Y
O
U
N
G
‘
S
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
7
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
A N NU A L R EP O RT
FOR THE 53 WEEKS ENDED
3 APRIL 2017
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Contents
Strategic report
Chairman’s statement
Chief executive’s review
Principal risks and uncertainties
Financial statements
Independent auditor’s report
Group income statement
Statements of comprehensive income
3
5
8
Business and financial review
10
Balance sheets
Directors’ report
Our board
Committees
Other disclosures
Preparation and disclaimer
Statements of cash flow
Group statement of changes
in equity
Parent company statement
of changes in equity
Notes to the financial statements
Five year review
16
17
21
22
Shareholder information
Notice of meeting
Explanatory notes to the notice
of meeting
Young’s pubs and hotels
Senior personnel, committees
and advisers
Shareholder information
23
24
25
26
27
28
29
30
60
61
65
66
68
68
Pub quiz
18??
Young & Co.’s
is incorporated
193?
First woman
to work for
Young & Co.’s
is employed
197?
Queen
Elizabeth II
visits the
Ram Brewery
200?
Young &
Bainbridge
buy the
Ram Brewery
18??
First pub with
guest bedrooms
is purchased
193?
‘35 years of
service’ club
is introduced
198?
Young & Co.’s
sells the
Ram Brewery
Young &
Co.’s buys
Geronimo
Inns
20??
20??
Young’s
On Tap is
launched
The answers to the above are from the independent
adjudicator’s report and set out on page 69.
Financial highlights
Strategic report
Directors’ report
Financial statements
Shareholder information
2017
53 weeks
2016
52 weeks
%
£m
£m
CHANGE
Revenue
268.9
245.9
+9.4
Adjusted operating profit(1)(2)
Operating profit(2)
Adjusted profit before tax(1)(2)
Profit before tax(2)
Net cash generated from operations
46.1
42.7
40.4
37.0
63.5
41.2
+11.9
38.4
+11.2
35.6
+13.5
32.8
+12.8
60.4
+5.1
Adjusted basic earnings per share(1)(2)
66.43p
58.44p
+13.7
Basic earnings per share(2)
61.51p
54.73p
+12.4
Dividend per share
(interim and recommended final)
18.50p
17.45p
+6.0
Net assets per share(3)
£10.10
£9.30
+8.6
All of the results above are from continuing operations.
(1) Reference to an “adjusted” item means that item has been adjusted to exclude exceptional items (see notes 9 and 10).
(2) The prior period comparatives have been restated for a non-cash adjustment in respect of the treatment of short leasehold
premiums (see note 1).
(3) Net assets per share are the group’s net assets divided by the shares in issue at the period end.
1
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Charly – local at Hand in Hand
(Wimbledon)
“The people, sense of community, great
company and superb food are why I have
been coming to the Hand in Hand for the
last 6 years.”
2
Chairman’s statement
Strategic report
Directors’ report
Financial statements
Shareholder information
Stephen Goodyear
Chairman
+
9.4%
Revenue
+
13.5%
Adjusted profit
before tax
20th
consecutive increase
of dividend
I am very proud to have been offered the chance to
continue my long association with Young’s, and to serve
as its Non-executive Chairman.
Nick Bryan was a great asset to our
business over the past 11 years, six of those
as Chairman, and I am just one of many
that are grateful for his stewardship and
the rich health in which he left the Young’s
business. I’m sure that all shareholders
will join me in raising a glass to Nick and
wishing him well. He will be a tough act
to follow but, with the support of my
fellow board members, I look forward to
approaching the Chairman role with the
same passion and enthusiasm that I have
had for Young’s over the past 22 years.
It has been a period of both success and
succession within Young’s this year. We
have cemented ourselves as a leader in
our sector while seamlessly making the
planned board changes to continue our
winning formula.
The success of our business is driven by our
core beliefs and unwavering commitment
to deliver on our strategy to operate
premium, individual and differentiated
pubs that are well-invested in every aspect:
people, décor, product and technology.
Total revenue was up 9.4%, with Young’s,
Geronimo and the Ram Pub Company all
in high single digit growth, and this year
managed house like-for-like sales were up
4.7%. Underlying adjusted profit before
tax was up 13.5% to £40.4 million; once
exceptional items are included, profit before
tax was up 12.8% to £37.0 million. This
year was a 53 week year (2016: 52 weeks);
on a comparable 52 week basis, total
revenue was up 7.0% and adjusted profit
before tax was up 10.7%.
Young’s is a well-established business and
the board changes over the past year have
been carefully planned to ensure that we
continue our upward march. Patrick Dardis
will have completed his first year as Chief
Executive in July; his progression from
Retail Director has been very smooth given
his vast experience in our industry and the
operational aspects of Young’s.
19 highly successful years in the role,
Steve Robinson, who had over 7 years’
experience in the Young’s finance function,
stepped up to the board as Chief Financial
Officer. At the same time, we announced
the promotion of Tracy Read to the board
as People Director. People are at the heart
of our business and with Tracy’s experience
I’m confident that our ability to attract,
retain and develop talent will improve
further. The final change to the make-up
of our board was the recruitment of Nick
Miller who joined as a Non-executive
Director on 4 April 2017. Nick is highly
respected in the industry having been the
Managing Director of Miller Brands, the
UK arm of SABMiller, and most recently
CEO of Meantime Brewing Company.
His experience and fresh perspectives
will complement our board.
Although our leadership has changed
this year, our strategy and delivery of
strong shareholder returns has not. Basic
earnings per share increased by 12.4%;
once adjusted for exceptional items and
the associated tax on those items, they
increased by 13.7% to 66.43 pence. The
board is therefore delighted to recommend
our 20th consecutive final dividend
increase, this time by 6.1% to 9.62 pence. If
approved by shareholders, this will result in
a total dividend for the year of 18.50 pence
(2016: 17.45 pence). The final dividend is
expected to be paid on 13 July 2017 to
shareholders on the register at the close
of business on 9 June 2017.
I am confident that we have the expertise
and energy throughout our organisation to
continue our outperformance of the sector.
On behalf of the board, I am truly grateful
to everyone in our pubs and at head office
that helps make Young’s the success story
that it is today.
Last summer we announced that Peter
Whitehead had decided to step down
in September as Finance Director after
Stephen Goodyear
Chairman
24 May 2017
3
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Ian – local at Richard 1st (Greenwich)
“I’ve been coming here for over 40 years
to meet with friends and to make new ones.
I think this is the best the pub has ever been
thanks to its recent refurbishment and the
excellent staff.”
4
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2017
Chief executive’s review
Strategic report
Directors’ report
Financial statements
Shareholder information
My first aim as incoming Chief Executive was to continue the
good work of my predecessors and build on the success we
have created to date. I am therefore delighted to announce
that the 53 weeks ended 3 April 2017 has seen another
strong performance.
Revenue was up 9.4% to £268.9 million
and within managed houses, which
make-up 94.8% of our total sales, like-
for-like sales were up 4.7%. Operating
cash generation is at an all-time high
at £63.5 million (2016: £60.4 million)
which has allowed us to continue our
investment plans, both through internal
developments and acquisitions, while also
reducing our net debt. At the year-end,
our net debt to adjusted EBITDA ratio was
1.9 times (2016: 2.2).
Our profitability is also improving, with
basic earnings per share increasing by
12.4% to 61.51 pence (2016: 54.73 pence)
and adjusted basic earnings per share by
13.7% to 66.43 pence.
Creating an experience is key
The pub is now the most popular
destination for eating out in the evening,
with 37% of Britons visiting pubs more
regularly than restaurants and fast food
outlets. Furthermore, spend in pubs is
growing, outstripping the increase in
overall national consumer spending.
We operate in the premium pub sector
and the resilience of this segment’s more
affluent customer base has, so far, been
particularly encouraging. Consumers,
when they do go out, are looking for an
experience, and going to a Young’s pub
is seen as an affordable lifestyle choice
– a treat but not an extravagance.
Our well-invested, well-positioned pub
estate is geared up to deliver those
experiences through our highly motivated
and talented staff and our premium and
evolving product range.
The estate now stands at 252 pubs; we
acquired four pubs during the period,
sold one and two leases expired. Its value
has increased again, now to £689.1
million (2016: £649.8 million), and this
firm foundation allows us to look for
further opportunities to expand, whether
that be on an individual pub purchase
basis or groups.
Proven track record, ready
for challenges ahead
Our performance in recent times
has been highly consistent; the
outperformance of our managed estate
has been the reward for our consistent
strategy of running differentiated,
individual pubs at the heart of the
communities in which they reside.
However, we live in interesting times
with both economic uncertainty and
the political environment becoming
unpredictable as a result of the snap
UK General Election.
Looking forward, there will be some
impact to our margins due to the
significant hike in business rates, the next
instalment of the National Living Wage
and the introduction of the Apprenticeship
Levy, as well as by a predicted period
of cost inflation. Business rates have
been a contentious subject for the retail
sector and it is with cautious optimism
that we greeted the Government’s
acknowledgement of the issue and the
Chancellor’s announcement that it would
commit to reform. We believe that there
must be a better method to calculating
business rates to level the playing field
between physical and online based
companies and would welcome and
support any initiative to achieve this.
5
Patrick Dardis
Chief Executive
135
(2016: 131)
38
(2016: 40)
CYAN
MAGENTA
YELLOW
BLACK
SCALE MM: THIS RULER MEASURES 100MM WHEN ARTWORK IS 100%
0
1 0
2 0
5 0
4 0
3 0
A P P R O V A L
D es ign
S P E C I A L I N S T R U C T I O N S
I M A G E S I N A / W
P R I N T C O L O U R S
CLIENT
CONTACT
JOB NUMBER
PROJECT
DESIGN
DESIGNER / ARTWORKER
PRODUCTION CONTACT
AW APPLICATION
COLOUR PROFILE
DATE
1
ARTWORK
VERSION No.
Young’s
Gill McLaren
YOU145/05
Ram Pub Company
Full Colour
SL/GH
Christie Nelson
Illustrator CS5.1
jkr-operations (FOGRA39)
13/05/14
79
PL EA SE N OT E IF VIEWI NG TH IS A RT WOR K A S A PD F IT M A Y N OT
B E T O SC A LE. TH E S CA L E OPP OSIT E WIL L GIV E A N IN D ICA T ION
OF T HE RE DU C TIO N
N.B. The colours on this artwork run out are for colour indication only.
Refer to listed Pantone (PMS) specification or attached swatches
where applicable for true colour representation.
All artwork is approved by jkr as of the date given.
Please double check ALL details with client prior to final production.
ANY changes made after this date are the responsibility of the client.
A/C management
Production
P L E A S E R E A D
Date
D ate
10 0
9 0
7 0
8 0
6 0
(2016: 80)
F O N T S U S E D I N A / W
• HELVETICA LT BOLD (LEGEND)
• DELTA
Date
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
How we performed
We measure the development, performance and position of our business against a number of key indicators.
The reference to an “adjusted” item means that item has been adjusted to exclude exceptional items. These
alternative performance measures have been provided to help investors with additional measures of the group’s
underlying performance.
Revenue £m
This is our total group revenue,
including both managed and
tenanted businesses.
268.9
245.9
227.0
Like for like revenue %
This is our revenue growth for this
period compared with the previous
period for our managed pubs and
hotels that traded throughout
both periods.
RevPAR £
This is our revenue per available
bedroom; it is the average room
rate achieved multiplied by the
occupancy percentage.
6.5
5.6
4.7
7
6
5
4
3
2
1
0
60.01
60.86
56.82
62
60
58
56
54
52
50
2015
2016
2017
2015
2016
2017
2015
2016
2017
Adjusted EBITDA £m
This is our adjusted earnings before
interest, taxes, depreciation and
amortisation. (See notes 9 and 10).
Adjusted profit before tax £m
This is our profit before tax on
continuing operations only, adjusted
to exclude any exceptional items for
the group. (See notes 9 and 10).
Adjusted earnings per share (pence)
This is our adjusted profit before tax,
but after tax has been deducted,
divided by the weighted average
number of ordinary shares in issue.
(See notes 9 and 15).
66.5
58.4
52.2
40.4
35.6
32.2
45
40
35
30
25
20
15
70
65
60
55
50
45
40
66.43
58.44
51.04
2015
2016
2017
2015
2016
2017
2015
2016
2017
Gearing %
This is our net debt divided by our net
assets (expressed as a percentage).
Interest cover (times)
This is our adjusted operating profit
divided by our finance costs.
Recycling (tonnes)
This is the amount of waste we recycle
and divert from landfill.
31.6
28.8
25.7
8.4
7.8
7.2
9
8
7
6
5
4
3
6,768
5,803
7,000
6,000
5,000
4,000
4,481
3,000
2015
2016
2017
2015
2016
2017
2015
2016
2017
270
260
250
240
230
220
210
70
65
60
55
50
45
40
50
40
30
20
10
0
6
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 Strategic report
Directors’ report
Financial statements
Shareholder information
Terry and Jayne – locals at Lock
Keeper (Keynsham)
“The Lock Keeper has been an
extension of our home for the last
10 years – whenever we eat here
it feels like sitting down for a meal
with one big family.”
Additionally, the Government’s surprising
recent increase in alcohol excise duty by
almost 4% has not helped an industry
that invested over £2bn and contributed
over £23bn overall to the British
economy in 2016, and currently employs
over 900,000 people.
Despite that backdrop, we remain
positive and will channel our efforts
into our proposition and continue to
deliver great customer service. Superior
productivity, aided by our investment
and innovation in technology, will
mitigate some cost pressures. We are
also mindful that pubs are people
businesses and are enjoyable places to
work; therefore maintaining the morale
and motivation of our staff is paramount.
hard to continue to grow our estate
through carefully selected acquisitions
and development opportunities, all key
ingredients in delivering superior returns
for our shareholders.
We have a strong track record; a
very clear and consistent strategy; the
financial muscle to continue to grow
and an engaged team of people that
are our main competitive advantage.
Despite the headwinds, we look
forward to continuing to surprise and
delight our customers, and will work
Patrick Dardis
Chief Executive
24 May 2017
7
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
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 may currently be unknown and others currently regarded as immaterial could turn out to be
material. Further information on the group’s financial risk management objectives and policies are set out in note 23,
starting on page 49.
RISK/UNCERTAINTY
POTENTIAL IMPACT
MITIGATION
D
E
T
A
L
E
R
-
R
E
M
U
S
N
O
C
I
L
A
C
N
A
N
I
F
Our revenue is largely dependent
on consumer spending within
our managed estate. A consumer’s
decision to spend their money
can be affected by a broad range of
matters (including confidence in the
economy, the weather, fears of terrorist
activity and improved awareness of the
potential adverse health consequences
associated with alcohol), all set against
a background of an ever-increasing
choice of where to go and what
to do.
Various factors may result in the
amount we pay for our key supplies
(including food, drink, gas and
electricity) and labour being increased.
Following on from the Government’s
introduction of the National Living Wage,
the hourly rate will increase to £7.50 with
effect from April 2017, with annual
stepped increases to follow. Increased
costs could potentially make our offer
less attractive to consumers if they
are passed on.
The pub industry is subject to a
variety of taxes, including business
taxes, duty on alcoholic drinks
and business rates. New rateable
values for all of our properties came
into effect in April 2017 following the
2017 Rating Revaluation undertaken
by the Government. The new rating
assessments have resulted in materially
higher business rates payable
by the group as a whole.
We operate a defined benefit
pension scheme, the Young
& Co.’s Brewery, P.L.C. Pension
Scheme, which has to be funded to
meet agreed benefit payments. The
value of the scheme, and therefore its
funding, is subject to changes in life
expectancy assumptions, lower than
anticipated performances of the
stock market and by reduced
bond yields.
Our financial structure involves
bank borrowings. The business
therefore needs to generate sufficient
cash to repay these debts with accrued
interest. Interest rates are also subject
to change.
A reduction in our
revenue could lead to
lower profits.
A reduction in revenue and/
or increased costs will have an
impact on our margins and result
in lower profits.
Our pubs and hotels are spread throughout
southern England, albeit the majority are within
the M25. Through them, we are able to provide
a hospitable and welcoming home from home,
often at the heart of the local community. They
benefit from customer-focussed designs, high
service standards, quality food and market-leading
drinks, all of which matter to the discerning
consumer. By having a mix of excellent riverside,
garden and city pubs and hotels, we seek to
address the impact of seasonality and changes
in consumers’ spending habits.
Fixed-price arrangements are in place with some of
our food and drink suppliers. Regarding utilities, we
continually look at ways of reducing our levels of
consumption; we also regularly review our energy
needs and price changes in the market, and, where
appropriate, we make forward purchases.
Increased wages may result in consumers having
greater capacity to absorb increased prices but any
shortfall will need to be mitigated through greater
labour and other efficiency gains.
The introduction of new
taxes and/or increases in the
rates of existing taxes will
result in lower profits.
We retain the services of specialist
rating consultants who review each and
every rating assessment. Appeals are
lodged on our behalf where the new
assessments are deemed excessive.
Variations in the difference
in value between the assets
of the scheme and its liabilities
may increase the amount we are
required to pay into it in order to
account for past service benefit
deficits and future service
benefit accruals.
Our ability to trade as a
going concern depends on
generating sufficient cash to
meet these repayments.
The scheme was closed to new entrants in
2003 and we make additional contributions
over and above regular service contributions
in order to address any funding deficit.
We also maintain a close dialogue with the
scheme’s trustee. To further limit the potential
exposure, future service benefits accruing
to remaining active members were reduced
from April 2016, with member contributions
being increased in tandem.
The board ensures the group’s debt profile is
long dated, facilities are committed and debt is
carefully managed within financial covenants. A
mix of debt at fixed and variable interest rates is
also maintained with interest rate swaps used to
manage this exposure.
8
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
I
S
N
O
T
A
R
E
P
O
I
N
O
T
A
L
U
G
E
R
RISK/UNCERTAINTY
POTENTIAL IMPACT
MITIGATION
We rely on a number of key
suppliers to provide our pubs and
hotels with food and drink.
Supply disruption could
affect customer satisfaction,
leading to a reduction in our
revenue and possibly lower
growth rates.
Food and drink is sourced from a number
of suppliers. Informal arrangements are
also in place such that substitute suppliers
or products could be used if required. We
regularly review our choice of suppliers.
We, and particularly our managed
estate, are reliant on information
systems and technology for many
aspects of our business (including
communication, sales transaction recording,
stock management, purchasing, accounting
and reporting and many of our internal
controls). Information systems can be at
risk of failure due to technical issues or
the growing threat of cyber attack.
Any failure of such systems or
technology would cause some
disruption, and any extended
period of downtime, loss of
backed up information or delay
in recovering information could
impact significantly on our
ability to conduct business.
Firewalls and anti-virus software are installed to
protect our networks. Information is routinely
backed up and arrangements are in place with a
third party provider to assist with data recovery.
An off-site disaster recovery facility is also available
if any major incident occurs at Riverside House
or to our systems. The IT needs of the business
are regularly monitored and we invest in new
technology and services as necessary.
We are dependent on having the right
people throughout our organisation,
at all of our pubs and hotels and also at
Riverside House. It is too early to have a
clear view on the impact of Brexit on our
business, but its potential to have an
impact is fully acknowledged.
Our ability to achieve our
strategic and operational
objectives could be affected if
we are unable to attract and
retain the right people with
the desired skillset.
We look to recruit and retain the best talent.
The remuneration and reward packages we
offer are competitive and designed to retain and
motivate staff. We have training and development
programmes in place intended to ensure that our
people have the right skills to perform their jobs
successfully and achieve their full potential.
Part of our growth plan is based on
acquiring and/or developing additional
pubs and hotels/rooms.
If we do not acquire the right
opportunities when planned, or
at all, our desired future growth
rate will be delayed or reduced.
We have relationships with a variety of third parties to
ensure, as far as possible, that we are made aware of
acquisition opportunities as and when they come up.
We have provided a number of agents and landlords
with details of our preferred site profile.
We are required to meet a range of
ever-increasing compliance, regulatory
and health and safety obligations in the
operation of our business.
A failure to comply with these
obligations could result in an
accident or incident occurring
involving injury, illness or even
loss of life. This could damage our
reputation and lead to fines, possibly
leading to a reduction in our revenue
and lower growth rates. Increases
in the cost of compliance will have
an impact on our margins and
result in lower profits.
We carefully monitor legislative developments,
and our training programmes, policies, processes
and audits are designed to promote and achieve
compliance with our obligations. Health and safety
audits are undertaken by a third party who also
work with us to ensure changes in health and safety
practices and procedures are incorporated into our
business and reviewed on a regular basis. Insurance
cover to help with any financial compensation that
may be payable as a result of an accident
or incident has been taken out.
The Neighbourhood Planning Bill is
currently passing through Parliament.
This may make changes to the planning
use classification of pubs generally and
the physical changes that can be made
to them without the need to obtain
planning permission.
The introduction of any
additional requirement to
obtain planning permission will
increase costs and will also have
an impact on the timescale
of development projects
within our estate.
Through our membership of the British Beer
and Pub Association, we seek to ensure that
the Government is made aware of the impact
of changes of this nature on our business.
9
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Business and financial review
2017 financial figures are on a 53 week basis unless specified (2016: 52 weeks).
Managed houses
Our managed houses delivered another
strong performance in 2017. After five
highly successful years, the comparable
figures were always going to be tough.
However, we relish a challenge at
Young’s and see the delivery of results
that consistently outperform the industry
average as the reward for the work ethic
that runs throughout our organisation
and for the consistent execution of our
clearly defined strategy. Ultimately, it
is our people and our proposition that
underpin our achievements.
The vast majority of our managed estate
(160 out of 173 pubs) is on a like-for-like
basis. Our run of managed house like-
for-like sales performance is a beacon
of consistency at 6.0%, 4.6%, 6.7%,
6.5% and 5.6%, averaging 5.7%. This
year’s 4.7% was especially satisfying as
last year’s results included the Rugby
World Cup which was played out within
our heartland and where we maximised
revenue opportunities both in the lead-
up to and throughout the tournament.
Revenue and profits
Our two managed house brands,
Young’s and Geronimo, have both
delivered strong performances. Total
managed sales were up 7.0% on a 52
week basis. This year, Young’s managed
houses delivered like-for-like sales
growth of 5.0% and we are confident
that we can continue to outperform the
sector with more opportunities to drive
further growth.
The turnaround in our Geronimo
performance has been equally pleasing.
From a decline of 1.0% in sales on a
like-for-like basis last year, the business
has bounced back to deliver 3.8%
like-for-like sales growth this year.
This achievement has been realised by
focussing on the individuality of each
pub, restoring the menu to the Best
of British and re-energising the
service teams.
Although food sales have been gaining
product share from drink over the past
few years, drink sales remain almost two
thirds (65.6%) of our managed house
sales mix. With our strong London
weighting (86% of our pubs are within
10
the M25), the proximity of our pubs
to public transport and our premium,
ever-evolving drinks range, we expect
this ratio to remain at around the current
level. At Young’s, we believe in “best in
class” and are proud of the diversity we
are able to offer our customers. We have
great partnerships with our suppliers
which allow us to be flexible with both
global and local brands to ensure we
represent current trends and tastes.
Thankfully, Young’s Bitter is a wonderful
beer and more than holds its own in
the ever-competitive world of craft ales.
We are pleased to welcome back
Guinness, after a three year absence,
in a partnership which will strengthen
our rugby association, especially in our
backyard of South West London. This
draught stalwart has been joined by
exciting new brands such as Beavertown
Neck Oil, Twickenham Grandstand and
Founders All Day IPA.
This year-end marks the first anniversary
of our partnership with Berkmann Wine
Cellars. This relationship has borne
fruit in the past year and we hope will
only get better with age. Through the
introduction of a refreshed wine menu
design, wine pairing events and better
informed staff through our jointly run
“Grape Masters” programme, we have
seen a shift away from traditional “house
wines” to New World wines. The bubble
has yet to burst on our customers’
thirst for sparkling wine, with volume
up 11.4% in the last year alone and up
121% over a three-year period.
Spirit sales are also in strong growth,
with volumes up 3.7%. Gin’s remarkable
resurgence continues and we are well
placed to further expand into this
market. Through the creation of the
Young’s “Cocktail Collective”, we have
refreshed and reinvigorated our training
and support to allow our pubs to offer
a range of on-trend cocktails to our
discerning customers. Drink sales were
up 7.1% in total and up 4.8% on a like-
for-like basis.
Food sales were up 7.4% in total and
up 4.9% on a like-for-like basis. The
standout success story within our food
offering has been our Ultimate Sunday
Lunch; our customers are welcome to
grab a comfy corner, read the papers,
play a board game and enjoy a roast
with all the trimmings. Even our Mayfair
institution, the Guinea Grill, which has
been serving ales since 1423, is opening
on Sundays again to meet this growing
demand. The Guinea Grill is a founding
member of the Scotch Beef Club and
the pub and its team won the award
for Best Steaks and Grills in Harden’s
London Restaurant Awards 2016.
Having increased the roll-out of our
innovative and successful BurgerShack
concept, including its little sister, ‘Shack-
in-a-Box’, which can pop up to maximise
sunny days in smaller gardens, we
now have 25 ‘shacks’, an increase of
13 over the year. BurgerShacks allow
us to offer a fast, convenient service
to our customers, taking pressure off
our kitchens during busy times, while
delivering an indulgent treat to satiate
our nation’s growing hunger for
better burgers.
We completed a number of projects
within our hotel division this year. We
started the year by putting the finishing
touches to our new 12-bedroom
boutique hotel at the Hand and
Spear (Weybridge) which increased
our total room stock to 486 rooms.
During late spring and early summer
2016, we transformed the trading
space and kitchen at the Brook Green
(Hammersmith) and the 21 rooms at
the Greyhound (Carshalton) into stylish
retreats of calm and relaxation. Finally,
throughout the final quarter of the
financial year, we temporarily closed
the City Gate (Exeter) to completely
overhaul the pub and its 14 bedrooms
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 to boutique standard. 53% (255) of
our room stock is now of boutique
standard with an average room rate of
£97.02 compared with £64.50 for our
classic rooms. Despite the disruption
caused by these investments and tough
comparatives as a result of the excellent
work we did to maximise returns during
the Rugby World Cup in September and
October 2015, accommodation revenue
was up 2.8% driven by occupancy rate,
up 2.0% to 74.9%. As a result, RevPAR
was £60.86 (2016: £60.01).
The combination of the impact of the
new wine deal, tight control over labour
costs and the fixed nature of some
other costs has resulted in a 0.8% point
improvement in our managed house
adjusted operating profit margin to
24.6%. Coupled with the rising sales
performance, managed house adjusted
operating profit grew by 9.8% to £58.4
million on a 52 week basis. Full year
profits were £59.7 million.
Investment
We run a well-invested managed pub
estate and have a clear and consistent
investment plan that underpins our
growth. This year we have invested
£35.7 million, spread over acquisitions,
transformational developments and
day-to-day maintenance to preserve
the quality to which our customers
have grown accustomed.
We acquired three freehold properties
and opened one leasehold during
the year, spending £12.0 million
in the process. The Blue Boar at
the gateway to the Cotswolds in
Chipping Norton reopened after a
major refurbishment in October. The
Woolpack (Bermondsey) transferred
from the Ram Pub Company in
October, having spent six months
trading under the previous tenant
following its purchase at the start of
the financial year. The Riverstation,
anchored on Bristol’s beautiful
and historic harbourside, landed in
November. Finally, the Station Tavern
(Cambridge) signalled our broadening
appetite for destination market towns.
Within the existing estate, we invested
£23.7 million (2016: £25.6 million)
on refurbishing the Brook Green
(Hammersmith), Bear (Oxshott), Coach
and Horses (Barnes), County Arms
(Wandsworth), Devonshire (Balham),
Eagle (Shepherd’s Bush), Fentiman
Arms (Vauxhall), Fox and Anchor
(Smithfield Market), Greyhound
(Carshalton), Hammersmith Ram,
Hand and Spear (Weybridge), Hare
and Hounds (Sheen), Old Brewery
(Greenwich), Trinity Arms (Brixton)
and the Victoria (Surbiton). The White
Bear (Kennington) was this year’s
largest investment and is a stunning
example of traditional pub meets
modern design, with an eclectic
collection of artwork and bric-a-brac
overlooking the original wooden bar.
On the total internal investments
we made in the prior year we have
delivered a 25.0% return on capital in
the current year.
Customer engagement
The hospitality sector as a whole has
seen a recent renaissance of people
considering it to be a career instead
of a stepping stone to something
else. At Young’s, we understand the
importance of nurturing talent within
our organisation and we are proud
to have seen the number of Pub
Manager vacancies filled through
internal appointments grow to 61%.
The vast majority of these promoted
Deputy Managers have completed our
internally run Management Academy,
which is now in its third rotation. We
ensure the programme is demanding
enough to set participants up for
success, living the Young’s values and
culture and they then, themselves, start
succession planning to identify and
develop the next generation of talent
for the Academy.
Just before Christmas, we launched
our own white label mobile app –
Young’s On Tap – which is available
to download for free on iPhone
and Android from the App Store.
The Young’s App seeks to facilitate
our customers’ digital journey by
enabling them to find a pub, book
a table, pay or split the bill, or just
change the music in their local; all
of these things are aimed at growing
engagement, driving loyalty and
enhancing customers’ experiences.
Strategic report
Directors’ report
Financial statements
Shareholder information
From dray horses to digital pioneers,
Young’s On Tap represents the next
generation in our technological
journey. By the year-end we already
had over 30,000 downloads and all
our staff have embraced Young’s
On Tap by becoming “Appbassadors”.
The app is just one of the ever-growing
social media tools we have at our
disposal to interact with our customers.
The Ram Pub Company
It has been a strong year for our
tenanted estate, further underlining
the decisions made in previous
years to focus on the long-term
opportunities that a smaller and better
supported operation can deliver. We
want to build and maintain healthy
working relationships with our tenants
so that both parties can prosper.
The Ram Pub Company tenants
benefit from the same contemporary
and diverse product range as our
managed pubs, in addition to “local
heroes” specific to their communities.
Together with the business advice,
training and sales expertise our in-
house team provide, we believe we
have the right ingredients to attract
and retain entrepreneurs who can
operate a flourishing business.
Revenue and profits
In total, on a 53 week basis, revenue was
up 8.7%. On a comparable 52 week
basis, revenue was up 7.1% in total and
up 3.2% on a like-for-like basis. The first
six months of the year benefitted from
the Woolpack (Bermondsey) before
it was transferred from the Ram Pub
Company to our Young’s managed
estate. Our like-for-like business has
benefitted from the capital investments
made in the previous year and the
new wine deal that refreshed the range
available to our tenant partners and
their customers. This better buying
has led to operating efficiencies which
have generated enhanced margins. The
combination of increasing sales and
improving margins has resulted in the
division’s adjusted, both for the 53rd
week and exceptional items, operating
profit rising to £5.0 million, up 11.1%
and up 4.5% on a like-for-like basis.
11
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Business and financial review
Continued
Anj & family – locals at Windmill
(Clapham Common)
“The Windmill offers a great variety of
food and drink, but the biggest reason
we love the Windmill is because it is such
a pet friendly pub where our dogs have
been enjoying their treats for the last
2 years”.
Young’s graduation evening – Class of 2016
12
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 At year end, the Ram Pub Company’s
estate stood at 79 pubs and generated
5.1% of our group revenue (2016: 5.2%).
Although a small part of our overall
business, the Ram Pub Company is
important to us; it is cash generative and
offers us a different route to market both
as a day-to-day business and through
acquisitions that may already have
tenants in situ.
Investment
The investment in our tenanted estate
has continued throughout the financial
year. Major developments have been
completed at the Grand Junction Arms
(Harlesden), Malt Shovel (Dartford),
O’Connors (Chelmsford), Pig and
Whistle (Wandsworth), Robin Hood
(Sutton) and the Ship (East Grinstead).
In May 2016, we sold the Lord Napier,
a small tenancy in Thornton Heath.
Just after the current year end we sold
the King’s Arms (Epsom) and the Bell
Inn (Illminster). All three sites were at
the lower end of the estate and failed
to meet our internal returns criteria.
Tenant engagement
The rebadging of the Ram Pub
Company is well underway, offering our
pubs and tenants a refreshed identity
that will serve us well for many years to
come. The new-look signage captures
the essence of the tenanted business,
with the strapline “Everyone’s local”.
The Ram Pub Company offers tenants
the chance to run their own highly
successful individual businesses while
having the financial, operational and
marketing support that being part of
an established group presents. The
tenanted model has challenges for both
pubcos and tenants, but we believe
in operating these as sustainable
businesses that fairly reward the risk
that both partners face.
Property, treasury,
retirement benefits,
exceptional items and tax
Property
Our property estate remains the
foundation for our growth and healthy
operating cash generation. In total, we
have 252 pubs, with the vast majority
in prime locations and 82% inside the
M25. Being based in Wandsworth,
South West London remains our
stronghold, but in recent years we
have been expanding our reach by
acquiring pubs in similarly affluent
areas. We have the desire and scope to
increase our expansion rate, but we will
not make acquisitions for the sake of
it and all new opportunities must meet
our returns criteria and complement
our existing estate.
We have a predominantly freehold
backed estate (194) with a number of
long leaseholds with peppercorn rents
(16). In accordance with International
Financial Reporting Standards (“IFRS”),
these properties are revalued each year
to reflect their current market values.
This exercise is undertaken using a
combination of an independent and
leading commercial property adviser,
Savills, who revalue 20% of the estate
annually, and an internal review of
the remainder led by Andrew Cox,
MRICS, our Director of Property and
Tenancies. The valuation method uses a
number of inputs of which deriving the
sustainable trade of each pub is key.
The review has resulted in a net
upward movement of £22.6 million,
driven by our improving trade
and continued strong demand for
pubs in prime London and South
East locations. In gross terms and
in accordance with IFRS, individual
movements in value, totalling £23.1
million (2016: £20.0 million), are
reflected in the revaluation reserve in
the balance sheet, while £0.5 million
of downward movement (2016: £1.2
million) has been charged to the
income statement under exceptional
items. All these adjustments are non-
cash items.
As highlighted at the half year,
we have changed our approach
to recording our short leasehold
properties (17% of our total number of
pubs). In the prior period, this resulted
in a non-cash decrease in the carrying
value of our property and equipment
and an increase in lease premiums,
split between non-current and current
assets (see note 1).
The total estate, at the period end, is
now valued at £689.1 million.
Strategic report
Directors’ report
Financial statements
Shareholder information
Treasury
Our business model is highly cash
generative. Increasing sales, strong
improving operating margins and our
high proportion of freehold pubs provide
increasing operating cash flow, this year
£63.5 million (2016: £60.4 million). After
paying interest, taxation and other costs,
we are left with three options for our
cash: invest it, repay our debt or return
it to our shareholders. This year we have
done all three. The vast majority, £38.2
million, was re-invested to continue our
strong success in future years. Our net
debt has decreased by £3.6 million to
£126.6 million, with gearing falling to
25.7% (2016: 28.8%) and our net debt to
EBITDA ratio dropping to 1.9 times (2016:
2.2 times). Our proposed final dividend
per share of 9.62p, as recommended to
our shareholders, represents an increase
of 6.1% and the 20th consecutive
annual increase.
Going concern
Just after the year-end we extended
£20 million of our £175 million
long-term debt facility to 2024.
Our facility is now held across three
banks – Royal Bank of Scotland,
Barclays and HSBC – and is repayable
between 2019 and 2024. £100
million of our £126.6 million net debt
is on fixed interest rates through a
combination of different interest rate
swaps which provide some protection
from possible adverse interest rate
movements in future years. Given
these committed facilities, our
freehold-backed balance sheet,
significant free cash flow and the
conservative financial ratios above,
we have prepared these financial
statements on a going concern basis.
Retirement benefits
Like many UK companies with defined
benefit pension schemes, we have
seen the balance sheet value of our
pension deficit move significantly
throughout the year. The volatility
in the economic climate, both in
the short-term and long-term, has
caused corporate bond yields to
decrease dramatically during the first
six months of the year and then to
increase slightly in the second half
of the year. We use these corporate
13
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Business and financial review
Continued
bond yields as a basis to discount our
future pension liabilities to present
values which can cause large non-cash
movements in net pension deficit.
At the end of last year, our pension
deficit was £6.3 million, by the half
year it had increased to £23.4 million
and at the current year-end date it
had fallen back to £12.8 million. We
have a strong relationship with the
pension trustees and continue to work
with them to ensure the pension fund
is adequately funded.
Exceptional Items
In the current year, we purchased
the Woolpack (Bermondsey) in a
two-stage process. On the first day
of the financial year, we purchased
the freehold interest. The pub had,
at the time, a tenant in situ with an
unexpired agreement for a number
of years. In October, both parties
decided to terminate the agreement
early, allowing us to bring the pub
into our managed house estate.
Although included in our internal
investment decision from the outset,
the compensation paid to the former
tenants, under IFRS, has been
expensed and is included within
exceptional items.
This year’s exceptional items also
include a £0.7 million loss flowing
from the expiry of our own leases with
Heathrow for the Three Bells and Five
Tuns, with the majority reflecting the
write-off of goodwill recognised on
the initial acquisition of Geronimo in
December 2010.
The remaining exceptional items
relate to the estate management of
our properties which, as mentioned
previously, includes the £0.5 million
(2016: £1.2 million) downward
movement in the property valuation
and £0.2 million (2016: £0.4 million)
of acquisition costs associated with
business combinations.
Tax
The corporation tax charge for
the year was £7.0 million, with our
effective corporation tax rate for the
year, adjusted for exceptional items,
at 19.8% (2016: 20.5%). Next year we
14
Mick and Sarah Dore – Alexandra (Wimbledon)
expect our effective rate to decrease
as the UK’s headline corporation tax
rate falls from 20% to 19%.
Corporate and social
responsibility
Our pubs aim to be at the centre of
their communities; to us, a socially
responsible business is one that
enriches the area in which it operates.
Our pubs offer jobs and training to
local people, build partnerships with
local suppliers and provide the perfect
venues for people to be neighbourly.
There has been no finer example
of our approach this year than the
Alexandra (Wimbledon). The pub and
its managers, Mick and Sarah Dore,
became internet sensations over the
festive period when they offered a full
turkey dinner and a beer to anyone
alone on Christmas Day. The pub has
opened its arms to those on their own
at Christmas for a number of years
but this past year, a few tweets led
to the story trending on social media
and hitting the national press. Mick
explained “It’s not just about a free
plate of food but making a fuss of
them and introducing them to each
other so they can chat and hopefully
make some new friends.”
We also work hard to improve the
environment in which we operate.
In the current year, we have raised
our recycling efforts by more than
16% to 6,768 tonnes (2016: 5,803
tonnes) and reduced the waste going
to landfill to 1.0% (2016: 1.4%). We
sent enough litres of used cooking oil
to be recycled into biofuel to power
a London taxi ride to the moon and
back twice over. Both our Young’s
and Geronimo operations have been
awarded two stars by the Sustainable
Restaurant Association.
Our pubs work with many local
charities in their communities, but as
a company we decided to support the
children’s charity of rugby, Wooden
Spoon, for a second year. Wooden
Spoon funds around 70 projects
each year that support disadvantaged
and disabled children. One of these
projects is the Oasis Children’s venture
based on our doorstep in Stockwell,
London. Oasis has a simple aim of
improving the lives of children, young
people and the local community.
Many of our staff have spent volunteer
days with Oasis, helping maintain the
freshness and fun side of the nature
garden, adventure playground and
karting track.
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 Strategic report
Directors’ report
Financial statements
Shareholder information
Scott and Lewis – locals at the
Castle (Tooting)
“We have been visiting the Castle
regularly for the last 3 years.
What makes it special to us is the
wonderful atmosphere and the
friendliness of the staff”.
In the short-term, the impact on
consumer confidence from the prospect
of Brexit has not been as harsh as
some expected, being softened by
a combination of falling sterling, low
interest rates and the resilience of the
British consumer. In the longer-term,
we remain busy, while the broader
economic environment remains
uncertain, to ensure we are best placed
for whatever is around the corner.
As previously announced in the
interim results, the new business
rates are expected to increase our
cost base by roughly £1.8 million in
the 2018 financial year. Together with
the next instalment in the National
Living Wage and the introduction of
the Apprenticeship Levy, there are
challenges ahead.
We remain confident in our strategy
and our ability to meet and exceed
our customers’ expectations. The
team we have has the wherewithal to
deliver on a ‘best in class’ proposition,
both in our current footprint and
in new locations, and we expect
this combination to provide our
shareholders with superior returns.
On behalf of the board
Patrick Dardis
Chief Executive
24 May 2017
15
Shareholder returns
As a business, we focus on long-term
sustainable growth, each year investing
in our estate through a structured
refurbishment/redevelopment plan that
harnesses opportunities on a consistent
basis. Our estate, as a result, remains
well-invested which is reflected in
our strong balance sheet; our major
investments in the previous year have
fuelled a return of 25.0% in the current
year. The combination of revenue growth
of 9.4% and improved operating profit
margins has increased our adjusted profit
before tax by 13.5% and our adjusted
earnings per share by 13.7% to 66.43
pence. Unadjusted earnings per share
rose by 12.4% to 61.51 pence.
We are very proud of our dividend record
and are pleased to be recommending
raising the final dividend for the 20th
consecutive year, a feat that few
companies can claim. This year, the
recommended increase is 6.1% to 9.62
pence, which will result, if approved by
shareholders, in a total dividend for the
year of 18.50 pence (2016: 17.45 pence).
The dividend is covered 3.6 times by our
adjusted earnings per share and 3.3 times
by our unadjusted earnings per share.
Outlook
Managed house revenue in the first
seven weeks of the new financial year
was up 6.1% in total and up 4.7% on
a like-for-like basis. The mild and dry
weather during April and the increase
in “staycations” during the Easter
holidays drove footfall, however this
was dampened by a comparatively
wet May.
This year, we will benefit from a full
year’s trade at the Station Tavern in
Cambridge which opened in March,
and from the two high turnover pubs
added to our managed house estate
in October last year: the Woolpack
(Bermondsey) and the Riverstation
(Bristol). All are stunning examples
of our acquisition strategy which will
enhance our portfolio. Just after the
year end, we exchanged contracts of
the Bull (Bracknell) and transferred
three pubs from our Ram Pub
Company to managed houses; namely
the King’s Arms (Wandsworth), the
Hope and Anchor (Brixton) and the
Grove (Camberwell). We also sold
the King’s Arms (Epsom) and the Bell
Inn (Illminster) both from our Ram
Pub Company.
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Directors’ report
For the 53 weeks ended 3 April 2017
Welcome to our board of directors. Apart from Steven Robinson and Tracy Read (who both joined the board on 6
September 2016) and Nick Miller (who joined on 4 April 2017), all served throughout the period. No other person
was a director during the period other than Nicholas Bryan and Peter Whitehead who stepped down from the board
at the end of the period and on 6 September 2016 respectively.
Stephen Goodyear
NON-EXECUTIVE CHAIRMAN
Joined in 1995 as sales director. Appointed to the
board in 1996 as sales and marketing director.
Became chief executive in 2003. Stepped down
as chief executive and became a non-executive
director in 2016. Appointed as chairman in 2017.
Member of the company’s audit committee.
Previously worked for Courage Ltd (1974-95) in
a number of senior roles. In 2013, was the Master
of the Brewers’ Company, one of the oldest Livery
Companies in the City of London. Aged 61.
Patrick Dardis
CHIEF EXECUTIVE
Joined in 2002 and appointed to the board
in 2003. Became chief executive in 2016.
Previous positions have included director
of retail operations at Wolverhampton &
Dudley Breweries PLC (now Marston’s
PLC), business development with Guinness
Brewing and retail management with
Whitbread PLC and Courage Ltd. Aged 58.
Steven Robinson, FCA
CHIEF FINANCIAL OFFICER
Joined the company in 2009 and appointed
to the board in 2016. Qualified as a chartered
accountant with Deloitte in 2004, becoming
a fellow of the Institute of Chartered
Accountants in August 2015. Immediately
before joining the company, held a number
of finance roles at The Walt Disney Company
(2004-09). Aged 37.
Torquil Sligo-Young
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 the group’s
technological needs and for health and safety.
Previously worked for stockbrokers, Bell,
Lawrie, Macgregor & Co. Aged 57.
Tracy Read
PEOPLE
Joined the company in 2015 and appointed to
the board in 2016. Has overall responsibility
for people matters, including personnel and
training and development. Immediately
before joining the company was at The
Orchid Group (2006-14), most recently
as head of people. Aged 47.
Roger Lambert, M.A.
NON-EXECUTIVE AND
SENIOR INDEPENDENT
Appointed to the board in 2008 and as senior
independent director in 2011. Chairman of the
company’s audit committee, as well as a member
of the company’s remuneration committee. Since
2017, a Partner at Peel Hunt LLP. Previously was
Chairman of Corporate Broking, Canaccord
Genuity (2010–16) and for the 26 years before that
was in corporate finance at J.P. Morgan Cazenove
where he was a senior managing director with
responsibilities for corporate client coverage of the
consumer sector. Having acted for more than 25
companies in the sector, has a wealth of relevant
expertise in brewing, drinks and hospitality.
Aged 58.
Trish Corzine
NON-EXECUTIVE
Nick Miller
NON-EXECUTIVE
Appointed to the board in 2015. Member of the
company’s audit and remuneration committees.
Has wide-ranging knowledge of the hospitality
and leisure sector, having spent the majority of her
career in the restaurant industry. Before retiring
from the board of The Restaurant Group plc in
2013, she spent 20 years with the company, nine
as an executive director responsible for their
concessions business. Aged 60.
Appointed to the board in 2017. Chairman of the
company’s remuneration committee, as well as a
member of the company’s audit committee. Has
a wealth of experience in the hospitality, leisure
and brewing sectors. Most recently was CEO
of Meantime Brewing Company (2011-16). Was
previously managing director of Miller Brands, the
UK arm of SAB Miller, the multinational brewing
and beverage company. Aged 52.
16
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 Strategic report
Directors’ report
Financial statements
Shareholder information
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.
Corporate governance
The board is committed to good corporate governance in the management and operation of the group’s business.
Summarised below are its current corporate governance arrangements; no particular corporate governance code has
been adopted.
The role of the board
The board is collectively responsible for the business
and management of the group. Its role includes:
• approving the group’s long-term objectives,
commercial strategy, major acquisitions and disposals
and the group’s annual operating and capital
expenditure budgets;
• ensuring maintenance of sound management and
internal control systems; and
• overseeing the group’s operations, ensuring competent
and prudent management, sound planning, adequate
accounting and other records, and compliance with
statutory and regulatory obligations.
Board composition
The board is made up of:
• a non-executive chairman: Stephen Goodyear;
• four executive directors: Patrick Dardis, Steven Robinson,
Torquil Sligo-Young and Tracy Read; and
• three further non-executive directors: Roger Lambert,
Trish Corzine and Nick Miller.
Their roles and brief biographical details appear opposite.
How the board works
The board governs through its executive management and via committees. It has a formal written schedule of matters
reserved for its review and approval; this includes those matters described above as well as other strategic, financial and
governance issues.
The board meets every two months, with additional meetings arranged as required; it met seven times during the year.
Formal agendas and reports are provided to the board on a timely basis, along with other information to enable it to
discharge its duties. Each of the executive directors and the company secretary updates the board at each meeting on
matters for which they are responsible. This flow of information is in addition to information exchanged between and
prior to board meetings, and regular meetings of non-executives with one or more of the executive directors outside
of board meetings.
The board has a procedure in place such that it can consider and, if it sees fit, authorise situations where a director has
an interest that conflicts, or may possibly conflict, with the interests of the company.
The board’s committees
The board has four principal and permanent committees: executive, remuneration, audit and disclosure. The latter three committees
have specific terms of reference which can be found in the investors section of www.youngs.co.uk.
Executive committee
Chairman: Patrick Dardis
Members: Executive directors
Remuneration committee
Chairman: Nick Miller
Members: Roger Lambert
Trish Corzine
It is responsible for the daily running of the group and the execution of approved
policies and the business plan. It usually meets on a weekly basis, with members
of the group’s senior management being invited to attend as appropriate.
Its primary function is to determine, on behalf of the board, the remuneration
packages of the executive directors (see the ‘Remuneration: executive directors’
box on page 19).
17
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Directors’ report
Continued
Audit committee
Chairman: Roger Lambert
Members: Stephen Goodyear
Trish Corzine
Nick Miller
It assists the board in fulfilling its oversight responsibilities, with its primary
functions being monitoring the integrity of the company’s financial statements and
internal control systems (including risk management), overseeing the company’s
relationship with its external auditor and reviewing the effectiveness of the audit
process. The chief financial officer attends the committee’s meetings, as do the
external audit partner and audit manager when the business of the meeting
relates to the full-year and half-year results. The committee meets separately with
the group’s internal audit/business risk assurance manager and with the external
audit partner and audit manager without any other member of the group’s
management present to give them the opportunity to raise any concerns they
may have and any issues arising from their work. The committee has a meeting
planner which sets out the basic items to be covered at its regular meetings.
At its meeting in May, the committee reviews the company’s preliminary
announcement, the report and accounts and the performance of the group’s
external auditor. The focus of the November meeting is on reviewing the interim
report and agreeing the scope for the next external audit, the audit plan and
related fees; it also assesses whether the auditor continues to show the required
level of independence. At both the May and November meetings, audit findings
are reviewed, which includes considering the appropriateness of accounting
policies, estimates and judgements and the auditors views on the control
environment, including fraud and risk management. At each of its meetings
there is a report from the group’s internal audit/business risk assurance manager.
Disclosure committee
Chairman: Steven Robinson
Members: Executive directors
Its primary function is to assist the company in making timely and accurate
disclosure of any information required to be disclosed in order to meet legal
and regulatory obligations.
Balance of the board
There is a clear division of responsibility between the chairman and the chief executive. The former is responsible for the
effective running of the board; the latter has overall responsibility for the running of the business.
Each of the executive directors has specific roles and responsibilities, and all of the non-executives are experienced business
people who bring a wide range of skills and experiences to the board. In their roles the non-executive directors are required,
amongst other things, to constructively challenge and contribute to the development of strategy, to scrutinise the performance
of management in meeting agreed goals and objectives and to monitor the reporting of performance.
Roger Lambert is the senior independent director. He is a partner in the corporate department at Peel Hunt LLP. Prior to
this, he was Chairman of Corporate Broking at Canaccord Genuity for 7 years after spending 26 years in corporate finance
at J.P. Morgan Cazenove, where he was a senior managing director with responsibilities for corporate client coverage of the
consumer sector, including brewing, drinks and hospitality. With this background, he is able to provide support and advice
to the chairman and to the other members of the board.
The directors consider that the board is a well-balanced one that has the right number of members for the size of the group.
Board nominations and appointments
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 it. 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.
Once appointed, the company’s articles of association ensure that any new board member is subject to re-appointment by
the company’s voting shareholders at the first AGM after their appointment – this applies to Steven Robinson, Tracy Read
and Nick Miller at this year’s AGM. They are then subject to a further re-appointment vote every third AGM after that
– this does not apply to any director at this year’s AGM.
18
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
The directors mentioned above are seeking re-appointment and their brief biographical details are on page 16.
Subject to shareholder re-appointment, each of the executive directors has been appointed for an indefinite period and
is generally entitled to not less than one year’s notice from the company if it wishes to terminate his/hers appointment.
In return, Torquil Sligo-Young has to give not less than six months’ notice if he wishes to leave, and Patrick Dardis, Steven
Robinson and Tracy Read have to give at least one year’s notice.
The non-executives have been appointed for fixed terms which are terminable earlier by them or the company giving
notice and they are likewise subject to shareholder re-appointment. The expiry dates of their current fixed terms and their
minimum periods of notice are as follows: Stephen Goodyear (3 April 2020 and six months), Roger Lambert (31 July 2020
and six months), Trish Corzine (11 January 2018 and six months) and Nick Miller (3 April 2020 and six months).
The executive directors are expected to devote substantially the whole of their time, attention and ability to their duties, whereas,
as one would expect, the non-executives have a lesser time commitment. Apart from the chairman, who has agreed to spend 30-
50 days a year on work for the company, it is anticipated that each of the non-executives will dedicate 15 days a year.
Copies of the executive directors’ service contracts and copies of the letters of appointment of the non-executive directors
are available for inspection at the company’s registered office.
Advice for the board
Subject to certain limitations, all of the directors are entitled to obtain independent professional advice at the company’s
expense; they also have access to the advice and services of the company secretary.
Keeping up to date generally and particularly with the market
From time to time the directors attend training courses and/or industry forums. They also attend relevant specialist
briefings, some of which form part of board or executive committee meetings.
The directors, executive and non-executive, regularly spend time out in the trade with fellow directors, colleagues and
friends. This helps to keep them up to date with the group’s operations, developments in the market and the competition.
Liability insurance cover for directors and officers
The company maintains, at its own expense, insurance cover in respect of legal action against its directors and officers.
Remuneration: executive directors
The remuneration of the executive directors is determined by the remuneration committee in the context of the
company’s reward policy, the principal objective of which is the recruitment and retention of officers with appropriate
skills and qualities to drive the company’s strategy and deliver value for shareholders. Against this background, the
remuneration committee has decided that total remuneration levels for the executive directors should be in line
with the market for the performance achieved, with the variable element included in the total remuneration varying
according to achievement of key performance measures.
This variable element is currently delivered via deferred annual bonus awards which are dependent on certain
performance targets being achieved. See note 28 for details of how the deferred annual bonus scheme operates.
The remuneration committee believes that the company’s remuneration policy is consistent with the group’s risk
management policy as it does not encourage inappropriate risks to be taken to achieve the performance targets;
the focus is very much on a long-term remuneration model.
Details of the remuneration of each executive director appear in note 8. None of them are involved in deciding their
own remuneration.
19
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Directors’ report
Continued
Remuneration: non-executives
Initially the remuneration of the non-executives is determined by the board but any fee increase is determined by the
executive committee, with the intention being that the fees paid are not out of line with the market and go some way
towards rewarding the non-executives for the time they commit to their various roles. Accordingly all non-executive directors
receive a basic fee; they do not participate in bonus schemes or share options and none of them are members of any group
pension scheme other than for the purposes of complying with pensions auto-enrolment legislation. However, as a result
of his former employment within the group as an executive director, Stephen Goodyear is a participant in various bonus
schemes (see note 28) and has outstanding share options (see note 28); he is also a pensioner member of the group’s
defined benefit pension scheme. The non-executives are entitled to be reimbursed for certain business-related expenses.
Details of the remuneration of each non-executive director appear in note 8.
Risk and internal control
The board has overall responsibility for the group’s internal control system and for reviewing its effectiveness. The
executive directors implement and maintain the risk management and internal control system, and the audit committee
assists the board in fulfilling its oversight responsibilities by monitoring the system’s integrity.
The system is designed to manage risk; it cannot eliminate it and therefore provides reasonable, not absolute, assurance against
material misstatement or loss. As part of the system, the board regularly reviews its financial controls memorandum; the
controls in this lengthy and detailed document seek to:
• mitigate risks which might cause the failure of business objectives;
• help safeguard assets against unauthorised use or disposal;
• ensure the maintenance and reliability of proper accounting records and financial information used within the business
or for publication; and
• help achieve compliance with applicable laws and regulations.
The group’s internal audit/business risk assurance manager regularly tests controls contained in the financial controls memorandum
in order to assess their effectiveness. The results of his work are shared with the executive directors concerned and with the audit
committee. With the approval of that committee, changes, as appropriate, are then made to the financial controls memorandum.
The group, through its internal audit/business risk assurance manager, carries out internal reviews of financial areas according to a
programme set by the audit committee following input from the chief financial officer and the group’s external auditor. The internal
audit/business risk assurance manager reports to both the company secretary and the chief financial officer and he is independent
of the areas which he reviews. His reports, the management responses and the recommended actions are presented to the audit
committee on a regular basis. Management may from time to time supplement the internal resource for these reviews with specialist
external resources.
The group also employs an in-house team of retail auditors who monitor the controls in place in the group’s managed pubs and
hotels, in particular those covering stock and cash. This team ultimately reports to the chief financial officer.
The group has business continuity arrangements in place with third parties. It also has, and reviews annually, business continuity
plans for each of the departments within Riverside House in Wandsworth.
The group has a whistleblowing policy. This is overseen by the audit committee and allows staff to raise any concerns in confidence
directly with the chairman of the audit committee, the company secretary or the group’s internal audit/business risk assurance manager.
Relations with shareholders
Copies of the annual report and the interim report are sent to all shareholders and copies can be downloaded from the
investors section of www.youngs.co.uk. Other information for shareholders and interested parties is also provided on that
website. Written or e-mailed enquiries are handled by the company secretary.
The company has an on-going programme of individual meetings with institutional shareholders and analysts following the
preliminary and half-year results presentations to the City. These meetings allow the chief executive and the chief financial
officer to update shareholders on strategy and the group’s performance. Additional meetings with institutional investors
and/or analysts are arranged from time to time. All members of the board receive copies of feedback reports from the
City presentations and meetings, thus keeping them in touch with shareholder opinion.
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.
20
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 Strategic report
Directors’ report
Financial statements
Shareholder information
Directors’ holdings and interests
The holdings and interests of the directors who held office at the period end in the share capital of the company are shown
in the table below – these include, as at 28 March 2016, the interests of their families (as defined in the AIM Rules) and,
as at 3 April 2017, the interests of persons closely associated with them (as defined in the Market Abuse Regulation). These
interests are in addition to those shown in note 8(d) and 8(e) on page 39.
Nicholas Bryan
Stephen Goodyear (i), (ii)
Patrick Dardis (i), (ii)
Steven Robinson (i), (iii)
Torquil Sligo-Young (i), (ii), (iv)
Tracy Read (i), (iii)
Roger Lambert
Trish Corzine
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
Trustee
Beneficial
Beneficial
Beneficial
As at
3 April 2017
28 March 2016
3 April 2017
28 March 2016
3 April 2017
28 March 2016
3 April 2017
28 March 2016
3 April 2017
28 March 2016
3 April 2017
28 March 2016
3 April 2017
28 March 2016
3 April 2017
28 March 2016
3 April 2017
28 March 2016
A shares
8,505
8,505
240,930
231,796
79,195
49,257
20,620
–
305,016
268,462
4,154,340
4,154,340
–
–
5,250
5,250
1,000
1,000
Non-voting
shares
–
–
–
–
–
–
–
–
–
–
649,914
649,914
–
–
5,000
5,000
5,000
5,000
(i) Also interested in 66,991 (2016: 554,077) A shares held in trust by RBT II Trustees Limited – see note 29 on page 57.
(ii) Also interested in 337,067 (2016: 337,067) A shares held in trust by Young’s Pension Trustees Limited – see note 29 on page 57.
(iii) No comparative number is shown for Steven Robinson and Tracy Read as they became directors during the period.
(iv) Torquil Sligo-Young and various members of his immediate family are discretionary beneficiaries under trusts holding 836,368 (2016: 836,368) of
the A shares and 553,866 (2016: 553,866) of the non-voting shares in respect of which Torquil Sligo-Young is shown as trustee in the above table.
Qualifying indemnity provisions
The company’s articles of association contains an indemnity provision for the benefit of the directors; this provision, which is a qualifying
third party indemnity provision, is in force at the date of this report and applied throughout the period for the benefit of those who were
then directors of the company. An additional qualifying third party indemnity provision, which came into effect on 20 May 2016, is also in
force at the date of this report; this provision benefits the executive directors (and those that were executive directors during the period)
and relates to certain losses and liabilities which they may incur in connection with certain property-related matters.
AIM
The company’s shares are traded on AIM. There are no other exchanges or trading platforms on which the company has applied
or agreed to have its shares admitted or traded.
Profit and dividends
The profit for the period attributable to shareholders was £30.0 million. The directors recommend a final dividend for the period
of 9.62 pence per share. Subject to approval at the AGM, this is expected to be paid on 13 July 2017 to shareholders on the
register at the close of business on 9 June 2017. When added to the interim dividend of 8.88 pence per share, this will produce
a total dividend for the period of 18.50 pence per share.
Donations
No political donations were made.
AGM
Notice convening the AGM and an explanation of the resolutions being proposed are set out on pages 61 to 65.
Important events since the end of the period and likely future developments
As permitted under section 414C(11) of the Companies Act 2006, the directors have chosen to include in the strategic report
(on pages 1 to 15) particulars of important events affecting the group which have occurred since the end of the period and an
indication of likely future developments in the group’s business.
Financial instruments and related matters
Included in note 23, starting on page 49, are the group’s financial risk management objectives and policies and an indication
of the group’s exposure to certain risks.
21
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Directors’ report
Continued
Strategic report
Directors’ report
Financial statements
Shareholder information
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, both formally and informally, 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 Riverside House 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. To encourage further involvement in the group’s performance, the company invited all employees of the group who
had been continuously employed on and from 29 March 2014 to join the group’s savings-related share option scheme for 2016. After
saving for a three-year period (through deductions from net salary), scheme members can then buy A shares in the company if they choose
to do so at 964 pence per share, being a discount of 20% to the market price at the time the invitations were issued. 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.
Notifications of major holdings of voting rights
As at 3 April 2017 the company had been notified of the following holdings of 3% or more of the voting rights
in the company:
Torquil Sligo-Young
James Young
Caroline Chelton
Octopus Investments Nominees Ltd
Lindsell Train Limited
BlackRock Investment Management (UK) Ltd
Helena Young
14.82%
13.81%
11.70%
6.04%
5.28%
<5.00%
3.12%
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 4 April 2017 and 24 May 2017, 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 (made up of a strategic report and a directors’
report) and a set of financial statements. The latter must be prepared in accordance with International Financial Reporting
Standards as adopted by the European Union (“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. As regards the company’s financial
statements (as opposed to the ones for the group), the directors have chosen to prepare them under IFRS too. In preparing the
financial statements the directors have to make judgments and accounting estimates that are reasonable and prudent, select
suitable accounting policies and then apply them consistently, and information, including accounting policies, must be presented
in a manner that provides relevant, reliable and comparable information. There also has to be included a note that the group has
complied with IFRS, subject to any material departures disclosed and explained in the financial statements. Under the Companies
Act 2006, 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 are such to enable them to ensure that the financial statements
comply with that Act. 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 person who was a director at the time when this report was approved has confirmed that (a) so far as he or she 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; and (b) he or she had taken all the steps that he or she ought to have taken as a director to make himself or herself
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, together with the strategic report (on pages 1 to 15) and the financial statements for the period ended
3 April 2017 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
ANTH O NY S C H R O E D E R
Company Secretary
24 May 2017
22
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Independent auditor’s report
For the 53 weeks ended 3 April 2017
Independent auditor’s report to the members of Young & Co.’s Brewery, P.L.C.
We have audited the financial statements of Young & Co.’s Brewery, P.L.C. for the 53 week period ended 3 April 2017 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 Statement 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 22, 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 and to
identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course
of performing the audit. 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 3 April 2017 and of the
group’s profit for the 53 week 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 based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial period for which the financial statements are prepared
is consistent with the financial statements; and
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have identified no
material misstatements in the Strategic Report or Directors’ Report.
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.
Andy Glover (Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
24 May 2017
Notes:
1. The maintenance and integrity of the Young & Co.’s Brewery, P.L.C. website is the responsibility of the directors; the work carried out by the auditor does not involve
consideration of these matters and, accordingly, the auditor accepts no responsibility for any changes that may have occurred to the financial statements since they
were initially presented on the website.
2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
23
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 Group income statement
For the 53 weeks ended 3 April 2017
Revenue
Operating costs before exceptional items
Operating profit before exceptional items
Operating exceptional items
Operating profit
Finance costs
Other finance charges
Profit before tax
Taxation
Profit for the period attributable to shareholders of the parent company
Earnings per 12.5p ordinary share
Basic
Diluted
Strategic report
Directors’ report
Financial statements
Shareholder information
2017
53 weeks
£m
Notes
Restated(1)
2016
52 weeks
£m
6
7
9
11
25
12
268.9
(222.8)
245.9
(204.7)
46.1
(3.4)
42.7
(5.5)
(0.2)
37.0
(7.0)
30.0
41.2
(2.8)
38.4
(5.3)
(0.3)
32.8
(6.2)
26.6
Pence
Pence
15
15
61.51
61.47
54.73
54.70
All of the results above are from continuing operations.
(1)The prior period comparatives have been restated for a non-cash adjustment in respect of the treatment of short leasehold premiums (see note 1).
The notes on pages 30 to 59 form part of these financial statements.
The independent auditor’s report is set out on page 23.
24
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Statements of comprehensive income
For the 53 weeks ended 3 April 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
Profit for the period
Other comprehensive income
Group
Company
2017
53 weeks
£m
Notes
Restated(1)
2016
52 weeks
£m
2017
53 weeks
£m
Restated(1)
2016
52 weeks
£m
30.0
26.6
23.2
24.1
Items that will not be reclassified subsequently to profit or loss:
Unrealised gain on revaluation of property
Remeasurement of retirement benefit schemes
Tax on above components of other comprehensive income
17
25
Items that will be reclassified subsequently to profit or loss:
Fair value movement of interest rate swaps
Tax on fair value movement of interest rate swaps
23
23.1
(7.7)
1.2
1.3
(0.3)
17.6
20.0
4.2
0.5
–
(0.2)
24.5
22.6
(7.7)
1.1
1.3
(0.3)
17.0
19.4
4.2
0.2
–
(0.2)
23.6
Total comprehensive income for shareholders of the parent company
47.6
51.1
40.2
47.7
All of the results above are from continuing operations.
(1)The prior period comparatives have been restated for a non-cash adjustment in respect of the treatment of short leasehold premiums (see note 1).
The notes on pages 30 to 59 form part of these financial statements.
The independent auditor’s report is set out on page 23.
25
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Balance sheet
At 3 April 2017
Non-current assets
Goodwill
Property and equipment
Investment in subsidiaries
Deferred tax assets
Lease premiums
Current assets
Inventories
Trade and other receivables
Lease premiums
Cash
Assets held for sale
Total assets
Current liabilities
Borrowings
Derivative financial instruments
Trade and other payables
Income tax payable
Non-current liabilities
Borrowings
Derivative financial instruments
Deferred tax liabilities
Retirement benefit schemes
Provisions
Total liabilities
Net assets
Capital and reserves
Share capital
Share premium
Capital redemption reserve
Hedging reserve
Revaluation reserve
Retained earnings
Total equity
Notes
16
17
18
24
19
20
21
23
23
22
23
23
24
25
26
27
Group
Restated(1)
2016
£m
Restated(1)
2015
£m
20.6
649.8
–
6.2
8.2
684.8
2.6
6.4
0.5
13.2
22.7
–
20.9
607.7
–
7.7
6.1
642.4
2.7
5.5
0.5
0.2
8.9
–
Company
2017
£m
1.1
620.1
30.2
7.3
3.5
662.2
2.1
22.7
0.2
5.3
30.3
1.3
Restated(1)
2016
£m
Restated(1)
2015
£m
–
582.3
31.3
6.1
3.8
623.5
1.9
28.8
0.1
11.8
42.6
–
–
540.3
31.3
7.6
1.6
580.8
2.0
27.6
0.1
0.2
29.9
–
707.5
651.3
693.8
666.1
610.7
–
(3.1)
(35.5)
(3.2)
(41.8)
(143.4)
(9.0)
(53.5)
(6.3)
(1.0)
(213.2)
(255.0)
452.5
6.1
4.1
1.8
(9.8)
224.6
225.7
452.5
(5.0)
(2.5)
(29.2)
(4.0)
(40.7)
(124.2)
(9.5)
(56.2)
(13.1)
–
(203.0)
(243.7)
407.6
6.1
2.7
1.8
(9.6)
203.2
203.4
407.6
(28.5)
(2.9)
(38.5)
(2.6)
(72.5)
(104.7)
(7.9)
(47.3)
(12.8)
(1.1)
(173.8)
(246.3)
447.5
6.1
5.2
1.8
(8.8)
238.8
204.4
447.5
–
(3.1)
(38.2)
(2.2)
(43.5)
(143.4)
(9.0)
(48.5)
(6.3)
(1.0)
(208.2)
(251.7)
414.4
6.1
4.1
1.8
(9.8)
216.2
196.0
414.4
(6.0)
(2.5)
(27.9)
(3.7)
(40.1)
(124.2)
(9.5)
(50.9)
(13.1)
–
(197.7)
(237.8)
372.9
6.1
2.7
1.8
(9.6)
195.7
176.2
372.9
2017
£m
19.9
689.1
–
7.4
7.6
724.0
2.8
7.2
0.6
6.6
17.2
1.3
742.5
(28.5)
(2.9)
(35.3)
(4.7)
(71.4)
(104.7)
(7.9)
(51.6)
(12.8)
(1.1)
(178.1)
(249.5)
493.0
6.1
5.2
1.8
(8.8)
247.7
241.0
493.0
The company’s profit after tax for the period was £23.2 million (2016: restated £24.1 million).
(1)The prior period comparatives have been restated for a non-cash adjustment in respect of the treatment of short leasehold premiums (see note 1).
Approved by the board of directors and signed on its behalf by:
Patrick Dardis
Steven Robinson
24 May 2017
Chief Executive
Chief Financial Officer
The notes on pages 30 to 59 form part of these financial statements.
Young & Co.’s Brewery, P.L.C. registered in England Number 32762.
26
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Statements of cash flow
For the 53 weeks ended 3 April 2017
Notes
30
17
13
14
Operating activities
Net cash generated from operations
Interest received
Tax paid
Net cash flow from operating activities
Investing activities
Sale of property and equipment
Purchases of property, equipment and lease premiums
Business combinations, net of cash acquired
Net cash used in investing activities
Financing activities
Interest paid
Issued equity
Equity dividends paid
(Decrease)/increase in borrowings
Net cash flow used in financing activities
(Decrease)/increase in cash
Cash at the beginning of the period
Cash at the end of the period
The notes on pages 30 to 59 form part of these financial statements.
Strategic report
Directors’ report
Financial statements
Shareholder information
Group
Company
2017
53 weeks
£m
2016
52 weeks
£m
2017
53 weeks
£m
2016
52 weeks
£m
63.5
–
(7.6)
55.9
0.4
(34.5)
(3.8)
(37.9)
(5.7)
0.2
(8.7)
(10.4)
(24.6)
(6.6)
13.2
6.6
60.4
–
(7.8)
52.6
3.6
(41.6)
(3.5)
(41.5)
(4.4)
0.5
(8.2)
14.0
1.9
13.0
0.2
13.2
59.2
0.4
(7.6)
52.0
0.4
(30.4)
(3.8)
(33.8)
(5.8)
0.2
(8.7)
(10.4)
(24.7)
(6.5)
11.8
5.3
55.4
0.5
(6.4)
49.5
3.5
(38.8)
(3.5)
(38.8)
(4.4)
0.5
(8.2)
13.0
0.9
11.6
0.2
11.8
27
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Group statement of changes in equity
At 3 April 2017
At 31 March 2015
Prior period adjustments(2)
At 31 March 2015 restated(2)
Total comprehensive income
Profit for the period – 52 weeks(2)
Other comprehensive income
Unrealised gain on revaluation of property(2)
Remeasurement of retirement benefit schemes
Fair value movement of interest rate swaps
Tax on above components of other comprehensive income(2)
Total comprehensive income restated(2)
Transactions with owners recorded directly in equity
Share capital issued
Dividends paid on equity shares
Revaluation reserve realised on disposal of properties
Share based payments
Tax on share based payments
At 28 March 2016 restated(2)
Total comprehensive income
Profit for the period – 53 weeks
Other comprehensive income
Unrealised gain on revaluation of property
Remeasurement of retirement benefit schemes
Fair value movement of interest rate swaps
Tax on above components of other comprehensive income
Total comprehensive income
Transactions with owners recorded directly in equity
Share capital issued
Dividends paid on equity shares
Revaluation reserve realised on disposal of properties
Share based payments
Tax on share based payments
Capital
Share redemption
capital (1)
reserve
£m
£m
Notes
Hedging Revaluation
reserve
£m
reserve
£m
Retained
earnings
£m
8.8
–
8.8
1.8
–
1.8
(9.6)
–
(9.6)
209.6
(6.4)
203.2
196.4
7.0
203.4
Total
equity
£m
407.0
0.6
407.6
–
–
–
–
–
–
–
1.4
–
–
–
–
1.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
26.6
26.6
–
–
–
(0.2)
(0.2)
(0.2)
–
–
–
–
–
–
20.0
–
–
1.9
21.9
21.9
–
–
(0.5)
–
–
(0.5)
–
4.2
–
(1.4)
2.8
29.4
–
(8.2)
0.5
0.5
0.1
(7.1)
20.0
4.2
–
0.3
24.5
51.1
1.4
(8.2)
–
0.5
0.1
(6.2)
10.2
1.8
(9.8)
224.6
225.7
452.5
–
–
–
–
–
–
–
1.1
–
–
–
–
1.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30.0
30.0
–
–
1.3
(0.3)
1.0
1.0
–
–
–
–
–
–
23.1
–
–
0.1
23.2
23.2
–
–
(0.1)
–
–
(0.1)
–
(7.7)
–
1.1
(6.6)
23.4
–
(8.7)
0.1
0.4
0.1
(8.1)
23.1
(7.7)
1.3
0.9
17.6
47.6
1.1
(8.7)
–
0.4
0.1
(7.1)
17
25
23
12
14
28
24
17
25
23
12
14
28
24
At 3 April 2017
11.3
1.8
(8.8)
247.7
241.0
493.0
(1) Total share capital comprises the nominal value of the share capital issued and fully paid of £6.1 million (2016: £6.1 million) and the share
premium account of £5.2 million (2016: £4.1 million). Share capital issued in the period comprises the nominal value of £nil (2016: £nil) and share
premium of £1.1 million (2016: £1.4 million).
(2) The prior period comparatives have been restated for a non-cash adjustment in respect of the treatment of short leasehold premiums (see note 1).
The notes on pages 30 to 59 form part of these financial statements.
28
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Parent company statement of changes in equity
At 3 April 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
At 31 March 2015
Prior period adjustments(2)
At 31 March 2015 restated(2)
Total comprehensive income
Profit for the period – 52 weeks(2)
Other comprehensive income
Unrealised gain on revaluation of property(2)
Remeasurement of retirement benefit schemes
Fair value movement of interest rate swaps
Tax on above components of other comprehensive income(2)
Total comprehensive income restated(2)
Transactions with owners recorded directly in equity
Share capital issued
Dividends paid on equity shares
Revaluation reserve realised on disposal of properties
Share based payments
Tax on share based payments
At 28 March 2016 restated(2)
Total comprehensive income
Profit for the period – 53 weeks
Other comprehensive income
Unrealised gain on revaluation of property
Remeasurement of retirement benefit schemes
Fair value movement of interest rate swaps
Tax on above components of other comprehensive income
Total comprehensive income
Transactions with owners recorded directly in equity
Share capital issued
Dividends paid on equity shares
Revaluation reserve realised on disposal of properties
Share based payments
Tax on share based payments
Capital
Share redemption
capital (1)
reserve
£m
£m
Notes
Hedging Revaluation
reserve
£m
reserve
£m
Retained
earnings
£m
8.8
–
8.8
1.8
–
1.8
(9.6)
–
(9.6)
201.7
(6.0)
195.7
172.8
3.4
176.2
Total
equity
£m
375.5
(2.6)
372.9
–
–
–
–
–
–
–
1.4
–
–
–
–
1.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
24.1
24.1
–
–
–
(0.2)
(0.2)
(0.2)
–
–
–
–
–
–
19.4
–
–
1.6
21.0
21.0
–
–
(0.5)
–
–
(0.5)
–
4.2
–
(1.4)
2.8
26.9
–
(8.2)
0.5
0.5
0.1
(7.1)
19.4
4.2
–
–
23.6
47.7
1.4
(8.2)
–
0.5
0.1
(6.2)
10.2
1.8
(9.8)
216.2
196.0
414.4
–
–
–
–
–
–
–
1.1
–
–
–
–
1.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
23.2
23.2
–
–
1.3
(0.3)
1.0
1.0
–
–
–
–
–
–
22.6
–
–
0.1
22.7
22.7
–
–
(0.1)
–
–
(0.1)
–
(7.7)
–
1.0
(6.7)
16.5
–
(8.7)
0.1
0.4
0.1
(8.1)
22.6
(7.7)
1.3
0.8
17.0
40.2
1.1
(8.7)
–
0.4
0.1
(7.1)
17
25
23
24
14
28
24
17
25
23
24
14
28
24
At 3 April 2017
11.3
1.8
(8.8)
238.8
204.4
447.5
(1) Total share capital comprises the nominal value of the share capital issued and fully paid of £6.1 million (2016: £6.1 million) and the share premium
account of £5.2 million (2016: £4.1 million). Share capital issued in the period comprises the nominal value of £nil (2016: £nil) and share premium of
£1.1 million (2016: £1.4 million).
(2) The prior period comparatives have been restated for a non-cash adjustment in respect of the treatment of short leasehold premiums (see note 1).
The notes on pages 30 to 59 form part of these financial statements.
29
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notes to the financial statements
For the 53 weeks ended 3 April 2017
1. General information
The group and parent company financial statements of Young & Co.’s Brewery, P.L.C. for the period ended 3 April 2017 were authorised for issue
by the board of directors on 24 May 2017. 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 strategic report on pages 1 to 15.
The current period and prior period relate to the 53 weeks ended 3 April 2017 and the 52 weeks ended 28 March 2016 respectively.
The financial statements are presented in pounds sterling and all values are rounded to the nearest hundred thousand (£0.1 million) except where
otherwise indicated.
Going concern
The group’s business activities, together with the factors likely to affect its future development and performance, financial position and its cash flows are set out
within the strategic report on pages 1 to 15. The group’s capital management and financial instruments including its objectives and exposures to interest risk,
credit risk and liquidity and cash flow risk are set out in note 23. A £10 million bank overdraft facility is used for day to day cash management.
The group’s budgets and forecasts in trading performance, including sensitivity analysis, show that the group has sufficient financial resources to
meet its liabilities as they fall due. As a consequence the board has a reasonable expectation that the group is able to manage its business risks and
to continue in operational existence for the twelve months from the date of signing the financial statements. Accordingly, the board continues to
adopt the going concern basis in preparing the consolidated financial statements.
Prior period adjustment
The comparative figures for the 52 weeks ended 28 March 2016 have been restated for a non-cash prior period adjustment in respect of the
treatment of premiums paid for short leasehold pubs which are held as operating leases. The premiums were previously revalued which was not in
accordance with IAS 17: Leases. The revaluation has been reversed and the premiums have been reclassified from property and equipment to lease
premiums which are held on the balance sheet as current (the portion relating to the next financial period) and non-current assets. The premiums
are amortised on a straight-line basis over the length of the leases.
The restatement has had the following impact on the prior period comparatives ended 28 March 2016 and opening 31 March 2015.
The restatement had no effect on the group’s cash flow:
Group
Group
Prior period
adjustments
2016
£m
Restated
28 March
2016
£m
(16.0)
8.2
0.5
3.9
9.9
(6.5)
649.8
8.2
0.5
(53.5)
(224.6)
(225.7)
Prior period
adjustments
2016
£m
Restated
52 weeks
2016
£m
Previously
reported
31 March
2015
£m
617.3
–
–
(59.8)
(209.6)
(196.4)
Previously
reported
52 weeks
2015
£m
Prior period
adjustments
2015
£m
Restated
31 March
2015
£m
(9.6)
6.1
0.5
3.6
6.4
(7.0)
607.7
6.1
0.5
(56.2)
(203.2)
(203.4)
Prior period
adjustments
2015
£m
Restated
52 weeks
2015
£m
26.2
33.4
(0.5)
(4.0)
26.6
51.1
26.7
33.6
(0.5)
(0.2)
Previously
reported
28 March
2016
£m
665.8
–
–
(57.4)
(234.5)
(219.2)
Previously
reported
52 weeks
2016
£m
27.1
55.1
Property and equipment
Lease premiums – non-current
Lease premiums – current
Deferred tax liabilities
Revaluation reserve
Retained earnings
Income statement
Statement of comprehensive income
30
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
Company
Company
Previously
reported
28 March
2016
£m
594.4
–
–
(50.5)
(225.6)
(192.8)
Previously
reported
52 weeks
2016
£m
24.3
51.3
Property and equipment
Lease premiums – non-current
Lease premiums – current
Deferred tax liabilities
Revaluation reserve
Retained earnings
Income statement
Statement of comprehensive income
Prior period
adjustments
2016
£m
Restated
28 March
2016
£m
(12.1)
3.8
0.1
2.0
9.4
(3.2)
582.3
3.8
0.1
(48.5)
(216.2)
(196.0)
Prior period
adjustments
2016
£m
Restated
52 weeks
2016
£m
Previously
reported
31 March
2015
£m
546.3
–
–
(52.6)
(201.7)
(172.8)
Previously
reported
52 weeks
2015
£m
Prior period
adjustments
2015
£m
Restated
31 March
2015
£m
(6.0)
1.6
0.1
1.7
6.0
(3.4)
540.3
1.6
0.1
(50.9)
(195.7)
(176.2)
Prior period
adjustments
2015
£m
Restated
52 weeks
2015
£m
22.7
28.1
(0.2)
(3.6)
24.1
47.7
22.9
28.1
(0.2)
–
The impact on both the group’s basic and diluted earnings per share for the 52 weeks ended 28 March 2016 was a decrease of 1.03 pence.
2. Basis of preparation
The consolidated financial statements of the group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted
by 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 and amendments to existing IFRS were issued by the International Accounting Standards Board (IASB). The impact and,
if applicable, the adoption of these standards 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.
New Accounting Standards, Amendments and Interpretations
The directors intend to adopt the Standards, Amendments and Interpretations listed in the table below when they become effective. The directors
do not expect that adoption in future periods will have a material impact except the following:
IFRS 16: Leases: replaces IAS 17 and requires lessees to recognise a lease liability reflecting future lease payments and a right-of-use-asset in respect
of virtually all leases currently classified as operating leases. The balance sheet will effectively be ‘grossed up’, but with no impact to net assets, at the
inception of each lease. The income statement impact will be a new interest charge and a decrease in the amount charged to operating costs. Early
adoption is permitted. The group is currently assessing the quantitative impact on both the income statement and net assets. Adoption is anticipated
to have a material impact on both assets and liabilities, and is also expected to have a material impact on a small number of isolated components within
the income statement.
IAS 7
IFRS 12
IFRS 15*
IFRS 9
IFRS 2
IFRS 16
Disclosure Initiative (Amendment)
Disclosure of Interest in Other Entities
Revenue from Contracts with Customers
Financial Instruments
Classification and Measurement of Share-based Payment Transactions
Leases
Effective date
1 January 2017
1 January 2017
1 January 2018
1 January 2018
1 January 2018
1 January 2019
*IFRS 15: Revenue from contracts with customers. The core principle is that an entity will recognise revenue at an amount that reflects the consideration
to which the entity expects to be entitled in exchange for transferring goods or services to a customer. The group’s revenue streams are discussed
in note 3(c) and are not based on a number of performance obligations within a contract but at a point of sale, or rent over a lease term or accrued
interest using the effective interest method. It does not enter into common arrangements and although disclosure requirements are more extensive
the adoption of IFRS 15 is not expected to have a material impact on the group’s financial performance.
31
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notes to the financial statements
For the 53 weeks ended 3 April 2017
3. Summary of significant accounting policies
The significant accounting policies adopted are set out below and 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. An investor controls an investee when it is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to affect those returns through its power over the investee. The special purpose entity
is the Ram Brewery Trust II; the trust holds assets for the benefit of employees and former employees, is an ESOP trust and is consolidated only
in the group accounts.
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.
(b) The parent company’s investments in subsidiaries
In its separate financial statements, the parent company recognises its investments in its subsidiaries on the basis of the direct equity interest method.
Investments are therefore held at cost less provision for impairment. Income is recognised from these investments in relation to distributions received.
(c) 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 and VAT.
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).
(d) Exceptional items
Exceptional items are items which due to their material or 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.
(e) 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 and the amount of any non-controlling interest in the acquiree. The consideration transferred is measured at the acquisition date fair value.
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.
(f) Property and equipment
Freehold and long leasehold 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. The valuation is assessed on the basis of the highest and best use. When the necessary requirements have been met, assets are immediately
revalued and are transferred to non-current assets held for sale. These requirements include that the assets have been identified for disposal. The highest and
best use for a market participant may reflect an alternative use for the asset held for sale.
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.
At the date of revaluation, any accumulated depreciation is eliminated to the extent of the difference between the revalued amount and the carrying value of
the asset immediately before valuation.
Short leasehold improvements and fixtures, fittings and equipment within those sites are measured at cost on recognition, and are stated as such less any
accumulated depreciation.
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. The group does not depreciate freehold land or the residual value of its
freehold and long leasehold buildings.
Useful lives:
Freehold and long leasehold buildings
Short leasehold improvements
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(g)).
32
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 Strategic report
Directors’ report
Financial statements
Shareholder information
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. Property, plant and equipment are treated as disposals in the period of their write down.
(g) 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. Goodwill is mandatorily assessed for impairment on an annual basis or more frequently if there are indications that the carrying value
may be impaired.
Impairment is assessed on the basis of either each individual asset or each individual cash generating unit (an individual pub), or, in the case of goodwill, the
group of cash generating units associated with it. 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.
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, and is determined for an individual asset unless the asset does not generate cash inflows
that are largely independent of those from other assets or groups of assets. 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 relates to goodwill,
in which case it is not reversed.
(h) 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 within property and equipment and/or lease premiums, as appropriate, and are 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.
(i) Assets held for sale
Assets whose carrying amounts will be recovered principally through a 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 fair value less costs of disposal.
(j) 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.
(k) Cash
Cash in the balance sheet comprises cash at banks and in hand. For the purpose of the group and parent company cash flow statements, cash is net
of outstanding bank overdrafts. Cash and cash equivalents include only deposits which mature in less than three months.
(l) Trade and other payables
Trade and other 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.
(m) Interest bearing loans and borrowings
All loans and borrowings are recognised initially at fair value. Directly attributable transaction costs are capitalised and amortised over the life of the
facility using the effective interest method through finance expense.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.
(n) Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The current tax payable is based on taxable profit for the period. Taxable profit differs from profit before tax as reported in the income statement because
the former excludes items of income or expense that are taxable or deductible in other years and also excludes items that are never taxable or deductible.
The group’s liability for current tax is calculated using UK tax rates that have been enacted under UK law and that are applicable to the period.
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
credited or charged directly to equity.
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;
33
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 Notes to the financial statements
Continued
3. Summary of significant accounting policies (continued)
• in respect of taxable temporary differences associated with investments in subsidiaries, 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 and the asset is expected to be realised through disposal, 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 UK tax 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.
(o) Accounting for the ESOP Trust
The capital gains tax liability that may arise on the notionally 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 under trade and other payables.
(p) 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. Derivative financial
instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured 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 immediately expensed.
If the related transaction is not expected to occur, the amount held in equity is immediately expensed.
(q) Pensions and other post retirement benefits
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.
Contributions to the defined contribution scheme are recognised in the income statement in the period in which they become due.
For the defined benefit scheme, the actuarial cost charged to the income statement in the period consists of the current service cost, net interest
on the net defined benefit liability or asset, past service cost and the impact of any settlements or curtailments.
Remeasurements of the defined benefit pension and post retirement health care schemes are recognised in full in the statement of comprehensive
income in the period in which they relate.
The net defined benefit pension liability or asset in the balance sheet comprises the present value of the defined benefit obligations 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 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. 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 participants’ 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. Remeasurements of health care benefits are recognised in full directly in the statement of
comprehensive income.
(r) Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost less provision for impairment. 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 impairment provision. Impaired debts are derecognised when they are assessed as irrecoverable.
(s) Share based payments
The group operates two types of share based payment arrangements: a director/senior management employee deferred bonus scheme (“DBS”)
and a Save-As-You-Earn (“SAYE”) scheme.
Under the DBS, directors and senior management are encouraged to receive bonus payments in the form of shares instead of cash. They are
encouraged to do this by being offered ‘matching’ shares (see note 28). The ‘matching’ shares constitute shares with non-market performance based
vesting conditions over three years. The group has used the “grant date model” as its valuation model for recording the fair value of these equity
instruments at the date when they were originally granted. The fair value of equity represents the market value of the shares at grant date, less the
nominal value which the employees will pay.
34
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 Strategic report
Directors’ report
Financial statements
Shareholder information
Under the SAYE scheme, eligible employees are encouraged to save over a set period and then, if they choose, purchase shares at the price set
before the start of that period (see note 28). The group uses the “Black-Scholes model” as its valuation model for valuing awards at fair value.
The fair value cost of both schemes is expensed to the income statement with a corresponding credit in equity on a straight line basis over the
vesting period. The cumulative expense also takes account of the group’s estimate of the number of shares that will ultimately vest.
(t) 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.
(u) Supplier income
The group earns supplier income through purchase volume-related discounts and stocking incentives. Most of the supplier income received relates to
volume discounts and are driven by the number of units purchased from suppliers. They relate to adjustments to a gross purchase price, and as such are
recognised on an accrual basis at the point of purchase. Stocking incentives are earned through a fixed payment in return for fulfilling certain stocking
obligations including number of stockists. Supplier income is recognised when the group has met all obligations conditional for earning the income, they
are recognised as a credit within cost of sales.
Outstanding amounts due from suppliers for earned income at period end is recognised within trade receivables, except in cases where the group has
right of set-off and intends to offset these against trade payables to suppliers.
(v) Short leasehold premiums
Premiums paid on acquiring new short (less than 50 years) leaseholds are amortised on a straight-line basis over the lease term, which range from
6 to 38 years. Such premiums are classified in the balance sheet as current or non-current prepayments, with the current portion being the element
which relates to the following financial period.
4. Key accounting estimates and judgements
The following are the key estimates and 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 presented in the financial statements.
(a) 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. See note 17.
(b) Carrying value of goodwill
The group considers annually whether goodwill has suffered any impairment in accordance with the accounting policy set out in note 3(g). The
recoverable amounts for 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(g) and 16.
(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, the net assets acquired and whether
the purchase represents a business combination. See notes 3(e), 13, 16 and 17.
(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(f) and 17.
(e) Defined benefit pension and health care scheme obligations
Measurement of defined benefit pension and health care scheme 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 an independent
qualified actuary. See notes 3(q) and 25.
(f) Taxation
The group reviews potential tax liabilities and benefits to assess the appropriate accounting treatment. Tax provisions are made if it is probable that
a liability will arise. Tax benefits are not recognised unless it is probable that they will be recovered. Assessing the outcome of uncertain tax positions
requires judgements to be made based on past experience and the current tax environment. See notes 3(n), 12 and 24.
35
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 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 the Ram Pub Company. Both Young’s and
Geronimo managed houses operate pubs. Revenue is derived from sales of drink, food and the provision of 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. The Ram Pub Company 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. Unallocated relates to head office costs.
Total segment revenue is derived externally with no intersegment revenues between the segments in either period. The group’s revenue is derived
entirely from the UK.
Income statement
2017 – 53 weeks
Total segment revenue
Operating profit/(loss) before exceptional items
Operating exceptional items
Operating profit/(loss)
2016 – 52 weeks
Total segment revenue
Operating profit/(loss) before exceptional items restated
Operating exceptional items restated
Operating profit/(loss) restated
Managed
houses
£m
254.8
Ram Pub
Company
£m
Segments
total
£m
13.8
268.6
59.7
(4.7)
55.0
232.9
53.5
(0.6)
52.9
5.1
1.3
6.4
12.7
4.5
(1.2)
3.3
64.8
(3.4)
61.4
245.6
58.0
(1.8)
56.2
The following is a reconciliation of the operating profit to the profit before tax:
Operating profit
Finance costs
Other finance charges
Profit before tax
Balance sheet
2017
Segment assets
Deferred tax assets
Cash
Total assets
Other segmental information
Depreciation and amortised lease premiums
Additions to non-current assets (note 17)
Net (downwards)/upwards movements in property valuation
through income statement (note 17)
2016
Segment assets restated
Deferred tax assets
Cash
Total assets restated
Other segmental information
Depreciation and amortised lease premiums restated
Additions to non-current assets (note 17)
Net downward movements in property valuation through income
statement (note 17) restated
36
Managed
houses
£m
654.4
–
–
654.4
Ram Pub
Company
£m
62.8
–
–
62.8
Segments
total
£m
717.2
–
–
717.2
(18.4)
35.6
(1.4)
618.6
–
–
618.6
(15.4)
39.3
(0.2)
(1.5)
2.0
0.9
62.2
–
–
62.2
(1.5)
2.6
(1.0)
(19.9)
37.6
(0.5)
680.8
–
–
680.8
(16.9)
41.9
(1.2)
Unallocated
Total
£m
0.3
(18.7)
–
(18.7)
0.3
(16.8)
(1.0)
(17.8)
2017
53 weeks
£m
42.7
(5.5)
(0.2)
37.0
£m
268.9
46.1
(3.4)
42.7
245.9
41.2
(2.8)
38.4
Restated
2016
52 weeks
£m
38.4
(5.3)
(0.3)
32.8
Unallocated
Total
£m
11.3
7.4
6.6
25.3
(0.5)
0.6
£m
728.5
7.4
6.6
742.5
(20.4)
38.2
–
(0.5)
7.3
6.2
13.2
26.7
(0.3)
0.6
–
688.1
6.2
13.2
707.5
(17.2)
42.5
(1.2)
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
2017
53 weeks
£m
2016
52 weeks
£m
253.7
15.2
268.9
231.6
14.3
245.9
2017
53 weeks
£m
Restated
2016
52 weeks
£m
(0.2)
64.1
84.1
19.8
0.6
54.4
0.1
61.8
76.1
16.7
0.5
49.5
222.8
204.7
6.5
0.7
7.2
0.2
–
–
–
–
0.2
5.8
0.6
6.4
0.2
–
–
–
–
0.2
6. Revenue
Sales of goods
Rental income
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 17)
Amortisation of lease premiums
Other operating costs
Other operating costs include:
Operating lease rentals:
Auditor’s remuneration:
8. Employment
(a) Costs and employee numbers
Wages and salaries
Social security
Pension and health care schemes
Employment costs
minimum lease payments
sublease payments
audit of the group financial statements
audit of subsidiaries’ accounts
audit related assurance services
taxation advisory services
all other services
Group
Company
2017
53 weeks
£m
2016
52 weeks
£m
2017
53 weeks
£m
2016
52 weeks
£m
77.3
5.8
1.0
84.1
69.8
5.0
1.3
76.1
61.6
4.6
0.9
67.1
55.9
4.0
1.2
61.1
The group’s average monthly number of employees was 3,924 (2016: 3,735). The number of employees at the period end was 3,854 (2016: 3,819).
The company’s average monthly number of employees was 3,079 (2016: 2,912). The number of employees at the period end was 3,030 (2016: 2,966).
37
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notes to the financial statements
Continued
8. Employment (continued)
(b) Directors’ emoluments
Basic
salary
and fees
2017
£000
89
321
141
144
119
41
39
116
99
–
–
–
Basic
salary
and fees Benefits (i)
2017
£000
2016
£000
Benefits (i)
2016
£000
Bonus (ii)
2017
£000
Bonus (ii)
2016
£000
Total
excluding
pension
costs
2017
£000
Total
excluding
pension
costs
2016
£000
87
245
–
129
–
40
39
321
235
57
11
3
–
2
–
30
–
–
–
5
7
–
–
–
–
2
–
28
–
–
–
19
6
3
–
1
–
235
97
94
69
–
–
–
–
–
–
–
–
227
–
126
–
–
–
268
179
–
–
–
89
558
238
268
188
41
39
121
106
–
–
–
87
474
–
283
–
40
39
608
420
60
11
4
1,109
1,167
44
59
495
800
1,648
2,026
Nicholas Bryan
Patrick Dardis
Steven Robinson (iii)
Torquil Sligo–Young
Tracy Read (iii)
Roger Lambert
Trish Corzine
Steven Goodyear
Peter Whitehead (iv) (v)
Edward Turner
David Page
Rupert Clevely
Total
(i) These relate primarily to the provision of private medical insurance and car-related benefits.
(ii) The amounts shown in the ‘Bonus’ columns reflect the cash value of bonuses receivable by the executive directors pursuant to the deferred bonus
scheme referred to in note 28, but excluding the cash value of any ‘matching’ shares (as explained in that note). If the company decides to provide
the current period bonuses in shares, the cash value of the ‘matching’ shares to be awarded to Patrick Dardis is £117,689 (2016: £93,360), to
Steven Robinson is £48,299 (2016: £nil) and to Torquil Sligo-Young is £46,924 (2016: £62,833).
(iii) The amounts shown for Steven Robinson and Tracy Read exclude the cash value of any bonus received by them in respect of the achievement
of their personal objectives set prior to their appointment as directors.
(iv) Note 8(e) on page 39 sets out the gains made on the exercise of share options.
(v) Peter Whitehead also received £364,247 by way of compensation for loss of office. Of this, £6,000 was paid to the providers of outplacement
services and £3,000 was paid to the law firm that advised him in connection with the cessation of his directorship and employment.
(c) Retirement benefits
Defined benefit pension scheme
The company operates a defined benefit pension scheme: the Young & Co.’s Brewery, P.L.C. Pension Scheme. All active members contribute to
it. During the period, those contributions were on average at a rate between 6% and 7% of pensionable earnings dependent on each member’s
accrual rate. The scheme invests largely in managed funds. The company accounts for retirement benefits in accordance with IAS 19; detailed
disclosures covering this are set out in note 25. As at 3 April 2017, no director was accruing any defined benefit and, during the year ended 3 April
2017, no director accrued any defined benefit under the scheme. Patrick Dardis, Torquil Sligo-Young, Stephen Goodyear and Peter Whitehead are
all members of the defined benefit pension scheme.
Patrick Dardis’ pension entitlement (being that which would be paid annually on retirement under the terms of his service agreement based on
service to 3 April 2017) is £43,582 (2016: £43,582) and his normal retirement date will be reached when he is 60. Net of member contributions,
the value of the increase in his accrued pension during the year to 3 April 2017 was £nil (2016: £59,809) - this value was calculated using appropriate
methodology prescribed under relevant legislation: for example, this included applying a factor of 20 to the increase in accrued pension over the year
(net of the required allowance for inflation). This method of valuation is different from using the scheme’s normal cash equivalent transfer value basis.
Defined contribution pension scheme
The company operates a defined contribution pension scheme. As at 3 April 2017, Steven Robinson and Tracy Read were members. For the year
ended 3 April 2017, the company paid contributions of £4,306 into the scheme for each of them in respect of qualifying service.
Post retirement health care
In addition, the company bears the cost of post retirement health care premiums for certain employees and ex-employees (see note 25).
38
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
(d) Profit sharing schemes
This scheme, which involved an annual profit share allocation, was closed a number of years ago. As a result, it has effectively been in ‘run-off’, with
periodic releases of accrued entitlements, represented by A shares, happening as and when a member reaches his or her normal retirement date. During
the period, it was agreed with HM Revenue & Customs that the company could release all accrued entitlements free of tax, even where an individual had
not reached his or her retirement date. During the period, the company released 493,820 A shares, which included the following accrued entitlements
of those individuals who served as directors during the period: Stephen Goodyear (22,680), Patrick Dardis (6,696), Torquil Sligo-Young (31,412) and Peter
Whitehead (20,816). As at the end of the period, 57,176 A shares, notionally allocated to 22 former employees, are still in the scheme.
(e) Savings-related share option scheme
The company operates a savings-related share option scheme. From year to year eligible employees of the group are invited to join the scheme
and be granted options to buy shares in the company. Employees must agree to save a fixed monthly amount with a savings institution through
deductions from net salary and usually over a three-year period. The amount to be saved determines the number of shares over which an option is
granted. If the board chooses, options are granted at a discount of up to 20% of the market price of a share at the time invitations are sent out to join
the scheme for that year. There are no performance conditions other than continued employment.
The entitlement to A shares under the scheme of each of the directors who served during the period is as follows:
Stephen Goodyear
Patrick Dardis
Steven Robinson
Torquil Sligo-Young
Peter Whitehead (iii)
At 28
March
2016
1,071
888
1,071
888
1,071
888
1,071
–
1,071
–
Granted
Exercised
Lapsed
–
–
–
–
–
–
–
933
–
933
–
–
–
–
–
–
–
–
(922)
(181)
–
–
–
–
–
–
–
–
(149)
(752)
At 3
April
2017
1,071
888
1,071
888
1,071
888
1,071
933
–
–
Exercise
price
(pence per
share) (i)
840
1,013
840
1,013
840
1,013
840
964
840
964
Exercisable
from
01.09.17
01.09.18
01.09.17
01.09.18
01.09.17
01.09.18
01.09.17
01.09.19
01.09.17
01.09.19
Exercisable
to
28.02.18
28.02.19
28.02.18
28.02.19
28.02.18
28.02.19
28.02.18
28.02.20
28.02.18
28.02.20
Gains made
on exercise
of share
options (£)
(ii)
–
–
–
–
–
–
–
–
4,642
687
Notes:
(i) The exercise prices of 840p per share, 1,013p per share and 964p per share represent a discount of not more than 20% to the market price
of an A share at the time the relevant invitations to join the scheme were issued, being 1,050p per share, 1,265.5p per share and 1,205p per
share respectively.
(ii) The figures appearing in the ‘Gains made on exercise of share options’ column are calculated by taking the difference between the exercise price
and the market price of an A share on the day the option was exercised, and then multiplying that by the number of A shares in respect of which
the option was exercised.
(iii) Peter Whitehead continued to save privately under the scheme after leaving the company. He then bought a reduced number of shares within
six months of leaving. This was allowed per the scheme’s early leaver provisions.
39
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notes to the financial statements
Continued
9. Exceptional items
Amounts included in operating profit:
Upward movement on the revaluation of properties(1) (note 17) restated
Downward movement on the revaluation of properties(1) (note 17) restated
Tenant compensation(2)
Acquisition costs(3)
Goodwill disposal(4)
Net profit on sale of properties(5)
Restructuring costs(6)
Exceptional tax:
Tax attributable to above adjustments restated
Change in corporation tax rate
Total exceptional items after tax
2017
53 weeks
£m
2016
52 weeks
£m
3.0
(3.5)
(2.0)
(0.2)
(0.7)
–
–
(3.4)
0.1
0.9
1.0
(2.4)
1.6
(2.8)
–
(0.4)
(0.3)
0.1
(1.0)
(2.8)
(0.7)
1.7
1.0
(1.8)
(1) The movement on the revaluation of properties is a non-cash item that relates to the revaluation exercise that was completed based on the period
end date. The revaluation was conducted at an individual pub level and identified an upward movement of £3.0 million (2016: restated £1.6 million),
representing reversals of previous impairments recognised in the income statement, and a downward movement of £3.5 million (2016: restated £2.8
million), representing downward movements in excess of amounts recognised in equity. These resulted in a net downward movement of £0.5 million
(2016: restated £1.2 million net downward) which has been taken to the income statement. The downward movement for the period ended 3 April
2017 was split between land and buildings of £0.5 million downwards (2016: restated £0.9 million downward) and fixtures and fittings of £nil (2016:
restated £0.3 million downward). See note 5 for segmental information.
(2) During the current period, the company paid £2.0 million to the previous tenants of the Woolpack (Bermondsey) to terminate their lease agreement early.
(3) The acquisition costs relate to the purchases of the Blue Boar (Chipping Norton) and the Riverstation (Bristol). They include legal and professional fees and
stamp duty. The prior period acquisition costs related to the purchase of the Canonbury (Islington) and the Old Brewery (Greenwich).
(4) The goodwill disposal is a non-cash item and relates to the Three Bells (Heathrow Airport) and the Five Tuns (Heathrow Airport) whose leases expired
during the period. The Three Bells and Five Tuns formed part of the Geronimo group of cash generating units (which are pubs under the Geronimo
concept) and fall within the Geronimo managed houses segment.
(5) The profit on sale of properties relates to the difference between the cash, less selling costs, and the carrying value of the assets on the date of sale.
In the current period there was no profit or loss from the sale of Lord Napier (Thornton Heath). In the prior period, sales of properties included the
Seven Stars (Brighton), New Town (Sutton) and the Sekforde Arms (Clerkenwell).
(6) In the prior period, restructuring costs relate to a reorganisation of the group’s head office functions. These are largely made up of severance costs
and consultancy fees.
10. Other financial measures
The table below shows how adjusted group EBITDA, operating profit and profit before tax have been arrived at. These alternative performance
measures have been provided as the board believes that they give useful additional measures of the group’s underlying performance. Details of
the exceptional items can be seen in note 9. All the results below are from continuing operations.
2017 – 53 weeks
2016 restated – 52 weeks
Unadjusted
£m
Exceptional
items
£m
63.6
(20.3)
(0.6)
42.7
(5.5)
(0.2)
37.0
2.9
0.5
–
3.4
–
–
3.4
Adjusted
£m
Unadjusted
£m
66.5
56.8
(19.8)
(0.6)
46.1
(5.5)
(0.2)
40.4
(17.9)
(0.5)
38.4
(5.3)
(0.3)
32.8
Exceptional
items
£m
Adjusted
£m
1.6
1.2
–
2.8
–
–
2.8
58.4
(16.7)
(0.5)
41.2
(5.3)
(0.3)
35.6
EBITDA
Depreciation and net movement on the
revaluation of properties
Amortisation of lease premiums
Operating profit
Net finance costs
Other finance charges
Profit before tax
40
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
11. Finance costs
Bank loans and overdrafts
Finance lease interest
12. Taxation
Tax charged in the group income statement
Current tax
Current tax expense
Adjustment in respect of current tax of prior periods
Deferred tax
Origination and reversal of temporary differences
Change in corporation tax rate
Adjustment in respect of deferred tax of prior periods
Tax expense
Deferred tax in the group income statement
Property revaluation and disposals
Fair value gains on acquisition of subsidiaries
Capital allowances
Retirement benefit schemes
Share based payments
Tax credit
Deferred tax in the group statement of comprehensive income
Property revaluation and disposals
Retirement benefit schemes
Interest rate swaps
Change in corporation tax rate
Tax credit
Strategic report
Directors’ report
Financial statements
Shareholder information
2017
53 weeks
£m
2016
52 weeks
£m
5.4
0.1
5.5
5.2
0.1
5.3
2017
53 weeks
£m
Restated
2016
52 weeks
£m
8.9
0.2
9.1
(0.7)
(0.9)
(0.5)
(2.1)
7.0
(1.4)
–
(0.7)
0.1
(0.1)
(2.1)
2.0
(1.4)
0.2
(1.7)
(0.9)
7.1
(0.1)
7.0
1.6
(1.7)
(0.7)
(0.8)
6.2
(0.5)
(0.1)
(0.1)
0.2
(0.3)
(0.8)
2.0
0.9
–
(3.2)
(0.3)
41
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notes to the financial statements
Continued
12. Taxation (continued)
A reconciliation of the tax expense applicable to the profit from operating activities before tax at the statutory rate to the actual tax expense at the
group’s effective tax rate for the periods ended 3 April 2017 and 28 March 2016 respectively is as follows:
Profit before tax
Total profit before tax at corporation tax rate of 20% (2016: 20%)
Tax effects of:
Expenses not deductible for tax purposes(1)
Recognition of property revaluation, rollover claim and other property movements
Non-assessable income
Remeasurement of deferred tax – change in corporation tax rate
Prior period adjustment – current tax
Prior period adjustment – deferred tax
Total tax expense
2017
53 weeks
£m
37.0
7.4
1.0
(0.2)
–
(0.9)
0.2
(0.5)
7.0
Restated
2016
52 weeks
£m
32.8
6.6
0.5
1.5
0.1
(1.7)
(0.1)
(0.7)
6.2
(1)Expenses not deductible for tax purposes includes property acquisition costs, depreciation on assets ineligible for capital allowances and share based payments.
Changes to the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) and then to 17% (effective from 1 April 2020), were substantively
enacted into law on 6 September 2016. Deferred tax balances that will be realised or settled between 1 April 2017 and 1 April 2020 have been
measured at 19%, with the remainder re-measured at 17%.
13. Business combinations
The group and the company acquired the Blue Boar (Chipping Norton) on 9 June 2016 and Riverstation (Bristol) on 15 November 2016 as business
combinations in the current period for considerations totalling £3.8 million. 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 £0.2 million of costs associated with the acquisitions,
which have been recorded within operating exceptional items.
In the prior period, the group and the company acquired the Canonbury (Islington) and the Old Brewery (Greenwich) as business combinations for
considerations totalling £3.5 million. The aggregated fair value of the identifiable assets and liabilities of the acquired businesses was property and
equipment of £3.5 million and inventories of £nil. The group incurred £0.4 million of costs associated with the acquisitions, which have been recorded
within operating exceptional items.
Cash flow from business combinations
Business combinations
Total net cash outflow
2017
£m
(3.8)
(3.8)
2016
£m
(3.5)
(3.5)
42
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
14. Dividends on equity shares
Final dividend (previous period)
Interim dividend (current period)
2017
53 weeks
Pence
2016
52 weeks
Pence
2017
53 weeks
£m
2016
52 weeks
£m
9.07
8.88
8.56
8.38
17.95
16.94
4.4
4.3
8.7
4.1
4.1
8.2
In addition, the board is proposing a final dividend in respect of the period ended 3 April 2017 of 9.62 pence per share at a cost of £4.7 million.
If approved, it is expected to be paid on 13 July 2017 to shareholders who are on the register of members at the close of business on 9 June 2017.
15. Earnings per ordinary share
(a) Earnings
Profit attributable to equity shareholders of the parent
Operating exceptional items
Tax attributable to above adjustments
Change in corporation tax rate
Adjusted earnings after tax
Basic weighted average number of ordinary shares in issue
Dilutive potential ordinary shares from outstanding employee share options
Diluted weighted average number of shares
(b) Basic earnings per share
Basic
Effect of exceptional items and other adjustments
Adjusted basic
(c) Diluted earnings per share
Diluted
Effect of exceptional items and other adjustments
Adjusted diluted
The basic earnings per share figure is calculated by dividing the profit attributable to equity shareholders of the parent for the period by the
weighted average number of ordinary shares in issue during the period.
Diluted earnings per share have been calculated on a similar basis taking into account 26,331 (2016: 26,324) dilutive potential shares under
the SAYE scheme (see notes 8(e) and 28).
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.
2017
53 weeks
£m
Restated
2016
52 weeks
£m
30.0
3.4
(0.1)
(0.9)
32.4
26.6
2.8
0.7
(1.7)
28.4
Number
Number
48,774,457
26,331
48,598,203
26,324
48,800,788
48,624,527
Pence
61.51
4.92
66.43
Pence
61.47
4.92
66.39
Pence
54.73
3.71
58.44
Pence
54.70
3.71
58.41
43
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notes to the financial statements
Continued
16. Goodwill
2017
Geronimo
Bell at Stow
580 Limited
2016
Geronimo
Bell at Stow
580 Limited
2017
Bell at Stow
580 Limited
Group
At 28 March
2016 Acquisitions
£m
£m
Disposal
£m
19.5
0.2
0.9
20.6
–
–
–
–
(0.7)
–
–
(0.7)
At 3 April
2017
£m
18.8
0.2
0.9
19.9
At 30 March
2015
£m
Acquisitions
£m
At 28 March
2016
£m
Disposal
£m
19.8
0.2
0.9
20.9
–
–
–
–
Company
(0.3)
–
–
(0.3)
19.5
0.2
0.9
20.6
At 28 March
2016 Acquisitions
£m
£m
Disposal
£m
–
–
–
0.2
0.9
1.1
–
–
–
At 3 April
2017
£m
0.2
0.9
1.1
The opening goodwill of £20.6 million arose on the acquisition of Geronimo Group Limited, 580 Limited and the Bell at Stow. The goodwill was
allocated for impairment testing purposes to the Geronimo group, the individual pubs within the 580 Group and the Bell at Stow respectively; these
are the cash generating units. The Geronimo group of cash generating units is the pubs trading under the Geronimo concept. All three cash generating
units fall within the managed houses segment.
During the current period, the Three Bells and Five Tuns (both at Heathrow) leases expired and no longer formed part of the Geronimo group
and the managed houses segment. The relative value of the goodwill associated with the Three Bells and Five Tuns, £0.7 million, has been expensed
and classified within exceptional items.
During the prior period the Lord Palmerston (Tufnell Park) was transferred out of the Geronimo group and the managed houses segment and into
our Ram Pub Company segment. The relative value of the goodwill associated with the Lord Palmerston, £0.3 million, was expensed and classified
within exceptional items in the prior period.
During the current period the company recognised £1.1 million of goodwill being £0.2 million for the Bell at Stow and £0.9 million for 580 Limited
due to an intragroup restructure. There was no goodwill recognised in the company in prior years.
The group tests goodwill annually for impairment or more frequently if there are indicators that goodwill may have been impaired.
There will be an impairment if the recoverable amount is lower than carrying value. Recoverable amount is value in use. The value in use is calculated
using the three-year business plan approved by the board. Cash flows beyond this period assume 2.0% growth (2016: 2.0%) which is below the
industry long-term average growth rate. The pre-tax discount rate applied to cash flow projections is 7.8% (2016: 8.7%). The calculation is most
sensitive to revenue assumptions and the pre-tax discount rate, however the board believes that the assumptions used are reasonable. The board has
conducted a sensitivity analysis on the impairment test and neither a 10% decline in cash flow nor a 1% increase in the discount rate would lead to
the impairment of the goodwill in the period ended 3 April 2017 and the board is therefore comfortable that presently no reasonably possible change
in key assumptions would give rise to an impairment.
44
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
17. Property and equipment
Group
Fixtures,
fittings &
equipment
£m
Land &
buildings
£m
Cost or valuation
At 31 March 2015
Prior period adjustment
At 31 March 2015 restated
Additions restated
Business combinations
Disposals
Fully depreciated assets
Revaluation(1) restated
– effect of upward movement
in property valuation
– effect of downward movement
in property valuation
At 28 March 2016 restated
Additions
Business combinations
Disposals
Transfer out to assets held for sale
Fully depreciated assets
Revaluation(1)
– effect of upward movement
in property valuation
– effect of downward movement
in property valuation
607.1
(15.4)
591.7
14.0
2.3
(4.2)
–
25.5
(5.5)
623.8
9.4
3.0
(0.3)
(1.6)
(6.5)
27.0
(7.5)
106.8
–
106.8
25.0
1.2
(1.5)
(12.7)
–
–
118.8
25.0
0.8
(0.2)
(0.3)
(22.8)
–
–
Total
£m
713.9
(15.4)
698.5
39.0
3.5
(5.7)
(12.7)
25.5
(5.5)
742.6
34.4
3.8
(0.5)
(1.9)
(29.3)
27.0
(7.5)
Strategic report
Directors’ report
Financial statements
Shareholder information
Company
Fixtures,
fittings &
equipment
£m
Land &
buildings
£m
Total
£m
629.8
(8.6)
621.2
36.5
3.5
(5.2)
(10.1)
23.8
(4.4)
665.3
30.4
3.8
(0.4)
(1.9)
(28.0)
93.7
–
93.7
20.8
1.2
(1.1)
(10.1)
–
–
104.5
22.0
0.8
(0.1)
(0.3)
(20.9)
–
–
26.5
(6.7)
536.1
(8.6)
527.5
15.7
2.3
(4.1)
–
23.8
(4.4)
560.8
8.4
3.0
(0.3)
(1.6)
(7.1)
26.5
(6.7)
At 3 April 2017
647.3
121.3
768.6
583.0
106.0
689.0
Depreciation and impairment
At 31 March 2015
Prior period adjustment
At 31 March 2015 restated
Depreciation charge restated
Disposals
Fully depreciated assets
Transfers
Revaluation(1) restated
– effect of downward movement
in property valuation
– effect of upward movement
in property valuation
At 28 March 2016 restated
Depreciation charge
Disposals
Transfer out to assets held for sale
Fully depreciated assets
Revaluation(1)
– effect of downward movement
in property valuation
– effect of upward movement
in property valuation
At 3 April 2017
Net book value
43.6
(5.3)
38.3
1.6
(0.9)
–
(1.0)
2.5
(1.6)
38.9
1.6
–
(0.4)
(6.5)
3.6
(6.7)
53.0
(0.5)
52.5
15.1
(1.3)
(12.7)
–
0.3
–
53.9
18.2
(0.1)
(0.2)
(22.8)
–
–
96.6
(5.8)
90.8
16.7
(2.2)
(12.7)
(1.0)
2.8
(1.6)
92.8
19.8
(0.1)
(0.6)
(29.3)
3.6
(6.7)
36.9
(2.4)
34.5
0.9
(0.8)
–
(1.0)
2.4
(1.6)
34.4
0.8
–
(0.4)
(7.1)
3.4
(5.8)
46.6
(0.2)
46.4
13.2
(1.0)
(10.1)
–
0.1
–
48.6
16.2
(0.1)
(0.2)
(20.9)
–
–
83.5
(2.6)
80.9
14.1
(1.8)
(10.1)
(1.0)
2.5
(1.6)
83.0
17.0
(0.1)
(0.6)
(28.0)
3.4
(5.8)
30.5
49.0
79.5
25.3
43.6
68.9
At 31 March 2015 restated
At 28 March 2016 restated
553.4
584.9
54.3
64.9
607.7
649.8
493.0
526.4
47.3
55.9
540.3
582.3
At 3 April 2017
616.8
72.3
689.1
557.7
62.4
620.1
45
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notes to the financial statements
Continued
17. Property and equipment (continued)
(1) The group’s net book value uplift during the period was £22.6 million (2016: £18.8 million restated). This uplift was recognised either in the revaluation
reserve or the income statement, as appropriate. The impact of the revaluations was as follows:
Group
Company
Income Statement
Revaluation loss charged as impairment
Reversal of past impairment
Revaluation Reserve
Unrealised revaluation surplus
Reversal of past surplus
Net increase in property, plant and equipment
2017
£m
Restated
2016
£m
(3.5)
3.0
(0.5)
30.7
(7.6)
23.1
22.6
(2.8)
1.6
(1.2)
25.5
(5.5)
20.0
18.8
2017
£m
(3.3)
2.9
(0.4)
29.4
(6.8)
22.6
22.2
Restated
2016
£m
(2.5)
1.6
(0.9)
23.8
(4.4)
19.4
18.5
(a) Revaluation of property and equipment
On an annual basis, a portion of the group’s property estate is valued externally by Savills, independent Chartered Surveyors, in accordance with the
provisions of the RICS Valuation – Professional Standards January 2014 (Revised April 2015) (‘the Red Book’), which takes account of the properties’
highest and best value. The remaining portion of the estate is valued internally, based upon the information supplied by the group’s external valuers
and by Andrew Cox MRICS, the group’s director of property and tenancies and a Chartered Surveyor.
The valuation is based on information, such as current and historic levels of turnover, gross profit, wages and overheads and resultant EBITDA.
The valuers have then applied a multiplier to the EBITDA based upon the relative risks associated with the trading format, tenure and property.
In a number of cases the value of the property derived purely from an income approach understates the underlying property value. In these
cases the valuers have applied a spot value to the property rather than a value derived from a multiple applied to the income. EBITDA represents
a key unobservable input. In addition, the valuation was based on the valuer’s assumptions and models. Each individual pub is valued as a fully
equipped operational entity after taking into account its trading potential, location, tenure, size and condition and other factors such as recent
market transactions. Changes in these variables and assumptions could materially impact the valuations.
The external valuations made are consistent and in support with the values derived by Andrew Cox. These valuations and the assumptions used
are reviewed by the board and the auditor. The highest and best use of the group’s properties do not differ materially from their current use.
These techniques are consistent with the principles in IFRS 13: Fair Value Measurement and use significant unobservable inputs such that the
fair value measurement of each property within the portfolio has been classified as Level 3 (2016: Level 3) in the fair value hierarchy.
The key inputs to valuation on property and equipment are as follows:
Segment
2017
Managed houses
Ram Pub Company
Managed houses
Ram Pub Company
Segment total
Short leaseholds
Unallocated
Total net book value at 3 April 2017
2016
Managed houses
Ram Pub Company
Managed houses
Ram Pub Company
Segment total
Short leaseholds
Unallocated
Tenure
Freehold and long leasehold
Freehold and long leasehold
Freehold and long leasehold
Freehold and long leasehold
EBITDA
multiple range
High
Low
6.0
3.0
Spot
Spot
12.0
12.0
Spot
Spot
Freehold and long leasehold
Freehold and long leasehold
Freehold and long leasehold
Freehold and long leasehold
6.0
3.0
Spot
Spot
12.0
10.0
Spot
Spot
Total net book value at 28 March 2016 restated
46
Number
of pubs
122
53
18
19
212
40
–
252
114
43
23
28
208
43
–
251
Value
of pubs
£m
545.8
42.8
59.8
16.2
664.6
16.3
8.2
689.1
476.8
29.7
90.0
30.5
627.0
14.7
8.1
649.8
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
If, at 3 April 2017, the property estate had been carried at historic cost less accumulated depreciation and impairment losses, its carrying amount
would have been approximately £425.7 million (2016: £419.5 million).
The revaluation surplus represents the amount by which the fair value of the estate exceeds its historic cost.
A sensitivity analysis has been conducted on the property estate to give an indication of the impact of movements in the most sensitive assumption,
EBITDA. The analysis considers this single change with the other assumptions unchanged. In practice, changes in one assumption may be
accompanied by changes in another. Changes in market values may also occur at the same time as any changes in assumptions. This information
should not be taken as a projection of likely future valuation movements. Decreasing the EBITDA used in the revaluation by 10% would decrease
the valuation by £54.2 million (2016 restated: £50.6 million). Increasing the EBITDA used in the revaluation by 10% would increase the valuation
by £54.2 million (2016 restated: £50.6 million).
(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:
18. Investments in subsidiaries
Cost and net book value
At 31 March 2015
Additions
At 28 March 2016
Disposals
At 3 April 2017
Group subsidiary undertakings
Geronimo Inns Limited
Geronimo Airports Limited
580 Limited
Bermondsey Woolpack Limited
2017
£m
30.9
2016
£m
29.9
2.5
9.5
Company
£m
31.3
–
31.3
(1.1)
30.2
Country of
incorporation
and registration
Country of
principal
operations
% of
equity and
votes held
England
England
England
England
England
England
England
England
100
100
100
100
All group subsidiaries’ registered offices are at Riverside House, 26 Osiers Road, Wandsworth, London, SW18 1NH.
During the prior period, the following companies were struck off and dissolved at their own request: 587 Limited, 588 Limited, 591 Limited,
592 Limited and The Bell at Stow Limited. Prior to that, these entities were wholly-owned subsidiaries of the company.
19. Inventories
Finished goods and raw materials
Group
Company
2017
2016
2017
£m
2.8
£m
2.6
£m
2.1
2016
£m
1.9
47
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notes to the financial statements
Continued
20. Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
Amounts due from subsidiaries
Group
Company
2017
2016
£m
2.9
0.8
3.5
–
7.2
£m
2.6
0.5
3.3
–
6.4
2017
£m
3.0
0.8
2.6
16.3
22.7
2016
£m
2.1
0.4
2.5
23.8
28.8
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 3 April 2017, trade receivables with a nominal value of £0.6 million (2016: £0.8 million) 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
2017
£m
0.8
0.1
(0.3)
0.6
The amounts written off in the period were specific debts which proved irrecoverable.
The analysis of trade receivables at 3 April 2017 is as follows:
Neither
past due
nor impaired
£m
2.2
1.6
Total
£m
2.9
2.6
<31
days
£m
0.2
0.5
31-60
days
£m
0.1
0.4
61-90
days
£m
0.1
0.1
2017
2016
2016
£m
0.7
0.2
(0.1)
0.8
91+
days
£m
0.3
–
Of the trade receivables that are neither past due nor impaired by value, 29.0% (2016: 10.3%) reflects new customers with no previous history
of default, 36.8% (2016: 45.3%) represents existing customers with no history of default and 34.2% (2016: 44.4%) represents existing customers
with some history of default.
21. Assets held for sale
Properties held for sale
Group
Company
2017
£m
1.3
2016
£m
–
2017
£m
1.3
2016
£m
–
At 3 April 2017, two properties were classified as held for sale (2016: none). Both properties have been sold subsequent to the period end. The value
of the property and equipment held for sale represents the expected net disposal proceeds at the period end. This includes a net upwards revaluation
of £0.4 million which is included within the income statement as an exceptional item. Both properties are in the Ram Pub Company segment.
22. Trade and other payables
Trade payables
Other tax and social security
Other creditors
Accruals and deferred income
Amounts due to subsidiaries
Group
Company
2017
£m
14.2
9.1
7.2
4.8
–
35.3
2016
£m
14.7
7.9
7.3
5.6
–
35.5
2017
£m
14.1
8.8
6.6
4.3
4.7
38.5
2016
£m
14.6
7.5
6.6
5.0
4.5
38.2
All trade payables are payable on demand and the carrying values above equate to fair value.
Other creditors mainly consist of employee and property related creditors.
48
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
23. 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
board monitors its capital using gearing ratios, such as 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 30).
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, liquidity and cash flow. Other risks that the group faces are referred to in the principal risks and
uncertainty section starting on page 8. The board seeks to manage the financial risks 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.
2017
2016
Increase/
decrease
in %
Effect on profit
before tax
£m
+1.0
–0.5
+1.0
–0.5
(0.260)
0.130
(0.300)
0.150
Credit risk
The objective is to minimise the group’s credit risk. Credit risks include counterparties defaulting 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 group’s maximum credit risk is considered to be limited to its trade receivables (note
20). 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.
(a) Derivative financial instruments: interest rate swaps
Current liabilities
Non-current liabilities
Total financial liability
Group and company
2017
£m
(2.9)
(7.9)
(10.8)
2016
£m
(3.1)
(9.0)
(12.1)
Fair value movement of interest rate swaps
1.3
–
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 each 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.
49
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notes to the financial statements
Continued
23. Capital management and financial instruments (continued)
(b) Loans, borrowings, interest rates and fair values
2017
Secured
£20 million loan swapped into fixed rate
£30 million loan swapped into fixed rate
£20 million loan swapped into fixed rate
£30 million loan swapped into fixed rate
£75 million revolving credit facility
Unsecured
Current borrowings
Finance leases
Financial liabilities
Current borrowings
Non-current financial liabilities
Financial liabilities
2016
Secured
£20 million loan swapped into fixed rate
£30 million loan swapped into fixed rate
£20 million loan swapped into fixed rate
£30 million loan swapped into fixed rate
£75 million revolving credit facility
Unsecured
Finance leases
Financial liabilities
Current borrowings
Non-current financial liabilities
Financial liabilities
Group and company
Term or
expiry date
Effective
interest rate
Period
rate fixed
March 2018
March 2021
March 2021
March 2023
March 2019
4.58%
4.34%
2.23%
5.97%
Variable
1 year
4 years
4 years
6 years
None
Group and company
Term or
expiry date
Effective
interest rate
Period
rate fixed
March 2018
March 2021
March 2021
March 2023
March 2019
4.58%
4.34%
2.23%
5.97%
Variable
2 years
5 years
5 years
7 years
None
Fair
value
2017
£m
20.6
32.7
19.8
37.3
24.4
Book
value
2017
£m
20.0
29.8
19.9
30.0
24.4
134.8
124.1
8.5
0.6
133.2
Group Company
2017
£m
28.5
2017
£m
28.5
104.7
104.7
133.2
133.2
Fair
value
2016
£m
21.3
32.7
19.8
38.0
43.1
Book
value
2016
£m
20.0
29.8
19.9
30.0
43.1
154.9
142.8
0.6
143.4
Group Company
2016
£m
–
143.4
143.4
2016
£m
–
143.4
143.4
The secured borrowings are secured on the assets of the group.
The fair values of borrowings and interest rate 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 £10 million overdraft facility with interest linked to the Bank of England
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 loan is repayable as to £20 million on 28 March 2018 and as to £30 million on 28 March 2023. The syndicated loan is
repayable on 17 March 2021. Interest rate swaps have been entered into in respect of these bank loans which result in the effective interest charge
being fixed at the rates disclosed above.
50
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
Revolving credit facility
The group has a £75 million revolving credit facility with the Royal Bank of Scotland and Barclays of which £24.5 million was drawn at the period
end. Final repayment of the total drawn down balance is due as one payment on 17 March 2019. This is a committed facility which permits
drawings of different amounts and for different periods. These drawings carry interest at a margin above LIBOR with a commitment payment on the
undrawn portions. Interest is payable at each loan renewal date.
(c) Maturity of the group’s financial liabilities and expiry of facilities
2017
Borrowings
Trade and other payables
Derivative financial instruments
2016
Borrowings
Trade and other payables
Derivative financial instruments
Maturity of financial liabilities
Within
one year
£m
29.0
26.2
3.2
58.4
Within
one year
£m
1.0
22.6
3.7
27.3
Between
one and
two years
£m
Between
two and
five years
£m
24.6
–
2.5
27.1
Between
one and
two years
£m
21.0
–
3.2
24.2
52.6
–
6.5
59.1
Between
two and
five years
£m
96.2
–
7.5
103.7
After
five years
£m
30.0
–
1.5
31.5
After
five years
£m
30.0
–
3.0
33.0
Total
£m
136.2
26.2
13.7
176.1
Total
£m
148.2
22.6
17.4
188.2
The above maturity table includes contractual gross undiscounted cash flows of the borrowings, related interest, net derivatives, finance leases, trade
and other 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
Group and company
Fair value
2017
£m
Level 1
2017
£m
Level 2
2017
£m
Level 3
2017
£m
10.8
10.8
–
–
Fair value
2016
£m
Level 1
2016
£m
12.1
12.1
–
–
10.8
10.8
Level 2
2016
£m
12.1
12.1
–
–
Level 3
2016
£m
–
–
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, calculated using a discounted cash flow method. Actual and estimated cash flows are discounted
by applying discount factors derived from observable market data and by considering the credit risk.
Level 3
Fair values measured using inputs for the asset or liability that are not based on observable market data.
(e) Financial assets and other financial liabilities
Financial assets and other financial liabilities of the group and the company are not included in this note because their book value approximates
their carrying value.
51
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notes to the financial statements
Continued
24. Deferred tax
Deferred tax relates to the following:
Deferred tax assets
Interest rate swaps
Retirement benefit schemes
Decelerated capital allowances
Capital losses
Share based payments
Group
Company
2017
£m
Restated
2016
£m
2017
£m
Restated
2016
£m
1.9
2.2
1.9
0.5
0.9
7.4
2.2
1.2
1.1
0.9
0.8
6.2
1.9
2.2
1.8
0.5
0.9
7.3
2.2
1.2
1.0
0.9
0.8
6.1
Deferred tax liabilities
Rolled over gains and property revaluations
(51.6)
(53.5)
(47.3)
(48.5)
Net deferred tax liabilities
(44.2)
(47.3)
(40.0)
(42.4)
Group
Company
Opening balance
Tax credit in the income statement
Tax credit in the statement of comprehensive income
Tax credit recognised directly in equity
Transfer of property to parent company
Closing balance
Movements in the deferred tax assets are shown below:
2017
£m
(47.3)
2.1
0.9
0.1
–
(44.2)
Restated
2016
£m
(48.5)
0.8
0.3
0.1
–
(47.3)
2017
£m
(42.4)
1.9
0.8
0.1
(0.4)
(40.0)
Interest
rate swap
£m
Retirement
benefit
scheme
£m
Decelerated
capital
allowances
£m
Capital
losses
£m
Share based
payments
£m
Deferred tax assets
Balance as at 31 March 2015
(Charged)/credited to income statement
Charged to other comprehensive income
Credited directly to equity
Balance as at 28 March 2016
(Charged)/credited to income statement
(Charged)/credited to other comprehensive income
Credited directly to equity
Balance as at 3 April 2017
2.4
–
(0.2)
–
2.2
–
(0.3)
–
1.9
2.8
(0.2)
(1.4)
–
1.2
(0.1)
1.1
–
2.2
1.1
–
–
–
1.1
0.8
–
–
1.9
0.9
–
–
–
0.9
(0.4)
–
–
0.5
0.5
0.2
–
0.1
0.8
–
–
0.1
0.9
Restated
2016
£m
(43.3)
0.8
–
0.1
–
(42.4)
Total
£m
7.7
–
(1.6)
0.1
6.2
0.3
0.8
0.1
7.4
The deferred tax liability decreased by £1.9 million (2016: £2.7 million) in the period. Of this amount £1.8 million (2016: £0.8 million) was credited
to the income statement and £0.1 million (2016: £1.9 million) was credited to other comprehensive income.
The deferred tax assets and liabilities at the balance sheet date are calculated at the substantively enacted rate of 19% for balances that will be realised
or settled between 1 April 2017 and 1 April 2020 and 17% for the remainder.
52
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
The group has realised capital losses of £4.3 million (2016: £6.9 million), which are available indefinitely to offset against future capital gains.
A deferred tax asset has not been recognised in respect of £1.6 million (2016: £1.6 million) of these losses because at present it is unclear whether
suitable gains will arise in the foreseeable future to utilise them. The company has realised capital losses of £2.7 million (2016: £5.3 million). A deferred
tax asset has been recognised in respect of these losses in both the current and the prior period.
In addition, the group has unrealised capital losses of £13.4 million (2016: £16.4 million). No deferred tax asset has been recognised in respect
of these losses (2016: £nil) because it is uncertain whether they will be utilised. The company has unrealised capital losses of £11.7 million
(2016: £14.1 million); no deferred tax asset has been recognised in respect of these losses (2016: £nil).
25. 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 aggregate contribution to the defined contribution scheme was £0.7 million (2016: £0.8 million).
Independent, professionally qualified actuarial advice is sought to determine the liabilities arising from the defined benefit scheme, using the projected
unit credit method. The scheme is formally valued every three years. The obligations under the scheme consist mainly of a final salary scheme which
provides members with benefits based on length of service and salary.
Through its defined benefit scheme and post retirement health care scheme, the group is exposed to a number of risks. For details of the principal
risks and uncertainties, see page 8.
The employer contribution to the defined benefit scheme for the period ended 3 April 2017 was £1.5 million (2016: £3.2 million) plus premiums of
£0.2 million (2016: £0.2 million) to the post retirement health care scheme. The current arrangement as regards contribution rates is described in the
relevant Schedule of Contributions.
Future employee contribution rates are projected to be between 7% and 9% 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 2018 financial period are expected to be £1.5 million
which includes a special contribution of £1.2 million. The total contributions to the post retirement health care scheme in the 2018 financial period are
expected to be £0.2 million.
The defined benefit scheme is closed to new entrants.
Financial 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
2017
%
2.50
3.40
2.40
2.70
3.40
N/A
2016
%
3.00
3.00
2.00
3.50
3.00
N/A
2017
%
N/A
N/A
N/A
2.70
3.40
9.00
2017
Years
22.8
24.1
23.9
25.9
2016
%
N/A
N/A
N/A
3.50
3.00
9.00
2016
Years
22.8
24.9
25.0
27.2
At the period end date the average age of current pensioners was 72 years (2016: 72 years) and for future pensioners was 54 years (2016: 53 years).
The weighted average duration of liabilities for the current period was 19.8 years (2016: 18.6 years).
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
Increase
£m
Decrease
£m
–
0.4
–
(0.4)
The sensitivities regarding the principal assumptions used to measure the schemes’ 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 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 9.0%
Increase/decrease by 8.0%
Increase by 5.0%
53
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notes to the financial statements
Continued
25. Retirement benefit schemes (continued)
Pension scheme and health care scheme assets and liabilities
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
Assets and liabilities
2017
£m
34.2
10.8
12.1
56.2
10.0
0.2
123.5
(136.3)
2016
£m
28.6
9.8
12.1
51.7
10.6
(1.0)
111.8
(118.1)
(12.8)
(6.3)
The pension scheme assets includes some of the company’s A shares with a fair value of £4.6 million (2016: £3.9 million). There are no property
assets of the scheme occupied by the company.
Of the above assets, £113.3 million are quoted securities.
Movement in scheme deficits in the period
2017
Health
care
scheme
£m
Pension
scheme
£m
(a) Changes in the present value of the schemes are as follows:
Opening deficit
Current service cost
Contributions
Other finance charges
Remeasurement through other comprehensive income
Closing deficit
(2.2)
(0.3)
1.5
(0.1)
(7.7)
(8.8)
(4.1)
–
0.2
(0.1)
–
(4.0)
(b) Recognised in the income statement
Group and company
Total
£m
(6.3)
(0.3)
1.7
(0.2)
(7.7)
(12.8)
Pension
scheme
£m
(8.6)
(0.5)
3.1
(0.2)
4.0
(2.2)
2016
Health
care
scheme
£m
(4.5)
–
0.3
(0.1)
0.2
(4.1)
Total
£m
(13.1)
(0.5)
3.4
(0.3)
4.2
(6.3)
Current service cost included in operating costs
(0.3)
–
(0.3)
(0.5)
–
(0.5)
Net interest expense
(0.1)
(0.1)
(0.2)
(0.2)
(0.1)
(0.3)
(c) Recognised in the statement of comprehensive income
Experience gains arising on the scheme liabilities
Changes in demographic assumptions underlying
the plan liabilities
Changes in financial assumptions underlying
the plan liabilities
Remeasurement of obligations
Return on scheme assets (less amounts included
in the net interest expense)
Net remeasurement recognised
1.8
6.0
(25.9)
(18.1)
10.4
(7.7)
–
–
–
–
–
–
1.8
6.0
(25.9)
(18.1)
10.4
(7.7)
2.6
–
8.0
10.6
(6.6)
4.0
0.1
–
0.1
0.2
–
0.2
2.7
–
8.1
10.8
(6.6)
4.2
54
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
Group and company
2017
Pension Health care
scheme
scheme
£m
£m
Pension
scheme
£m
2016
Health care
scheme
£m
Total
£m
(d) Movements in the present value of schemes obligations during the period
Opening defined benefit obligations
Current service cost
Interest on obligations
Contributions by scheme members
Remeasurement of obligations
Benefits paid
(114.0)
(0.3)
(3.9)
(0.1)
(18.1)
4.1
(4.1)
–
(0.1)
–
–
0.2
(118.1)
(0.3)
(4.0)
(0.1)
(18.1)
4.3
(124.3)
(0.5)
(4.0)
(0.1)
10.5
4.4
Present value of scheme liabilities
(132.3)
(4.0)
(136.3)
(114.0)
(e) Change in fair value of scheme assets
Opening fair value of scheme assets
Interest on scheme assets
Return on scheme assets (less amounts included
in the net interest expense)
Contributions by employer
Contributions by scheme members
Benefits paid
111.8
3.8
10.4
1.5
0.1
(4.1)
–
–
–
0.2
–
(0.2)
111.8
3.8
10.4
1.7
0.1
(4.3)
115.7
3.8
(6.6)
3.2
0.1
(4.4)
Fair value of scheme assets
123.5
–
123.5
111.8
(4.5)
–
(0.1)
–
0.3
0.2
(4.1)
–
–
–
0.2
–
(0.2)
–
Total
£m
(128.8)
(0.5)
(4.1)
(0.1)
10.8
4.6
(118.1)
115.7
3.8
(6.6)
3.4
0.1
(4.6)
111.8
26. Provisions
At 30 March 2015
Created
At 28 March 2016
Provided
At 3 April 2017
Analysed as:
Current liabilities
Non-current liabilities
At 3 April 2017
Group and company
£m
–
1.0
1.0
0.1
1.1
–
1.1
1.1
The provisions relate to four property leases where the expected operating income does not cover the rents payable. The rent payable
commitments range from 3 to 47 years.
27. Share capital and reserves
Issued and fully paid shares – 12.5p each
Opening balance
Issued under employee share schemes
2017
Shares
2017
£000
2016
Shares
2016
£000
48,669,491
6,084
48,453,599
6,057
140,027
18
215,892
27
Closing balance
48,809,518
6,102
48,669,491
6,084
Of the opening balance of 48,669,491 shares, 29,509,491 are A shares and 19,160,000 are non-voting shares (2016: 29,293,599 A shares,
19,160,000 non-voting shares). Of the closing balance of 48,809,518 shares, 29,649,518 are A shares and 19,160,000 are non-voting shares
(2016: 29,509,491 A shares, 19,160,000 non-voting shares).
For details of the A shares issued in the current period, see note 8(b) (Directors’ emoluments) and note 28 (Share awards).
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.
55
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notes to the financial statements
Continued
28. Share awards
The group operates two types of share-based payment arrangements: a director / senior management employee deferred bonus scheme
(“DBS”) and a Save-As-You-Earn (“SAYE”) scheme.
(a) DBS
This scheme is designed to incentivise directors and certain other senior management employees to deliver long-term superior shareholder returns. For the
directors, it is expected that half of any bonus will be settled in shares, with the other half being paid in cash except to the extent that the director elects to receive
all or part of it in shares instead. The values of these parts of the bonus awards are capped at 100% of the directors’ basic annual salaries (but for these purposes
and going forward the basic annual salary of one of the directors is adjusted). For the senior management employees, there is no requirement for them to
take any of their bonus in shares, but they may elect to take up to half in this way. For every share taken in place of cash by a director or senior management
employee, the individual is allowed to subscribe at nominal value for one ‘matching’ share. The company retains the right to determine, at its sole and absolute
discretion, the form in which any bonus is provided (i.e. by issue or transfer of shares and/or payment of cash); this is notwithstanding any election that a director
or senior management employee may make. If the company so exercises its discretion to provide cash then no matching shares are receivable. None of the
individuals are generally free to sell any of the shares before the end of a restricted period which ordinarily will end three years after the shares have been
acquired or, if earlier, the date on which his or her employment terminates by reason of illness, disability or redundancy. The ‘matching’ shares are subject to
satisfaction of a further condition relating to the extent to which the group’s adjusted earnings per ordinary share in respect of the group’s continuing operations
for a particular performance period exceeds the same measure for an earlier financial period. In certain circumstances, the shares acquired, whether ‘matching’
or otherwise, have to be transferred to the company or to an employee benefit trust designated by the company – this is at a pre-agreed price or, in the case of
‘matching’ shares, for no consideration. The number of shares to be issued to an individual in order to fulfil his entitlement is based on the market price of the
company’s A shares as shown in the Financial Times (online version) published on the date on which the issue is made.
The following table summarises the A shares issued under the DBS. These shares are registered in the relevant individual’s name and, save as
explained above, are fully vested. The weighted fair value of DBS share options granted in the period was 1,201 pence (2016: 1,266 pence).
Date
of award
Matching
shares
(Y/N)
At
28 March
2016
Awarded
during
the period
Ceased to
apply
during
the period
Transferred
during
the period*
Stephen Goodyear
Patrick Dardis
Steven Robinson
Torquil Sligo-Young
Peter Whitehead**
Senior management
employees***
June 2013
June 2013
September 2014
September 2014
June 2015
June 2015
June 2016
June 2016
June 2013
September 2014
September 2014
June 2015
June 2016
June 2016
September 2014
September 2014
June 2015
June 2015
June 2016
June 2016
June 2013
September 2014
September 2014
June 2015
June 2015
June 2016
June 2016
June 2013
June 2013
September 2014
September 2014
June 2015
June 2015
June 2016
June 2016
June 2013
June 2013
September 2014
September 2014
June 2015
June 2015
June 2016
June 2016
N
Y
N
Y
N
Y
N
Y
N
N
Y
N
N
Y
N
Y
N
Y
N
Y
N
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
18,487
9,243
32,478
16,239
22,446
11,223
–
–
6,801
21,744
10,872
7,522
–
–
2,682
2,682
2,343
2,343
–
–
5,284
12,599
6,299
8,977
4,488
–
–
12,365
6,182
21,744
10,872
15,044
7,522
–
–
2,416
1,208
7,865
7,865
8,760
8,760
–
–
–
–
–
–
–
–
22,199
11,099
–
–
–
–
15,495
7,747
–
–
–
–
2,551
2,551
–
–
–
–
–
10,428
5,214
–
–
–
–
–
–
14,885
7,442
–
–
–
–
–
–
9,404
9,404
(18,487)
(9,243)
–
–
–
–
–
–
(6,801)
–
–
–
–
–
–
–
–
–
–
–
(5,284)
–
–
–
–
–
–
(12,365)
(6,182)
(21,744)
–
(15,044)
–
(14,885)
–
(2,416)
(1,208)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,364)
(1,364)
(1,048)
(1,048)
(955)
(955)
At
3 April
2017
–
–
32,478
16,239
22,446
11,223
22,199
11,099
–
21,744
10,872
7,522
15,495
7,747
2,682
2,682
2,343
2,343
2,551
2,551
–
12,599
6,299
8,977
4,488
10,428
5,214
–
–
–
10,872
–
7,522
–
7,442
–
–
6,501
6,501
7,712
7,712
8,449
8,449
Issue price
(pence per
share)
827.5
12.5
960.0
12.5
1,280.0
12.5
1,205.0
12.5
827.5
960.0
12.5
1,280.0
1,205.0
12.5
960.0
12.5
1,280.0
12.5
1,205.0
12.5
827.5
960.0
12.5
1,280.0
12.5
1,205.0
12.5
827.5
12.5
960.0
12.5
1,280.0
12.5
1,205.0
12.5
827.5
12.5
960.0
12.5
1,280.0
12.5
1,205.0
12.5
*These shares were transferred to the Ram Brewery Trust II, an employee benefit trust designated by the company. The transfers were at the issue
price per share shown in the far right-hand column (other than those with an issue price of 12.5 pence which were transferred for no consideration).
56
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
**Peter Whitehead stepped down from the board on 6 September 2016.
***Steven Robinson was among the group of senior management employees who received the awards dated September 2014, June 2015 and
June 2016. The shares shown in the ‘At 28 March 2016’ column and the ‘Awarded during the period’ column have therefore been adjusted as
his interest is now shown separately.
The performance periods for the awards dated September 2014, June 2015 and June 2016 are from April 2014 to March 2017, from April 2015
to March 2018 and from April 2016 to March 2019 respectively.
The group’s adjusted earnings per share performance conditions set a range for the adjusted earnings per share for the relevant period; they
are not disclosed due to commercial sensitivity. Based on the recent performance of the group and assuming this performance continues, it is
anticipated that the maximum target for the adjusted earnings per share performance conditions will be met.
A charge of £0.3 million (2016: £0.4 million) was made to the group and company income statements in respect of the outstanding 134,019
‘matching’ shares at 3 April 2017.
(b) SAYE
The scheme enables eligible directors and employees to acquire options over A shares of the company. The options are issued at a discount of up
to 20% of the market price of an A share at the time invitations to join the scheme for the relevant year are issued, with the proceeds of a related
SAYE savings contract then being used to acquire shares at a later date if the option holders choose to do so. All employees who have worked for the
minimum qualifying period on an invitation date are eligible to join the scheme. Options granted under the scheme are not subject to performance
conditions other than continued employment. These options are all equity-settled.
In the current period, options over 46,732 A shares (2016: 47,864 A shares) were granted under the scheme at an exercise price of 964 pence per
share (2016: 1,013 pence per share). Subject to the participants remaining in the group’s employment and making 36 monthly contributions, these
options will be exercisable between 1 September 2019 and 28 February 2020.
Options over 102,498 A shares were outstanding at the beginning of the period. During the period, a total of 21,402 options lapsed, 20,338 options were
exercised at 662 pence per share, 922 options were exercised at 840 pence per share, 167 options were exercised at 1,013 pence per share and 181
options were exercised at 964 pence per share. The options that were exercised resulted in an increase in share capital (of £2,701) and an increase in share
premium (of £143,118).
A charge of £0.1 million (2016: £0.1 million), valued using the Black-Scholes option pricing model, was made to the group and company income
statements in respect of these options in the period. As at 3 April 2017 options over 106,220 A shares remain outstanding.
Valuation assumptions
Assumptions used in the Black-Scholes model to determine the fair value of share options at grant date for the period ended 3 April 2017 and
28 March 2016 were as follows:
Share price at grant date (pence)
Exercise price (pence)
Expected volatility (%)
Option life (years)
Expected dividends (expressed as dividend yield %)
Risk-free interest rate (%)
Probability of forfeiture (%)
Group and company
2016 plan
2015 plan
2014 plan
2013 plan
1,205.0
964.0
18.0
3
1.5
0.9
26.1
1,266.3
1,013.0
17.3
3
1.5
1.0
34.7
1,050.0
840.0
13.6
3
1.6
0.8
25.9
827.5
662.0
14.0
3
1.7
1.0
21.6
Volatility is based on the standard deviation of the A share of Young & Co.'s Brewery, P.L.C. over the three years prior to the grant date, adjusted for
management’s view of future volatility of share price. The assumed volatility may not necessarily be the actual outcome.
29. Related party transactions
Directors
Directors’ emoluments and retirement benefits are disclosed in notes 8(b) and (c). Directors’ shareholdings and interests are disclosed or referred
to on page 21 and in notes 8(d) and (e) and 28. No other transactions requiring disclosure have been entered into with the directors.
Pension scheme and trusts
The Young & Co.’s Brewery, P.L.C. Pension Scheme 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 3 April 2017, the pension scheme held 337,067 A shares
(2016: 337,067), being 1.14% of the class.
The Ram Brewery Trust II holds assets for the benefit of employees and former employees. It is managed by a corporate trustee, RBT II Trustees
Limited (“RBT II”). Two individuals, neither of whom is a director of the company, are the directors of RBT II. As at 3 April 2017, the trust held 66,991
A shares (2016: 554,077), being 0.23% 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.
In addition, the group made employers’ national insurance contributions of £0.4 million (2016: £0.2 million) and incurred a share based payment
charge of £0.4 million (2016: £0.3 million).
57
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notes to the financial statements
Continued
30. Net cash generated from operations and analysis of net debt
Profit before tax on continuing operations
Net finance cost
Other finance charges
Operating profit on continuing operations
Depreciation
Amortisation
Movement on revaluation of properties
Net profit on sales of property and associated goodwill
Goodwill impairment
Difference between pension service cost and cash contributions paid
Movement on onerous leases
Share based payments
Movements in working capital
- Inventories
- Receivables
- Payables
Net cash generated from operations
Analysis of net debt
Cash
Current borrowings and loan capital
Non-current borrowings – loan capital and finance lease
Net debt
Group
Company
2017
53 weeks
£m
Restated
2016
52 weeks
£m
2017
53 weeks
£m
Restated
2016
52 weeks
£m
37.0
5.5
0.2
42.7
19.8
0.6
0.5
–
0.7
(1.4)
0.1
0.4
(0.3)
(0.8)
1.2
63.5
32.8
5.3
0.3
38.4
16.7
0.5
1.2
(0.1)
0.3
(2.9)
–
0.5
–
(0.9)
6.7
60.4
29.9
5.1
0.2
35.2
17.0
0.2
0.4
(0.1)
–
(1.4)
0.1
0.4
(0.3)
6.1
1.6
59.2
28.2
4.8
0.3
33.3
14.1
0.1
0.9
(0.1)
–
(2.9)
–
0.5
–
(1.2)
10.7
55.4
Group
Company
2017
£m
6.6
(28.5)
(104.7)
2016
£m
13.2
–
(143.4)
2017
£m
5.3
(28.5)
(104.7)
(126.6)
(130.2)
(127.9)
2016
£m
11.8
–
(143.4)
(131.6)
31. 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.
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
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
58
Group
Company
2017
£m
2016
£m
2017
£m
2016
£m
–
0.2
2.5
2.7
(2.1)
0.6
–
–
0.6
0.6
–
0.2
2.5
2.7
(2.1)
0.6
–
–
0.6
0.6
–
0.2
2.5
2.7
(2.1)
0.6
–
–
0.6
0.6
–
0.2
2.5
2.7
(2.1)
0.6
–
–
0.6
0.6
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
Future minimum rentals receivable from non-cancellable subleases on the above properties as at 3 April 2017 were £0.1 million (2016: £0.2 million).
(b) Operating lease agreements where the group is lessee
Operating leases for property are for terms ranging from one to 47 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 four years.
2017
£m
Future minimum rentals payable under non-cancellable operating leases are as follows:
- Not later than one year
- Later than one year and not later than five years
- Later than five years
6.4
22.5
38.0
66.9
Group
Company
2016
£m
6.7
22.1
38.5
67.3
2017
£m
3.5
11.5
20.4
35.4
2016
£m
3.1
10.8
21.1
35.0
Future minimum rentals receivable from non-cancellable subleases on the above properties as at 3 April 2017 were £0.7 million (2016: £0.9 million).
(c) Operating lease agreements where the group is lessor
The group leases licensed properties to third party tenants. These non-cancellable leases are over terms varying from one to 18 years.
Future minimum rentals receivable under non-cancellable operating leases are as follows:
3.5
- Not later than one year
6.1
- Later than one year and not later than five years
6.2
- Later than five years
3.4
5.8
8.0
3.4
6.0
6.2
15.8
17.2
15.6
3.3
5.8
8.0
17.1
32. Post balance sheet events
There were no post balance sheet events apart from the exchange of contracts on the Bull (Bracknell), the transfer of three pubs within the Ram Pub
Company segment to the managed house segment and the disposal of the King’s Arms (Epsom) and the Bell Inn (Illminster).
33. Contingent liabilities
There were no contingent liabilities at the current or prior period balance sheet dates.
59
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Five year review
Strategic report
Directors’ report
Financial statements
Shareholder information
Restated
Restated
Restated
Restated
2017
2016
2015
2014
2013
53 weeks
52 weeks
52 weeks
52 weeks
52 weeks
£m
£m
£m
£m
£m
Revenue
268.9
245.9
227.0
210.8
193.6
Operating profit before exceptional items
Operating exceptional items
Net finance costs and other finance charges
Profit before tax
Taxation charge
Profit for the period from continuing operations
Adjusted profit before tax
Net assets employed
Non-current assets
Current assets and assets held for sale
Current liabilities
Non-current liabilities
Financed by
Share capital
Reserves
46.1
(3.4)
(5.7)
37.0
(7.0)
30.0
40.4
41.2
(2.8)
(5.6)
32.8
(6.2)
26.6
35.6
37.6
3.4
(5.4)
35.6
(9.4)
26.2
32.2
33.2
(0.5)
(6.0)
26.7
(4.9)
21.8
27.2
28.7
(3.8)
(5.7)
19.2
(5.2)
14.0
23.0
724.0
18.5
(71.4)
(178.1)
684.8
22.7
(41.8)
(213.2)
642.3
9.0
(38.2)
(205.5)
582.1
11.3
(32.4)
(180.1)
542.4
18.0
(36.7)
(186.3)
493.0
452.5
407.6
380.9
337.4
6.1
486.9
493.0
6.1
446.4
452.5
6.1
401.5
407.6
6.0
374.9
380.9
6.0
331.4
337.4
Purchase of fixed assets, lease premiums
and business combinations
38.3
45.1
50.9
33.6
20.5
Net debt
(126.6)
(130.2)
(129.0)
(112.0)
(112.6)
Per 12.5p ordinary share
Adjusted basic earnings from continuing operations
Basic earnings from continuing operations
Dividends – paid in period
66.43
61.51
17.95
58.44
54.73
16.94
51.04
54.14
15.97
42.70
45.19
15.06
35.66
29.02
14.27
Pence
Pence
Pence
Pence
Pence
Gearing
25.7%
28.8%
31.6%
29.4%
33.4%
Average number of employees
3,924
3,735
3,496
3,357
3,242
60
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notice of meeting
Strategic report
Directors’ report
Financial statements
Shareholder information
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, 9 July 2017. 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 128th 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, 11 July 2017 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 3 April 2017, together with the strategic report, directors’ report
and the auditor’s report on those accounts and reports.
2. To declare a final dividend of 9.62p per share for the financial year ended 3 April 2017.
3. That Ernst & Young LLP be, and is hereby, re-appointed as the Company’s auditor to hold office from the conclusion of this meeting until
the conclusion of the next general meeting of the Company at which the Company’s annual accounts and reports are laid in accordance
with section 437 of the Companies Act 2006.
4. That the directors be, and are hereby, authorised to fix the remuneration of the Company’s auditor.
5. That Steven Robinson be, and is hereby, re-appointed as a director.
6. That Tracy Read be, and is hereby, re-appointed as a director.
7. That Nick Miller be, and is hereby, re-appointed as a director.
8. 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 2018) 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.
9. That, for the purposes of article 52(A) of the Company’s articles of association, a higher sum of £300,000 be, and is hereby, decided.
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 £2,033,526 (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 £4,067,052 (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,
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
2018) 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.
61
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Notice of meeting
Continued
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,
the allotment (otherwise than under paragraph (a) above) of equity securities or sale of treasury shares up to a nominal amount
of £305,059, 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 2018) 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 authority to be limited:
(a) to a maximum number of 4,880,951 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 that may be paid for an Ordinary Share is the nominal
amount of that share and the maximum price that may be paid for an Ordinary Share is an amount equal to 5% above the average of
the middle market quotations for that share as derived from the AIM appendix to the Daily Official List of the London Stock Exchange
for the five business days immediately preceding the day on which that share is contracted to be purchased, such authority to apply
until the end of next year’s annual general meeting (or, if earlier, until the close of business on 30 September 2018) 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 authority ends and the Company may purchase Ordinary Shares pursuant to any such contract as if the authority had not ended.
By order of the board
ANTH O NY S C H RO E D E R
Company Secretary
24 May 2017
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
62
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
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, 10 July 2017 (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, 9 July 2017.
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.
63
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 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 your
intentions 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 2017 annual report or any proxy form for the Company’s 128th annual general meeting may not be used to
communicate with the Company for any purpose other than any expressly stated.
64
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 Explanatory notes to the notice of meeting
Strategic report
Directors’ report
Financial statements
Shareholder information
Notice of the 128th annual general meeting of Young & Co.’s
Brewery, P.L.C. (the “Company”) to be held on Tuesday, 11 July
2017 is set out on pages 61 to 64. 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 strategic report, directors’ report and the auditor’s report on those
accounts and reports before you at a general meeting; this is a legal
requirement.
Resolution 2: final dividend
An interim dividend of 8.88p per share was paid in December 2016.
The directors are recommending a final dividend of 9.62p per share for
the year ended 3 April 2017, bringing the total dividend for the year to
18.50p per share. Subject to approval being given, the final dividend is
expected to be paid on 13 July 2017 to shareholders on the register at
the close of business on 9 June 2017.
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 5-7: re-appointments of directors
Each of Steven Robinson, Tracy Read and Nick Miller will be retiring
automatically from the office of director at the meeting; this is because
they were appointed by the board since the last annual general meeting.
All of these individuals are seeking re-appointment and their brief
biographical details are on page 16.
Resolution 8: 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 9: increased limit on the amount payable in respect
of directors’ fees
Broadly, article 52(A) of the Company’s articles of association provides
that the total fees to be paid to all the directors must not exceed
£250,000 a year or any higher sum decided on by an ordinary
resolution at a general meeting - a fee payable to a director pursuant
to this article is distinct from any salary, remuneration or other amount
payable to him or her pursuant to any other provision of the articles.
Currently, the total annual fees payable to directors amount to £210,124.
However, to ensure that the £250,000 cap (which was set in 2007) is
not inadvertently breached and to ensure that the Company is able to
continue to recruit and retain suitable candidates, it is proposed that
the higher sum authority for article 52(A) be increased to £300,000.
The directors have no present intention of making any further board
appointments that would cause the existing £250,000 cap to be
exceeded, however the increased amount provides the board with
the flexibility to allow it to do so should the need arise.
Resolution 10: general authority 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 £2,033,526 - this amount represents
approximately one-third of the Company’s issued share capital as at
24 May 2017 (but would be reduced by the nominal amount of any
shares allotted or rights granted under paragraph (b) of this resolution
in excess of £2,033,526). In line with guidance issued by the Investment
Association, 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 £4,067,052,
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 24 May 2017. Therefore the maximum nominal
amount of shares and rights that may be allotted or granted under this
resolution is £4,067,052. 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
2018). The directors have no present intention of exercising either of the
authorities sought under this resolution other than in respect of any one
or more of the Company’s 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, similar
to previous years, be 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 £305,059.
This aggregate nominal amount represents approximately 5% of the
Company’s issued share capital as at 24 May 2017. 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 2018).
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 4,880,951 of
its shares, being no more than 10% of its issued share capital as at
24 May 2017. 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 2018). 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, that may be paid for a share
is its nominal value. The maximum price, exclusive of expenses, that
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. As at 1 May 2017,
there were options outstanding over 105,936 A shares, representing
0.22% of the Company's issued share capital at that date. If the
Company were to purchase its own shares to the fullest possible extent
of its existing authority and of the authority sought pursuant to this
resolution, these would then represent 0.27% of the Company's issued
share capital. No warrants to subscribe for shares are outstanding.
65
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 Pubs and hotels
London and the surrounding areas
Stow on the Wold
Bell at Stow H
Chipping Norton
Blue Boar
Oxford
Angel & Greyhound
King’s Arms
Greenford
Bridge Hotel H
Kew
Coach & Horses H
Richmond
Lass O’Richmond Hill
Marlborough
Old Ship
Orange Tree H
Red Cow T
Shaftesbury
Waterman’s Arms T
White Cross
Kingston
Albert
Bishop
Grey Horse T
Spring Grove
Surbiton
Black Lion T
Victoria
Waggon & Horses T
Isleworth
Castle T
Coach & Horses
Twickenham
Alexander Pope H
Teddington
Abercorn Arms T
Staines
Bells T
Walton-on-Thames
Royal George T
Swan
Chertsey
Crown Hotel H
Weybridge
Hand & Spear H
Bracknell
Bull
Esher
Bear Inn H
Claygate
Foley H
Oxshott
Bear
Southern England
Radlett
Red Lion Hotel H
Hendon
Beaufort
Greyhound T
Kilburn
Queen’s Arms T
Maida Vale
Prince Alfred
Harlesden
Grand Junction Arms T
Ealing
Grange
New Inn T
Shepherd’s Bush
Bull (Westfield) G
Eagle G
Defector’s Weld
Hammersmith
Brook Green Hotel H
Thatched House T
Hammersmith Ram
Old Ship
Mortlake
Jolly Gardeners T
East Sheen
Hare & Hounds
Barnes
Bull’s Head G
Coach & Horses
White Hart
Putney
Boathouse
Coat and Badge G
Duke’s Head
Green Man
Half Moon G
Spotted Horse
Roehampton
Angel T
King’s Head
Wimbledon
Alexandra
Bayee Village T
Crooked Billet
Dog & Fox H
Fire Stables
Hand in Hand
Rose & Crown H
Epsom
Rising Sun T
Walton-on-the-Hill
Chequers
Paddington
Porchester
Bayswater
Mitre
Chelsea
Builder’s Arms G
Chelsea Ram G
Cooper’s Arms
Hollywood Arms
King’s Arms G
Phoenix G
Surprise G
Battersea
Duke of Cambridge
Nine Elms Tavern
Northcote G
Plough
Prince Albert G
Clapham
Clapham North T
Windmill H
Balham
Devonshire
Grove
Nightingale
Tooting
Castle
Trafalgar Arms G
Mitcham
King’s Arms T
Carshalton
Greyhound H
Notting Hill
Duke of Wellington
Elgin G
Kensington
Britannia
Curtains Up G
Duke of Clarence G
Fulham
Cock Tavern
Duke on the Green
Waterside
Wandsworth
Alma H
Crane T
Brewers Inn H
County Arms
East Hill G
Gardeners’ T
King’s Arms G
Grapes T
Old Sergeant T
Pig & Whistle T
Queen Adelaide
Ship
Spread Eagle T
Waterfront
Earlsfield
Halfway House
Leather Bottle
Sutton
Lord Nelson T
Robin Hood T
Littleton-on-Severn
White Hart
Sherston
Rattlebone T
Burnham-on-Sea
Dunstan House Inn H
Congresbury
Old Inn T
Wrington
Plough Inn T
Somerton
Unicorn T
Bristol
Bristol Ram T
Highbury Vaults
Horts
Rope Walk T
Riverstation
Keynsham
Lock Keeper
Castle Cary
Horse Pond T
Exeter
City Gate H
Double Locks
Exmouth
Grove
Sidmouth
Swan T
66
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017
Barnet
Lord Nelson T
Hampstead
Flask
Roebuck
Primrose Hill
Queens
Marylebone
Lord Wargrave T
Westminster
Buckingham Arms
Clarence G
Morpeth Arms
Phoenix G
Royal Oak T
Pimlico
Fox & Hounds T
Rising Sun T
Winchmore Hill
Kings Head G
Tufnell Park
Lord Palmerston T
Kentish Town
Bull & Gate
Lion & Unicorn G
Camden
Spread Eagle
Euston
Square Tavern T
Fitzrovia
Adam & Eve G
One Tun
Mayfair
Guinea
Windmill
Islington
Canonbury
Castle G
Duchess of Kent G
John Salt
King’s Head
Marquess Tavern T
Narrowboat
King’s Cross &
St Pancras Station
Betjeman Arms G
Curious Pig G
Fellow G
Bloomsbury
Calthorpe Arms T
Lamb
Covent Garden
Marquess of Anglesey
Strategic report
Directors’ report
Financial statements
Shareholder information
Cambridge
Station Tavern
Chelmsford
O’Connor’s T
Riverside Inn T
Clapton
Princess of Wales G
Bethnal Green
Royal Oak T
Stratford
Cow (Westfield) G
Bow
Coborn
Crown G
Stepney
Queen’s Head T
Aldgate
Leman Street Tavern G
Shoreditch
Owl & Pussycat G
City of London
Albion
Boisdales T
Dirty Dick’s
Finch’s
Grocer G
Fox & Anchor H
Lamb Tavern
Oyster Shed G
Paternoster
Three Lords T
White Horse G
Vauxhall
Fentiman Arms G
Riverside
Stockwell
Surprise T
Brixton
Trinity Arms
Hope & Anchor
Streatham
Bull
Wallington
Duke’s Head H
Kennington
White Bear
Camberwell
Grove
Southwark
Founder’s Arms
Mulberry Bush
Prince William Henry T
Borough Market
Bunch of Grapes
Wheatsheaf
Bermondsey
Woolpack
Peckham Rye
Clock House
Dulwich
Wood House
Norwood
Hope T
Railway Bell T
Thornton Heath
Railway Telegraph T
Croydon
Dog & Bull T
Beddington
Plough
Greenwich
Cutty Sark
Old Brewery
Richard the First
Woolwich
Dial Arch
Guardhouse G
Rotherhithe
Ship T
Catford
Black Cat T
Bromley
Two Doves T
Lee
Crown
Chislehurst
Bull’s Head Hotel H
Dartford
Court House T
Malt Shovel T
Key
Young’s managed house unless marked
Tenanted
Geronimo
Hotel
T
G
H
Sherfield-on-Loddon
White Hart
Fetcham
Bell
Leatherhead
Penny Black
Effingham
Plough T
Betchworth
Dolphin
Hindon
Lamb Inn H
Shaftesbury
Mitre
Guildford
Weyside
Witley
White Hart T
Emsworth
Sussex Brewery T
Dorking
Falkland Arms T
Old House T
Stonebridge
Royal Oak T
Southampton
Strand T
Chichester
Crown & Anchor
Bognor Regis
Waverley
Redhill
Home Cottage
William IV T
Farnborough
Rose & Crown T
Blindley Heath
Red Barn G
Lingfield
Greyhound T
East Grinstead
Ship T
Plumpton Green
Fountain Inn T
67
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 Senior personnel, committees and advisers
Strategic report
Directors’ report
Financial statements
Shareholder information
Directors
Stephen Goodyear
Non-executive Chairman
Patrick Dardis
Chief Executive
Steven Robinson, F.C.A.
Chief Financial Officer
Torquil Sligo-Young
Information Resources
Tracy Read
People
Roger Lambert, M.A.
Non-executive Senior Independent
Trish Corzine
Non-executive
Nick Miller
Non-executive
Company Secretary
Anthony Schroeder
Audit committee
Roger Lambert (Chairman)
Stephen Goodyear
Trish Corzine
Nick Miller
Remuneration committee
Nick Miller (Chairman)
Roger Lambert
Trish Corzine
Bankers
Royal Bank of Scotland Group plc
Corporate Banking London
250 Bishopsgate
London EC2M 4RB
Barclays Bank plc
1 Churchill Place
London E14 5HP
HSBC Bank plc
8 Canada Square
London E14 5HQ
Auditor
Ernst & Young LLP
1 More London Place
London SE1 2AF
Nominated adviser
J.P. Morgan Securities plc
25 Bank Street
Canary Wharf
London E14 5JP
Stockbrokers
J.P. Morgan Securities plc
25 Bank Street
Canary Wharf
London E14 5JP
Panmure Gordon (UK) Ltd
One New Change
London EC4M 9AF
Solicitors
Slaughter and May
One Bunhill Row
London EC1Y 8YY
Gowling WLG (UK) LLP
Two Snowhill
Birmingham
B4 6WR
Shareholder information
Registrar
Shareholder offers
Proposed financial diary 2017
The company’s registrar is Computershare
Investor Services PLC.
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.
All requests to amend account details
must be made in writing.
Computershare’s contact address is:
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Their telephone no. is 0370 707 1420.
Shareholders can manage their Young’s
shareholding online at:
www.investorcentre.co.uk
Details of shareholder discounts and offers
are mailed to shareholders from time to
time. Any shareholder who does not wish
to receive details of such offers should
write to the Company Secretary at the
registered office.
Registered office and
company number
Riverside House
26 Osiers Road
Wandsworth
London SW18 1NH
Registered number: 32762
Further information
Please visit:
www.youngs.co.uk
8 June 2017
Ex-dividend date for final dividend
9 June 2017
Record date for final dividend
11 July 2017
Annual general meeting
13 July 2017
Payment of final dividend
16 November 2017
Interim results announcement
23 November 2017
Ex-dividend date for interim dividend
24 November 2017
Record date for interim dividend
8 December 2017
Payment of interim dividend
68
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 How did you do?
1831
Young & Co.’s
is incorporated
1931
First woman
to work for
Young & Co.’s
is employed
1974
Queen
Elizabeth II
visits the
Ram Brewery
2007
Young &
Bainbridge
buy the
Ram Brewery
1890
First pub with
guest bedrooms
is purchased
1939
‘35 years of
service’ club
is introduced
1981
Young & Co.’s
sells the
Ram Brewery
Young &
Co.’s buys
Geronimo
Inns
2010
In our opinion the above statements give a true and fair view of the
group’s history for the 185 year period then ended 3 April 2017.
2016
Young’s
On Tap is
launched
69
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2017 Y
O
U
N
G
‘
S
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
7
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
A N NU A L R EP O RT
FOR THE 53 WEEKS ENDED
3 APRIL 2017