Adam and Eve Albert Albion Alexander Pope Alexandra Alma Alphabet Angel and Greyhound Bear Bear Inn Beaufort Bell Bell
Adam and Eve Albert Albion Alexander Pope Alexandra Alma Alphabet Angel and Greyhound Bear Bear Inn Beaufort Bell Bell
Hotel Betjeman Arms Bickley Bishop Blue Boar Boathouse Brewers Inn Bridge Hotel Britannia Brook Green Hotel Buckingham
Hotel Betjeman Arms Bickley Bishop Blue Boar Boathouse Brewers Inn Bridge Hotel Britannia Brook Green Hotel Buckingham
Arms Builders Arms Bull Bull and Gate Bulls Head Bunch of Grapes Candlemaker Canonbury Carnarvon Arms Castle Chelsea
Arms Builders Arms Bull Bull and Gate Bulls Head Bunch of Grapes Candlemaker Canonbury Carnarvon Arms Castle Chelsea
Ram Chequers Cherry Tree City Gate Clarence Clockhouse Coach and Horses Coat and Badge Coborn Cock Tavern Coopers
Ram Chequers Cherry Tree City Gate Clarence Clockhouse Coach and Horses Coat and Badge Coborn Cock Tavern Coopers
Arms County Arms Cow Crooked Billet Crown Crown and Anchor Crown Hotel Curtains Up Cutty Sark Defectors Weld Depot
Arms County Arms Cow Crooked Billet Crown Crown and Anchor Crown Hotel Curtains Up Cutty Sark Defectors Weld Depot
Devonshire Dial Arch Dirty Dicks Dog and Fox Dolphin Double Locks Duchess of Kent Duke of Cambridge Duke of Clarence Duke
Devonshire Dial Arch Dirty Dicks Dog and Fox Dolphin Double Locks Duchess of Kent Duke of Cambridge Duke of Clarence Duke
of Wellington Duke on the Green Duke’s Head Dunstan House Inn Eagle Elgin Fellow Fentiman Arms Finch’s Fire Stables Flask
of Wellington Duke on the Green Duke’s Head Dunstan House Inn Eagle Elgin Fellow Fentiman Arms Finch’s Fire Stables Flask
Foley Founder’s Arms Fox and Anchor Grange Green Man Greyhound Grocer Grove Guard House Guinea Half Moon Halfway
Foley Founder’s Arms Fox and Anchor Grange Green Man Greyhound Grocer Grove Guard House Guinea Half Moon Halfway
House Hammersmith Ram Hand and Spear Hand in Hand Hare and Hounds Highbury Vaults Hollywood Arms Home Cottage
House Hammersmith Ram Hand and Spear Hand in Hand Hare and Hounds Highbury Vaults Hollywood Arms Home Cottage
Hope and Anchor Horts John Salt Kings Arms Kings Head King’s Head Lamb Lamb Tavern Lass O’Richmond Hill Leather Bottle
Hope and Anchor Horts John Salt Kings Arms Kings Head King’s Head Lamb Lamb Tavern Lass O’Richmond Hill Leather Bottle
Leman Street Tavern Lion and Unicorn Lock Keeper Lockhouse Lord Palmerston Manor Arms Marlborough Marquess of
Leman Street Tavern Lion and Unicorn Lock Keeper Lockhouse Lord Palmerston Manor Arms Marlborough Marquess of
Anglesey Mitre Morpeth Arms Mulberry Bush Narrowboat Naturalist New Inn Nightingale Nine Elms Tavern Northcote Old
Anglesey Mitre Morpeth Arms Mulberry Bush Narrowboat Naturalist New Inn Nightingale Nine Elms Tavern Northcote Old
Brewery Old Manor Old Shades Old Ship One Tun Orange Tree Owl and Pussycat Oyster Shed Park Hotel Paternoster Penny
Brewery Old Manor Old Shades Old Ship One Tun Orange Tree Owl and Pussycat Oyster Shed Park Hotel Paternoster Penny
Black Phoenix Plantation Plough Porchester Prince Albert Prince Alfred Princess of Wales Queen Adelaide Queen’s Red Barn Red
Black Phoenix Plantation Plough Porchester Prince Albert Prince Alfred Princess of Wales Queen Adelaide Queen’s Red Barn Red
Lion Richard the First Riverside Riverstation Roebuck Rose and Crown Seagate Hotel Shaftesbury Ship Smiths of Smithfield
Lion Richard the First Riverside Riverstation Roebuck Rose and Crown Seagate Hotel Shaftesbury Ship Smiths of Smithfield
Spotted Horse Spread Eagle Spring Grove Station Hotel Station Tavern Surprise Swan Theodore BullfrogTrafalgar Arms Trinity
Spotted Horse Spread Eagle Spring Grove Station Hotel Station Tavern Surprise Swan Theodore BullfrogTrafalgar Arms Trinity
Arms Victoria Village Inn Waterfront Waterside Waverley Weyside Wheatsheaf White Bear White Cross White Hart White Horse
Arms Victoria Village Inn Waterfront Waterside Waverley Weyside Wheatsheaf White Bear White Cross White Hart White Horse
Windmill Wood House Woolpack Worplesdon Place Abercorn Arms Angel Bells Black Cat Black Lion Boisdales Bristol Ram
Windmill Wood House Woolpack Worplesdon Place Abercorn Arms Angel Bells Black Cat Black Lion Boisdales Bristol Ram
Calthorpe Arms Castle Clapham North Crane Dog & Bull Falkland Arms Fountain Inn Fox and Hounds Gardeners Grand Junction
Calthorpe Arms Castle Clapham North Crane Dog & Bull Falkland Arms Fountain Inn Fox and Hounds Gardeners Grand Junction
Arms Grapes Grey Horse Greyhound Grove House Heartbreakers Hope Horse Pond Inn Jolly Gardeners Lord Nelson Lord
Arms Grapes Grey Horse Greyhound Grove House Heartbreakers Hope Horse Pond Inn Jolly Gardeners Lord Nelson Lord
Wargrave Malt Shovel Marquess Tavern New Inn O’Connors Old House Old Inn Old Sergeant People’s Park Tavern Pig and
Wargrave Malt Shovel Marquess Tavern New Inn O’Connors Old House Old Inn Old Sergeant People’s Park Tavern Pig and
Whistle Plough Inn Prince William Henry Queens Arms Railway Bell Railway Telegraph Rattlebone Inn Red Cow Rising Sun
Whistle Plough Inn Prince William Henry Queens Arms Railway Bell Railway Telegraph Rattlebone Inn Red Cow Rising Sun
Riverside Inn Robin Hood Rope Walk Rose & Crown Royal George Royal Oak Ship Ship Inn Spread Eagle Square Tavern Surprise
Riverside Inn Robin Hood Rope Walk Rose & Crown Royal George Royal Oak Ship Ship Inn Spread Eagle Square Tavern Surprise
Sussex Brewery Swan Inn Thatched House Three Lords Two Doves Unicorn Hotel Waggon & Horses Watermans Arms White Hart
Sussex Brewery Swan Inn Thatched House Three Lords Two Doves Unicorn Hotel Waggon & Horses Watermans Arms White Hart
A N N U A L R E P O R T
F O R T H E 5 2 W E E K S E N D E D 1 A P R I L 2 019
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
18
20
22
23
24
FINANCIAL STATEMENTS
Independent auditor’s report
Group income statement
39
44
Group statement of comprehensive income
45
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,
advisers and others
Shareholder information
46
47
48
49
50
80
81
85
86
88
88
View our Annual Report 2019 on our website:
www.youngs.co.uk/investors
Financial highlights
Strategic report
Directors’ report
Financial statements
Shareholder information
2019
£m
2018
£m
%
CHANGE
Revenue
303.7
279.3
Adjusted operating profit(1)
Operating profit
Adjusted profit before tax(1)
Profit before tax
Net cash generated from operations
48.5
44.6
43.4
39.5
69.2
+8.7
+3.4
+2.5
+5.9
+5.1
46.9
43.5
41.0
37.6
61.4
+12.7
Adjusted basic earnings per share(1)
72.13p
67.74p
Basic earnings per share
64.36p
61.60p
+6.5
+4.5
Dividend per share
(interim and recommended final)
20.78p
19.61p
+6.0
Net assets per share(2)
£12.12
£11.24
+7.8
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.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019
1
2
Chairman’s statement
Stephen Goodyear, Chairman
It has been another highly
successful period of trading
which included the fantastic
early summer weather
and was capped off with
Young’s making its most
significant acquisition since
2010, with the purchase of
the Redcomb group and its
15 pubs in January 2019.
+8.7%
Revenue
£67.1
million
invested
22nd
consecutive
increase of
dividend
Strategic report
Directors’ report
Financial statements
Shareholder information
Brexit-related uncertainty and the current
impasse in Parliament continues to
remain an issue for the entire economy,
although we are yet to see any material
impact on our business. Longer term,
we believe that whatever the outcome
of Brexit, London, home to the majority
of our pubs, will continue to thrive as a
major cosmopolitan city.
We have a proven and winning strategy of
maintaining and operating a differentiated,
premium and well-invested pub estate,
focussed on London and Southern
England. Hospitality is at the heart of our
economy and we continue to believe in
the individuality and the power of each
Young’s pub, often at the heart of their
communities. Our record level of adjusted
EBITDA is testament to this proven
formula of owning and managing pubs
that our customers continue to frequent
and enjoy. Elsewhere we continue to
invest in our people and technology,
recognising how integral they are to our
long-term success.
On the back of another good set
of results, the board is delighted to
recommend our 22nd consecutive annual
dividend increase, this time by 6.0%
again, to 10.81 pence. If approved by
shareholders, this will result in a total
dividend for the year of 20.78 pence
(2018: 19.61 pence) and it is expected to
be paid on 11 July 2019 to shareholders
on the register at the close of business
on 7 June 2019.
Finally, following an extensive search,
we are delighted that Mike Owen will
be joining the Young’s team as Chief
Financial Officer in September. With over
10 years’ experience in the drinks and
pub sector, Mike comes with an intimate
knowledge of the industry and will bring
a fresh perspective to the finance function.
I would like to take this opportunity to
thank Steve Robinson for his contribution
to Young’s over the past 9 years, and
more recently Daniel Quint for the
dedication he has shown in his role as
interim CFO. We wish them both well
for the future.
Stephen Goodyear
Chairman
22 May 2019
In total, group revenue was up 8.7%
to £303.7 million, underpinned by our
strong managed house like-for-like sales
growth of 5.1%. Our well-invested and
premium managed houses were well
placed to capitalise on the key trading
periods of the year. The Ram Pub
Company has also had a highly successful
year, with like-for-like sales growth
of 5.0%.
The ongoing margin pressures facing the
industry are well documented and we are
not immune to these; however, our strong
EBITDA margin performance of 24.0%
remains one of the highest in the sector.
The year saw us achieve record adjusted
EBITDA of £72.8 million (2018: £68.7
million), an increase of 6.0%. Adjusted
basic earnings per share increased by
6.5% and at the year-end stood at 72.13
pence per share; on an unadjusted basis,
basic earnings per share were at 64.36
pence per share.
A core characteristic of Young’s success
in recent years has been the consistent
investment for future growth through
a combination of acquisitions and
investment in our estate which is made
possible by our strong cash generation.
In the year, we invested a total of £67.1
million; this included the acquisition of the
15 Redcomb pubs, as well as two further
standalone managed pubs. With one eye
on our future pipeline we also acquired
the People’s Park Tavern (Hackney), a tied
freehold pub now within our tenanted
estate, and the freehold of a Lloyds Bank
site in Farnham. Following another year of
increased investment, encouragingly the
business remains conservatively financed
with net debt of £163.6 million (2018:
£140.5 million), being 2.2 times adjusted
EBITDA (2018: 2.0 times).
We have made two improvements to our
financing arrangements. First, we used the
£25 million accordion within our revolving
credit facility, extending our long-term
borrowing capacity to £200 million.
Secondly, following the end of the financial
year, we secured additional long-term debt
financing through a private placement;
this will see us raise £35 million in July
2019 at a fixed interest rate of 3.30% for
20 years. This secured financing provides
us with additional financial headroom at
enhanced long-term rates and allows us
to refinance part of the group’s bank debt
whilst continuing to invest in the business
and make further acquisitions.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019
3
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
11
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 66.4% drink, 29.0% 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 predominately
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
11
Chief executive’s review
Strategic report
Directors’ report
Financial statements
Shareholder information
Patrick Dardis, Chief Executive
I am delighted to announce
another strong set of results,
driven by our well-invested,
premium managed house
estate that continues to
operate at the highest
standards in the industry.
+5.1%
Like-for-like
revenue
269
pubs
Adjusted
profit before tax
£43.4
million
Our riverside locations, beautiful gardens
and growing number of roof terraces
meant the business was well placed to
take advantage of the fabulous summer
weather and the performance of the
England football team at the FIFA World
Cup. The Christmas trading period was
also very strong, with Young’s pubs
packed full of seasonal cheer
and merriment.
Total revenue was up 8.7% to £303.7
million, yet again underpinned by our
managed house like-for-like performance,
enhanced by complementary, eye-
catching acquisitions. Through strong
conversion, profit before tax was up 5.1%
to £39.5 million or up 5.9% to £43.4
million once adjusted for exceptional items.
Group operating margins of 16.0%
were maintained once again at a high
level for the industry, albeit slightly lower
than last year (2018: 16.8%). This reflects
a significant amount of investment
over the past 18 months for long-term
growth, both in our existing estate and
acquisitions, including the recently added
Redcomb pubs, as well as the external
cost pressures facing the industry.
Established, expanding
and consistent
The main driver of the group
performance was our managed house
division, which now makes up 95.6% of
turnover, where like-for-like sales in the
period were up 5.1%. This represents
the eighth consecutive year of increases
over 4.2% and is a great indicator
of our strength and resilience over a
sustained period of time. Our strong
results are a testament to the quality of
our incredible people who bring our
premium pubs to life and demonstrate
that our strategy continues to deliver.
In January we acquired 15 pubs through
our purchase of the Redcomb pub
group. They complement the existing
Young’s managed house estate both
in and around London, as well as build
on a growing presence in the South
West. Each of the pubs has a premium
offering and distinct personality that
differentiates it in its local market.
All with individual qualities, the pubs
possess tremendous opportunities for
future growth through expanding the
trading space, improved operational
excellence and by introducing the
unique Young’s style.
We acquired three more pubs during
the year. Through our ongoing
partnership with Berkeley Homes we
opened the Naturalist (Hackney), a
long leasehold, along with two freehold
purchases: the Plantation (Poole),
which also contributed to our growing
bedroom stock with ten bedrooms,
and the People’s Park Tavern, which
will be ‘warehoused’ in the Ram Pub
Company and in the future provides
a fantastic opportunity for a managed
pub. Following these investments, our
total pub count at the end of the year
stood at 269, split with 199 of those as
managed houses and the remaining
70 operating under the Ram Pub
Company. At the same time, we have
increased our managed room stock by
88, or 15.2%, to 668 rooms.
Within the existing estate, we have also
made significant investment. The two
hotels acquired at the end of the last
financial year, the Park (Teddington)
and the Bridge (Chertsey), have both
recently completed transformational
refurbishments to their pub offer,
bringing them in line with the Young’s
standard. We also started on site at
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019
5
Chief executive’s review
Continued
the Dog & Fox (Wimbledon Village)
where work has begun on adding
11 new hotel rooms and a dedicated
function space, and close to my heart,
in March we re-opened the Hand in
Hand (Wimbledon Village), the pub
where I pulled my first pint. Amongst
many others, these great projects will
make significant contributions in the
year ahead.
Strong performance in a
challenging environment
The current economic and political
climate remains a challenge, and with
each year the costs to our business
increase; I am delighted, despite this,
that the Young’s team has delivered
these results. Total adjusted operating
profits are at a record high of £48.5
million, up by 3.4%, with an operating
margin for the year of 16.0%. In the
last year our managed and tenanted
businesses both performed strongly and
we have once again delivered results at
the forefront of the industry.
In our pubs it is our general managers
and their teams who deliver premium
value for our customers. They are
some of the very best people in the
industry and really understand how
to run differentiated pubs within a
6
supportive framework. Forever the
face of our business, we are constantly
looking to increase the amount of time
they spend coaching their teams and
focussing on our customers. Managers
in offices don’t grow profitable sales; it’s
managers interacting with customers,
working on the atmosphere and the
quality of our offer, ensuring we deliver
outstanding service who do.
Investment in technology
To match the investment in our pubs
we are continually upgrading our
technology to improve our offer and
productivity. Following last year’s
successful roll out of our new till
software across the estate, we have
gained a greater understanding of
what our customers want. We have
re-launched our app, “Young’s On Tap”,
which included new bar tab features to
add to the experience of a Young’s pub.
Online, our websites play an important
role in the customer journey and we
have made significant developments
enhancing their functionality and
improving the interaction with our
customers. We have seen an increase in
organic traffic, reached new customers
and improved booking conversions
through the new concierge style events
functionality. We will continue to evolve
our digital offer to ensure we are serving
our customers most effectively.
Outlook
We have welcomed a warm Easter
and Varsity Boat Race, both falling in
April this year, as we were up against
a very positive start to last year when
temperatures during April and the early
May Bank Holiday reached 30 degrees.
For the last thirteen weeks our total
sales were up 9.4%, and like-for-like
sales were up 2.6% reflecting the
tough comparatives.
The two new hotels added last year,
the Park and the Bridge, are open
and trading strongly following their
recent investment. We will be investing
in a number of the newly acquired
Redcomb pubs over the course of the
year, although the focus for now is on
ensuring a smooth operational transition.
Since the year-end we have opened
the Depot (Kidbrooke Village) which
is a roaring success with the locals,
another pub as part of our successful
partnership with Berkeley Homes.
In April, we transferred the New Inn
(Ealing) from the Ram Pub Company
into the managed house division; the
true benefit of this will come later in the
year following a planned refurbishment.
Looking ahead, the amazing weather
throughout the summer of 2018 and
England’s World Cup success sets a high
benchmark. It has been a busy period
of acquisitions and investment in our
estate, and we are excited about the
opportunities to unlock that potential.
Patrick Dardis
Chief Executive
22 May 2019
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.
303.7
279.3
268.9
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.
Like-for-like RevPAR £
This is our like-for-like revenue per
available bedroom; it is the average
room rate achieved multiplied by
the occupancy percentage.
4.7
4.2
5.1
6
5
4
3
2
1
0
68
66
64
62
60
58
56
66.39
63.15
60.86
2017
2018
2019
2017
2018
2019
2017
2018
2019
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).
72.8
68.7
66.5
45
40
35
30
25
20
15
40.4
41.0
43.4
74
72
70
68
66
64
62
72.13
67.74
66.43
2017
2018
2019
2017
2018
2019
2017
2018
2019
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.
25.7
25.6
27.6
10
9
8
7
6
5
4
9.7
8,000
7,000
7,403
8.4
8.4
6,000
6,768
6,830
5,000
4,000
2017
2018
2019
2017
2018
2019
2017
2018
2019
320
300
280
260
240
220
200
74
72
70
68
66
64
62
50
40
30
20
10
0
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019
7
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 22
starting on page 68.
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
A reduction in our
revenue could lead to
lower profits.
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 greater 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.
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 (including non-alcoholic options), 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.
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 was increased
to £8.21 (from £7.83) with effect from 1
April 2019, 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. See also 11 below.
3. The pub industry is subject to a variety
of taxes, including business taxes, duty
on alcoholic drinks and business rates.
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.
5. Our financial structure involves bank
borrowings and, from 2 July 2019,
senior secured notes due 2039. The
business therefore needs to generate
sufficient cash to repay these debts
with accrued interest. Interest rates
are also subject to change. See also
11 below.
8
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.
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.
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.
KEY TO CHANGE IN THE RISK/UNCERTAINTY LEVEL FROM THE PRIOR PERIOD
Decrease
No change
Increase
RISK/UNCERTAINTY
POTENTIAL IMPACT
MITIGATION
Strategic report
Directors’ report
Financial statements
Shareholder information
CHANGE
IN RISK/
UNCERTAINTY
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A
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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
should any major incident occur 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. See also 11 below.
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.
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. Having gained
“employer provider” status, which enables us to
be an official training provider for apprentices,
our training programme is now active and we are
developing our own talent pool for the future.
9. Part of our growth plan is based
on acquiring and/or developing
additional pubs and hotels/rooms.
If acquisitions do not take place
and/or developments do not
occur when planned, or at all,
our desired future growth rate
will be delayed or reduced.
We have relationships with a variety of third parties to
ensure, as far as possible, that we are made aware of
acquisition opportunities as and when they come up.
We have provided a number of agents and landlords
with details of our preferred site profiles.
10. We are required to meet a range of
ever-increasing compliance, regulatory
and health and safety obligations in the
operation of our business.
11. The UK’s decision to leave the
European Union (“EU”) has led to a
heightened degree of uncertainty.
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 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.
The introduction of trade
barriers would make it costlier
for the UK to do business with
Europe and there is also a
risk that it will become more
difficult for UK businesses to
hire from the EU.
We are a UK business with a predominantly UK supplier
base and fixed price arrangements in place across many
of those relationships. We are also an ‘employer of choice’
with a strong track record of retaining talent. Having
gained ‘employer provider’ status, we are an official
training provider for apprentices, thus allowing us to
develop our own talent pool for the future; this is expected
to help mitigate staffing issues should certain of the group’s
EU staff (currently representing c. 37% of the workforce)
be forced to leave the UK post Brexit, albeit we are looking
to support them to stay in the UK. See also 2 and 8 above.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019
9
Business and financial review
Managed houses
For our managed houses it has been a
standout year. Maintaining such high
performance only gets harder with
each year, but our impressive like-
for-like sales growth of 5.1% (2018:
4.2%) demonstrates the bedrock
of consistency on which we pride
ourselves. Over the last eight years our
managed houses have averaged like-
for-like sales growth of 5.4%.
An increase in our acquisition activity
in the past 18 months has helped add
to our total revenue growth, and as a
result total revenue for the year was up
9.0%, to £290.3 million. The exciting
purchase of Redcomb’s 15 pubs has
added prime locations with tremendous
opportunities for sales growth. They
have also brought further geographical
diversity into the estate with two new
locations in the South West. We also
added the Plantation, a small hotel
with 10 rooms on the south coast near
Poole, Dorset. Aligned with our strategy
of targeted quality acquisitions in the
South of England, these pubs further
extend the Young’s reach. This now
takes our managed estate to 199 pubs,
including 30 hotels, and is an increase
of 18 pubs compared with the
previous year.
Continuing to drive and support 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 in our offer and
accompanying results 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
Sales in the first half of the year were
given the perfect start as our riverside
locations and beautiful gardens provided
ideal locations as customers looked to
bask in the sunshine for the hottest
British summer on record. For many,
the summer of 2018 will also be fondly
remembered as football fever gripped
the nation, and it wasn’t just Gareth
Southgate who liked to enjoy a pint
of Young’s Bitter, as England’s success
helped boost pub footfall during the
10
five-week tournament period. At the half
year we had achieved like-for-like sales
growth of 5.2%, which was maintained
during the second half thanks to another
exceptional Christmas season for
Young’s and some welcome early spring
sunshine; together, this saw us close out
the year with a like-for-like sales increase
of 5.1%.
Through those early summer months,
pubs were once again the focus for
social gatherings and it was our drink
sales which benefitted most. Craft lager
and ale continue to grow in popularity,
with craft keg ale sales increasing by
22.9%. Again, the premium choice
of customers is the driving force, with
the two key brands of Camden and
Beavertown being the success stories,
and their sales have now matched
those of all cask ale. For the year, total
drink sales were up 9.6% and up 6.5%
on a like-for-like basis.
Cask ale remains a key part of our
heritage and reputation and this year we
were particularly excited to work with St
Austell Brewery which now sees Proper
Job sit perfectly alongside our existing
Young’s portfolio and our established
‘local hero’ products. Young’s pubs offer
the environment for our customers to
enjoy a perfect pint of cask ale and it is
important that it maintains its presence
on the bar in the ever-changing pub
market. To ensure the premium quality
of our cask ale we closely manage
our throughputs and control cellar
temperatures, whilst our ‘Hop Masters’
training programme focuses on all things
beer; from the history and process of
brewing to the latest in beer trends.
At the start of the year we launched our
latest gin campaign, ‘Spring into Gin’,
where the focus and innovation were
on flavour, both in the gins and mixers,
adding further interest and colour. Its
success alongside the popularity of the
‘ginspired’ premium serve balloon glass
kept the Young’s gin revolution rolling
on, as sales rose by 35.2%, making it the
sixth consecutive year with sales growth
of over 20%. Our sales of gin are
34.5% of total spirit sales, and compared
with the market we are over-indexed,
highlighting our premium standing from
this resurgent product.
We have also taken on a more
premium position with our wine offer
as training and marketing activity is
aimed towards a ‘Super 6’ and ‘Focus’
range as part of our partnership with
Berkmann Wine Cellars. We continue
to benefit 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.
Our now established ‘Cocktail
Collective’, which focuses on delivering
a selective range of quality, perfectly
served cocktails, has played a significant
part in another year of outstanding
cocktail growth, with sales up 32.1%
(2018: 46.1%). The most popular cocktail
for a second successive year has been
Aperol Spritz which has seen a boom
of 70.0% (2018: 85.0%). Overall, spirit
sales grew by 14.4%.
We remain confident in our food
strategy in what continues to be a
challenging marketplace. Our expert
team of executive chefs work tirelessly
to ensure that British, seasonal and fresh
produce are at the heart of every dish
we produce. With our menus continually
changing with the seasons, this year we
introduced the ‘Famous For’ strategy
which allows each pub to find that
something different that customers can
associate them with. A fine example of
this is the Windmill (Mayfair) with a nod
to ‘proper pub grub’; its hand crafted
and traditional British seasonal pies made
with homemade pastry are winners
with its customers, and last year their
venison pie came highly commended
at the prestigious Annual Pie Awards
finishing in the top 3 of the specialty
meat class. Our five Young’s classics and
the ultimate Sunday lunches remain at
the core of our strategy. In total, food
sales were up 6.1%, and up 1.7% on a
like-for-like basis. With no Easter bank
holidays falling in the financial year, this
had a negative 0.6% pts impact on our
like-for-like food sales; excluding this
period they were up 2.3%.
Nowadays, in such a competitive
market, consumers are spoilt for
choice and expect a unique customer
experience that sets itself apart from the
crowd. A great example of this is the
Devonshire (Balham), which, following
on from last year, flipped more than
burgers as it turned the successful
“Balham Peaks” on its head, as the
popular pop-up became the “Balham
Beach Club” during the summer
months. Kitted out with sand, beach
hut cabanas and deck chairs, customers
enjoyed summer-themed cocktails and
Aperol Spritz, alongside freshly cooked
burgers straight from the Burger Shack
garden grill.
Hotel room sales have also had another
successful year, up 5.4% on a like-for-
like basis. Occupancy rates were 75.5%,
up by 0.8% pts on the previous year,
and RevPar increased by £3.24 or
5.1% to £66.39. Total accommodation
revenue has increased by a considerable
19.6%, largely driven by the two hotels
acquired at the end of the last financial
year. Split across five new hotels, we
have also added 88 rooms in the last
twelve months, bringing our total room
stock to 668. Another key part of our
premium offer is the high standard of
our hotel rooms. With designated capital
investment set aside each year for an
average of 5 hotels, improvements are
made to meet the long term vision of
our room quality. Projects focus on
improving specifications to boutique
standard, modernising bathrooms
and installing air conditioning. This
investment has gone a long way to
helping support such healthy like-for-
like sales growth.
It has been another year where we
have had to combat further increases
to our cost base. The well-publicised
cost headwinds such as business rates,
another year’s instalment of the national
living wage and the apprenticeship levy
have added significantly to our operating
costs. Over the past 18 months we have
invested significantly on acquisitions,
some of which are taking their time to
achieve their expected returns. Despite
these factors, our managed house
adjusted operating profit grew by
1.3% to £61.5 million.
Investment
In the year, we were extremely excited
to acquire Redcomb Pubs, the owner
and operator of 15 sites in prime
locations in and around London and in
the South West, increasing our coastal
presence and further enhancing the
Young’s brand. They fit well with our
strategy, which focusses on adding high
quality managed houses where our
premium offer will work extremely well.
Elsewhere we made other major
acquisitions, openings and transfers,
all of which are unique in their own
way yet still at the premium end of the
market. The highlights include:
• the Naturalist, a new waterside
development in the regeneration area
of Woodberry Down (Hackney), and
another in the list of pubs opened in
partnership with Berkeley Homes;
• the Plantation, further increasing our
hotel room stock with the addition of
10 rooms at Canford Cliffs Beach, near
to the well-known Sandbanks in Poole;
and
• the Bear, now a stunning refurbished
18th century country inn, in Cobham
in the heart of Surrey, transferred
from the Ram Pub Company late in
the financial year.
A common theme in all these
acquisitions is their superb locations
and future potential, both fundamental
factors in our investment decisions.
During the course of the year,
including acquisitions, we invested
£52.2 million in our managed estate.
Strategic report
Directors’ report
Financial statements
Shareholder information
Significant investment was made in
two of last year’s acquisitions, the
Park and the Bridge, with the pub
and dining areas at both transformed,
elevating these businesses to show
the best in class, premium standards
of Young’s. Alongside these, we have
targeted investment in our core estate,
designed to update or increase trading
areas with major projects undertaken
at the Bull (Westfield Shepherd’s
Bush), Cow (Westfield Stratford),
Coach & Horses (Kew), Hand in
Hand, Red Barn (Lingfield), Waterside
(Fulham), Wheatsheaf (Borough
Market) and the White Hart (Sherfield).
Customer engagement
Technology is such an important part
of the customer experience, from the
start to the end of their interaction with
the pub, and we understand how vital
it is to our success. This year we have
re-launched our corporate website onto
an updated platform to offer customers
a visually more impactful experience
and a smoother customer journey, as
well as driving search optimisation. We
are seeing the benefit of modernising
our individual pub websites, resulting
in above industry-average booking
conversion rates and significant growth
in online bookings across the pubs.
Elsewhere we have launched our new
hotel booking system, facilitating a
seamless customer journey. Its 7 stage
booking process allows guests to tailor
their stay to the occasion, whether it be
adding a bottle of something bubbly in
the room, reserving a table for dinner
or arranging tickets for a local event.
Now in its third year, ‘Young’s On
Tap’ was re-launched with a simpler
mobile payment process to enhance the
customer journey and drive revenue.
Our new bar tab functionality allows
customers to create a digital tab via
the app, order at the bar or to their
table and invite guests to join their tab.
When it’s time to leave, payment and
bill splitting can all be done through the
app, giving customers flexibility while
taking pressure off staff, leaving them
more time to serve customers. The
latest update is now able to support our
centralised marketing campaigns by
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 11
Business and financial review
Continued
12
providing targeted treats for users with
accompanying push notifications to
encourage repeat visits.
The customer journey wouldn’t be
complete without the interaction with
our teams and the pubs themselves.
This year we completed the roll out of
our new enhanced till system which
allows for a more interactive experience
for staff as well as the infrastructure
that connects with multiple third party
platforms, reflecting our belief that
trading is only likely to become ever
more reliant on technology.
The Ram Pub Company
It has been a strong year for the Ram
Pub Company, with focus on good
estate management as well as building
on the opportunities that we can help
to develop and support through healthy
working relationships with our tenants.
We sold two pubs at the tail of the
estate for combined proceeds of £1.3
million: the William IV (Bletchingley)
and the King’s Arms (Mitcham), whilst
also exiting from our lease agreement
at the Queen’s Head (Stepney Green).
In early 2019, we transferred the Bear,
acquired last year, to our managed
house division in order to maximise
its potential further, returning it to its
former glory as a fantastic, local village
pub. Other transfer opportunities do
exist within the Ram Pub Company
which we will look to harvest when the
time is right for both us and our tenants.
As a result of the above movements,
the Ram Pub Company ended the
year with 70 pubs down from 74 in
the previous year.
Revenue and profits
In total, revenue within the Ram Pub
Company was up by 3.2%, reflective
of the net reduction in pubs. On a like-
for-like basis, revenue growth was up
5.0%; the highest in over a decade, with
growth driven from both increased beer
sales as well as the rents we receive from
our tenants.
Our increasing like-for-like sales,
improving margins and continued
investment have resulted in total
adjusted operating profit of £5.0 million,
an increase of £0.6 million or 13.6%.
Our average pub EBITDA was £96.4K
(2018: £80.6K) and remains one of the
highest in the sector.
With the good year for the Ram Pub
Company, it now represents 7.5% of
adjusted operating profit at pub level
whilst its share of total group revenue
has fallen to 4.3%.
Investment
In December 2018, we welcomed the
People’s Park Tavern and its tenant into
the Ram Pub Company. This attractive
freehold pub has an extensive garden
which backs onto the edge of Victoria
Park in East London and, in time,
will become another exciting future
managed opportunity. Within our
existing estate, we follow a structured
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 Calthorpe Arms
(Bloomsbury), Grand Junction Arms
(Harlesden), Surprise (Lambeth), Swan
Inn (Sidmouth) and the White Hart
(Witley). In addition to these projects
we are currently underway with the
exciting development of the Ram Inn
(Wandsworth) on the site of the old
Ram Brewery, which will see this iconic
pub restored back to its former glory.
Completion and opening of the pub is
due early in the new financial year.
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. By
reflecting industry codes of practice,
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”.
Strategic report
Directors’ report
Financial statements
Shareholder information
Property, treasury, going
concern, retirement benefits,
exceptional items and tax
Property
Our balance sheet strength is
underpinned by our predominately
freehold estate in many highly
desirable locations. 222 of our total
269 pubs are freehold or long
leaseholds with peppercorn rents. Our
total estate is now valued at £807.0
million (2018: £742.9 million). The
increased value has been driven by
acquisitions, major developments
and improving existing pub values,
especially in our London heartland,
assisted by our growing 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 £25.2 million (2018:
£29.5 million). This is comprised of an
upward movement of £25.3 million
(2018: £29.2 million) reflected in the
revaluation reserve and a downward
movement of £0.1 million (2018:
£0.3 million reversal of downward
movement) recognised in the income
statement under exceptional items.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 13
Business and financial review
Continued
Treasury
We remain highly cash generative. Our
operating cash flow was £69.2 million
(2018: £61.4 million) with our premium
business and predominantly freehold
estate outperforming the market.
Following the acquisition of Redcomb
pubs, our total net debt has increased
by £23.1 million to £163.6 million. The
leverage ratio impact of the Redcomb
acquisition was slightly exaggerated due
to the completion date falling in the
last quarter of the year. Nevertheless,
our net debt to adjusted EBITDA ratio
remains conservative at 2.2 times (2018:
2.0 times) underpinned by our strong
balance sheet, giving us opportunities to
pursue our acquisition strategy. Gearing
is 27.6% (2018: 25.6%).
During the year, we utilised the accordion
mechanism in our revolving credit facility,
extending it from £75 million to £100
million and thus bringing our year-end
funding facilities to £200 million. Taken
out in March 2018, the revolving credit
facility, split evenly between HSBC and
Barclays, initially ran until 2023. We
extended the facility to 2024; a further
one year option to extend to 2025
remains. All our remaining facilities are
unamended. Of our drawn debt, 61.0%
is on fixed interest rates.
14
After the end of the financial year we
secured additional long-term debt
financing through a private placement.
This will see us raise £35 million in July
2019, with Barings receiving senior
secured notes at a fixed interest rate of
3.30% for 20 years.
Going concern
Given our long-term facilities, our
freehold estate, significant free cash
flow and the conservative financial ratios
referred to above, we have prepared
our 2019 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
deficit has increased by £2.5 million
to £8.6 million. Compared with last
year, the rate of inflation has remained
flat whilst we have continued our
commitment with another year
of special contributions, totalling
£1.2 million, and we remain fully
committed to ensuring the pension
scheme is adequately funded.
A recent High Court judgement
handed down regarding the
Lloyds Banking Group’s defined
benefit pension scheme will affect
many pension schemes in the UK,
including the company’s scheme. The
judgement concluded that schemes
should be amended to ensure that
members who have guaranteed
minimum pensions receive the same
benefits regardless of their gender.
This change impacts on guaranteed
minimum pension benefits accrued
between 1990 and 1997. The
trustee of the company’s scheme
is considering the impact of the
judgement on scheme liabilities and
individual members, and at 1 April
2019 this work is ongoing.
In consultation with independent
actuaries, the company has estimated
that the financial effect of equalising
benefits is to increase the company’s
accounting pension deficit in the
balance sheet by £2.5 million. This
is required to be accounted for as
a benefit change, and a non-cash
charge has been recognised as
a past service cost.
Exceptional Items
Due to the size and nature of the
guaranteed minimum pension charge,
the £2.5 million has been presented
as an exceptional item in the income
Strategic report
Directors’ report
Financial statements
Shareholder information
statement, making up the majority of the
total £3.9 million of exceptional items.
It was another busy year on the
acquisition front and the associated
costs related to business combinations
were £1.2 million (2018: £1.2 million).
The most significant investment
decision of the year was the acquisition
of the Redcomb group, and there were
further costs relating to the People’s
Park Tavern. The Bear was the latest
pub to transfer across to the managed
house division following its acquisition
in the prior year. An early termination
was also agreed with the tenant of the
Bayee Village (Wimbledon Village) as
part of the project at the Dog & Fox.
Compensation payable to terminate
their lease agreements early is
expensed under IFRS, with the cost in
the year of £0.5 million included within
exceptional items.
The remaining exceptional items are
a charge relating to the revaluation
of the pub estate of £0.1 million, as
mentioned previously, along with a
profit on disposal of two tenanted pubs
of £0.4 million.
Tax
Our corporation tax charge for the
year was £8.0 million, with a fall in our
effective corporation tax rate for the
year, adjusted for exceptional items, of
0.6% pts to 18.7%. The headline UK
corporation tax rate remained at 19.0%
and is set to reduce in future years to
17.0% from April 2020 impacting on
deferred tax balances.
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 existing estate and our hand-picked
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 help continue our proud record of
consecutive dividend increases.
This year, we are pleased to
recommend raising the final dividend
for the 22nd consecutive year, once
again by 6.0%, this time to 10.81
pence. If approved by shareholders,
this will give a total dividend for the
year of 20.78 pence (2018: 19.61
pence), representing a real income
increase from Young’s shares.
Our adjusted earnings per share now
stands at 72.13 pence per share, up
6.5%. On an unadjusted basis, earnings
per share rose by 4.5% to 64.36 pence.
These earnings per share figures result
in a healthy dividend cover of 3.5 times
and 3.1 times respectively.
On behalf of the board
Patrick Dardis
Chief Executive
22 May 2019
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 15
Most pints of Young’s
Special sold in the year:
Alexandra, Wimbledon
Most coastal site:
Boathouse, Appledore
Pub facts
Owned since inception
in 1831: Spotted Horse,
Putney
Most fish dishes
sold in the year:
Crown & Anchor,
Chichester
16
Strategic report
Directors’ report
Financial statements
Shareholder information
Most gin-based drinks
sold in the year:
Ship, Wandsworth
Most pints of Young’s
Bitter sold in the year:
Lamb Tavern, City of
London
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 17
New boutique
bedrooms added at:
Park, Teddington
Most steak dishes
sold in the year:
Guinea, Mayfair
Corporate social responsibility
We are committed to
investing in our people and
their future. We conduct our
business in a socially and
environmentally responsible
manner, benefiting the
communities in which we
work and remembering that
we are custodians of a long
and proud history.
Our people
We have always believed that our
team is our greatest asset and how we
nurture and develop them is crucial in
delivering our winning strategy. At 1
April 2019 we employed 4,874 (2018:
4,116) people and we see everyone’s
well-being as vitally important for
them to enjoy and continue working
with us. There are so many different
aspects to personal well-being;
understanding this, we made it one
of our key people initiatives this past
year to focus on both the mental and
financial elements.
It is widely recognised that an
important part of an individual’s
well-being stems from good financial
health. From October 2018, we
partnered with Salary Finance to offer
support and advice to employees free
of charge to help them live healthier,
happier lives through the current and
future financial decisions they make.
Working with Salary Finance, we have
also introduced a financial support
programme. This aims to help our
staff get out of any financial difficulties
they may find themselves in by offering
access to affordable loans through
their salary as it is earned. Since the
programme’s launch, 9.2% of our
employees have engaged with their
team, with 2.9% of eligible employees
having applied for support under the
scheme offered.
18
Mental health is now more widely
talked about in public, given greater
coverage in the media and has been
discussed in Parliament where there
are thoughts of implementing it as
part of compulsory education in the
UK. In recognising its importance to
our own employees, our initial key
initiative has been the training of
mental health first aiders from within
our People Team. Further mental
health training has been given to our
head office employees and to those in
our pubs, alongside a workshop held
by the License Trade Charity on the
support they can offer to people
in need.
Our Management Academy, now
in its 7th cycle, is aimed at setting
up our future managers for success.
This year we are very proud that 50
general manager vacancies have been
filled through internal candidates.
Not just focussed on finding the
general managers of the future, our
Management Academy has produced
four graduates who have taken up
roles in our support functions.
The government recognised that
Young’s apprenticeship scheme is an
18-month commitment focusing on
progressing kitchen porters through
to qualified chefs. Work is underway
to expand our suite of available
apprenticeships with the addition of
a course to cover front of house staff.
Our community
Our pubs play an important part in the
heart of their communities and we are
extremely proud of the continued efforts
they make in this regard. The role that
our pubs take on can either be financially
through charitable contributions or the
endless events they hold for members
of their community.
This year, in the month of October, we
held a coordinated charitable fundraising
effort across the company with teams
from the pubs and head office holding
local, individual and unique events.
Examples of fundraising events that
took place came in all different shapes
and sizes such as marathons, barrel
rolling, a ‘MasterChef’ style cook off by
head office staff, and a pyjama party.
Across the month events raised almost
£50,000 for a host of charities that
were selected in consultation with pub
customers adding to the community
aspect. Chosen charities ranged from
larger national charities to local not-for-
profit organisations closer to home such
as Shepherd’s Bush Families, Glass Door
Homeless Charity, Noah’s Ark Children’s
Hospice, St George’s Hospital, DT38
Foundation, Stem4 and Wimbledon
Food Bank. With its success in 2018,
plans are already afoot for an even
bigger total in 2019.
There are many stories of how our pubs
help their communities. At the Red
Barn (Lingfield), the pub held a local
Strategic report
Directors’ report
Financial statements
Shareholder information
farmer’s market charity fundraiser where
people could come and showcase their
local produce and crafts, with each stall
donating an element of their takings.
Then at the King’s Head (Winchmore
Hill), our manager Gary approached St.
Paul’s and Highfield’s primary schools
to see how his team could contribute to
seasonal fundraising activities. As a result,
they have run bars and barbecues at a
number of summer fetes, with all profits
going to the schools’ chosen charities.
Lastly, Mick and Sarah at the Alexandra
(Wimbledon), have for many years
found ways to champion community
work through the pub. Taking it upon
themselves to help combat loneliness,
their ‘Meet up Monday’s’ served up a
free lunch to any customers wanting
some human contact. Its success led
to them receiving an invitation to
Buckingham Palace on 5 June 2018.
Finally, following last year’s move to
biodegradable straws, we continue
to look at other ways of reducing the
amount of single use plastics in our
business. Recently we joined the ‘Simply
Cups’ scheme which provides a cost-
effective method to the recycling of
plastic drink glasses. Working with them
we have deployed a collection service
in several of our pubs where there is
a high volume of plastic usage. There
are further improvements we can make
to our plastic usage and we continue
to review this in conjunction with
our suppliers.
Our 2019 Strategic Report, from
pages 1 to 19, was approved by the
board on 22 May 2019 and it was
signed on behalf of the board by:
Patrick Dardis
Chief Executive
22 May 2019
Our environment
We continue to work hard to improve
the environment in which we operate.
Last year we again saw improvements
to our recycling, with an increase of
9.4% to 7,403 tonnes (2018: 6,768
tonnes) and proudly maintained our
position of sending zero waste
to landfill.
We remain an active member of the
Sustainable Restaurant Association and
have continued, via the focus of our
food strategy, to support local produce,
with fresh, premium and seasonal
British ingredients helping reduce
our carbon footprint. We supported
the local and historic fishing town of
Hastings with the introduction of day
boat fish landed from the quay. We
also began supporting food producers
who sometimes are forced to send
crops straight to landfill. Now, their
often underutilised or misshapen fruit
and vegetables regularly appear in our
dishes. Focussing on seasonal monthly
specials we also deliver a variety of
rare breed meats allowing our guests
to taste and support these traditional
English varieties.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 19
Directors’ report
For the 52 weeks ended 1 April 2019
Welcome to our board of directors. All of the directors served throughout the period; no other person was a director
during the period apart from Steven Robinson who resigned and left the company on 11 December 2018.
PD
IM
TD
RL
SG
TC
TSY
NM
Stephen Goodyear
NON-EXECUTIVE CHAIRMAN
A
Patrick Dardis
CHIEF EXECUTIVE
E
D
Torquil Sligo-Young
INFORMATION RESOURCES
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
January 1997
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
Torquil joined Young’s in 1985 and has held
various positions in the company. With his broad
experience, he has overall responsibility for the
group’s technological needs – here, he delegates
to an experienced internal team and oversees
management of this area. 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
20
Strategic report
Directors’ report
Financial statements
Shareholder information
Trish Corzine
NON-EXECUTIVE
A R
Commenced role
January 2015
Skills and experience
With the majority of her career spent 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.
Committee membership
Audit committee
A
R
E
D
Remuneration committee
Executive committee
Disclosure committee
Chair of committee
Tracy Dodd
PEOPLE
E D
Commenced role
September 2016
Skills and experience
Tracy has overall responsibility for people matters
and for health and safety. She joined Young’s in
January 2015; before that, during eight years at the
Orchid pub group, she held a number of roles,
most recently as Head of People, whilst also being
involved with health and safety for part of her time
there. As an ex-operator, Tracy is well aware of the
issues faced by a pub business, and she has the
skills, knowledge and expertise to help ensure that
the group has the right people and culture in place
and that it operates in a safe and healthy way. She
has a clear understanding of the group’s premium-
led strategy and her focus is on what is required to
deliver that, remaining ever mindful of the regulatory
backdrop to people and health and safety matters,
including equality, gender diversity and employee
well-being. 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)
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
Nick Miller
NON-EXECUTIVE
Commenced role
April 2017
A R
Ian McHoul
NON-EXECUTIVE
A
Commenced role
January 2018
Skills and experience
Nick has a wealth of 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 the
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 directors. 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
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), Bellway Plc (2018 to date) and The
Vitec Group plc (2019 to date, chairman designate
and then chairman). 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 licenced 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.
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
The Vitec Group plc (chairman) – a leading global
provider of products and solutions to the “image
capture and content creation” market
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 21
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 58.
Stephen Goodyear (i), (ii)
Patrick Dardis (i), (ii)
Torquil Sligo-Young (i), (ii), (iii)
Tracy Dodd (i)
Roger Lambert
Trish Corzine
Nick Miller
Ian McHoul
Beneficial
Beneficial
Beneficial
Trustee
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
As at
1 April 2019
2 April 2018
1 April 2019
2 April 2018
1 April 2019
2 April 2018
1 April 2019
2 April 2018
1 April 2019
2 April 2018
1 April 2019
2 April 2018
1 April 2019
2 April 2018
1 April 2019
2 April 2018
1 April 2019
2 April 2018
A shares
223,189
224,001
104,928
82,772
292,373
301,980
4,154,340
4,154,340
7,301
2,579
5,250
5,250
1,000
1,000
55,000
55,000
–
–
Non-voting
shares
–
–
–
–
–
–
649,914
649,914
–
–
5,000
5,000
5,000
5,000
–
–
–
–
(i) Also interested in 29,740 (2018: 7,345) A shares held in trust by RBT II Trustees Limited – see note 28 on page 78.
(ii) Also interested in 337,067 (2018: 337,067) A shares held in trust by Young’s Pension Trustees Limited – see note 28 on page 78.
(iii) Torquil and various members of his immediate family are discretionary beneficiaries under trusts holding 836,368 (2018: 836,368) of the A shares
and 553,866 (2018: 553,866) of the non-voting shares in respect of which Torquil Sligo-Young is shown as trustee in the above table.
Profit and dividends
The profit for the period attributable to shareholders was £31.5 million. The directors recommend a final dividend for the period
of 10.81 pence per share (which, subject to approval at the AGM, is expected to be paid on 11 July 2019 to shareholders on the
register at the close of business on 7 June 2019). When added to the interim dividend of 9.97 pence per share paid in December
2018, this would produce a total dividend for the period of 20.78 pence per share.
Disclosure of information to the auditor
Each of the directors shown on pages 20 and 21 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 it 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 19) 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 22, on page 68, are the group’s financial risk management objectives and policies and an indication of the
group’s exposure to certain risks.
22
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 and, for employees based at Riverside
House in Wandsworth, a full-year and half-year results presentation. Where appropriate and necessary, some information had to be cascaded.
The company 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. 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 and interest in the group’s performance, the company invited all
employees of the group who had been continuously employed at and from the start of the period to join the group’s savings-related share
option scheme for 2018. 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 1,364 pence per share, being a discount of 20% to the market price at the time the invitations were
issued. Young’s maintained its policy of giving full and fair consideration to all applications for employment, including those made by disabled
people, taking account of the applicant’s particular aptitude and ability; of seeking to continue to employ anyone who becomes disabled while
employed by the company and arranging training in a role appropriate to the person’s changed circumstances; and of giving all employees,
including disabled employees, equal opportunities for training, career development and promotion.
Corporate governance
The group’s report on corporate governance is set out on pages 24 to 38. 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 81 to 85.
Notifications of major holdings of voting rights
As at 1 April 2019 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%
12.99%
11.70%
8.99%
5.55%
5.28%
<5.00%
3.12%
On 11 April 2019, Octopus Investments Nominees Limited notified the company that their holding had then changed to
9.01%; on 2 May 2019, it notified the company that its holding had then reverted to 8.99%; on 17 May 2019, it notified the
company that its holding had then changed to 9.09%. 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 2 April 2019 and 20 May 2019, both
dates inclusive.
Statement of certain responsibilities in relation to the financial statements and otherwise
For each financial period the directors are required to prepare an annual report (made up of a strategic report and a directors’ report) and
a set of financial statements. The latter must be prepared in accordance with International Financial Reporting Standards as adopted by
the European Union (“IFRS”) and applicable law, and must present fairly the financial position of the group and the financial performance
and cash flows of the group for the relevant period. As regards the company’s financial statements (as opposed to the ones for the group),
the directors have chosen to prepare them under IFRS too. In preparing the financial statements, the directors have to make judgments
and accounting estimates that are reasonable and prudent, select suitable accounting policies and then apply them consistently, and
information, including accounting policies, must be presented in a manner that provides relevant, reliable and comparable information.
There also has to be included a note that the group has complied with IFRS, subject to any material departures disclosed and explained in
the financial statements. Under the Companies Act 2006, the directors are responsible for keeping accounting records which disclose with
reasonable accuracy, at any time, the financial position of the group and the company at that time and are such to enable them to ensure
that the financial statements comply with that Act. The directors 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 19) and the financial statements for the period ended
1 April 2019 have been drawn up and presented for the purpose of complying with English law. Any liability arising out of
or in connection with them will also be determined in accordance with English law.
By order of the board
ANTHONY SCHROEDER
Company Secretary
22 May 2019
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 23
Corporate governance report
Chairman’s corporate governance statement
As chairman, my main responsibility is the effective
leadership of the board and the fostering of a good
corporate governance culture. I am fortunate though to
have board colleagues equally persuaded of the importance
of collectively defining, delivering and communicating our
governance model so as to ensure that good governance
standards are embraced throughout our business.
Stephen Goodyear, Chairman
This time last year, I wrote to you explaining that a new AIM rule was being
introduced that would require us to formally apply a recognised corporate
governance code, provide details of it on our corporate website and then
explain how we comply with that code and include reasons where we have
departed from it. I am pleased to confirm that last July the board chose to apply
The QCA Corporate Governance Code (2018 edition) (the “QCA Code”); this
was the new and fully updated corporate governance code that the Quoted
Companies Alliance had released in April.
The choice of code to adopt was important to us. We wanted to be sure that
we would proactively embrace whatever code we opted for and not end up
with a code that could stifle us and result, on a comply or explain basis, with us
describing why certain requirements were not appropriate. A thorough review
of the impact of the QCA Code on our corporate governance arrangements
was therefore undertaken and it led us to believe that this particular code
would provide us with the right governance framework: a flexible but rigorous
outcome-oriented environment in which we could continue to develop our
governance model to support our business.
As it happened, much of what was in the QCA Code was already embedded
in our governance model, our ways of working and our behaviours. Our
review of the QCA Code’s impact did, however, highlight board performance
evaluation as an area where our informal arrangements could be and should
be enhanced. This is something that I, on behalf of the board, agreed to look
into in conjunction with our people director, and I’m pleased to refer you to the
Performance evaluation section on page 31 for details of the performance
review carried out in the period and the areas that it was felt should be
changed or could be improved.
At the start of the period, the remuneration committee considered an
independent report prepared by Deloitte LLP (“Deloitte”) on the remuneration
packages of the board’s executive directors; the previous independent review
had been carried out in 2008. The overall conclusion was that the packages
at chief executive and chief financial officer level were below the market
competitive range but that the packages for the two other executives were
within the range. What was done as a result is detailed in the Remuneration
committee section starting on page 37.
In December, the board received a recommendation from the audit committee
that Ernst & Young LLP (“EY”) be re-appointed as the company’s statutory
auditor for the financial year ending 2020; this followed a comprehensive
tender process for the group’s statutory audit. Further information on this is in
the Audit committee section starting on page 33.
As one would expect, the board has a defined strategy of how to grow our
business, supported by an equally clear business model of how to create long-
term value for shareholders – further detail on these is in the Our strategy
and business model section on page 4. It is against this background, and a
mission statement of “delighting our customers with stylish pubs and hotels”,
that the board makes decisions and manages risk.
As a board, we set clear expectations concerning the group’s culture and
values. 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 pubs through to a
goodbye at the end of their visits. 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.
Clear statements of behaviour are also issued by the board. An anti-bribery
statement is on our corporate website and members of staff are encouraged
to refer contractors and suppliers to this. We also have an anti-bribery policy.
24
Both the statement and policy confirm that we have a zero-tolerance stance
on bribery and they repeat the board’s expectation that everyone behaves
at all times honestly, professionally, fairly and with integrity. The policy is
circulated to everyone at Riverside House and to all pub managers; it is also
printed in each pub employee’s contract of employment. Our slavery and
human trafficking statement, likewise published on our corporate website,
also explains to external stakeholders that we seek to conduct our business
honestly and with integrity at all times and that we recognise that it is not
acceptable to put profit above the welfare and well-being of our employees
and those working on our behalf. Steps to combat modern slavery are
taken seriously, and efforts to prevent abuses are fully embedded across
all departments throughout our organisation to ensure we play our part in
helping to stamp out slavery and human trafficking. A whistleblowing policy is
also in place: this 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.
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, while supported by policies, processes and an extensive
training program that assists in protecting the business from unnecessary risk.
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 – however
hard it may be, sometimes just fading into the background whilst observing
and listening can be really educational. Our relatively informal approach here
is supported by more formal processes – we encourage customer feedback
(both directly to the pubs and via online booking review platforms), have a
comprehensive customer mystery diner program that sees covert guests give
detailed comments about their experience and there are also staff appraisals.
Together, these provide invaluable insight into how we are seen to behave
and lead the board to believe that the group has a healthy corporate culture
throughout the business.
Further details on our corporate governance arrangements (reflecting the
ten broad principles in the QCA Code and their application) appear in the
following pages and on our corporate website. With our change of approach to
performance reviews, I now very much feel that the whole essence of the QCA
Code is fully reflected and observed in our business. A regular review by me
with our company secretary will, however, ensure that this remains the case.
To finish, I remain ever aware of the importance of ensuring that we regularly
engage with you, our shareholders. On page 32 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, 9 July 2019.
Stephen Goodyear
Chairman
22 May 2019
For information: an index setting out where to find each of the disclosures
required to be published by the QCA Code appears at the end of the corporate
governance information part of the ‘Companies Act and AIM Rules compliance’
page within the investors section of www.youngs.co.uk.
Strategic report
Directors’ report
Financial statements
Shareholder information
Leadership
Board composition
Details of the board, including their skills and experience, appear on pages 20 and 21.
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
listed 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 33
to 36.
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 pages 37 and 38.
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:
Chief executive
Other members:
The other executive
directors
Chairman:
Roger Lambert
Other members:
Stephen Goodyear
Trish Corzine
Nick Miller
Ian McHoul
Chairman:
Nick Miller
Other members:
Roger Lambert
Trish Corzine
Chairman:
Chief financial officer
Other members:
The other executive
directors
The terms of reference for the audit, remuneration and disclosure committees can be found in the investors section of
www.youngs.co.uk. The executive committee has no formal terms of reference.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 25
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 nine times during the period,
excluding the strategy meeting 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
This in-depth meeting 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.
J.P. Morgan Cazenove attended this year’s strategy meeting and the key matters covered were:
• the group’s long-term business plan and a re-affirming of the group’s strategy and business model;
• the market and acquisition opportunities that could possibly arise;
• the group’s equity and capital structure; and
• challenges facing the business.
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, usually on a weekly basis, the
group’s sales numbers and, on a monthly basis, a management accounts pack that includes 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.
26
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 25 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, re-appointment or
removal of the external auditor to be put to shareholders for approval, following the
recommendation of the audit committee.
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.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 27
Corporate governance report
Continued
Board’s key activities during the period
Generally excluding those matters that come up each year and the autumn strategy meeting (see previously), the board’s key
activities in the period surrounded:
• a review of the company’s activities as part of its commitment to combatting slavery and human trafficking, culminating in the
approval of a slavery and human trafficking statement;
• consideration of the company’s debt structure, leading to the company agreeing to issue, in July 2019, £35 million of 3.30%
senior secured notes due 2 July 2039 (see note 31);
• the ratification of Steve Robinson’s resignation as chief financial officer and Daniel Quint’s appointment as interim chief
financial officer;
• the circulation of a letter to shareholders seeking their agreement to the company sending certain communications by email;
• the review and approval of changes to the company’s anti-bribery policy and procedures;
• consideration of the group’s pension scheme and the projects being undertaken to reduce the scheme’s liabilities and
funding risks;
• a review of the impact of the General Data Protection Regulation on the group’s operations and the approval and adoption
of group-wide policies;
• consideration of developments in marketing and plans to drive an increased level of operating profit from the managed
house division;
• consideration of the acquisition of the Redcomb group;
• a review of the principal risks and uncertainties facing the group;
• a review of the impact of IFRS 16 (Leases) on the group;
• consideration and adoption of the QCA Code as part of the group’s corporate governance arrangements, the review and
adoption of a website corporate governance statement and the carrying out of a board performance evaluation; 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:
• leading an effective board;
• fostering a good corporate governance culture; and
• ensuring appropriate strategic focus and direction.
Chief executive
Has overall responsibility for:
• proposing the strategic focus to the board;
• implementing the strategy once 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 question or concern that cannot be raised through the
normal channels.
All have particular roles and areas of responsibility – see
pages 20 and 21. 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
legal and regulatory obligations.
28
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 (i)
Torquil Sligo-Young
Tracy Dodd
Roger Lambert
Trish Corzine
Nick Miller
Ian McHoul
Board
Audit committee
Remuneration committee
9
9
9
4
9
9
9
9
9
9
4
4
–
–
–
–
4
4
3
4
5
–
–
–
–
–
5
5
5
–
(i) Steve resigned in December 2018 – he attended all board 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 him having served on the board
for more than 10 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 company has appointed Mike Owen as its chief financial officer; he is due to join the board and start this role in September
2019. Subject to that, in view of the relevant experience, skills and personal qualities and capabilities that each director brings to
the board (as summarised on pages 20 and 21), the directors consider that the board is well-balanced, has the right number of
members for the size of the group and that no single person dominates discussions.
Nominations, appointments and inductions
Typically, 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.
Each board member is invited to meet with the candidate. 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. The importance of
diversity, including gender balance, is acknowledged in making any appointment – against this background, the board continues
to believe, however, that appointments should be merit-based against the selection criteria created for any given role.
Subject to the company’s articles of association, shareholders can, by passing an ordinary resolution, appoint any willing person
as an additional director or as a replacement for another director.
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.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 29
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 doesn’t apply to any director at this year’s AGM. Directors are then subject to a
further re-appointment vote every third AGM after that – this applies to Stephen Goodyear and Patrick Dardis at this year’s AGM.
Both 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-executive directors 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
Torquil Sligo-Young
Tracy Dodd
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
them to keep 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 long-standing 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. During the period:
• Deloitte provided advice in connection with the remuneration committee’s review of executive director remuneration – further
detail on this is in the Remuneration committee section starting on page 37; and
• N M Rothschild & Sons Limited and HSBC Bank plc provided advice in connection with the company’s debt structure and
the company agreeing to issue, in July 2019, £35 million of 3.30% senior secured notes due 2 July 2039 (see note 31).
30
Strategic report
Directors’ report
Financial statements
Shareholder information
Performance evaluation
During the period, the board carried out its first formal review of the effectiveness of its performance as a unit, as well as that of its
committees. Each individual director’s performance was also appraised. This process was led by the chairman, and was conducted
by him, the senior independent director and the chief executive.
The performance review of the board and its committees involved the completion of a questionnaire on an anonymous basis
– anonymity was intended to encourage more open and constructive comment. All board members were asked to provide a
rating (on a scale of 1 - 4) across a variety of criteria concerned with practices and processes relevant to effectiveness; further
details of these appear in the company’s corporate governance website disclosures that can be found in the investors section of
www.youngs.co.uk. The completed questionnaires were then submitted to the company secretary who collated and consolidated
the responses into a report that was first shared with the chairman and subsequently circulated to the other directors. The report
included all unattributed comments. Overall, the review produced some positive feedback, with a good set of rating scores. At
the November board meeting, the chairman highlighted specific areas that he considered should be addressed, driven either by
particular rating scores awarded or comments made. As a result of the review process and an ensuing discussion, the following
was agreed for the areas that it was felt should be changed or could be improved:
• rather than start the year with a predetermined timetable of presentations, it will be agreed at each board meeting what, if any,
non-routine presentations should be given at the next meeting – in this way, the presentations received by the board will be
more pertinent and timely, reflecting ongoing developments in the business;
• presentations on certain topics (for example IT and health and safety) will be given by non-director members of staff – this will
help the board as a whole, but without straying into the executive’s area of responsibility, to assess the quality and depth of the
team below board level;
• although the principal risks and uncertainties facing the business will continue to be discussed by the audit committee and by the
board as a whole as part of its review and sign-off of the annual report, a more formal and separate discussion on this area will
now be part of each January’s board meeting agenda – this will give this area an increased degree of focus; and
• an annual update will now be provided to the board on senior level succession (i.e. the level below the board) – this will assist
the board in its thinking as regards succession planning.
The next formal review by the board of the effectiveness of its performance as a unit, as well as that of its committees, is expected
to be carried out in summer 2020.
As required by its terms of reference, the audit committee also carried out a review of its own performance, as well as its
constitution and terms of reference to ensure it was operating at maximum effectiveness. No changes were considered necessary.
The chairman’s performance was appraised by the senior independent director. The chairman appraised the performance of
the other non-executive directors and the chief executive. The appraisal of the other executive directors was conducted by the
chief executive; this was in addition to his regular 1:1 meetings with them. As part of the executive appraisal process, individual
development needs were discussed, as well as areas in which the executives could seek mentoring guidance.
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 regularly considers the group’s financial controls memorandum – this comprehensive and internally-focussed
document identifies a number of finance-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 in the Audit committee section starting on page 33.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 31
Corporate governance report
Continued
Shareholders Relations
Copies of the annual report (which includes the notice of AGM) and the interim report are sent to all shareholders and they can
be downloaded from the investors section of www.youngs.co.uk. Other information for shareholders and interested parties is also
provided on that website, 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 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 any questions or concerns that are 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. This 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 registrar. 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 him as proxy, as well as those present at the meeting. As soon as practicable
after the AGM has concluded, the results of the meeting are released through a regulatory information 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.
32
Strategic report
Directors’ report
Financial statements
Shareholder information
Audit committee
During the period, the committee continued to focus on
the appropriateness of the group’s financial reporting,
the group’s management of risk and systems of internal
control and the thoroughness of the external and
internal audit processes. Outside of this, the committee
conducted a tender for the group’s statutory audit,
resulting in a recommendation that Ernst & Young LLP
(“EY”) be re-appointed as auditor.
Roger Lambert, Committee Chairman
Major tasks
During the period, the major tasks undertaken by the committee (in addition to those mentioned below) were:
(cid:53) a review of the group’s preliminary announcements of interim and final results, and the results themselves, all prior to review by
the board;
(cid:53) a review of the group’s systems of internal control and risk management;
(cid:53) a review of the group’s information systems security management policy;
(cid:53) the setting of the group’s internal audit plan and the review of various reports prepared by the group’s internal audit manager;
(cid:53) oversight of EY, the group’s external auditor, to continue the delivery of a robust audit plan;
(cid:53) management of a comprehensive tender process for the group’s statutory audit; and
(cid:53) an assessment of the impact of the forthcoming adoption of IFRS 16 on the group’s balance sheet and consideration of the
resulting disclosures to be made in the group’s financial statements.
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. 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 four times during the period (in May, August,
November and March) and the table on page 29 sets out each member’s
attendance record. The chief financial officer/interim chief financial officer
joined the meetings, as did the company’s audit partner and audit manager
at EY when the meeting related to the group’s full-year and half-year results
and also in March. 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
review 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; the group’s stocking policy and supplier rebates
received; a copy of the committee’s terms of reference and a draft audit timetable.
Areas of responsibility
The committee’s responsibilities are split into four distinct areas, with the following main tasks:
Financial reporting
Monitoring the integrity of the company’s
financial statements.
Internal control and risk management
Monitoring the integrity, adequacy and effectiveness of the
company’s internal control and risk management systems.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 33
Corporate governance report
Continued
Internal audit
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
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 which can be found in the investors
section of www.youngs.co.uk.
2018 financial statements – Financial Reporting Council (“FRC”) thematic review
During the year, the FRC corporate reporting team reviewed the company’s tax and pensions disclosures in its 2018 financial
statements. The review was a desktop exercise only; no questions or queries were raised in relation to these specific disclosures.
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
Acquisition of the
Redcomb pub group
Supplier rebates
This is by far the largest number on the balance sheet at 1 April 2019 and note 17 on page 64
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 checked by EY, enabling them to confirm to the committee that the valuation exercise was in
accordance with accounting standards 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 1 April 2019.
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 supported the deferred tax liability on the rollover relief and property revaluations on
each pub, as well as the treatment of capital losses, indexation and initial recognition exemptions.
EY audited these calculations and workings. The outcome was that the committee was satisfied
that the deferred tax provision shown in the balance sheet at 1 April 2019 was appropriate.
During the period, the group acquired the Redcomb pub group for a total cash cost of £31.7
million. Management performed a preliminary purchase price allocation exercise (“PPA”), with the
assistance of external experts. The primary element of the PPA assessed the fair value of the 15
pubs acquired, as well as the fair value of intangible assets, borrowings, contract liabilities, other
assets and liabilities and deferred tax. EY evaluated whether the assets and liabilities acquired
were correctly identified and valued and were satisfied that they were complete and accurate. The
committee ultimately concluded that the disclosures made in the balance sheet at 1 April 2019 are
in accordance with IFRS 3.
Management, with help from the group’s director of commercial operations, regularly calculated,
monitored and reviewed all volumes and applicable discounts – this included monthly and
quarterly reviews depending on the size of the supplier and also included checking that rebates had
been correctly recorded within a specific period. Management only recognises these rebates when
the group has met all relevant obligations – see note 3(t) on page 54. 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 1 April 2019.
EY’s audit report on pages 39 to 43 also provides further detail on how the above matters were addressed.
34
Strategic report
Directors’ report
Financial statements
Shareholder information
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 which included a review of the group’s interim financial statements. The total fees paid to EY during the period for non-audit fees
amounted to £37k (14.1% of total fees paid to EY during the period) (2018: £43k and 20.9%). In the committee’s view, the nature and
extent of the non-audit work carried out by EY did not impair EY’s independence or objectivity.
External auditor: audit tender process and proposed re-appointment of EY
In August 2018, the committee decided that the group’s statutory audit for the financial year ending 2020 should be put out to
tender as EY had been in office, as auditor, for more than 15 years. This was a matter of good corporate governance and was
despite the committee being satisfied with EY’s qualification, objectivity, independence and overall service. Based on best practice
guidance issued by the Financial Reporting Council, the tender process involved the following:
(cid:53) EY, along with two other leading firms, were invited to participate;
(cid:53) access to a data-room was provided – this contained information on the group, its structure and how it operates;
(cid:53) carousel meetings took place with the group’s senior management enabling an exchange of information about the group and
the participating firms – feedback to the participating firms was given;
(cid:53) technology presentations were made to the group’s senior management;
(cid:53) written proposals were submitted to the committee for its consideration – these outlined key firm details, resourcing and the
proposed audit team, audit approach, transition approach and challenges, quality assurance, independence and governance
and a fee proposal;
(cid:53) presentations on audit approach were given to the committee; and
(cid:53) participating firms were judged against objective criteria determined in advance of the process.
In mid-December, the committee concluded that it was appropriate to recommend the re-appointment of EY as the company’s
auditor. EY has expressed its willingness to continue in office and a resolution to re-appoint them will therefore be proposed at the
forthcoming AGM.
Qualification, objectivity, independence etc. of EY during the period
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:
(cid:53) reviewed the audit plan for the period ended 1 April 2019 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;
(cid:53) been provided with a copy of the Financial Reporting Council’s June 2018 audit quality inspection report in respect of EY and
a copy of EY’s published transparency report for the UK;
(cid:53) 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) 260 “Communication of audit matters with those charged with governance”;
(cid:53) considered EY’s proposed fees for the group’s audit for the period ended 1 April 2019 and the additional non-audit services
for that same period; and
(cid:53) obtained the views of management.
The fees paid to EY for audit services for the financial period ended 1 April 2019 were £0.2 million (2018: £0.2 million).
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;
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 35
Corporate governance report
Continued
• 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 committee assists the board in
fulfilling its oversight responsibilities by monitoring the systems’ integrity.
The group’s strategic priorities and their connection to the principal risks and uncertainties facing the business are listed on
page 4. This 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.
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 Riverside House 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/interim 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 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, compliance and operational
areas according to a programme set by the committee following input from the chief financial officer. His review reports, the
management responses and the recommended actions, were presented to the committee. Management may supplement the
internal resource for these reviews with specialist external resources; however, none were perceived as being required during the
period, although external advice is being sought in relation to cyber threats.
The group’s in-house team of retail auditors is led by an experienced member of the group’s finance team 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 business continuity plans for each of the
departments within Riverside House.
The group has a whistleblowing policy that is overseen by the committee. This policy allows staff to raise any concerns in
confidence directly with the chairman of the 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.
36
Remuneration committee
Strategic report
Directors’ report
Financial statements
Shareholder information
The committee’s primary function is to determine 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.
Nick Miller, Committee Chairman
Primary function
The committee’s primary function is to determine 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 which can be found in the investors section
of www.youngs.co.uk.
Committee membership, meetings
and attendance
The 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
five times during the period and the table on page 29 sets
out each member’s attendance record. During the period,
Patrick Dardis, in his capacity as chief executive, was invited
to provide input to the committee when it considered the
performance of the other executive directors.
Advice, guidance and information
During the period, Deloitte helped the committee in its review
of the remuneration arrangements of the executive directors –
for further detail, see the Remuneration: executive directors
section below. More generally, advice and guidance is
provided by the company secretary. Where possible, agendas
and supporting papers are provided to the committee a week
before its meetings – the following were amongst the papers
provided to the committee during the period:
• an independent report prepared by Deloitte on the
• a pack of financial information and proposed personal
objectives to help the committee set the performance
conditions applicable to the executive directors’ performance-
related bonus awards for FY2018/19; and
• the December 2018 edition of ‘FTSE AIM Directors’
Remuneration’ published by FIT Remuneration Consultants
LLP to help the committee to set the executive directors’
basic salaries for FY2019/20.
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 an element of the
total remuneration varying according to achievement of key
performance targets. The main elements of the executives’ reward
packages therefore comprise:
• a basic salary;
• a range of benefits, including life assurance, regular medical
check-ups, a car scheme/allowance (at levels set in 2008),
private medical insurance and a pension (see note 8(b) on
page 57); and
• to satisfy the ‘variable’ element, a stretching deferred annual
bonus scheme.
The bonus awards are subject to caps equal to either 125%
of basic annual salary (Patrick Dardis) or 100% of basic
annual salary (Torquil Sligo-Young and Tracy Dodd). The
key performance targets relevant to the bonus scheme for
FY2018/19 (and the extent of the award dependent on each
target, expressed as a percentage of basic annual salary) were
as follows:
Financial performance
targets
Personal
objectives
remuneration packages of the board’s executive directors;
Patrick Dardis
• a pack of financial and other information to help the
Torquil Sligo-Young
committee determine the extent to which the financial
performance and other conditions for the executive directors’
performance-related bonuses for FY2017/18 had been met;
Tracy Dodd
125%
50%
50%
–
50%
50%
Total
125%
100%
100%
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 37
Corporate governance report
Continued
The financial performance targets were linked to adjusted
profit before tax, like-for-like sales growth and return on
capital employed. The inclusion of personal objectives for
Torquil Sligo-Young and Tracy Dodd recognised the specific
executive roles and responsibilities they have. The targets
and objectives are confidential; they have not therefore been
included in this report.
The committee believes that the bonus scheme supports
the company’s strategy and business plan by incentivising
the executive directors in a way that is aligned with both the
group’s long-term financial performance and the interests of
shareholders – note 27(a) starting on page 76 provides further
details of how the scheme operates.
With the last independent review of executive remuneration
having been carried out in 2008, the committee had become
conscious that the executives’ remuneration levels might have
fallen out of line with the market for the performance achieved;
this was especially so bearing in mind that, since that time, the
company had delivered sustained, strong performance and
growth, outperformed sector peers and had seen its revenue
and market capitalisation grow by c. 120% and c. 190%
respectively. The committee had therefore asked Deloitte
to undertake a review of total compensation arrangements
from a number of perspectives (including benchmarking,
review of structures against market practice, positioning and
performance) and to set out potential approaches. The market
positioning assessment was carried out against companies of a
similar size to the company by market capitalisation, as well as,
in the case of the positions of chief executive and chief financial
officer, sector peers (brewing/hospitality companies).
The committee met with Deloitte to discuss its findings shortly
after the start of the period; this resulted in some follow-up work
that then enabled the committee to decide on the executives’
packages for FY2018/19. Although instructive, the market
data reported by Deloitte was not looked at in isolation – the
executives were considered by the committee on an individual
basis, together with their performance in their role, as well as the
then current environment and company performance.
As a result, the committee felt, supported by the work
undertaken by Deloitte, that the packages at chief executive
and chief financial officer level were below the market
competitive range. Taking into account the performance
and growth of the company and the fact that the executive
remuneration framework had remained unchanged for the
last ten years, the committee considered that it would be
reasonable to include a step change increase in their overall
remuneration. The structure and design of the deferred annual
bonus scheme was largely left untouched as it was considered
to continue to be aligned to the company’s strategy and
culture: in particular, the requirement for the executives to
actively commit to purchase shares (to get the full potential
from the scheme) enhances alignment to shareholders.
38
Therefore, to address the competitiveness of the packages, the
committee instead revised significantly the basic salaries of the
chief executive and chief financial officer. The basic salaries for
Torquil Sligo-Young and Tracy Dodd were raised broadly in line
with inflation. The salary increases were effective from 1 April
2018. In making the increases, the committee was aware of the
annual pay review that the executive committee had carried
out for staff at Riverside House.
The committee believes that the company’s reward policy as
regards the executive directors is consistent with the group’s
risk management policy as it does not encourage inappropriate
risks to be taken to achieve the performance targets; the focus
is very much on a long-term remuneration model.
Details of the remuneration of each executive director who
was in office during the period appear in note 8(b) on page
57. Details of pension benefits, other benefits (principally car-
related (which can be taken in cash and if this is done they
are then shown as part of a director’s basic salary and fees)
and private medical insurance) and interests in the company’s
savings-related share option scheme are in notes 8(b) and 8(e)
respectively, on pages 57 and 58 respectively. No executive
director is involved in deciding their own remuneration.
Remuneration: non-executives
The initial remuneration of the non-executive directors 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 they are not members
of any group pension scheme other than for the purposes of
complying with pension auto-enrolment legislation. As a result
of having been an executive director, Stephen Goodyear still
holds shares under the deferred annual bonus scheme (see
note 27(a) starting on page 76) and is a pensioner member
of the group’s defined benefit pension scheme – during the
period, he exercised his remaining SAYE share option (see
note 27 on page 75). The non-executive directors are entitled
to be reimbursed for certain business-related expenses. Details
of the remuneration of the non-executive directors appear in
note 8(b) on page 57.
By order of the board
AN THO NY SC HRO ED ER
Company Secretary
22 May 2019
Independent auditor’s report
For the 52 weeks ended 1 April 2019
Strategic report
Directors’ report
Financial statements
Shareholder information
Independent auditor’s report to the members of Young & Co.’s Brewery, P.L.C.
Opinion
In our opinion:
Group income statement for
the 52 weeks then ended
Statement of changes in equity
for the 52 weeks then ended
Audit scope
• Young & Co.’s Brewery, P.L.C.’s group financial statements 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 1 April 2019 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 provisions of the
Companies Act; 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 1 April 2019
Balance sheet as at 1 April 2019
Statement of cash flow 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 32 to the
financial statements, including
a summary of significant
accounting policies
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as regards
to 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.
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 when the financial statements are
authorised for issue.
Overview of our audit approach
Key audit
matters
• Valuation of the pub estate
• Deferred tax arising on the valuation of the
pub estate
• Redcomb Pubs preliminary purchase price
allocation (new risk for 2019)
• Supplier rebates
• Management override in the recognition
of revenue
• 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
Materiality
• Overall group materiality of £2.2 million,
which represents 5% of profit before
taxation and exceptional items
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.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 39
Independent auditor’s report
Continued
Valuation of the group’s pub estate
Refer to the Audit Committee Report (page 33); accounting policies (page 51); and note 17 of the group financial statements (page 64).
In accordance with the group’s accounting policy for property and equipment, management applies the revaluation model for the pub estate,
which had a carrying value of £807.0 million at 1 April 2019 (2018: £742.9 million). As permitted by IAS 16 and in common with other listed
pub operators in the UK, this revaluation was achieved through:
• A reassessment of the fair maintainable trade of each pub based on its current and forecast trading performance, or a spot 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 Andrew Cox, the group’s director of property and tenancies, using
updated trading results, management’s knowledge of each pub, and 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.
Our response to the risk
We performed a walkthrough of each aspect of the group’s pub valuation process and assessed the design effectiveness of the key controls that
were in place.
We met with management and the group’s external valuation specialists to discuss their valuation approach and the judgements made in
determining the fair value of the pub estate. These included the fair maintainable trade, EBITDA multiples and spot valuations.
We assessed the competence and objectivity of the external valuer including consideration of its qualifications and expertise.
We tested management’s valuation model for mathematical accuracy and consistency with underlying records. This included an assessment
of the fair maintainable trade of each pub by reference to the group’s financial records, management’s historical forecasting accuracy, and its
consideration of the external valuation results on the remainder of the estate.
Of the group’s 222 freehold and long leasehold pubs, with support from our property valuations specialists we tested a sample of 66 pub
valuations. We performed testing over the underlying valuation assumptions, with a particular focus on pubs valued using a spot valuation as these
involved 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 appropriately accounted for through the revaluation reserve or the income statement.
We considered the appropriateness of the valuation disclosures in note 17 of the group financial statements 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 group’s entire pub estate.
Key observations communicated to the Audit Committee
We executed our procedures as planned and we consider the valuation to be appropriate and on a consistent basis to 2018. There is also
appropriate disclosure on the pub estate valuation in note 17 to the group financial statements.
Deferred tax on the group’s pub estate
Refer to the Audit Committee Report (page 33); accounting policies (page 51); and note 23 of the group financial statements (page 72).
There is complexity in the group’s accounting for deferred tax and, specifically, a significant level of management judgement is required in
accounting for deferred tax arising on the valuation of the pub estate.
Both management judgement and complex calculations are required to estimate the deferred tax arising in respect of the valuation of each
pub. These judgements are focused on:
- the treatment of capital losses, rollover relief, indexation allowances and initial recognition exemptions;
- recognising deferred tax on the pubs on a sale, in-use or a dual basis; and
- recognising the deferred tax at the correct corporation tax rate, depending on the underlying assumptions.
Our response to the risk
We performed a walkthrough of the group’s process for determining the deferred tax arising from the valuation of the pub estate. We also assessed
the design effectiveness of the key controls that were in place.
In conjunction with our tax specialists we tested the deferred tax calculations based on the valuation of each pub. This focused on verifying the inputs
into the deferred tax calculation, testing its mathematical accuracy and recalculating 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 evaluated 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 considered whether the related deferred tax disclosures, included in note 23 to the group financial statements, 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 considered management’s judgements in the recognition of deferred tax arising on the valuation of the pub estate to be appropriate and
consistent with 2018. We also consider that the disclosures in note 23 to the group financial statements are appropriate.
40
Strategic report
Directors’ report
Financial statements
Shareholder information
Redcomb Pubs preliminary purchase price allocation (new risk for 2019)
Refer to the Audit Committee Report (page 33); accounting policies (page 51); and note 13 of the group financial statements (page 61).
In January 2019 the group acquired Redcomb Pubs for a total cash cost of £31.7 million, on a cash and debt-free basis. The acquisition
was accounted for as a business combination and involved a number of significant and complex judgements, particularly in identifying and
determining the fair value of the assets acquired and liabilities assumed.
Management performed a preliminary purchase price allocation exercise, assisted by external experts. The primary element of the valuation
exercise assessed the fair value of the 15 pubs acquired. The allocation also considered the fair values of intangible assets, borrowings, contract
liabilities, other assets and liabilities and deferred tax. The remaining consideration was recognised as goodwill.
This is a new key audit matter in the current year.
Our response to the risk
We performed a walkthrough of the group’s process for determining the fair value of assets acquired and liabilities assumed, including the
completeness of those assets and liabilities, and assessed the design effectiveness of the key controls that were in place.
We read the Sale and Purchase Agreement to corroborate the group’s accounting conclusions and identify any clauses that could have an
accounting impact.
We assessed the group’s considerations as to whether acquired leasehold pubs should be accounted for as finance or operating leases under
IAS 17 Leases.
For freehold pubs and leasehold pubs accounted for as finance leases, we obtained the group’s external expert’s reports supporting the value
of the pubs and performed the same procedures as we describe for the “valuation of the pub estate” key audit matter.
For leasehold pubs accounted for as operating leases, we involved our valuation specialists to assist us in assessing the appropriateness
of the methodology and the key assumptions applied to value the assets and liabilities acquired.
For other assets acquired and liabilities assumed, we evaluated the group’s methodology, assumptions and estimates used in determining
the fair value.
We evaluated the competence and independence of the experts used by the group by reference to their qualifications and experience.
We evaluated whether appropriate disclosures are included in the group financial statements.
Scope of our procedures
We performed full scope audit procedures over the entire acquisition.
Key observations communicated to the Audit Committee
We evaluated that the preliminary identification and valuation of assets and liabilities acquired was complete and accurate, and that the disclosures
made in the financial statements are in accordance with IFRS 3.
Supplier rebates
Refer to the Audit Committee Report (page 33) and accounting policies (page 51).
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 of supplier rebates as a percentage of the group’s profit and the risk of incorrect cut-off applied around the year end, we
consider there to be a risk over this figure. This is focused on any changes to volume discounts and stocking incentive arrangements and the
recognition of rebates in the appropriate period.
Our response to the risk
We performed a walkthrough of the group’s process over the recognition of volume discounts and stocking incentives and assessed the design
effectiveness of the key controls that were in place.
For a sample of supplier arrangements, we agreed key terms used to calculate the rebate to external confirmation and recalculated amounts recorded.
We verified that rebates have been appropriately recorded in the correct period through cut-off testing at the year end.
We evaluated management’s 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
We considered the supplier rebate income recognised in the year to be appropriate, given the contractual arrangements in place.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 41
Independent auditor’s report
Continued
Management override in the recognition of revenue
Refer to the Audit Committee Report (page 33) and accounting policies (page 51).
The vast majority of the group’s revenue transactions are non-complex, with no judgement applied over the amount recorded.
We consider the significant 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 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.
The group also adopted IFRS 15 for revenue recognition from 3 April 2018. Based on its detailed assessment and given the nature of the
group’s revenue, with the vast majority of transactions settled at the point of consumption, management concluded that the adoption of IFRS
15 has no material impact on the group.
Our response to the risk
We performed a walkthrough of each of the group’s significant revenue processes, including the recording of manual journal adjustments, and
assessed the design effectiveness of the key controls that were in place.
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.
We understood management’s process for assessing the impact of the adoption of IFRS 15, including validating key assumptions and
conclusions to underlying contracts where appropriate.
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, including through topside journals. 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.
We also agree with management’s conclusion that the adoption of IFRS 15 has not had a material impact on the group.
An 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 consolidated financial statements.
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 and IT 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
1 April 2019 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 or 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 £2.2 million (2018:
£2.0 million), which is 5% (2018: 5%) of profit before taxation
and exceptional items. We believe that 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 exceptional items,
as they are non-recurring items which do not reflect the underlying
trading performance of the group.
• Profit before taxation – £39.5 million
Starting
basis
• Exceptional items before taxation
Adjustments
– £3.9 million
• Profit before taxation and exceptional items
– £43.4 million (materiality basis)
Materiality
• Materiality of £2.2 million
(5% of materiality basis)
During the course of our audit, we reassessed initial materiality
and did not make any changes based on final results.
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.
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% (2018: 75%) of our planning
materiality, namely £1.6 million (2018: £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.
42
Strategic report
Directors’ report
Financial statements
Shareholder information
• 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 page 23, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true
and fair view, 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 the
directors either intend to liquidate the group or the parent company
or to cease operations, or have no realistic alternative but to do so.
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.
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.
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 (2018:
£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.
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
Jon Killingley (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
22 May 2019
the accounting records and returns; or
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 auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were initially presented on the website.
2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation
in other jurisdictions.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 43
Group income statement
For the 52 weeks ended 1 April 2019
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
2019
£m
303.7
(255.2)
48.5
(3.9)
44.6
(5.0)
(0.1)
39.5
(8.0)
31.5
2018
£m
279.3
(232.4)
46.9
(3.4)
43.5
(5.6)
(0.3)
37.6
(7.5)
30.1
Notes
6
7
9
11
24
12
Pence
Pence
15
15
64.36
64.31
61.60
61.56
All of the results above are from continuing operations.
The notes on pages 50 to 79 form part of these financial statements.
The independent auditor’s report is set out on pages 39 to 43.
44
Group statement of comprehensive income
For the 52 weeks ended 1 April 2019
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
24
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
22
Strategic report
Directors’ report
Financial statements
Shareholder information
2019
£m
31.5
2018
£m
30.1
25.3
(1.2)
(3.2)
0.5
(0.1)
21.3
29.2
5.8
(4.5)
4.3
(0.7)
34.1
Total comprehensive income for shareholders of the parent company
52.8
64.2
All of the results above are from continuing operations.
The notes on pages 50 to 79 form part of these financial statements.
The independent auditor’s report is set out on pages 39 to 43.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 45
Balance sheets
At 1 April 2019
Non-current assets
Goodwill and intangible assets
Property and equipment
Investment in subsidiaries
Deferred tax assets
Lease premiums
Current assets
Inventories
Trade and other receivables
Lease premiums
Cash
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
23
19
20
22
22
21
22
22
23
24
25
26
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
2019
£m
1.9
777.7
35.8
7.4
4.8
827.6
3.4
24.5
0.3
8.2
36.4
864.0
(8.5)
(1.9)
(39.9)
(4.4)
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)
(54.7)
(104.3)
(163.6)
(4.2)
(57.9)
(8.6)
(0.5)
(234.8)
(289.5)
574.5
6.1
6.7
1.8
(4.8)
286.2
278.5
574.5
(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
2019
£m
33.5
807.0
–
7.4
12.9
860.8
3.7
8.3
0.7
8.5
21.2
882.0
(8.5)
(1.9)
(35.9)
(4.8)
(51.1)
(163.6)
(4.2)
(60.6)
(8.6)
(0.5)
(237.5)
(288.6)
593.4
6.1
6.7
1.8
(4.8)
295.1
288.5
593.4
The company’s profit after tax for the period was £64.5 million (2018: £23.7 million).
Approved by the board of directors and signed on its behalf by:
Patrick Dardis
22 May 2019
Chief Executive
The notes on pages 50 to 79 form part of these financial statements.
Young & Co.’s Brewery, P.L.C. registered in England number 32762.
46
Statements of cash flow
For the 52 weeks ended 1 April 2019
Operating activities
Net cash generated from operations
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
Investment in subsidiaries
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 in cash
Cash at the beginning of the period
Cash at the end of the period
Notes
29
17
13
14
Strategic report
Directors’ report
Financial statements
Shareholder information
Group
Company
2019
£m
2018
£m
2019
£m
69.2
(9.2)
60.0
1.3
(33.9)
(25.3)
–
(57.9)
(5.1)
0.3
(9.9)
(12.1)
26.0
(0.8)
1.3
7.2
8.5
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
56.3
(9.0)
47.3
1.3
(32.1)
(6.9)
(18.4)
(56.1)
(5.1)
0.3
(9.9)
(1.5)
26.0
9.8
1.0
7.2
8.2
2018
£m
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
The notes on pages 50 to 79 form part of these financial statements.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 47
Group statement of changes in equity
At 1 April 2019
At 3 April 2017
11.3
1.8
(8.8)
247.7
241.0
493.0
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
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
Movement in shares held by the Ram Brewery Trust II
At 2 April 2018
Total comprehensive income
Profit for the period
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
Share based payments
–
–
–
–
–
–
–
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)
11.8
1.8
(5.2)
273.3
267.5
549.2
–
–
–
–
–
–
–
1.0
–
–
1.0
–
–
–
–
–
–
–
–
–
–
–
–
–
31.5
31.5
–
–
0.5
(0.1)
0.4
0.4
–
–
–
–
25.3
–
–
(3.5)
21.8
21.8
–
–
–
–
–
(1.2)
–
0.3
(0.9)
30.6
–
(9.9)
0.3
(9.6)
25.3
(1.2)
0.5
(3.3)
21.3
52.8
1.0
(9.9)
0.3
(8.6)
17
24
22
12
14
27
17
24
22
12
14
27
At 1 April 2019
12.8
1.8
(4.8)
295.1
288.5
593.4
(1) Total share capital comprises the nominal value of the share capital issued and fully paid of £6.1 million (2018: £6.1 million) and the share premium
account of £6.7 million (2018: £5.7 million). Share capital issued in the period comprises the nominal value of £nil (2018: £nil) and share premium
of £1.0 million (2018: £0.5 million).
The notes on pages 50 to 79 form part of these financial statements.
48
Parent company statement of changes in equity
At 1 April 2019
Strategic report
Directors’ report
Financial statements
Shareholder information
At 3 April 2017
11.3
1.8
(8.8)
238.8
204.4
447.5
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
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
Movement in shares held by the Ram Brewery Trust II
At 2 April 2018
Total comprehensive income
Profit for the period
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
Share based payments
–
–
–
–
–
–
–
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)
11.8
1.8
(5.2)
264.4
224.5
497.3
–
–
–
–
–
–
–
1.0
–
–
1.0
–
–
–
–
–
–
–
–
–
–
–
–
–
64.5
64.5
–
–
0.5
(0.1)
0.4
0.4
–
–
–
–
25.3
–
–
(3.5)
21.8
21.8
–
–
–
–
–
(1.2)
–
0.3
(0.9)
63.6
–
(9.9)
0.3
(9.6)
25.3
(1.2)
0.5
(3.3)
21.3
85.8
1.0
(9.9)
0.3
(8.6)
17
24
22
12
14
27
17
24
22
12
14
27
At 1 April 2019
12.8
1.8
(4.8)
286.2
278.5
574.5
(1) Total share capital comprises the nominal value of the share capital issued and fully paid of £6.1 million (2018: £6.1 million) and the share premium
account of £6.7 million (2018: £5.7 million). Share capital issued in the period comprises the nominal value of £nil (2018: £nil) and share premium
of £1.0 million (2018: £0.5 million).
The notes on pages 50 to 79 form part of these financial statements.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 49
Notes to the financial statements
For the 52 weeks ended 1 April 2019
1. GENERAL INFORMATION
The group and parent company financial statements of Young & Co.’s Brewery, P.L.C. for the period ended 1 April 2019 were authorised for issue by
the board of directors on 22 May 2019. 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 19.
The current period and prior period relate to the 52 weeks ended 1 April 2019 and the 52 weeks ended 2 April 2018 respectively.
The financial statements are presented in pounds sterling, which is the functional currency of the parent company, 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 19. 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 22. 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 group and parent company financial statements 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:
IFRS 15: Revenue from contracts with customers became effective for the financial period starting on 3 April 2018. IFRS 15 introduces a five-step
approach to the timing of revenue recognition based on performance obligations in customer contracts. 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. Most of the group’s revenue, 98.6%, is through the sale of goods which have a very simple performance obligation, a low level
of judgement applied in determining the consideration and the timing of transfer of control occurs at a point of time. The remainder of the group’s
revenue is made up of rental income received from tenanted and unlicensed properties and accrued interest using the effective interest method;
both are outside of scope for IFRS 15. The group has adopted IFRS 15 using the modified retrospective method, thereby not requiring restatement
of comparatives. Adoption has not had a material impact on the group’s financial performance apart from extended disclosure requirements.
IFRS 9: Financial instruments became effective for the financial period starting 3 April 2018, introducing a new impairment model for financial
assets and new rules for hedge accounting. The group does not have significant financial assets other than trade and other receivables. The carrying
values of receivables, previously shown net of a provision for impairment, equates to fair value; under IFRS 9 they are carried at amortised cost less
impairment due to their sole purpose being the collection of contract cash flows (the payment of the principal amount and if applicable interest). The
change in measurement has had no impact on the group’s financial position.
In determining the impairment to trade and other receivables, the group has applied the simplified approach permitted by IFRS 9, with expected
lifetime credit losses recognised from initial recognition of the receivable. Expected credit losses are assessed by considering the group’s historical
credit loss experience, factors specific for each receivable, the current economic climate and expected changes in forecasts of future events. Changes
in expected credit losses are recognised in the income statement. The adoption did not have a material impact on the group’s financial performance
or financial position.
The requirements of the new hedge accounting model did not have a material impact on the group’s financial performance or financial position.
The group’s current interest rate swaps were considered highly effective under the previous standard, IAS 39, and qualified for hedge accounting
and have remained so under IFRS 9.
Due to the adoption of the new standard having no material impact on the group, prior year comparatives have not been restated as permitted by
IFRS 9. Expanded disclosure requirements have changed the extent of the group’s current disclosures on financial instruments.
The directors will adopt the following Standards, Amendments and Interpretations listed below in the first full financial period following their effective
date. The directors do not expect that adoption in future periods will have a material impact with the exception of IFRS 16:
IFRS 16
IFRIC Interpretation 23
IAS 19
IFRS 3
Leases
Uncertainty over Income Tax Treatments
Employee Benefits (Amendments)
Business Combination (Amendments)
Effective date
1 January 2019
1 January 2019
1 January 2019
1 January 2020
IFRS 16: ‘Leases’, replacing IAS 17, will be effective for the financial period starting on 2 April 2019. IFRS 16 removes the distinction between operating
leases and finance leases for the lessee and will result in most leases being recognised on the balance sheet as a lease liability and a right-of-use asset.
The lease liability will be recognised equal to the present value of the remaining lease payments discounted using an incremental borrowing rate at the
date of initial application. Generally, the right-of-use asset will be recognised equal to the lease liability adjusted for initial direct costs (including lease
premiums) and any prepaid or accrued lease payments. The only exception to this is for finance leased assets where the right-of-use asset on transition
is based on the carrying value prior to transition. The right-of-use asset will be carried at cost going forwards.
There will be no impact on net assets at the date of adoption, but due to the different methods of unwinding the asset and liability, over time,
a difference will arise.
For leases previously classified as operating leases, the operating lease rental charge will be removed and replaced with amortisation of the right-of-
use asset and interest incurred on the lease liability. The group’s current operating lease portfolio includes short leasehold properties, vehicles and
certain office and computer equipment. IFRS 16 will reshape the income statement with changes in phasing to operating profit and profit before tax,
50
Strategic report
Directors’ report
Financial statements
Shareholder information
compared to the cost profiles and presentation in the income statement under IAS 17, however the total cost over any individual lease term remains
unchanged. IFRS 16 will also impact the classification of associated cash flows in the consolidated cash flow statement.
The group will apply IFRS 16 using the modified retrospective approach and therefore no prior year restatement is required. The group has
reviewed all lease contracts which fall within the scope of IFRS 16 and intends to apply the below practical expedients permitted under the modified
retrospective approach:
• exclude leases for measurement and recognition for leases where the term ends within 12 months from the date of initial application;
• apply a single discount rate to a portfolio of leases with similar characteristics; and
• adjust the right-of-use asset on transition by any previously recognised onerous lease provisions.
Using discount rates based on lease specific incremental borrowing rates and based upon the current lease portfolio, the impact of applying IFRS 16
for the period to 1 April 2020 is expected to be as follows:
Income statement
Based on the group’s lease portfolio at 2 April 2019, adjusted operating profit for the period ending 30 March 2020 is expected to increase by
between £1.2 million and £1.8 million. This is a result of the lease expense of between £7.5 million and £8.5 million being replaced by depreciation
on the right-of-use asset of between £6.0 million and £7.0 million. Finance costs are expected to increase by between £2.0 million and £3.0 million
to reflect the current year unwinding of the discounted lease liability. Adjusted profit before tax would therefore reduce by between £0.7 million and
£1.3 million, however adjusted EBITDA is expected to benefit by between £7.0 million and £9.0 million.
Balance sheet
At the opening balance sheet date of 2 April 2019, total assets and total liabilities are both expected to increase by between £78.0 million and £82.0 million.
This is the result of the introduction of a lease liability and a right-of-use asset.
Cash flow statement
The principal lease payments and interest will be separately disclosed within the cash flow statement, no longer forming part of operating activities.
The above items will have no effect on the group’s net cash flow apart from certain disclosures and classifications.
Due to routine acquisitions and modifications to lease terms, the actual impact of IFRS 16 may vary to such an extent that the actual impact of IFRS
16 on the period to 1 April 2020 may be materially different to the amounts disclosed.
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 measured at the transaction price when control passes to the customer in respect of goods and services provided, net of discounts and VAT.
The group has transitioned to IFRS 15 under the modified retrospective method. Due to the nature of the goods and services sold, the judgements
made in identifying performance obligations and transaction prices have not had an impact on the revenue recognised. The recognition of revenue
under each of the group’s material revenue streams is as follows:
Sale of goods
Revenue is recognised at a point in time when control of the goods or services is transferred to the customer.
Accommodation sales
Revenue is recognised on a straight-line basis over the duration of the room occupation.
Rental income
Rental income arising from operating leases on properties is accounted for on a straight-line basis over the lease term.
Rental income does not fall within the scope of IFRS 15.
(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.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 51
Notes to the financial statements
Continued
(f) Property and equipment
Freehold and long leasehold properties, including land and buildings, 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.
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.
(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) 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.
(j) Cash
Cash in the balance sheet comprises cash at banks, cash in transit due from credit card providers and cash 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.
(k) 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.
(l) 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.
Expected credit losses are recognised from initial recognition based on the group’s historical credit loss experience, factors specific for each loan, the
current economic climate and expected changes in forecasts of future events. Changes in expected credit losses are recognised in the income statement.
52
Strategic report
Directors’ report
Financial statements
Shareholder information
(m) 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
• 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.
(n) 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.
(o) 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.
(p) 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.
(q) Trade and other receivables
Trade receivables are initially recognised at the transaction price less impairment as they do not contain a significant financial component. In measuring
and recognising the impairment, the group has applied the simplified approach to expected credit losses as permitted by IFRS 9. Expected credit losses
are recognised from initial recognition based on the group’s historical credit loss experience, factors specific for each receivable, the current economic
climate and expected changes in forecasts of future events. Changes in expected credit losses are recognised in the income statement.
(r) 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 27). 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
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 53
Notes to the financial statements
Continued
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 27). 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.
(s) 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.
(t) 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 rights of set-off and intends to offset these against trade payables to suppliers.
(u) Short leasehold premiums
Premiums paid on acquiring new short leaseholds are amortised on a straight-line basis over the lease term, which range from one to 31 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.
(v) Lease intangible assets
The fair value acquired on operating leasehold interests are deemed to represent lease premiums, and are carried as intangible assets. The lease
intangible is amortised on a straight-line basis over the lease term, which range from 13 to 23 years.
(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 resulting in a material adjustment
to the reported amount in the next financial year 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(p) and 24.
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(m), 12 and 23.
54
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 two operating segments: Young’s managed houses and the Ram Pub Company. Young’s managed houses operate pubs with revenue derived
from sales of drink, food and the provision of accommodation. 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 income and costs relate to head office.
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
2019
Sales of goods
Accommodation sales
Revenue recognised under contracts with customers
Rental income
Total revenue recognised
Operating profit/(loss) before exceptional items
Operating exceptional items
Operating profit/(loss)
2018
Sales of goods
Accommodation sales
Revenue recognised under contracts with customers
Rental income
Total revenue recognised
Operating profit/(loss) before exceptional items
Operating exceptional items
Operating profit/(loss)
Managed
houses
£m
Ram Pub
Company
£m
Segments
total
£m
276.4
13.3
289.7
0.6
290.3
61.5
(0.9)
60.6
254.7
11.2
265.9
0.5
266.4
60.7
(4.0)
56.7
9.7
–
9.7
3.3
13.0
5.0
(0.5)
4.5
9.3
-
9.3
3.3
12.6
4.4
0.6
5.0
286.1
13.3
299.4
3.9
303.3
66.5
(1.4)
65.1
264.0
11.2
275.2
3.8
279.0
65.1
(3.4)
61.7
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
2019
Segment assets
Deferred tax assets
Cash
Total assets
Other segmental information
Depreciation and amortisation of lease premiums
Additions to non-current assets
Net downward movements in property valuation through
income statement (note 17)
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)
Managed
houses
£m
784.5
–
–
784.5
(22.1)
66.0
(0.1)
715.2
–
–
715.2
(19.6)
39.5
–
Ram Pub
Company
£m
70.0
–
–
70.0
(1.7)
8.0
Segments
total
£m
854.5
–
–
854.5
(23.8)
74.0
–
(0.1)
60.7
–
–
60.7
(1.6)
6.3
0.3
775.9
–
–
775.9
(21.2)
45.8
0.3
Unallocated
£m
11.6
7.4
8.5
27.5
(0.5)
3.0
–
11.1
6.4
7.2
24.7
(0.6)
0.4
–
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 55
Unallocated
£m
–
–
–
0.4
0.4
(18.0)
(2.5)
(20.5)
-
-
-
0.3
0.3
(18.2)
–
(18.2)
2019
£m
44.6
(5.0)
(0.1)
39.5
Total
£m
286.1
13.3
299.4
4.3
303.7
48.5
(3.9)
44.6
264.0
11.2
275.2
4.1
279.3
46.9
(3.4)
43.5
2018
£m
43.5
(5.6)
(0.3)
37.6
Total
£m
866.1
7.4
8.5
882.0
(24.3)
77.0
(0.1)
787.0
6.4
7.2
800.6
(21.8)
46.2
0.3
Notes to the financial statements
Continued
6. REVENUE
The recognition of revenue under each of the group’s material revenue streams is as follows:
Sales of goods
Accommodation sales
Revenue recognised under contracts with customers
Rental income(1)
Total revenue recognised
(1) Rental income for 2018 includes accommodation sales.
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
2019
£m
286.1
13.3
299.4
4.3
303.7
2019
£m
(0.7)
70.6
96.1
23.4
0.9
64.9
2018
£m
264.1
–
264.1
15.2
279.3
2018
£m
(0.2)
65.1
87.6
21.1
0.7
58.1
255.2
232.4
Other operating costs include:
Operating lease rentals:
minimum lease payments
sublease payments
Auditor’s remuneration:
audit of the group financial statements
7.1
0.8
7.9
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
2019
£m
88.2
6.6
1.3
96.1
2018
£m
80.5
6.0
1.1
87.6
2019
£m
87.0
6.5
1.3
94.8
6.5
0.7
7.2
0.2
0.2
2018
£m
78.0
5.9
1.1
85.0
The group’s and the company’s average monthly number of employees was 4,735 and 4,385 respectively (2018 group and company: 4,116).
The number of employees at the period end was 4,874 and 4,524 respectively (2018 group and company: 4,273).
The group’s and the company’s average monthly number of operational employees was 4,602 and 4,253 respectively (2018 group and company:
3,990). The number of operational employees at the period end was 4,740 and 4,391 respectively (2018 group and company: 4,143).
The group’s and the company’s average monthly number of administration employees was 133 and 132 respectively (2018 group and company: 126).
The number of administration employees at the period end was 134 and 133 respectively (2018 group and company: 130).
56
Strategic report
Directors’ report
Financial statements
Shareholder information
Total
excluding
pension
costs
2019
£000
Total
excluding
pension
costs
2018
£000
95
828
291
356
41
41
41
41
91
597
300
346
41
40
39
8
227
1,961
422
1,884
–
242
118
134
–
–
–
–
170
664
(b) Directors’ emoluments
Stephen Goodyear (iii) (iv)
Patrick Dardis (iii)
Torquil Sligo–Young
Tracy Dodd
Roger Lambert
Trish Corzine
Nick Miller
Ian McHoul (v)
Basic
salary
and fees
2019
£000
93
444
160
218
41
41
41
41
Basic
salary
and fees Benefits (i)
2019
£000
2018
£000
Benefits (i)
2018
£000
Bonus (ii)
2019
£000
Bonus (ii)
2018
£000
90
353
156
212
41
40
39
8
2
1
19
–
–
–
–
–
1
1
2
26
–
–
–
–
–
1
–
383
112
138
–
–
–
–
–
Steven Robinson (iii) (vi)
226
251
Total
1,305
1,190
23
30
633
(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 27
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 £191,250 (2018: £120,876), to Torquil is £56,231 (2018: £59,071) and to Tracy is
£13,773 (2018: £6,710).
(iii) Note 8(e) on page 58 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) Ian was appointed to the board on 24 January 2018.
(vi) Steven resigned from the board on 11 December 2018 and left the company. He assisted with an orderly handover after his departure and
therefore for those services he continued to receive salary, car-related benefits and private medical insurance up until 31 December 2018.
(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 8% and 11% 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 24. No director was accruing any defined benefit under the scheme
as at 1 April 2019. Further, no director accrued any defined benefit under the scheme during the period. Stephen Goodyear, Torquil Sligo-Young
and Patrick Dardis are pensioner members of the scheme.
Defined contribution pension scheme
The company operates a defined contribution pension scheme. As at 1 April 2019, Tracy Dodd was a member of the scheme and was accruing
retirement benefits under it; for the period, the company paid contributions of £8,040 (2018: £7,710) into the scheme for her in respect of her
qualifying service. Up until 31 December 2018, Steven Robinson was also a member of the scheme; the company paid contributions of £6,700
(2018: £7,710) into the scheme for him in respect of his qualifying service.
Post retirement health care
The company bears the cost of post retirement health care premia for certain employees and ex-employees – see note 24.
(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 period ended 3 April 2017, 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, 3,572 A shares were released to scheme members (2018: 31,104).
As at 1 April 2019, accrued entitlements now effectively remain in respect of 3,772 A shares (2018: 7,344 A shares).
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 57
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 throughout or during the period is as follows:
At 2
April
2018 Granted
Exercised
Lapsed
Stephen Goodyear
Patrick Dardis
Steven Robinson
Torquil Sligo-Young
Tracy Dodd
888
888
888
844
–
933
–
1,013
–
–
–
–
659
–
659
–
888
888
888
–
–
–
–
–
–
–
–
844
659
–
–
–
At 1
April
2019
–
–
–
–
–
933
659
1,013
Exercise
price
(pence per
share) (i)
1,013
1,013
1,013
1,066
1,364
964
1,364
1,066
Exercisable
from
01.09.18
01.09.18
01.09.18
01.09.20
01.09.21
01.09.19
01.09.21
01.09.20
Gains made
on exercise
of share
options
(£) (ii)
Exercisable
to
28.02.19
28.02.19
28.02.19
28.02.21
28.02.22
28.02.20
28.02.22
28.02.21
6,189
6,189
6,189
–
–
–
–
–
(i) The exercise prices of 1,013p per share, 1,066p per share, 1,364p 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 1,265.5p per share, 1,332p per share,
1,705p 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 opening 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. Each of the directors listed (other than Tracy Dodd) exercised a share option in the prior period – each such
option was in respect of 1,071 A shares and had an exercise price of 840p per share – in respect of that exercise, each of Stephen Goodyear,
Patrick Dardis and Steven Robinson made a gain of £5,837 and Torquil Sligo-Young made a gain of £5,869.
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)
Guaranteed minimum pension equalisation(2) (note 24)
Tenant compensation(3)
Acquisition costs(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
Total exceptional items after tax
2019
£m
2018
£m
3.4
(3.5)
(2.5)
(0.5)
(1.2)
0.4
–
–
(3.9)
0.1
0.1
(3.8)
2.1
(1.8)
–
(2.8)
(1.2)
0.3
(0.5)
0.5
(3.4)
0.4
0.4
(3.0)
(1) The movement on the revaluation of properties is a non-cash item that relates to the revaluation exercise that was completed based on the period
end date. The revaluation was conducted at an individual pub level and identified an upward movement of £3.4 million (2018: £2.1 million)
representing reversals of previous impairments recognised in the income statement, and a downward movement of £3.5 million (2018: £1.8 million),
representing downward movements in excess of amounts recognised in equity. These resulted in a net downward movement of £0.1 million (2018:
£0.3 million net upward) which has been recognised in the income statement. The downward movement for the period ended 1 April 2019 was
split between land and buildings of £0.1 million downward (2018: £0.3 million upward) and fixtures and fittings of £nil (2018: £nil). See note 5 for
segmental information.
58
Strategic report
Directors’ report
Financial statements
Shareholder information
(2) The Guaranteed Minimum Pension (GMP) is the minimum pension which a UK occupational pension scheme must provide for those employees who
were contracted out of the State Earnings-Related Pensions Scheme between 6 April 1978 and 5 April 1997. Following the ruling of the High Court
of Justice of England and Wales on 26 October 2018, the need to equalise the effect of differences in GMPs between males and females was made
more certain and consequently an allowance for the effect of GMP equalisation has been made in the current financial period. Although a number
of methodologies could be used to determine the impact, the group has adopted method C2 to identify its best estimate of the additional liabilities.
These are charged as a past service cost in the income statement as an exceptional item since the liabilities relate to employee service between 1990
and 1997 and they have no link to current business performance. The increase in liabilities (note 24) as at 1 April 2019 is estimated at £2.5 million,
assessed using market conditions at the date of the ruling as required by IAS 19.
(3) Tenant compensation of £0.5 million was paid to the previous tenants of the Bear (Cobham) and the Bayee Village (Wimbledon Village) to terminate their
lease agreements early. During the prior period, the group paid tenant compensation of £2.8 million to the previous tenants of the Hope & Anchor (Brixton),
Grove (Camberwell) and the King’s Arms (Wandsworth).
(4) The acquisition costs relate to the purchase of Redcomb Pubs Limited, a corporate group with 15 sites acquired on 23 January 2019, along with the People’s
Park Tavern (Hackney) and the Plantation (Poole). They include legal and professional fees and stamp duty land tax. The prior period acquisition costs related
to the Chequers Inn (Hanham Mills), Smiths of Smithfield (Smithfield Market), Smiths (Cannon Street), Park (Teddington) and the Bridge (Chertsey).
(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 (Mitcham)
and the William IV (Bletchingley) and the carrying value of the assets on the date of sale. In the prior period there was a profit from the sale of the
King’s Arms (Epsom).
(6) The prior year 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
2019
Exceptional
items
£m
Unadjusted
£m
69.0
(23.5)
(0.9)
44.6
(5.0)
(0.1)
39.5
3.8
0.1
–
3.9
–
–
3.9
Adjusted
£m
Unadjusted
£m
72.8
65.0
(23.4)
(0.9)
48.5
(5.0)
(0.1)
43.4
(20.8)
(0.7)
43.5
(5.6)
(0.3)
37.6
Any reference to ‘like-for-like’ means excluding the impact of any acquisitions or disposals in the financial period.
11. FINANCE COSTS
Bank loans and overdrafts
2018
Exceptional
items
£m
Adjusted
£m
3.7
(0.3)
–
3.4
–
–
3.4
2019
£m
5.0
5.0
68.7
(21.1)
(0.7)
46.9
(5.6)
(0.3)
41.0
2018
£m
5.6
5.6
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 59
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
Tax expense
Deferred tax in the group income statement
Property revaluation and disposals
Capital allowances
Retirement benefit schemes
Share based payments
Trade losses
Tax credit
Deferred tax in the group statement of comprehensive income
Property revaluation and disposals
Retirement benefit schemes
Interest rate swaps
Tax charge
2019
£m
2018
£m
9.3
(0.4)
8.9
(0.9)
(0.9)
8.0
(0.1)
(0.5)
(0.2)
0.1
(0.2)
(0.9)
3.5
(0.3)
0.1
3.3
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
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 1 April 2019 and 2 April 2018 respectively is as follows:
Profit before tax
Total profit before tax at a corporation tax rate of 19% (2018: 19%)
Tax effects of:
Expenses not deductible for tax purposes(1)
Recognition of property revaluation, rollover claim and other property movements
Non-taxable income
Prior period adjustment – current tax
Total tax expense
2019
£m
39.5
7.5
1.3
(0.1)
(0.3)
(0.4)
8.0
2018
£m
37.6
7.1
1.4
(0.7)
(0.3)
–
7.5
(1) Expenses not deductible for tax purposes include property acquisition costs, pension service 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 remeasured at 17%.
60
Strategic report
Directors’ report
Financial statements
Shareholder information
13. BUSINESS COMBINATIONS
Redcomb Pubs Limited
On 23 January 2019, the group and the company acquired the entire issued share capital of Redcomb Pubs Limited for a provisional total cash cost
of £31.7 million. This comprised cash consideration for the share capital of £18.4 million, overdraft and bank loan repayment of £10.6 million and
the settlement of £2.7 million of the acquired working capital on acquisition. The remainder of the working capital acquired has either been utilised or
subsequently paid or received. The acquired group consists of 15 premium sites in prime locations that fit well with Young’s managed house expansion
strategy. Redcomb Pubs Limited, directly or indirectly, owns 100% of the share capital of BFI Ltd, Redcomb Pubs & Bars Ltd and Old Manor Trading Ltd.
The provisional 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
Intangible assets – operating leases
Inventories
Cash
Trade and other receivables
Overdraft and loans
Trade and other payables
Deferred taxation on fair value adjustment
Net assets
Goodwill
Cash consideration for share capital
Provisional
fair value
£m
22.4
3.9
0.3
0.1
3.7
(10.6)
(8.7)
(1.5)
9.6
8.8
18.4
Goodwill of £8.8 million was recognised on the acquisition which represents the opportunity to the group of acquiring and operating 15 new
managed sites with immediate effect.
The group incurred £0.5 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, Redcomb Pubs Limited contributed £3.0 million of revenue and £0.2 million of operating
loss. If the acquisition had been completed on 3 April 2018, group revenues for the period would have been expected to increase by £19.6 million
and the group operating profit would have been expected to increase by £2.6 million.
In the prior period, 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 owned and operated Smiths of Smithfield (Smithfield Market) and the
Candlemaker (Cannon Street). The aggregated fair value of the identifiable assets and liabilities was a net liability of £0.1 million, with a lease premium
of £6.8 million being recognised in respect of the £6.7 million total consideration exchanged for the share capital acquired. During the current period,
a further £1.1 million deferred tax liability was recognised within the prescribed 12-month adjustment period following completion of a business
combination. This therefore increased the goodwill recognised by a corresponding £1.1 million. In the prior year, the group incurred £0.2 million
of costs associated with the acquisition, which were recorded within operating exceptional items.
Other business combinations
The group and the company acquired the People’s Park Tavern (Hackney) on 3 December 2018 and the Plantation (Poole) on 28 January 2019 as
business combinations in the current period for considerations totalling £6.9 million. The aggregated fair value of the identifiable assets and liabilities
of the acquired businesses was property and equipment of £6.9 million and inventories of £nil. The group incurred £0.5 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 £0.2 million of revenue and £nil
operating profit to the group. If the acquisitions had been completed on 3 April 2018, group revenues for the period would have been expected
to increase by £1.1 million and the group operating profit would have been expected to increase by £0.2 million.
In the prior period, the group and the company acquired the Chequers Inn (Hanham Mills), Park (Teddington) and the Bridge (Chertsey) as business
combinations 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 were
recorded within operating exceptional items.
In the prior period between the respective dates of acquisition and the balance sheet date, the Chequers Inn, Park and the Bridge contributed £0.6
million of revenue and £nil of operating profit to the group. If the acquisitions had been completed on 4 April 2017, group revenues for the prior
period would have been expected to increase by £2.4 million and the group operating profit would have been expected to increase by £0.2 million.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 61
Notes to the financial statements
Continued
13. BUSINESS COMBINATIONS (CONTINUED)
Cash flow from business combinations
Redcomb Pubs Limited
Smiths of Smithfield Limited
Other business combinations
Total net cash outflow
14. DIVIDENDS ON EQUITY SHARES
Final dividend (previous period)
Interim dividend (current period)
2019
£m
(18.4)
–
(6.9)
(25.3)
2019
£m
5.0
4.9
9.9
2018
£m
–
(9.0)
(14.0)
(23.0)
2018
£m
4.7
4.6
9.3
2019
Pence
10.20
9.97
20.17
2018
Pence
9.62
9.41
19.03
In addition, the board is proposing a final dividend in respect of the period ended 1 April 2019 of 10.81 pence per share at a cost of £5.3 million. If approved,
it is expected to be paid on 11 July 2019 to shareholders who are on the register of members at the close of business on 7 June 2019.
15. EARNINGS PER ORDINARY SHARE
(a) Earnings
Profit attributable to equity shareholders of the parent
Operating exceptional items
Tax attributable to above adjustments
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
2019
£m
31.5
3.9
(0.1)
35.3
2018
£m
30.1
3.4
(0.4)
33.1
Number
Number
48,941,761
41,753
48,862,927
33,413
48,983,514
48,896,340
Pence
64.36
7.77
72.13
Pence
64.31
7.76
72.07
Pence
61.60
6.14
67.74
Pence
61.56
6.13
67.69
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 41,753 (2018: 33,413) dilutive potential shares under the
SAYE scheme (see notes 8(e) and 27).
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.
62
Strategic report
Directors’ report
Financial statements
Shareholder information
16. GOODWILL AND INTANGIBLE ASSETS
Group
Goodwill
£m
Operating lease
intangible asset
£m
Total
£m
Goodwill
£m
Company
Operating lease
intangible asset
£m
Total
£m
Cost
At 3 April 2017
Acquisitions
At 2 April 2018
Acquisitions
At 1 April 2019
Amortisation
At 3 April 2017
Disposals/impairment
At 2 April 2018
Disposals/impairment
At 1 April 2019
Carrying amount
At 3 April 2017
At 2 April 2018
At 1 April 2019
21.5
–
21.5
9.9
31.4
1.6
0.2
1.8
–
1.8
19.9
19.7
29.6
–
–
–
3.9
3.9
–
–
–
–
–
–
–
3.9
21.5
–
21.5
13.8
35.3
1.6
0.2
1.8
–
1.8
19.9
19.7
33.5
1.1
1.0
2.1
–
2.1
–
0.2
0.2
–
0.2
1.1
1.9
1.9
–
–
–
–
–
–
–
–
–
–
–
–
–
Goodwill and lease intangible assets are recognised in respect of the following acquisitions for group and company respectively:
Geronimo
580 Limited
Smiths of Smithfield
Redcomb Pubs Limited
At 1 April 2019
Group
Goodwill
£m
Operating lease
intangible asset
£m
18.8
0.9
1.1
8.8
29.6
–
–
–
3.9
3.9
Total
£m
18.8
0.9
1.1
12.7
33.5
Company
Operating lease
intangible asset
£m
Goodwill
£m
1.0
0.9
–
–
1.9
–
–
–
–
–
1.1
1.0
2.1
–
2.1
–
0.2
0.2
–
0.2
1.1
1.9
1.9
Total
£m
1.0
0.9
–
–
1.9
The opening group goodwill of £19.7 million arose on the acquisition of Geronimo Group Limited and 580 Limited. The cash generating
units supporting the acquisition of Geronimo Group Limited are the pubs trading under the Geronimo concept. The cash generating
units within 580 Limited are those individual pubs acquired as part of the 580 group. All cash generating units are routinely tested for
impairment. Both cash generating units fall within the managed houses segment.
During the current period, £1.1 million of goodwill arose upon the acquisition of Smiths of Smithfield Limited in the previous financial
year. The goodwill was identified within the prescribed 12-month adjustment period following completion of a business combination.
A further £8.8 million of goodwill and £3.9 million of operating lease intangible assets were recognised following the acquisition of
Redcomb Pubs Limited on 23 January 2019. Both goodwill additions form part of the managed houses segment.
During the prior period, an impairment assessment on the Bell at Stow identified an impairment of £0.2 million which was expensed
through the income statement. This eliminated all goodwill resulting from the acquisition of the Bell at Stow Limited.
During the prior period, the trade and assets of Geronimo Airports Limited were transferred into the company at book value and
Geronimo Airports Limited went into members’ voluntary liquidation. As a result, associated goodwill was transferred into the company
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 budget approved by the board. For all cash generating units cash flows beyond this period assume 2.0% growth
(2018: 2.0%), with the exception of Smiths of Smithfield Limited where an initial build-up growth period following acquisition is included,
which is below the industry long-term average growth rate. The pre-tax discount rate applied to all cash flow projections is 8.0% (2018:
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 1 April 2019 and the board
is therefore comfortable that presently no reasonably possible change in key assumptions would give rise to an impairment.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 63
Notes to the financial statements
Continued
17. PROPERTY AND EQUIPMENT
Group
Fixtures,
fittings &
equipment
£m
Land &
buildings
£m
Cost or valuation
At 3 April 2017
Additions
Business combinations
Disposals
Fully depreciated assets
Transfers from lease premiums
Transfers from subsidiary companies
Revaluation(1)
– effect of upward movement
in property valuation
– effect of downward movement
in property valuation
At 2 April 2018
Additions
Business combinations
Disposals
Fully depreciated assets
Revaluation(1)
– effect of upward movement
in property valuation
– effect of downward movement
in property valuation
647.3
9.3
12.7
(1.0)
(0.7)
0.4
–
32.5
(4.9)
695.6
10.1
23.5
(1.1)
(0.2)
34.0
(10.4)
121.3
20.7
3.5
–
(11.3)
–
–
–
–
134.2
23.8
5.8
(0.3)
(15.5)
–
–
Total
£m
768.6
30.0
16.2
(1.0)
(12.0)
0.4
–
32.5
(4.9)
829.8
33.9
29.3
(1.4)
(15.7)
34.0
(10.4)
Company
Fixtures,
fittings &
equipment
£m
Land &
buildings
£m
583.0
9.3
11.6
(1.0)
(0.7)
–
59.7
32.5
(4.9)
689.5
9.9
6.0
(1.1)
(0.2)
33.2
(10.4)
106.0
20.2
3.4
–
(11.2)
–
15.6
–
–
134.0
22.2
0.9
(0.3)
(15.5)
–
–
Total
£m
689.0
29.5
15.0
(1.0)
(11.9)
–
75.3
32.5
(4.9)
823.5
32.1
6.9
(1.4)
(15.7)
33.2
(10.4)
At 1 April 2019
751.5
148.0
899.5
726.9
141.3
868.2
Depreciation and impairment
At 3 April 2017
Depreciation charge
Disposals
Fully depreciated assets
Transfers from lease premiums
Transfers from subsidiary companies
Revaluation(1)
– effect of downward movement
in property valuation
– effect of upward movement
in property valuation
At 2 April 2018
Depreciation charge
Disposals
Fully depreciated assets
Revaluation(1)
– effect of downward movement
in property valuation
– effect of upward movement
in property valuation
30.5
1.8
–
(0.7)
0.2
–
1.8
(3.7)
29.9
1.9
(0.4)
(0.2)
3.5
(5.1)
49.0
19.3
–
(11.3)
–
–
–
–
57.0
21.5
(0.1)
(15.5)
–
–
79.5
21.1
–
(12.0)
0.2
–
1.8
(3.7)
86.9
23.4
(0.5)
(15.7)
3.5
(5.1)
25.3
1.5
–
(0.7)
–
4.7
1.8
(3.7)
28.9
1.6
(0.4)
(0.2)
3.5
(5.1)
43.6
18.9
–
(11.2)
–
5.7
–
–
57.0
20.8
(0.1)
(15.5)
–
–
68.9
20.4
–
(11.9)
–
10.4
1.8
(3.7)
85.9
22.4
(0.5)
(15.7)
3.5
(5.1)
At 1 April 2019
Net book value
At 3 April 2017
At 2 April 2018
29.6
62.9
92.5
28.3
62.2
90.5
616.8
665.7
72.3
77.2
689.1
742.9
557.7
660.6
62.4
77.0
620.1
737.6
At 1 April 2019
721.9
85.1
807.0
698.6
79.1
777.7
(1) The group’s net book value uplift during the period was £25.2 million (2018: £29.5 million). This uplift was recognised either in the revaluation
reserve or the income statement, as appropriate. The impact of the revaluations was as follows:
64
Strategic report
Directors’ report
Financial statements
Shareholder information
Group
Company
2019
£m
2018
£m
2019
£m
2018
£m
(3.5)
3.4
(0.1)
35.8
(10.5)
25.3
25.2
(1.8)
2.1
0.3
34.1
(4.9)
29.2
29.5
(3.5)
3.4
(0.1)
35.8
(10.5)
25.3
25.2
(1.8)
2.1
0.3
34.1
(4.9)
29.2
29.5
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
(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 (2018: 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
2019
Managed houses
Ram Pub Company
Managed houses
Ram Pub Company
Segment total
Short leaseholds
Unallocated
Total net book value at 1 April 2019
2018
Managed houses
Ram Pub Company
Managed houses
Ram Pub Company
Segment total
Short leaseholds
Unallocated
Total net book value at 2 April 2018
Number
of pubs
124
45
33
20
222
47
–
269
123
48
25
17
213
42
–
255
Value
of pubs
£m
599.2
40.7
106.0
23.9
769.8
24.2
13.0
807.0
574.6
39.5
80.9
20.3
715.3
19.3
8.3
742.9
If, at 2019, the property estate had been carried at historic cost less accumulated depreciation and impairment losses, its carrying amount would have
been approximately £489.1 million (2018: £449.5 million).
The revaluation surplus represents the amount by which the fair value of the estate exceeds its historic cost.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 65
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 £64.0 million (2018: £61.4
million). Increasing the EBITDA used in the revaluation by 10% would increase the valuation by £64.0 million (2018: £61.4 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
Long leaseholds
Finance lease and long leaseholds
(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 3 April 2017
Additions
Disposals
At 2 April 2018
Additions
Impairment
At 1 April 2019
Group subsidiary undertakings
580 Limited
BFI Limited*
Geronimo Airports Limited (in members’ voluntary liquidation)**
Geronimo Inns Limited
Old Manor Trading Limited*
Redcomb Pubs & Bars Limited*
Redcomb Pubs Limited
Smiths of Smithfield Limited
*These shares are indirectly held.
**Dissolved on 24 April 2019.
2019
£m
33.1
34.0
67.1
2018
£m
31.3
29.8
61.1
6.0
7.4
Company
£m
30.2
6.7
(1.2)
35.7
18.4
(18.3)
35.8
Country of
incorporation
and registration
Country of
principal
operations
% of
equity and
votes held
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
England
100
100
100
100
100
100
100
100
During the current period, the company acquired the entire issued share capital of Redcomb Pubs Limited, the parent company of Redcomb Pubs &
Bars Limited, BFI Limited and Old Manor Trading Limited. This created an additional investment of £18.4 million.
During the current period, an impairment loss of £18.3 million was recognised on the investment in Geronimo Inns Limited as the majority of the
assets of Geronimo Inns Limited have been transferred into the company.
During the prior period, the company acquired 100% of the share capital of Smiths of Smithfield Limited, creating an additional investment of £6.7 million.
During the prior period, the trade and the assets of Geronimo Airports Limited were transferred into the company 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.
All group subsidiaries’ registered offices are at Riverside House, 26 Osiers Road, Wandsworth, London SW18 1NH.
66
19. INVENTORIES
Finished goods and raw materials
20. TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Prepayments
Amounts due from subsidiaries
Strategic report
Directors’ report
Financial statements
Shareholder information
Group
Company
2019
2018
2019
£m
3.7
£m
3.0
£m
3.4
Group
Company
2019
2018
£m
2.8
0.8
4.7
–
8.3
£m
2.3
0.8
3.9
–
7.0
2019
£m
2.8
0.8
4.3
16.6
24.5
2018
£m
3.0
2018
£m
2.3
0.8
3.9
1.6
8.6
Trade receivables are denominated in sterling, are non-interest bearing and are generally on 0-20 days’ terms. They are carried at amortised cost less
expected lifetime credit losses.
Considering the probability of default and loss given default, the 12-month expected credit losses on amounts due from subsidiaries are not material
in the current period.
At 1 April 2019, there were expected lifetime credit losses recognised against the trade receivables of £0.7 million (2018: bad debt provision
of £0.8 million).
The table below provides an indication of the expected lifetime credit losses recognised in the current period in accordance with IFRS 9 and the bad
debt provision in the prior period in accordance with IAS 39:
Opening balance
Charge for period
Amounts written off
2019
£m
0.8
–
(0.1)
0.7
Management have applied the provision matrix to identify expected credit losses in the current period as follows:
Neither
past due
nor impaired
£m
2.1
5%
0.1
2.1
Total
£m
2.8
0.7
2.3
<31
days
£m
0.2
40%
0.1
0.2
31-60
days
£m
0.2
80%
0.2
–
61-90
days
£m
0.1
100%
0.1
–
2019
Percentage loss rate
Expected lifetime credit
2018
2018
£m
0.6
0.3
(0.1)
0.8
91+
days
£m
0.2
100%
0.2
–
21. TRADE AND OTHER PAYABLES
Trade payables
Other tax and social security
Other creditors
Accruals and deferred income
Amounts due to subsidiaries
Group
Company
2019
£m
16.0
6.9
7.2
5.8
–
35.9
2018
£m
13.0
4.8
7.2
5.9
–
30.9
2019
£m
14.7
6.2
7.1
5.8
6.1
39.9
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.
Amounts due to subsidiaries decreased as a result of settlement for the purchase of assets from Geronimo in the prior period.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 67
Notes to the financial statements
Continued
22. 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 2.2 times
(2018: 2.0 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 26) and debt (note 29).
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.
2019
2018
Increase/
decrease
in %
Effect on profit
before tax
£m
+1.0
–0.5
+1.0
–0.5
(0.60)
0.30
(0.40)
0.20
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. This is assessed with regard to historical credit losses experienced, the current
economic climate, expected changes in forecasts and specific other factors of future events.
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. 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
2019
£m
(1.9)
(4.2)
(6.1)
2018
£m
(1.9)
(4.7)
(6.6)
Fair value movement of interest rate swaps recognised in other comprehensive income
0.5
4.3
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.
Of the interest rate swaps, £2.0 million in payable within one year, £1.9 million in payable between one and two years and £2.5 million is payable between two
and five years.
68
(b) Loans, borrowings, interest rates and fair values
2019
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
£100 million revolving credit facility
Group and company
Term or
expiry date
Effective
interest rate
when hedged
Variable
interest rate
Period
rate fixed
when unhedged(1)
March 2021
March 2021
March 2023
May 2024
May 2024
March 2024
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%
2 years
2 years
4 years
5 years
5 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
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
Group and company
Term or
expiry date
Effective
interest rate
Variable
interest rate
Period
rate fixed
when hedged when unhedged(1)
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
Strategic report
Directors’ report
Financial statements
Shareholder information
Fair
value
2019
£m
31.2
20.0
34.7
10.0
10.0
63.2
Book
value
2019
£m
30.0
20.0
30.0
9.9
9.9
63.2
169.1
163.0
8.5
0.6
172.1
Group Company
2019
£m
8.5
2019
£m
8.5
163.6
163.6
172.1
172.1
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
137.7
147.7
2018
£m
10.0
137.7
147.7
The secured borrowings are secured on the assets of the group (other than two pubs, broadly up to a value of £12.0 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 1 April 2019, 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.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 69
Notes to the financial statements
Continued
22. 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
The group has a bilateral £10 million term loan with Barclays Bank plc and a bilateral £10 million term loan with HSBC Bank plc, both repayable on
23 May 2024.
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 the prior period, 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 Royal Bank of Scotland 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.
During the current year the group exercised its right to extend the maturity date of the revolving credit facility by 1 year, making the new maturity
date March 2024. A further 1 year extension is available to the group in March 2020, should it see fit to take advantage of this facility. The group
also exercised an option to increase the limit of the revolving credit facility by £25 million to £100 million. The availability of these funds serve to
maintain the headroom available to the group following the acquisition of the Redcomb group in January 2019.
At the period end, £64.0 million was drawn. Final repayment of the total drawn down balance is due as one payment on 20 March 2024. 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
2019
Borrowings
Trade and other payables
2018
Borrowings
Trade and other payables
Maturity of financial liabilities
Within
one year
£m
10.3
30.5
40.8
Within
one year
£m
10.9
25.3
36.2
Between
one and
two years
£m
51.8
–
51.8
Between
one and
two years
£m
1.1
–
1.1
Between
two and
five years
£m
112.3
–
112.3
Between
two and
five years
£m
122.8
–
122.8
After
five years
£m
20.0
–
20.0
After
five years
£m
20.0
–
20.0
Total
£m
194.4
30.5
224.9
Total
£m
154.8
25.3
180.1
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.
70
(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
2019
£m
Level 1
2019
£m
Level 2
2019
£m
Level 3
2019
£m
6.1
6.1
–
–
Fair value
2018
£m
Level 1
2018
£m
6.6
6.6
–
–
6.1
6.1
Level 2
2018
£m
6.6
6.6
–
–
Level 3
2018
£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
Finance leases
At
3 April
2018
£m
147.1
0.6
Total liabilities from financing activities
147.7
13.9
Group and company
Changes Acquired
in fair Redcomb
loans
value
£m
£m
Cash
flows
£m
Expired
loans
£m
Other
£m
13.9
–
–
–
–
10.5
–
10.5
–
–
–
–
–
–
At
1 April
2019
£m
171.5
0.6
172.1
The acquired Redcomb loans were immediately repaid on acquisition of Redcomb Pubs Limited. The repayment of the loan is presented within the
cash flow movement.
Bank loans
Derivative financial instruments
Finance leases
Group and company
At
4 April
2017
£m
132.6
10.8
0.6
Changes
in fair
value
£m
–
(4.3)
–
Cash
flows
£m
14.2
–
–
New
loans
£m
20.0
–
–
Expired
loans
£m
(20.0)
–
–
Total liabilities from financing activities
144.0
14.2
(4.3)
20.0
(20.0)
At
2 April
2018
£m
147.1
6.6
0.6
154.3
Other
£m
0.3
0.1
–
0.4
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 71
Notes to the financial statements
Continued
23. 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
Trade losses
Group
Company
2019
£m
2018
£m
2019
£m
2018
£m
1.1
1.5
3.3
0.6
0.7
0.2
7.4
1.2
1.0
2.8
0.6
0.8
–
6.4
1.1
1.5
3.3
0.6
0.7
0.2
7.4
1.2
1.0
2.8
0.6
0.8
–
6.4
Deferred tax liabilities
Rolled over gains on property revaluations
(60.6)
(54.6)
(57.9)
(54.6)
Net deferred tax liabilities
(53.2)
(48.2)
(50.5)
(48.2)
Opening balance
Tax credit in the income statement
Tax charge in the statement of comprehensive income
Recognised on acquisition
Transfer of property to parent company
Closing balance
Movements in the deferred tax assets are shown below:
Group
Company
2019
£m
(48.2)
0.9
(3.3)
(2.6)
–
(53.2)
2018
£m
(44.2)
1.2
(5.2)
–
–
(48.2)
2019
£m
(48.2)
1.0
(3.3)
–
–
(50.5)
Interest
rate swap
£m
Retirement Decelerated
capital
allowances
£m
benefit
scheme
£m
Capital
losses
£m
Share
based
payments
£m
Trade
losses
£m
Deferred tax assets
Balance as at 3 April 2017
(Charged)/credited to the income statement
Charged to other comprehensive income
Balance as at 2 April 2018
1.9
–
(0.7)
1.2
(Charged)/credited to the income statement
–
(Charged)/credited to other comprehensive income (0.1)
Balance as at 1 April 2019
1.1
2.2
(0.2)
(1.0)
1.0
0.2
0.3
1.5
1.9
0.9
–
2.8
0.5
–
3.3
0.5
0.1
–
0.6
–
–
0.6
0.9
(0.1)
–
0.8
(0.1)
–
0.7
–
–
–
–
0.2
–
0.2
2018
£m
(40.0)
1.3
(5.2)
–
(4.3)
(48.2)
Total
£m
7.4
0.7
(1.7)
6.4
0.8
0.2
7.4
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 (2018: £4.9 million), which are available indefinitely to offset against future capital gains. A deferred
tax asset has not been recognised in respect of £1.6 million (2018: £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 (2018: £3.3 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.
In addition, the group has unrealised capital losses of £9.3 million (2018: £10.0 million). No deferred tax asset has been recognised in respect of these
losses (2018: £nil) because it is uncertain whether they will be utilised. The company has unrealised capital losses of £9.3 million (2018: £9.8 million);
no deferred tax asset has been recognised in respect of these losses (2018: £nil).
72
Strategic report
Directors’ report
Financial statements
Shareholder information
24. 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 £1.1 million (2018: £0.8 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 1 April 2019 was £1.4 million of which £1.2 million were special contributions
(2018: £1.3 million of which £1.2 million were special contributions) plus premiums of £0.2 million (2018: £0.2 million) to the post retirement health care
scheme. The current arrangement as regards contribution rates specifies that special contributions of £1.2 million will be payable until October 2023.
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 2020 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 2020 financial period are expected to be £0.2 million.
During the prior year, the company provided security over two managed houses (broadly, the amount recoverable under the security is limited to £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.
The Guaranteed Minimum Pension (GMP) is the minimum pension which a UK occupational pension scheme must provide for those employees who were
contracted out of the State Earnings-Related Pensions Scheme between 6 April 1978 and 5 April 1997. Following the ruling of the High Court of Justice of England
and Wales on 26 October 2018, the need to equalise the effect of differences in GMPs between males and females was made more certain and consequently an
allowance for the effect of GMP equalisation has been made in the current financial period. Although a number of methodologies could be used to determine the
impact, the group has adopted method C2 to identify its best estimate of the additional liabilities. These are charged as a past service cost in the income statement
as an exceptional item (note 9) since the liabilities relate to employee service between 1990 and 1997 and they have no link to current business performance. The
increase in liabilities as at 1 April 2019 is estimated at £2.5 million, assessed using market conditions at the date of the ruling as required by IAS 19.
The defined benefit scheme is closed to new entrants.
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
2019
%
2.50
3.30
2.50
3.30
2.30
N/A
2018
%
2.70
3.30
2.50
3.30
2.30
N/A
2019
%
2.50
3.30
N/A
N/A
N/A
9.00
2019
Years
21.7
24.0
23.1
25.5
2018
%
2.70
3.30
N/A
N/A
N/A
9.00
2018
Years
22.1
24.0
23.8
25.8
At the period end date, the average age of current pensioners was 73 years (2018: 73 years) and for future pensioners was 55 years (2018: 54 years).
The weighted average duration of liabilities for the current period was 18.4 years (2018: 18.6 years).
A one percentage point change in the assumed rate of increase in health care costs would have the following effects:
Effect on the aggregate service cost and interest cost
Effect on the defined benefit obligation
Increase
£m
Decrease
£m
–
0.3
–
(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 7.0%
Increase/decrease by nil%
Increase/decrease by 5.0%
Increase/decrease by 1.0%
Increase by 5.0%
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 73
Notes to the financial statements
Continued
24. 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
2019
£m
37.8
20.5
–
56.7
9.0
0.1
124.1
(132.7)
2018
£m
36.2
11.3
12.2
56.4
9.6
(0.8)
124.9
(131.0)
(8.6)
(6.1)
The pension scheme assets includes some of the company’s A shares with a fair value of £5.4 million (2018: £5.2 million). There are no property
assets of the scheme occupied by the company.
Of the above assets, £115.0 million are quoted securities.
Movement in scheme deficits in the period
2019
Health
care
scheme
£m
Pension
scheme
£m
(a) Changes in the present value of the schemes are as follows:
Opening deficit
Current service cost
Past service cost
Contributions
Other finance charges
Remeasurement through other comprehensive income
Closing deficit
(2.4)
(0.3)
(2.5)
1.4
–
(1.3)
(5.1)
(3.7)
–
–
0.2
(0.1)
0.1
(3.5)
(b) Recognised in the income statement
Group and company
Pension
scheme
£m
2018
Health
care
scheme
£m
(8.8)
(0.3)
–
1.3
(0.2)
5.6
(2.4)
(4.0)
–
–
0.2
(0.1)
0.2
(3.7)
Total
£m
(6.1)
(0.3)
(2.5)
1.6
(0.1)
(1.2)
(8.6)
Total
£m
(12.8)
(0.3)
–
1.5
(0.3)
5.8
(6.1)
Current service cost included in operating costs
(0.3)
–
(0.3)
(0.3)
–
(0.3)
Net interest expense
–
(0.1)
(0.1)
(0.2)
(0.1)
(0.3)
(c) Recognised in the statement of comprehensive income
Experience gains arising on the schemes’ liabilities
Changes in demographic assumptions underlying
the schemes’ liabilities
Changes in financial assumptions underlying
the schemes’ liabilities
Remeasurement of obligations
Return on schemes’ assets (less amounts included
in the net interest expense)
Net remeasurement recognised
1.1
2.3
(4.3)
(0.9)
(0.4)
(1.3)
0.1
0.1
(0.1)
0.1
–
0.1
1.2
2.4
(4.4)
(0.8)
(0.4)
(1.2)
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
74
Strategic report
Directors’ report
Financial statements
Shareholder information
Group and company
2019
Pension Health care
scheme
scheme
£m
£m
Pension
scheme
£m
2018
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
Past service cost
Interest on obligations
Contributions by schemes’ members
Remeasurement of obligations
Benefits paid
(127.3)
(0.3)
(2.5)
(3.3)
(0.1)
(0.9)
5.2
(3.7)
–
–
(0.1)
–
0.1
0.2
(131.0)
(0.3)
(2.5)
(3.4)
(0.1)
(0.8)
5.4
(132.3)
(0.3)
–
(3.5)
(0.1)
4.0
4.9
Present value of schemes’ liabilities
(129.2)
(3.5)
(132.7)
(127.3)
(e) Change in fair value of schemes’ assets
Opening fair value of schemes’ assets
Interest on schemes’ assets
Return on schemes’ assets (less amounts included
in the net interest expense)
Contributions by employer
Contributions by schemes’ members
Benefits paid
124.9
3.3
(0.4)
1.4
0.1
(5.2)
–
–
–
0.2
–
(0.2)
124.9
3.3
(0.4)
1.6
0.1
(5.4)
123.5
3.3
1.6
1.3
0.1
(4.9)
Fair value of schemes’ assets
124.1
–
124.1
124.9
(4.0)
–
–
(0.1)
–
0.2
0.2
(3.7)
–
–
–
0.2
–
(0.2)
–
25. OTHER NON-CURRENT LIABILITIES
At 3 April 2017
Released on disposal of property
Created
At 2 April 2018
Released
At 1 April 2019
Group and company
Deferred
income
£m
Provisions
£m
1.1
(0.5)
0.1
0.7
(0.5)
0.2
–
–
0.5
0.5
(0.2)
0.3
Total
£m
(136.3)
(0.3)
–
(3.6)
(0.1)
4.2
5.1
(131.0)
123.5
3.3
1.6
1.5
0.1
(5.1)
124.9
Total
£m
1.1
(0.5)
0.6
1.2
(0.7)
0.5
The provisions relate to four property leases where the expected operating income does not cover the rents payable. The rent payable
commitments range from 1 to 45 years.
26. SHARE CAPITAL AND RESERVES
Issued and fully paid shares – 12.5p each
Opening balance
Issued under employee share schemes
2019
Shares
2019
£000
2018
Shares
2018
£000
48,874,822
6,110
48,809,518
6,102
90,218
11
65,304
8
Closing balance
48,965,040
6,121
48,874,822
6,110
Of the opening balance, 29,714,822 are A shares and 19,160,000 are non-voting shares (2018: 29,649,518 A shares, 19,160,000 non-voting
shares). Of the closing balance, 29,805,040 are A shares and 19,160,000 are non-voting shares (2018: 29,714,822 A shares, 19,160,000 non-
voting shares).
For details of the A shares issued in the current period, see Director’s emoluments (note 8(b)) and Share Awards (note 27).
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.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 75
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.
27. 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 equal to 125% of basic annual
salary in the case of Patrick Dardis and to 100% of basic annual salary in the case of Torquil Sligo-Young and Tracy Dodd. 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 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 are received – special rules apply if an individual’s employment terminates earlier
by reason of death, 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 their 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 2 April 2018 and 1 April 2019 of the directors and senior
management employees who served during the period ended 1 April 2019. 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 1,710 pence per share (2018: 1,342 pence per
share). During the year, the ‘matching’ shares were issued on the same date as the ‘non-matching’ shares which had a market value of 1,705p per share
(2018: 1,332p per share).
Date
of award
Matching
shares
(Y/N)
At
2 April
2018
Awarded
during
the period
Restrictions
ceased to
apply during
the period
Transferred
during
the period(1)
At
1 April
2019
Issue price
(pence per
share)(2)
June 2015
June 2015
June 2016
June 2016
June 2015
June 2016
June 2016
June 2017
June 2017
June 2018
June 2018
June 2015
June 2015
June 2016
June 2016
June 2017
June 2017
June 2018
June 2018
June 2017
June 2018
June 2018
N
Y
N
Y
N
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
N
Y
22,446
11,223
22,199
11,099
7,522
15,495
7,747
17,671
8,835
–
–
8,977
4,488
10,428
5,214
7,045
3,522
–
–
2,579
–
–
–
–
–
–
(22,446)
(11,223)
–
–
–
–
–
–
–
14,179
7,089
–
–
–
–
–
–
6,929
3,464
–
4,329
393
(7,522)
–
–
–
–
–
–
(8,977)
(4,488)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
22,199
11,099
–
15,495
7,747
17,671
8,835
14,179
7,089
–
–
10,428
5,214
7,045
3,522
6,929
3,464
2,579
4,329
393
1,280.0
12.5
1,205.0
12.5
1,280.0
1,205.0
12.5
1,332.0
12.5
1,705.0
12.5
1,280.0
12.5
1,205.0
12.5
1,332.0
12.5
1,705.0
12.5
1,332.0
1,705.0
12.5
Stephen Goodyear
Patrick Dardis
Torquil Sligo-Young
Tracy Dodd
76
Strategic report
Directors’ report
Financial statements
Shareholder information
Steven Robinson(3)
Senior management
employees
Date
of award
Matching
shares
(Y/N)
At
2 April
2018
Awarded
during
the period
Restrictions
ceased to
apply during
the period
Transferred
during
the period(1)
At Market price
(pence per
share)(2)
1 April
2019
June 2015
June 2015
June 2016
June 2016
June 2017
June 2017
June 2018
June 2018
June 2015
June 2015
June 2016
June 2016
June 2017
June 2017
June 2018
June 2018
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
2,343
2,343
2,551
2,551
7,252
3,626
–
–
5,369
5,369
5,898
5,898
6,936
6,936
–
–
–
–
–
–
–
–
9,975
4,987
–
–
–
–
–
–
6,807
6,807
(2,343)
(2,343)
–
–
–
–
–
–
(5,369)
(5,369)
–
–
–
–
–
–
–
–
(2,551)
(2,551)
(7,252)
(3,626)
(5,000)
(4,987)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,975
–
–
–
5,898
5,898
6,936
6,936
6,807
6,807
1,280.0
12.5
1,205.0
12.5
1,332.0
12.5
1,705.0
12.5
1,280.0
12.5
1,205.0
12.5
1,332.0
12.5
1,705.0
12.5
(1)These shares were transferred to the Ram Brewery Trust II, an employee benefit trust designated by the company. The transfers were at the issue
price per share shown in the far right-hand column, apart from the following:
• the 5,000 June 2018 awarded shares were transferred at 1,522.5p per share: this was the price for an A share as shown in the online version
of the Financial Times published on 31 January 2019, being the day of the transfer; and
• those shares with an issue price of 12.5p were transferred for no consideration.
(2)For ‘matching’ shares, the price shown is the nominal value.
(3)Steven resigned from the board on 11 December 2018 and left the company.
The performance periods for the awards dated June 2016, 2017 and 2018 are the group’s four-year financial periods ending on or around
31 March 2019, 2020 and 2021 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 90% for the awards dated June 2016, as to 50% for the awards dated June 2017 and as to 30% for the awards dated June 2018.
A charge of £0.2 million (2018: £0.5 million) was made to the group and company income statements in respect of the outstanding 70,190
‘matching’ shares at 1 April 2019 (2018: 103,473).
(b) SAYE
The scheme enables eligible directors and employees to acquire options over the company’s A shares. The options can be granted 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 52,275 A shares (2018: 73,312 A shares) were granted under the scheme at an exercise price of 1,364p per share
(2018: 1,066p per share). These options will generally be exercisable between 1 September 2021 and 28 February 2022.
Options over 134,096 A shares were outstanding at the beginning of the period. During the period, options over 20,087 A shares lapsed and
options over 24,402 A shares were exercised at 1,013p per share. The weighted average share price of shares exercised in the period was 1,710p
per share. The options that were exercised resulted in an increase in share capital of £3,050.25 and an increase in share premium of £244,142.01.
A charge of £0.1 million (2018: £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 1 April 2019, options over 141,882 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 1 April 2019 and 2 April
2018 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
2018 plan
2017 plan
2016 plan
2015 plan
1,705.0
1,364.0
26.2
3
1.3
0.7
17.2
1,332.0
1,066.0
8.5
3
1.3
2.4
33.7
1,205.0
964.0
18.0
3
1.4
0.9
15.7
1,265.5
1,013.0
17.3
3
1.5
1.0
44.3
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.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 77
Notes to the financial statements
Continued
28. 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 22 and in notes 8(e) and 27. 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 1 April 2019, the Scheme held 337,067
A shares (2018: 337,067), being 1.13% of the class. In March 2018, 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 1 April 2019, the trust held
29,740 A shares (2018: 7,345), being 0.10% of the class. During the period, 3,572 A shares (2018: 31,104) were transferred out in connection with
the company’s profit sharing scheme (see note 8(d)), nil A shares (2018: 28,542) were transferred out in connection with the company’s savings-
related share option scheme (see note 8(e)) and 25,967 A shares (2018: nil) were transferred in in connection with the company’s deferred annual
bonus scheme (see note 27(a)).
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 £0.3 million (2018: £0.4 million) and incurred a share based payment charge
of £0.2 million (2018: £0.3 million).
29. NET CASH GENERATED FROM OPERATIONS AND ANALYSIS OF NET DEBT
Group
Company
2019
£m
39.5
5.0
0.1
44.6
23.4
0.9
–
–
0.1
(0.4)
–
2.5
(1.3)
(0.7)
0.3
(0.4)
2.4
(2.2)
69.2
2018
£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
2019
£m
72.7
5.5
0.1
78.3
22.4
0.4
–
18.3
0.1
(0.4)
–
2.5
(1.3)
(0.7)
0.3
(0.4)
(15.9)
(47.3)
56.3
2018
£m
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
Group
Company
2019
£m
8.5
(8.5)
(163.6)
2018
£m
7.2
(10.0)
(137.7)
2019
£m
8.2
(8.5)
(163.6)
(163.6)
(140.5)
(163.9)
2018
£m
7.2
(10.0)
(137.7)
(140.5)
Profit before tax on continuing operations
Net finance cost
Other finance charges
Operating profit on continuing operations
Depreciation
Amortisation of lease premiums
Goodwill impairment
Investment impairment
Movement on revaluation of properties
Profit on sales of property
Loss on disposal
Guaranteed minimum pension equalisation
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
78
Strategic report
Directors’ report
Financial statements
Shareholder information
30. OBLIGATIONS UNDER LEASES
(a) Obligations under finance leases
Finance leases for property are for terms ranging from 50 to 999 years. Minimum lease payments for most leases are nominal amounts. Leases do not
have a purchase option but most are renewable at the lessee’s option at the end of the lease term.
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
2019
£m
2018
£m
2019
£m
2018
£m
–
0.2
3.3
3.5
(2.9)
0.6
–
–
0.6
0.6
–
0.2
2.5
2.7
(2.1)
0.6
–
–
0.6
0.6
–
0.2
3.3
3.5
(2.9)
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 1 April 2019 were £0.3 million (2018: £0.4 million).
(b) Operating lease agreements where the group is lessee
Operating leases for properties are for terms ranging from 1 to 54 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.
2019
£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
8.7
31.3
80.3
120.3
Group
Company
2018
£m
7.2
25.7
60.3
93.2
2019
£m
6.7
23.7
56.5
86.9
2018
£m
6.2
22.5
55.7
84.4
Future minimum rentals receivable from non-cancellable subleases on the above properties as at 1 April 2019 were £0.9 million (2018: £0.8 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 1 to 16 years.
Future minimum rentals receivable under non-cancellable operating leases are as follows:
3.6
- Not later than one year
5.8
- Later than one year and not later than five years
3.9
- Later than five years
3.7
5.4
4.0
3.6
5.8
3.9
13.3
13.1
13.3
3.7
5.4
4.0
13.1
31. Post balance sheet events
There were no post balance sheet events except for completion of a private placement debt facility; after the end of the financial year the group secured
additional long-term debt financing through a private placement. This will see the group raise £35 million in July 2019, with Barings receiving senior
secured notes at a fixed interest rate of 3.30% for 20 years.
32. Contingent liabilities
There were no contingent liabilities at the current or prior period balance sheet date.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 79
Five year review
Strategic report
Directors’ report
Financial statements
Shareholder information
Revenue
303.7
279.3
268.9
245.9
227.0
2019
2018
2017
2016
2015
52 weeks
52 weeks
53 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
48.5
(3.9)
(5.1)
39.5
(8.0)
31.5
43.4
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
860.8
21.2
(51.2)
(237.5)
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)
593.3
549.2
493.0
452.5
407.6
6.1
587.2
593.3
6.1
543.1
549.2
6.1
486.9
493.0
6.1
446.4
452.5
6.1
401.5
407.6
Purchase of fixed assets, lease premiums
and business combinations
67.0
53.0
38.3
45.1
50.9
Net debt
(163.6)
(140.5)
(126.6)
(130.2)
(129.0)
Per 12.5p ordinary share
Adjusted basic earnings from continuing operations
Basic earnings from continuing operations
Dividends – paid in period
72.13
64.36
20.17
67.74
61.60
19.03
66.43
61.51
17.95
58.44
54.73
16.94
51.04
54.14
15.97
Pence
Pence
Pence
Pence
Pence
Gearing
27.6%
25.6%
25.7%
28.8%
31.6%
Average number of employees
4,735
4,116
3,924
3,735
3,496
80
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 to the purchaser or transferee, or to the person who arranged the sale or transfer, so they can pass it 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, 7 July 2019. 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 130th 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, 9 July 2019 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 1 April 2019, together with the strategic report, directors’ report
and the auditor’s report on those accounts and reports.
2. To declare a final dividend of 10.81p per share for the financial year ended 1 April 2019.
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 Stephen Goodyear be, and is hereby, re-appointed as a director.
6. That Patrick Dardis be, and is hereby, re-appointed as a director.
7. 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 2020) 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.
8. 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 £2,040,210 (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 £4,080,420 (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
2020) 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.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 81
Notice of meeting
Continued
Special resolutions
To consider and, if thought fit, to pass the following resolutions which will be proposed as special resolutions:
9. That if resolution 8 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 8, 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 8 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 £306,031,
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 2020)
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.
10. 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 4,896,204 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 2020)
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
22 May 2019
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
82
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, 8 July 2019
(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 registrar. To be valid, your proxy
form must be received by the Company’s registrar no later than 11.30am on Sunday, 7 July 2019.
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 (but your proxy appointment will
automatically be terminated).
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 registrar 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 registrar 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.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 83
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 registrar. 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 registrar 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 registrar 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 registrar 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 registrar is Computershare Investor Services PLC. They can be contacted at The Pavilions, Bridgwater Road, Bristol,
BS99 6ZZ. Their telephone number is 0370 7071420.
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 2019 annual report or any proxy form for the Company’s 130th annual general meeting may not be used to
communicate with the Company for any purpose other than any expressly stated.
84
Explanatory notes to the notice of meeting
Strategic report
Directors’ report
Financial statements
Shareholder information
Notice of the 130th annual general meeting of Young & Co.’s
Brewery, P.L.C. (the “Company”) to be held on Tuesday, 9 July
2019 is set out on pages 81 to 84. 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 and unanimously
recommend that all A shareholders vote in favour of them as they
intend to do in respect of their beneficial holdings.
Resolutions 1 to 8 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 9.97p per share was paid in December 2018.
The directors are recommending a final dividend of 10.81p per share
for the year ended 1 April 2019, bringing the total dividend for the year
to 20.78p per share. Subject to approval being given, the final dividend
is expected to be paid on 11 July 2019 to shareholders on the register
at the close of business on 7 June 2019.
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 their 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 and 6: re-appointments of directors
Stephen Goodyear and Patrick Dardis 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. They are both seeking re-appointment and their brief
biographical and other details are on page 20.
Resolution 7: 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 8: 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 £2,040,210 – this amount represents one-
third of the Company’s issued share capital as at 17 May 2019 (but
would be reduced by the nominal amount of any shares allotted or
rights granted under paragraph (b) of this resolution in excess of
£2,040,210). 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 £4,080,420, 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 two-thirds of the Company’s issued share capital as at 17 May
2019. Therefore the maximum nominal amount of shares and rights
that may be allotted or granted under this resolution is £4,080,420. 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 2020). 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 9 and 10 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 9: 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 £306,031.
This aggregate nominal amount represents approximately 5% of the
Company’s issued share capital as at 17 May 2019. 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 2020).
Resolution 10: 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 4,896,504 of
its shares, being no more than 10% of its issued share capital as at 17
May 2019. 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 2020). 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 5%
above 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 2019, there were options outstanding over 140,349 A
shares, representing 0.29% 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 0.36% of the Company’s issued share capital. No warrants
to subscribe for shares are outstanding.
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 85
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
Radlett
Red Lion Hotel H
Hendon
Beaufort
Greyhound T
Kilburn
Queen’s Arms T
Harlesden
Grand Junction Arms T
Ealing
Grange
New Inn T
Village Inn
Shepherd’s Bush
Bull (Westfield)
Eagle
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
Coach & Horses
White Hart
Putney
Boathouse
Coat and Badge
Duke’s Head
Green Man
Half Moon
Spotted Horse
Roehampton
Angel T
King’s Head
Wimbledon
Alexandra
Crooked Billet
Dog & Fox H
Fire Stables
Hand in Hand
Rose & Crown H
Epsom
Rising Sun T
Walton-on-the-Hill
Chequers
Maida Vale
Prince Alfred
Notting Hill
Duke of Wellington
Elgin
Kensington
Britannia
Curtains Up
Duke of Clarence
Fulham
Cock Tavern
Duke on the Green
Waterside
Wandsworth
Alma H
Crane T
Brewers Inn H
County Arms
East Hill
Gardeners’ T
King’s Arms
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
Paddington
Porchester
Lockhouse
Bayswater
Mitre
Chelsea
Builder’s Arms
Chelsea Ram
Cooper’s Arms
Hollywood Arms
King’s Arms
Phoenix
Surprise
Battersea
Duke of Cambridge
Nine Elms Tavern
Northcote
Plough
Prince Albert
Clapham
Clapham North T
Windmill H
Balham
Devonshire
Grove
Nightingale
Tooting
Castle
Trafalgar Arms
Carshalton
Greyhound H
Southern England
Appledore
Seagate Hotel H
Boathouse
Exeter
City Gate H
Double Locks
Exmouth
Grove
Sidmouth
Swan T
86
Burnham-on-Sea
Dunstan House Inn H
Congresbury
Old Inn T
Wrington
Plough Inn T
Somerton
Unicorn T
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
Potters Bar
Old Manor
Strategic report
Directors’ report
Financial statements
Shareholder information
Cambridge
Station Tavern
Barnet
Lord Nelson T
Hampstead
Flask
Roebuck
Primrose Hill
Queens
Winchmore Hill
Kings Head
Tufnell Park
Lord Palmerston
Kentish Town
Bull & Gate
Lion & Unicorn
Marylebone
Lord Wargrave T
Camden
Spread Eagle
Westminster
Buckingham Arms
Clarence
Morpeth Arms
Old Shades
Phoenix
Royal Oak T
Pimlico
Fox & Hounds T
Rising Sun T
Euston
Square Tavern T
Fitzrovia
Adam & Eve
One Tun
Mayfair
Guinea
Windmill
Chelmsford
O’Connor’s T
Riverside Inn T
Stratford
Cow (Westfield)
Islington
Alphabet
Canonbury
Castle
Duchess of Kent
John Salt
King’s Head
Marquess Tavern T
Narrowboat
King’s Cross &
St Pancras Station
Betjeman Arms
Fellow
Bloomsbury
Calthorpe Arms T
Lamb
Covent Garden
Marquess of Anglesey
Charing Cross
Theodore Bullfrog
Hackney
Naturalist
People’s Park Tavern T
Clapton
Princess of Wales
Shoreditch
Owl & Pussycat
City of London
Albion
Boisdales T
Candlemaker
Dirty Dick’s
Finch’s
Grocer
Fox & Anchor H
Lamb Tavern
Oyster Shed
Paternoster
Smiths
Three Lords T
White Horse
Bethnal Green
Royal Oak T
Bow
Coborn
Crown
Aldgate
Leman Street Tavern
Vauxhall
Fentiman Arms
Riverside
Stockwell
Surprise T
Brixton
Trinity Arms
Hope & Anchor
Streatham
Bull
Manor Arms
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
Cherry Tree
Wood House
Norwood
Hope T
Railway Bell T
Thornton Heath
Railway Telegraph T
Croydon
Dog & Bull T
Beddington
Plough
Rotherhithe
Ship T
Greenwich
Coach & Horses
Cutty Sark
Old Brewery
Richard the First
Catford
Black Cat T
Bromley
Two Doves T
Dartford
Malt Shovel T
Woolwich
Dial Arch
Guardhouse
Lee
Crown
Hither Green
Station Hotel H
Chislehurst
Bickley
Bull’s Head Hotel H
Key
Young’s managed house unless marked
Tenanted
Hotel
T
H
Sherfield-on-Loddon
White Hart
Fetcham
Bell
Leatherhead
Penny Black
Effingham
Plough T
Betchworth
Dolphin
Hindon
Lamb Inn H
Shaftesbury
Mitre
Cobham
Bear
Guildford
Weyside
Worplesdon Place H
Newbury
Carnarvon Arms H
Witley
White Hart T
Emsworth
Sussex Brewery T
Dorking
Falkland Arms T
Old House T
Stonebridge
Royal Oak T
Poole
Plantation H
Southampton
Heartbreakers T
Chichester
Crown & Anchor
Bognor Regis
Waverley
Redhill
Home Cottage
Farnborough
Rose & Crown T
Blindley Heath
Red Barn
Lingfield
Greyhound T
East Grinstead
Ship T
Plumpton Green
Fountain Inn T
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 87
Senior personnel, committees, advisers and others
Strategic report
Directors’ report
Financial statements
Shareholder information
Directors
Stephen Goodyear
Non-executive Chairman
Patrick Dardis
Chief Executive
Torquil Sligo-Young
Information Resources
Tracy Dodd
People
Roger Lambert
Non-executive and 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
Banks
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
Shareholder information
Registrar
The company’s registrar is Computershare
Investor Services PLC. They can be
contacted at The Pavilions, Bridgwater
Road, Bristol BS99 6ZZ. Their telephone
no. is 0370 707 1420.
Queries
If a shareholder has any questions about
their shareholding or if they 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 (see above). All
requests to amend account details must be
made in writing.
Shareholding management and
receiving certain documents and
information via email
Shareholders can manage their
shareholding online at www.investorcentre.
co.uk. If they would like to receive certain
documents and information from the
company via email, they should read the
company’s November 2018 letter to
shareholders and then set up or update their
profile online at www.investorcentre.co.uk.
Shareholders may change their email
88
address at any time and can also, via the
online portal, revert to receiving hard copy
documents and information. The letter can
be found at https://www.youngs.co.uk/
youngs/uploads
sites/2/2018/11/20181123
-request-letter-for-electronic-
communications-tfw-version.pdf
Shareholder offers
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
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
Proposed financial diary 2019
6 June 2019
Ex-dividend date for final dividend
7 June 2019
Record date for final dividend
9 July 2019
Annual general meeting
11 July 2019
Payment of final dividend
14 November 2019
Interim results announcement
21 November 2019
Ex-dividend date for interim dividend
22 November 2019
Record date for interim dividend
6 December 2019
Payment of interim dividend
YO U N G & C O.’S B R EW E RY, P. L .C . AN N UAL R E PORT 2019 89
Adam and Eve Albert Albion Alexander Pope Alexandra Alma Alphabet Angel and Greyhound Bear Bear Inn Beaufort Bell Bell
Adam and Eve Albert Albion Alexander Pope Alexandra Alma Alphabet Angel and Greyhound Bear Bear Inn Beaufort Bell Bell
Hotel Betjeman Arms Bickley Bishop Blue Boar Boathouse Brewers Inn Bridge Hotel Britannia Brook Green Hotel Buckingham
Hotel Betjeman Arms Bickley Bishop Blue Boar Boathouse Brewers Inn Bridge Hotel Britannia Brook Green Hotel Buckingham
Arms Builders Arms Bull Bull and Gate Bulls Head Bunch of Grapes Candlemaker Canonbury Carnarvon Arms Castle Chelsea
Arms Builders Arms Bull Bull and Gate Bulls Head Bunch of Grapes Candlemaker Canonbury Carnarvon Arms Castle Chelsea
Ram Chequers Cherry Tree City Gate Clarence Clockhouse Coach and Horses Coat and Badge Coborn Cock Tavern Coopers
Ram Chequers Cherry Tree City Gate Clarence Clockhouse Coach and Horses Coat and Badge Coborn Cock Tavern Coopers
Arms County Arms Cow Crooked Billet Crown Crown and Anchor Crown Hotel Curtains Up Cutty Sark Defectors Weld Depot
Arms County Arms Cow Crooked Billet Crown Crown and Anchor Crown Hotel Curtains Up Cutty Sark Defectors Weld Depot
Devonshire Dial Arch Dirty Dicks Dog and Fox Dolphin Double Locks Duchess of Kent Duke of Cambridge Duke of Clarence Duke
Devonshire Dial Arch Dirty Dicks Dog and Fox Dolphin Double Locks Duchess of Kent Duke of Cambridge Duke of Clarence Duke
of Wellington Duke on the Green Duke’s Head Dunstan House Inn Eagle Elgin Fellow Fentiman Arms Finch’s Fire Stables Flask
of Wellington Duke on the Green Duke’s Head Dunstan House Inn Eagle Elgin Fellow Fentiman Arms Finch’s Fire Stables Flask
Foley Founder’s Arms Fox and Anchor Grange Green Man Greyhound Grocer Grove Guard House Guinea Half Moon Halfway
Foley Founder’s Arms Fox and Anchor Grange Green Man Greyhound Grocer Grove Guard House Guinea Half Moon Halfway
House Hammersmith Ram Hand and Spear Hand in Hand Hare and Hounds Highbury Vaults Hollywood Arms Home Cottage
House Hammersmith Ram Hand and Spear Hand in Hand Hare and Hounds Highbury Vaults Hollywood Arms Home Cottage
Hope and Anchor Horts John Salt Kings Arms Kings Head King’s Head Lamb Lamb Tavern Lass O’Richmond Hill Leather Bottle
Hope and Anchor Horts John Salt Kings Arms Kings Head King’s Head Lamb Lamb Tavern Lass O’Richmond Hill Leather Bottle
Leman Street Tavern Lion and Unicorn Lock Keeper Lockhouse Lord Palmerston Manor Arms Marlborough Marquess of
Leman Street Tavern Lion and Unicorn Lock Keeper Lockhouse Lord Palmerston Manor Arms Marlborough Marquess of
Anglesey Mitre Morpeth Arms Mulberry Bush Narrowboat Naturalist New Inn Nightingale Nine Elms Tavern Northcote Old
Anglesey Mitre Morpeth Arms Mulberry Bush Narrowboat Naturalist New Inn Nightingale Nine Elms Tavern Northcote Old
Brewery Old Manor Old Shades Old Ship One Tun Orange Tree Owl and Pussycat Oyster Shed Park Hotel Paternoster Penny
Brewery Old Manor Old Shades Old Ship One Tun Orange Tree Owl and Pussycat Oyster Shed Park Hotel Paternoster Penny
Black Phoenix Plantation Plough Porchester Prince Albert Prince Alfred Princess of Wales Queen Adelaide Queen’s Red Barn Red
Black Phoenix Plantation Plough Porchester Prince Albert Prince Alfred Princess of Wales Queen Adelaide Queen’s Red Barn Red
Lion Richard the First Riverside Riverstation Roebuck Rose and Crown Seagate Hotel Shaftesbury Ship Smiths of Smithfield
Lion Richard the First Riverside Riverstation Roebuck Rose and Crown Seagate Hotel Shaftesbury Ship Smiths of Smithfield
Spotted Horse Spread Eagle Spring Grove Station Hotel Station Tavern Surprise Swan Theodore BullfrogTrafalgar Arms Trinity
Spotted Horse Spread Eagle Spring Grove Station Hotel Station Tavern Surprise Swan Theodore BullfrogTrafalgar Arms Trinity
Arms Victoria Village Inn Waterfront Waterside Waverley Weyside Wheatsheaf White Bear White Cross White Hart White Horse
Arms Victoria Village Inn Waterfront Waterside Waverley Weyside Wheatsheaf White Bear White Cross White Hart White Horse
Windmill Wood House Woolpack Worplesdon Place Abercorn Arms Angel Bells Black Cat Black Lion Boisdales Bristol Ram
Windmill Wood House Woolpack Worplesdon Place Abercorn Arms Angel Bells Black Cat Black Lion Boisdales Bristol Ram
Calthorpe Arms Castle Clapham North Crane Dog & Bull Falkland Arms Fountain Inn Fox and Hounds Gardeners Grand Junction
Calthorpe Arms Castle Clapham North Crane Dog & Bull Falkland Arms Fountain Inn Fox and Hounds Gardeners Grand Junction
Arms Grapes Grey Horse Greyhound Grove House Heartbreakers Hope Horse Pond Inn Jolly Gardeners Lord Nelson Lord
Arms Grapes Grey Horse Greyhound Grove House Heartbreakers Hope Horse Pond Inn Jolly Gardeners Lord Nelson Lord
Wargrave Malt Shovel Marquess Tavern New Inn O’Connors Old House Old Inn Old Sergeant People’s Park Tavern Pig and
Wargrave Malt Shovel Marquess Tavern New Inn O’Connors Old House Old Inn Old Sergeant People’s Park Tavern Pig and
Whistle Plough Inn Prince William Henry Queens Arms Railway Bell Railway Telegraph Rattlebone Inn Red Cow Rising Sun
Whistle Plough Inn Prince William Henry Queens Arms Railway Bell Railway Telegraph Rattlebone Inn Red Cow Rising Sun
Riverside Inn Robin Hood Rope Walk Rose & Crown Royal George Royal Oak Ship Ship Inn Spread Eagle Square Tavern Surprise
Riverside Inn Robin Hood Rope Walk Rose & Crown Royal George Royal Oak Ship Ship Inn Spread Eagle Square Tavern Surprise
Sussex Brewery Swan Inn Thatched House Three Lords Two Doves Unicorn Hotel Waggon & Horses Watermans Arms White Hart
Sussex Brewery Swan Inn Thatched House Three Lords Two Doves Unicorn Hotel Waggon & Horses Watermans Arms White Hart
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