A N N U A L R E P O R T
FOR THE 52 WEEKS EN DED 2 A P R IL 2 0 18
CONTENTS
STRATEGIC REPORT
Chairman’s statement
Our strategy and business model
Chief executive’s review
How we performed
Principal risks and uncertainties
Business and financial review
Corporate social responsibility
DIRECTORS’ REPORT
Our board
Other disclosures
Preparation and disclaimer
Corporate governance report
3
4
5
7
8
10
16
18
20
21
22
FINANCIAL STATEMENTS
Independent auditor’s report
Group income statement
35
40
Group statement of comprehensive income
41
Balance sheets
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
SHAREHOLDER INFORMATION
Notice of meeting
Explanatory notes to the notice of meeting
Pubs and hotels (map)
Senior personnel, committees and advisers
Shareholder information
42
43
44
45
46
76
77
81
82
84
84
View our Annual Report 2018 on our website:
www.youngs.co.uk/investors
FINANCIAL HIGHLIGHTS
Strategic report
Directors’ report
Financial statements
Shareholder information
2018
52 weeks
2017
53 weeks
%
£m
£m
CHANGE
Revenue
279.3
268.9
Adjusted operating profit(1)
Operating profit
Adjusted profit before tax(1)
Profit before tax
Net cash generated from operations
46.9
43.5
41.0
37.6
61.4
46.1
42.7
40.4
37.0
63.5
Adjusted basic earnings per share(1)
67.74p
66.43p
Basic earnings per share
61.60p
61.51p
+3.9
+1.7
+1.9
+1.5
+1.6
–3.3
+2.0
+0.1
Dividend per share
(interim and recommended final)
19.61p
18.50p
+6.0
Net assets per share(2)
£11.24
£10.10
+11.3
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) Net assets per share are the group's net assets divided by the shares in issue at the period end.
In this report, unless the context otherwise requires, 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.
1
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
2
CHAIRMAN’S STATEMENT
Strategic report
Directors’ report
Financial statements
Shareholder information
Stephen Goodyear, Chairman
+6.2%
Revenue
£53.0
million
invested
21st
consecutive
increase of
dividend
This has been another highly successful year for
Young’s and it further strengthens the belief we have
in our winning strategy of maintaining and operating
a differentiated, premium and well-invested pub estate,
focussed on London and Southern England.
Total revenue was up 3.9% when
compared with the 53 weeks of last year
and up 6.2% on a comparable 52 week
basis. At a time when margins across the
industry have been under intense pressure,
our EBITDA margin of 24.6% remains one
of the strongest in the sector, resulting in
our highest ever adjusted EBITDA of £68.7
million (2017: £66.5 million). Adjusted basic
earnings per share have increased by 2.0%
and now stand at 67.74 pence per share;
on an unadjusted basis, basic earnings per
share are at 61.60 pence per share.
Our healthy cash generation allows us
to invest in future growth through a
combination of acquisitions and investment
in our existing estate. This year we invested
a total of £53.0 million, acquiring six pubs
including the iconic Smiths of Smithfield
(Smithfield Market), and increased our
number of bedrooms by 94 or 19.3%
through the purchase of the Park
(Teddington) and the Bridge (Chertsey);
we also opened the Bull (Bracknell).
Despite this increased level of investment,
we remain conservatively financed with
net debt of £140.5 million (2017: £126.6
million), being 2.0 times adjusted EBITDA
(2017: 1.9 times).
More than ever, the importance of
investing in and growing our own people
is fundamental to our ongoing success;
a belief long embedded in our culture
at Young’s. Gaining “employer provider”
status during the year has enabled us to be
an official training provider for apprentices
and it improves our prominent position
in a tough labour market. Through the
comprehensive training and support, our
talented teams gain the knowledge and
expertise they need to continue to surprise
and delight our customers. It’s wonderful to
work with every one of our employees and
their boundless energy and enthusiasm is
something that I’m very grateful for.
Brexit remains an issue for the entire
economy. We welcome the progress the
Government is making on the negotiations
so far. In particular, given that roughly a
third of our team members originate from
mainland Europe, the granting of reciprocal
citizen rights to EU nationals is a reassuring
first step. Although many issues still remain
on the table, we are looking positively to
the future.
We continue to believe in the individuality
and the power of each Young’s pub,
rather than follow a particular concept
of which customers can quickly tire. Our
busy investment programme ensures our
customers continue to frequent and enjoy
our pubs which are at the heart of their
communities, as hospitality is at the heart
of our economy.
Given these strong results, the board
is delighted to recommend our 21st
consecutive annual dividend increase, by
6.0% again, to 10.20 pence. If approved
by shareholders, this will result in a total
dividend for the year of 19.61 pence
(2017: 18.50 pence). The final dividend
is expected to be paid on 12 July 2018
to shareholders on the register at the
close of business on 8 June 2018.
Finally, I’d like to welcome Ian McHoul to
our board, following his appointment as a
non-executive director in January this year.
Ian has gained a wealth of knowledge and
experience during a long and successful
career, including while having been the
Chief Financial Officer of Amec Foster
Wheeler plc for over 9 years. He is
currently sitting on the boards of Britvic
plc and Bellway plc as a non-executive
director and has held non-executive roles
in other companies. Ian will be a great
addition to our board.
Stephen Goodyear
Chairman
23 May 2018
3
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
OUR STRATEGY AND BUSINESS MODEL
Our Strategy –
How we grow
We look to grow through a combination of investing in our
existing pub estate, opportunity-led acquisitions and our people.
Each year, on average, we reinvest about two thirds of the
cash we generate. Much goes back into our existing estate in
the form of transformational developments and maintenance
to the high standard our customers expect. In carrying out
developments, we look to improve current trading area
efficiencies and increase each pub’s trading space; the latter can
see upper parts converted into accommodation, function rooms
and roof top bars; basements become cocktail bars and outdoor
spaces turned into beautiful gardens with Burger Shacks.
Risk link
9
10
We also invest in hand-picked acquisitions, based in
locations where we feel our style of operation will thrive,
as well as benefitting the surrounding area. All acquisitions
have to pass our strict internal investment criteria. Through
our experience and expertise, we assess what we believe an
acquisition can realistically achieve; what it may currently be
doing is often less relevant.
Risk link
5
9
We believe in investing in our people, nurturing our own
talent, so they are able to continue to grow our businesses by
surprising and delighting our customers.
Our individually-tailored development programmes allow
people at every level in our business to explore opportunities
and we encourage the entrepreneurial spirit that has ensured
our place as industry leaders. Entrepreneurs can be a rare
commodity in the hospitality industry and getting the right fit for
both parties can be a challenge as well as time consuming and
expensive. Promoting our internally-developed talent pool
therefore ensures our future leaders know who we are and
what we stand for, giving us and our teams a head start in
growing our business and increasing our productivity.
Risk link
9
The risk links reference to Principal risks and
uncertainties on pages 8 and 9.
4
Our Business Model –
How we create value
We run a predominantly freehold estate and we intend to
keep it that way. We believe freehold assets give us greater
control and opportunities within our business, whether this is,
for example, insulating us against potential rent increases or
providing us with greater freedom to do up and improve our
pubs. A predominantly freehold backed estate also enables
us to negotiate better terms with lenders, whilst allowing us to
also benefit from increases in property values.
Risk link
5
9
10
Within our managed segment, we operate differentiated,
premium, mostly drink-led pubs in London and Southern
England. Our locations are mainly in areas that have
a high proportion of affluent and discerning customers
derived through a mixture of residential, leisure and work
where our premium product offerings is greater suited.
Risk link
1
6
Our revenue mix is 65.8% drink, 29.6% food and 4.6%
accommodation. Although food is an important part of our
offer, we run pubs, not restaurants, which can be more labour
intensive. Our drink-led offer is supported by our locations which
are often within walking distances of public transport links.
Risk link
1
6
8
We also run a small quality tenanted estate which extends
our reach into other geographical areas. Our tenanted
estate allows us to work in partnership with engaging
entrepreneurs to run sustainable businesses. Tenanted pubs
are less labour intensive than managed houses, increase
our buying power with suppliers and are cash generative.
They also allow us to acquire freehold pubs with tenants
in situ that we can service through our tenanted operation
and, when the time is right for both parties, transfer these
pubs into our managed estate.
Risk link
1
We use the combined buying power of our managed and
tenanted estates to source the best products for the best prices
from a small number of suppliers – we buy predominantly
British produce, supporting the local communities we operate
in. Although the suppliers we use stretch across the estate,
our general managers are given the freedom and flexibility
within guidelines to run the pubs to best fit and contribute
to the communities in which they reside. This individuality is
supported by the uniqueness of the pub designs which don’t
follow a particular format or concept but have a welcoming, cosy
theme to offer our customers that home-away-from-home feel.
Risk link
2
6
CHIEF EXECUTIVE’S REVIEW
Strategic report
Directors’ report
Financial statements
Shareholder information
Patrick Dardis, Chief Executive
+4.2%
Like-for-like
revenue
580
Bedrooms
Adjusted
profit before tax
£41.0
million
I am very pleased to announce such a strong set of results.
This past year has been tough for our industry as a whole,
but these results are a testament to the quality of our
incredible people who bring our premium positioned pubs
to life. These results demonstrate that our strategy continues
to deliver.
On a comparable 52 week basis, total
revenue was up 6.2% to £279.3 million,
underpinned by an industry-leading
managed house like-for-like performance,
enhanced by complementary, eye-
catching acquisitions. Through strong
conversion, on a comparable 52 week
basis, profit before tax was up 5.4% to
£37.6 million or up 4.8% to £41.0 million
once adjusted for exceptional items.
Managed house like-for-like sales in the
period were up 4.2%, representing the
seventh consecutive year of delivering
like-for-like sales at the top end of the
industry. Over the last seven years,
we’ve delivered increases of between
4.2% and 6.7%.
PROVEN TRACK RECORD
DURING DIFFICULT TIMES
We have delivered these results against
the challenges of declining real wages,
heightened food and energy costs and
a challenging economic environment.
Our asset-backed, predominantly
freehold estate helps maintain our
competitive advantage.
These macro challenges are on top of
huge fixed cost increases burdening the
hospitality industry. I have previously
stated my view on business rates
and will continue to appeal to the
Government to review and reverse
recent unjustified increases. These,
combined with the introduction
of the National Living Wage, the
Apprenticeship Levy and the most
recent increases to pension auto-
enrolment, have created one of the
most difficult business environments
I have ever experienced.
Given this backdrop, our financial
performance is all the more impressive
and is further testament to our very
clear strategy of owning clearly
differentiated, premium and well-
invested pubs run by talented and
attentive people. Differentiation and the
provision of consumer experiences are
critical to our success.
DEVELOPING GROWTH
OPPORTUNITIES
We have continued to execute our
growth strategy through ongoing
investment in our existing estate and
selective acquisitions.
Our estate now has 255 pubs,
predominantly across London and
Southern England. Last November we
acquired the iconic Smiths of Smithfield
(“Smiths”) and its smaller sister site in
Cannon Street, which has just re-
opened having been re-branded as
the Candlemaker. Smiths, a four storey
Grade II listed building situated in the
vibrant Smithfield Market, offers a
unique experience on each level and
has already achieved the highest weekly
sales of any property within our estate.
Having recently completed a major
refurbishment project, we look forward
to seeing the results.
Just before the financial year-end we
increased the total number of bedrooms
in our hotel portfolio by 19.3% to
580 rooms through the freehold
acquisitions of the Park (Teddington)
with 43 bedrooms and the Bridge
(Chertsey) with 51 rooms. The Park is
a stunning Victorian building dating
back to 1866 and occupies a prominent
position in an affluent area within our
own backyard. The Bridge, anchored
on the Thames riverbank, has strong
business and leisure guest appeal.
5
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
CHIEF EXECUTIVE’S REVIEW
Continued
We added two further freehold pubs
through our purchase of the Chequers
(Hanham Mills, near Bristol) and the
Old Bear (Cobham), and one additional
leasehold, the Bull (Bracknell).
Following completion of its acquisition
in May 2018, we are on site at the
Naturalist (Woodberry Down), our
11th Berkeley Group pub. We are also
poised to start fitting out our 12th in
Kidbrooke Village.
Within the existing estate, many
opportunities remain. This coming
year’s most exciting plan is a
transformational development at the
King’s Head (Islington) with its new
dining room, events space and a
stunning roof terrace.
6
We also continue to invest in
technology. By the end of this summer
all our pubs will have new till software
that will allow us to capitalise on greater
sales opportunities and provide our
general managers and teams with
enhanced tools to continue to surprise
and delight our customers. The new
software will allow us to interact with
multiple third party providers; our own
app, “Young’s On Tap”, will also evolve
to allow our customers to order in
advance and receive tailored rewards
based on their unique habits and
preferences.
Through our carefully selected growth
opportunities and freehold-backed
balance sheet, we are confident our
strategy will continue to deliver. The
ongoing development of our people
and helping them achieve their full
potential will create an even more vibrant
experience for our customers who are at
the forefront of everything we do.
Patrick Dardis
Chief Executive
23 May 2018
HOW WE PERFORMED
Strategic report
Directors’ report
Financial statements
Shareholder information
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 assess the group’s underlying performance.
Revenue £m
This is our total group revenue,
including both managed and
tenanted businesses.
279.3
268.9
245.9
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.
5.6
4.7
4.2
7
6
5
4
3
2
1
0
64
62
60
58
56
54
52
63.15
60.86
60.01
2016
2017
2018
2016
2017
2018
2016
2017
2018
Adjusted EBITDA £m
This is our earnings before interest,
taxes, depreciation and amortisation
adjusted to exclude any exceptional
items for the group. (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).
68.7
66.5
58.4
40.4
41.0
35.6
45
40
35
30
25
20
15
66.43
67.74
58.44
70
65
60
55
50
45
40
2016
2017
2018
2016
2017
2018
2016
2017
2018
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.
28.8
25.7
25.6
8.4
8.4
7.8
9
8
7
6
5
4
3
6,768
6,830
5,803
7,000
6,000
5,000
4,000
3,000
2016
2017
2018
2016
2017
2018
2016
2017
2018
280
270
260
250
240
230
220
70
65
60
55
50
45
40
50
40
30
20
10
0
7
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
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 64.
RISK/UNCERTAINTY
POTENTIAL IMPACT
MITIGATION
CHANGE
IN RISK/
UNCERTAINTY
D
E
T
A
L
E
R
-
R
E
M
U
S
N
O
C
I
L
A
C
N
A
N
I
F
1. 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.
2. 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 £7.83 with effect from April 2018, with
annual stepped increases, announced
each year, to follow. Increased costs could
potentially make our offer less attractive to
consumers if they are passed on.
A reduction in our
revenue could lead to
lower profits.
A reduction in our revenue
and/or an increase in our
costs will have an impact
on our margins and could
result in lower profits.
Our pubs and hotels are mainly spread
throughout London and Southern England,
with the majority inside the M25. Through
them, we 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.
3. The pub industry is subject to a variety
of taxes, including business taxes, duty
on alcoholic drinks and business rates.
The introduction of new
taxes and/or increases in the
rates of existing taxes will
result in lower profits.
As regards rates, 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.
4. We operate a defined benefit pension
scheme, the Young & Co.’s Brewery, P.L.C.
Pension Scheme, that has to be funded
to meet agreed benefit payments. The
value of the scheme can be impacted by
a variety of factors, including changes in
life expectancy assumptions, lower than
anticipated performances of the stock
market and reduced bond yields. We also
operate two defined contribution pension
schemes that require minimum levels
of contribution from the company
set by the Government.
Variations in the difference in
value between the assets of the
defined benefit 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. An increase in
our contribution levels to the
defined contribution schemes will
result in lower profits.
The defined benefit scheme was closed to
new entrants in 2003 and we make additional
contributions over and above regular service
contributions to help address any funding
deficit. We also maintain a close dialogue
with the scheme’s trustee. To limit further the
potential exposure, future service benefits
accruing to remaining active members were
reduced from April 2016, with member
contributions being increased in tandem.
5. 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.
Our ability to trade as a
going concern depends on us
generating sufficient cash to
meet these repayments.
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
assist in managing 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
RISK/UNCERTAINTY
POTENTIAL IMPACT
MITIGATION
Strategic report
Directors’ report
Financial statements
Shareholder information
CHANGE
IN RISK/
UNCERTAINTY
I
S
N
O
T
A
R
E
P
O
)
1
(
I
N
O
T
A
L
U
G
E
R
6. 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,
leading to lower profits and
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.
7. 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 and 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.
8. We are dependent on having the right
people throughout our organisation: at all
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 do so 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 skillsets.
9. 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.
10. 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 damage our
reputation, see us being fined,
and, as regards health and
safety, result in an accident or
incident occurring involving
injury, illness or even loss of
life. All of these could possibly
lead 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 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 so that our people have the
right skills to perform their jobs successfully and
achieve their full potential. We have also gained
“employer provider” status, enabling us to be
an official training provider for apprentices and
develop our own talent pool for the future.
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 profiles.
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 works 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.
(1) The Neighbourhood Planning Bill became law during the current period. The scope of the Act is now clear and the risk associated with draft legislation has now been removed.
KEY TO CHANGE IN THE RISK/UNCERTAINTY LEVEL FROM THE PRIOR PERIOD
Decrease
No change
Increase
9
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
BUSINESS AND FINANCIAL REVIEW
The prior period was a 53 week period but all figures below have been adjusted by removing the final week of the last period to be on a comparable 52 week
basis unless specified.
MANAGED HOUSES
Once again, our managed houses
have performed at the top of the pub
sector, with strong revenue growth, up
6.9% to £266.4 million, underpinned
by industry-leading like-for-like sales
growth of 4.2% (2017: 4.7%). Managed
houses represent the vast majority of
our business and our managed estate
now comprises 181 pubs (including
25 hotels), an increase of eight pubs
(including two hotels) during the year,
making up 95.4% of our total revenue.
Continuing to drive and challenge the
pubs and their teams to outperform the
market is a relentless pursuit, but it’s
one that we embrace wholeheartedly.
Our longstanding record of consistently
raising the bar creates its own challenges,
but our ambition and work ethic gives us
that extra spring in our step to continue
to excel.
REVENUE AND PROFITS
Revenue growth has been very
consistent throughout the year. Like-
for-like sales were up 4.7% for the first
seven weeks of the year, up 4.6% for
the first half, and we have now closed
the year with like-for-like sales up 4.2%
despite the impact of the exceptionally
cold weather in late February and
early March.
Drink sales have had a buoyant year,
with the continued trend of customers
trading up to more premium products,
further increasing sales values. As a
result, total drinks sales were up 7.9%
and up 4.8% on a like-for-like basis.
Today’s consumers are more
knowledgeable and discerning, with
technology helping to fuel this. As a
trend-setter, we continue to evolve
our market-leading drinks offering
to stimulate the changing nature of
consumers’ drinking habits. Keg ales are
a fine example of this, with consumers
switching from traditional products to try
new keg beers such as Founders IPA, a
beer for all occasions naturally brewed
in Michigan, and Beavertown Neck Oil,
a punchy, go-to beer. In total, sales of
draught keg ale were up 28.1%, taking
share from other draught drinks.
10
Our cask-focussed, “local hero”
programme continues to grow our
reputation both for being a stage to
showcase the finest new brews from
gifted smaller entrepreneurial brewers
and for having discerning customers
ready to discover them.
We are delighted to have extended
our partnership with Berkmann Wine
Cellars, our sole wine and spirits
supplier. During the past two years,
we’ve benefitted from their expertise, a
wider range of new world wines and a
more engaged workforce through the
jointly run “Grape Masters” programme.
Our customers have, in turn, enjoyed
the journey from traditional house wines
to more complex grape varieties, most
recently the rosé revolution.
Spirit sales continued their resurgence,
with volumes up 5.4%. Gin sales have
once again grown at over 20%, with
continued ‘premiumisation’ and new
craft gins coming to market.
“Cucumber currency” created a social
media buzz which saw us working
together with Hendricks and Schweppes
to celebrate the start of spring by
offering a G&T to customers in
exchange for one thing and one thing
only: a cucumber. This fun initiative was
well received by our vegetable-bearing
customers and the 3,416 cucumbers we
collected were donated to food banks
the following day.
This was the year of the cocktail at
Young’s, in fact the year of the ‘Cocktail
Collective’, with astonishing sales growth
of 46.1%, albeit from a low base.
Leading the Collective, which focusses
on the quality, not quantity, of cocktails
and the perfect serve every time, has
been Aperol Spritz, which has seen a
boom of 88.9%.
While others have faltered in the current
highly-competitive eating-out market, our
food sales remain robust. Sales were up
4.9% in total and up 2.6% on a like-for-
like basis, driven in particular by good
growth in our all-day brunch offer, our
Sunday lunches and our Burger Shack
concept which is now across 35 sites.
All our pubs relaunched their individual
food menus to attract different audiences
at different times, but with Britishness,
seasonal and fresh produce at the heart
of each dish. Our Burger Shack offering,
including its little sister, ‘Shack-in-a-Box’,
benefitted from the additional openings
made last year and is now gaining
industry accreditation, with one of our
five burger offerings, “The Streaky”,
being a finalist at the 2017 National
Burger Awards.
These initiatives in food and drink
combine with an innovative approach
to create enhanced sales, for example
during the winter, sitting just 27 metres
above sea level, the Devonshire (Balham)
invited customers to join them at the
“Balham Peaks” après ski pop up resort.
Customers were treated to cosy cabins,
Winter Negronis and traditional proper
pub grub.
Our hotel business continues to flourish,
with sales up 4.7% on a like-for-like
basis. Occupancy rates were 74.7%,
down by 0.2% on the previous year, but
RevPAR increased by £2.29 or 3.8%
to £63.15. Just before the year-end, we
completed on two exciting acquisitions
that represent a real step change in our
hotel portfolio: the Park (Teddington)
and the Bridge (Chertsey) have together
increased our room stock by 94 rooms
or 19.3%.
Despite unfavourable cost headwinds such
as the significant hike in business rates,
the second instalment of the National
Living Wage and the introduction of
the Apprenticeship Levy, which in total
added over £4.0 million to our cost base,
managed house adjusted operating profit
grew by 3.9% to £60.7 million.
INVESTMENT
During the year, we undertook some
major purchases, openings and
transfers, all of which are unique in their
own way yet still at the premium end of
the market. The highlights include:
• Purchasing Smiths of Smithfield
(Smithfield Market) which, following
its major refurbishment in April
2018, is looking better than ever and
is now our largest site by average
weekly turnover;
• Relaunching and renaming the
previous Smiths of Smithfield site at
Cannon Street as the Candlemaker;
• Taking the Young’s brand to new
suburbs for our managed houses
by opening the Bull (Bracknell) and
acquiring the Park (Teddington);
• Shifting our revenue mix by
increasing our hotel presence
through the Park and the Bridge
(Chertsey), both freeholds;
• Capitalising on some of the growth
opportunities that exist within our
Ram Pub Company by transferring
the Hope and Anchor (Brixton),
King’s Arms (Wandsworth) and the
Lord Palmerston (Tufnell Park) to our
managed house estate; and
• Acquiring the Chequers (Hanham
Mills), a beautiful freehold pub on
the banks of the river Avon.
A common theme in all these
acquisitions is their superb locations
which remains a fundamental factor in
our investment decisions.
During the course of the year,
including acquisitions, we invested
£46.3 million in our managed estate.
Major development work was
carried out at the Alexander Pope
(Twickenham), Betjeman Arms (St.
Pancras), Brewers Inn (Wandsworth),
Duke of Clarence (Chelsea), Duke’s
Head (Putney), Elgin (Ladbroke
Grove), Mitre (Bayswater), Old Ship
(Hammersmith), Oyster Shed (Cannon
Street), Plough (Beddington) and the
Princess of Wales (Clapton). The fresh
botanical feel and “Juniper Terrace”
rooftop bar at the Spotted Horse
(Putney) is proving a triumph with its
customers and was a finalist in the Casual
Dining Awards 2018 for ‘Best Designed
Pub’ of the year. We also secured the
freehold of the Phoenix (Chelsea), a pub
that we previously leased.
CUSTOMER ENGAGEMENT
With two thirds of the UK population
owning a smartphone and almost 80%
now buying goods or services online,
today’s consumers want seamless
interaction with technology that gives
them a wide range of choices while still
remaining in complete control of their
own experiences.
With customer aspirations at the
forefront of our minds, the next stop
on our digital journey has been to
invest in a new enhanced till system.
In March 2018, we launched our first
pilot sites on this more interactive,
intuitive system with an infrastructure
that connects with multiple third
party platforms, reflecting our belief
that trading is only likely to become
ever more based on technology.
Young’s On Tap, our mobile app,
has been available for download for
just over a year and I am pleased
with the progress we’ve made. We’ve
had over 70,000 downloads and our
“Appbassadors” continue to promote
usage and uptake. When the new
till system is fully up and running,
Young’s On Tap will, in time, go
to the next level, adding more
content and functionality through
online ordering, enhanced booking
capability and tailored customer
rewards.
All our pubs use a range of social
media platforms to engage with our
customers through their favoured
medium. A great example is this year’s
#scotcheggchallenge (which was a
cracking success in its own right) – we
reached over 1 million tweets, viewed
more than 3.5 million times.
Delivering the ultimate pub experience
to our customers every time they visit
us is at the core of everything we
do. Our team members, supported
through hours of focussed training, live
the golden rules of service, built on the
value of team work.
Strategic report
Directors’ report
Financial statements
Shareholder information
THE RAM PUB COMPANY
During the year we transferred three
high turnover pubs to managed
houses to maximise their potential:
the Hope and Anchor (Brixton), the
King’s Arms (Wandsworth) and the
Lord Palmerston (Tufnell Park). Further
transfer opportunities exist within the
Ram Pub Company which we will look
to harvest when the time is right for
both us and our tenants.
We sold three pubs at the tail of the
estate for combined proceeds of £2.1
million: the Bell (Illminster), Court
House (Dartford) and the King’s
Arms (Epsom). In February 2018, we
acquired the Old Bear (Cobham), an
attractive 16th century pub situated in
the heart of an affluent Surrey town.
As a result of the above movements,
the Ram Pub Company ended the
year with 74 pubs, down from 79
in the previous year.
REVENUE AND PROFITS
In total, revenue within the Ram
Pub Company was down 6.7% on a
comparable 52 week basis which is
broadly in line with the net reduction in
pubs. However, on a like-for-like basis,
revenue growth was up a healthy 1.6%.
We offer a range of tenancy packages
that differ in terms such as length of
lease and financial support. This year,
we’ve increased that support to a
number of tenants, in turn reducing our
tenanted operating margins but with a
view to igniting volume growth.
On a like-for-like basis, adjusted
operating profit was flat at £4.4 million.
Our average pub EBITDA was £80.8k
(2017: £80.8k), one of the highest
in the sector.
The Ram Pub Company now represents
4.5% of our total revenue and 6.8% of
adjusted operating profit at a pub level.
INVESTMENT
We welcomed the Old Bear (Cobham)
and its tenant into the Ram Pub
Company flock following the purchase
of this freehold pub. Within our
existing estate, we follow a structured
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YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
BUSINESS AND FINANCIAL REVIEW
Continued
APPRENTICESHIPS
This year we began our internal apprenticeship programme, focussing on chef career development. Helping some of our most
promising team members perfect their skills whilst they continue to surprise and delight our customers.
Louanas
Sous chef
Hare and Hounds (East Sheen)
“The Young’s apprenticeship programme allows me to
improve my knowledge about cooking and food presentation.
I enjoy learning within a team and my aim is to one day
become a head chef and run my own kitchen in one of
Young’s pubs.”
Janek
Junior sous chef
Wheatsheaf (Borough Market)
“My favourite aspect of the Young’s apprenticeship
programme is the structure of my training. Each session
we start by making a plan and then follow this with
practical tasks. It allows me to improve my knowledge
about different ingredients and their seasonality.”
Przemek
Kitchen team member
Founder’s Arms (Southwark)
“What I like most about the Young’s Commis Chef
programme is the opportunity to learn new skills and the
professional advice we receive from experienced chefs. My
goal is to become a sous chef and to provide strong support
to a head chef in the daily running of a kitchen.”
12
Malvina
Junior sous chef
Crown (Bow)
“I have always wanted to learn how to cook. When I saw an
advert for a trainee chef in one of Young’s pubs, I decided to
apply. After a few months of working here, I was encouraged
to join the Young’s training programme and it has given me
confidence to apply for a more challenging role at the Crown.”
and viable investment programme
to ensure that each tenanted pub is
maintained at an attractive standard
to appeal to customers, current tenants
and future business partners.
In the past year we’ve completed
major developments at the Bristol
Ram, Gardeners (Wandsworth), Grand
Junction Arms (Harlesden), Grove
House (Camberwell), Heartbreakers
(Southampton), Prince William Henry
(Southwark), Red Cow (Richmond) and
the Robin Hood (Sutton).
TENANT ENGAGEMENT
Our tenanted model is focussed upon
developing and maintaining businesses
that offer a sustainable income for
individual tenants and sustainable
profits for Young’s. It’s a partnership
built on trust and a common goal.
Industry codes of practice mean that
rents can move down as well as up. Our
entrepreneurial tenants, supported by
our own experienced in-house team,
continue to operate bespoke offerings,
tailored to attract customers in the
communities they serve under the
strapline “Everyone’s local”.
PROPERTY, TREASURY,
GOING CONCERN,
RETIREMENT BENEFITS,
EXCEPTIONAL ITEMS
AND TAX
PROPERTY
Our balance sheet strength is
underpinned by our predominantly
freehold estate in many highly
desirable locations. 213 of our total
255 pubs are freehold or long
leaseholds with peppercorn rents.
Our total estate is now valued at
£742.9 million (2017: £689.1 million).
The increased value has been driven
by acquisitions, major developments
and improving existing pub values,
especially in our London heartland,
assisted by our improving trade.
Each year we undertake an exercise
to revalue our pub estate to reflect
current market values. Savills, an
independent and leading commercial
property adviser, revalued 20% of our
estate, while an internal review of the
remaining 80% was led by Andrew
Cox, MRICS, our Director of Property
and Tenancies. The valuation method
used a number of inputs of which the
sustainable level of trade of each pub
is key. In accordance with International
Financial Reporting Standards,
individual increases in value have been
reflected in the revaluation reserve
in the balance sheet (except to the
extent that they had previously been
revalued downwards) and individual
falls in value below depreciated cost
have been accounted for through
the income statement. None of these
adjustments have a cash impact.
The pub property market in London
and the surrounding areas has
remained strong throughout the
period, which, coupled with our
continued trading performance, has
resulted in a net upward revaluation
movement of £29.5 million (2017:
£22.6 million). This is comprised of an
upward movement of £29.2 million
(2017: £23.1 million) reflected in the
revaluation reserve and a reversal
of a previously revalued downward
movement of £0.3 million (2017:
£0.5 million of downward movement)
recognised in the income statement
under exceptional items.
TREASURY
We remain highly cash generative.
Our operating cash flow was £61.4
million (2017: £63.5 million) with our
premium business and predominantly
freehold estate outperforming the market.
The slight decrease of £2.1 million in
the period was caused by an adverse
movement in working capital.
Due to the increased acquisition activity
and the larger purchases all falling in the
second half of the year, our net debt has
increased by £13.9 million to £140.5
million. Despite this increased outlay, our
net debt to adjusted EBITDA ratio remains
conservative and one of the lowest in
the sector at 2.0 times (2017: 1.9 times).
Gearing is just 25.6% (2017: 25.7%).
GOING CONCERN
Our total facilities remain at £175
million, with nothing now repayable
until 2021. Of our drawn debt, 71.2%
is on fixed interest rates.
Strategic report
Directors’ report
Financial statements
Shareholder information
During the year, we refinanced a
number of our banking facilities and
effectively extended their terms. In
May 2017, we borrowed £20 million
over a seven year period (£10 million
from each of Barclays Bank plc and,
a new lender to us, HSBC Bank plc)
to enable an equivalent sum to be
repaid to the Royal Bank of Scotland
plc. In March 2018, we entered into
a £75 million revolving credit facility
split evenly with Barclays and HSBC
until 2023, with an option to extend
through to 2025, to replace the
previous equivalent sum revolving
credit facility with RBS and Barclays.
Given these long-term facilities, our
freehold estate, significant free cash
flow and the conservative financial
ratios above, we have prepared
these financial statements on a going
concern basis.
RETIREMENT BENEFITS
We have a defined benefit pension
scheme which has been closed to
new entrants since 2003. During
the course of the year, our pension
and post retirement health care
deficit has reduced by £6.7 million
to £6.1 million. Compared with last
year, we have witnessed a slight
decrease in inflation and continued
our commitment with another
year of special contributions, this
time totalling £1.2 million. We are
committed to ensuring the pension
scheme is adequately funded.
EXCEPTIONAL ITEMS
The majority of the £3.4 million
exceptional items expenditure in the
period relates to investment decisions
to bring three tenanted pubs into our
managed house estate and to acquire
new businesses such as Smiths of
Smithfield, the Park (Teddington) and
the Bridge (Chertsey). Acquisition costs
associated with business combinations
have gone up as a result of increased
activity this year: £1.2 million (2017:
£0.2 million).
From time to time, we believe that
we can achieve greater shareholder
returns within our managed estate for
certain pubs than within the Ram Pub
Company. When this happens, and
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YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
BUSINESS AND FINANCIAL REVIEW
Continued
The group’s tax strategy has been
published on the Young’s website in
accordance with recent UK tax law.
SHAREHOLDER RETURNS
Having started life in 1831, Young’s is
a long-standing business and we are
determined to continue our long-term,
sustainable growth story. We continue
to deliver strong performances from
our developments, focussing on both
immediate and maintainable gains.
Our strong and sustainable cash
flows support our acquisition and
development programs to maintain
our pubs at the premium end of the
market, maximise future returns,
maintain net debt at acceptable levels
and to continue our proud record
of consecutive dividend increases.
This year, we are pleased to
recommend raising the annual
dividend for the 21st consecutive
year, by 6.0% again, to 10.20 pence.
If approved by shareholders, this
represents a total dividend for the year
of 19.61 pence (2017: 18.50 pence),
representing a real income increase
from Young’s shares.
Our adjusted earnings per share
now stands at 67.74 pence per share,
up 2.0%. On an unadjusted basis,
earnings per share rose by 0.1% to
61.60 pence. These earnings per share
figures result in a healthy dividend
cover of 3.5 times and 3.1 times
respectively.
OUTLOOK
We have certainly enjoyed a couple of
very warm and sunny weeks recently.
The first May Day Bank Holiday was a
record breaker for many of our garden
and riverside pubs. A welcome boost
at the start of the new financial year,
when we are up against very strong
comparatives in the previous year.
Managed houses revenue in the first
seven weeks was up 11.0% in total and
up 7.5% on a like-for-like basis.
British consumers have had a tough
time of late. However, things are slowly
beginning to look a little brighter
with real wages now increasing,
the rate of inflation decreasing and
unemployment continuing to fall.
when the time is right for our tenants
and us, we agree with the tenant the
amount of any compensation payable
to terminate their lease agreements
early. This compensation is expensed
under IFRS and has been included
within exceptional items.
The remaining exceptional items
relate to a net increase in the property
valuation of our estate of £0.3 million,
as mentioned previously, along with a
profit on disposal of a small number
of tenanted pubs of £0.3 million.
Last year’s exceptional items included
a £0.7 million loss flowing from the
expiry of our leases at Heathrow for
the Three Bells and the Five Tuns, with
the majority reflecting the write-off
of goodwill recognised on the initial
acquisition of Geronimo in
December 2010.
TAX
Our corporation tax charge for the
year was £7.5 million (2017: £7.0
million), with a fall of 0.5% pts in our
effective corporation tax rate for the
year, adjusted for exceptional items,
to 19.3% mainly due to the decrease
in the headline UK corporation tax
rate to 19.0%.
14
Strategic report
Directors’ report
Financial statements
Shareholder information
Our pub individuality, alongside our
ability to give our talented general
managers the freedom and flexibility
to continue to innovate, is paramount
to our continued success. Each
general manager shares the belief
of making their pub “famous for”
whatever the community they serve
requires, whether it be fabulous fish at
the Crown and Anchor (Chichester),
award-winning steaks at the Guinea
(Mayfair) or continuing an association
with a charity walk launched in 1979
by a trio of regulars at the Nightingale
(Wandsworth).
This coming year, we face the second
consecutive business rates increase,
this time c. £1.6 million (2018: £1.8
million). Although we welcomed the
Chancellor’s announcement in the
spring statement to bring forward
the next rates valuation, we were
disappointed that it didn’t go far
enough to modernise the method
of calculating business rates in this
growing digital age.
Against cost pressures, we’re confident
that the investments we’ve made
during the past year will continue to
propel us forward. Our investment
in our new till technology will create
further opportunities and bring
productivity gains while our structured
and sustainable investment programme
and acquisitions will bear fruit in the
coming year when we will see the full
year benefit of Smiths of Smithfield
(Smithfield Market) and the recently
renamed Candlemaker (Cannon
Street). We’ll also benefit from a full
year of the three transfers made last
year from the Ram Pub Company into
managed houses.
We still have plenty of opportunities
to invest in our existing estate and we
will also start to see a good return from
the recently acquired Park (Teddington)
and Bridge (Chertsey). Our new pub
the Naturalist (Woodberry Down) also
opens its doors later in the year.
We are active in the acquisition market.
Whilst we have the necessary firepower
thanks to our robust balance sheet,
our strict internal investment criteria
remain: for us it’s about quality. We
believe plenty of opportunities exist in
our sector.
Although uncertainty prevails in
both the political and economic
environment, we are confident that
our strategy of running differentiated
well-invested, individual, premium
pubs in high-demand locations
will continue to deliver superior
shareholder returns. By remaining
flexible in our offer and investing in
our people and technology, we will
also continue to deliver outstanding
customer service. Together, these
create a recipe where the traditional
British pub will never go out of
fashion. As a result, I’m both excited
and optimistic about the year ahead.
On behalf of the board
Patrick Dardis
Chief Executive
23 May 2018
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YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
CORPORATE SOCIAL RESPONSIBILITY
Our pubs play an integral role in their individual neighbourhoods. Together, we put great
emphasis on running a sustainable business that engages with our communities, employees
and shareholders alike, creating a mutually beneficial culture.
In addition to the apprenticeship
programme, our trainers have delivered
over 30,000 hours of training to our
staff through bespoke development
programmes via initiatives such as
our Management Academy and Chef
Career Pathway.
The Management Academy sets our
future managers up for success and
we’re very proud of the fact that over two
thirds of our general manager vacancies
are filled with internal candidates.
The Chef Career Pathway nurtures our
most talented kitchen staff through a
variety of different roles so they can one
day run their own kitchens as a Young’s
head chef. One of the many successes
of the pathway is Bela who joined the
programme two years ago and is now
the head chef at one of our largest sales
pubs, the Founder’s Arms (Southwark).
We believe that as a robust and
successful business we must have
a strong pipeline of talent, a strategy
which is illustrated by our continued
promotion from within, even at the
more senior positions.
In 2016 we welcomed Steven Robinson
and Tracy Read to our board having
previously built up their experience
working for Young’s across a number of
positions. In 2017, this organic growth
continued with Peter Taylor taking
the reins as Head of Operations and
Mark Loughborough and Trish Moody
being promoted to Directors of Retail
Operations, having both been successful
Operations Managers.
Externally, we recruit people from
different backgrounds and, where
possible, give others a chance to rebuild.
This year we’ve been working with
“Only a Pavement Away”, in partnership
with Crisis, to help provide those made
homeless or in danger of homelessness
with jobs in the sector to help tackle the
problem of sleeping rough.
OUR PEOPLE
The pub business is a people
business; our talented teams bring our
pubs to life and create the experiences
and atmosphere that our customers
enjoy. We have always believed that
people are our greatest asset and
how we engage, interact with and
develop them is crucial in delivering
our winning strategy. Just like our
pubs, our people are very diverse; we
currently employ 4,273 (2017: 3,854)
people and each individual has their
own development plan to help them
achieve their full potential.
We were delighted to gain “employer
provider” status for apprenticeships
programmes during the year. We’ve
always invested heavily in training
our staff but having this formally
recognised allows us to draw down
on the funds created by last year’s
introduction of the Apprenticeship
Levy and grow our own talent
pool further through the Young’s
apprenticeship programme.
One part of the Young’s apprenticeship
programme includes an 18 month
commitment focussing on progressing
kitchen porters through to chefs. Our
dedicated training teams launched
the first apprenticeship programme in
September 2017 and the second cohort
will go live later this summer.
16
Strategic report
Directors’ report
Financial statements
Shareholder information
OUR ENVIRONMENT
We are proud to announce that this
year we achieved zero waste to landfill,
as well as increasing the amount we
recycle to 6,830 tonnes of waste (2017:
6,768 tonnes). Running a sustainable
business and reducing our carbon
footprint is important to us and we explore
energy saving technologies during the
refurbishment of each pub we undertake.
This year, we’ve reduced our CO2
consumption by over 1,250,000kg as a
result of our continued investment – the
equivalent of planting over 5,500 trees.
We remain an active member of the
Sustainable Restaurant Association
and this year the key focus of our
food strategy was to increase our use
of locally grown, seasonal products to
reduce further our carbon footprint. The
best British produce, such as fresh fish
from Brixham in Devon or asparagus
cut in the fields of Markham Farm in
Bicester, Oxfordshire, take pride of place
on our individual pub menus.
We took 180 chefs on our “inspirational
visits” trips this year; trips designed to
give our chefs the true ‘field to fork’
experience. They learn how British
seasonal produce may be caught,
reared or grown and what makes these
particular farms produce the best. This
reinforces our food strategy of bringing
more locally grown, seasonal products to
our menus.
Finally, we replaced all existing plastic
straws with a bio-degradable alternative
in the year. However, this represents only
a proportion of plastic used in our pubs
so we are working with our suppliers to
review other changes that can be made
elsewhere in our supply chains.
Our 2018 Strategic Report, from
pages 1 to 17, has been reviewed
and approved by the Board of
Directors on 23 May 2018.
Patrick Dardis
Chief Executive
23 May 2018
17
OUR COMMUNITY
Our pubs play an important role
in the communities in which they
reside and we are very proud to be
widely recognised as a responsible
business. Our pubs have always taken
the initiative to give something back,
actively contributing to helping others,
whether that is financially or through
time and energy.
Probably the most touching story was
when our general managers, Mick and
Sarah at the Alexandra in Wimbledon
Village, opened their doors for a free
lunch and a drink to anyone alone on
Christmas Day last year.
Their idea of tackling loneliness
has been such a success that they
have built on this with a new
“Meet up Mondays” event, which
provides complimentary games and
refreshments for local retirees in the
Wimbledon area each week.
Both Mick and Sarah were also at the
centre of a social media campaign
which reunited a builder with his
pay packet after it was left in the pub
before Christmas. In the six days
between one of their team finding the
pay packet and reuniting it with its
rightful owner, the story was shared
on Facebook over 1.5 million times
and had been seen by over 3 million
Twitter users.
Since 2012 Young’s has partnered
with the halow project, an initiative
dedicated to supporting young people
aged 16-35 with learning disabilities.
Over the years, many employees
throughout our organisation have
completed the epic challenge which
sees riders embark on a 250 mile bike
ride to France and back, helping
to raise over £350,000 for this
wonderful charity.
In line with the Government’s attempts
to combat rising levels of obesity in the
UK with the introduction of the sugar
tax, we’ve worked with our soft drink
suppliers to ensure low and zero sugar
alternatives are readily available, whilst
maintaining the choice of original
recipe alternatives. We estimate our
customers could reduce their annual
total sugar consumption by up to 41
tonnes by switching to Coca Cola Zero
Sugar on draught soft drinks.
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
DIRECTORS’ REPORT
For the 52 weeks ended 2 April 2018
Welcome to our board of directors. Apart from Ian McHoul (who joined the board on 24 January 2018),
all served throughout the period. No other person was a director during the period.
IM
NM
RL
SG
PD
SR
TC
TSY
TR
Stephen Goodyear
NON-EXECUTIVE CHAIRMAN
A
Patrick Dardis
CHIEF EXECUTIVE
E
D
Steven Robinson, FCA
CHIEF FINANCIAL OFFICER
E
D
Commenced role
April 2017 (appointed to the board in February 1996)
Commenced role
July 2016 (appointed to the board in July 2003)
Commenced role
September 2016
Skills and experience
Stephen has a considerable knowledge of, and
passion for, Young’s and the industry. He began
his career with Courage Ltd in 1974 and joined
Young’s in 1995. In 2003, he became chief
executive and oversaw the sale of the Ram Brewery,
the creation of the tenanted Ram Pub Company
and the transformation of Young’s into a premium
managed house business. The latter involved the
acquisition of Geronimo Inns at the end of 2010
and the creation of a growing hotels operation. In
2016, Stephen stepped down as chief executive and
became a non-executive director. In 2013, he was
also the Master of the Brewers’ Company. Stephen
is approachable, measured, calm and influential, and
provides invaluable support to the chief executive.
As chairman, he is impartial and objective and
encourages open and constructive debate.
Skills and experience
With over 35 years’ experience working in the
pub and brewing industry, Patrick has extensive
knowledge and experience of the sector. Before
joining Young’s in 2002, he held various roles at
Wolverhampton & Dudley Breweries PLC (now
Marston’s PLC), Guinness Brewing, Whitbread PLC
and Courage Ltd. Over his time as retail director at
Young’s (2003-16), he developed his leadership skills
further and was instrumental in making Young’s
the premium managed house operation it is today.
Patrick is a council member of the British Beer
and Pub Association and an executive committee
member of the IFBB (see below). He understands
the Young’s business inside out, is well-known and
very well respected both within Young’s and the
industry. Patrick brings unrivalled passion, drive
and commitment to the role.
Other relevant external appointments
The Independent Family Brewers of Britain (director)
Skills and experience
As the chief financial officer, Steve combines
strong commercial and operational leadership
with an intimate knowledge of our business
and industry and therefore its challenges and
opportunities. He 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 in 2009, he held a number of finance
roles at The Walt Disney Company (2004-09).
Steve is strategic, proactive, analytical and team
oriented. He is responsible for the group’s financial
strategy and stewardship, including forecasting,
reporting, tax, treasury, and risk management.
18
Strategic report
Directors’ report
Financial statements
Shareholder information
Roger Lambert
NON-EXECUTIVE AND
SENIOR INDEPENDENT
A R
Commenced role
August 2008 (becoming senior independent
in July 2011)
Skills and experience
Roger is a Partner at Peel Hunt LLP (see below)
(2017 to date). He was previously Chairman of
Corporate Broking at Canaccord Genuity (2010-16)
and a member of the corporate finance team at J.P.
Morgan Cazenove (1982-2008), most recently as
a senior managing director covering the consumer
sector. He started in 1982 as an analyst covering
the brewing and pubs sector before moving into
corporate finance where he has advised more
than 25 companies in the sector. Roger has a
wealth of relevant expertise in capital markets
and brewing, drinks and hospitality. He brings
gravitas to the senior independent role, along with
financial astuteness to his chairmanship of the audit
committee and strength of personality and charisma
to his non-executive position.
Other relevant external appointments
Peel Hunt LLP (partner) – corporate broking,
advisory and trading house focussing on mid
and small-cap companies
Torquil Sligo-Young
INFORMATION RESOURCES
E D
Commenced role
January 1997
Tracy Read
PEOPLE
E D
Commenced role
September 2016
Skills and experience
Tracy has overall responsibility for people matters,
including personnel, training and development. She
joined Young’s in January 2015; before that, during
eight years at The Orchid Group, another pub
company, she held a number of roles, most recently
Head of People. Tracy is experienced in delivering
training and development programmes to support
the company’s strategy and help ensure the business
has the right people and culture throughout it. She
has a clear understanding of the group’s premium-
led strategy and her focus is on what is required to
deliver that from a people perspective, remaining
ever mindful of equality and gender diversity. Tracy
leads by example, is a team player, communicates
well and, as one would expect of someone holding
her position, is very approachable and discreet.
Other relevant external appointments
Hospitality Apprenticeship Board (member)
Skills and experience
Torquil joined in 1985 and has held various positions
in Young’s. With his broad experience, he has
overall responsibility for the group’s technological
needs and for health and safety – here, he delegates
to experienced internal and external teams and
oversees management of these areas. He heads up
the in-house corporate social responsibility team and
is chairman of a charitable trust set up by William
Allen Young, a founder of the business. These
latter two positions have seen a furthering of the
company’s relationship with the local community and
various charities. Due to his length of service and
knowledge of Young’s, he is chairman of Young’s
Pension Trustees Limited (see below). Torquil brings
a calmness to his position and, being a member of
the founding family, he helps the company keep in
touch with family shareholders.
Other relevant external appointments
The Aldenham Foundation (director) – a trustee of
charities engaged in secondary, primary and nursery
education
Friends of Holy Cross Hospital (chairman of the
trustees) – supports the work of the hospital
William Allen Young Charitable Trust (chairman
of the trustees)
Young’s Pension Trustees Limited (chairman) – the
trustee company that manages the Young & Co.’s
Brewery, P.L.C. Pension Scheme
Trish Corzine
NON-EXECUTIVE
A R
Commenced role
January 2015
Nick Miller
NON-EXECUTIVE
Commenced role
April 2017
A R
Ian McHoul
NON-EXECUTIVE
A
Commenced role
January 2018
Skills and experience
With the majority of her career in the restaurant
industry, Trish brings to the board more detailed
knowledge and understanding of this part of the
hospitality and leisure sector. This experience was
gained primarily at The Restaurant Group plc where
she spent 20 years, nine as an executive director
responsible for their concessions business. She is
commercially aware and understands the inner
workings and challenges of running restaurants
and food operations.
Skills and experience
Nick has a wealth of industry experience in
hospitality, leisure and brewing. Most recently, he
was the CEO of Meantime Brewing Company (2011-
16) and before that he was the MD of Miller Brands,
the UK arm of SAB Miller, the multinational brewing
and beverage company. Nick has an excellent
reputation in our industry. He is a particularly
perceptive businessman, with significant experience
and demonstrable career success at both Meantime
and SAB Miller. With this background, he is able and
prepared to challenge the executive. He has brought
a strong and valuable external perspective to the
board. With his recent executive experience, strength
of character and willingness and ability to engage, he
is well placed to lead the remuneration committee.
Other relevant external appointments
Hogs Back Brewery Limited (director)
– a Surrey-based brewer
Higsons 1780 Limited (observer and consultant)
– a Liverpool-based brewer
Skills and experience
Ian is a chartered accountant and an experienced
non-executive director: Premier Foods plc (2004-
13), Britvic Plc (2014 to date, appointed as senior
independent director in 2017), John Wood Group
plc (2017-18) and Bellway Plc (2018 to date). Most
recently, Ian was the chief financial officer of Amec
Foster Wheeler plc (2008-17) (having also been the
interim CEO there) and before then was involved in
the brewing and licensed retail industry in a variety
of positions (1985-2008). With his considerable
experience, his contribution both in and outside of
board meetings is insightful. At a personal level, his
ability to listen, build trust and encourage means
he is able to act as a mentor to others, especially
Steve Robinson.
Other relevant external appointments
Bellway Plc (director) – a major listed UK residential
property developer based in Newcastle upon Tyne
Britvic Plc (director) – a major listed UK producer of
soft drinks based in Hemel Hempstead
Committee membership
E
A
R
D
Executive committee
Audit committee
Remuneration committee
Disclosure committee
Chair of committee
19
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
DIRECTORS’ REPORT
Continued
Directors’ interests in the company’s share capital
Set out below are the interests in the company’s share capital of the directors who held office at the end of the period and
of the persons closely associated with them (as defined in the Market Abuse Regulation). These interests are in addition to
those shown in note 8(e) on page 54.
Stephen Goodyear (i), (ii)
Patrick Dardis (i), (ii)
Steven Robinson (i)
Torquil Sligo-Young (i), (ii), (iii)
Tracy Read (i)
Roger Lambert
Trish Corzine
Nick Miller (iv)
Ian McHoul (iv)
Beneficial
Beneficial
Beneficial
Beneficial
Trustee
Beneficial
Beneficial
Beneficial
As at
2 April 2018
3 April 2017
2 April 2018
3 April 2017
2 April 2018
3 April 2017
2 April 2018
3 April 2017
2 April 2018
3 April 2017
2 April 2018
3 April 2017
2 April 2018
3 April 2017
2 April 2018
3 April 2017
A shares
224,001
240,930
82,772
79,195
30,569
20,620
301,980
305,016
4,154,340
4,154,340
2,579
–
5,250
5,250
1,000
1,000
Beneficial
2 April 2018
55,000
Beneficial
2 April 2018
–
Non-voting
shares
–
–
–
–
–
–
–
–
649,914
649,914
–
–
5,000
5,000
5,000
5,000
–
–
(i) Also interested in 7,345 (2017: 66,991) A shares held in trust by RBT II Trustees Limited – see note 29 on page 74.
(ii) Also interested in 337,067 (2017: 337,067) A shares held in trust by Young’s Pension Trustees Limited – see note 29 on page 74.
(iii) Torquil and various members of his immediate family are discretionary beneficiaries under trusts holding 836,368 (2017: 836,368) of the A shares
and 553,866 (2017: 553,866) of the non-voting shares in respect of which Torquil Sligo-Young is shown as trustee in the above table.
(iv) No comparative numbers are shown for Nick or Ian as they were not directors as at 3 April 2017.
Profit and dividends
The profit for the period attributable to shareholders was £30.1 million. The directors recommend a final dividend for the period
of 10.20 pence per share (which, subject to approval at the AGM, is expected to be paid on 12 July 2018 to shareholders on the
register at the close of business on 8 June 2018). When added to the interim dividend of 9.41 pence per share paid in December
2017, this would produce a total dividend for the period of 19.61 pence per share.
Disclosure of information to the auditor
Each of the directors shown on pages 18 and 19 confirms that so far as he or she is aware, there is no information needed by the
company’s auditor in connection with preparing its report of which the company’s auditor is unaware. Further, each of them confirms
that he or she has 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 is aware of it. This paragraph is to be interpreted in accordance with section
418 of the Companies Act 2006.
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 is also in force at the date of this report; this
benefits, amongst others, the executive directors and Stephen Goodyear, and relates to certain losses and liabilities which they may incur
in connection with certain property-related matters.
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 17) 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.
Donations
No political donations were made.
Financial instruments and related matters
Included in note 23 on page 64 are the group’s financial risk management objectives and policies and an indication of the group’s
exposure to certain risks.
20
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 the company’s 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 the start of the period to join the group’s savings-related share option
scheme for 2017. 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 1,066 pence per share, being a discount of just under 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.
Corporate governance
The group’s report on corporate governance is set out on pages 22 to 34. That report forms part of this report and is
incorporated by reference.
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.
AGM
Notice convening the AGM and an explanation of the resolutions being proposed are set out on pages 77 to 81.
Notifications of major holdings of voting rights
As at 2 April 2018 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
Canaccord Genuity Group Inc.
Lindsell Train Limited
BlackRock Investment Management (UK) Ltd
Helena Young
14.82%
13.81%
11.70%
6.04%
5.55%
5.28%
<5.00%
3.12%
On 20 April 2018, James Young notified the company that his holding had then changed to 12.99%. No other changes in the
above holdings, and no other holdings of 3% or more of the voting rights in the company, had been notified to the company
between 3 April 2018 and 20 May 2018, 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 judgements
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.
Preparation and disclaimer
This annual report, together with the strategic report (on pages 1 to 17) and the financial statements for the period ended
2 April 2018 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 RO E D E R
Company Secretary
23 May 2018
21
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
CORPORATE GOVERNANCE REPORT
We firmly believe that by encouraging the
right way of thinking and behaving across all
our people, our corporate governance culture
is reinforced, enabling us to conduct business
sustainably and responsibly, drive our premium,
customer-focussed, people-led strategy and
deliver value for our shareholders.
Stephen Goodyear, Chairman
Dear fellow shareholder,
I am incredibly proud to have been part of the Young’s
story for many years now. Its success has not come without
its challenges and has been against a continually changing
political, legal and regulatory backdrop. A constant, however,
has been the need to adapt and for the governance
infrastructure that supports our business to evolve accordingly.
Back in 2005
Those, like me, who were shareholders back in 2005 may
well remember that Young’s moved from the Official List to
AIM in July of that year. As a result, and as was explained
at the time, the Combined Code (now known as the UK
Corporate Governance Code) ceased to apply directly to us;
no equivalent requirement applied to companies on AIM.
The Combined Code set out standards of good practice for
listed companies on board composition and development,
remuneration, shareholder relations, accountability and audit.
Despite the Combined Code no longer applying to us, the
board remained committed to good corporate governance
in the management and operation of the group’s business;
it continued the good habits instilled from our time on
the Official List and chose to use as a guide the Quoted
Companies Alliance Corporate Governance Code for Small
and Mid-Size Quoted Companies 2013 (the “QCA Code”). It
was felt that this was appropriate as the QCA Code adopted
key elements of the UK Corporate Governance Code, policy
initiatives and other relevant guidance and then applied those
to the needs and particular circumstances of small and mid-
size quoted companies on a public market.
Now
In March 2018, the London Stock Exchange introduced
a new rule applicable to Young’s as a company on AIM;
going forward, we will be required to apply a recognised
corporate governance code and will have to provide details
of it on our website and then explain how we comply with
that code and include reasons where we have departed
from it. This information is to be reviewed annually and our
website will need to include the date on which this was last
done. This rule takes effect from 28 September 2018.
Towards the end of April 2018, the Quoted Companies
Alliance released a new and fully updated QCA Corporate
Governance Code. As a board, we are currently considering
this and its impact on the group’s corporate governance
arrangements. We will confirm in due course, via disclosure
on our website, the code we decide to apply.
22
Ongoing
As Chairman, it remains my responsibility, working with my
fellow board colleagues, to ensure that good standards of
corporate governance are embraced throughout the group.
As a board, we set clear expectations concerning the group’s
culture, values and behaviours. By way of example, each
person starting at one of our pubs receives a training journal
designed to support them through their induction – this not
only covers our vision and values, but also explains how we
go about caring for our customers, right from their decision
to come to our pub through to a goodbye at the end of their
visit. This is so important if we are to develop our people to
delight our customers. The learnings from this four-week
induction programme then become instinctive over a member
of staff’s time with us. We firmly believe that by encouraging
the right way of thinking and behaving across all our people,
our corporate governance culture is reinforced, enabling us
to conduct business sustainably and responsibly, drive our
premium, customer-focussed, people-led strategy and deliver
value for our shareholders. Within this framework, those
managing our pubs are encouraged to be entrepreneurial,
supported by policies, processes and an extensive training
program. We accept that simply setting expectations is
insufficient and so the board understands how important it
is that it leads by example: it is therefore regularly seen out
and about engaging with staff, customers and others, and the
executive team, in particular, communicates regularly with
staff through meetings and messages and at events. Being
seen isn’t always good – sometimes, just fading into the
background with a pint (or two) of Young’s whilst observing
and listening can be really educational. Our relatively informal
approach here is supported by more formal processes, such
as a customer mystery diner program and staff appraisals.
Together, these lead the board to believe that the group has a
healthy corporate culture throughout the business.
Shareholder engagement
I am ever mindful of the need to ensure that we regularly
engage with you, our shareholders. On page 29 we’ve set
out what we do in this regard; the AGM is a key part of this
and I look forward to meeting with you at this year’s AGM
in Wandsworth on Tuesday, 10 July 2018.
Stephen Goodyear
Chairman
23 May 2018
Strategic report
Directors’ report
Financial statements
Shareholder information
Leadership
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 four further non-executive directors: Roger Lambert, Trish Corzine,
Nick Miller and Ian McHoul. Their skills and experience are summarised on pages 18 and 19.
The role of the board and its committees
The board
The board is collectively responsible for the success of the company and the business and management of
the group. Its role includes:
• approving the group’s long-term objectives, commercial strategy and annual budgets;
• approving acquisitions and disposals;
• 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.
The board governs through its executive management and via committees, the principal ones of which are
set out below.
Executive
committee
Audit
committee
Remuneration
committee
Disclosure
committee
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 staff invited
to attend as appropriate.
Its primary focus is on
corporate reporting (from
an external perspective)
and on monitoring the
company’s internal control
and risk management
systems (from an internal
perspective). Further
details on the committee’s
responsibilities and
activities are on pages
30 to 33.
Its primary function
is to determine, on
behalf of the board, the
remuneration packages
of the executive directors.
Further details on the
committee and the
company’s reward policy
are on page 34.
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.
Chairman:
Patrick Dardis
Other members:
Steven Robinson
Torquil Sligo-Young
Tracy Read
Chairman:
Roger Lambert
Other members:
Stephen Goodyear
Trish Corzine
Nick Miller
Ian McHoul
Chairman:
Nick Miller
Other members:
Roger Lambert
Trish Corzine
Chairman:
Steven Robinson
Other members:
Patrick Dardis
Torquil Sligo-Young
Tracy Read
The terms of reference for the audit, remuneration and disclosure committees can be found in the investors section of
www.youngs.co.uk.
23
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
CORPORATE GOVERNANCE REPORT
Continued
Board meetings and activities during the period
Meetings
The board meets every two months, with additional meetings arranged as required. It met 11 times during the period; this
included a strategy day held in the autumn. Most meetings take place at Riverside House; occasionally, they are held at
one of the group’s pubs, thus providing the board with further opportunities to keep up-to-date with the group’s business
and how particular pubs are performing.
A formal agenda, made up of regular and other specific business matters, and a supporting pack is provided to each
member of the board sufficiently in advance of each meeting to ensure there is time for these to be reviewed. The agendas
are prepared by the company secretary and agreed with the chairman and the chief executive.
Included in the pack for each of the board’s scheduled meetings is a report from the chief executive, a latest forecast,
a health and safety report, a people report, a property report and details of any material claims against the group. At
the meetings, the executive directors expand upon what is covered in their reports and the company secretary updates
the board on matters for which he is responsible. The chairmen of the company’s audit, remuneration and disclosure
committees also report formally at board meetings on the proceedings of their committees; with some exceptions on
remuneration matters, the minutes of those committee meetings are also circulated to members of the board.
Autumn strategy meeting
The board is joined by relevant departmental heads to discuss the group’s strategy. This in-depth day gives management
and the non-executives an opportunity to discuss a variety of matters. Once the strategy is agreed, management is
able to build the budgets for the following year and develop longer-term plans. The key matters covered at this year’s
strategy meeting were:
• a half-year trading update;
• the group’s long-term business plan;
• financing/debt options; and
• challenges and capacity for growth within the group’s current capital and operating structure.
From time to time, senior managers are invited to attend board meetings to provide updates on developments in their areas
of responsibility.
Open and constructive debate in meetings is always encouraged by the chairman and he ensures that matters are challenged
and discussed before any decision that needs to be made is made.
The ‘formal’ flow of information in board meetings is in addition to information exchanged outside of those meetings, often
in relation to ad hoc matters that need considering between meetings. The directors also receive, at least on a weekly basis, the
group’s sales numbers, and, on a monthly basis, a management accounts pack containing, amongst other things, a summary
of the group’s financial and non-financial performance, sales information for drink and food and the group’s financial position
and cash flow. There are also 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; this is set out in article 63 of the company’s
articles of association.
24
Strategic report
Directors’ report
Financial statements
Shareholder information
Matters reserved for the board
The board has a formal written schedule of matters reserved for its review and approval; this schedule includes those matters
described in The role of the board and its committees section on page 23 as well as those in the following table.
Category
Strategy and
management
Examples
Extension of the group’s activities into new business or geographic areas; cessation of the
operation of all or any material part of the group’s business.
Structure and capital
Changes relating to the group’s capital structure; major changes to the group’s corporate or
management and control structure; changes to the company’s listing or its status as a plc.
Financial reporting
and controls
Approval of the following: annual report and accounts, preliminary announcements of
results, significant changes in accounting policies or practices, treasury policies, certain
unbudgeted capital or operating expenditure; declaration or recommendation of
dividends; review and approval of expenditure authorisation limits.
Contracts
Contracts in the ordinary course of business material strategically or by reason of size;
contracts not in the ordinary course of business; major investments.
Communication
Approval of resolutions, circulars, prospectuses and press releases concerning matters
decided by the board.
Board membership
and other
appointments
Changes to the structure, size and composition of the board; ensuring adequate
succession planning for the board and senior management; board appointments; selection
of the chairman and the chief executive; appointment of the senior independent director;
membership and chairmanship of board committees; continuation in office of directors;
appointment or removal of the company secretary; appointment, reappointment or
removal of the external auditor to be put to shareholders for approval.
Remuneration
Approving the remuneration policy for the directors; determining the initial remuneration
of the non-executive directors; introduction of new share incentive plans or major changes
to existing plans.
Delegation of
authority
Division of responsibilities between the chairman and the chief executive; establishing
board committees and approving their terms of reference.
Corporate governance
Undertaking any formal and rigorous review of the board’s own performance, that of
its committees and individual directors, and the division of responsibilities; determining
the independence of non-executive directors; review of the group’s overall corporate
governance arrangements; authorising conflicts of interest where permitted by the
company’s articles of association.
Policies and
procedures
Approval of the following: manual on compliance with the AIM Rules and aspects of
the Market Abuse Regulation, company’s insider list manual, dealing code, anti-bribery
policy, whistleblowing policy and health and safety policy.
25
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
CORPORATE GOVERNANCE REPORT
Continued
Particular matters considered during the period
Excluding those matters that generally come up each year and the strategy day (see previously), the board’s key activities in the
period surrounded:
• a review of the group’s activities as part of its commitment to combatting slavery and human trafficking, culminating in the
approval of a slavery and human trafficking statement, a copy of which is available on www.youngs.co.uk;
• consideration of the group’s debt structure, leading to the borrowing of £20 million (see note 23 on pages 64 to 67) to enable
an equivalent sum to be repaid to the Royal Bank of Scotland plc, and a re-financing of the group’s £75 million revolving credit
facility (see note 23);
• consideration of the group’s brand licence and drinks supply arrangements with Charles Wells Brewery Ltd and their novation
to a wholly-owned subsidiary of Marston’s plc;
• the decision for both Roger Lambert and Trish Corzine to continue in office following the expiry of their fixed terms of office and
the new appointment of Ian McHoul as an additional non-executive director;
• the review and approval of updates to various of the company’s compliance manuals, including the manual on compliance with
the AIM Rules and aspects of the Market Abuse Regulation;
• discussions regarding the triennial valuation of the group’s pension scheme, including the financial assumptions underlying
it, appropriate future contribution rates and the introduction of a contingent asset arrangement (see note 25 on page 69);
• the use of some of the shares held in the Ram Brewery Trust II to satisfy the exercise of options under the company’s
Save-As-You-Earn (“SAYE”) scheme;
• the impact (from May 2018) of the General Data Protection Regulation on the group’s operations;
• consideration of developments in marketing and the group’s proposed plans to deliver innovative marketing activities to meet
customers’ needs and raise expectations;
• consideration of the group’s corporate governance arrangements; and
• approval and publication of the company’s tax strategy and its gender pay gap information.
Directors and the company secretary
Roles and responsibilities
There is a clear division of responsibility at the head of the company.
Chairman: is responsible for:
Chief Executive: has overall responsibility for:
• leading an effective board;
• fostering a good corporate governance culture; and
• ensuring appropriate strategic focus and direction.
• proposing the strategic focus to the board;
• implementing the strategy once it has been approved; and
• managing the group’s business.
Senior Independent Director
Executive directors
Acts as a sounding board for, and provides support and advice
to, the chairman and other board members. Also available
to shareholders and any of the directors should they have a
concern that cannot be raised through the normal channels.
All have particular roles and areas of responsibility – see
above and pages 18 and 19. They are responsible for the
day-to-day running of the business.
Non-executive directors
Company secretary
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. They play their part by being knowledgeable
business people who bring a wide range of skills and
experiences to the board.
Acts as a channel through which the directors, particularly
the non-executives, gain an understanding of the workings
of the company. All the directors are entitled to seek advice
from him and he provides guidance and information to
all of them. He also plays a key part in helping the board
ensure that it is aware of, and that the company meets, its
regulatory obligations.
26
Strategic report
Directors’ report
Financial statements
Shareholder information
Attendance at board and committee meetings
Meeting attendance
Number of meetings
Stephen Goodyear
Patrick Dardis
Steven Robinson
Torquil Sligo-Young
Tracy Read
Roger Lambert
Trish Corzine
Nick Miller
Ian McHoul (ii)
Board (i)
Audit committee
Remuneration committee
10
10
10
10
10
10
10
8
8
3
3
3
-
-
-
-
3
3
2
1
4
-
-
-
-
-
4
3
4
-
(i) Does not include the autumn strategy meeting.
(ii) Ian was appointed to the board in January 2018 – he attended all the meetings he was eligible to attend.
Independence
The board asserts, based on its experience that all the non-executive directors act independently in character and judgement.
It is recognised that only Trish Corzine and Ian McHoul can be considered independent when judged against the UK Corporate
Governance Code. The board, however, considers Roger Lambert to be independent despite having served on the board for
more than 9 years. In reaching this conclusion, the board considered the length of Roger’s period in office, his other external
commitments, the objective manner in which he has provided support to the chairman and other board members and his
strength of character and attitude of mind. Nick Miller is also regarded as independent by the board even though he was, up
until 31 March 2016, a director of the Meantime Brewing Company, a supplier to the group. In looking at Nick’s position, the
board concluded that there was nothing to suggest that his former directorship was likely to affect, or could appear to affect, his
judgement, particularly as he did not become a director of the company until after he had left Meantime and he is not involved
in decisions as regards the group’s supply arrangements. Having recently been the company’s chief executive, Stephen Goodyear
is not independent.
Balance and size
The directors consider that the board is well-balanced and has the right number of members for the size
of the group.
Nominations, appointments and inductions
In practice, the chairman and the chief executive lead on the board nomination and appointment process.
They consider the balance of skills, knowledge and experience on the board and make appropriate
recommendations for consideration by the whole board. This 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. Other senior appointments are made by the
chief executive in discussion with the chairman.
New directors undertake a tailored induction programme, as appropriate, and receive education and
training on the AIM Rules from the company’s nominated adviser. The company secretary spends time
with new directors ensuring they understand the key procedures they need to comply with and he also
provides them with an induction pack covering or containing:
• regulatory matters (e.g. the company’s articles of association, the AIM Rules, the company’s manual on compliance with the AIM
Rules and aspects of the Market Abuse Regulation, the company’s insider list manual and a note on directors’ duties);
• internal policies (e.g. anti-bribery; pub purchases, pub refurbishment projects and schedule of matters reserved for the board);
• internal information (e.g. diary dates and D&O certificates);
• public information (e.g. latest annual and interim reports and any circulars issued in the last 12 months); and
• terms of reference for the audit, remuneration and disclosure committees.
27
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
CORPORATE GOVERNANCE REPORT
Continued
Re-appointment of directors and notice periods
Once appointed, the company’s articles of association ensure that any new director is subject to re-appointment by the company’s
voting shareholders at the next AGM – this applies to Ian McHoul at this year’s AGM. Directors are then subject to a further re-
appointment vote every third AGM after that – this applies to Torquil Sligo-Young, Roger Lambert and Trish Corzine at this year’s
AGM. All are seeking re-appointment.
Subject to shareholder re-appointment, the executive directors have been appointed for indefinite periods and are generally
entitled to not less than one year’s notice if the company wishes to terminate their appointment. In return, the executive directors
have to give not less than the notice shown in the table below if they wish to leave.
The non-executives have been appointed for fixed terms which are terminable earlier by them or the company giving not less
than six months’ notice and they are likewise subject to shareholder re-appointment. The expiry dates of their current fixed terms
are shown in the following table:
Executive
directors
Notice period
from the director
Non-executive
directors
Fixed term
expiry dates
Patrick Dardis
Steven Robinson
Torquil Sligo-Young
Tracy Read
One year
One year
Six months
One year
Stephen Goodyear
Roger Lambert
Trish Corzine
Nick Miller
Ian McHoul
3 April 2020
31 July 2020
11 January 2021
3 April 2020
23 January 2021
Time commitment
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. The
non-executive directors have all confirmed that they are able to allocate sufficient time to meet the
expectations of their role, and they are required to obtain the chairman’s agreement (or, in the case
of the chairman, the chief executive’s agreement) before accepting additional commitments that might
affect the time they are able to devote.
Service contracts and letters of appointment
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.
Training, development and advice
From time to time, the directors, as appropriate, attend training courses, conferences and/or industry
forums, read technical and other journals and undertake online learning to keep up-to-date on
various matters. 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, shareholders,
members of staff, colleagues and friends: this helps to keep them up-to-date with the group’s operations, developments in the
market and the competition.
Once a year, the company secretary provides education and training to the executive directors on the company’s manual on
compliance with the AIM Rules and aspects of the Market Abuse Regulation, and to all the directors on the company’s dealing
code. The company's nominated adviser also provides education and training to all the directors annually on the AIM Rules.
Subject to certain limitations, all the directors are entitled to obtain independent professional advice at the company’s expense.
J.P. Morgan Cazenove and Slaughter and May are advisers to the board. The former is the company’s nominated adviser and joint
broker; in its capacity as nominated adviser, it is responsible to the London Stock Exchange for providing advice and guidance in
relation to the company’s continuing obligations resulting from its admission to AIM. Slaughter and May is an international law
firm headquartered in London that the board calls on for legal advice and services from time to time.
28
Strategic report
Directors’ report
Financial statements
Shareholder information
Performance evaluation
The chief executive currently conducts rigorous annual performance appraisals of the three executive directors that report to him,
supported by monthly 1:1 meetings. The chairman, on behalf of the board, has agreed to look into performance evaluation of
the other directors, the board (taken as a whole) and the board’s committees; this will be done in conjunction with the company’s
people director.
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.
Risk
The board as a whole oversees risk. With the chief executive having overall responsibility for implementing the group’s strategy, it is
the executive committee, as a group under his leadership, that is primarily responsible for keeping abreast of developments that may
affect delivery of that strategy (especially in terms of their likelihood and impact), identifying any mitigating actions that could be taken
and then ensuring, as far as possible, those actions are taken – here the executive team’s experience and management, collectively
and individually, is vital. That informal process then feeds through to the whole board when it considers, on an annual basis, the
list of principal risks (and uncertainties) for inclusion in the company’s annual strategic report (see pages 8 and 9). Additionally, the
executive committee, but this time lead by the chief financial officer, regularly considers the group’s financial controls memorandum
– this comprehensive and internally-focussed document identifies a number of financial-related risks and, for each of them, sets
out the potential business impact, potential for occurrence, what mitigating controls are in place and who within the business has
responsibility for managing the control. That document is considered by the audit committee before being submitted to the board
for approval. Although the board has overall responsibility for the group’s systems of internal control and risk management and for
reviewing their effectiveness, the audit committee performs an important role in monitoring those systems – a summary of what the
committee did during the period in this regard is set out in the audit committee section of this report.
Shareholders Relations
Copies of the annual report (which includes the notice of AGM) 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 our website, including the
preliminary and half-year results presentations to the City.
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 board members receive copies of feedback reports from the City presentations and meetings,
thus keeping them in touch with shareholder opinion.
Stephen Goodyear, Patrick Dardis and Torquil Sligo-Young are the key contacts with the company’s family
shareholders, with Torquil Sligo-Young having a specific part to play in keeping in touch with them.
Roger Lambert, as the senior independent director, and the other non-executive directors are all willing
to engage with shareholders should they have a concern that is not resolved through the normal channels.
The company secretary can also be contacted by shareholders on matters of governance and investor relations.
The board supports the use of the AGM to communicate, in particular, with private investors. The meeting is well attended and
all shareholders are given the opportunity to ask questions and raise issues; this can be done formally during the meeting or
informally with the directors after it.
At the AGM, the company proposes a separate resolution on each substantially separate issue. For each resolution, proxy
appointment forms are issued which provide voting shareholders with the option to vote in advance of the AGM if they are
unable to attend in person. All valid proxy votes received for the AGM are properly recorded and counted by Computershare,
the company’s registrars. Voting at the AGM is by a show of hands unless a poll is called for – in this regard, the chairman is
aware of the possible need to exercise his powers as chairman and demand a poll to ensure that the vote represents the voting
intentions of those shareholders who have appointed the chairman as proxy as well as those present at the meeting. As soon as
practicable after the AGM has finished, the results of the meeting are released through a regulatory news service, and a copy of
the announcement is posted on the Company News page within the investors section of www.youngs.co.uk. The announcement
also provides, for information, details of the total number of voting shares in issue and the number of shares in respect of which
valid proxy appointments were received; a table is included showing the number of votes for and against each resolution and also
the number within the chairman’s discretion – excluded from the table are abstentions/votes withheld and proxy appointments
received from holders who appointed someone other than the chairman of the meeting as their proxy.
29
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
CORPORATE GOVERNANCE REPORT
Continued
Audit committee
All the committee’s members understand
the essential role the committee plays
in the company’s corporate governance
arrangements, focussing, as it does, on
corporate reporting and on monitoring
the company’s internal control and risk
management systems.
Roger Lambert, Committee Chairman
Major tasks
During the period, the major tasks undertaken by the committee (in addition to those mentioned elsewhere in this report) were:
R a review of the group’s preliminary announcements of interim and final results, and the results themselves, all prior to review
by the board;
R a review of the group’s cyber security arrangements and the group’s information systems security management policy;
R the setting of the group’s internal audit plan and the review of reports prepared by the group’s internal audit manager;
R oversight of the integration of the new external audit partner to continue the delivery of a robust audit plan; and
R a review of the group’s systems of internal control and risk management.
Committee membership
The committee, chaired by Roger
Lambert, comprises the board’s five
non-executive directors. All of them
served on the committee throughout
the period, apart from Ian McHoul
who joined the committee in January
following his appointment to the
board. The members of the committee
consider that they have the requisite
skills and experience to fulfil the
committee’s responsibilities.
Committee meetings and attendance
The committee met three times during the period (in May, November
and March) and the table on page 27 sets out each member’s attendance
record. The chief financial officer joined the meetings, as did the
company’s audit partner and audit manager at Ernst & Young LLP (“EY”)
when the meeting related to the group’s full-year and half-year results.
Other senior members of staff joined the meetings, as appropriate. As
part of the meetings, the committee met separately with the group’s
internal audit manager and with the company’s audit partner and audit
manager at EY, in each case without any other member of the group’s
management present; this gave them the opportunity to raise any
concerns they had and any issues arising from their work.
Advice, guidance and information
Formal agendas and reports are provided to the committee a week before its meetings, along with other information
to enable it to discharge its duties. Amongst the information and reports provided to the committee during the period
(other than those referred to elsewhere in this section and in the Risk and internal control section) were: full-year and
half-year reports prepared by EY; draft engagement and management representation letters; an updated financial controls
memorandum for approval; the group’s procedures for whistleblowing, detecting fraud and preventing bribery; a schedule
of non-audit work performed by EY; a schedule of director’s expenses; a copy of the committee’s terms of reference and a
draft audit timetable.
30
Strategic report
Directors’ report
Financial statements
Shareholder information
Areas of responsibility
The committee’s responsibilities are split into four distinct areas:
Financial reporting
Primarily, monitoring the integrity of the company’s
financial statements.
Internal control and risk management
Chiefly, monitoring the integrity, adequacy and effectiveness of
the company’s internal control and risk management systems.
Internal audit
Mainly, reviewing and approving the company’s internal
audit plan and monitoring and assessing the effectiveness
of the company’s internal audit function in the context of
the company’s overall risk management system.
External audit
Principally, overseeing the company’s relationship with its
external auditor, reviewing the effectiveness of the company’s
external audit process and assessing the independence of the
company’s external auditor.
These and the committee’s other duties are set out in the committee’s terms of reference, a copy of which can be found in the
investors section of www.youngs.co.uk.
Significant matters considered in relation to the financial statements
The following table sets out what the committee regards as the significant matters considered by it in relation to the group’s
financial statements and how they were addressed.
Matter
How addressed
Value of the group’s
pub estate
Deferred taxation
Supplier rebates
This is by far the largest number on the balance sheet at 2 April 2018 and note 17 on
page 60 explains the valuation exercise undertaken. The committee focussed its attention
on understanding and challenging the annual valuation exercise and the appropriate
accounting approach and disclosures; it did this by reviewing the approach, the key
assumptions, the valuation reports and other documentation analysing the outcome of
the exercise. Management’s valuation process was also assessed by EY, enabling them to
confirm to the committee that the valuation exercise was in accordance with accounting
standards (IAS 16 and IFRS 13) and in line with common practice in the industry. As a
result of the above, the committee was satisfied that a thorough and robust valuation
exercise had been undertaken, with appropriate challenges by EY and the committee,
and that appropriate values were reflected in the balance sheet at 2 April 2018.
Management, with help from the group’s in-house tax manager, made judgements and
produced detailed calculations supporting the estimated deferred tax movement and year-
end balance. The workings produced supported the deferred tax liability on the rollover
gains and property revaluations on each pub, as well as the deferred tax assets. EY audited
these calculations and workings. The committee then challenged the exercise undertaken
as a whole. The outcome was that the committee was satisfied that the deferred tax
provision shown in the balance sheet at 2 April 2018 was appropriate.
Management only recognises these when the group has met all relevant obligations
– see note 3(u) on page 50. EY audited these rebates: this involved (a) understanding
management’s processes and controls over the recognition of rebates, (b) reviewing a
sample of supplier agreements and understanding their key terms, (c) recalculating a
sample of the rebates and agreeing them to invoices and (d) verifying that rebates had
been appropriately recorded in the correct period, by reference to supplier statements
and post year-end settlement. Direct confirmation from a sample of suppliers of their
liability to the company was also obtained. The overall results of this testing confirmed
the committee’s expectation of the likely level of rebate due when compared with
the previous year and gave it sufficient assurance as to the reliability of the process
undertaken and the correctness of the amount included within operating costs shown
in the group income statement for the period ended 2 April 2018.
EY’s audit report on pages 35 to 39 also provides further detail on how the above matters were addressed.
31
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
CORPORATE GOVERNANCE REPORT
Continued
Non-audit work carried out by EY
The company has a formal policy in respect of non-audit work carried out by EY whilst appointed
as the company’s external auditor; this is in place to mitigate any risks threatening, or appearing to
threaten, EY’s independence and objectivity arising through the provision of non-audit services. As
a result, the committee has to approve certain new engagements with EY. Other new engagements
may be approved by the company’s chief financial officer, subject to certain safeguards, including
the level of fees payable and the services being given by EY not creating a conflict of interest.
During the period, the company engaged EY for a limited amount of non-audit work, including the
interim review and a review of the parent company and its subsidiaries corporation tax returns prior
to submission. The total fees paid to EY during the period for non-audit fees amounted to £43k
(20.9% of total fees paid to EY during the period). In the committee’s view, the nature and extent
of the non-audit work carried out by EY did not impair their independence or objectivity.
Qualification, objectivity, independence etc. and proposed
re-appointment of EY
The committee felt that the qualification, expertise, resources and effectiveness of EY were appropriate in the context of the group
wanting an effective and high quality service, and that EY was independent of the group and not reliant on fees from the group.
The committee concluded that EY’s work had been robust and perceptive, with EY’s reports showing a good understanding of the
company’s business. As part of its assessment process, the committee had:
R reviewed the audit plan for the period ended 2 April 2018 as regards the activities to be undertaken by EY and EY’s final audit
results report, and considered how EY had handled the key accounting and audit matters that had arisen;
R been provided with a copy of the Financial Reporting Council’s May 2017 audit quality inspection report in respect of EY and a
copy of EY’s published transparency report for the UK;
R reviewed an independence report prepared by EY, which contained all significant facts and matters bearing upon EY’s
independence and objectivity that EY was required to communicate to the company as per the FRC Ethical Standard and ISA
(UK and Ireland) 260 “Communication of audit matters with those charged with governance”;
R considered EY’s proposed fees for the group’s audit for the period ended 2 April 2018 and the additional non-audit services
for that same period;
R noted that the company’s audit partner within EY was required to rotate every five years (and that accordingly Andy Glover
had stood down in 2017, replaced by Jon Killingley); and
R obtained the views of management.
The fees paid to EY for audit services for the financial period ended 2 April 2018 were £0.2 million.
As a result of the above assessment process, the committee has recommended the re-appointment of EY as the company’s
auditor, and EY has expressed its willingness to continue. A resolution to re-appoint EY and a resolution to enable the directors
to set EY’s remuneration will therefore be proposed at the forthcoming AGM.
Risk and internal control
The board has overall responsibility for the group’s systems of internal control and risk management and for reviewing their
effectiveness. These systems cannot eliminate risk and are therefore designed to manage it – they provide reasonable but not
absolute assurance and seek to:
• mitigate risks which might cause the failure of business objectives;
• prevent material misstatement or loss;
• 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 executive directors are responsible for implementing and maintaining the systems, and the audit committee assists the board
in fulfilling its oversight responsibilities by monitoring the systems’ integrity.
The group’s strategic priorities and their connection to principal risks and uncertainties facing the business are set out on page 4.
The principal risks and uncertainties 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.
32
Strategic report
Directors’ report
Financial statements
Shareholder information
The following is an overview of the main parts of the group’s systems of internal control and risk management:
• clearly defined reporting lines up to the board;
• clearly set levels of authorisation throughout the business;
• a detailed financial controls memorandum;
• the preparation of a comprehensive annual budget and the preparation of a vision document which is reviewed and approved
by the executive directors and then further reviewed and approved by the board;
• the circulation of monthly management accounts, including commentary on significant variances, updated profit and cash flow
expectations for the year and actual capital expenditure compared to budget and signed-off sums;
• a detailed investment approval process requiring board authorisation for all pub purchases and major projects (with regular
performance reviews of invested pubs for a certain period post-investment);
• board approval for disposals;
• regular reporting of legal and accounting developments to the board;
• regular circulation of, and assessment of employees’ understanding of, the group’s anti-bribery policy;
• the group’s internal audit function and the group’s in-house team of retail auditors; and
• on-going health and safety audits and monitoring of accident statistics, with audit results being a standing item at board meetings.
The group’s internal audit manager reports to both the company secretary and the chief financial officer and is independent of the
areas which he reviews. During the period, the internal audit manager tested various controls contained in the financial controls
memorandum to assess their effectiveness. The results of his work were shared with the executive directors concerned and with
the audit committee. With that committee’s approval, changes were then made to the financial controls memorandum. The
internal audit manager also carried out internal reviews of financial areas according to a programme set by the audit committee
following input from the chief financial officer. His review reports, the management responses and the recommended actions, were
presented to the audit committee at each of its meetings. Management may supplement the internal resource for these reviews
with specialist external resources; however, none were perceived as being required during the period.
The group’s in-house team of retail auditors is led by an experienced member of the group’s finance team who reports to the
head of procurement (who in turn reports to the chief financial officer) and is responsible for co-ordinating the audits as well as
performing some of them. The rest of the team have relevant experience, whether that be from having worked in the finance
department or in one or more pubs; in each case, the person performing the audit is independent of the area that is the subject of
the audit. Throughout the period, this team monitored the controls in place in the group’s managed pubs and hotels, in particular
those covering stock and cash.
The group has business continuity arrangements in place with third parties. It also has, and reviews regularly, business continuity
plans for each of the departments within Riverside House in Wandsworth.
The group has a whistleblowing policy that is overseen by the audit committee. This policy 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 manager.
Experience to date suggests that this policy is effective and staff members are aware of it.
33
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
CORPORATE GOVERNANCE REPORT
Continued
Remuneration committee
The remuneration committee believes that the
company’s reward policy as regards the executive
directors is also 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.
Nick Miller, Committee Chairman
Primary function
The committee’s primary function is to determine, on behalf
of the board, the remuneration packages of the executive
directors. This is 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.
Terms of reference
The committee’s duties are set out in its terms of reference,
a copy of which can be found in the investors section of
www.youngs.co.uk.
Committee membership, meetings
and attendance
The remuneration committee comprises three of the board’s
non-executive directors. It is chaired by Nick Miller; the other
two members are Roger Lambert and Trish Corzine. All of
them served on the committee throughout the period. The
committee met four times during the period and the table
on page 27 sets out each member’s attendance record.
Advice, guidance and information
As with the other committees, formal agendas and supporting
papers are provided to the committee a week before its
meetings. Amongst the information provided to the committee
during the period was:
• a pack of financial information to help the committee
determine the extent to which the financial performance
conditions for the executive directors’ performance-related
bonuses had been met; and
• an analysis of remuneration trends across the group and
the December 2016 edition of ‘FTSE AIM Directors’
Remuneration’ published by FIT Remuneration Consultants
LLP to enable the committee to set the executive directors’
remuneration for FY2018/19.
Remuneration: executive directors
Against the background of the company’s reward policy, the
committee decided a number of years ago 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
34
performance targets. This variable element is currently delivered
via deferred annual bonus awards which support the company’s
strategy and business plan by incentivising and retaining the
executive directors in a way that is aligned with both the group’s
long-term financial performance and the interests of shareholders
– see note 28(a) on page 72 for details of how the deferred
annual bonus scheme operates. The remuneration committee
believes that the company’s reward policy as regards the executive
directors is also 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(b) on page 53 (and details
of pension benefits, other benefits (principally private medical
insurance and car-related benefits) and interests in the company’s
savings-related share option scheme are in notes 8(e) and 28(b)
respectively, on pages 54 and 73 respectively). No executive
director is involved in deciding his/her own remuneration.
Remuneration: non-executives
The initial remuneration of the non-executives is determined
by the board, but any fee increase is decided 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 the
business. Accordingly, all non-executive directors receive a
basic fee; generally, 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. As a result of having been
an executive director of the company, Stephen Goodyear is a
participant in various bonus schemes (see note 28 starting on
page 72) and has outstanding share options (see note 28(a)
starting on page 72); 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(b) on page 53.
By order of the board
AN TH O NY S C H R O E D E R
Company Secretary
23 May 2018
INDEPENDENT AUDITOR’S REPORT
For the 53 weeks ended 3 April 2017
Strategic report
Directors’ report
Financial statements
Shareholder information
Independent auditor’s report to the members of Young & Co.’s Brewery, P.L.C.
Use of our report
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.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you where:
• the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is not appropriate; or
• the directors have not disclosed in the financial statements any
identified material uncertainties that may cast significant doubt
about the group’s or the parent company’s ability to continue
to adopt the going concern basis of accounting for a period of at
least twelve months from the date of approval when the financial
statements are authorised.
Overview of our audit approach
Materiality
• Overall group materiality of £2.0 million,
which represents 5% of profit before taxation
and exceptional items. Materiality for our 2017
audit was £2.1 million, on the same basis.
Audit scope
Key audit
matters
• We performed an audit of the complete
financial information of the group, which
accounted for 100% of profit before
taxation and exceptional items, 100% of
revenue and 100% of total assets.
• Valuation of the group’s pub estate
• Deferred tax on the group’s pub estate
• Supplier rebates
• Management override of controls in the
recognition of revenue
Our key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
that we identified. These matters included those which had the
greatest effect on: the overall audit strategy, the allocation of resources
in the audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in our opinion thereon, and we do not
provide a separate opinion on these matters.
Opinion
In our opinion:
• Young & Co.’s Brewery, P.L.C.’s group and parent company financial
statements (‘the financial statements’) give a true and fair view of the
state of the group’s and of the parent company’s affairs as at 2 April
2018 and of the group’s profit for the 52 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 provision of the
Companies Act 2006; and
• the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements of Young & Co.’s Brewery,
P.L.C. which comprise:
Group
Parent company
Group balance sheet
as at 2 April 2018
Balance sheet as at 2 April 2018
Group income statement for
the 52 weeks then ended
Statement of cash flow for the
52 weeks then ended
Statement of changes in equity
for the 52 weeks then ended
Group statement of
comprehensive income for the
52 weeks then ended
Group statement of changes
in equity for the 52 weeks
then ended
Group statement of cash flow
for the 52 weeks then ended
Related notes 1 to 33 to the
financial statements, including
a summary of significant
accounting policies
The financial reporting framework that has been applied in the
preparation of the financial statements 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.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our
report below. We are independent of the group and parent company
in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
35
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018 INDEPENDENT AUDITOR’S REPORT
Continued
Valuation of the group’s pub estate
In accordance with the group’s accounting policy for property and equipment management has revalued the pub
estate for the 2018 year end, as permitted by IFRS and in common with other listed pub operators in the UK. This
was achieved through:
• reassessment of the fair maintainable trade of each pub based on its current and forecast trading performance, or a spot rate valuation;
• a revaluation by Sian Tunney, a valuation specialist at Savills, independent chartered surveyors, of a representative sample of 20% of the group’s
pubs, including pubs of varying tenure, location and type; and
• a revaluation of the remaining 80% of the pub estate internally, led by the group’s director of property and tenancies, using updated trading
results, management’s knowledge of each pub, and an appropriate consideration of the results of the external valuation.
This involves significant management judgement, particularly in respect of the methodology and assumptions used in the valuation model.
Management also assesses viable alternative uses for a property should they provide increased value.
Refer to the Audit Committee Report (page 30); and notes 3(f) and 17 of the financial statements.
Our response to risk
We gained an understanding of the process and controls management has in place to determine the group’s pub valuations.
We met with management and the group’s external valuation specialists to discuss their valuation approach and the judgements made in assessing
the property valuation. These included the fair maintainable trade, EBITDA multiples and spot rate valuations.
We assessed the competence and objectivity of the external valuer including consideration of its qualifications and expertise.
We checked and recalculated management’s valuation model, including its assessment of the fair maintainable trade of each pub, its forecasting
accuracy, and its consideration of the external valuation results on the remainder of the estate.
For a sample of properties valued by management, with support from our property valuation specialists, we performed testing over the underlying
valuation assumptions. We put a particular focus on pubs valued using a spot rate as these involve a higher level of management judgement.
We benchmarked the group’s pub valuations by comparing with other pub market transactions.
We verified that changes in pub valuations were reflected and appropriately accounted for through the revaluation reserve or the
income statement.
We assessed the appropriateness of the valuation disclosures in the Annual Report, and whether they were compliant with the fair value
information required under IFRS 13.
Scope of our procedures
We performed full scope audit procedures over the valuation of the whole of the group’s pub estate.
Key observations communicated to the Audit Committee
We consider the valuation to be appropriate and on a consistent basis to 2017.
Deferred tax on the group’s pub estate
Young’s has complexity in its accounting for deferred tax and a significant level of management judgement is required in
accounting for deferred tax on the pub estate valuations.
Management judgements and detailed and complex calculations are required to estimate the deferred tax on each pub,
including on the treatment of capital losses, rollover relief, indexation allowances and initial recognition exemptions. There is also
judgement involved in recognising deferred tax on the pubs on a sale, in-use or a dual basis.
There is also judgement involved in recognising the deferred tax at the correct corporation tax rate, depending on the underlying assumptions.
Refer to the Audit Committee Report (page 30); and notes 3(n) and 24 of the financial statements.
Our response to risk
We gained an understanding of the processes and controls management has in place over the calculation of deferred tax on the pub estate.
In conjunction with our tax specialists checking all deferred tax calculations based on revaluations of pubs, we checked and recalculated the
deferred tax for a sample of pubs across the estate. This included a review of capital losses, rollover relief, indexation allowances and initial
recognition exemptions.
We challenged management on the assumptions used in calculating the deferred tax balances, including whether the deferred tax was consistent
with the group’s intended use of each pub – being a sale, in-use or a dual basis.
We determined if the tax rates applied in calculating the deferred tax on the group’s pub estate were appropriate based on when the balances are
expected to unwind.
We checked the deferred tax disclosures were in line with IAS 12 requirements.
Scope of our procedures
We performed full scope audit procedures over all the group’s deferred tax on the group’s pub estate.
Key observations communicated to the Audit Committee
We consider management’s judgements in the recognition of deferred tax on the pub estate to be appropriate and consistent with 2017.
36
Strategic report
Directors’ report
Financial statements
Shareholder information
Supplier rebates
The group earns supplier income through purchase volume discounts and stocking incentives. Stocking incentives are received
through holding certain products within a pub and are set at a fixed amount. Purchase volume discounts are received based on
the number of units purchased from suppliers.
Given the quantum as a percentage of the group’s profit and the risk around incorrect cut off applied, we consider there to
be a risk over this figure. This is focussed on the system controls over the inputs, any changes to volume discounts and stocking incentive
arrangements and the recognition of rebates in the appropriate period.
Refer to the Audit Committee Report (page 30); and note 3(u) of the financial statements.
Our response to risk
We gained an understanding of the process and controls management has in place over the recognition of stocking incentives, leveraging the
testing performed by our IT specialists (ITRA) to rely on the inputs of volumes purchased.
For a sample of supplier arrangements, we agreed key input terms through external confirmation and recalculating amounts recorded.
We verified that rebates have been appropriately recorded in the correct period through cut off testing at the year end.
We challenged year end rebate estimates by considering the outturn of prior period rebate estimates.
We assessed the recoverability of unsettled rebates with reference to historical settlements, the group’s relationships with its suppliers and post year
end settlements.
Scope of our procedures
We performed full scope audit procedures over all of the group’s supplier rebates.
Key observations communicated to the Audit Committee
Based on our work, including third party confirmations, our recalculation of a sample of supplier income and cut off testing, we agree with the
income recognised in the year.
Management override in the recognition of revenue
The vast majority of Young’s revenue transactions are non-complex, with no judgement applied over the amount recorded.
We consider the risk relating to revenue to be around management override of controls and topside journals to revenue in
the managed and tenanted estate.
For managed houses revenue is typically comprised of a large number of low-value transactions. Although there is little
management judgement involved, there is a risk that manual topside adjustments could be posted which could result in cash revenue being
overstated or sales not being recorded. For the Ram Pub Company (tenanted pubs) there is also a risk that manual topside adjustments could
be posted to revenue.
Refer to the Audit Committee Report (page 30); and notes 3(c) and 6 of the financial statements.
Our response to risk
We gained an understanding of the process and controls management has in place around the recording of revenue, including the recording
of manual journal adjustments.
We used our specialised data analytics to analyse the group’s revenue, performing procedures including comparisons of actual results to forecast,
with consideration to weather conditions, weekends, bank holidays and special events.
We applied correlation data analysis over the group’s revenue journal population to identify how much of the revenue is converted to cash
and to isolate non-standard revenue transactions for further analysis.
We identified manual journals to revenue and obtained corroborative evidence to support them.
We performed cut-off testing procedures including review of post period end cash receipts and journals and an analytical review
of significant variances.
Scope of our procedures
We performed full scope audit procedures over all of the group’s revenue.
Key observations communicated to the Audit Committee
We did not identify any instances of management override of controls. Based on our work, which included using data analysis tools to examine
the correlation of 100% of the group’s revenue to cash receipts, we consider that revenue is fairly stated.
37
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018 INDEPENDENT AUDITOR’S REPORT
Continued
Overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our
allocation of performance materiality determine our audit scope for
each entity within the group. Taken together this enables us to form
an opinion on the group financial statements.
Performance materiality
The application of materiality at the individual account or balance
level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
The group’s operations are based solely in the United Kingdom with
a single head office finance function and therefore all audit procedures
are completed by one audit team at this location. The audit team
includes tax, IT, property valuation and actuarial specialists.
In assessing the risk of material misstatement to the group financial
statements and to ensure we had adequate quantitative coverage
of significant accounts in the financial statements we performed full
scope audit procedures over 100% of the group’s results for the
52 weeks to 2 April 2018 and 100% of the group’s total assets at
that date. We obtained an understanding of the entity-level controls
of the group which assisted us in identifying and assessing risks of
material misstatement due to fraud or error, as well as assisting us in
determining the most appropriate audit strategy.
Our application of materiality
We apply the concept of materiality in planning and performing the
audit, in evaluating the effect of identified misstatements on the audit
and in forming our audit opinion.
Materiality
The magnitude of an omission of misstatement that, individually or in
the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a
basis for determining the nature and extent of our audit procedures.
We determined materiality for the group to be £2.0 million
(2017: £2.1 million), which is 5% of profit before taxation and
exceptional items.
We believe that the profit before taxation and exceptional items
is considered to be the primary area of focus of the group’s
stakeholders. We exclude the impact of one-off items which
do not reflect the underlying trading performance of the group.
Starting
basis
Adjustments
• Profit before tax – £37.6 million
• Exceptional items before tax – £3.4 million
• Profit before taxation and exceptional items
– £41.0 million (materiality basis)
Materiality
• Materiality of £2.0 million
(5% of materiality basis)
On the basis of our risk assessments, together with our assessment
of the group’s overall control environment, our judgement was
that performance materiality was 75% (2017: 75%) of our planning
materiality, namely £1.5 million (2017: £1.5 million). We have
maintained performance materiality at this percentage reflecting
the results of our testing of the group’s systems and processes and
historical audit findings.
Reporting threshold
An amount below which identified misstatements are considered
as being clearly trivial.
We agreed with the Audit Committee that we would report to
them all uncorrected audit differences in excess of £0.1 million
(2017: £0.1 million), which is set at 5% of planning materiality, as
well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in light
of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our auditor’s
report thereon. The directors are responsible for the other information.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit
or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement
in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude
that there is a material misstatement of the other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters 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 year for which the financial statements are
prepared is consistent with the financial statements; and
• the strategic report and directors’ report have been prepared in
accordance with applicable legal requirements.
38
Strategic report
Directors’ report
Financial statements
Shareholder information
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Jon Killingley (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
23 May 2018
Matters on which we are required to
report by exception
In the light of the knowledge and understanding of the group and the
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic
report or the directors’ report.
We have nothing to report in respect of the following matters in
relation to which 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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement
set out on pages 20 and 21, the directors are responsible for the
preparation of the financial statements and for being satisfied that they
give a true and fair view in accordance, and for such internal control
as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are responsible
for assessing the group and parent company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless
management either intends to liquidate the group or the parent
company or to cease operations, or has no realistic alternative
but to do so.
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.
39
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
GROUP INCOME STATEMENT
For the 52 weeks ended 2 April 2018
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
Notes
6
7
9
11
25
12
2018
52 weeks
£m
279.3
(232.4)
2017
53 weeks
£m
268.9
(222.8)
46.9
(3.4)
43.5
(5.6)
(0.3)
37.6
(7.5)
30.1
46.1
(3.4)
42.7
(5.5)
(0.2)
37.0
(7.0)
30.0
Pence
Pence
15
15
61.60
61.56
61.51
61.47
All of the results above are from continuing operations.
The notes on pages 46 to 75 form part of these financial statements.
The independent auditor’s report is set out on pages 35 to 39.
40
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the 52 weeks ended 2 April 2018
Notes
Profit for the period
Other comprehensive income
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
Strategic report
Directors’ report
Financial statements
Shareholder information
2018
52 weeks
£m
2017
53 weeks
£m
30.1
30.0
29.2
5.8
(4.5)
4.3
(0.7)
34.1
23.1
(7.7)
1.2
1.3
(0.3)
17.6
Total comprehensive income for shareholders of the parent company
64.2
47.6
All of the results above are from continuing operations.
The notes on pages 46 to 75 form part of these financial statements.
The independent auditor’s report is set out on pages 35 to 39.
41
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
BALANCE SHEETS
At 2 April 2018
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
Other liabilities
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
Company
2018
£m
19.7
742.9
–
6.4
13.6
782.6
3.0
7.0
0.8
7.2
18.0
–
800.6
(10.0)
(1.9)
(30.9)
(4.3)
(47.1)
(137.7)
(4.7)
(54.6)
(6.1)
(1.2)
(204.3)
(251.4)
549.2
6.1
5.7
1.8
(5.2)
273.3
267.5
549.2
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
2018
£m
1.9
737.6
35.7
6.4
5.2
786.8
3.0
8.6
0.3
7.2
19.1
–
805.9
(10.0)
(1.9)
(88.2)
(4.2)
(104.3)
(137.7)
(4.7)
(54.6)
(6.1)
(1.2)
(204.3)
(308.6)
497.3
6.1
5.7
1.8
(5.2)
264.4
224.5
497.3
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
693.8
(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
The company’s profit after tax for the period was £23.7 million (2017: £23.2 million).
Approved by the board of directors and signed on its behalf by:
Patrick Dardis
Steven Robinson
23 May 2018
Chief Executive
Chief Financial Officer
The notes on pages 46 to 75 form part of these financial statements.
Young & Co.’s Brewery, P.L.C. registered in England Number 32762.
42
STATEMENTS OF CASH FLOW
For the 52 weeks ended 2 April 2018
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
Repayment of borrowings
Proceeds from borrowings
Net cash flow used in financing activities
Increase/(decrease) in cash
Cash at the beginning of the period
Cash at the end of the period
Notes
30
17
13
14
The notes on pages 46 to 75 form part of these financial statements.
Strategic report
Directors’ report
Financial statements
Shareholder information
Group
Company
2018
52 weeks
£m
2017
53 weeks
£m
2018
52 weeks
£m
2017
53 weeks
£m
61.4
–
(9.1)
52.3
2.1
(30.4)
(23.0)
(51.3)
(5.3)
–
(9.3)
(20.0)
34.2
(0.4)
0.6
6.6
7.2
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
53.8
–
(9.1)
44.7
2.1
(29.5)
(15.0)
(42.4)
(5.3)
–
(9.3)
(20.0)
34.2
(0.4)
1.9
5.3
7.2
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
43
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
GROUP STATEMENT OF CHANGES IN EQUITY
At 2 April 2018
At 28 March 2016
10.2
1.8
(9.8)
224.6
225.7
452.5
Capital
Share redemption
capital (1)
reserve
£m
£m
Notes
Hedging Revaluation
reserve
£m
reserve
£m
Retained
earnings
£m
Total
equity
£m
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
At 3 April 2017
Total comprehensive income
Profit for the period – 52 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
Movement in shares held by The Ram Brewery Trust II
–
–
–
–
–
–
–
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)
11.3
1.8
(8.8)
247.7
241.0
493.0
–
–
–
–
–
–
–
0.5
–
–
–
–
–
0.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30.1
30.1
–
–
4.3
(0.7)
3.6
3.6
–
–
–
–
–
–
–
29.2
–
–
(3.5)
25.7
25.7
–
–
(0.1)
–
–
–
(0.1)
–
5.8
–
(1.0)
4.8
34.9
–
(9.3)
0.1
0.6
–
0.2
(8.4)
29.2
5.8
4.3
(5.2)
34.1
64.2
0.5
(9.3)
–
0.6
–
0.2
(8.0)
17
25
23
12
14
28
24
17
25
23
12
14
28
24
At 2 April 2018
11.8
1.8
(5.2)
273.3
267.5
549.2
(1) Total share capital comprises the nominal value of the share capital issued and fully paid of £6.1 million (2017: £6.1 million) and the share
premium account of £5.7 million (2017: £5.2 million). Share capital issued in the period comprises the nominal value of £nil (2017: £nil) and share
premium of £0.5 million (2017: £1.1 million).
The notes on pages 46 to 75 form part of these financial statements.
44
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
At 2 April 2018
Strategic report
Directors’ report
Financial statements
Shareholder information
At 28 March 2016
10.2
1.8
(9.8)
216.2
196.0
414.4
Capital
Share redemption
capital (1)
reserve
£m
£m
Notes
Hedging Revaluation
reserve
£m
reserve
£m
Retained
earnings
£m
Total
equity
£m
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
At 3 April 2017
Total comprehensive income
Profit for the period – 52 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
Movement in shares held by The Ram Brewery Trust II
–
–
–
–
–
–
–
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)
11.3
1.8
(8.8)
238.8
204.4
447.5
–
–
–
–
–
–
–
0.5
–
–
–
–
–
0.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
23.7
23.7
–
–
4.3
(0.7)
3.6
3.6
–
–
–
–
–
–
–
29.2
–
–
(3.5)
25.7
25.7
–
–
(0.1)
–
–
–
(0.1)
–
5.8
–
(1.0)
4.8
28.5
–
(9.3)
0.1
0.6
–
0.2
(8.4)
29.2
5.8
4.3
(5.2)
34.1
57.8
0.5
(9.3)
–
0.6
–
0.2
(8.0)
17
25
23
24
14
28
24
17
25
23
24
14
28
24
At 2 April 2018
11.8
1.8
(5.2)
264.4
224.5
497.3
(1) Total share capital comprises the nominal value of the share capital issued and fully paid of £6.1 million (2017: £6.1 million) and the share premium
account of £5.7 million (2017: £5.2 million). Share capital issued in the period comprises the nominal value of £nil (2017: £nil) and share premium
of £0.5 million (2017: £1.1 million).
The notes on pages 46 to 75 form part of these financial statements.
45
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 2 April 2018
1. GENERAL INFORMATION
The group and parent company financial statements of Young & Co.’s Brewery, P.L.C. for the period ended 2 April 2018 were authorised for issue by
the board of directors on 23 May 2018. 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 17.
The current period and prior period relate to the 52 weeks ended 2 April 2018 and the 53 weeks ended 3 April 2017 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 17. 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.
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 or statement of comprehensive income are presented for the company, as permitted by section 408(3) of the
Companies Act 2006.
New Accounting Standards, Amendments and Interpretations
The group has adopted the following new accounting standards during the period:
IAS 7: Disclosure Initiative (Amendment). The amendment requires entities to provide disclosures about changes in their liabilities arising from financing
activities, including both changes arising from cash flows and non-cash changes. The amendment was effective for the full period ended 2 April 2018
and disclosures for both the current and comparative period have been presented in note 23(f).
IAS 12: Recognition of deferred tax assets for unrealised losses (Amendments). The amendment was effective for the full period ended 2 April 2018
and clarifies the use taxable profits and how they are determined. The adoption of the new standard did not have a material impact on the group’s
financial performance or financial position.
The directors will adopt the following Standards, Amendments and Interpretations listed below for the first full financial period following their
effective date.
IFRS 15: Revenue from contracts with customers became effective for periods commencing on or after 1 January 2018. 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 described in note 6 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. Based on our assessments the group has concluded that the adoption of the new standard will not have a material impact on the
group’s financial performance apart from extended disclosure requirements.
IFRS 9: Financial instruments became effective for periods commencing on or after 1 January 2018. The new standard impacts classification,
measurement and disclosure of financial assets and financial liabilities. The standard also introduces new rules for hedge accounting and a new
impairment model for financial assets. The group does not have significant financial assets other than trade and other receivables. Under IFRS 9, the
group’s trade and other receivables will be assessed for impairment provisions based on expected credit losses rather than incurred credit losses under
IAS 39. The group intends to apply the simplified approach as permitted by IFRS 9 and the adoption will not have a material impact on the group’s
financial performance or financial position.
The requirements of the new hedge accounting model will not have a material impact on the group’s financial performance or financial position. We
anticipate that our hedging instruments will remain highly effective under IFRS 9 and our current interest rate swaps will qualify as continuing hedges
upon adoption of the standard. Expanded disclosure requirements will change the extent of the group’s current disclosures on financial instruments.
IFRS 2: Classification and Measurement of Share Based Payment Transactions. The directors expect that adoption of the amendments to the standard
in future periods will not have a material impact on the group.
IFRS 16: ‘Leases’: For the financial period starting on or around 31 March 2019, the directors intend to adopt IFRS 16: Leases, which will replace 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
group income statement impact will contain a new interest charge and a lower rent charge and an increase in depreciation charge recognised on the
right-of-use-asset. By way of reference, the group has non-cancellable operating lease commitments at period end of £93.2 million (note 31). This is a
gross value and does not reflect the discounting to present value required by IFRS 16. A project to assess the full impact of the new standard is under
way and will be completed in the new financial period. Due to the ongoing project, it is not yet possible to disclose the full impact of the new standard.
The above items will have no effect on the group’s cash flow apart from certain disclosures and classifications.
46
Strategic report
Directors’ report
Financial statements
Shareholder information
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 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 to better reflect 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)).
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.
47
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
Continued
(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. Lease incentives are recognised as a reduction of rental costs
over the lease term.
(2) Where the group is the lessor
Assets leased out under operating leases are included within property and equipment 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 the lower of carrying amount and fair value less costs to sell.
(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;
• 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
48
Strategic report
Directors’ report
Financial statements
Shareholder information
• 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
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.
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.
49
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
Continued
(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 is driven by the number of units purchased from suppliers. The volume discounts 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 the period end are 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
5 to 37 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.
(w) Onerous lease provisions
Onerous obligations for loss making short (less than 50 years) leaseholds are reviewed and calculated by management. Judgements are made over
the timings and amounts of future cash flows, the potential opportunity to exit the lease early and the appropriate discount rate when calculating the
onerous lease provision. The provision is calculated on an individual property basis over the remaining lease term.
4. KEY ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts
of assets, liabilities, income and expenses.
In applying the group’s accounting policies, the following estimates are considered to carry the most significant risk of a material adjustment to the
reported amount if the actual outcome differs from these estimates:
(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) 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 useful lives requires the use of estimates. See notes 3(f) and 17.
(d) 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.
The critical judgements considered to carry the most significant risk of a material adjustment to the reported amount if the actual outcome differs
from these judgements are as follows:
(e) Business combinations
When assets are acquired, management determines whether the assets form a business combination. A fair value exercise of both the
consideration paid 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 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.
(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. Calculating the group’s tax provisions
requires judgements to be made based on past experience and the current tax environment. See notes 3(n), 12 and 24.
50
Strategic report
Directors’ report
Financial statements
Shareholder information
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
2018 – 52 weeks
Total segment revenue
Operating profit/(loss) before exceptional items
Operating exceptional items
Operating profit/(loss)
2017 – 53 weeks
Total segment revenue
Managed
houses
£m
266.4
60.7
(4.0)
56.7
Ram Pub
Company
£m
Segments
total
£m
12.6
279.0
4.4
0.6
5.0
65.1
(3.4)
61.7
Unallocated
Total
£m
0.3
(18.2)
–
(18.2)
£m
279.3
46.9
(3.4)
43.5
254.8
13.8
268.6
0.3
268.9
Operating profit/(loss) before exceptional items
Operating exceptional items
Operating profit/(loss)
59.7
(4.7)
55.0
5.1
1.3
6.4
64.8
(3.4)
61.4
(18.7)
–
(18.7)
46.1
(3.4)
42.7
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
2018
Segment assets
Deferred tax assets
Cash
Total assets
Other segmental information
Depreciation and amortisation of lease premiums
Additions to non-current assets (note 17)
Net upward movements in property valuation through
income statement (note 17)
2017
Segment assets
Deferred tax assets
Cash
Total assets
Other segmental information
Depreciation and amortisation of lease premiums
Additions to non-current assets (note 17)
Net (downward)/upward movements in property valuation
through income statement (note 17)
Managed
houses
£m
715.2
–
–
715.2
(19.6)
39.5
–
654.4
–
–
654.4
(18.4)
35.6
(1.4)
Ram Pub
Company
£m
60.7
–
–
60.7
(1.6)
6.3
0.3
62.8
–
–
62.8
(1.5)
2.0
0.9
Segments
total
£m
775.9
–
–
775.9
(21.2)
45.8
0.3
717.2
–
–
717.2
(19.9)
37.6
(0.5)
2018
52 weeks
£m
2017
53 weeks
£m
43.5
(5.6)
(0.3)
37.6
42.7
(5.5)
(0.2)
37.0
Unallocated
Total
£m
11.1
6.4
7.2
24.7
(0.6)
0.4
–
11.3
7.4
6.6
25.3
(0.5)
0.6
–
£m
787.0
6.4
7.2
800.6
(21.8)
46.2
0.3
728.5
7.4
6.6
742.5
(20.4)
38.2
(0.5)
51
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
Continued
6. REVENUE
Sales of goods
Rental income
Revenue
Rental income includes revenue from letting hotel bedrooms. 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:
minimum lease payments
sublease payments
Auditor’s remuneration:
audit of the group financial statements
audit of subsidiaries’ accounts
audit related assurance services
taxation advisory services
all other services
2018
52 weeks
£m
2017
53 weeks
£m
264.1
15.2
279.3
253.7
15.2
268.9
2018
52 weeks
£m
2017
53 weeks
£m
(0.2)
65.1
87.6
21.1
0.7
58.1
(0.2)
64.1
84.1
19.8
0.6
54.4
232.4
222.8
6.5
0.7
7.2
0.2
–
–
–
–
0.2
6.5
0.7
7.2
0.2
–
–
–
–
0.2
8. EMPLOYMENT
(a) Costs and employee numbers
Wages and salaries
Social security
Pension and health care schemes
Employment costs
Group
Company
2018
52 weeks
£m
2017
53 weeks
£m
2018
52 weeks
£m
2017
53 weeks
£m
80.5
6.0
1.1
87.6
77.3
5.8
1.0
84.1
78.0
5.9
1.1
85.0
61.6
4.6
0.9
67.1
At the beginning of the current period employees of some of the subsidiaries of the group became employees of the company.
The group’s and the company’s average monthly number of employees was 4,116 (2017 group and company: 3,924 and 3,079 respectively). The
number of employees at the period end was 4,273 (2017 group and company: 3,854 and 3,030 respectively).
The group’s and the company’s average monthly number of operational employees was 3,990 (2017: 3,807). The number of operational employees at
the period end was 4,143 (2017: 3,734).
The group’s and the company’s average monthly number of administration employees was 126 (2017: 117). The number of administration employees
at the period end was 130 (2017: 120).
52
Strategic report
Directors’ report
Financial statements
Shareholder information
(b) Directors’ emoluments
Stephen Goodyear (iii) (iv)
Patrick Dardis (iii)
Steven Robinson (v)
Torquil Sligo–Young (iii)
Tracy Read (v)
Roger Lambert
Trish Corzine
Nick Miller (vi)
Ian McHoul (vi)
Nicholas Bryan
Peter Whitehead (vii)
Basic
salary
and fees
2018
£000
90
353
251
156
212
41
40
39
8
–
–
Basic
salary
and fees Benefits (i)
2018
£000
2017
£000
Benefits (i)
2017
£000
Bonus (ii)
2018
£000
Bonus (ii)
2017
£000
Total
excluding
pension
costs
2018
£000
Total
excluding
pension
costs
2017
£000
116
321
141
144
119
41
39
–
–
89
99
1
2
1
26
–
–
–
–
–
–
–
5
2
–
30
–
–
–
–
–
–
7
–
242
170
118
134
–
–
–
–
–
–
–
235
97
94
69
–
–
–
–
–
–
91
597
422
300
346
41
40
39
8
–
–
121
558
238
268
188
41
39
–
–
89
106
Total
1,190
1,109
30
44
664
495
1,884
1,648
(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 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 is £120,876 (2017: £117,689), to Steven is £85,042 (2017: £48,299), to Torquil is
£59,071 (2017: £46,924) and to Tracy is £6,710 (2017: £nil).
(iii) Note 8(e) on page 54 sets out the gains made on the exercise of share options.
(iv) The amount shown in the ‘Benefits’ column is a cash contribution paid to Stephen Goodyear towards private medical insurance.
(v) The amounts shown in the ‘Bonus 2017’ column for Steven and Tracy exclude the cash value of the bonuses received by them in respect of the
achievement of their personal objectives set prior to their appointments to the board in September 2016.
(vi) Nick and Ian were appointed to the board on 4 April 2017 and 24 January 2018 respectively.
(vii) In the prior year, Peter 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
and continue to accrue benefits; during the period, those contributions were, on average, at a rate between 7% and 9% 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. No director was accruing any defined benefit as at 2 April 2018.
Further, no director accrued any defined benefit under the scheme during the period. Stephen Goodyear and Torquil Sligo-Young are pensioner
members of the scheme. Patrick Dardis is a deferred member of the scheme; his pension entitlement (being that which would be paid annually on
retirement under the terms of his service agreement based on service to 2 April 2018) is £44,018 (2017: £43,582), his normal retirement date will
be reached when he is 60 and there was no increase in his accrued pension during the period (2017: £nil).
Defined contribution pension scheme
The company operates a defined contribution pension scheme. As at 2 April 2018, Steven Robinson and Tracy Read were members. For the period,
the company paid contributions of £7,710 (2017: £4,306) into the scheme for each of them in respect of qualifying service.
Post retirement health care
The company bears the cost of post retirement health care premiums for certain employees and ex-employees – see note 25.
(d) Profit sharing scheme
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. In
the preceding period, it was agreed with HM Revenue & Customs that all accrued entitlements could be released free of tax, even where an individual
had not reached his or her retirement date. During the period, 31,104 A shares were released to scheme members. As at 2 April 2018, accrued
entitlements now effectively remain in respect of 7,344 A shares (2017: 57,176 A shares).
53
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
Continued
(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 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:
At 3
April
2017 Granted
Exercised
Lapsed
Stephen Goodyear
Patrick Dardis
Steven Robinson
Torquil Sligo-Young
Tracy Read
1,071
888
1,071
888
1,071
888
–
1,071
933
–
–
–
–
–
–
–
844
–
–
1,013
1,071
–
1,071
–
1,071
–
–
1,071
–
–
–
–
–
–
–
–
–
–
–
–
At 2
April
2018
–
888
–
888
–
888
844
–
933
1,013
Exercise
price
(pence per
share) (i)
840
1,013
840
1,013
840
1,013
1,066
840
964
1,066
Exercisable
from
01.09.17
01.09.18
01.09.17
01.09.18
01.09.17
01.09.18
01.09.20
01.09.17
01.09.19
01.09.20
Gains made
on exercise
of share
options
(£) (ii)
Exercisable
to
28.02.18
28.02.19
28.02.18
28.02.19
28.02.18
28.02.19
28.02.21
28.02.18
28.02.20
28.02.21
5,837
–
5,837
–
5,837
–
–
5,869
–
–
(i) The exercise prices of 840p per share, 1,013p per share, 1,066p 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,
1,332p 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. None of the listed directors exercised any share options during the prior period.
9. EXCEPTIONAL ITEMS
Amounts included in operating profit:
Upward movement on the revaluation of properties(1) (note 17)
Downward movement on the revaluation of properties(1) (note 17)
Tenant compensation(2)
Acquisition costs(3)
Goodwill disposal(4)
Net profit on sale of properties(5)
Loss on disposal of property(6)
Onerous lease provision released on disposal of property(6)
Exceptional tax:
Tax attributable to above adjustments
Change in corporation tax rate
2018
52 weeks
£m
2017
53 weeks
£m
2.1
(1.8)
(2.8)
(1.2)
–
0.3
(0.5)
0.5
(3.4)
0.4
–
0.4
3.0
(3.5)
(2.0)
(0.2)
(0.7)
–
–
–
(3.4)
0.1
0.9
1.0
Total exceptional items after tax
(3.0)
(2.4)
(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 £2.1 million (2017: £3.0 million)
representing reversals of previous impairments recognised in the income statement, and a downward movement of £1.8 million (2017: £3.5 million),
representing downward movements in excess of amounts recognised in equity. These resulted in a net upward movement of £0.3 million (2017:
£0.5 million net downward) which has been recognised in the income statement. The upward movement for the period ended 2 April 2018 was
split between land and buildings of £0.3 million upward (2017: £0.5 million downward) and fixtures and fittings of £nil (2017: £nil). See note 5 for
segmental information.
54
Strategic report
Directors’ report
Financial statements
Shareholder information
(2) During the period, the group paid £2.8 million to the previous tenants of the Hope and Anchor (Brixton), Grove (Camberwell) and the King’s Arms
(Wandsworth) and, in the prior period, £2.0 million to the previous tenants of the Woolpack (Bermondsey), in each case to terminate their lease
agreement early.
(3) The acquisition costs relate to the purchase of the Chequers Inn (Hanham Mills), Smiths of Smithfield (Smithfield Market), Smiths (Cannon Street), Park
(Teddington) and the Bridge (Chertsey). They include legal and professional fees and stamp duty land tax. The prior period acquisition costs related to the
purchases of the Blue Boar (Chipping Norton) and the Riverstation (Bristol).
(4) The prior period goodwill disposal was a non-cash item and related to the Three Bells (Heathrow Airport) and the Five Tuns (Heathrow Airport)
whose leases expired during the prior period. The Three Bells and the Five Tuns formed part of the Geronimo group of cash generating units (which
are pubs under the Geronimo concept) and fell within the Geronimo managed houses segment.
(5) The profit on sale of properties relates to the difference between the cash, less selling costs, received from the sale of the King’s Arms (Epsom)
and the carrying value of the assets on the date of sale. In the prior period there was no profit or loss from the sale of properties.
(6) The loss on disposal of properties relates to the difference between cash, less selling costs, received from the sale of the Court House (Dartford) and
the carrying value of the net assets at the date of sale. Previously an onerous lease was recognised in respect of the property which was subsequently
released on disposal.
10. OTHER FINANCIAL MEASURES
The table below shows how adjusted group EBITDA, operating profit and profit before tax have been arrived at. They exclude exceptional items
which due to their material or non-recurring nature distort the group’s performance. These alternative performance measures have been provided
to help investors assess the group’s underlying performance. Details of the exceptional items can be seen in note 9. All the results below are from
continuing operations.
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
11. FINANCE COSTS
Bank loans and overdrafts
Finance lease interest
2018 – 52 weeks
2017 – 53 weeks
Unadjusted
£m
Exceptional
items
£m
Adjusted
£m
Unadjusted
£m
Exceptional
items
£m
Adjusted
£m
65.0
3.7
68.7
63.6
(20.8)
(0.7)
43.5
(5.6)
(0.3)
37.6
(0.3)
–
3.4
–
–
3.4
(21.1)
(0.7)
46.9
(5.6)
(0.3)
41.0
(20.3)
(0.6)
42.7
(5.5)
(0.2)
37.0
2.9
0.5
–
3.4
–
–
3.4
66.5
(19.8)
(0.6)
46.1
(5.5)
(0.2)
40.4
2018
52 weeks
£m
2017
53 weeks
£m
5.6
–
5.6
5.4
0.1
5.5
55
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
Continued
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
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 charge/(credit)
2018
52 weeks
£m
2017
53 weeks
£m
8.7
–
8.7
(1.2)
–
–
(1.2)
7.5
(0.5)
(0.9)
0.2
–
(1.2)
3.5
1.0
0.7
–
5.2
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)
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 2 April 2018 and 3 April 2017 respectively is as follows:
Profit before tax
Total profit before tax at a corporation tax rate of 19% (2017: 20%)
Tax effects of:
Expenses not deductible for tax purposes(1)
Recognition of property revaluation, rollover claim and other property movements
Non-taxable income
Remeasurement of deferred tax – change in corporation tax rate
Prior period adjustment – current tax
Prior period adjustment – deferred tax
Total tax expense
2018
52 weeks
£m
37.6
7.1
1.4
(0.7)
(0.3)
–
–
–
7.5
2017
53 weeks
£m
37.0
7.4
1.0
(0.2)
–
(0.9)
0.2
(0.5)
7.0
(1) Expenses not deductible for tax purposes include 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 3 April 2018 and 1 April 2020
have been measured at 19%, with the remainder re-measured at 17%.
56
Strategic report
Directors’ report
Financial statements
Shareholder information
13. BUSINESS COMBINATIONS
Smiths of Smithfield Limited
On 13 November 2017 the group and the company acquired the entire issued share capital of Smiths of Smithfield Limited for a consideration
of £9.0 million on a debt and working capital free basis. Smiths of Smithfield Limited owns and operates Smiths of Smithfield (Smithfield Market)
and Smiths (Cannon Street).
The fair value of the identifiable assets and liabilities of the acquired business at the date of acquisition was as follows:
Identifiable assets and liabilities acquired:
Property and equipment
Inventories
Trade and other receivables
Loans
Trade and other payables
Net assets
Lease premium
Total consideration for share capital
Cash flow on acquisition:
Loans acquired and repaid
Net working capital acquired and repaid
Cash paid for share capital
Net cash outflow
Fair
value
£m
2.2
0.1
1.6
(2.2)
(1.8)
(0.1)
6.8
6.7
(2.2)
(0.1)
(6.7)
(9.0)
The group incurred £0.2 million of costs associated with the acquisition, which have been recorded as operating exceptional items.
Between the date of acquisition and the balance sheet date, Smiths of Smithfield Limited contributed £2.3 million of revenue and £0.2 million of operating
loss. If the acquisition had been completed on 4 April 2017, group revenues for the period would have increased by £3.0 million and the group operating
profit would have increased by £0.5 million.
Other business combinations
The group and the company acquired the Chequers Inn (Hanham Mills) on 17 July 2017 and both the Park (Teddington) and the Bridge (Chertsey)
on 29 March 2018 as business combinations in the current period for considerations totalling £14.0 million. The aggregated fair value of the identifiable
assets and liabilities of the acquired businesses was property and equipment of £14.0 million and inventories of £nil. The group incurred £1.0 million
of costs associated with the acquisitions, which have been recorded within operating exceptional items.
Between the respective dates of acquisition and the balance sheet date these business combinations contributed £0.6 million of revenue and £nil operating
profit to the group. If the acquisitions had been completed on 4 April 2017, group revenues for the period would have increased by £2.4 million and the
group operating profit would have increased by £0.2 million.
In the prior period, the group and the company acquired the Blue Boar (Chipping Norton) and the Riverstation (Bristol) as business combinations
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 were recorded within
operating exceptional items.
In the prior period between the respective dates of acquisition and the balance sheet date, the Blue Boar and the Riverstation contributed £1.0 million of
revenue and £nil of operating profit to the group. If the acquisitions had been completed on 29 March 2016, group revenues for the prior period would
have increased by £1.7 million and the group operating profit would have increased by £0.4 million.
Cash flow from business combinations
Smiths of Smithfield Limited
Other business combinations
Total net cash outflow
2018
£m
(9.0)
(14.0)
(23.0)
2017
£m
–
(3.8)
(3.8)
57
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
Continued
14. DIVIDENDS ON EQUITY SHARES
Final dividend (previous period)
Interim dividend (current period)
2018
52 weeks
Pence
2017
53 weeks
Pence
2018
52 weeks
£m
2017
53 weeks
£m
9.62
9.41
9.07
8.88
19.03
17.95
4.7
4.6
9.3
4.4
4.3
8.7
In addition, the board is proposing a final dividend in respect of the period ended 2 April 2018 of 10.20 pence per share at a cost of £5.0 million.
If approved, it is expected to be paid on 12 July 2018 to shareholders who are on the register of members at the close of business on 8 June 2018.
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
2018
52 weeks
£m
2017
53 weeks
£m
30.1
3.4
(0.4)
–
33.1
30.0
3.4
(0.1)
(0.9)
32.4
Number
Number
48,862,927
33,413
48,774,457
26,331
48,896,340
48,800,788
Pence
61.60
6.14
67.74
Pence
61.56
6.13
67.69
Pence
61.51
4.92
66.43
Pence
61.47
4.92
66.39
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 33,413 (2017: 26,331) 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.
58
16. GOODWILL
2018
Geronimo
Bell at Stow
580 Limited
2017
Geronimo
Bell at Stow
580 Limited
2018
Geronimo
Bell at Stow
580 Limited
2017
Bell at Stow
580 Limited
Strategic report
Directors’ report
Financial statements
Shareholder information
Group
At 3 April
2017 Acquisitions
£m
£m
Impairment/
disposal
£m
At 2 April
2018
£m
18.8
0.2
0.9
19.9
–
–
–
–
–
(0.2)
–
(0.2)
18.8
–
0.9
19.7
At 28 March
2016
£m
Acquisitions
£m
Impairment/
disposal
£m
At 3 April
2017
£m
19.5
0.2
0.9
20.6
–
–
–
–
Company
(0.7)
–
–
(0.7)
18.8
0.2
0.9
19.9
At 3 April
2017 Acquisitions
£m
£m
Impairment/
disposal
£m
At 2 April
2018
£m
–
0.2
0.9
1.1
1.0
–
–
1.0
–
(0.2)
–
(0.2)
1.0
–
0.9
1.9
At 28 March
2016
£m
Acquisitions
£m
Impairment/
disposal
£m
At 3 April
2017
£m
–
–
–
0.2
0.9
1.1
–
–
–
0.2
0.9
1.1
The opening goodwill of £19.9 million arose on the acquisition of Geronimo Group Limited, 580 Limited and the Bell at Stow Limited. 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, an impairment assessment on the Bell at Stow identified an impairment of £0.2 million which has been expensed through
the income statement.
During the prior period, the leases of the Three Bells and the Five Tuns (both at Heathrow) 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 the Five Tuns, £0.7 million, had
been expensed and classified within exceptional items.
The trade and assets of Geronimo Airports Limited were transferred into Young’s at book value during the period and in December 2017 Geronimo
Airports Limited went into members’ voluntary liquidation. As a result, associated goodwill has been transferred into Young’s creating goodwill of
£1.0 million within the company.
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 (2017: 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% (2017: 7.8%). 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 2 April 2018 and the board is therefore comfortable that presently no reasonably
possible change in key assumptions would give rise to an impairment.
59
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
Continued
17. PROPERTY AND EQUIPMENT
Group
Fixtures,
fittings &
equipment
£m
Land &
buildings
£m
Cost or valuation
At 28 March 2016
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
At 3 April 2017
Additions
Business combinations
Disposals
Fully depreciated assets
Transfers from lease premiums
Transfer in from subsidiary companies
Revaluation(1)
– effect of upward movement
in property valuation
– effect of downward movement
in property valuation
623.8
9.4
3.0
(0.3)
(1.6)
(6.5)
27.0
(7.5)
647.3
9.3
12.7
(1.0)
(0.7)
0.4
–
32.5
(4.9)
118.8
25.0
0.8
(0.2)
(0.3)
(22.8)
–
–
121.3
20.7
3.5
–
(11.3)
–
–
–
–
Total
£m
742.6
34.4
3.8
(0.5)
(1.9)
(29.3)
27.0
(7.5)
768.6
30.0
16.2
(1.0)
(12.0)
0.4
–
32.5
(4.9)
Company
Fixtures,
fittings &
equipment
£m
Land &
buildings
£m
560.8
8.4
3.0
(0.3)
(1.6)
(7.1)
26.5
(6.7)
583.0
9.3
11.6
(1.0)
(0.7)
–
59.7
32.5
(4.9)
104.5
22.0
0.8
(0.1)
(0.3)
(20.9)
–
–
106.0
20.2
3.4
–
(11.2)
–
15.6
–
–
Total
£m
665.3
30.4
3.8
(0.4)
(1.9)
(28.0)
26.5
(6.7)
689.0
29.5
15.0
(1.0)
(11.9)
–
75.3
32.5
(4.9)
At 2 April 2018
695.6
134.2
829.8
689.5
134.0
823.5
Depreciation and impairment
At 28 March 2016
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
Depreciation charge
Disposals
Fully depreciated assets
Transfers from lease premiums
Transfer in from subsidiary companies
Revaluation(1)
– effect of downward movement
in property valuation
– effect of upward movement
in property valuation
38.9
1.6
–
(0.4)
(6.5)
3.6
(6.7)
30.5
1.8
–
(0.7)
0.2
–
1.8
(3.7)
53.9
18.2
(0.1)
(0.2)
(22.8)
–
–
49.0
19.3
–
(11.3)
–
–
–
–
92.8
19.8
(0.1)
(0.6)
(29.3)
3.6
(6.7)
79.5
21.1
–
(12.0)
0.2
–
1.8
(3.7)
34.4
0.8
–
(0.4)
(7.1)
3.4
(5.8)
25.3
1.5
–
(0.7)
–
4.7
1.8
(3.7)
48.6
16.2
(0.1)
(0.2)
(20.9)
–
–
43.6
18.9
–
(11.2)
–
5.7
–
–
83.0
17.0
(0.1)
(0.6)
(28.0)
3.4
(5.8)
68.9
20.4
–
(11.9)
–
10.4
1.8
(3.7)
At 2 April 2018
29.9
57.0
86.9
28.9
57.0
85.9
Net book value
At 28 March 2016
At 3 April 2017
584.9
616.8
64.9
72.3
649.8
689.1
526.4
557.7
55.9
62.4
582.3
620.1
At 2 April 2018
665.7
77.2
742.9
660.6
77.0
737.6
60
Strategic report
Directors’ report
Financial statements
Shareholder information
(1) The group’s net book value uplift during the period was £29.5 million (2017: £22.6 million). This uplift was recognised either in the revaluation reserve
or the income statement, as appropriate. The impact of the revaluations was as follows:
Income Statement
Revaluation loss charged as impairment
Reversal of past impairment
Revaluation reserve
Unrealised revaluation surplus
Reversal of past surplus
Net revaluation increase in property
Group
Company
2018
£m
2017
£m
2018
£m
2017
£m
(1.8)
2.1
0.3
34.1
(4.9)
29.2
29.5
(3.5)
3.0
(0.5)
30.7
(7.6)
23.1
22.6
(1.8)
2.1
0.3
34.1
(4.9)
29.2
29.5
(3.3)
2.9
(0.4)
29.4
(6.8)
22.6
22.2
(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 (2017: Level 3) in the fair value hierarchy.
The key inputs to valuation on property and equipment are as follows:
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
12.0
Spot
Spot
Segment
2018
Managed houses
Ram Pub Company
Managed houses
Ram Pub Company
Segment total
Short leaseholds
Unallocated
Total net book value at 2 April 2018
2017
Managed houses
Ram Pub Company
Managed houses
Ram Pub Company
Segment total
Short leaseholds
Unallocated
Total net book value at 3 April 2017
Number
of pubs
123
48
25
17
213
42
–
255
122
53
18
19
212
40
–
252
Value
of pubs
£m
574.6
39.5
80.9
20.3
715.3
19.3
8.3
742.9
545.8
42.8
59.8
16.2
664.6
16.3
8.2
689.1
If, at 2 April 2018, the property estate had been carried at historic cost less accumulated depreciation and impairment losses, its carrying amount
would have been approximately £449.5 million (2017: £425.7 million).
The revaluation surplus represents the amount by which the fair value of the estate exceeds its historic cost.
61
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
Continued
17. PROPERTY AND EQUIPMENT (CONTINUED)
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 £61.4 million
(2017: £54.2 million). Increasing the EBITDA used in the revaluation by 10% would increase the valuation by £61.4 million (2017: £54.2 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 28 March 2016
Disposals
At 3 April 2017
Additions
Disposals
At 2 April 2018
2018
£m
31.3
2017
£m
30.9
7.4
2.5
Company
£m
31.3
(1.1)
30.2
6.7
(1.2)
35.7
Group subsidiary undertakings
Geronimo Inns Limited
Geronimo Airports Limited (in members’ voluntary liquidation)
580 Limited
Smiths of Smithfield Limited
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
During the period, the company acquired 100% of the share capital of Smiths of Smithfield Limited, creating an additional investment of £6.7 million.
The trade and the assets of Geronimo Airports Limited were transferred into Young’s during the period and in December 2017 Geronimo Airports
Limited went into members’ voluntary liquidation. An investment disposal of £1.2 million was recognised in respect of this. For further details on the
transfer, see note 16.
During the period, Bermondsey Woolpack Limited was struck off and dissolved at its own request. Prior to that, it was a wholly-owned subsidiary
of the company.
All group subsidiaries’ registered offices are at Riverside House, 26 Osiers Road, Wandsworth, London SW18 1NH.
19. INVENTORIES
Finished goods and raw materials
62
Group
Company
2018
2017
2018
£m
3.0
£m
2.8
£m
3.0
2017
£m
2.1
Strategic report
Directors’ report
Financial statements
Shareholder information
20. TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Prepayments and accrued income
Amounts due from subsidiaries
Group
Company
2018
2017
2018
£m
2.3
0.8
3.9
–
7.0
£m
2.9
0.8
3.5
–
7.2
£m
2.3
0.8
3.9
1.6
8.6
2017
£m
3.0
0.8
2.6
16.3
22.7
Trade receivables are denominated in sterling, are non-interest bearing and are generally on 0-20 days’ terms. The above carrying values are shown
net of a provision for impairment and equate to fair value.
At 2 April 2018, trade receivables with a nominal value of £0.8 million (2017: £0.6 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
2018
£m
0.6
0.3
(0.1)
0.8
The amounts written off in the period were specific debts which proved irrecoverable.
The analysis of trade receivables at 2 April 2018 is as follows:
Neither
past due
nor impaired
£m
2.1
2.2
Total
£m
2.3
2.9
<31
days
£m
0.2
0.2
31-60
days
£m
–
0.1
61-90
days
£m
–
0.1
2018
2017
2017
£m
0.8
0.1
(0.3)
0.6
91+
days
£m
–
0.3
Of the trade receivables that are neither past due nor impaired by value, 3.5% (2017: 29.0%) reflects new customers with no previous history
of default, 46.5% (2017: 36.8%) represents existing customers with no history of default and 50.0% (2017: 34.2%) represents existing customers
with some history of default.
21. ASSETS HELD FOR SALE
Properties held for sale
Group
Company
2018
£m
–
2017
£m
1.3
2018
£m
–
2017
£m
1.3
In the prior period, two properties were classified as held for sale. Both properties have been sold in the current period. The value of the property
and equipment held for sale represented the expected net disposal proceeds at the prior period end. This included a net upwards revaluation of
£0.4 million which was included within the prior year income statement as an exceptional item. Upon disposal in the current period, a £0.3 million
profit has been recognised within the income statement as an exceptional item. Both properties were 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
2018
£m
13.0
4.8
7.2
5.9
–
30.9
2017
£m
14.2
9.1
7.2
4.8
–
35.3
2018
£m
13.0
4.8
7.2
5.9
57.3
88.2
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.
2017
£m
14.1
8.8
6.6
4.3
4.7
38.5
63
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
Continued
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 works within a
financial framework aimed at keeping net debt to EBITDA not greater than 4.0 times. At the period end, the net debt to EBITDA was 2.0 times
(2017: 1.9 times), providing the group with plenty of headroom. All covenants in relation to bank loans have also been fully complied with.
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
uncertainties 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.
2018
2017
Increase/
decrease
in %
Effect on profit
before tax
£m
+1.0
–0.5
+1.0
–0.5
(0.40)
0.20
(0.26)
0.13
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 liabilities
Group and company
2018
£m
(1.9)
(4.7)
(6.6)
2017
£m
(2.9)
(7.9)
(10.8)
Fair value movement of interest rate swaps recognised in other comprehensive income
4.3
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.
64
(b) Loans, borrowings, interest rates and fair values
2018
Secured
£30 million loan swapped into fixed rate
£20 million loan swapped into fixed rate
£30 million loan swapped into fixed rate
£10 million loan swapped into fixed rate
£10 million loan swapped into fixed rate
£75 million revolving credit facility
Term or
expiry date
Effective
interest rate
when hedged
Variable
interest rate
Period
rate fixed
when unhedged(1)
Group and company
March 2021
March 2021
March 2023
May 2024
May 2024
March 2023
4.34%
2.23%
5.97%
2.77%
2.71%
Variable
L+1.50%
L+1.50%
L+0.95%
L+1.35%
L+1.50%
L+0.75%
3 years
3 years
5 years
6 years
6 years
None
(1) For variable rate loans, the interest rate payable is either 1-month or 3-month LIBOR (L) plus the margin shown.
Unsecured
Current borrowings
Finance leases
Financial liabilities
Current borrowings
Non-current financial liabilities
Financial liabilities
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
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
Strategic report
Directors’ report
Financial statements
Shareholder information
Fair
value
2018
£m
31.5
19.8
35.3
10.0
9.8
37.4
Book
value
2018
£m
29.9
20.0
30.0
9.9
9.9
37.4
143.8
137.1
10.0
0.6
147.7
Group Company
2018
£m
10.0
2018
£m
10.0
137.7
137.7
147.7
147.7
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
104.7
133.2
2017
£m
28.5
104.7
133.2
The secured borrowings are secured on the assets of the group (other than two pubs, broadly up to a value of £10.0 million, which provide security
to the Young & Co.’s Brewery, P.L.C. Pension Scheme).
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. The group enters into interest rate derivatives with various banks; these counterparties each have investment grade credit
ratings. Interest rate swaps are valued using Level 2 valuation techniques, which employ the use of market observable inputs. The valuation techniques
include swap models using present value calculations. The models incorporate various inputs, including the credit quality of counterparties, discount
factors and interest rate curves. As at 2 April 2018, the marked-to-market value of other derivative asset positions is net of a credit valuation adjustment
attributable to derivative counterparty default risk. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment
for derivatives designated in hedge relationships.
65
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
Continued
23. CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS (CONTINUED)
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 loans
During the year, the group refinanced a number of our banking facilities. In May 2017, the group entered into a new bilateral £10 million term loan
with Barclays Bank plc, a new bilateral £10 million term loan with HSBC Bank plc, both repayable on 23 May 2024. This was used to immediately
extinguish a £20 million term loan with Royal Bank of Scotland plc that was due to expire in March 2018. Arrangement fees relating to the new loans
were capitalised and will be written off to the income statement over the life of term loan. Any remaining capitalised arrangement fees associated with
the extinguished loan were written off immediately to the income statement.
The group also has a bilateral £30 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 with the Royal Bank of Scotland is repayable 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
on the previous page.
Revolving credit facility
In March 2018, the group entered into a new £75 million revolving credit facility split evenly with Barclays and HSBC. This was used to replace the
previous equivalent sum revolving credit facility with RBS and Barclays. Arrangement fees relating to the revolving credit facility were capitalised and
will be written off to the income statement over the life of the facility. Any remaining capitalised arrangement fees associated with the extinguished
facility were written off immediately to the income statement.
At the period end, £38.0 million was drawn. Final repayment of the total drawn down balance is due as one payment on 20 March 2023. 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
2018
Borrowings
Trade and other payables
Derivative financial instruments
2017
Borrowings
Trade and other payables
Derivative financial instruments
Maturity of financial liabilities
Within
one year
£m
10.9
25.3
2.8
39.0
Within
one year
£m
29.0
26.2
3.2
58.4
Between
one and
two years
£m
Between
two and
five years
£m
1.1
–
2.8
3.9
Between
one and
two years
£m
24.6
–
2.5
27.1
122.8
–
6.3
129.1
Between
two and
five years
£m
52.6
–
6.5
59.1
After
five years
£m
20.0
–
0.3
20.3
After
five years
£m
30.0
–
1.5
31.5
Total
£m
154.8
25.3
12.2
192.3
Total
£m
136.2
26.2
13.7
176.1
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.
66
(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
Strategic report
Directors’ report
Financial statements
Shareholder information
Group and company
Fair value
2018
£m
Level 1
2018
£m
Level 2
2018
£m
Level 3
2018
£m
6.6
6.6
–
–
Fair value
2017
£m
Level 1
2017
£m
10.8
10.8
–
–
6.6
6.6
Level 2
2017
£m
10.8
10.8
–
–
Level 3
2017
£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.
(f) Changes in liabilities arising from financing activities
Bank loans
Derivative financial instruments
Finance leases
Group and company
At
4 April
2017
£m
Changes
in fair
value
£m
Cash
flows
£m
New
loans
£m
Expired
loans
£m
132.6
14.2
–
20.0
(20.0)
10.8
0.6
–
–
(4.3)
–
–
–
–
–
At
2 April
2018
£m
147.1
6.6
0.6
Other
£m
0.3
0.1
–
Total liabilities from financing activities
144.0
14.2
(4.3)
20.0
(20.0)
0.4
154.3
Group and company
At
29 March
2016
£m
Changes
in fair
value
£m
Cash
flows
£m
New
loans
£m
Expired
loans
£m
Other
£m
At
3 April
2017
£m
Bank loans
Derivative financial instruments
Finance leases
142.8
(10.4)
12.1
0.6
–
–
Total liabilities from financing activities
155.5
(10.4)
–
(1.3)
–
(1.3)
–
–
–
–
–
–
–
–
0.2
132.6
–
–
10.8
0.6
0.2
144.0
67
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
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
2018
£m
2017
£m
2018
£m
2017
£m
1.2
1.0
2.8
0.6
0.8
6.4
1.9
2.2
1.9
0.5
0.9
7.4
1.2
1.0
2.8
0.6
0.8
6.4
1.9
2.2
1.8
0.5
0.9
7.3
Deferred tax liabilities
Rolled over gains on property revaluations
(54.6)
(51.6)
(54.6)
(47.3)
Net deferred tax liabilities
(48.2)
(44.2)
(48.2)
(40.0)
Opening balance
Tax credit in the income statement
Tax (charge)/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:
Group
Company
2018
£m
(44.2)
1.2
(5.2)
–
–
(48.2)
2017
£m
(47.3)
2.1
0.9
0.1
–
(44.2)
2018
£m
(40.0)
1.3
(5.2)
–
(4.3)
(48.2)
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 28 March 2016
(Charged)/credited to the income statement
(Charged)/credited to other comprehensive income
Credited directly to equity
Balance as at 3 April 2017
(Charged)/credited to the income statement
Charged to other comprehensive income
Balance as at 2 April 2018
2.2
–
(0.3)
–
1.9
–
(0.7)
1.2
1.2
(0.1)
1.1
–
2.2
(0.2)
(1.0)
1.0
1.1
0.8
–
–
1.9
0.9
–
2.8
0.9
(0.4)
–
–
0.5
0.1
–
0.6
0.8
–
–
0.1
0.9
(0.1)
–
0.8
2017
£m
(42.4)
1.9
0.8
0.1
(0.4)
(40.0)
Total
£m
6.2
0.3
0.8
0.1
7.4
0.7
(1.7)
6.4
The deferred tax liability increased by £3.0 million (2017: decreased £1.9 million) in the period. Of this amount, £0.5 million (2017: £1.8 million) was
credited to the income statement and £3.5 million (2017: credited £0.1 million) was charged 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 3 April 2018 and 1 April 2020 and 17% for the remainder.
The group has realised capital losses of £4.9 million (2017: £4.3 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 (2017: £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 £3.3 million (2017: £2.7 million).
A deferred tax asset has been recognised in respect of these losses in both the current and the prior period. The group’s tax losses can
be carried forward for an unlimited period.
68
Strategic report
Directors’ report
Financial statements
Shareholder information
In addition, the group has unrealised capital losses of £10.0 million (2017: £13.4 million). No deferred tax asset has been recognised in respect of these
losses (2017: £nil) because it is uncertain whether they will be utilised. The company has unrealised capital losses of £9.8 million (2017: £11.7 million);
no deferred tax asset has been recognised in respect of these losses (2017: £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 defined benefit scheme is closed to new entrants.
The aggregate contribution to the defined contribution scheme was £0.8 million (2017: £0.7 million) which is recognised as an expense in the
income statement.
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 2 April 2018 was £1.3 million of which £1.2 million were special
contributions (2017: £1.5 million of which £1.2 million were special contributions) plus premiums of £0.2 million (2017: £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 8% and 11% 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 2019 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 2019 financial
period are expected to be £0.2 million. During the year, the company provided security over two managed houses (broadly up to a total value of
£10 million) with additional funding contributions continuing to be paid for the foreseeable future. The two managed houses had previously been
subject to a floating charge in favour of the banks which provide the company with its loan facilities.
Financial assumptions
Discount rate
Inflation
Rate of increase in salaries
Discretionary pension increases
Rate of revaluation of deferred pensions
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
2018
%
2.70
3.30
2.50
3.30
2.30
N/A
2017
%
2.70
3.40
2.50
3.40
2.40
N/A
2018
%
2.70
3.30
N/A
N/A
N/A
9.00
2018
Years
22.1
24.0
23.8
25.8
2017
%
2.70
3.40
N/A
N/A
N/A
9.00
2017
Years
22.8
24.1
23.9
25.9
At the period end date, the average age of current pensioners was 73 years (2017: 72 years) and for future pensioners was 54 years (2017: 54 years).
The weighted average duration of liabilities for the current period was 18.6 years (2017: 19.8 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 the defined benefit obligation
Increase
£m
Decrease
£m
–
0.4
–
(0.3)
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
Rate of increase in salary
Discretionary pension increases
Rate of revaluation of deferred pensions
Life expectations
Change in assumption
Increase/decrease by 0.5%
Increase/decrease by 0.5%
Increase/decrease by 0.5%
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/decrease by nil
Increase/decrease by 6.0%
Increase/decrease by 2.0%
Increase by 4.0%
69
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
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
2018
£m
36.2
11.3
12.2
56.4
9.6
(0.8)
124.9
(131.0)
2017
£m
34.2
10.8
12.1
56.2
10.0
0.2
123.5
(136.3)
(6.1)
(12.8)
The pension scheme assets includes some of the company’s A shares with a fair value of £5.2 million (2017: £4.6 million). There are no property
assets of the scheme occupied by the company.
Of the above assets, £116.1 million are quoted securities.
Movement in scheme deficits in the period
2018
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
(8.8)
(0.3)
1.3
(0.2)
5.6
(2.4)
(4.0)
–
0.2
(0.1)
0.2
(3.7)
(b) Recognised in the income statement
Group and company
Total
£m
(12.8)
(0.3)
1.5
(0.3)
5.8
(6.1)
Pension
scheme
£m
(2.2)
(0.3)
1.5
(0.1)
(7.7)
(8.8)
2017
Health
care
scheme
£m
(4.1)
–
0.2
(0.1)
–
(4.0)
Total
£m
(6.3)
(0.3)
1.7
(0.2)
(7.7)
(12.8)
Current service cost included in operating costs
(0.3)
–
(0.3)
(0.3)
–
(0.3)
Net interest expense
(0.2)
(0.1)
(0.3)
(0.1)
(0.1)
(0.2)
(c) Recognised in the statement of comprehensive income
Experience gains arising on the scheme liabilities
Changes in demographic assumptions underlying
the scheme liabilities
Changes in financial assumptions underlying
the scheme liabilities
Remeasurement of obligations
Return on scheme assets (less amounts included
in the net interest expense)
Net remeasurement recognised
1.1
0.9
2.0
4.0
1.6
5.6
0.2
–
–
0.2
–
0.2
1.3
0.9
2.0
4.2
1.6
5.8
1.8
6.0
(25.9)
(18.1)
10.4
(7.7)
–
–
–
–
–
–
1.8
6.0
(25.9)
(18.1)
10.4
(7.7)
70
Strategic report
Directors’ report
Financial statements
Shareholder information
Group and company
2018
Pension Health care
scheme
scheme
£m
£m
Pension
scheme
£m
2017
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
(132.3)
(0.3)
(3.5)
(0.1)
4.0
4.9
(4.0)
–
(0.1)
–
0.2
0.2
(136.3)
(0.3)
(3.6)
(0.1)
4.2
5.1
(114.0)
(0.3)
(3.9)
(0.1)
(18.1)
4.1
Present value of scheme liabilities
(127.3)
(3.7)
(131.0)
(132.3)
(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
123.5
3.3
1.6
1.3
0.1
(4.9)
–
–
–
0.2
–
(0.2)
123.5
3.3
1.6
1.5
0.1
(5.1)
111.8
3.8
10.4
1.5
0.1
(4.1)
Fair value of scheme assets
124.9
–
124.9
123.5
(4.1)
–
(0.1)
–
–
0.2
(4.0)
–
–
–
0.2
–
(0.2)
–
26. OTHER NON-CURRENT LIABILITIES
At 28 March 2016
Created
At 3 April 2017
Released on disposal of property
Created
At 2 April 2018
Group and company
Deferred
income
£m
Provisions
£m
1.0
0.1
1.1
(0.5)
0.1
0.7
–
–
–
–
0.5
0.5
Total
£m
(118.1)
(0.3)
(4.0)
(0.1)
(18.1)
4.3
(136.3)
111.8
3.8
10.4
1.7
0.1
(4.3)
123.5
Total
£m
1.0
0.1
1.1
(0.5)
0.6
1.2
The provisions relate to four property leases where the expected operating income does not cover the rents payable. The rent payable
commitments range from 2 to 46 years.
27. SHARE CAPITAL AND RESERVES
Issued and fully paid shares – 12.5p each
Opening balance
Issued under employee share schemes
2018
Shares
2018
£000
2017
Shares
2017
£000
48,809,518
6,102
48,669,491
6,084
65,304
8
140,027
18
Closing balance
48,874,822
6,110
48,809,518
6,102
Of the opening balance of 48,809,518 shares, 29,649,518 are A shares and 19,160,000 are non-voting shares (2017: 29,509,491 A shares,
19,160,000 non-voting shares). Of the closing balance of 48,874,822 shares, 29,714,822 are A shares and 19,160,000 are non-voting shares
(2017: 29,649,518 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, or to attend,
speak or vote at, general meetings.
71
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
Continued
Share premium account
The share premium account represents the excess of proceeds received over the nominal value of new shares issued.
Capital redemption reserve
The capital redemption reserve arose from the repurchase and subsequent cancellation of ordinary share capital. The balance represents the
nominal amount of the share capital cancelled.
Hedging reserve
Hedging reserve adjustments arise from the movement in fair value of the group’s derivative instruments used as an effective hedge.
Revaluation reserve
The revaluation reserve represents unrealised gains generated on the property estate from annual property valuations. It arises from the
surplus of fair value over the original cost, net of any associated deferred taxation.
28. SHARE AWARDS
The group operates two types of share-based payment arrangements: an executive director/senior management employee deferred bonus
scheme (“DBS”) and a Save-As-You-Earn (“SAYE”) scheme.
(a) DBS
This scheme is designed to incentivise the executive 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 subject to caps, the highest of which is equal
to 125% of basic annual salary (which applies to the chief executive and the chief financial officer). For the senior management employees, there is no
expectation that any bonus will be settled in shares, but the individual 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 nevertheless
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. So, if the company decides to pay a bonus entirely
in cash, no ‘matching’ shares are receivable. None of the individuals are generally free to sell any of the shares received before the end of a restricted
period which ordinarily will end three years after the shares have been received or, if earlier, the date on which their employment terminates by reason of
retirement, 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 received, whether ‘matching’ or otherwise, have to be transferred to the company or to an
employee benefit trust designated by the company at a pre-agreed price or, in the case of ‘matching’ shares, for no consideration. The number of shares to
be received by an individual in order to fulfil his or her entitlement is based on the market price of the company’s A shares as shown in the online version
of the Financial Times published on the date on which the shares are allotted (in the case of shares to be issued) or on the date of transfer set out in the
relevant transfer form (in the case of shares to be transferred).
The following table summarises the outstanding entitlements to A shares under the DBS as at 3 April 2017 and 2 April 2018 of the directors and senior
management employees who served during the period ended 2 April 2018. All these shares are registered in the relevant individual’s name and, save as
explained above, are fully vested. The weighted fair value of the A shares awarded during the period was 1,342 pence (2017: 1,201 pence). During the year,
the ‘matching’ shares were issued on the same date as the ‘non-matching’ shares which had a market value of 1,332 pence per share.
Date
of award
Matching
shares
(Y/N)
At
3 April
2017
Awarded
during
the period
Restrictions
ceased to
apply during
the period
At Market price
(pence per
share)
2 April
2018
September 2014
September 2014
June 2015
June 2015
June 2016
June 2016
September 2014
September 2014
June 2015
June 2016
June 2016
June 2017
June 2017
September 2014
September 2014
June 2015
June 2015
June 2016
June 2016
June 2017
June 2017
September 2014
September 2014
June 2015
June 2015
June 2016
June 2016
June 2017
June 2017
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
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
–
–
–
–
–
–
–
–
–
–
–
–
–
17,671
8,835
–
–
–
–
–
–
7,252
3,626
–
–
–
–
–
–
7,045
3,522
(32,478)
(16,239)
–
–
–
–
(21,744)
(10,872)
–
–
–
–
–
(2,682)
(2,682)
–
–
–
–
–
–
(12,599)
(6,299)
–
–
–
–
–
–
–
–
22,446
11,223
22,199
11,099
–
–
7,522
15,495
7,747
17,671
8,835
–
–
2,343
2,343
2,551
2,551
7,252
3,626
–
–
8,977
4,488
10,428
5,214
7,045
3,522
960.0
12.5
1,280.0
12.5
1,205.0
12.5
960.0
12.5
1,280.0
1,205.0
12.5
1,332.0
12.5
960.0
12.5
1,280.0
12.5
1,205.0
12.5
1,332.0
12.5
960.0
12.5
1,280.0
12.5
1,205.0
12.5
1,332.0
12.5
Stephen Goodyear
Patrick Dardis
Steven Robinson
Torquil Sligo-Young
72
Strategic report
Directors’ report
Financial statements
Shareholder information
Tracy Read
Senior management
employees
Date
of award
Matching
shares
(Y/N)
June 2017
September 2014
September 2014
June 2015
June 2015
June 2016
June 2016
June 2017
June 2017
N
N
Y
N
Y
N
Y
N
Y
At
3 April
2017
–
6,501
6,501
7,712
7,712
8,449
8,449
–
–
Awarded
during
the period
Restrictions
ceased to
apply during
the period
At Market price
(pence per
share)
2 April
2018
2,579
–
–
–
–
–
–
6,936
6,936
–
(6,501)
(6,501)
–
–
–
–
–
–
2,579
–
–
7,712
7,712
8,449
8,449
6,936
6,936
1,332.0
960.0
12.5
1,280.0
12.5
1,205.0
12.5
1,332.0
12.5
* For ‘matching’ shares, the price shown is the nominal value.
The performance periods for the awards dated June 2015, June 2016 and June 2017 are the group’s four-year financial periods ending on or
around 31 March 2018, March 2019 and March 2020 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. It is anticipated that the maximum target for the adjusted earnings per share performance conditions
will be met as to 100% for the awards dated June 2015, as to 90% for the awards dated June 2016 and as to 70% for the awards dated June 2017.
A charge of £0.5 million (2017: £0.3 million) was made to the group and company income statements in respect of the outstanding 103,473
‘matching’ shares at 2 April 2018 (2017: 134,019).
(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 73,312 A shares (2017: 46,732 A shares) were granted under the scheme at an exercise price of 1,066p per share
(2017: 964p per share). Subject to the participants remaining in the group’s employment and making 36 consecutive monthly contributions, these
options will be exercisable between 1 September 2020 and 28 February 2021.
Options over 106,220 A shares were outstanding at the beginning of the period. During the period, a total of 15,135 options lapsed, 28,081 options
were exercised at 840p per share, 1,974 options were exercised at 1,013p per share and 246 options were exercised at 964p per share. The weighted
average share price of shares exercised in the period was 1,359 pence per share. The options that were exercised, to the extent they were satisfied
through the issue of new shares, resulted in an increase in share capital of £112.75 and an increase in share premium of £7,502.49. A charge of
£0.1 million (2017: £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 2 April 2018, options over 134,096 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 ending 2 April 2018 and
3 April 2017 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
2017 plan
2016 plan
2015 plan
2014 plan
1,332.0
1,066.0
8.5
3
1.5
2.4
29.2
1,205.0
964.0
18.0
3
1.5
0.9
26.1
1,265.5
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
Volatility is based on the standard deviation of an 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.
73
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
Continued
29. RELATED PARTY TRANSACTIONS
Directors
Directors’ emoluments and retirement benefits are disclosed in notes 8(b) and (c). Directors’ interests in the company’s share capital are disclosed
or referred to on page 20 and in notes 8(e) and 28. No other transactions requiring disclosure have been entered into with the directors.
Pension scheme and other trust
The Young & Co.’s Brewery, P.L.C. Pension Scheme (the “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 2 April 2018, the Scheme held 337,067 A
shares (2017: 337,067), being 1.13% of the class. During the period, the company granted a charge over two of its pubs as security for its obligation
to make payments to the Scheme. The company felt that it was appropriate to agree to this so as to demonstrate its commitment to the Scheme
and to provide YPTL, as trustee, with greater comfort as to the security of the Scheme. The charge was based on a standard form document issued
by the Pension Protection Fund.
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 2 April 2018, the trust held 7,345
A shares (2017: 66,991), being 0.02% of the class. During the year, a number of A shares were transferred out in connection with the company’s
profit sharing scheme (31,104 A shares (2017: 493,820) – see note 8(d)) and the company’s savings-related share option scheme (28,542 A shares
(2017: nil) – see note 8(e)).
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 (2017: £0.4 million) and incurred a share based payment
charge of £0.3 million (2017: £0.4 million).
30. NET CASH GENERATED FROM OPERATIONS AND ANALYSIS OF NET DEBT
Group
Company
2018
52 weeks
£m
2017
53 weeks
£m
2018
52 weeks
£m
2017
53 weeks
£m
37.6
5.6
0.3
43.5
21.1
0.7
0.2
(0.3)
(0.3)
0.5
(1.2)
0.1
0.6
(0.2)
0.4
(3.7)
61.4
37.0
5.5
0.2
42.7
19.8
0.6
0.7
0.5
–
–
(1.4)
0.1
0.4
(0.3)
(0.8)
1.2
63.5
29.3
6.6
0.3
36.2
20.4
0.3
0.2
(0.3)
(0.3)
0.5
(1.2)
0.1
0.6
(0.9)
7.6
(9.4)
53.8
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
Group
Company
2018
£m
7.2
(10.0)
(137.7)
2017
£m
6.6
(28.5)
(104.7)
2018
£m
7.2
(10.0)
(137.7)
(140.5)
(126.6)
(140.5)
2017
£m
5.3
(28.5)
(104.7)
(127.9)
Profit before tax on continuing operations
Net finance cost
Other finance charges
Operating profit on continuing operations
Depreciation
Amortisation of lease premiums
Goodwill impairment
Movement on revaluation of properties
Net profit on sales of property
Loss on disposal
Difference between pension service cost and cash contributions paid
Movement in other provisions
Share based payments
Movements in working capital
- Inventories
- Receivables
- Payables
Net cash generated from operations
Analysis of net debt
Cash
Current borrowings – current borrowings and loan capital
Non-current borrowings – loan capital and finance lease
Net debt
74
Strategic report
Directors’ report
Financial statements
Shareholder information
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
Group
Company
2018
£m
2017
£m
2018
£m
2017
£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
Future minimum rentals receivable from non-cancellable subleases on the above properties as at 2 April 2018 were £0.4 million (2017: £0.1 million).
(b) Operating lease agreements where the group is lessee
Operating leases for properties are for terms ranging from one to 46 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 not more than four years.
2018
£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
7.2
25.7
60.3
93.2
Group
Company
2017
£m
6.4
22.5
38.0
66.9
2018
£m
6.2
22.5
55.7
84.4
2017
£m
3.5
11.5
20.4
35.4
Future minimum rentals receivable from non-cancellable subleases on the above properties as at 2 April 2018 were £0.8 million (2017: £0.7 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 17 years.
Future minimum rentals receivable under non-cancellable operating leases are as follows:
3.7
- Not later than one year
5.4
- Later than one year and not later than five years
4.0
- Later than five years
3.5
6.1
6.2
3.7
5.4
4.0
13.1
15.8
13.1
32. Post balance sheet events
There were no post balance sheet events apart from the acquisition of the Naturalist (Woodberry Down).
33. Contingent liabilities
There were no contingent liabilities at the current or prior period balance sheet date.
3.4
6.0
6.2
15.6
75
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
FIVE YEAR REVIEW
Strategic report
Directors’ report
Financial statements
Shareholder information
Revenue
279.3
268.9
245.9
227.0
210.8
2018
2017
2016
2015
2014
52 weeks
53 weeks
52 weeks
52 weeks
52 weeks
£m
£m
£m
£m
£m
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
46.9
(3.4)
(5.9)
37.6
(7.5)
30.1
41.0
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
782.6
18.0
(47.1)
(204.3)
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)
549.2
493.0
452.5
407.6
380.9
6.1
543.1
549.2
6.1
486.9
493.0
6.1
446.4
452.5
6.1
401.5
407.6
6.0
374.9
380.9
Purchase of fixed assets, lease premiums
and business combinations
53.0
38.3
45.1
50.9
33.6
Net debt
(140.5)
(126.6)
(130.2)
(129.0)
(112.0)
Per 12.5p ordinary share
Adjusted basic earnings from continuing operations
Basic earnings from continuing operations
Dividends – paid in period
67.74
61.60
19.03
66.43
61.51
17.95
58.44
54.73
16.94
51.04
54.14
15.97
42.70
45.19
15.06
Pence
Pence
Pence
Pence
Pence
Gearing
25.6%
25.7%
28.8%
31.6%
29.4%
Average number of employees
4,116
3,924
3,735
3,496
3,357
76
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, 8 July 2018. Appointing a proxy does
not stop you from attending the meeting and voting. An attendance 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 129th annual general meeting of Young & Co.’s Brewery, P.L.C. (the “Company”) will be held in the Civic
Suite in Wandsworth Town Hall, Wandsworth High Street, Wandsworth, London SW18 2PU on Tuesday, 10 July 2018 at 11.30am for the
following purposes:
Ordinary resolutions
To consider and, if thought fit, to pass the following resolutions which will be proposed as ordinary resolutions:
1. To receive the Company’s annual accounts for the financial year ended 2 April 2018, together with the strategic report, directors’ report
and the auditor’s report on those accounts and reports.
2. To declare a final dividend of 10.20p per share for the financial year ended 2 April 2018.
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 set the remuneration of the Company’s auditor.
5. That Torquil Sligo-Young be, and is hereby, re-appointed as a director.
6. That Roger Lambert be, and is hereby, re-appointed as a director.
7. That Trish Corzine be, and is hereby, re-appointed as a director.
8. That Ian McHoul be, and is hereby, re-appointed as a director.
9. That the Company and all companies that are subsidiaries of the Company at any time during the period for which this resolution
has effect be, and are hereby, authorised to:
(a) make political donations to political parties, not exceeding £50,000 in total;
(b) make political donations to political organisations other than political parties, not exceeding £50,000 in total; and
(c) incur political expenditure, not exceeding £50,000 in total;
in each case at any time during the period starting with the date this resolution is passed and ending at the end of next year’s annual
general meeting (or, if earlier, at the close of business on 30 September 2019) but the aggregate amount of political donations and political
expenditure that may be made and incurred by the Company and its subsidiaries pursuant to this authority must not exceed £50,000.
Note: for the purposes of this resolution, “political donation” has the meaning given in section 364 of the Companies Act 2006, “political
expenditure” has the meaning given in section 365 of the Companies Act 2006 and reference to a “political party” or to a “political
organisation” is to a party or to an organisation to which Part 14 of the Companies Act 2006 applies.
10. That the directors be, and are hereby, authorised to allot shares in the Company and to grant rights to subscribe for, or to convert any
security into, shares in the Company:
(a) up to a nominal amount of £2,034,450 (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 £4,068,900 (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
2019) 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.
77
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018
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,
to the allotment (otherwise than under paragraph (a) above) of equity securities or sale of treasury shares up to a nominal amount
of £305,472,
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 2019)
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 4,887,567 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 2019)
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
23 May 2018
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
78
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, 9 July 2018 (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 attendance 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 or its registrars. To be valid, your proxy
form must be received by the Company’s registrars no later than 11.30am on Sunday, 8 July 2018.
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 or its registrars 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.
79
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018 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
or its registrars. 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. Their telephone number is 0370 707 1420.
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 2018 annual report or any proxy form for the Company’s 129th annual general meeting may not be used to
communicate with the Company for any purpose other than any expressly stated.
80
EXPLANATORY NOTES TO THE NOTICE OF MEETING
Strategic report
Directors’ report
Financial statements
Shareholder information
Notice of the 129th annual general meeting of Young & Co.’s
Brewery, P.L.C. (the “Company”) to be held on Tuesday, 10 July
2018 is set out on pages 77 to 80. 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 9.41p per share was paid in December 2017.
The directors are recommending a final dividend of 10.20p per share
for the year ended 2 April 2018, bringing the total dividend for the year
to 19.61p per share. Subject to approval being given, the final dividend
is expected to be paid on 12 July 2018 to shareholders on the register
at the close of business on 8 June 2018.
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 set the auditor’s remuneration.
Resolutions 5-8: re-appointments of directors
Each of Torquil Sligo-Young, Roger Lambert and Trish Corzine will be
retiring automatically from the office of director at the meeting; this is
because they held that position at the last two annual general meetings
and did not retire at either of them. Ian McHoul will also be retiring
automatically from the office of director at the meeting; this is because
he was appointed by the board since the last annual general meeting.
All of these individuals are seeking re-appointment and their brief
biographical and other details are on pages 18 and 19.
Resolution 9: political donations etc.
This resolution seeks renewal of the existing authority for the Company
and its subsidiaries to make or incur certain political donations and
political expenditure. Although there is no intention to make or incur
such donations or expenditure, the legislation is very broadly drafted
and may catch activities such as funding seminars and other functions
to which politicians are invited and supporting certain bodies involved
in policy review and law reform. The authority given by this resolution
will be capped at £50,000 in total.
Resolution 10: general 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 £2,034,450 – this amount represents
approximately one-third of the Company’s issued share capital as at
20 May 2018 (but would be reduced by the nominal amount of any
shares allotted or rights granted under paragraph (b) of this resolution
in excess of £2,034,450). 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 £4,068,900,
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 20 May 2018. Therefore the maximum nominal
amount of shares and rights that may be allotted or granted under this
resolution is £4,068,900. 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
2019). 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 £305,472.
This aggregate nominal amount represents approximately 5% of the
Company’s issued share capital as at 20 May 2018. 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 2019).
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 4,887,567
of its shares, being no more than 10% of its issued share capital as
at 20 May 2018. 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 2019). 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 2018, there were options outstanding over 133,084 A shares,
representing 0.27% of the Company's issued share capital at that
date. If the Company were to purchase (and cancel) 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 0.34%
of the Company's issued share capital. No warrants to subscribe for
shares are outstanding.
81
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018 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
Park H
Staines
Bells T
Walton-on-Thames
Royal George T
Swan
Chertsey
Crown Hotel H
Bridge 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
Burnham-on-Sea
Dunstan House Inn H
Congresbury
Old Inn T
Wrington
Plough Inn T
Somerton
Unicorn T
Exeter
City Gate H
Double Locks
Exmouth
Grove
Sidmouth
Swan T
82
Littleton-on-Severn
White Hart
Sherston
Rattlebone T
Bristol
Bristol Ram T
Highbury Vaults
Horts
Rope Walk T
Riverstation
Hanham
Chequers Inn
Keynsham
Lock Keeper
Castle Cary
Horse Pond T
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
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
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
Candlemaker
Dirty Dick’s
Finch’s
Grocer G
Fox & Anchor H
Lamb Tavern
Oyster Shed G
Paternoster
Smiths
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 House T
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
Malt Shovel T
Key
Young’s managed house unless marked
Tenanted
Geronimo
Hotel
T
G
H
Sherfield-on-Loddon
White Hart
Cobham
Old Bear T
Guildford
Weyside
Witley
White Hart T
Emsworth
Sussex Brewery T
Fetcham
Bell
Leatherhead
Penny Black
Effingham
Plough T
Betchworth
Dolphin
Dorking
Falkland Arms T
Old House T
Stonebridge
Royal Oak T
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
Hindon
Lamb Inn H
Shaftesbury
Mitre
Southampton
Heartbreakers T
Chichester
Crown & Anchor
Bognor Regis
Waverley
83
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018 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, FCA
Chief Financial Officer
Torquil Sligo-Young
Information Resources
Tracy Read
People
Roger Lambert
Non-executive Senior Independent
Trish Corzine
Non-executive
Nick Miller
Non-executive
Ian McHoul
Non-executive
Company Secretary
Anthony Schroeder
Audit committee
Roger Lambert (Chairman)
Stephen Goodyear
Trish Corzine
Nick Miller
Ian McHoul
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 2018
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
7 June 2018
Ex-dividend date for final dividend
8 June 2018
Record date for final dividend
10 July 2018
Annual general meeting
12 July 2018
Payment of final dividend
15 November 2018
Interim results announcement
22 November 2018
Ex-dividend date for interim dividend
23 November 2018
Record date for interim dividend
7 December 2018
Payment of interim dividend
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85
YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2018 A PINT OF ‘SPECIAL’ BY TH E RIVER B ANK
AS THE SUMMER EVENING SUN F ADES AW AY
A COLD WINTER’S WALK TO T HE VILLAG E GR EE N
FOR WARMTH AND COMFORT ON A S NO WY DAY .
A CELEBRAT ION IN A CITY BAR
AS A BUSY SPRING WEEK COMES TO A C LO SE
A PLACE FOR RELAXING AND L OVIN G LI FE
WHERE FAMILIES BOND AND FRIENDSHIP GRO WS .
A DATE NIGHT, A GROUP NIGH T, A W ORKING LUNCH
GREAT FOOD, GREAT BEER, COM E RAIN O R SU N
AND THE COMFORT OF THAT FAMILIAR SI GN
“YOUNG’S”, IT SAYS, “ESTD 18 31” .
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