the Clarence (Whitehall), Fentiman Arms  (Vauxhall) and King’s Head (Winchmore Hill).  The profit on sales of properties relates to the difference between the cash, less selling costs, received from the sale of the George (Fulham), Charlie  Butler (Mortlake), Castle (Battersea), Bricklayers Arms (Sydenham), Britannia Tap (Kensington), Stinging Nettle (Shepherd’s Bush), Queen Dowager  (Teddington) and Prince of Wales (Tooting) and the carrying value of the assets on the date of sale. Compensation paid to terminate leases represents payments made to former tenants to enable properties to be moved into both the Young’s  managed houses and Geronimo managed houses operating segments. The capital gains tax on ESOP allocated shares relates to the shares held within the Ram Brewery Trust II on behalf of the closed profit sharing  scheme. A liability is recognised at each balance sheet date for the potential capital gains tax that could arise on the disposal of shares to the  members of the scheme on retirement.  In the prior period, exceptional items related to an impairment charge, one off integration costs, and hotels project fees relating to unsuccessful  research costs. 10. FINANCE COSTS AND REVENUE Bank loans and overdrafts  Finance lease interest  Finance costs Interest receivable and unwinding of discounted deferred consideration  Net finance cost 2012  52 weeks  £000  2011 53 weeks £000 6,093  42  6,135 (537)  5,598  4,005 10 4,015 (9) 4,006                                                                                 YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  39 2012  52 weeks  £000  2011 53 weeks £000 (4,825)  229  (4,596) 5,640 (875)  1,746  185 – 6,696 2,100 (3,540)  5,640  – 2,100 (4,631) 553 (4,078) – 555 1,394 (261) 4,945 6,633 2,555 (2,390) – 4,945 2,555 (47,344) 1,063  2,136  2,923  – (904) (79) (472) (41,222) (1,455) 4,926  1,543  1,583  (426)  (858)  (72)  6,696 6,786 157 265 (154)  (444) 23 6,633 11. TAXATION Group income statement  Current tax  Current tax expense  Adjustment in respect of current tax of prior periods  Deferred tax    Movement on the revaluation of properties  Origination and reversal of temporary differences  Change in corporation tax rate  Adjustment in respect of prior periods  Recognition of rollover claim  Tax credit Presented in the income statement as follows:  Taxation  Taxation on property revaluation  Recognition of rollover claim Tax credit Group and company statement of comprehensive income  Deferred tax    Movement on the revaluation of properties  Retirement benefit schemes  Interest rate swaps  Change in corporation tax rate  Tax expense Group income statement – deferred tax  Property revaluation and disposals  Fair value gains on acquisition of subsidiaries  Capital allowances  Utilisation of tax losses  Retirement benefit schemes  Other tax provisions  Tax credit As described in note 2, the group changed its accounting policy for property and equipment. The tax impact in relation to the downward movement  was a credit in the income statement of £5.6 million, while the impact of the upward movement was a debit through the statement of comprehensive  income of £47.3 million. A deferred tax liability relating to fair value gains on acquisition of subsidiaries arose on the acquisition of Geronimo Group  Limited on 16 December 2010. In the prior period, property revaluation and disposals included the reduction in the deferred tax liability by £4.9 million  arising from the allocation of rolled over capital gains to specific assets in August 2010 and the subsequent claim to HM Revenue & Customs.                                                                                                                                                                                                               40  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS (Continued) 11. TAXATION (CONTINUED) A reconciliation of the tax (credit)/expense applicable to the (loss)/profit from operating activities before tax at the statutory rate to the actual tax  (credit) at the group’s effective tax rate for the periods ended 2 April 2012 and 4 April 2011 respectively is as follows:  (Loss)/profit before tax from continuing operations  Total (loss)/profit before tax at corporation tax rate of 26% (2011: 28%)  Tax effects of:  Expenses not deductible for tax purposes  Recognition of property revaluation, rollover claim and other property movements  Non assessable income  Re-measurement of deferred tax – change in corporation tax rate    Prior period adjustment – current tax  Prior period adjustment – deferred tax  Utilisation of previously unrecognised tax losses  Total tax credit 2012  52 weeks  £000  2011 53 weeks £000 (7,494)  13,294 (1,948)  3,722 7,988  (5,640)  (340)  (1,746)  (229)  (185)  –  1,511 (5,764) (153) (1,394) (553) 261 (185) (2,100) (2,555)  During the period, as a result of the change in the UK corporation tax rate from 26% to 24%, that was substantively enacted in two parts on 5 July  2011 and on 26 March 2012, and is effective from 1 April 2012, the relevant deferred tax balances have been re-measured. Deferred tax expected to  reverse in the period ending 1 April 2013 and thereafter has been measured using the effective rate that will apply in the UK for the period. Further reductions to the UK tax rate have been announced. The changes, which are expected to be enacted separately each year, propose to reduce  the rate by 1% per annum to 22% by 1 April 2014. The changes had not been substantively enacted at the balance sheet date and are not therefore  recognised in these financial statements.  12. DISCONTINUED OPERATIONS On 8 August 2011, the group disposed of its entire 40% share in Wells & Young’s Brewing Company Limited (“Wells & Young’s”), its brewing  associate. The disposal allows Young’s to increase its focus on its pubs and the cash generated will be used to expand the group’s core business.   The consideration receivable for the company’s shareholding is £15.1 million in cash. £5.1 million was received in February 2012, with the remaining  £10.0 million being receivable in two equal amounts in February 2013 and February 2014. This deferred consideration has been discounted to its  current fair value and is recognised in the group’s balance sheet as “Other financial asset” of which £4,749,000 is held under current assets and  £4,463,000 is held under non current assets.  The discounted fair value of these proceeds less the carrying amount of the investment in associate and disposal costs resulted in a loss on disposal  of £1.7 million: Cash consideration  Net assets disposed  Disposal costs  Loss on disposal of discontinued operations The results of the discontinued operations, which have been included in the group income statement, were as follows: 2012 52 weeks £000 13,782 (15,455) (60) (1,733) Share of associate’s profit before exceptional items and tax  Share of associate’s exceptional items  Share of associate’s tax expense  Share of associate’s post tax result  Loss on disposal of discontinued operations  Tax on loss on disposal of discontinued operations  (Loss)/profit for the period from discontinued operations  During the current period and the prior period, Wells & Young’s contributed £nil to the group’s cash flows. 2012  52 weeks  £000  2011 53 weeks £000 1,289  (401)  (272)  616  (1,733)  –  (1,117) 2,642 (141) (537) 1,964 – – 1,964                                                                                                                                                                                                     YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  41 Group  Company 2012  £000  15,273  (354)  616  (80)  (15,455)  2011  £000  13,942  (637)  1,964  4  –  2012  £000  11,303  –  –  –  (11,303)  –  15,273 – 2011 £000 11,303 – – – – 11,303 Investment in associate Opening balance  Items charged directly to equity  Share of profit of associate  (Release)/increase of stock provision  Disposal  13. BUSINESS COMBINATIONS There were no business combinations in the period. Prior period business combinations On 16 December 2010, the group acquired the entire issued share capital of Geronimo Group Limited for a total cash payment of £60.0 million. At the  time, Geronimo Group Limited operated a high quality estate of 26 individually designed, food-led managed pubs. The estate had exceptional locations  with 22 pubs based in London, three at Heathrow and one in Surrey. The prior period transaction achieved an important step change in the size of the  Young’s managed estate, which increased by more than 20% to 149 pubs, taking the total estate at the end of the prior period to 246 pubs. The fair values of the identifiable assets and liabilities of the acquired business at the date of acquisition were as follows: Assets and liabilities acquired:  Property and equipment (note 18)  Inventories  Cash  Trade and other receivables  Overdrafts and loans  Trade and other payables  Deferred tax asset  Deferred taxation on fair value adjustments  Net assets    Goodwill arising on acquisition (note 17)  Total consideration  Cash flow on acquisition:  Cash acquired  Overdrafts and loans acquired and repaid  Cash paid    Net cash outflow  Fair value £000 50,736 467 2,140 823 (32,850) (4,128) 279 (8,603) 8,864 20,426 29,290 2,140 (32,850) (29,290) (60,000) In addition, the group incurred £1.9 million of costs associated with the acquisition, paid in cash, which were recorded as operating exceptional items. The goodwill arising on the acquisition of Geronimo Group Limited included deferred taxation of £8.6 million, which arose on the fair value adjustment  of property and equipment. In addition, goodwill arising on acquisition also included intangible assets that could not be individually separated. These  items include the expected value of synergies from the business combination together with the benefits and experience of the Geronimo Group Limited  management team. None of the goodwill is expected to be deductible for income tax purposes. In the prior period, between the date of acquisition and the balance sheet date, Geronimo Group Limited contributed £10.3 million of revenue and £0.7  million of operating profit. If the acquisition of Geronimo Group Limited had been completed on 30 March 2010, group revenues for the prior  period would have increased by £24.0 million and group operating profit would have increased by £1.9 million. In addition, in the prior period the group acquired the Lass O’Richmond Hill, White Hart (Witley) and the Lion & Unicorn (Kentish Town). The  aggregated fair value of the identifiable assets and liabilities of the acquired businesses was property and equipment of £3.8 million and  inventories of £nil. The group incurred £182,000 of costs associated with the acquisitions, which were recorded as operating exceptional items.                                                                                                                                                                                                       42  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS (Continued) 14. DIVIDENDS ON EQUITY SHARES Final dividend (previous period)  Interim dividend (current period)  2012  52 weeks  Pence  2011  53 weeks  Pence  2012  52 weeks  £000  2011 53 weeks £000 6.90  6.68  6.76  6.36  13.58 13.12 3,328  3,221  6,549 3,260 3,067 6,327 In addition, the board is proposing a final dividend in respect of the period ended 2 April 2012 of 7.25p per share at a cost of £3,496,000. If  approved, it is expected to be paid on 12 July 2012 to shareholders who are on the register of members at the close of business on 8 June 2012. 15. ADJUSTED PROFIT BEFORE TAX The table below shows how adjusted group profit before tax has been arrived at. This alternative performance measure has been provided as the board  believes that it gives a useful additional indication of the group’s underlying performance. All the results below are from continuing operations. (Loss)/profit before tax  Operating exceptional items (note 9)  16. EARNINGS PER ORDINARY SHARE (a) Earnings  (Loss)/profit from continuing operations  (Loss)/profit from discontinued operations  (Loss)/profit attributable to equity shareholders of the parent  (Loss)/profit from continuing operations  Operating exceptional items  Tax attributable to above adjustments  Tax on movement on revaluation of properties  Change in corporation tax rate  Recognition of rollover relief claim  Adjusted earnings after tax Basic and diluted weighted average number of ordinary shares in issue (b) Basic and diluted earnings per share Basic and diluted from continuing operations  Basic and diluted from discontinued operations  Basic and diluted 2012  52 weeks  £000  (7,494)  28,827  2011 53 weeks £000 13,294  4,883 21,333 18,177 2012  52 weeks  £000  (5,367)  (1,117)  2011 53 weeks £000 15,863 1,964 (6,484) 17,827 (5,367)  28,827  39  (5,640)  (1,746)  –  15,863 4,883 (729) – (1,394) (4,945) 16,113 13,678 Number  000  Number 000 48,224 48,224 Pence  (11.13)  (2.32)  (13.45) Pence 32.89 4.08 36.97                                                                                                                                                                           YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  43 (c) Adjusted basic and diluted earnings per share Basic and diluted from continuing operations  Effect of exceptional items and other adjustments  Adjusted basic and diluted from continuing operations 2012 52 weeks  Pence  2011 53 weeks Pence (11.13)  44.54  33.41 32.89 (4.53) 28.36 The basic earnings per share figure is calculated by dividing the net profit before the non controlling interest for the period attributable to ordinary  shareholders by the weighted average number of ordinary shares in issue during the period. Adjusted earnings per share are presented to eliminate the effect of the exceptional items and the tax attributable to those items on basic and diluted  earnings per share. 17. GOODWILL Opening 5 April (30 March)  Businesses acquired*  Closing 2 April (4 April)  2012  £000 20,426  –  2011 £000 – 20,426 20,426 20,426 * included £8.6 million due to the deferred tax recognised on fair value adjustments.  In the prior period, goodwill of £11.8 million arose (net of deferred tax) on the acquisition of Geronimo Group Limited and was allocated for  impairment testing purposes to the Geronimo group of cash generating units. The Geronimo group of cash generating units is the pubs trading  under the Geronimo concept and falls within the Geronimo managed houses segment. The group tests the goodwill annually for impairment or more frequently if there are indicators that goodwill may have been impaired. The recoverable amount is the value in use and exceeds the carrying value. The value in use is calculated using the three year business plan approved  by senior management. Cash flows beyond this period assume 2.0% growth (2011: nil) which is below the industry long term average growth rate.  The pre-tax discount rate applied to cash flow projections is 8.6% (2011: 8.4%). The calculation is most sensitive to revenue assumptions and the pre- tax discount rate, however senior management believes that the assumptions used are reasonable. The group has conducted a sensitivity analysis on  the impairment test and neither a 10% decline in revenue nor a 1% increase in the discount rate would lead to the impairment of the goodwill in the  current period.   18. PROPERTY AND EQUIPMENT  Group  Fixtures,  fittings &  equipment  £000  65,988  9,695  2,960   (750)  (4,918)  72,975  13,200  –  (1,026)  –  (5,124)  –  Land &  buildings  £000  246,818  8,919  47,776  (191)  –  303,322  12,405  600  (7,799)  (777)  –   201,544  Total  £000  312,806  18,614  50,736  (941)  (4,918)  376,297  25,605  600  (8,825)  (777)  (5,124)  201,544  Cost or valuation At 30 March 2010  Additions  Business combinations  Disposals  Fully depreciated assets  At 4 April 2011  Additions  Transfer from other financial assets  Disposals  Transfer to assets held for sale  Fully depreciated assets  Revaluation*  Company  Fixtures,  fittings &  equipment  £000  65,988  9,168  –  (750)  (4,918)  69,488  10,346  –  (1,026)  –  (5,124)  –  Land &  buildings  £000  246,818  6,025  –  (191)  –  252,652  11,773  600  (7,799)  (777)   –   201,544   Total  £000 312,806  15,193 –  (941) (4,918) 322,140  22,119  600 (8,825)  (777)  (5,124)  201,544 At 2 April 2012  509,295 80,025 589,320 457,993 73,684 531,677                                                                                             44  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS (Continued) 18. PROPERTY AND EQUIPMENT (CONTINUED)  Group  Fixtures,  fittings &  equipment  £000  Land &  buildings  £000  Company  Fixtures,  fittings &  equipment  £000  Land &  buildings  £000  15,630  862  1,171  (191)  –   17,472  1,036  (2,377)  (22)   –   34,212  8,079  711  (553)  (4,918)  37,531  7,970  (721)  –  (5,124)  Total  £000 49,842 8,941 1,882 (744) (4,918) 55,003  9,006  (3,098) (22)  (5,124)  Total  £000  49,842  10,031  1,882  (744)  (4,918)  56,093  11,840  (3,098)  (22)  (5,124)  15,630  1,485  1,171  (191)  –   18,095  2,650  (2,377)  (22)  –   34,212  8,546  711   (553)  (4,918)  37,998  9,190  (721)  –  (5,124)  26,534  2,576  29,110  24,877  2,365  27,242  (1,521)  –  (1,521)  (1,521)  –  (1,521) 43,359 43,919 87,278 39,465 42,021 81,486 231,188  31,776  262,964  231,188  31,776  262,964 285,227  34,977  320,204   235,180  31,957  267,137  465,936 36,106 502,042 418,528 31,663 450,191 Depreciation and impairment At 30 March 2010  Depreciation charge  Impairment charge  Disposals  Fully depreciated assets  At 4 April 2011  Depreciation charge  Disposals  Transfer to assets held for sale  Fully depreciated assets  Revaluation*        effect of downward movements in         property valuation        effect of upward movements in        property valuation  At 2 April 2012  Net book value At 30 March 2010  At 4 April 2011  At 2 April 2012  * The group net book value uplift due to revaluation of £174.0 million (company £175.8 million) comprises an upward movement of £203.1 million  (company £203.1 million) shown in the statements of comprehensive income, net of a downward movement of £29.1 million (company £27.2  million) in the income statements. (a) Revaluation of property and equipment A policy of valuing the group’s property estate was adopted in the current period, as described in notes 2 and 3(g). All of the group’s freehold and  leasehold land, buildings, fixtures and fittings were valued at market value, as at 3 October 2011, by Colliers International UK P.L.C., independent  chartered surveyors. The valuation was carried out in accordance with the provisions of the RICS Valuation Standards (‘the Red Book’). The pubs  were valued as fully equipped operational entities having regard to trading potential, and factors such as current and future projected income levels,  taking account of the location, tenure, the quality of the pub and recent market transactions in the sector. Changes in these assumptions, such as  the valuation basis applied in comparable market transactions or the income level generated by a pub, could materially impact the valuations. At 2 April 2012, had the property estate been carried at historic cost less accumulated depreciation and impairment losses their carrying amount  would have been approximately £327.8 million. The revaluation surplus represents the amount by which the fair value of the estate exceeds its historic value. A sensitivity analysis was conducted on the property estate to give an indication of the impact of movements in the most sensitive assumption, cash  flow. The analysis considers the single change with the other assumptions assumed to be unchanged. In practice, changes in one assumption may  be accompanied by changes in another assumption. Changes in market values may also occur at the same time as the changes in assumptions and  may or may not offset them. This information should not be taken as a projection of likely future valuation movements. Decreasing the cash flows  used in the revaluation by 10% would decrease the valuation by £41.4 million. Increasing the cash flows used in the revaluation by 10% would  increase the valuation by £41.4 million.                                                             YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  45 (b) Assets held under finance leases The net book value of assets held under finance leases was: Land and buildings held under finance leases  (c) Capital commitments Capital commitments not provided for in these financial statements and  for which contracts have been placed amounted to:  2012  £000  9,311  2012  £000  2011 £000 13,101 2011 £000 5,606  1,880 (d) Impairment During the period, the group changed its property and equipment accounting policy and adopted the revaluation model (see notes 2 and 3(g)). As a  result of adopting this model, a downward movement of £29.1 million was recorded in the income statement.  In the prior period, an impairment charge of £1,882,000 was made. Impairment was assessed at the cash generating unit level, which is considered  to be each individual pub. Whether an asset was impaired or not was determined by comparing the carrying value of an asset against its deemed  ‘recoverable amount’. The recoverable amount was taken as the higher of either the fair value (net of disposal costs) or its value in use. The value  in use was determined by conducting a net present value review of all relevant cash flows from the asset. The pre-tax discount rate used in the prior  period review was 8.4%.  19. INVESTMENTS IN SUBSIDIARIES Opening balance  Additions  Disposals  Closing balance Group subsidiary undertakings (*held indirectly)  Geronimo Group Limited(1)  Geronimo Inns Limited  Geronimo Airports Limited  Sticky Fingers Food Limited*  Group  Company 2012  £000  2011  £000  –  –  –  – –  –  –  – 2012  £000  25,620  24,254  (25,620)  2011 £000 20 25,600 – 24,254 25,620 Country of  incorporation    or registration  Country of  principal  % of equity  operations  and votes held England  England  England  England  England  England  England  England  100 100  100 51  (1) An application has been made to strike off and dissolve the inactive Geronimo Group Limited.  During the period, each of the following inactive companies successfully applied to be struck off and dissolved, namely Wigwam Holdings Limited,  Geronimo Inns VCT I Limited, Geronimo Inns VCT II Limited, Geronimo Inns VCT LLP and Bill Bentley’s (Bishopsgate) Limited. Prior to that, each of  these entities was directly or indirectly a 100% subsidiary of the company. The addition and disposals above reflect a group reorganisation during  the period. 20. INVENTORIES Finished goods and goods for resale Group  Company 2012  £000  2,342 2011  £000  2,143 2012  £000  1,887 2011 £000 1,824                                                                                                                           46  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS (Continued) 21. TRADE AND OTHER RECEIVABLES Trade receivables  Other receivables  Prepayments and accrued income  Amounts due from subsidiaries  Group  Company 2012  £000  1,340  512  2,593  –  4,445  2011  £000  1,019  1,453  2,415  –  4,887 2012  £000  1,210  363  2,046  28,410  32,029 2011 £000 999 1,129 1,810 33,282 37,220 Trade receivables are denominated in sterling, are non interest bearing and are generally on 0-20 days’ terms. The above carrying values are shown  net of a provision for impairment and equate to fair value.  At 2 April 2012, trade receivables with a nominal value of £899,000 (2011: £1,112,000) were impaired and fully provided for.  Movements in the provision for impairment of receivables were as follows:   Opening balance  Charge for period  Amounts written off  2012  £000  1,112  54  (267)  2011 £000 993 210 (91) 899  1,112 The amounts written off in the period were specific debts which proved irrecoverable. At 2 April 2012, the analysis of trade receivables is as follows: Neither past due nor impaired £000 264 234  Total £000 1,340 1,019  <31 days £000 709 509  31-60 days £000 154 171 61-90 days £000 64 –  91+ days £000 149 105 2012 2011  Of the trade receivables that are neither past due nor impaired by value, 8.7% (2011: 2.7%) reflect new customers with no previous history   of default, 89.1% (2011: 86.1%) represent existing customers with no history of default and 2.2% (2011: 11.2%) represent existing customers  with some history of default. 22. NON CURRENT ASSETS CLASSIFIED AS HELD FOR SALE Non current assets classified as held for sale Group  Company 2012  £000  755 2011  £000  – 2012  £000  755 2011 £000 – At 2 April 2012, two properties were classified as held for sale (2011: none). One property has been sold subsequent to the period end and the  other property sale is expected to be completed within one year. The value of property and equipment held for sale represents the expected net  disposal proceeds. This includes an upward revaluation of £165,000 which is included in the revaluation reserve within equity. Both properties  are included in the tenanted houses segment. During the period, two properties were transferred from property and equipment (2011: none) to non current assets classified as held for sale.                                                             YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  47 23. TRADE AND OTHER PAYABLES Trade payables  Amounts owed to subsidiaries  Other related parties: Ram Brewery Trust General Fund  Other tax and social security  Other creditors  Accruals and deferred income  Group  Company 2012  £000  2011  £000  9,859  11,769  –  –  5,551  4,739  5,991  –  –  4,375  5,462  4,575  2012  £000  9,304  –  325  5,249  4,118  5,260  2011 £000 10,047 565 295 3,876 3,959 3,786 26,140 26,181 24,256 22,528 All trade payables are payable on demand and the carrying values above equate to fair value. 24. CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS The group’s capital management objective is to maintain an optimal structure, measuring investment opportunities against returning capital to  shareholders, but with an appropriate level of gearing. This provides a platform from which the group can seek to maximise shareholder value. The  group monitors its capital using gearing ratios, net debt as a multiple of EBITDA and interest cover. The group finances the business with a mixture of  equity (note 27) and debt (note 28). The group’s principal treasury objective is to manage financial risks and provide secure and competitively priced funding for the group’s activities.  When appropriate, the group uses financial instruments and derivatives to manage these risks. The borrowing requirements are met largely by bank debt and, to a very small extent, finance leases. Other sources of funding arise directly from  trading activities, such as trade and other payables. The main financial risks relate to interest rates, credit and liquidity. The board seeks to manage these in the following manner: Interest rate risk The objective is to minimise the group’s interest cost and provide protection from adverse movements in interest rates. The board does this by  maintaining a mix of debt at fixed and variable interest rates. Interest rate swaps are used to help manage this exposure by fixing interest rates  whilst matching the maturity profile and cash flows of the underlying debt. These swaps are designated as cash flow hedges. The following table demonstrates the sensitivity of the group’s profit before tax to a change in interest rates, with all other variables held constant. Increase/ decrease in basis points +100 –50 +100  –50  Effect on profit before tax £000  (218) 109  (232)  116  2012  2011  Credit risk The objective is to minimise the group’s costs relating to credit risk. Such risks arise where counterparties default on their debts or other obligations  which would impair the group’s ability to recover the carrying value of that asset. The group has financial control policies which it follows before  entering into arrangements with a new counterparty or when there is a substantial change in the existing relationship. Any potential impairments are  monitored and, where appropriate, provision is made for any irrecoverable balances. The company is not considered to have any exposure to credit  risk from amounts due from subsidiaries. Liquidity and cash flow risk The objective is to ensure that the group has sufficient financial resources to develop its existing business and exploit opportunities as they arise.  The board manages liquidity risk by ensuring that the group’s debt profile is long dated, facilities are committed and the group does not rely unduly  on short term borrowings. The group’s borrowings are dependent on certain financial covenants being met. If these were breached, funding could  be withdrawn leaving the group with insufficient working capital and if the group were unable to find other alternative sources of funding it may  not be possible to continue trading in its current form. The board is vigilant in managing the business, assessing and monitoring acquisitions and  investments, and forecasting the group’s profit and cash flows. The funding position of the group is continuously reviewed against the headroom   in the group’s borrowing facilities. Other risks that the group faces are referred to in the principal risks and uncertainties section starting, on page 14.                                                                     48  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS (Continued) 24. CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS (CONTINUED) (a) Derivative financial instruments: interest rate swaps Financial liability – interest rate swaps (Loss)/profit on cash flow hedge taken to equity  Group and company 2012  £000  2011 £000 (12,223) (4,008) (8,215)  282 The group has a number of interest rate swaps that fix future interest cash flows on the variable interest rate bank loans. These instruments result  in the group paying fixed interest rates on the notional amount for the swap’s life. The swaps are being used to hedge the exposure to changes in  the group’s cash flows on its variable rate loans due to changes in LIBOR. The secured loans and the interest rate swaps have the same critical terms  over their relevant period. The duration of each swap, and its respective interest rates once combined with the bank’s margin and other costs, are detailed in part (b) of this note. (b) Loans, borrowing, interest rates and fair values Group and company Term or    expiry date  Effective  interest rate  Period  rate fixed  Secured  £20 million loan swapped into fixed rate  £30 million loan swapped into fixed rate  £50 million loan swapped into fixed rate  £50 million revolving credit facility     March 2018    March 2023  December 2013 to 2015  December 2015  6 years  4.58%  5.97%  11 years  4.51%  2 to 4 years  None  Variable  Unsecured Finance leases  Financial liabilities  Current financial liabilities  Non current financial liabilities Fair  value  2012  £000  22,492  37,660  52,071  21,747  Fair  value  2011  £000  20,672  33,577  49,759  24,842  Book  value  2012  £000  19,916  29,873  49,747  21,747  Book value 2011 £000 19,891 29,837 49,673 24,842 133,970  128,850  121,283  124,243 700  704 121,983 124,947 (5)  (2,672) 121,978 122,275 The secured borrowings are secured on the assets of the group. The fair values of borrowings and interest rates derivatives are estimates based on prevailing market rates of interest and expected future cash  flows arising from those instruments. Bank overdrafts Bank overdrafts are used for day to day cash management. The group has a £5 million overdraft facility with interest linked to the base rate. Bank loan The group has a bilateral £50 million term loan with the Royal Bank of Scotland and a £50 million syndicated facility with the Royal Bank of  Scotland and Barclays. The bilateral is repayable as to £20 million on 28 March 2018 and as to £30 million on 28 March 2023. The syndicated loan  is repayable in two instalments of £10 million on 15 December 2013 and 15 December 2014 with a final £30 million repayment on 15 December  2015. An interest rate swap has been entered into in respect of all these bank loans which results in the effective interest charge being fixed at the  rates disclosed above. Revolving credit facility The group has a £50 million revolving credit facility with the Royal Bank of Scotland and Barclays of which £22 million was drawn at the period  end. Final repayment of the total drawn down balance is due as one payment on 15 December 2015. This is a committed facility which permits  drawings of different amounts and periods. These drawings carry interest at a margin above LIBOR, with a commitment payment on the undrawn  portions. Interest is payable at each renewal date.                                                                                                                                 YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  49 (c) Maturity of the group’s financial liabilities and expiry of facilities Borrowings  Trade and other payables  Derivative financial instruments  Borrowings  Trade and other payables  Derivative financial instruments  2012 2011  Maturity of financial liabilities Between one and two years £000 14,012 – 1,712 15,724 Between  one and  two years  £000  2,754  –  3,362  6,116 Between two and five years £000 70,595 – 4,506 75,101 Between  two and  five years  £000  79,074  –  10,086  89,160 Within one year £000 4,012 15,850 1,712 21,574 Within  one year  £000  2,754  16,344  3,362  22,460 After five years £000 61,511 – 6,244 Total £000 150,130 15,850 14,174 67,755 180,154 After five years  £000  56,575  –  14,226  70,801 Total £000 141,157 16,344 31,036 188,537 The above maturity table includes contractual gross undiscounted cash flows of the borrowings, related interest, net derivatives, finance leases,  trade payables and contractual accruals. (d) Fair value hierarchy for instruments measured at fair value Financial liabilities at fair value Interest rate swaps  Financial liabilities at fair value Interest rate swaps  Fair value 2012 £000 (12,223) (12,223) Group and company Level 1 2012 £000 Level 2 2012 £000 – – (12,223) (12,223) Fair value  2011  £000  Level 1  2011  £000  (4,008)  (4,008)  –  –  Level 2  2011  £000  (4,008)  (4,008)  Level 3 2012 £000 – – Level 3 2011 £000 – – Level 1 Fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 Fair values measured using inputs, other than quoted prices included within Level 1, that are observable for the asset or liability either directly   or indirectly.    Interest rate swaps are accounted for at their fair value based on market prices.  Level 3 Fair values measured using inputs for the asset or liability that are not based on observable market data. (e) Financial assets Financial assets of the group and the company are not included in this note because their book value approximates their carrying value.                                               50  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS (Continued) 25. DEFERRED TAX Deferred tax assets  Interest rate swap  Retirement benefit schemes  Other provisions  Tax losses  Decelerated capital allowances  Deferred tax liabilities  Rolled over gains and property revaluations  Fair value gains on acquisition of subsidiaries  Accelerated capital allowances  Group  Company 2012  £000  2011  £000  2012  £000  (2,934)  (2,135)  (179)  (26)  –  (1,042)  (2,405)  (250)  (453)  –  (2,934)  (2,135)  (179)  –  (203)  (5,274) (4,150) (5,451) 52,607  6,903  152  13,832  8,446  1,734  52,607  –  –  59,662 24,012 52,607 2011 £000 (1,042) (2,405) (250) – – (3,697) 13,832 – 1,423 15,255 Net deferred tax liabilities 54,388 19,862 47,156 11,558 The deferred tax assets and liabilities at the balance sheet date are calculated at the substantively enacted rate of 24%. Whilst detailed  calculations have not been prepared at this stage, it is estimated that the impact of the remaining annual corporation tax rate reductions from  24% to 22% would be to reduce the value of the group’s net deferred tax liabilities at the balance sheet date by approximately £4,532,000 and to  reduce the value of the company’s net deferred tax liabilities by approximately £3,930,000.  The group has realised capital losses of £6,252,000 (2011: £3,694,000) which are available indefinitely to offset against future capital gains.  Deferred tax assets have not been recognised in respect of £1,327,000 (2011: £1,344,000) of these losses because at present it is unclear whether  suitable gains will arise in the foreseeable future to utilise these losses.  In addition, the group has unrealised capital losses of £10,236,000 (2011: £9,978,000) of which £1,375,000 have been recognised (2011: £nil) and  £8,861,000 (2011: £9,978,000) have not been recognised at present because it is uncertain whether these unrealised losses may be utilised. The  company has unrealised capital losses of £7,131,000 (2011: £5,981,000) of which £1,375,000 have been recognised (2011: £nil) and £5,756,000  (2011: £5,981,000) have not been recognised because it is uncertain whether these unrealised losses may be utilised.                                                                   YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  51 26. RETIREMENT BENEFIT SCHEMES The company operates one defined benefit pension scheme, namely the Young & Co.’s Brewery, P.L.C. Pension Scheme, a defined contribution  pension scheme and a post retirement health care scheme. The contribution to the defined contribution scheme was £227,000 (2011: £225,000). An independent qualified actuary has updated the most recent actuarial valuations at 5 April 2008 to take account of the requirements of IAS 19 in  order to assess the liabilities of the schemes as at 2 April 2012. The employer contribution to the defined benefit scheme for the period ended 2 April 2012 was £3,129,000 (2011: £3,640,000) plus premiums of  £232,000 (2011: £232,000) to the post retirement health care scheme. The current arrangement as regards contribution rates is described in the  relevant Schedule of Contributions. The overall expected rate of return of the scheme assets has been based on the average expected return for each asset class, weighted by the  amount of assets in each class. The defined benefit scheme is closed to new entrants. Consequently the current service cost will increase as the members of that scheme  approach retirement. Future employee contribution rates are projected to be 5% of pensionable earnings. Future employer contribution rates are projected to be 18% of  pensionable earnings. The total contributions to the defined benefit scheme in the 2013 financial period are expected to be £2,600,000. The total  contributions to the post retirement health care scheme in the 2013 financial period are expected to be £250,000. The pension scheme assets includes some of the company’s A shares with a fair value of £4,498,000 (2011: £4,074,000). There are no property  assets of the scheme occupied by the company. Assumptions Rate of increase in salaries  Discretionary pension increases  Rate of revaluation of deferred pensions  Discount rate  Inflation  General medical expenses inflation  Mortality assumptions The life expectancies underlying the valuation are as follows: Current pensioners (at age 65) – males  Current pensioners (at age 65) – females  Future pensioners (at age 65) – males  Future pensioners (at age 65) – females  Pension  Health care  2012  %  4.20  3.20  2.20  4.95  3.20  N/A  2011  %  4.60  3.60  3.00  5.55  3.60  N/A  2012  %  N/A  N/A  N/A  4.95  3.20  9.00  2012  Years  22.6  25.0  24.5  26.9  2011 % N/A N/A N/A 5.55 3.60 9.00 2011 Years 21.9 24.2 23.0 25.1 Increase  £000  Decrease £000 28  502  (24) (428) A one percentage point change in the assumed rate of increase in health care costs would have the following effects: Effect on the aggregate service cost and interest cost  Effect on defined benefit obligation                                                                                                                                52  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS (Continued) 26. RETIREMENT BENEFIT SCHEMES (CONTINUED) Movement in scheme deficits in the period 2012  Health  care  scheme £000 Pension scheme £000 Group and company Total  £000  Pension  scheme  £000  (a) Changes in the present value of the pension schemes are as follows: Opening deficit  Current service cost  Contributions  Other finance income/(cost)  Actuarial (losses)/gains  (3,572) (730) 3,129 986 (3,615) (4,020) (10) 232 (217) (473) (7,592)  (740)  3,361  769  (4,088)  (9,947)  (999)  3,640  662  3,072  2011  Health  care  scheme  £000  (4,174)  (9)  232  (225)  156  Total £000 (14,121) (1,008) 3,872 437 3,228 Closing deficit  (3,802) (4,488) (8,290)  (3,572)  (4,020)  (7,592) (b) Recognised in the income statement Current service cost included in operating costs (730) (10) (740) (999) (9) (1,008) Expected return on pension scheme assets  Interest on pension liabilities  Other finance income/(charge) 5,926 (4,940) 986 – (217) (217) 5,926  (5,157)  5,661  (4,999)  769  662   –  (225)  (225)  (c) Recognised in statement of comprehensive income Actual return less expected return on scheme assets  Experience gains/(losses) arising on the scheme liabilities  Changes in assumptions underlying the scheme liabilities  627 859 (5,101) – (24) (449) 627  835  (5,550)  Actuarial (losses)/gains recognised (3,615) (473) (4,088) (262)  2,806  528  3,072 (d) Movements in the present value of defined benefit obligations during the period Opening defined benefit obligations  Current service cost  Interest on obligation  Contributions by scheme members  Actuarial losses/(gains) on obligations  Benefits paid  90,445 730 4,940 107 4,242 (3,710) 4,020 10 217 – 473 (232) 94,465   740  5,157  107  4,715  (3,942)  91,379  999  4,999  145  (3,334)  (3,743)  –      156  –  156 4,174  9  225  –  (156)  (232)  5,661 (5,224) 437 (262) 2,962 528 3,228 95,553 1,008 5,224 145 (3,490) (3,975) Present value of scheme liabilities 96,754 4,488 101,242 90,445 4,020 94,465 (e) Change in fair value of scheme assets Opening fair value of scheme assets  Expected return on scheme assets  Actuarial gains/(losses) on scheme assets  Contributions by employer  Contributions by scheme members  Benefits paid  Fair value of scheme assets 86,873 5,926 627 3,129 107 (3,710) 92,952 – – – 232 – (232) 86,873  5,926  627  3,361  107  (3,942)  81,432  5,661  (262)  3,640  145  (3,743)  –  –  –  232  –  (232)  81,432 5,661 (262) 3,872 145 (3,975) – 92,952 86,873  –  86,873                                 YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  53 Pension scheme and health care scheme assets, liabilities and expected rates of return Equities  Diversified growth fund  Absolute return  Corporate bonds  Insured pensions  Other  Total fair value of assets  Present value of retirement benefit liabilities  Scheme deficit  Group and company Expected rates of return  2012  %  2011  %  Assets and liabilities 2011 2012  £000 £000  7.00  7.00  5.50  5.15  4.95  2.00  8.25  8.25  N/A  5.75  5.55  2.00  22,358  18,905  1,624  35,018  14,512  535  21,869 18,894 N/A 31,241 13,747 1,122 92,952  (101,242)  86,873 (94,465) (8,290)  (7,592) The long term weighted average rate of return on scheme assets at 2 April 2012 is 5.93% (2011: 6.84%). History of experience gains and losses 2012  £000  2011  £000  2010  £000  2009  £000  2008 £000 Fair value of scheme assets  Present value of defined benefit obligations  92,952  (101,242)  86,873   (94,465)  81,432  (95,553)  65,070  (76,823)  79,261 (84,349) Deficit in the schemes   (8,290)  (7,592)  (14,121)  (11,753)  (5,088) Experience gains/(losses) arising on scheme liabilities  Experience gains/(losses) arising on scheme assets  835  627  2,962  (262)  (365)  13,869  5,883  (16,973)  (613) (10,413)  The cumulative amount of actuarial gains and losses recognised since 2 April 2006 in the statement of comprehensive income is a £16,856,000 loss  (2011: £12,768,000 loss). The directors are unable to determine how much of the pension scheme deficit of £5,898,000 recognised on transition to  IFRS and taken directly to equity is attributable to actuarial gains and losses since inception of those pension scheme. Consequently, the directors  are unable to determine the amount of actuarial gains and losses that would have been recognised in the statement of comprehensive income  before 2 April 2006. The sensitivities regarding the principal assumptions used to measure the scheme’s liabilities are set out below. The illustrations consider the single  change shown with the other assumptions assumed to be unchanged. In practice, changes in one assumption may be accompanied by offsetting  changes in another assumption. Changes in market values may also occur at the same time as the changes in assumptions and may or may not   offset them. Assumption  Discount rate  Rate of inflation  Life expectations  Change in assumption Increase/decrease by 0.5%  Increase/decrease by 0.5%  Increase by 1 year  Impact on scheme liabilities Decrease/increase by 8.6% Increase/decrease by 7.6% Increase by 3.2% 27. SHARE CAPITAL AND RESERVES Issued and fully paid shares  A shares of 12.5p each  Non voting shares of 12.5p each  2012 and 2011 2012 and 2011 Shares 29,064,000  19,160,000  48,224,000 £000 3,633 2,395 6,028 The two classes of shares are equal in all respects, except that the non voting shares do not carry the right to receive notices of general meetings   or to attend, speak or vote at them.                                                                                                     54  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS (Continued) 28. NET CASH GENERATED FROM OPERATIONS AND ANALYSIS OF NET DEBT (Loss)/profit before tax on continuing operations  Net finance cost  Other finance income  Operating (loss)/profit on continuing operations  Depreciation  Movement on revaluation of properties  Impairment of property  Profit on sales of properties  Difference between pension service cost and cash contributions paid    Amounts due from subsidiaries waived  Provision for capital gains tax on ESOP allocated shares  Movements in working capital     Inventories     Receivables     Payables  Group  Company 2012  52 weeks  £000  2011  53 weeks  £000  2012  52 weeks  £000  2011 53 weeks £000 (7,494)  5,598  (769) (2,665) 11,840 29,110 – (1,306) (2,621) – 152 (119) 442 (232) 13,294  4,006  (437)  16,863  10,031  –  1,882  (542)  (2,864)  –  166  25  257  3,925  (13,335)  4,834  (769)  (9,270)  9,006  27,242  –  (1,306)  (2,621)  6,080  152  (63)  459  1,556  7,380 3,597 (437) 10,540 8,941 – 1,882 (542) (2,864) 5,643 166 (43) (2,002) 4,111 Net cash generated from operations 34,601 29,743 31,235 25,832 Analysis of net debt Cash  Loan capital and finance leases  Net debt   Group   Company 2012  £000  2011  £000  2012  £000  2011 £000 3,914 (121,983) 2,332 (124,947) 2,577  (121,983)  112 (124,947) (118,069) (122,615) (119,406) (124,835) 29. RELATED PARTY TRANSACTIONS Balances and transactions between the company and its wholly owned subsidiaries, which are related parties, have been eliminated on  consolidation and are not disclosed in this note. These are on an arms’ length basis and disclosed in notes 21 and 23. Directors Directors’ emoluments and retirement benefits are disclosed in notes 8(b) and 8(c). Directors’ shareholdings and interests are disclosed or referred  to on page 18 and in note 8(d). Rupert Clevely and his wife, Jo Clevely: •  reside from time to time, free of charge, in accommodation above one of the group’s pubs in London – the value of the benefit was £9,050  (2011: £2,870) and is included in the “Benefits” column for Rupert Clevely in note 8(b); •  are lessees of a property in London from which the group operates one of its pubs – they hold the property on trust for two companies within  the group jointly and, as part of that arrangement, those companies have agreed to indemnify Rupert and Jo Clevely in respect of certain  liabilities relating to the property and the lease under which it is held; and •  are entitled to be reimbursed for certain liabilities, costs and expenses that may be incurred by them pursuant to or in connection with certain  pub related guarantees given by them – the guarantees are not expected to be called on. Rupert Clevely and four other members of his family own a 50% share of Rogers and Rufus Pty Limited, an Australian wine producer. That  company provides wine to the group for sale in its pubs via an intermediary wine supplier on an arm’s length basis. Goods purchased by the group  totalled £54,011 (2011: £4,317). No amount was outstanding at 2 April 2012 (2011: £nil). Jo Clevely Design Limited, a company owned and controlled by Jo Clevely, provides interior design services for some of the group’s pubs. For  these services (and inclusive of expenses and reimbursement for items of furniture purchased on behalf of the group), that company has received  £202,713 (2011: £34,813). £20,580 was outstanding at 2 April 2012 (2011: £nil). No other transactions requiring disclosure have been entered into with the directors.                                                           YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  55 Former director Roy Summers, a former non-executive director, has agreed to advise on the quality of the company’s own-brand beers brewed by the company’s  former associate, Wells & Young’s Brewing Company Limited, in Bedford, and also to assist with quality monitoring. For these services (and inclusive  of expenses), he has received £7,854 (2011: £16,242). No amount was outstanding at 2 April 2012 (2011: £nil). Pension scheme and trusts In 1959, the Ram Brewery Trust was established. It has two parts, namely: •  the General Fund. This holds assets and makes payments to or for the benefit of employees. It is managed by a corporate trustee, Ram Brewery  Trustees Limited, none of the directors of which is a director of the company. As at 2 April 2012, the General Fund held nil A shares (2011: nil). •  the Pension Fund (now renamed and known as the Young & Co.’s Brewery, P.L.C. Pension Scheme). This provides pensions and other benefits to  employees of the group and certain other individuals. It is managed by a corporate trustee, Young’s Pension Trustees Limited (“YPTL”). Torquil  Sligo-Young, a director of the company, and two other individuals, neither of whom is a director of the company, are the directors of YPTL. As at  2 April 2012, the Young & Co.’s Brewery, P.L.C. Pension Scheme held 702,769 A shares (2011: 726,906), being 2.42% of the class.  In 2008, the Ram Brewery Trust II was established. It holds assets for the benefit of employees and former employees, principally reflecting their  accrued entitlement to A shares under the group’s now closed profit sharing scheme – see note 8(d). The shares are all fully vested and are not  therefore disclosed as an investment in own shares in the group’s financial statements. The Ram Brewery Trust II is managed by a corporate  trustee, RBT II Trustees Limited (“RBT II”). Torquil Sligo-Young, a director of the company, and Roy Summers, a former non-executive director of  the company, are the directors of RBT II. As at 2 April 2012, the trust held 762,284 A shares (2011: 869,412), being 2.62% of the class.   Key management The group considers key management personnel to be solely the directors of the company as they are the only people with authority and  responsibility for planning, directing and controlling the activities of the group. The compensation provided to the directors is detailed in note 8. Majority owned subsidiary Sticky Fingers Food Limited (“SFFL”), a majority owned subsidiary of the group, provides food to the group for sale in its pubs. Goods purchased by  the group totalled £472,781 (2011: £291,966). £57,321 was outstanding at 2 April 2012 (2011: £69,658). The group performs payroll and administration functions on behalf of SFFL. For these services, the group has charged £319,387 (2011: £268,306).  £144,990 was outstanding at 2 April 2012 (2011: £76,275). As part of the arrangements entered into when the SFFL venture was set up, in 2010, SFFL borrowed £53,000 from Geronimo Inns Limited. The  whole of that amount remains outstanding. Former associate The group has agreed to purchase the majority of its drinks for its pub estate from its former associate, Wells & Young’s, at commercial market  prices. This arrangement is terminable on two year’s notice which may only be given by the group on or after 30 September 2013. The group  disposed of its entire 40% share in Wells & Young’s in August 2011. Listed below are the transactions between the group and Wells & Young’s up  until the date of disposal: Purchase of beer, wines and spirits for resale by the group  Other charges made to the group  All transactions arise in the normal course of business on an arm’s length basis. 2012  £000  (10,450)  –  2011 £000 (26,761) (336) 30. OBLIGATIONS UNDER LEASES (a) Obligations under finance leases Finance leases for property are for terms ranging from 50 to 999 years. Minimum lease payments for most leases are nominal amounts. Leases do not  have a purchase option but most are renewable at the lessee’s option at the end of the lease term. Equipment is leased over terms of up to five years.  Future minimum lease payments under finance leases are as follows: Future minimum lease payments due:  Not later than one year  Later than one year and not later than five years  Later than five years  Less: finance charges allocated to future years Group  Company 2012  £000  2011  £000  2012  £000  47  190  2,755  2,992  (2,292) 700 47  190  2,802  3,039  (2,335) 704 47  190  2,755  2,992  (2,292) 700 2011 £000 47 190 2,802 3,039 (2,335) 704                                                            56  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTES TO THE FINANCIAL STATEMENTS (Continued) 30. OBLIGATIONS UNDER LEASE (CONTINUED) The present value of minimum lease payments is analysed as follows:   Not later than one year  Later than one year and not later than five years  Later than five years  Group  Company 2012  £000  5  25  670  700 2011  £000  5  24  675  704 2012  £000  5  25  670  700 2011 £000 5 24 675 704 Future minimum rentals receivable from non cancellable subleases on the above properties as at 2 April 2012 were £1,248,000 (2011: £1,304,000). (b) Operating lease agreements where the group is lessee Operating leases for property are for terms ranging from seven to 50 years. Minimum lease payments are typically reviewed every five years and  are based on a percentage of turnover or a negotiated rate per square foot. Most property leases are renewable at the lessee’s option at the end  of the lease term. Equipment is leased over terms of up to five years.  Future minimum rentals payable under non cancellable operating leases are as follows: 6,267  Not later than one year  18,856  Later than one year and not later than five years  39,690  Later than five years  5,603  18,508  35,535  2,141  7,635  19,504  64,813 59,646 29,280 2,276 8,054 19,304 29,634 Future minimum rentals receivable from non cancellable subleases on the above properties as at 2 April 2012 were £1,009,000 (2011: £1,262,000). (c) Operating lease agreements where the group is lessor The group leases licensed properties to third party tenants. These non cancellable lease terms are over terms varying from three to 25 years.   Future minimum rentals receivable under non cancellable operating leases are as follows: 3,179  Not later than one year  4,749  Later than one year and not later than five years  8,164  Later than five years  3,805  5,633  8,337  3,179  4,749  8,164  3,805 5,633 8,337 16,092  17,775  16,092  17,775 31. POST BALANCE SHEET EVENTS There were no post balance sheet events. 32. CONTINGENT ASSET In a prior period, following the House of Lords’ ruling in the Condé Nast/Fleming cases removing the three year limit on VAT reclaims, the company  lodged a claim for repayment of VAT on gaming machine receipts on the basis that application of the VAT rules was not consistent and breached fiscal  neutrality. In a subsequent prior period, the company made a further claim for repayment of VAT on similar grounds of fiscal discrimination. Both claims  stand behind the Rank case on fiscal neutrality and gaming machines. On 10 November 2011, the European Court of Justice (ECJ) ruled on the Rank  case, however the ECJ’s decision on amusement machine receipts was not conclusive and the appeal was referred back to the UK courts.  Therefore,  the outcome of both of the company’s claims are uncertain. In addition, the company’s claims were based on management’s best estimates from the  information available and the company expects the valuation of the claim to be reviewed by HMRC if any settlement is reached.  The group and company have not recognised any revenue from the claims in the financial statements for the period ended 2 April 2012. 33. CONTINGENT LIABILITIES There were no contingent liabilities at the current or prior period balance sheet date.                                                            NOTICE OF MEETING YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  57 If you hold any A shares, this notice is important and requires your immediate attention. If you are in any doubt as to any aspect of the proposals referred to in this notice or as to the action you should take, you should seek your own advice from a stockbroker, solicitor, accountant or other professional adviser. If you have sold or otherwise transferred all of your shares, please pass this copy of the annual report, and any proxy form and business reply envelope that came with it, to the purchaser or transferee, or to the person who arranged the sale or transfer so they can pass it or them to the person who now holds the shares. If you hold any A shares, you should have received a proxy form for use at the meeting. Guidance notes on how to complete it, and on  other matters, are given on the form itself and in the notes to this notice. Whether or not you propose to attend the meeting, please  complete and submit the proxy form. It must be received by Computershare Investor Services PLC by 11.30am on Sunday, 8 July 2012.  Appointing a proxy does not stop you from attending the meeting and voting. An admission card is attached to the proxy form; please  bring this with you to the meeting. If you do not hold any A shares, this notice is for information purposes only. Notice is hereby given that the 123rd annual general meeting of Young & Co.’s Brewery, P.L.C. (the “Company”) will be held in the Civic  Suite in Wandsworth Town Hall, Wandsworth High Street, Wandsworth, London SW18 2PU on Tuesday, 10 July 2012 at 11.30am for the  following purposes: Ordinary resolutions To consider and, if thought fit, to pass the following resolutions which will be proposed as ordinary resolutions: 1.  To receive the Company’s annual accounts for the financial year ended 2 April 2012, together with the directors’ report and the auditor’s  report on those accounts and that directors’ report. 2.  To declare a final dividend of 7.25p per share for the financial year ended 2 April 2012. 3.  That Ernst & Young LLP be, and is hereby, re-appointed as the Company’s auditor for the financial year starting 3 April 2012. 4.  That the directors be, and are hereby, authorised to fix the remuneration of the Company’s auditor. 5.  That Torquil Sligo-Young be, and is hereby, re-appointed as a director. 6.  That Peter Whitehead be, and is hereby, re-appointed as a director. 7.  That Roger Lambert be, and is hereby, re-appointed as a director. 8.  That David Page be, and is hereby, re-appointed as a director. 9.  That the Company and all companies that are subsidiaries of the Company at any time during the period for which this resolution has  effect be, and are hereby, authorised to: (a)  make political donations to political parties, not exceeding £50,000 in total; (b)  make political donations to political organisations other than political parties, not exceeding £50,000 in total; and (c)  incur political expenditure, not exceeding £50,000 in total; in each case at any time during the period starting with the date this resolution is passed and ending at the end of next year’s annual  general meeting (or, if earlier, at the close of business on 30 September 2013) but the aggregate amount of political donations and political  expenditure that may be made and incurred by the Company and its subsidiaries pursuant to this authority must not exceed £50,000. Note: for the purposes of this resolution, “political donation” has the meaning given in section 364 of the Companies Act 2006, “political expenditure” has the meaning given in section 365 of the Companies Act 2006 and reference to a “political party” or to a “political organisation” is to a party or to an organisation to which Part 14 of the Companies Act 2006 applies. 10.  That the directors be, and are hereby, authorised to allot shares in the Company and to grant rights to subscribe for, or to convert any  security into, shares in the Company: (a)  up to a nominal amount of £2,009,333 (such amount to be reduced by the nominal amount allotted or granted under paragraph (b)    below in excess of such sum); and (b)  comprising equity securities (as defined in section 560(1) of the Companies Act 2006) up to a nominal amount of £4,018,666 (such     amount to be reduced by the nominal amount allotted or granted under paragraph (a) above) in connection with an offer by way of   a rights issue: (i)  to holders of ordinary shares in proportion (as nearly as may be practicable) to their existing holdings; and (ii)  to holders of other equity securities as required by the rights of those securities or as the directors otherwise consider necessary,   and so that the directors may impose any limits or restrictions and make any arrangements which they consider necessary or   appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the     laws of, any territory or any other matter,                                       58  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTICE OF MEETING (Continued) such authorities to apply until the end of next year’s annual general meeting (or, if earlier, until the close of business on 30 September  2013) but, in each case, during this period the Company may make offers and enter into agreements which would, or might, require  shares to be allotted or rights to subscribe for, or to convert securities into, shares to be granted after the authority ends and the directors  may allot shares or grant rights to subscribe for, or to convert securities into, shares under any such offer or agreement as if the authority  had not ended. Special resolutions To consider and, if thought fit, to pass the following resolutions which will be proposed as special resolutions: 11.  That if resolution 10 is passed, the directors be, and are hereby, given power to allot equity securities (as defined in section 560(1) of  the Companies Act 2006) for cash under the authorities given by that resolution and/or to sell ordinary shares held by the Company  as treasury shares for cash as if section 561 of the Companies Act 2006 did not apply to any such allotment or sale, such power to be  limited: (a)  to the allotment of equity securities and sale of treasury shares for cash in connection with an offer of, or invitation to apply for,   equity securities (but in the case of the authority granted under paragraph (b) of resolution 10, by way of a rights issue only): (i)  to holders of ordinary shares in proportion (as nearly as may be practicable) to their existing holdings; and (ii)  to holders of other equity securities as required by the rights of those securities or as the directors otherwise consider necessary, and so that the directors may impose any limits or restrictions and make any arrangements which they consider necessary or   appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the     laws of, any territory or any other matter; and (b)  in the case of the authority granted under paragraph (a) of resolution 10 and/or in the case of any sale of treasury shares for cash,   to the allotment (otherwise than under paragraph (a) above) of equity securities or sale of treasury shares up to a nominal amount   of £301,400,  such power to apply until the end of next year’s annual general meeting (or, if earlier, until the close of business on 30 September 2013)  but during this period the Company may make offers and enter into agreements which would, or might, require equity securities to be  allotted (and treasury shares to be sold) after the power ends and the directors may allot equity securities (and sell treasury shares) under  any such offer or agreement as if the power had not ended. 12.  That the Company be, and is hereby, authorised for the purposes of section 701 of the Companies Act 2006 to make one or more market  purchases (as defined in section 693(4) of the Companies Act 2006) of its ordinary shares of 12.5p each (“Ordinary Shares”), such power  to be limited: (a)  to a maximum number of 4,822,400 Ordinary Shares (which may be all A shares, all non-voting shares or a mix); and  (b)  by the condition that, in each case exclusive of expenses, the minimum price which may be paid for an Ordinary Share is the nominal  amount of that share and the maximum price which may be paid for an Ordinary Share is an amount equal to five per cent. above  the average of the middle market quotations for that share as derived from the AIM appendix to the London Stock Exchange’s Daily  Official List for the five business days immediately preceding the day on which that share is contracted to be purchased, such power to apply until the end of next year’s annual general meeting (or, if earlier, until the close of business on 30 September  2013) but during this period the Company may enter into a contract to purchase Ordinary Shares which would, or might, be executed  wholly or partly after the power ends and the Company may purchase Ordinary Shares pursuant to any such contract as if the power  had not ended. By order of the board  Anthony Schroeder Company Secretary  23 May 2012 Young & Co.’s Brewery, P.L.C.  Registered office:  Riverside House,  26 Osiers Road,  Wandsworth,  London SW18 1NH  Registered in England and Wales No. 32762                                       YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  59 Notes Entitlement to attend, speak and vote at the meeting To be entitled to attend, speak and vote at the meeting (and for the purpose of determining the number of votes you may cast), your  name must be entered in that part of the register of members relating to holders of A shares at 7am on Monday, 9 July 2012 (or, in  the event of any adjournment, at 7am on the day before the day of the adjourned meeting). What you need to bring If you come to the meeting, please bring with you the admission card attached to the proxy form. Appointment of proxies If you hold any A shares, you may appoint a proxy to exercise all or any of your rights to attend and to speak and vote on your behalf  at the meeting. You can do this by completing the proxy form which came with this document. If you did not receive a proxy form and  believe that you should have one, or if you require additional forms, please contact the Company’s registrars. To be valid, your proxy  form must be received by the Company’s registrars no later than 11.30am on Sunday, 8 July 2012. Who to appoint as a proxy A proxy does not have to be a member of the Company but must attend the meeting for your vote to be counted and to otherwise  represent you. Your proxy could be the chairman of the meeting, a director of the Company or someone you know personally who has  agreed to attend and represent you. If you appoint a proxy, you may still attend the meeting. Multiple proxies You may appoint more than one proxy in relation to the meeting provided each proxy is appointed to exercise the rights attached  to a different A share or different A shares held by you. A space has been included in the proxy form to allow you to specify the  number of A shares in respect of which that proxy is appointed. If you return the proxy form duly executed but leave this space  blank, you will be deemed to have appointed the proxy in respect of all of your holding of A shares. If you wish to appoint more  than one proxy in respect of your A shares, you should contact the Company for further proxy forms or photocopy the form as  required; you should also read the notes on the proxy form relating to the appointment of multiple  proxies. The following principles apply in relation to the appointment of multiple proxies: (a)  The Company will give effect to your intentions and include votes wherever and to the fullest extent possible. (b)  Where a proxy does not state the number of A shares to which it applies (a “blank proxy”) then, subject to the following principles where  more than one proxy is appointed, that proxy is deemed to have been appointed in relation to the total number of A shares registered  in your name (“your entire holding”). If there is a conflict between a blank proxy and a proxy which does state the number of A shares to  which it applies (a “specific proxy”), the specific proxy will be counted first, regardless of the time it was sent or received (on the basis that  as far as possible the conflicting forms of proxy should be judged to be in respect of different A shares) and remaining A shares will be  apportioned to the blank proxy (pro rata if there is more than one). (c)  Where there is more than one proxy appointed and the total number of A shares in respect of which proxies are appointed is no  greater than your entire holding, it is assumed that proxies are appointed in relation to different A shares, rather than that conflicting  appointments have been made in relation to the same A shares; that is, there is only assumed to be a conflict where the aggregate number  of A shares in respect of which proxies have been appointed exceeds your entire holding. (d)  When considering conflicting proxies, later proxies will prevail over earlier proxies, and which proxy is later will be determined on the basis  of which proxy is last sent (or, if the Company is unable to determine which is last sent, last received). Proxies in the same envelope will be  treated as sent and received at the same time to minimise the number of conflicting proxies. (e)  If conflicting proxies are sent or received at the same time in respect of (or deemed to be in respect of) your entire holding, none of them  will be treated as valid. (f)  Where the aggregate number of A shares in respect of which proxies are appointed exceeds your entire holding and it is not possible to  determine the order in which they were sent or received (or they were all sent or received at the same time), the Company’s registrars or  the Company will take steps to try to clarify the situation with you should time permit. If this is not possible, none of your proxies will be  treated as valid. (g)  If you appoint a proxy or proxies and then decide to attend the meeting in person and vote in person, then the vote in person will override  any proxy vote. If the vote in person is on a poll and is in respect of your entire holding then all proxy votes will be disregarded. If, however,  you vote at the meeting on a poll in respect of less than your entire holding, then if you indicate on your poll card that all proxies are to be  disregarded, that shall be the case; but if you do not specifically revoke proxies, then the vote in person will be treated in the same way as if it  were the last received proxy and earlier proxies will only be disregarded to the extent that to count them would result in the number of votes  being cast exceeding your entire holding. 60  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 NOTICE OF MEETING (Continued) (h)  In relation to paragraph (g), if you do not specifically revoke proxies, it will not be possible for the Company to determine the intentions of  you in this regard. However, in light of the aim to include votes wherever and to the fullest extent possible, it will be assumed that earlier  proxies should continue to apply to the fullest extent possible. Changing proxy instructions To change your proxy instructions, you need to submit a new proxy appointment – further copies can be obtained from the Company. However, in doing so, you should be aware of the principles that apply to multiple proxies – see the note headed Multiple proxies. If you are  in any doubt as to what to do where you wish to change your proxy instruction, please contact the Company’s registrars or your stockbroker,  solicitor, accountant or other professional adviser. Termination of proxy appointments If you wish to revoke your proxy instruction, you must send to the Company’s registrars a signed hard copy notice clearly stating your  intention to revoke your proxy appointment. If you are a corporation, the revocation notice must be executed under your common seal or  signed on your behalf by an officer of you or an attorney for you. Any power of attorney or any other authority under which the revocation  notice is signed (or a notarially certified copy of such power or authority) must be included with the revocation notice. The revocation notice  must be received by the Company’s registrars before the start of the meeting. If you attempt to revoke your proxy appointment but the  revocation is received after the time specified then, subject as follows, your proxy appointment will remain valid. Appointing a proxy does not  stop you from attending the meeting and voting. If you appoint a proxy and attend the meeting, your proxy appointment will automatically  be terminated. Multiple corporate representatives If you are a corporation, you may appoint one or more corporate representatives who may exercise on your behalf all your powers as a  member provided they do not do so in relation to the same A shares. Name and address of the Company’s registrars The Company’s registrars are Computershare Investor Services PLC. They can be contacted at The Pavilions, Bridgwater Road,   Bristol, BS99 6ZZ. Display documents The following will be available for inspection at the Company’s registered office during normal business hours (Saturdays, Sundays and public  holidays excepted) from the date of this notice until 10am on the day of the meeting: •  copies of the executive directors’ service contracts; and •  copies of the letters of appointment of the non-executive directors.  After 10am on the day of the meeting, these documents will be available for inspection in the Civic Suite in Wandsworth Town Hall,  Wandsworth High Street, Wandsworth, London SW18 2PU until the end of the meeting. Communication Any address or number used for the purpose of sending or receiving documents or information by electronic means that is referred to in the  Company’s annual report 2012 or any proxy form for the Company’s 123rd annual general meeting may not be used to communicate with  the Company for any purpose other than any expressly stated. EXPLANATORY NOTES TO THE NOTICE OF MEETING YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  61 Notice of the 123rd annual general meeting of Young & Co.’s Brewery, P.L.C. (the “Company”) to be held on Tuesday, 10 July 2012 is set out on pages 57 to 60. The directors consider that all the resolutions to be put to the meeting are in the best interests of the Company and its shareholders as a whole; accordingly, the Company’s board of directors will be voting in favour of them and unanimously recommends that all A shareholders do so as well. Resolutions 1 to 10 are ordinary resolutions; this means that for each of those resolutions to be passed, more than half of the votes cast must be in favour. Resolution 1: annual accounts and reports The directors have to lay copies of the Company’s annual  accounts, the directors’ report and the auditor’s report on those  accounts and that directors’ report before you at a general  meeting; this is a legal requirement. Resolution 2: final dividend An interim dividend of 6.68p per share was paid in December  2011. The directors are recommending a final dividend of 7.25p per  share for the year ended 2 April 2012, bringing the total dividend for  the year to 13.93p per share. Subject to approval being given, the  final dividend is expected to be paid on 12 July 2012 to shareholders  on the register at the close of business on 8 June 2012. Resolution 3: re-appointment of auditor  An auditor is required to be appointed for each financial year  of the Company. Ernst & Young LLP, the Company’s current  auditor, has agreed to serve for the current financial year and its  re-appointment is therefore being proposed. Resolution 4: auditor’s remuneration  In accordance with normal practice, the directors are asking for  your authority to determine the auditor’s remuneration. Resolutions 5-8: re-appointments of directors Each of Torquil Sligo-Young, Peter Whitehead, Roger Lambert  and David Page will be retiring automatically from the office of  director at the meeting; this is because he held that position at  the last two annual general meetings and did not retire at either  of them. Each of these individuals is seeking re-appointment and  his brief biographical details are on page 13. Resolution 9: political donations etc. This resolution seeks renewal of the existing authority for the  Company and its subsidiaries to make or incur certain political  donations and political expenditure. Although there is no  intention to make or incur such donations or expenditure, the  legislation is very broadly drafted and may catch activities such  as funding seminars and other functions to which politicians are  invited and supporting certain bodies involved in policy review  and law reform. The authority given by this resolution will be  capped at £50,000 in total. Resolution 10: general power to allot This resolution effectively seeks renewal of the directors’  existing authority to allot shares and grant rights. Paragraph  (a) of this resolution would give the directors the authority to  allot shares or grant rights to subscribe for, or to convert any  securities into, shares up to an aggregate nominal amount equal  to £2,009,333 - this amount represents approximately one-third  of the Company’s issued share capital as at 22 May 2012 (but  would be reduced by the nominal amount of any shares allotted  or rights granted under paragraph (b) of this resolution in excess  of £2,009,333). In line with guidance issued by the Association  of British Insurers, paragraph (b) of this resolution would give  the directors authority to allot shares or grant rights to subscribe  for, or to convert any securities into, shares in connection with a  rights issue in favour of shareholders up to an aggregate nominal  amount equal to £4,018,666, as reduced by the nominal amount  of any shares allotted or rights granted under paragraph (a) of  this resolution - this amount (before any reduction) represents  approximately two-thirds of the Company’s issued share capital  as at 22 May 2012. Therefore the maximum nominal amount  of shares and rights that may be allotted or granted under this  resolution is £4,018,666. The authorities sought under paragraphs  (a) and (b) of this resolution will expire at the end of next year’s  annual general meeting (or, if earlier, the close of business on  30 September 2013). The directors have no present intention  to exercise either of the authorities sought under this resolution  other than in respect of any one or more of the Company’s  employees’ share schemes. As at the date of the notice, no shares  are held by the Company in treasury.  Resolutions 11 and 12 are special resolutions; this means that for each of those resolutions to be passed, at least three- quarters of the votes cast must be in favour. Resolution 11: general power to disapply This resolution effectively seeks renewal of the directors’ existing  power to allot shares (or sell any shares which the Company  elects to hold in treasury) for cash without first offering them to  existing shareholders in proportion to their existing shareholdings.  This authority would be, similar to previous years, limited to  allotments or sales in connection with pre-emptive offers and  offers to holders of other equity securities if required by the rights  of those shares or as the directors otherwise consider necessary,  or otherwise up to an aggregate nominal amount of £301,400.  This aggregate nominal amount represents five per cent. of the  Company’s issued share capital as at 22 May 2012. The power  sought under this resolution will expire at the end of next year’s  annual general meeting (or, if earlier, the close of business on 30  September 2013). Resolution 12: authority to undertake market purchases   of own shares This resolution effectively seeks renewal of the Company’s  existing authority to make market purchases of not more than  4,822,400 of its shares, being no more than ten per cent. of its  issued share capital as at 22 May 2012. The authority sought  under this resolution will expire at the end of next year’s  annual general meeting (or, if earlier, the close of business on  30 September 2013). The directors have no present intention  of exercising the authority to make market purchases, however  the authority provides the flexibility to allow them to do so in  the future. The directors will exercise this authority only when  to do so would be in the best interests of the Company, and of  its shareholders generally, and could be expected to be earnings  enhancing. Any shares purchased pursuant to this authority will  be held in treasury or be cancelled. The minimum price, exclusive  of expenses, which may be paid for a share is its nominal value.  The maximum price, exclusive of expenses, which may be paid for  a share is an amount equal to 105% of the average of the middle  market quotations for that share for the five business days  immediately preceding the date of the purchase. No warrants or  options to subscribe for share capital are outstanding.    62  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 FIVE YEAR REVIEW 2012  £000  2011  £000  2010  £000  2009  £000  2008 £000 Revenue 178,964  142,597  127,539  126,091  122,124 Operating profit before exceptional items Operating exceptional items and discount of site proceeds  Debenture redemption  Net finance costs and other finance (charge)/income  (Loss)/profit before tax Taxation  (Loss)/profit from continuing operations (Loss)/profit from discontinued operation  26,162 (28,827)  –  (4,829)  (7,494) 2,100  (5,394) (1,117)  21,746 (4,883)  –  20,307 (234)  –  20,546 (10,519)  –  (3,569)  (2,844)  (3,281)  13,294 2,555  15,849 1,964  17,229 (5,858) 11,371 1,147  6,746 (2,988) 3,758 (1,684)  20,858 2,889 (6,817) (3,988) 12,942 (4,023) 8,919 1,783 (Loss)/profit for the period (6,511) 17,813 12,518 2,074 10,702 Adjusted profit before tax 21,333 18,177 17,463 17,265 16,870 Net assets employed Non current assets  Current assets and assets held for sale  Current liabilities  Non current liabilities  Financed by Equity share capital  Reserves  Non controlling interest  Purchase of fixed assets and business combinations 526,931  16,205  (28,614)  (196,879)  356,503  9,362  (30,611)  (153,737)  277,506  10,174  (19,734)  (99,332)  276,992  8,760  (20,505)  (101,036)  277,631 10,461 (30,543) (81,278) 317,643 181,517 168,614 164,211 176,271 6,028  311,657  (42)  6,028  6,028  6,028  6,028 175,504  162,586  158,183  170,243 (15)  –  –  – 317,643 181,517 168,614 164,211 176,271 25,605 78,614 10,819 24,487 38,055 Net debt  (118,069)  (122,615)  (62,632)  (65,690)  (49,967) Per 12.5p ordinary share Adjusted basic and diluted earnings from continuing operations  33.41p  -11.13p  Basic and diluted earnings from continuing operations  13.58p  Dividends – paid in period  28.36p  32.89p  13.12p  24.92p  23.62p  12.87p  23.09p  7.84p  12.62p  27.12p 18.83p 10.84p Gearing  Average number of employees 37.2%  2,985 67.6%  37.1%  40.0%  28.3% 2,335 2,059 2,084 2,261 The figures for 2010 and 2009, but not the earlier period, have been restated in respect of deferred tax relating to the group’s investment in  its former associate, Wells & Young’s Brewing Company Limited, a deferred tax liability relating to capital allowances, and the adoption of  amendments to IAS 17 Leases.  The figures for 2008 have been restated for the release of deferred tax liabilities on the impairment of property and brands and for the  adjustment to the deferred tax liability on industrial buildings allowances.      SENIOR PERSONNEL, COMMITTEES AND ADVISERS YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  63 Nominated adviser and stockbroker J.P. Morgan Securities Limited 10 Aldermanbury London EC2V 7RF Solicitors Slaughter and May One Bunhill Row London EC1Y 8YY Wragge & Co 55 Colmore Row Birmingham B3 2AS Directors Nicholas Bryan, B.A., F.C.A. Non-executive Chairman Stephen Goodyear Chief Executive Torquil Sligo-Young Human and Information Resources Peter Whitehead, F.C.A. Finance Patrick Dardis Retail Rupert Clevely Managing Director Geronimo Inns Roger Lambert, M.A. Non-executive Senior Independent Director David Page Non-executive Company Secretary Anthony Schroeder Audit committee Nicholas Bryan (Chairman) Roger Lambert David Page Remuneration committee David Page (Chairman) Nicholas Bryan Roger Lambert Auditor Ernst & Young LLP 1 More London Place London SE1 2AF Bankers Royal Bank of Scotland Group plc Corporate Banking London 280 Bishopsgate London EC2M 4RB Barclays Bank plc 1 Churchill Place London E14 5HP SHAREHOLDER INFORMATION Registrar Share dealing service Proposed financial diary 2012 The company’s registrar is Computershare J.P. Morgan Cazenove 6 June 2012 Investor Services PLC. 020 7588 2828 Ex-dividend date for final dividend If you have questions about your shareholding or if you require other guidance (e.g. to notify a change of address or to give instructions for dividends to be paid directly into a bank account), please contact Computershare. The availability of this service should not be 8 June 2012 taken as a recommendation to deal. Record date for final dividend Shareholder offers Details of shareholder discounts and offers 10 July 2012 Annual general meeting are mailed to shareholders from time to time. 12 July 2012 All requests to amend account details must Any shareholder who does not wish to receive Payment of final dividend be made in writing to: Computershare Investor Services PLC details of such offers should write to the Company Secretary at the registered office. 22 November 2012 Interim results announcement The Pavilions Bridgwater Road Bristol BS99 6ZZ You can also contact Computershare by telephone on 0870 707 1420 Shareholders can manage their Young’s shareholding online at: www.investorcentre.co.uk Registered office and company number 28 November 2012 Ex-dividend date for interim dividend Riverside House 26 Osiers Road Wandsworth London SW18 1NH Registered number: 32762 Further information Please visit www.youngs.co.uk 30 November 2012 Record date for interim dividend 14 December 2012 Payment of interim dividend 64  YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012 YOUNG’S PUBS AND HOTELS Balham Devonshire  Grove  Nightingale  Barnes Bull’s Head  Coach & Horses  White Hart  Barnet  Lord Nelson  Battersea  Duke of Cambridge  Northcote  Plough   Prince Albert   Bayswater  Mitre  Beddington  Plough  Betchworth  Dolphin  Blindley Heath  Red Barn  Bloomsbury  Calthorpe Arms  Lamb  Bognor Regis  Waverley  Borough Market  Bunch of Grapes  Bow   Coborn Arms  Crown  Bradford-on-Avon  Bunch of Grapes  Brighton  Seven Stars  Bristol  Bristol Ram  Highbury Vaults  Horts  Rope Walk  Brixton  Grand Union  Broadway, Nr Illminster  Bell Inn  Bromley  Two Doves  T T G G G T G T T T T T T Burnham-on-Sea  Dunstan House Inn  Camberwell  Grand Union  Camden  Spread Eagle  Carshalton  Greyhound  Cassington  Chequers  Castle Cary  Horse Pond  Catford  Catford Ram  Chedworth  Seven Tuns  Chelmsford  O’Connor’s  Riverside Inn  Chelsea  Builder’s Arms   Chelsea Ram  Cooper’s Arms  Hollywood Arms  King’s Arms  Phoenix   Surprise  Waterside  Chertsey  Crown Hotel  Chichester  Crown & Anchor  Chislehurst  Bull’s Head Hotel  City of London  Albion  Boisdales  City Retreat  Dirty Dick’s  Elephant  Lamb Tavern  Master Gunner  Oyster Shed  Paternoster  Three Lords  White Horse  H T H T T T T T H G G G G G H H T T G T G Clapham Common  Windmill on   the Common  Clapton  Princess of Wales  H  G  H T T T T T T T T T T T T H T H Claygate  Foley Arms  Clerkenwell  Sekforde Arms  Congresbury  Old Inn  Covent Garden  Marquess of Anglesey  Croydon  Dog & Bull  Tamworth Arms  Dartford  Court House  Malt Shovel  Dorking  Falkland Arms  Old House at Home  Dulwich  Dulwich Wood House  Ealing  Grange  Earlsfield  Halfway House  Leather Bottle  East Grinstead  Ship  East Sheen  Hare & Hounds  Effingham   Plough  Emsworth  Sussex Brewery  Epsom  King’s Arms  Rising Sun  Esher  Bear Inn  Euston  Square Tavern  Exeter  City Gate  Double Locks  Exmouth  Grove  Farnborough  Rose & Crown  Key Young’s managed house unless marked Tenanted pub  Geronimo pub  Hotel  T G   H Fetcham  Bell  Fitzrovia  Adam & Eve  One Tun  Fulham  Cock Tavern  Duke on the Green  Greenford  Bridge Hotel  Greenwich  Richard the First  Hammersmith  Brook Green Hotel  Hammersmith Ram  Old Ship  Thatched House  Hampstead  Flask  Roebuck  Harlesden  Grand Junction Arms  Heathrow Airport  Five Tuns  Three Bells  Tin Goose  Hendon  Beaufort  Greyhound  Hindon  Lamb Inn  Isleworth  Castle  Coach & Horses  Islington  Castle  Duchess of Kent  Marquess Tavern  Kensington  Britannia  Curtains Up  Duke of Clarence  Kentish Town  Lion & Unicorn  Kew  Coach & Horses  Keynsham  Lock Keeper  G H H T G G G T T T G G T G G G H                                                                                                                                             YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2012  65 Kilburn  Queen’s Arms  Kingston  Albert Arms  Bishop out of Residence  Grey Horse  Spring Grove  Lambeth  Surprise  Leatherhead  Penny Black  Lee  Crown  Lingfield  Greyhound  Littleton-on-Severn  White Hart  T T T T T T T T T T G Maida Vale  Prince Alfred  Marylebone  Lord Wargrave  Mayfair  Guinea  Windmill   Merton  Prince of Wales  Mitcham  King’s Arms  Mortlake  Jolly Gardeners  Norwood  Hope  Railway Bell  Notting Hill Duke of Wellington  Elgin  Oxford Angel & Greyhound  King’s Arms  Oxshott  Bear  Paddington  Porchester  Peckham Rye  Clock House  Pimlico  Fox & Hounds  Rising Sun  Plumpton Green  Fountain Inn  Primrose Hill  Queens  Putney  Boathouse  Coat and Badge  Duke’s Head  Green Man  Half Moon  Spotted Horse  Radlett  Red Lion Hotel  Redhill  Home Cottage  William IV  Richmond  Lass O’Richmond Hill  Marlborough  Mitre  Old Ship  Orange Tree  Red Cow  Shaftesbury  Waterman’s Arms  White Cross  Roehampton  Angel  Rotherhithe  Ship  St Pancras Station   Betjeman Arms  Shaftesbury  Mitre  Shepherd’s Bush  Bull (Westfield)  Eagle   Sherfield-on-Loddon  White Hart  Sherston  Rattlebone  Sidmouth  Swan  Somerton  Unicorn  T T T G G H T T T T T T G G G T T T Southampton   Mavericks  Southwark  Founders’ Arms  Mulberry Bush  Prince William Henry  Staines  Bells  Stepney  Queen’s Head  Stockwell  Trinity Arms  Stonebridge  Royal Oak  Stratford  Calf (Westfield)  Cow (Westfield)  Streatham  Pied Bull  Surbiton  Black Lion  Victoria  Waggon & Horses  Sutton  Lord Nelson  New Town  Robin Hood  Teddington  Abercorn Arms  Thornton Heath  Lord Napier  Railway Telegraph  Tooting  Castle  Gorringe Park  Tufnell Park  Lord Palmerston  Twickenham  Alexander Pope  Marble Hill  Old Anchor  Vauxhall  Fentiman Arms  Riverside  T T T T T G G T T T T T T T T T G H T T G Wallington  Duke’s Head  H  Walton-on-Thames  Royal George  Swan  Walton-on-the-Hill  Chequers  Wandsworth  Alma  Armoury  Brewers Inn  County Arms  East Hill  Gardeners’ Arms  Grand Union  Grapes  Old Sergeant  Pig & Whistle  Queen Adelaide  Ship   Spread Eagle  Waterfront  Westminster  Buckingham Arms  Clarence  Morpeth Arms  Phoenix  Royal Oak  Weybridge  Hand & Spear  Wimbledon  Alexandra  Bayee Village  Crooked Billet  Dog & Fox  Fire Stables  Hand in Hand  Rose & Crown  Winchmore Hill  Kings Head  Witley  White Hart  Woolwich  Dial Arch  Wrington  Plough Inn  T H T H G T T T T T T G G T T H G T T                                                                                                               TRACK & FIELD Young & Co.’s Brewery, P.L.C. Riverside House, 26 Osiers Road Wandsworth, London SW18 1NH Telephone: 020 8875 7000 Fax: 020 8875 7100 www.youngs.co.uk Registered in England number 32762 

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