Together at Young’s
Together at Young’s
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Annual Report
for the 52 weeks ended 29 March 2021
Contents
About Young’s
Strategic Report
04 Chairman’s statement
06 Young’s at a glance
08 Investing in our estate
10 Chief executive’s review
14 Our strategy and business model
16 How we performed
18 Section 172(1) statement
24 Welcoming back all our teams
26 Principal risks and uncertainties
30 Our approach to ESG
37 Business and financial review
Corporate Governance
44 Chairman’s corporate governance statement
48 Board of directors
52 Corporate governance report
60 Audit committee report
66 Remuneration committee report
68 Directors’ report
74 Independent auditor’s report
Financial Statements
83 Group income statement
84 Group statement of comprehensive income
85 Balance sheets
86 Statements of cash flow
87 Group statement of changes in equity
88 Parent company statement of changes in equity
89 Notes to the financial statements
130 Five-year review
Shareholder Information
131 Notice of meeting
136 Explanatory notes to the notice of meeting
138 Senior personnel, committees, banks, advisers and others
138 Shareholder information
Young’s pubs and hotels
are at the heart of our local
communities in London
and the south of England.
With more than 200
establishments, our award-
winning design approach
means excellence in ambience
as well as service and location.
From poetic pubs steeped in
history to secret underground
cocktail bars, the character
and individuality of each of
our premises gives them a
unique feel. Our pubs have
style and soul, and the people
who work with us have pride
in our culture and passion
for the work they do.
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Together at Young’s
we look forward to
the future with optimism.
The past year has been challenging for
everybody. Lockdown has shown us all how
important the Great British Pub is for so many
people and local communities.
We have been working hard to make sure
Young’s is at its best as we reopen our doors and
that we remain in a strong financial position to
invest for the future.
From all our teams we want to wish you a very
warm welcome back to our pubs and hotels.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
01
The story of our year
“We were able to navigate our way
through the pandemic, despite
the last financial year being one
of the most challenging in our
189-year history.”
I am extremely proud of the way our teams have reacted to
the extraordinary challenges that we have faced. The absolute
professionalism of our pub managers and their teams has
enhanced our reputation as a highly responsible pub operator
and underlined the exceptional quality of the Young’s business.
Despite the many lockdowns and disruption to our business,
the financing decisions taken during the summer allowed
us to continue to make significant investments in our pubs,
with some truly transformational projects. We expect to see
excellent growth from this investment in our next financial year
and beyond.
We are confident with the steps we have taken to ensure
Young’s continues to be in a position of strength and there
is potential for a strong recovery this summer.
Patrick Dardis
Chief Executive
Strategic Report
Results
Revenue
(£m)
£90.6
2020: £311.6
Adjusted operating
(loss)/profit (£m)1
£(34.0)
2020: £46.5
Operating
(loss)/profit (£m)
Adjusted (loss)/profit
before tax (£m)1
£(35.1)
2020: £37.9
£(44.1)
2020: £37.7
(Loss)/profit before
tax (£m)
Net cash generated
from operations (£m)
£(45.2)
2020: £29.1
£(23.0)
2020: £72.5
Adjusted basic (loss)/
earnings per share1
Basic (loss)/earnings
per share
(66.63)p
2020: 60.18p
(68.23)p
2020: 39.37p
Dividend
per share
–
2020: 10.57p
Net assets
per share2
£11.04
2020: £12.05
All of the results above are from continuing operations.
1 Reference to an “adjusted” item means that item has been adjusted to exclude non-
underlying costs (see notes 10 and 11).
2 Net assets per share are the group’s net assets divided by the shares in issue at the
period end.
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
April – June
After closing in March 2020, our pubs remained shut for the majority
of the first four months of the period. It was great to see the individual
acts of kindness across the estate, as our teams stepped up to help the
most vulnerable in their communities, gifting food parcels to elderly
neighbours and hospices, and delivering meals to NHS staff.
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July
We took a cautious approach, deciding to reopen all our managed
houses on 20 July. This allowed us to put in place all the necessary
covid-19 safety protocols without compromising on the great Young’s
experience. Our managers had time to retrain their teams, dust away
any cobwebs and prepare our wonderful pubs ready to welcome back
our loyal customers.
August – October
We were open for business and the resilience of our customers truly
amazed us as they flocked back in large numbers. The “Eat Out to Help
Out” campaign helped drive midweek food sales in August, and despite
social distancing restrictions, trading was encouraging. It was fantastic to
welcome our customers back after months away.
November – March
Following the second national lockdown all our pubs closed on
5 November, and although we were able to open our doors again in
December, trading was short-lived. Our pubs would remain closed until
the end of the period. However, by the end of March we were gearing
up ready to reopen a large number of our pubs in April.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Strategic Report
Chairman’s statement
We look forward to the future with optimism
£90.6m
Revenue
£88.4m
Equity proceeds
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
“In a year overshadowed by covid-19, I am immensely proud of everyone
at Young’s who, together, have reacted so positively in such adverse
trading conditions.”
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We have taken the necessary steps to ensure Young’s
continues to be in a position of strength and able to take full
advantage of the pub market as it returns to some level of
normality. Our pubs have continued to be at the heart of their
communities, and when allowed to open they were covid-19
secure, providing a safe environment for our customers and
teams. The absolute professionalism of our pub managers and
their teams has enhanced our reputation as a highly responsible
pub operator and underlined the exceptional quality of the
Young’s business.
I have been very proud of how Young’s provided significant
support for our teams, suppliers, tenants and local communities
during this difficult period. We are focussed on creating value
for all our stakeholders and enhancing the communities where
we operate. The board is currently devising a comprehensive
ESG strategy and will update our stakeholders on our plans in
due course.
The extraordinary challenges posed by covid-19 meant that
we needed to preserve and strengthen our capital position.
The initial short-term measures included issuing £30.0 million in
commercial paper under the Bank of England’s Covid Corporate
Financing Facility, which was paid back in full on 13 May 2021,
and securing an additional £20.0 million committed facility.
Longer-term, we refinanced the £50.0 million term loan that was
due to expire in March 2021, with a new longer-term five-year
facility that takes us to 2025. This facility also has two one-year
extension options that could take it out to 2027.
In June 2020, we also raised additional gross funds of
£88.4 million, through a share placing, highlighting at the
time the need not only to improve liquidity, but also to ensure
we were able to support our investment programme both in
our existing estate and provide for opportune acquisitions.
Our investment programme had previously been put on
hold as part of our covid-19 related cash conservation plan.
These actions have reinforced Young’s as a sound, resilient
business, built on a firm financial footing with a balanced,
well-invested and substantial estate of great pubs.
Our long-standing strategy of operating a differentiated,
premium, and well-invested pub estate remains unaltered.
Young’s has been focussed on steering a measured long-term
course through the current crisis. We have continued to invest
in our pubs as a result of the financing decisions taken during
the summer, investing £17.0 million in our managed estate, with
some truly transformational projects, including at several of our
iconic pubs such as the Windmill Hotel (Clapham), Oyster Shed
(Bank) and the Green Man (Putney). We have also continued
to invest in developing new pubs, completing two during the
year: Enderby House (Greenwich) and Alban’s Well (St. Albans).
Young’s is in a very strong position to capitalise on the truly
exciting times that I hope lay ahead, with financial firepower to
continue to upgrade our existing pubs and take advantage of
attractive acquisition opportunities that may come to the market.
On 12 April, we reopened 144 of our pubs, and the level of
trade clearly demonstrates that the great British public has been
yearning to get back to their local, which plays such a vital part
in the lives of so many. We are looking forward to the further
easing of restrictions so we can open our pub estate fully.
In light of this year’s disruption to our business and the
expected lower levels of trade for April, May and June, the
board concluded that it was not appropriate to recommend
payment of a final dividend for the financial year just ended.
The board is very mindful of the importance of dividends to its
shareholders and intends to resume dividend payments as soon
as is appropriate.
In September, Torquil Sligo-Young retired as an executive
director, a role he held for 24 years. During this time, Torquil
held several roles but will be particularly remembered for his
great work developing our IT solutions. Happily, Torquil has
accepted our invitation to remain on the board as a non-
executive director. In January, Trish Corzine stepped down as a
non-executive director, having completed a second three-year
term. She brought with her a wide-ranging knowledge and
experience of the hospitality and leisure sector, having spent
most of her career in the restaurant industry. Further, Roger
Lambert will be retiring as a non-executive director at the end
of July, shortly after this year’s AGM. Roger has been associated
with Young’s for many years, initially as our corporate advisor
with Cazenove and for the past 13 years as a non-executive
director; his wise counsel has always been hugely appreciated.
I would also like to personally thank Patrick and his executive
team of Mike, Simon and Tracy for their exemplary leadership
through such unprecedented times. To have the entire estate
closed for almost nine months but continue to maintain
the spirit and momentum of the business has been a
considerable achievement.
Stephen Goodyear
Chairman
19 May 2021
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Strategic Report
Young’s at a glance
From stunning riverside terraces to flower-filled garden huts, our collection of pubs have some
of the best gardens in London and the south of England. Inside, our pubs have style and soul,
and the people who work with us have pride in our culture and passion for the work they do.
1831
Established
4,185
Employees
273
Pubs
23.1
%
76.9
Managed
Tenanted
688
Hotel rooms
54
Burger Shacks
£773.7m
Valuation of our estate
£750.6m
£771.1m
£773.7m
2019
2020
2021
Pubs
Freehold* and leasehold
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228
Freehold
Leasehold
*
includes long leaseholds
Looking ahead to 2021
The Shack is back
Exciting summer of live sport
Year of the staycation
Our famous Burger Shack is back! With new
branding, unique collaborations and our best
of British seasonal ingredients offered at a
record number of shacks from April.
With the rearranged 2020 Euro’s football and
Tokyo Olympics, alongside the Lions rugby
tour of South Africa and Wimbledon tennis, it’s
an electrifying line-up of live sport this summer.
We are strongly positioned with our well-
invested hotel estate to serve the rise in
popularity for staycations in London and the
south of England.
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
Our locations
Since 1831, we’ve been running some of the best neighbourhood pubs, boutique
hotels and city bars in London and the south of England. No two of our pubs are the
same – they reflect the village vibes, suburb setting and city streets around them.
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Enfield
1
Haringey
0
Barnet
2
Harrow
0
Hillingdon
0
Ealing
5
Waltham
Forest
0
Redbridge
0
Brent
0
Camden
14
Islington
11 Hackney
3
City of
London
9
Tower
Hamlets
6
Newham
1
Hammersmith
& Fulham
11
Westminster
18
Kensington
& Chelsea
9
Wandsworth
35
Lambeth
13
Southwark
10
Greenwich
8
Lewisham
2
Bexley
0
Havering
0
Barking &
Dagenham
0
Merton
6
Sutton
5
Croydon
2
Bromley
3
0-5
6-10
11-15
16-20
More than 20
Hounslow
2
Richmond upon
Thames
18
Kingston
upon
Thames
8
Greater London 202
South West
26
South East
45
Refurbishments and renovations
Enderby House, Greenwich
Windmill, Clapham
The Canford, Poole
Our project in Greenwich was recently
finished, creating a magnificent, contemporary
pub in a beautiful and historic building with
views of the river.
This ever popular pub and hotel on Clapham
Common has had a complete renovation of
the trading space with a stunning new bar and
dining space.
We have added a further ten beautiful
boutique rooms, along with upgrading
the garden, in this popular hotel down
on the south coast, minutes away from
stunning beaches.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Strategic Report
Investing in our estate
Investing in our world-class pubs and hotels remains key to the success and long-term
growth of our business. During the period we invested £17.0m in our managed estate, from
acquisitions, to refurbishments of iconic favourites and adding new boutique bedrooms.
Acquisitions
Alban’s Well,
St Albans (right)
Recently opened, this stunning
pub and kitchen in the heart of
St Albans showcases a forward-
thinking approach to social dining
with a focus on sustainable, local
and simple dishes. A first for
Young’s, we installed a wine wall
showcasing the extensive range
of wines we offer.
Major projects
Enderby House,
Greenwich (right)
Our multi-million pound project
nestled in the heart of Greenwich
was completed in March, creating
a magnificent, contemporary pub
in a beautiful historic building
with views of the river. Boasting a
stunning terrace and an array of
floors and feature rooms to host
afternoon teas, private dining
experiences, meetings and
social meetups.
Windmill,
Clapham (right)
This ever popular pub and hotel
on Clapham Common has had
a complete renovation of the
trading space with a new bar,
snug spaces, a beautiful garden
dining room and additional
external covers to accompany
the revamped Burger Shack.
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
The Grange, Ealing (above)
With a wonderful new
conservatory refurb and a big
upgrade to the garden, the
Grange in Ealing is ready for
the summer.
Major projects continued
Duke of Wellington,
Notting Hill (below)
Sitting on the buzzing Portobello Road,
the Duke of Wellington has undergone
a major renovation including a beautiful
new lounge with cosy seating and a
‘Pie Room’ serving delicious home
made pies.
Hotels
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Oyster Shed,
City of London (left)
One of the City’s finest watering
holes has been stunningly
improved with a large mezzanine
extension creating additional
covers and private hire space.
Duke on the Green,
Fulham (above)
Overlooking Parsons Green, this
pub now boasts a superb new bar
and eating area, complete with
snug seating by the fire and a
vibrant and light back room.
Park Hotel,
Teddington (above)
We have created ten premium
boutique bedrooms in the main
building of our iconic pub and
hotel in Teddington, ready for
the staycation boom.
The Canford, Poole (above)
We have added a further ten
beautiful boutique rooms, along
with upgrading the garden in
this popular hotel down on the
south coast, minutes away from
stunning beaches.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Strategic Report
Chief executive’s review
A year like no other
£35.1m
Operating loss
£19.1m
Cash invested
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
“I am incredibly proud of the Young’s team, for all their hard work
and the way they handled the challenges thrown at them over the
course of the year.”
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The last financial year has been one of the toughest we have
ever endured; our wonderful pubs spent many more days with
their doors closed to our customers than open. Talk of like-for-
like sales and new pub openings took a backseat, replaced by
national lockdowns, trading restrictions and curfews. Despite this,
there is now a real sense of excitement and anticipation for
the year to come. With all our pubs having reopened, albeit
subject to operational restrictions for now, we are focussed on
a strong recovery.
The impact of covid-19 on our financial results has
understandably been significant. With only just under four
months of trading possible, total group revenue was down
by 70.9% to £90.6 million, resulting in an operating loss of
£35.1 million. Once adjusted for non-underlying items, the
operating loss was £34.0 million.
Our operators and support teams went through the immense
task of closing and then reopening our pubs for three national
lockdowns. During the enforced periods of closure, we were
busy behind the scenes reviewing our cost base, investing in the
estate and streamlining the business so that we returned stronger
and can look forward with confidence.
Faced with a global pandemic and our pubs closed for the
first time in my lifetime, we moved quickly last summer to
strengthen our capital position. Longer term, we refinanced the
£50.0 million term loan that was due to expire in March 2021,
replacing it with a five-year facility that takes us up to 2025.
This facility also has two one-year extension options that could
take it out to 2027. Short term, we accessed £30.0 million from
the Bank of England under the Covid Corporate Financing
Facility (“CCFF”), which was paid back in full on 13 May, and
we secured a further £20.0 million revolving credit facility.
With one eye on the future, we then raised gross proceeds of
£88.4 million through an equity issue of new shares in June.
This allowed us to restart our investment programme, and it
provided vital funding ahead of what turned out to be another
lengthy period in lockdown.
Securing our long-term future and success also means creating
value for all our stakeholders, ensuring that they are a key
consideration in our decision-making process. We were pleased
to provide extensive support to a number of our stakeholders
during the pandemic, particularly all our fantastic teams.
Going forwards, the group intends to set out an ESG strategy
outlining the material risks and opportunities for Young’s and
how we can play a positive role in the communities in which we
operate. We believe that embracing this approach will contribute
to the long-term success of our business.
For our managers and their teams in the pubs it has been a
difficult period. The majority of time has been spent away from
their businesses on furlough, but they have been fantastic in
rising to the challenges thrown at them. Maintaining contact
with our teams during these extended periods away from the
business on furlough has been vitally important. We used various
social media platforms and our ‘Keeping in touch’ Facebook
group to provide our teams with regular updates on what has
been going on at Young’s, with video content from heads of
department and myself. Training sessions have also taken place
online for teams to keep their skills up to date.
Going all the way back to last spring, many of our teams
immersed themselves fully to help support those in their local
communities most in need, through providing meals to frontline
healthcare workers, donating food supplies or giving up their
time to help nearby food banks.
We were one of the first pub companies to confirm support for
their tenants with rent holidays, as opposed to just rent deferrals,
meaning they were rent free without the worry of having to pay
this back in the future.
Our customers are really important to us and their loyalty has
never wavered. They flocked back initially after we reopened all
our pubs on 20 July, which was followed by the success of “Eat
Out to Help Out” where sales were in growth on the prior year.
Despite the ever-changing restrictions that we faced, sales often
reached 90% of the prior year up until the second lockdown
in November. This gives us great confidence in our proposition
and the potential for strong trading once all covid-19 operating
restrictions are lifted.
We pride ourselves on operating a differentiated, premium and
well-invested pub estate. Even in the desperately hard times
we have found ourselves in recently, it has been important to
continue the investment in our managed pubs, made possible by
the financing decisions taken during the summer. Once the first
lockdown was lifted in July, we were immediately back on-site at
three projects that had been stopped in their tracks – the Green
Man (Putney), Seagate Hotel (Appledore) and the City Gate
(Exeter) – to ensure all were completed in time to capitalise on
the summer trade.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Strategic Report
Chief executive’s review continued
After the summer, we resumed our capex programme with
schemes at the Duke of Cambridge (Battersea), Duke on the
Green (Fulham) and the Duke of Wellington (Notting Hill),
bringing these fine traditional pubs back to the highest of
Young’s premium standards. In March this year, we also invested
in one of our most iconic pubs, transforming the bar and dining
areas at the Windmill (Clapham), and added a further 87 covers
at our City of London favourite, the Oyster Shed (Bank); both
completed in time for the reopening on 12 April. Ahead of
another busy staycation summer, we have continued to invest
in our hotels. Creating 11 stylish boutique bedrooms at the
Canford (Poole), investing in a further ten boutique bedrooms
at the Park (Teddington) and transforming the bar and restaurant
areas at the Bear (Esher), we are ready to capitalise on what will
hopefully be a bumper British summer.
More important than ever, this year has seen the value of
desirable outside trading space that can be used throughout the
year and not just during the summer months. Ahead of autumn,
we invested £1.1 million in adding huts, stunning stretch tents
and heaters in many more of our pubs, creating an environment
that people could really enjoy, and for some customers the
excitement of discovering our amazing gardens for the very
first time. Further, whilst dining outside, our customers will
now be able to order from our rejuvenated Burger Shacks.
After breathing new life into the brand, we have launched a new
menu with greater variety and unique ‘Shack Session’ beers.
Understandably it has been quiet on the acquisition front and
we ended the period with 273 pubs (2020: 276). On reopening
this April, we launched in St Albans, a new territory for Young’s,
with Alban’s Well, and extended our presence in Greenwich
through the opening of Enderby House, an acquisition made
in the previous year. Both pubs have undergone significant
investment and showcase the finest essence of Young’s, with
premium bar and dining areas and well thought out external
trading space. I am particularly excited to see how these
additions to the managed estate perform over the coming
year. During the year, we also acquired a freehold property
in the Cotswolds village of Stow-on-the-Wold where we already
have the Bell Inn, a wonderful pub and hotel with 13 rooms.
This additional property will, subject to planning, enable us to
add further boutique bedrooms and car parking space in a
highly desirable, premium location.
During the year, three businesses transferred from our tenanted
division – the Spread Eagle (Wandsworth), Ship Inn (East
Grinstead) and the Royal Oak (Bethnal Green) – and all present
fantastic future growth potential following investment. We are
already on-site at the Spread Eagle, a freehold site, starting to
build our new head office, back in the heart of Wandsworth,
ready to move in during spring 2022.
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
Current trading and outlook
On 12 April, we were pleased to open 144 of our pubs for the
much-anticipated reopening of the economy and phase two
of the Government’s four-step plan. The pent-up demand was
evident weeks in advance as bookings for our gardens, huts
and newly created external space flooded in. Over the first five
weeks, we saw very strong trading and achieved 85% of normal
trade in those 144 pubs.
Our remaining pubs and hotels reopened this week, along
with thousands more pubs and restaurants that form the great
hospitality sector, ready for the next important step towards
normality. The key date for us is ‘freedom day’ on 21 June –
the day that will truly make a difference.
After the period end, we appointed Savills to explore the possible
sale of the tenanted estate. There can be no certainty, however,
that any sale will proceed. We also completed the freehold
acquisition of the Greenwich Union, a pub located adjacent to
our Richard the First. In the short-term, this provides additional
external trading space for the summer months before we
pursue a larger scheme to combine the internal trading areas,
subject to planning. We continue to explore further acquisition
opportunities that will enhance our estate.
There are many reasons to harbour optimism for the year ahead.
Following a period during which everyone has found their
opportunities for social interaction and celebration significantly
lacking, we know there is going to be a huge pent-up demand
for special events, whether it be big birthday bashes, weddings
or Christmas parties. People have missed these major life events
in which the pub plays a significant role, and we have missed
hosting them. We will also benefit from our exciting acquisitions
from last year, including the five pubs in and around southwest
London and Surrey that we purchased late in March 2020 and
which have not yet been able to trade fully for any real period
of time. Additionally, there are the recent major developments
which have not yet had the opportunity to perform such as the
Dog and Fox (Wimbledon Village) and the investments in all
the Redcomb pubs. This gives us great reason to look forward
with optimism.
We are confident with the steps taken to ensure Young’s
continues to be in a position of strength. April has started
better than planned, with future bookings also looking positive.
There is potential for a good recovery this summer and we
believe that our strategy of running a differentiated, premium
and well-invested pub estate will underpin the future success
of Young’s.
Patrick Dardis
Chief Executive
19 May 2021
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“There are many reasons to harbour
optimism for the year ahead.
Following a period during which
everyone has found their opportunities
for social interaction and celebration
significantly lacking, we know there is
going to be a huge pent-up demand.”
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Strategic Report
Our strategy
How we grow
11 12
We grow through investing in our estate
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 rooftop bars; basements become cocktail bars and outdoor
spaces turned into beautiful gardens with Burger Shacks.
7 11
We invest in hand-picked acquisitions
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.
Our business model
How we create value
We run a predominantly
freehold estate
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.
7 11 12
We focus on differentiated,
premium, drink-led pubs
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 are greater suited.
3 8
Revenue mix
Usually our revenue mix is 65% drink, 30% food and 5%
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.
3 8 10
We are a people business
10 12 13
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.
3
We run a small quality tenanted estate
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.
4 8 13
We use our combined buying power
We use the combined buying power of our managed and
tenanted estates to source the best products for the best prices
from a small number of suppliers – we buy predominantly
British produce, supporting the local communities we operate
in. Although the suppliers we use stretch across the estate, our
general managers are given the freedom and flexibility within
guidelines to run the pubs to best fit and contribute to the
communities in which they reside. This individuality is supported
by the uniqueness of the pub designs which don’t follow a
particular format or concept but have a welcoming, cosy theme
to offer our customers that home-away-from-home feel.
The circled numbers refer to Principal risks and uncertainties on pages 26 to 29.
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
Together at Young’s with the Bruen-Guerrero family
for Sunday lunch in the garden
John and Monica, along with their children Liam, Sean and Ane,
and their family dog, Tiger, have missed the social aspect of
visiting their local Young’s pub for Sunday lunch.
The welcoming and friendly atmosphere make it the perfect
place to bring the family, and enjoy our wonderful food
and drink.
“ We love feeling welcome and
homely outside our home,
celebrating special moments
or talking to other guests.”
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Key Performance Indicators
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 non-underlying 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 our managed and
tenanted business.
Like-for-like revenue %
This is our revenue movement for this
period compared with the previous
period for our managed pubs and hotels
that traded throughout both periods.
RevPAR £
This is our revenue per available
hotel bedroom; it is the average
room rate achieved multiplied by
the occupancy percentage.
303.7
311.6
90.6
2019
2020
2021
5.1
-2.4
2019
2020
-72.1
2021
61.44
59.23
29.68
2019
2020
2021
Adjusted EBITDA £m
This is our earnings before interest, taxes,
depreciation and amortisation adjusted
to exclude any exceptional items for the
group. (See notes 10 and 11).
Adjusted (loss)/profit before tax
£m
This is our (loss)/profit before tax on
continuing operations only, adjusted to
exclude any exceptional items for the
group. (See notes 10 and 11).
Adjusted (loss)/earnings per
share (p)
This is our adjusted (loss)/profit before tax,
but after tax has been deducted, divided by
the weighted average number of ordinary
shares in issue. (See notes 11 and 16).
72.8
79.6
43.4
37.7
72.13
60.18
-0.3
2019
2020
2021
2019
2020
-44.1
2021
-66.63
2019
2020
2021
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.
47.5
38.5
27.6
9.7
5.4
2019
2020
2021
2019
2020
-3.4
2021
7,403
7,458
4,351
2019
2020
2021
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
Together at Young’s with Kate, Ben and Max
We are all so excited to welcome back our guests
Our collection of 30 hotels are found across the south of
England, from London to the idyllic coasts of Devon and Dorset.
Whether it’s a country escape, a stay by the coast or a city break,
there’s something to match every mood or occasion.
By offering a mixture of traditional charm, character and
fantastic hospitality, our hotels have the unique attraction
of being within a traditional pub, complete with a range of
award-winning drinks and superb food.
“ Our hotel is at the heart of the
local community. We have many
regular guests and are looking
forward to welcoming them back.”
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How we have engaged
with our stakeholders
The following describes how the directors
have had regard to the matters set out in
section 172(1)(a) to (f ) of the Companies
Act 2006 when acting in the way they
considered, in good faith, would be
most likely to promote the success of the
company for the benefit of its members
as a whole. In line with guidance issued
by the Financial Reporting Council,
this statement concentrates on matters
that are of strategic importance to the
company. Where appropriate and to avoid
duplication, the statement cross-refers to
other sections within the annual report.
Principal stakeholder groups
The directors regard those listed below as the company’s
principal stakeholder groups.
Set out in relation to each group is:
• Why the directors believed it was important to engage
with that group (the Why?)
• The main methods used by the directors to engage with
that group and to understand the issues that concerned
that group (the How?)
•
Information on the effect on the company’s decisions and
strategies during the period as a result of issues raised by
that group (the Outcomes and actions)
Customers
Our people
Suppliers
Investors
Lenders
Trustees of the final
salary pension
scheme
Ram Pub Company
Tenants
Section 172(1) statement
Customers
Why?
The company’s biggest source of revenue is from customers in
the group’s managed houses (96.0% of total company revenue),
with drink sales being 59.4% of managed house revenue, food
being 37.5%, provision of accommodation being 2.9% and
other income 0.2%. Lower revenue could lead to lower profits.
A consumer’s decision to spend their money can be affected
by a broad range of matters, all set against a background of
consumer choice of where to go and what to do. See also
principal risk/uncertainty 3 on page 27.
How?
See the Engagement with suppliers, customers and others in a
business relationship with the company section within the directors’
report, starting on page 71.
Outcomes and actions
See the Engagement with suppliers, customers and others in a
business relationship with the company section within the directors’
report, starting on page 71.
Our people
Why?
The commitment, skills and experience of the people employed
throughout the organisation (whether they are in the company’s
pubs and hotels or at Riverside House) are integral to the
company’s long-term success; amongst other things, all of
them have a part to play in helping to continue to grow, and/
or support, the company’s business and in demonstrating the
company’s values on a daily basis. They are a most prized
asset and staff retention is therefore crucial. Consequently, it is
important that the company is an ‘employer of choice’, provides
an environment in which people are happy to work, supports the
physical and mental wellbeing of its staff, and gives individuals
the opportunity to develop. See also principal risk/uncertainty 10
on page 28.
How?
See the Employee engagement section within the directors’
report, starting on page 69.
Outcomes and actions
See the Employee engagement section within the directors’
report, starting on page 69 and Furloughing of staff on page 21.
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Suppliers
Lenders
Why?
The business relies, in the main, on a small number of suppliers
to provide the company’s pubs and hotels with food and drink.
The range, availability and quality of the products sourced
is fundamental to the company’s reputation. To remain as a
provider of a market-leading, competitive premium offering that
new and existing customers would want to enjoy, it is important
that the company partners with the right suppliers, and has
good, strong and mutually beneficial business relationships with
them. 80% of the company’s spend is with 7% of its suppliers.
See also principal risk/uncertainties 4 and 8 on pages 27 and 28.
How?
See the Engagement with suppliers, customers and others in a
business relationship with the company section within the directors’
report, starting on page 71.
Outcomes and actions
See the Engagement with suppliers, customers and others in a
business relationship with the company section within the directors’
report, starting on page 71 and Extension of two key drink supply
agreements on page 22.
Why?
Lenders are an additional important source of capital. As it
does with its investors, the company looks to get buy-in from
its lenders to the company’s strategy and business model.
The intention is to develop supportive, long-term relationships.
See also principal risk/uncertainty 7 on page 28.
How?
The chief financial officer regularly spoke with the company’s
banks and noteholders. Further, as required under the terms of
the company’s loan facilities, they received quarterly covenant
compliance certificates.
Outcomes and actions
The company’s lenders remained supportive of the company’s
strategy and business model. Discussions between them and
the company focussed on the strengthening of the company’s
liquidity position, the replacing of certain of the company’s
financial covenant tests with an available liquidity test and the
amendment or waiver of certain provisions in the company’s
borrowing facilities, all as a result of the impact of the coronavirus
pandemic. See also Liquidity position: strengthening on page 22.
Investors
Why?
Continued access to capital is of vital importance to the long-term
success of the company’s business. Via its engagement activities,
the company strives to obtain investor buy-in to the company’s
strategy of how to grow the business and the company’s
business model setting out how value is created. The aim is to
promote an investor base interested in a long-term holding in
the company. See also principal risk/uncertainty 7 on page 28.
How?
See the Shareholder relations section within the corporate
governance report, on page 59, for information on the
company’s main methods of engagement with investors.
Outcomes and actions
The company’s investors remained supportive of the company’s
strategy and business model. See also Equity issue on page 23.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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How we have engaged with our stakeholders
Section 172(1) statement continued
Trustees of the final salary pension scheme
Ram Pub Company tenants
Why?
The Ram Pub Company tenants are the company’s second
biggest source of revenue (3.6% of total company revenue).
This revenue is derived from rents paid by the tenants (who
lease or sublease pubs owned or leased by the company) and
from company sales of drink to them; lower revenue could lead
to lower profits. Albeit the tenants run the pubs for their own
account, they are nevertheless associated with Young’s; their
operations therefore reflect on the Young’s name and reputation.
The Ram Pub Company helps increase the company’s buying
power with suppliers, is cash generative and allows the company
to acquire freehold pubs with tenants in situ pending their
transfer to the managed estate when the time is right for the
tenant to leave and for the company to take over.
How?
During the period, engagement with the tenants tended to be on
an individual basis, with additional centralised communications
coming out from time to time, largely concerning changes
in trading restrictions brought about by tiered arrangements
imposed as a result of the pandemic. Cyclical business reviews
continued with tenants during the periods they were permitted
to trade. In light of the pandemic, the company’s yearly forum
(which historically has enabled the company and its tenants to
share views and best practice) had to be cancelled.
Outcomes and actions
Almost exclusively, the sole discussion topic with tenants
concerned the survival of their businesses in light of the national
lockdowns and the introduction of tiers and other restrictive
trading arrangements. Throughout the periods of lockdown, the
company provided varying degrees of rent holidays to the vast
majority of its tenants. For December (when the second national
lockdown had ended and tiered restrictions were in place), the
company continued to provide a rent holiday to most of its
tenants in recognition of the reduced governmental support
on offer: a ‘one-off’ grant of £1,000 to compensate the tenants
for the trading impact of the tiered restrictions in what was
traditionally their busiest trading month. Throughout the period,
the company assisted tenants to claim government grants, rates
relief and credits for wasted beer. Together, these actions saw
the estate remaining fully let and a tenant community that felt
supported and ready to reopen once post-lockdown trading was
permitted. In a couple of instances, the decision was taken to
exit from the pub: this resulted in the sale of the Horse Pond Inn
(Castle Cary) and the Grove House (Camberwell). The pandemic
impacted on the development programme for the estate, with
many intended investments having to be postponed until more
certain trading conditions returned. However, the Rising Sun
(Epsom) did reopen after a long period of closure, with a fresh
new look and new tenants, and the Pig & Whistle (Wandsworth)
underwent a kitchen investment whilst the pub remained closed.
Why?
The company operates a defined benefit pension scheme
covering benefits payable to various current and former
employees; the scheme was closed to new entrants in February
2003. The scheme is a key company financial commitment
as it needs to be funded to meet agreed benefit payments
and regulatory pension funding requirements. The scheme’s
trustee is Young’s Pension Trustees Ltd, a corporate trustee.
The company recognises that the trustee and the company
each has a vital role to play in the proper running of the
scheme and that regular, clear and open communication and,
where necessary, consultation is important in helping maintain
a good working relationship between the company and the
trustee. The company is party to all scheme deeds, undertaking
responsibilities under the scheme’s trust deed and rules together
with pension legislation and regulation, as required. See also
principal risk/uncertainty 6 on page 27.
How?
During the period, the chief financial officer worked closely with
the trustee. The chief financial officer attended meetings with the
trustee and delivered presentations on the company’s business,
thus keeping the trustee informed of the company’s financial
position and of any plans that would change or impact upon
the employer covenant supporting the scheme. In addition,
the chief financial officer was invited to join scheme investment
discussions. The chairman of the trustee is a director of the
company and gave presentations to the company’s board on
various aspects of the scheme.
Outcomes and actions
Discussions primarily focussed on funding, investment and
employer covenant considerations, ensuring an integrated
approach to risk management. Strategic scheme initiatives,
such as the approach to liability management and minimising
volatility, were discussed; these saw the trustee continuing
with a carefully designed strategy to manage liabilities and
underlying scheme risk, all against the background of the
scheme’s continuing maturity. The company was consulted on
a revised statement of investment principles (reflecting, in part,
new regulations on stewardship and governance matters), which
led to an updated statement being signed, and it was regularly
updated on scheme funding, membership changes and other
key details. Other legislative developments, such as the action
to be taken as a result of the need for GMP equalisation, were
progressed. The 2020 triennial actuarial valuation was signed
off ahead of the statutory deadline (to provide greater certainty
for the company, trustee and members on funding and security
in the uncertain times caused by the pandemic). In light of the
ongoing impact of the pandemic, the trustee chose to defer its
request for a discretionary increase for the year starting 1 April
2021. Overall, as a result of the company’s engagement and
the proactive appropriate stewardship of the trustee, stable
contributions continued to be paid to the scheme (as has been
the case for many years) and the company benefitted from
funding savings resulting from liability management initiatives.
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
Principal decisions
For the purposes of this statement, the directors regard their
principal decisions as not only those that are material to the
group, but also those that are significant to any of the company’s
principal stakeholder groups. Set out below are the principal
decisions made by the directors during the period; implicit in
making these was the desirability to maintain a reputation for
high standards of business conduct and the need to act fairly
as between members of the company.
Consequences of the coronavirus pandemic
In addition to what is set out in this statement, the strategic report
(on pages 1 to 42) and the Employee engagement section within
the directors’ report, starting on page 69, provide further detail
on various decisions and actions taken by the company in light
of the pandemic.
Approval of capital and revenue budget for
FY2021/22
The capital and revenue budget for FY2021/22 was approved
by the board in March. In doing this, the board acknowledged
that the business remained in uncertain times despite the
Government’s roadmap to the easing of lockdown restrictions
and that the business would face a considerable number
of unknowns as and when it reopens and could be readily
impacted by, amongst other things, consumer confidence and
a significant reduction in consumer spend. Subject to that,
and in the expectation that business will eventually return to
‘normal’, the board believed that the company’s premium
offering would remain attractive to existing customers and act as
a draw to new ones, the company’s business model would allow
the company to continue to invest in its people and pay them
appropriately, and that capital would continue to be available
to enable selected hand-picked complementary acquisitions to
be made. The company’s plans, underpinning the budget, are
demanding but will position the company well against its longer-
term value creation vision whilst honouring its commitments to
its stakeholders.
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Roger Lambert: deferral of retirement from
office by one year; Ian McHoul: invited to serve
a second three-year term; Trish Corzine:
accepted her wish to step down at end of her
second three-year term; and Torquil Sligo-
Young: invited to remain on the board as
a non-executive director
In agreeing to defer Roger’s retirement from office by one year
(to the end of July 2021), the board recognised the challenges
then facing the company in light of covid-19, and felt it was
important to retain on the board the additional strength, balance,
financial acumen and capital markets experience he provided.
With non-executive directors being typically expected to serve
two three-year terms, Ian was invited to stay for a second term
(through to 23 January 2024) and the board accepted Trish’s
wish to step down (in January 2021). Rather than lose Torquil
from the board (at the end of September 2020 when he
wanted to step down from his executive role in the company)
and miss out on the important family liaison role played by him,
and possibly also be deprived of his chairmanship of the trustee
company that manages the company’s final salary pension
scheme, he was invited to stay on as a non-executive director.
Implicit in the decisions relating to Roger, Ian and Torquil was
the board’s belief that they were independent in character and
judgement, made an effective and valuable contribution to the
board, had demonstrated commitment to their roles and were
able to give sufficient time to the company. Further, inherent
in all four decisions was the balance between executive
and non-executive directors, there being at least two
independent non-executive directors, and the board having an
appropriate number of members (with the right experience,
knowledge, standards, skills, personal qualities and capabilities)
for the company, its reputation and long-term strategy.
Furloughing of staff
The company chose, throughout the period, to access the
Coronavirus Job Retention Scheme, principally with a view to
keeping as many members of staff employed as possible in
circumstances where their place of work had been ordered to be
closed by the Government. As a result, HMRC reimbursed 80%
of the basic pay, up to £2,500 per month, of those individuals
who would otherwise have been laid off during the crisis.
These individuals, known as ‘furloughed workers’, were kept on
the group’s payroll but they stopped working. During the period,
the vast majority of the group’s employees (including over
4,500 weekly and monthly paid staff in the group’s pubs) were
designated as furloughed workers at some time. Recognising that
Young’s would be nothing without its people, the board agreed
that the group would, on top of the monies received from the
Government, fund the pay of all its furloughed workers whose
annual basic salary was more than £37,500 so that they would
continue to receive 80% of their normal pay.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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How we have engaged with our stakeholders
Section 172(1) statement continued
Extension of two key drink supply agreements
The drink supply arrangements with Marston’s were updated,
partly reflecting the creation of Marston’s Beer Company
Limited, a wholly owned subsidiary of Carlsberg Marston’s
Brewing Company Limited, and the increased volume of drink
supplied on a portered basis rather than wholesale. The new
arrangement has an initial fixed term running until the end
of May 2022; it is then terminable by either party giving not
less than two years’ notice. It is also terminable early (including,
during the initial term) in certain limited circumstances. The wine
and spirits supply agreement with Berkmann Wine Cellars,
originally entered into in 2016, was also extended; it now runs
until the end of 2023 and is likewise terminable early in certain
limited circumstances.
Interim dividend and final dividend in respect
of FY2020/21
Paying dividends remains an important priority for the board:
it helps demonstrate the company’s continuing ability to create
and deliver long-term value for its shareholders. Despite this, the
board decided in May 2020 that the company would not be
paying an interim dividend for the period in light of, amongst
other things, the then ongoing closure of the company’s pubs
and the then expected lower levels of trade when they reopened.
Given the extensive period of closure of the company’s pubs
following further waves of the pandemic and the then expected
lower levels of trade in April - June 2021, the board decided that
the company would not be paying any dividend for the period.
The board intends resuming dividend payments as soon as is
appropriate, but no decisions have been made about when that
will be. The company has, however, agreed with NatWest and its
noteholders that any dividend payments during the company’s
financial year that started on 30 March 2021 will not exceed
£5.0 million in aggregate, but there is no restriction on the
company recommending a final dividend with its results for that
year, payable in the following financial year, as normal.
Liquidity position: strengthening
In the first quarter of the period, the company strengthened its
liquidity position; this was to help secure the group’s business
and was prompted by the outbreak of the pandemic and the
ensuing forced closure of the group’s pub estate, which was then
expected to have significant impact on the company’s revenue,
balance sheet and plans. Amongst other things, the company:
• successfully negotiated with its existing lender group to
replace the company’s financial covenant tests at June,
September and December 2020 and at March 2021 with
an additional monthly £20.0 million available liquidity test
through to and including June 2021, and also got agreement
from that group to the waiver of any technical ‘cessation
of business’ breach resulting from the group’s pubs being
closed due to the coronavirus pandemic. By the end of the
period, further waivers had been obtained and the lending
group had agreed to extend the company’s monthly available
liquidity test up to and including March 2022, with a
headroom requirement of £25.0 million;
• established a euro-commercial paper programme and
issued £30.0 million in commercial paper (with a 364-day
maturity date) under the Covid Corporate Financing Facility;
the company repaid this amount from existing facilities in
May 2021;
• entered into a new £50.0 million syndicated term loan facility
with NatWest and HSBC; this five-year facility was drawn
immediately to repay in full the £50.0 million syndicated
facility with RBS and Barclays that was due to expire in
March 2021;
• entered into a new £20.0 million bilateral revolving credit
facility with NatWest. This facility had an initial 12-month
maturity, with the company having the option to request
extensions of the maturity to make it an 18- or 24-month
facility. The intention was to leave the facility undrawn and
retain it as available liquidity to help the company meet the
liquidity test referred to above. The facility has been extended
for six months through to the end of November 2021; and
• raised capital through an equity issue – see Equity issue on
page 23.
As a result of these actions (and exclusive of the company’s
£10.0 million overdraft with HSBC), the company has in place
at the date of this report £255.0 million of committed available
facilities (inclusive of the £25.0 million required to meet the
available liquidity test referred to above).
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Equity issue
In June, the company proceeded with a placing of new A shares
and new non-voting shares. The purpose behind the fundraising
was to provide the company with the financial flexibility to drive
its continued success and faster growth, including allowing
it to restart investments in its estate, strengthen its balance
sheet and pursue opportunistic acquisitions. The placing was
conducted through an accelerated bookbuild and involved a
cashbox structure, something of which various City bodies were
supportive in the extraordinary times created by the pandemic.
To provide retail investors with an opportunity to participate in
the equity fundraising alongside institutional investors, the board
decided that the company should also offer new A shares on the
PrimaryBid platform. The equity issue was completed successfully
and saw the company raise gross proceeds of c. £88.4 million
- this included c. £234,000 received from private subscriptions
for new shares made by some of the company’s directors (and/
or persons closely associated with them). The shares issued
represented in aggregate approximately 19.2 per cent of the
total existing issued ordinary share capital of the company prior
to the placing.
Disposals of the Horse Pond Inn (Castle Cary)
and the Grove House (Camberwell), and the
surrender of the lease of the Surprise (Chelsea)
During the period, the company agreed to sell the Horse
Pond Inn (Castle Cary) (for £375,000) and the Grove House
(Camberwell) (for £1,175,000); the former completed during
the period and the latter shortly after the period end. These were
tenancies falling within the Ram Pub Company, and the disposals
had no impact on any of the company’s work colleagues.
The challenges facing these pubs meant that their sustainability
was in question; as such, in each case a sale was considered
the appropriate approach and consistent with the company’s
strategy. The company chose to surrender, at the end of its term,
the lease of the Surprise (Chelsea), a pub within the company’s
managed estate. As a result, five members of staff were
transferred to other pubs in the managed estate, seven members
of staff were made redundant, and one member of staff
resigned. The Surprise was only marginally profitable and the
opportunity to have a ‘clean’ exit from the lease was compelling.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Strategic Report
Welcoming back all our teams
who’ve kept us going and made us proud
While our pubs remained shut during each lockdown, we missed our friends and colleagues
greatly. Nevertheless, we were able to maintain close contact and keep everyone up to date
using the ‘Keeping in touch at Young’s’ Facebook page. Here are just a few of the many
wonderful achievements over the past year.
Andrew and Lizzie at
the Hand in Hand (right)
General manager Andrew,
his deputy Christine and head
chef Lizzie have been busy
supporting the Riding for the
Disabled Association. In addition
to volunteering they helped raise
funds to save the endangered
stables in Teddington by hosting a
marquee stocked with homemade
pies at a local fete and running
the virtual marathon in October.
Anna at the Dolphin
feeding local children (right)
Anna and the team supported
their local community and by
offering complimentary children’s
packed lunches during the
October half-term.
Niamh from
Riverside House (left)
Niamh from head office has
volunteered as a crisis response
volunteer at Imperial College
Healthcare NHS Trust Charity,
since last April. She has also
been actively encouraging
other members of the Young’s
community to help with the
vaccine rollout and other roles on
the ‘Keeping in touch at Young’s’
Facebook page.
24
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
Connal from the
Dukes Head (above)
Connal at the Dukes Head Hotel
in Wallington, helped support
vulnerable local residents with
freshly prepared meals.
Robert from the
Waverly (above)
Robert gifted food and other
supplies to a local children’s
hospice, Chestnut Tree House,
in Bognor Regis.
Our chef Perry at
Smith’s of Smithfield (below)
Perry graced the exterior walls
of the Flannels store on Oxford
Street as part of the incredible
Made You Look project. This was
a visual celebration of talented
black chefs throughout the
hospitality industry while also
being an invitation to look beyond
the portraits per se, to discover
the fascinating stories behind
each individual.
Vikki helping local
people in crisis (right)
Vikki from the Park hotel in
Teddington joined her daughter
Hattie to collect donations for the
Shoreham Food Bank to support
the local community.
Mick and Sarah
from the Alexandra
(below right)
Proudly supporting
our NHS heroes.
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Greyhound hotel in
Carshalton offered
accommodation to
those in need (right)
The Greyhound hotel continued
their long-standing support for
the Royal Marsden Hospital
by offering rooms to cancer
patients while undergoing trial
treatment during the second
lockdown. This latest initiative
built on a tradition of support
that has included hosting
summer fundraisers, quizzes,
raffles, volunteering, and even
a Christmas wishing tree in the
Greyhound garden.
A minute’s silence
with Marie Curie
On the first anniversary of the first
UK lockdown, 23 March, many of
our colleagues joined the Marie
Curie charity’s initiative of lighting
up their homes and holding a
minute’s silence. Together, we
reflected on our collective loss
during the pandemic, celebrated
the lives of the special people no
longer with us, and focussed on
the need to support those who
have been bereaved.
“ Thank you…very much for the kindness. It is so
appreciated and we can’t thank you both enough.”
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Strategic Report
Principal risks and uncertainties
The principal risks and uncertainties facing the group are listed below. It is not an exhaustive list
of all significant risks and uncertainties; some 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 25 starting on page 113.
Risk/uncertainty
Potential impact
Mitigation
Change
in risk/
uncertainty
1.
d
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i
An example of this is the spread of a
disease - recent and current experience
has shown the potential for something like
this to have far-reaching and unexpected
consequences for our business. As the
coronavirus pandemic has spread around
the globe in the last 18 months, some
of these consequences became apparent
and resulted in a very material and
unforeseeable impact on our business.
2. Our revenue is derived from our managed
and tenanted pub estate. The Government
has issued its roadmap to reopening
the hospitality sector after lockdown 3:
on 12 April, pubs with outdoor trading
space were allowed to reopen; not earlier
than 17 May, indoor trading will be
allowed, and not earlier than 21 June,
remaining trading restrictions will drop
away. There remains an inherent risk
with a potential delay in the timings of
the roadmap, or indeed, social distancing
restrictions remaining in place far longer
than anticipated or planned.
e
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u
h
a
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o
/
d
n
a
s
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r
u
s
o
c
l
b
u
p
d
a
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p
s
e
d
w
o
t
i
i
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t
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v
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a
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t
x
e
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M
This will depend on the
nature of the event, its
impact and reach and
the reaction to it by the
Government, consumers,
business and others.
For the actual impact on
our business during the
period of the spread of the
coronavirus, see elsewhere
within this strategic report.
Whilst restrictive measures
remain in place, we
will have reduced
revenue from our
managed houses and
tenancies. Delays in the
Government’s roadmap
could lead to further
reduced revenues,
resulting in lower-than-
expected profits.
This will depend on the nature of the event,
its impact and reach and the reaction to it
by the Government, consumers, business
and others. Examples of the risk/uncertainty
that could flow from a major external event
leading to widespread pub closures and/or
a huge decline in demand, and therefore
what we might possibly do to mitigate
its effect, are set out below. The ongoing
covid-19 pandemic has given us the
experience to ensure we are better placed
to combat any future major event resulting
in widespread pub closures.
Our strong balance sheet and excellent
teams enable our strategy of operating a
diverse premium, well-invested pub estate
– see 3 below – and allow us to rise to
challenges thrown our way. As an example,
the Government’s social distancing
restrictions and reopening roadmap
limited initial trading to outdoor space
only. Therefore, ahead of the autumn, we
introduced or added cabins, stunning stretch
tents and heaters to many of our pubs,
creating a safe and amazing environment
for our customers to enjoy. This investment
is and will continue to be supported by
our enhanced Young’s on Tap app and
improved customer booking journey,
ensuring we are able to make the most of
our available space. On 12 April, 144 of our
pubs with outside space reopened; our plan
is to have all our pubs open on 17 May.
If there is a delay in the Government’s
reopening roadmap or certain restrictions
remain in place for longer, we will adapt our
ways of operating, maximise the available
trading space and ultimately seek to limit
impact on profitability.
26
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Risk/uncertainty
Potential impact
Mitigation
d 3. Our revenue is largely dependent on
A reduction in our revenue
could result in lower profits.
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consumer spending within our managed
estate. A consumer’s decision to spend
their money can be affected by a broad
range of matters (including those set out in
1, confidence in the economy, the weather,
fears of terrorist activity and greater
awareness of the potential adverse health
consequences associated with alcohol) set
against a choice of where to go and what
to do.
Change
in risk/
uncertainty
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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
(including vegan and vegetarian options)
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.
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.
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.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
27
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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.
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 by 2.2% to £8.91 (from £8.72)
with effect from 1 April 2021 (for those
aged 23 and over), 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 13.
5.
The pub industry is subject to a variety of
taxes, including business taxes, duty on
alcoholic drinks and business rates.
6. We operate a defined benefit 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.
The introduction of new
taxes and/or increases in
the rates of existing taxes
could result in lower profits.
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 could result in
lower profits.
Key to change in the risk/uncertainty level from the prior period
Decrease
No change
Increase
Strategic Report
Principal risks and uncertainties continued
Risk/uncertainty
Potential impact
Mitigation
Change
in risk/
uncertainty
l 7. Our financial structure involves bank
i
borrowings and 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 12.
s 8. We rely on a number of key suppliers to
provide our pubs and hotels with food
and drink.
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Our ability to trade as a
going concern depends
on us generating
sufficient cash to meet
these repayments.
Supply disruption could
affect customer satisfaction,
leading to a reduction in
our revenue which could
result in lower profits and
growth rates.
The vast majority of 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.
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.
Our offering provides an attractive showcase
for food and drink suppliers - we therefore
anticipate that new suppliers would be ready
and willing to come on board relatively
quickly should there be limited disruption
of our food and drink supply chain.
We regularly review our choice of suppliers.
9. 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-attacks.
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.
10. We are dependent on having the right
people throughout our organisation: at all
our pubs and hotels and also at Riverside
House. See also 13.
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.
11.
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 could be delayed
or reduced.
We look to recruit and retain the best talent.
The remuneration and reward packages we
offer are competitive and designed to retain
and motivate staff. We have training and
development programmes in place so that
our people have the right skills to perform
their jobs successfully and achieve their
full potential. We also have an active and
progressive internal training programme
that is developing our own talent pool for
the future.
We have relationships with a variety of third
parties to ensure, as far as possible, that we
are made aware of acquisition opportunities
as and when they come up. We have
provided a number of agents and landlords
with details of our preferred site profiles.
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Change
in risk/
uncertainty
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Risk/uncertainty
Potential impact
Mitigation
n 12. We are required to meet a range of
ever-increasing compliance, regulatory
and health and safety obligations in the
operation of our business.
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13. The UK’s new trade deal with the European
Union (“EU”) still leads to a degree of
uncertainty affecting the supply chain and
labour market.
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
could have an impact on
our margins and result in
lower profits.
The new trade deal could
make it costlier for the UK
to trade with the EU due to
additional border controls
and the potential delays
this will cause. It could also
become more difficult for
UK businesses to hire from
the EU.
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.
We are a UK business with a predominantly
UK supplier base and fixed price
arrangements in place across many of those
relationships. Whilst we are confident there
will be little or no impact on our supply
chain, the ability to flex our food and drink
offer on a daily basis will further mitigate
any potential shortages. We are also an
‘employer of choice’ with a strong track
record of retaining talent. We also have
an active and progressive internal training
programme that is developing our own
talent pool for the future; this is expected to
help mitigate staffing issues should certain
of the group’s EU staff be forced to leave
the UK due to them not obtaining pre-
settled status or indefinite leave to remain
status, albeit we are looking to support them
to stay in the UK. See also 4 and 10.
Key to change in the risk/uncertainty level from the prior period
Decrease
No change
Increase
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
29
Strategic Report
Building a more sustainable Young’s
Our approach to ESG
Custodians of our proud heritage: we are taking steps today to protect our planet and
make a positive impact on those in our pub estate, supply chain and communities.
People
• We focus on the wellbeing of our colleagues
with comprehensive financial and mental
health support.
• Engage and empower our teams with regular
communication and commitment to their
career pathway.
• We foster diversity and inclusion through our
approach to appointments and training.
Community
• Play a positive role in our communities and
give back where possible.
• Celebrate the best of British and champion
local suppliers throughout our menus.
• We do our utmost to support our suppliers
and be fair commercial partners.
30
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
Environment
• Aim to reduce, reuse and recycle our waste
in the most sustainable way possible.
•
Implement new emissions saving technologies
across our estate.
• Work closely throughout our supply chain
to improve the environmental impact of our
produce, from farm to fork.
People
As we welcome back our colleagues and customers, we are as passionate as ever to build
on our long-standing commitments to our people, community and environment.
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Health and wellbeing
Against the backdrop of the past year, the company’s long-
standing wellness project that puts physical, mental and financial
wellbeing at its heart was tested, but effective. Key cornerstones
of this initiative are the offer of fully-funded counselling at no cost
to the employee and our partnership with Salary Finance which
provides support in the form of loans, savings projects, and free
financial support and advice.
For a substantial portion of our year, and in keeping with the
rules of the Coronavirus Job Retention Scheme, many of our
team were on furlough pay which was based on 80% of their
basic pay, without taking into account the tips and gratuities
that boost their normal income. In recognising the impact of
their reduced pay, we encouraged staff to use their holiday
pay to boost their earnings as well as directing employees to
the financial support available through Salary Finance and the
Licensed Trade Charity, who provided financial grants of more
than £4,500 to our team members during the period.
Having worked hard to build a team of mental health first aiders,
mental health first aid champions and supporters across the
business, we were able to understand and offer support to our
teams remotely. With powerful communication channels, we
were able to keep in touch with all our teams and signpost for
help where and when it was most needed. Our fully-funded
counselling at no cost to the employee continued, albeit using
electronic means rather than in person.
All employees, whether at work or on furlough, were
encouraged to access mental health training provided by the
Licensed Trade Charity. There were several employees who
successfully completed the Level 2 Certificate in Understanding
Mental Health First Aid and Mental Health Advocacy in
the Workplace through the distance learning unit of Milton
Keynes College.
Our social media channels echoed this support infrastructure,
notably in the form of the closed Facebook page, Keeping in
Touch at Young’s. This allowed us to feature regular videos from
Patrick Dardis, share resources, engage in national initiatives such
as clapping for the NHS, and circulate regular editions of our
internal newsletter, the Ram Pages, which was tailored to reflect
the fact that most team members were not working.
“ Our people are, and always have
been, our greatest asset. In the face
of the unprecedented challenges
posed during the last year, we
continued and strengthened
our commitment to our team
of over 4,000.”
Together at Young’s... We continue to engage with our
employees about their mental health through our Mental
Health First Aiders scheme.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
31
Strategic Report
People continued
4,185
employees
(2020: 5,145)
85%
of our general manager
vacancies were filled internally
(2020: 72%)
Engagement and empowerment
Against the challenges heralded by temporary closure, we made
great efforts to include all employees in the latest developments
regarding the business throughout the year. In addition to the
Keeping in Touch at Young’s Facebook page, regular team
communications were shared via WhatsApp groups and “check
in” calls from line managers to staff who were away from the
business. Patrick Dardis also invited all general managers and
employees based at Riverside House to attend an interactive
presentation of the company’s results via Zoom and answered
any questions that were submitted. During periods of normal
operation, the Information and Consultation Committee met to
provide a formalised communication cascade channel.
Diversity and inclusion
As noted on page 70 of our corporate governance report
and our separately published Gender Pay Gap Report,
the importance of diversity, including gender balance, is
acknowledged in making any appointment as well as employees’
subsequent training, career development and promotion.
The board believes that all appointments should be merit-based
against the selection criteria created for each role regardless
of the applicants’ sex, race, ethnic origin, disability, sexual
orientation, religion or belief, marital status or age. We were
pleased to report that our furlough-adjusted mean gender pay
gap of 10.9% remains substantially better than the national
average of 15.5%.
The board has always taken a strong interest in supporting all
employees to fulfil their career ambitions. Our training and
development programmes will continue to be the lynchpin
of our business, supporting people as they progress on their
career pathway, or enhancing their knowledge and personal
understanding to be more confident in their role. We took the
opportunity to refresh and evolve our internal development
programmes so that we were able to continue training, even with
the covid-19 restrictions in place.
Our pro-active flexible working policy and use of the furlough
scheme allowed us to retain and support employees to manage
the impact of covid-19 on childcare, shielding and normal
work arrangements.
Our commitment to diversity and inclusion starts on our
induction programme and is a key element of the manager
training course. During the year, we were immensely proud of
Perry from Smith’s of Smithfield who featured in the Made You
Look project, a visual celebration of talented black chefs at all
levels who work in the country’s best restaurants.
Together at Young’s... Our commitment to diversity and inclusion starts on our induction programme and is a key element
of the manager training course. We were pleased to report that our furlough-adjusted mean gender pay gap of 10.9% remains
substantially better than the national average of 15.5%.
32
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
Community
We care deeply about our customers and the communities in which they reside.
Where possible, we look to maximise our positive externalities by supporting local
charities and businesses.
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Charity
At the start of the period, as detailed on page 3, our pubs rose to
the challenge of supporting our communities by donating meals
to individual charities, the NHS and other key workers, while
doing our utmost to prevent the waste of perishables. Elsewhere,
it was fantastic to be able to offer free accommodation to patients
of the Royal Marsden NGS Foundation Trust who were receiving
treatment during the second national lockdown.
This desire to give back to our community has long been integral
to our identity. As the covid-19 pandemic resides, we look forward
to once more engaging in myriad charitable initiatives focussed
around our third month-long collective fundraising effort in
October where we will stage a range of events across our pubs
and Riverside House to support both local and national charities.
Customers
Looking after our customers lies at the heart of everything we
do. Our focus on responsibly sourced, seasonal and local British
produce lends itself to nutrient dense food that tastes delicious.
One of our latest openings, Alban’s Well, exemplifies this with its
championing of underutilised, ethically sourced, local, plant-based
ingredients. Elsewhere, our enthusiastic adoption of more plant-
based options in our menus throughout our estate is embodied
in our updated Burger Shack menu that includes the ‘Classic
Plant’ burger patty, and vegan ‘CHKN katsu’ fillets. Likewise at
the bar, while ensuring a diversity of choice that includes original
recipes, we have undertaken robust initiatives to offer low and
zero ABV spirits and beers as well as low and zero sugar soft
drinks throughout our estate.
The stop-start nature of the last year drew into focus
the wonderful role our pubs play within their respective
communities. We take great pride in fulfilling our role as a key
hub, whether it is hosting the local farmers market at the Red
Barn in Blindley Heath or combatting loneliness through the
Alexandra’s Meetup Mondays. Our team continued to play their
part in the community during lockdown. For example, in an
effort to keep engaging with the local community of quiz-going
regulars, the Alexandra’s Mick hosted a weekly, free, interactive
quiz using his personal Twitter account during the periods
of lockdown. This soon grew to include national participants
and reached far beyond his original audience of regulars who
attended the weekly quiz at the pub.
All this was encapsulated in our short film, ‘A House is Not a
Home’, which reaffirms pub culture as an integral part of British
life with the messaging that pubs, like homes, are so much more
than just bricks and mortar. Pubs unite people and communities
and are where memories are made. Looking back on the last
few years makes us as excited as ever to serve our communities
once more.
Together at Young’s... Mick and Sarah from the
Alexandra (Wimbledon) were proud recipients of the
Merton Mayor’s award for their contribution to helping
others during the pandemic.
Suppliers
Despite our proud origins in the London Borough of
Wandsworth, our geographical reach has grown, and with it our
enthusiasm for local food and drink suppliers that celebrate the
best of British wherever our pubs reside. Where appropriate,
we fully encourage our pubs to explore their individuality and
support local businesses, from nearby breweries and distilleries,
to Paul Rhodes, our new artisan baked goods supplier in
Greenwich, or our amazing heritage tomatoes sourced from
Nutbourne Nurseries.
The challenges posed by the past year have put an acute strain
on the entire hospitality supply chain and – with this in mind –
we are proud to have always done our best to ensure suppliers
received payments in a timely manner for the wonderful
produce they provide.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
33
Strategic Report
Environment
The closure of many of our sites allowed us to reflect further on our impact on
the environment. Looking back on our efforts in recent years we can see how
far we have come in reducing average emissions and waste per site.
Reduce
In 2017, we eliminated all waste to landfill and have repeated
this feat every year since.
Elsewhere, as part of the exciting new developments listed on
pages 8 and 9, we have adopted the use of waterless urinals.
While eliminating odours and reducing costs, the crucial role of
this newly adopted technology is the ability to save, on average,
100,000 litres of waste water per urinal per year.
Reuse
Where it is not feasible to reduce waste, we have looked to reuse
items throughout our supply chain. Building on our removal
of plastic straws with biodegradable alternatives in 2018 and
‘simply cups scheme’ in 2019, we looked to circumvent the
practice of single use pint glasses in our gardens by purchasing
stock of washable, shatter-proof substitutes that can be used up
to 100 times.
Recycle
In recent years, we have doubled down our efforts at recycling
waste that can neither be reduced nor reused. From a base of
48% in 2012, we have consistently recycled over 68% of our
waste over the last four years. The impact of intermittent closures
over the past year meant both overall collected waste and
recycled waste volumes declined by over 40%, but we limited
the percentage fall in waste recycled to 1.4%. We look forward
to picking up where we left off, to educate and enact the best
waste management system we can.
For many years now, we have been collaborating with our
operational partner, Olleco, on the successful initiative of
recycling used cooking fat for use in biofuel. Up until our
covid-19 induced closure in March 2020, uptake improved
every year to reach an annual total of 355,605 litres.
Emissions
Together with our customers, we are passionate about reducing
our emissions and have therefore signed up to be part of the
Zero Carbon Forum (“ZCF”) in 2021. This will enable us to
collaborate on best practice within the hospitality industry, from
the identification of carbon intensive practices to producing a
clear road map to zero emissions.
We have a long tradition of carbon saving initiatives and energy
efficiencies throughout our estate as detailed in our SECR
disclosures starting on page 70. With every refurbishment,
we implement energy saving technologies targeting scope 1
and 2 emissions including, but not limited to:
• our Building Management System which reduces human
error in the control of our heating, cooling, lighting,
refrigeration, and coffee machines;
• energy saving Envirostart and Eco Flo technology for our
refrigeration and cooling equipment;
• cellar management and Cheetah extraction systems aimed
at reducing energy consumption in our cellars and kitchens
respectively; and
• all company car purchases for our pub teams and support
functions mandated to be either hybrid or electric.
While ensuring all new investments adhere to the latest energy
saving technologies, every year we survey several of our existing
sites as part of ESOS (“Energy Saving Opportunity Scheme”) to
identify areas of improvement in our pre-existing infrastructure.
Going forward, we have ambitious plans to put yet more
downward pressure on our scope 3 emissions, recognising both
our influence and our wish to be consistent in all our activities.
We are especially excited to trial the installation of the first of our
EV charging points at pubs in the autumn, allowing customers
to reliably charge their cars while enjoying their Sunday lunch
or mid-week catch up with friends.
Our locally sourced, fresh British produce naturally lends
itself towards a lower transportation footprint and to high
environmental standards. We have also worked closely with
our supplier network this year to reduce the number of deliveries
where possible. Whenever dealing with any new supplier we
ensure that their commitment to the environment is in line with
our values.
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
8,430
tCO2e Emissions*
(2020: 16,974)
4,351 tonnes
Waste recycled
(2020: 7,458 tonnes)
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Produce
Lastly, we are excited to resume service of our famed, best in
class, seasonal, British food and drink. It is no coincidence that
ingredients produced in a sustainable way also tend to be the
most delicious. In 2020, as part of our membership of the
Sustainable Restaurant Association, we were awarded a best in
class three-star rating. In the same year, it was also pleasing to
see us nominated in two award categories: ‘Celebrate Local and
Seasonal’ and ‘Source Fish Responsibly’ while also featuring in
the top 20 of sustainable businesses in their ‘Food Made Good
Business of the Year’ category.
In summary
The period of closure has allowed us to reflect on the many
ESG initiatives we have in play at present, while exciting us to
go further than ever before as we look forward to the year
ahead. Together at Young’s, we care deeply about our
communities, people and environment and look forward to
giving back in the most sustainable and effective way possible.
We cannot wait to serve you once more.
“Our locally sourced, fresh
British produce naturally
lends itself towards a lower
transportation footprint and
high environmental standards.
We work closely with our
suppliers to reduce the number
of deliveries where possible
and ensure they share our
values and commitment
to the environment.”
Together at Young’s... We champion underutilised,
ethically sourced, local, plant based ingredients. Young’s
have been recognised in the Sustainable Restaurant
Association’s top 20 sustainable businesses.
*
total of scope 1 and scope 2 emissions
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Strategic Report
Together at Young’s
The Burger Shack is back!
The Shack is back with our newly developed menu of jaw-
dropping burgers, hot dogs, and sides across our many garden
huts, tents and garden spaces. We believe in juicy patties,
squidgy buns and chin-dribbling sauce, and that’s what you’ll
get every time you bite into one. Our tasty new plant-based
alternatives complement our menus to provide something for
everyone. Bring on the napkins!
“ After breathing new life into the
brand, we launched the new menu
with greater variety and unique
‘Shack Session’ beers.”
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Business and financial review
£87.0m
Managed revenue
£19.2m
Managed operating loss
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Managed houses
In one of the most unique years in our 189-year history, we
began and ended the period with all our pubs closed to the
public. Over the course of the year, there were only 17 full
weeks of trade possible and for the majority of our managed
houses they have remained shut since Christmas. As a result,
total managed revenue is down by 70.9% to £87.0 million.
After the necessary closure of our pubs in late March, it was not
until 20 July, following a 16-week lockdown, when we decided
to reopen and trade all our 205 managed houses, setting the
tone that ‘Young’s was open for business’. The delay allowed
us to put in place all the necessary covid-19 safety protocols
without compromising on the great Young’s pub experience.
Our managers had the time to thoroughly retrain our returning
teams, dust away any cobwebs from the shuttered summer
months and prepare our wonderful pubs ready to welcome
back our loyal customers.
After a slow start, customer confidence improved as the appetite
grew to show support for their local. In August, we benefitted
from the Government funded “Eat Out to Help Out” campaign,
serving over 370,000 customers, which was a huge boost in
driving footfall through the early midweek days, with diners
attracted by the headline 50% discount. Food sales driven by
the campaign traded ahead of the prior year on a like-for-like
basis as our head chefs sought to entice customers to trade up
with a wonderful selection of premium dishes such as ‘posh
surf & turf’, rack of Dorset lamb and beef Wellington on offer
to share. Supported by some glorious summer weather, we were
able to make the most of our generous outdoor trading areas,
and total sales for the month were at approximately 90% of last
year on a like-for-like basis.
From September, the Government introduced restrictions on
group numbers, required full table service and face coverings
to be worn by staff and customers, and imposed a 10pm
curfew, all of which negatively affected trading to approximately
80% of last year. However, as the weather started to turn
heading into October, the introduction of Tier 2 status for
London affected 80% of our managed estate and limited
the mixing of households inside our pubs, forcing groups of
friends to meet outdoors in order to socialise. Our previous
investment in external trading spaces with fabulous gardens,
unique huts and iconic themed tents was perfectly placed to
help provide an attractive environment for our customers.
Even with the heightened restrictions, the resilience and loyalty
of our customers remained strong and sales during October
performed ahead of our expectations at 73% of last year.
On 5 November, all our pubs closed, initially for a four-week
lockdown. Although they were allowed to reopen in December,
trading was short-lived as the pandemic worsened and more
pubs entered the Government’s higher tier status which left
them unable to stay open. Unfortunately, there was no festive
excitement and by the end of the year all our pubs had closed
and remained so for the rest of the period.
The costs incurred when shutting down and reopening our pubs
cannot be underestimated. We faced staff costs as our teams
returned to their pubs days in advance of opening the doors,
unnecessary wastage of food and drink products unable to be
sold or reused, as well as the time of management to ensure
the process ran in an orderly fashion. Although we received
support from the Government and worked hard to streamline
our business during the first lockdown, it was the extensive
periods of closure during the year that solely contributed to an
operating loss of £19.2 million. When excluding our adjusting
items, we recognised an adjusted operating loss of £18.6 million.
Encouragingly, our managed operating margin was 16.1%
for the August to October trading periods between the first
two lockdowns.
Investment
We continue to place great value on the investment in our
premium pubs, and despite the impact of the pandemic we have
remained busy investing £17.0 million in our managed estate
over the course of the year.
In the first months of the period, we prioritised completing
projects that were paused in March, thus ensuring they were
able to open only a couple of weeks later than the rest of the
estate. At the Green Man (Putney), a full refurbishment which
added more than 50 new covers proved to be a big success with
locals, whilst the investment in existing and new bedrooms at the
Seagate Hotel (Appledore), City Gate (Exeter) and the Bear Hotel
(Esher) increased our hotel room stock to 688, of which 356 are
now boutique.
Following a successful return to trading in the late summer,
we kick-started the investment programme in our existing
estate from September with projects at the Duke of Cambridge
(Battersea), Duke of Wellington (Notting Hill) and the Duke
on the Green (Fulham). These much-loved pubs, at the heart
of their local communities, received a new lease of life as we
restored traditional features in their bar and dining areas.
Ahead of the winter period and in anticipation of further
prolonged periods of restrictions on internal trading and
social distancing, we accelerated our garden investment plans.
We invested £1.1 million adding huts, new stretch tents,
furniture and heaters. In order to capitalise on the short-term
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Business and financial review continued
“ We invested £1.1 million adding cabins, new stretch tents, furniture and
heaters ahead of winter and in anticipation of further prolonged periods
of restrictions on internal trading and social distancing.”
requirement for additional external covers, we have been able
to obtain temporary licences and/or convert car parking space
to increase capacity, such as at the Oyster Shed (Bank) with
an extra 120 covers along the riverside, and the Northcote
(Clapham) where the temporary pedestrianisation of Northcote
Road has been filled with tables outside the pub and has been
a huge success.
With all pubs closed in the final months and with one eye on
further potential growth opportunities for the coming year, we
kicked off additional pub investments in January. At the Windmill
Hotel (Clapham Common), internal bar and dining areas were
completely revamped, including a vibrant dining space and snug
lounge spaces creating cosy new seating areas. Whilst at the
Oyster Shed, a further 87 covers were created by extending the
first-floor mezzanine; this will come into its own when we head
into autumn. In total, we completed 16 major projects, including
schemes at the Bear (Esher), Cock Tavern (Fulham), Crooked
Billet (Wimbledon Common), Grange (Ealing), Park (Teddington)
and the One Tun (Fitzrovia).
It has been a quiet year for acquisitions, as we added just one
new pub, Alban’s Well. The offer focusses on sharing plates and
a delicious range of drinks featuring morning coffees, craft beers
and signature cocktails – the perfect place for your all-day dining
experience. Following its acquisition last year, we also completed
one of our most stunning recent investments at Enderby House,
nestled on the Greenwich Peninsula. It boasts an array of floors
and feature rooms where you can choose between the ground
floor pub or the stunning terrace for perfect views over the
Thames. Later in the period, we completed the acquisition of
a freehold building in Stow-on-the-Wold, which, subject to
planning, will add further boutique bedrooms to the Bell Inn,
a countryside getaway in the Cotswolds.
During the period, we transferred three businesses from
our tenanted division. The Royal Oak (Bethnal Green) is an
iconic pub that has continued to trade since its transfer; it has
featured on the small and big screen, and is located just yards
away from East London’s bustling Columbia Road Flower
Market. The Spread Eagle (Wandsworth) and the Ship Inn (East
Grinstead) have been closed pending planned investment in the
coming year, with the Spread Eagle forming part of an exciting
new boutique hotel and company head office development
located in our heartland of Wandsworth.
Following our exit from the lease of the Surprise (Chelsea),
we ended the period with 210 managed houses (including
30 hotels), up from 207 at the end of the same period last year.
Alongside the investment in our pubs, we are continually
upgrading our technology to improve our offer and productivity.
Our Young’s On Tap app, which we began developing five
years ago, was further improved with added functionality
allowing customers to browse menus, order food and drinks to
their table, and split pay their bills. The covid-19 pandemic has
accelerated changes in the great British pub and the customer
journey. Although previously adopted at some pubs, customers
are now greeted by a friendly host upon arrival, shown to their
table and asked to log personal details for track and trace.
To help reduce contact further, they are also invited to download
the updated Young’s On Tap app which allows customers
to view our menus and order a Young’s classic burger, or a
daily chef special alongside a post dinner cocktail, all from their
phones with delivery direct to their tables. Upon reopening, the
usage of the Young’s On Tap app has increased, accounting
for more than 40% of sales and provided another level to the
premium pub experience. Our online reservation system has also
been vitally important in the post-pandemic world, improving
booking conversions and enabling us to maximise covers to help
offset the downside from social distancing requirements.
Ram Pub Company
For our tenanted division, it has also been an extremely
challenging period, with trading opportunities severely
impacted by Government-imposed restrictions during the year.
The closure of pubs has directly impacted on the level of beer
sales but also the rental income as we have helped support
our tenants through the pandemic. As a result, total revenue
was £3.3 million, down from £12.1 million, resulting in an
adjusted operating loss of £0.7 million, compared to an adjusted
operating profit last year of £4.3 million.
Back in the summer, we were one of the first pub companies
to confirm support for their tenants, with a rent holiday period
dating from 16 March until the point of reopening in early
July. Once restrictions were lifted, most businesses returned to
normalised rent levels, however a number required continued
rent concession support due to the limited personal contact
permitted inside hospitality venues and the lack of opportunities
for wet led pubs with limited external trading space.
Following the second lockdown in November, we supported the
vast majority of our tenants with another rent holiday period,
this time running until the end of the financial year. Unlike rent
deferrals, this gave our tenants rent-free periods without the
worry of paying this back in the future. As we work towards
the full relaxation of restrictions this spring, we will continue to
support them.
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“More important than ever, this
year has seen the value of desirable
outside trading space that can be
used throughout the year and not
just during the summer months.”
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Strategic Report
Business and financial review continued
“We pride ourselves on operating a premium, well-invested pub estate,
and even in the desperately hard times we have found ourselves in recently,
it has been important to continue the investment in our managed pubs,
made possible by the financing decisions taken during the summer.”
Whilst all investment in the Ram Pub Company was put on hold
during the first lockdown, we were able to complete projects at
the Rising Sun (Epsom) and the Watermans Arms (Richmond).
Even in these unprecedented times, continued investment
remains vitally important to ensure our pubs are maintained to
a high standard to attract and retain the right tenants.
We continue to review our tenanted estate, exiting unfavourable
leases and divesting freehold properties where we feel the pub’s
sustainability is in question. During the period, we exercised the
break clause on the lease of the Black Cat (Catford), decided not
to renew an expired lease at the Greyhound (Hendon) and sold
the freehold of the Horse Pond Inn (Castle Cary). During the
period, we transferred the Spread Eagle (Wandsworth), Royal
Oak (Bethnal Green) and Ship Inn (East Grinstead) to our
managed houses, reducing the Ram Pub Company to an estate
of 63 pubs (2020: 69).
Other key areas
Property
Our balance sheet strength is underpinned by our
predominantly freehold estate in many highly desirable
locations. 228 of our 273 pubs are freehold or are long
leaseholds with peppercorn rents. Our total estate, including
freehold and fixtures and fittings on leaseholds, is now valued
at £773.7 million (2020: £771.1 million). The carrying value
of property leases, including long leaseholds, is separately
recognised as right-of-use assets in note 19. We have continued
to add value through major developments to improve our
existing pub values and hand-picked acquisitions, primarily
focussing on freehold assets.
Each year we revalue our pub estate to reflect current market
values. Again, this year we have had to consider the ongoing
implications of covid-19 following on from last year’s initial
impact, combined with the reopening of the hospitality sector
in line with the Government’s roadmap. Savills, an independent
and leading commercial property adviser, has revalued all our
freehold properties. The valuation method used several inputs
of which the sustainable level of trade of each pub was 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.
Over the course of the last year there has been renewed
optimism in the pub property market, reflected by increased
activity and property prices at pre-covid-19 levels; as a
result we have seen a net upward revaluation movement of
£10.8 million. This is comprised of an upward movement
of £9.0 million (2020: £9.3 million downward movement)
reflected in the revaluation reserve and an upward movement
of £1.8 million (2020: £5.3 million downward movement)
recognised as an adjusting item in the income statement.
Going concern and banking arrangements
There is now a clear pathway to the reopening of the hospitality
sector. This, combined with the actions undertaken by Young’s
during the period, provides the confidence that Young’s has
sufficient liquidity to withstand any ongoing uncertainty that
covid-19 brings to our business during the going concern
period to June 2022, be that closure of pubs for an extended
period, reduced trading hours, partial closure or general
market disruption.
We have modelled a broad range of forecasts, with our base
model assuming the continued reopening of our pubs and
the further lifting of restrictions aligned to the Government’s
roadmap. The more severe scenarios include a slower build
of trade in the summer months, further long periods of forced
closure and reduced trade through key trading periods such
as December.
Early on in the period we strengthened both our short-term
and long-term liquidity position. As regards the short term,
we initially accessed liquidity available to us under HM Treasury
and the Bank of England’s CCFF, issuing commercial paper
with a nominal value of £30.0 million, and a maturity date of
13 May 2021; this has now been repaid in full, with no further
funding under the CCFF received. We also entered into a new
£20.0 million revolving credit facility with NatWest. We do not
intend to draw on this facility, but instead retain it as available
liquidity to help us meet the monthly liquidity test referred to
below. This facility had an original maturity date in May 2021,
with two six-month extension periods available; we have now
taken the first six-month extension, moving the facility to a
maturity date in November 2021. So far as the long term is
concerned, we entered into a new £50.0 million facility with
NatWest and HSBC. This has an original maturity date falling in
May 2025. We had the option this year to request an extension
of the maturity date by a further year and to do the same the
following year; however, this process has been moved to start
next year given the current trading environment. We drew
down on this facility and repaid in full the original March 2021
£50.0 million facility with RBS and Barclays. Finally, in June
2020, the group also completed an equity issue raising gross
proceeds of £88.4 million in the period (see note 30).
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
£17.0m
Managed house investment
£773.7m
Our estate value
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During the period, the group also considered the effects of its
then latest forecasts on its compliance with bank covenants,
which were due to be tested each quarter on a 12-month
rolling basis. In anticipation of breaches due to the impact of the
pandemic, the group agreed with its lenders in May 2020 that
the financial covenants would be replaced by a monthly available
liquidity test. These initial covenant waivers have now been
extended until the quarter ending March 2022. The waivers
require the group to have £25.0 million of available liquidity
at each month end until the quarter ending March 2022 and
for total loan facilities not to exceed £220.0 million during
the waiver period. In addition, they have waived any technical
“cessation of business” breach of our banking facilities as a result
of our pubs being closed due to the covid-19 pandemic through
to the quarter ending June 2021.
In the base case forecast, there is significant headroom under the
revised monthly available liquidity test through to March 2022
and, when covenants revert to the group’s original financial
covenants from March 2022 onwards, there would be significant
headroom and all covenants would be fully complied with
through the going concern period. However, under the more
severe scenarios where our pubs may be required to close again
for prolonged periods and trade might be suppressed at key
times due to the reintroduction of social distancing and/or other
measures, the group would still comply with revised covenants to
March 2022, but on reverting to the original financial covenants
for the March 2022 and June 2022 quarter end tests, certain
performance-based covenants would risk being breached,
therefore compliance with financial covenants beyond 12 months
from these financial statements is a material uncertainty.
The group remains in regular dialogue with its lenders, and
should such a scenario arise, the group expects to be able to find
a solution with them well in advance of March 2022.
At 29 March 2021, the group had cash in bank of £4.7 million
and committed borrowing facilities of £285.0 million, of which
£174.8 million was drawn down. The group expects, by the
end of June 2022, to have available facilities of £235.0 million;
it has already repaid the £30.0 million due under the CCFF and
is not anticipating continuing with the £20.0 million RCF with
NatWest beyond November 2021. In addition to these facilities,
the group has a £10.0 million overdraft with HSBC, which is
not committed.
Together at Young’s... We have continued to add value
through major developments to improve our existing pub
values and hand-picked acquisitions.
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 decreased by £2.1 million to
£6.1 million. Compared with last year, the rate of inflation has
increased considerably from 2.8% to 3.3% which has heavily
contributed to an £18.1 million increase in liabilities. However,
this has been offset by a £19.0 million increase in the return
on scheme’s assets. We have continued our commitment with
another year of special contributions, totalling £1.2 million,
and remain fully committed to ensuring the pension scheme
is adequately funded.
Adjusting items
Total adjusting items were £1.1 million in the period, the
majority of which relate to the estate management of our
properties. This includes the net upward movement in property
revaluation of £1.8 million, as mentioned previously, and tenant
compensation cost of £0.5 million, where we agreed to terminate
the lease agreements early at the Royal Oak (Bethnal Green),
which transferred from the Ram Pub Company last July, and
in respect of an unlicensed property which will form part of the
new head office development at the rear of the Spread Eagle
(Wandsworth).
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Business and financial review continued
Following the acquisition of five pubs in March 2020, the
transfer of the business and assets of Spring Pub Company
Limited in September 2020 incurred a cost of £1.4 million
related to property taxes and associated professional and legal
fees. This cost, foreseen at the time of acquisition, did not
crystallise until the transfer was completed.
During the period, the loss on disposal of properties was
£0.5 million as we exited two leases forming part of the Ram
Pub Company - the Black Cat (Catford) and the Greyhound
(Hendon) - and one lease in the managed business, the Surprise
(Chelsea). The Horse Pond Inn (Castle Cary), a freehold pub in
the Ram Pub Company, was sold for £0.4 million.
The remaining £0.5 million in adjusting items relates to costs
incurred in response to covid-19 following a restructuring
process of our head office function and is largely made up
of severance costs.
Tax
A tax credit of £6.9 million was recognised for the year,
principally due to the losses incurred. The effective tax rate was
a negative 15.2% (2020: positive 33.6%) compared to the
statutory rate of 19%, with the difference primarily driven by
expenses not deductible for tax purposes. Further detail can
be found in note 13.
The group’s tax strategy for the accounting period ended
29 March 2021 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 maintain our long-term,
sustainable growth story. The covid-19 pandemic has had a
significant impact on the business; however, we now have the
Government’s roadmap to reopening the hospitality sector, and
this should enable us, once again, to deliver strong performances
from our existing estate and our premium developments,
focussing on both immediate and maintainable gains.
In view of the extensive period of closure of our pubs during
the period and the expected lower levels of trade during the
first three months of the current period, the company will not
be paying any dividend for the most recent period. The board
is very mindful of the importance of dividends to Young’s
shareholders and intends resuming dividend payments as soon
as is appropriate, although no decision has been made when that
will be. We have, however, agreed with NatWest and the holders
of the senior secured notes that any dividend payments during
FY2021/22 will not exceed £5.0 million in aggregate, but there
is no restriction on the company recommending a final dividend
with its results for FY2021/22, payable in the following financial
year, as normal.
Following the losses incurred in the year, our adjusted loss per
share was at 66.63 pence per share, compared to an adjusted
earnings per share of 60.18 pence in the prior period. On an
unadjusted basis, the loss per share increased to 68.23 pence.
Our 2021 strategic report, from pages 1 to 42, was approved by
the board on 19 May 2021 and it was signed on behalf of the
board by:
Patrick Dardis
Chief Executive
19 May 2021
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Corporate Governance
44 Chairman’s corporate governance statement
48 Board of directors
52 Corporate governance report
60 Audit committee report
66 Remuneration committee report
68 Directors’ report
74 Independent auditor’s report
“ We firmly believe that by
encouraging the right way of
thinking and behaving across
all our people, our corporate
governance culture is reinforced.”
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Corporate Governance
Chairman’s corporate
governance statement
Stephen Goodyear
Chairman
“We care about running
our business ethically and
responsibly for the benefit of our
stakeholders: therefore, in our
decision-making, we aim to do
the right thing in the right way
at the right time. This approach
and culture are underpinned
by our corporate governance
model which seeks to ensure
that good governance standards
are welcomed and adopted
throughout our business at
all times.”
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I am pleased to present our corporate governance report which
includes audit and remuneration committee reports.
It goes without saying that this year will probably go down as
one of the most challenging in the company’s long history,
with the pandemic’s initial impact in March 2020 only providing
a minimal insight into what was to come. Regardless of the
eventual outcome, the board continued to ensure that good
governance standards were adopted throughout the business.
As chairman, the effective leadership of the board and the
fostering of a good corporate governance culture remains a key
responsibility of mine. I am helped here by my board colleagues
who are 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 at all times.
The QCA Corporate Governance Code (2018 edition) was
applied throughout the period. It provides the right governance
framework for us: a flexible but rigorous outcome-oriented
environment in which we can continue to develop, as needed,
our governance model to support our business. I am pleased to
report again that the ten broad principles around which the QCA
Code has been constructed are effectively embedded in our
governance model, our ways of working and our behaviours.
This year, following on from the first formal review that we
carried out in 2018, the board undertook its second review of
the effectiveness of its performance as a unit. Details of what was
done, along with the agreed resulting actions, and the progress
made on the actions from the 2018 review, are set out on
page 58.
As previously reported, the board, in April last year, asked
Roger Lambert to stay on for an additional one-year period,
thus extending his period of office through to the end of this
July. In view of the challenges facing the company in light of
the coronavirus pandemic, it was felt important to retain on the
board the additional strength, balance, financial acumen, and
capital markets experience that Roger provided.
At the end of September, Torquil Sligo-Young, the company’s
information resources director, retired as an executive director
and became a non-executive director; he also joined the
company’s audit and remuneration committees. I was particularly
delighted that Torquil agreed to remain on the board: in doing
so, he continued as chairman of the trustee company that
manages our final salary pension scheme, remained as chairman
of the long-established charitable trust set up by one of the
founders of the business and, importantly, continued to liaise
with members of the Young’s family who, as major shareholders,
are so supportive.
In January this year, Trish Corzine stepped down as a non-
executive director when her second three-year term expired; Ian
McHoul replaced her on the remuneration committee when she
left. We were grateful to Trish for the insight and guidance she
provided over her years on the board, including as a member
of the audit and remuneration committees. We wish her well for
the future.
Lastly, also in January this year, the board extended Ian McHoul’s
term of office through to January 2024. In deciding to do this,
the board determined that Ian was independent in character and
judgement, made an effective and valuable contribution to the
board, demonstrated commitment to his role as a non-executive
director and chairman of the audit committee, and was able to
give sufficient time to Young’s.
I am confident that the board is well-balanced and composed of
the right individuals with the appropriate and complementary
skills required to run our business, and will continue to be so
after Roger Lambert steps down.
For many years, I, and my board colleagues, have been ably
supported by Anthony Schroeder, our company secretary.
After more than 16 years’ service, he has decided to retire
and will be leaving us at the end of September. I will miss his
unique sense of humour and the invaluable advice, guidance
and support he has provided; we wish him all the best and
are grateful for the unequivocal commitment he has shown to
Young’s over such a long period. In preparation for Anthony’s
retirement, we appointed Chris Taylor as joint company secretary
back at the start of April. Chris was part of our company
secretariat team many years ago, after which he became the
company secretary at Sky plc. We are fortunate to have found an
equal successor.
The board’s strategy and model to grow the business and drive
shareholder value are set out on page 14. It is usually against
that background, and a mission statement of “delighting our
customers with stylish pubs and hotels”, that the board makes
decisions and manages risk. This year, however, required
an ongoing pandemic overlay; this saw the introduction of
fortnightly board meetings during the first national lockdown
(April, May and June) and the executive management
throughout the year monitoring the effects of the crisis on the
business and keeping abreast of the fast- and ever-changing
developments (including Government-issued guidance, the
introduction of local tier restrictions and the defining and
redefining of tier areas). Altogether, this effectively allowed the
board to adopt a fact-based, real-time decision-making process.
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The board continued to set clear expectations concerning the
group’s culture and values. By way of example, each person
starting at one of our pubs received a training journal designed
to support them through their induction – this not only covered
our vision and values, but also explained 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 team member’s
time with us. All our teams also received, as relevant to their
roles, specific coronavirus-related training or guidance that
supplemented the introduction of estate-wide operational
policies and procedures designed to protect the health and
safety of our teams, customers and others visiting our pubs or
Riverside House.
Clear statements of behaviour have been issued by the board.
An anti-bribery statement is on our corporate website and
team members at Riverside House have been encouraged to
refer contractors and suppliers to this. We also have an anti-
bribery policy. 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 has
been circulated to everyone at Riverside House and to all pub
managers; it is also printed in each pub employee’s contract
of employment. Group-wide circulation of the policy last
happened in January 2019. An online assignment, testing the
understanding and knowledge of this policy, has to be taken
by every individual employed at Riverside House – this must
be taken within three months of joining Young’s and then
every two years after that. 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 wellbeing 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 our
employees to raise any concerns in confidence directly with the
chairman of the audit committee, either of the joint company
secretaries or the group’s internal audit manager. Experience to
date suggests that this policy is effective and widely known.
Our estate-wide coronavirus operational policies and procedures
also set out expected behaviours that were crucial for the safe
and responsible running of our business and so necessary to
garner customer confidence, and I am very proud of how our
teams proactively adopted and worked with these, all to the relief
and enjoyment of our customers.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Corporate Governance
Chairman’s corporate governance statement continued
“Always with the safety of our staff
and customers in mind, we maintained
the great Young’s pub experience
for our customers.”
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We firmly believe that by encouraging the right way of thinking
and behaving across all our people, our corporate governance
culture is reinforced. This enables us to conduct business
sustainably and responsibly, and, against the background of
the extraordinary times we have found ourselves in, allows us
to 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 programme that assists in protecting the business
from unnecessary risk. Always with the safety of our staff and
customers in mind, we maintained the great Young’s pub
experience for our customers. Much more on what was done in
our pubs to ‘embrace’ and make the most of a covid-19 world is
set out in the strategic report, starting on page 1.
We accept that simply setting expectations is insufficient and
so the board understands how important it is that it leads by
example: in ordinary times, it would therefore regularly be seen
out and about engaging with our team members, customers and
others, and the executive team, in particular, would communicate
regularly with the teams in the pubs and at Riverside House
through meetings and messages and at events. Despite the
significant impact of the pandemic on the operations of the
business and the executive team’s freedom and ability to get
around the estate, the executive team was able to engage with
staff, albeit often in an online environment via Zoom video
conferencing. In last year’s extraordinary times, customer
feedback has perhaps never been so important: this was
encouraged (both directly to the pubs and via online booking
review platforms) to ensure that we were doing the right things
and, in particular, that we had our customers’ confidence and
they felt safe. This feedback provided invaluable insight into how
we were seen to behave, and indeed produced some of our
highest feedback ratings in years. The board therefore continues
to believe that the group has a healthy corporate culture
throughout the business.
Further details on our corporate governance arrangements
(reflecting the broad principles in the QCA Code and their
application) appear in the following pages and on our corporate
website. Overall, I very much feel that the essence of the QCA
Code is fully reflected and observed in our business, and a
regular review by me with our company secretary will ensure
that this remains the case in the years to come.
To finish, I remain ever aware of the importance of ensuring that
we regularly engage with you, our shareholders. I am keen to
welcome holders of our A shares in person to our 2021 annual
general meeting (‘AGM’), particularly given the constraints we
faced in 2020 due to the covid-19 pandemic. At the time of
preparing our notice of AGM (see pages 131 to 135), indoor
events of up to 1,000 people or half a venue’s capacity (if lower)
are allowed to take place. We are therefore proposing to hold
the AGM in the Civic Suite in Wandsworth, as we have now
done for many years, and to welcome as many A shareholders
as we can in accordance with Government guidelines and other
necessary safety considerations. Currently this means, amongst
other things, that A shareholders will not be able to mix beyond
what is permitted by social contact restrictions, namely the
rule of six or two households. We will also put in place further
arrangements to ensure that the meeting is safe. In light of
this, attendance by guests (other than carers accompanying a
shareholder) will not be permitted. You should be prepared to
wear a face covering (unless exempt from that requirement),
have your temperature checked, and confirm on arrival that
you have not recently developed symptoms or been exposed
to someone who has tested positive or is displaying covid-19
symptoms. However, given the constantly evolving nature of
the situation, we want to ensure that we are able to adapt the
meeting arrangements efficiently to respond to changes in
circumstances. On this basis, should the situation change so that
we consider it is no longer possible for shareholders to attend
the meeting in person, we will hold our AGM as a combined
physical and electronic meeting. In such event, shareholders
and other attendees will not be permitted to attend the physical
AGM, save for such nominated persons as are required in order
to establish a quorum or to otherwise conduct the business
of the meeting. A shareholders could instead attend the
meeting using electronic means. Should it become necessary
for shareholders to participate in the AGM electronically, the
electronic platform will enable A shareholders to attend, vote and
raise questions electronically, and instructions will be provided on
our website at www.youngs.co.uk/investors. We will continue to
monitor public health guidance and legislation issued by the UK
Government in relation to the covid-19 pandemic as our AGM
approaches. A shareholders are encouraged to monitor our
website as well as our stock exchange announcements for any
updates to meeting arrangements.
A Shareholders intending to attend the AGM (should this be
possible in light of covid-19 restrictions in place at the time of
the meeting), are asked to register their intention as soon as
practicable by entering a tick in the ‘Intention to Attend’ box,
which is located below the resolutions on the second page of the
proxy form. Please note that in the absence of a full relaxation of
covid-19 restrictions and social distancing rules, directors will not
be mingling with shareholders before or after the meeting and
no refreshments will be available before or after the meeting.
In view of the uncertainty around whether shareholders will
be able to attend the AGM, and because tighter Government
restrictions may be introduced due to a change in the covid-19
pandemic situation, I would encourage all A shareholders to
complete and return their proxy forms appointing me, as chair
of the meeting, as their proxy. This will ensure that your vote will
be counted even if you (or any other proxy you might otherwise
appoint) are unable to attend the meeting. Details regarding
the appointment of proxies, and the completion and return of
completed proxy forms are on pages 134 and 135.
Stephen Goodyear
Chairman
19 May 2021
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.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Corporate Governance
Board of directors
1. Stephen Goodyear
Non-executive Chairman
Commenced role
April 2017 (appointed to the board in February 1996)
Skills and experience
A
4. Simon Dodd
Chief Operating Officer
Commenced role
September 2019
Skills and experience
E D
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. 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.
Other relevant external appointments
The Independent Family Brewers of Britain (director)
2. Patrick Dardis
Chief Executive
Commenced role
July 2016 (appointed to the board in July 2003)
Skills and experience
With more than 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. 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
Council member of the British Beer and Pub Association
Simon is responsible for the group’s managed house operations,
including marketing. He also heads up the in-house CSR team.
Having spent more than a decade working in the pub and brewing
sector, he has a wealth of experience. Before starting at Young’s,
Simon was a director at Fuller’s and MD of their beer company
(2016–19) – previously, he was the operations director of their
premium city pubs division (2015–16). Prior to joining Fuller’s, Simon
was at the Orchid Pub Company: COO (2013–14) and commercial
director (2006–13). He is the company’s UKHospitality representative.
With his experience, knowledge and retail and marketing background,
Simon makes a positive contribution to the well-established Young’s
business; he combines this with good analytical and people skills and a
cheery manner.
Other relevant external appointments
E D
The company’s UKHospitality representative
5. Tracy Dodd
People
Commenced role
September 2016
Skills and experience
E D
Tracy is responsible for people, and health and safety matters. She joined
Young’s in 2015; before that, she was at the Orchid Pub Company
(2006–14), most recently as Head of People. Tracy 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 wellbeing. As an ex-operator, she has the
skills, knowledge and expertise to help ensure the group has the right
people and culture in place and that it operates in a safe and responsible
way. Tracy leads by example, is a team player, communicates well and is
very approachable and discreet.
3. Mike Owen
Chief Financial Officer
Commenced role
September 2019
Skills and experience
E D
Other relevant external appointments
Hospitality Apprenticeship Board (member)
Mike has overall stewardship of the group’s finance functions (including
strategy, forecasting, reporting, tax, treasury, and risk management) and,
since 1 October 2020, is responsible for the group’s technological needs.
He has a strong passion for the industry having been group finance
and IT director at Hall & Woodhouse Ltd (2016–19), head of European
and then Global Deployment in the Global Business Services division
of SAB Miller PLC (2014–16) and finance and IT director at Miller
Brands (UK&I) Ltd (2008–14). Due to his influence and involvement in
the business, and his open and engaging personality and management
style, the leadership he provides benefits not just his direct reports and
team but a much wider section of the company’s people. Mike is a
qualified accountant.
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2
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Committee Membership
A Audit committee
R Remuneration committee
D Disclosure committee
Chair of committee
E Executive committee
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Corporate Governance
Board of directors continued
7
9
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
6. Roger Lambert
Non-executive and senior independent
Commenced role
A R
8. Ian McHoul
Non-executive
Commenced role
August 2008 (became senior independent director in July 2011)
January 2018
Skills and experience
Skills and experience
A R
Roger left the City in May 2020 after 40 years in banking, most recently
with Peel Hunt but previously with Canaccord Genuity (2010–16)
and J.P. Morgan Cazenove (1982–2008). After two years working for
Chemical Bank in New York, he started his career in London in 1982
as an analyst covering the brewing, leisure and hospitality sectors before
moving into corporate finance in 1985 where he has advised more than
25 companies in those sectors. Roger has a wealth of relevant expertise
in capital markets and brewing, drinks and hospitality. He brings gravitas
to the senior independent role and strength of personality and charisma
to his non-executive position.
7. Nick Miller
Non-executive
Commenced role
April 2017
Skills and experience
A R
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, and he
provides a strong and valuable external perspective to the board.
Through a combination of his executive experience, strength of character
and willingness and ability to engage, he is well placed to lead the
remuneration committee.
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Ian is a chartered accountant and an experienced non-executive
director. Aside from the current appointments listed below, he has
been a non-executive director at Premier Foods plc (2004–13) and
John Wood Group plc (2017–18). Most recently, Ian was the CFO at
Amec Foster Wheeler plc (2008–17); before that, he had a variety of
positions in the brewing and licenced retail industry, including at Scottish
& Newcastle plc and Inntrepreneur Pub Company Ltd (1985–2008).
With his considerable sector experience and strategic and financial
acumen, his contributions both in and outside of board meetings are
insightful. He also brings financial astuteness to his chairmanship of the
audit committee. At a personal level, his ability to listen, build trust and
encourage allows him to mentor others.
Other relevant external appointments
Bellway Plc (2018 to date) (director) – a major listed UK residential
property developer based in Newcastle upon Tyne
Britvic Plc (2014 to date) (now senior independent director) – a major
listed UK producer of soft drinks based in Hemel Hempstead
The Vitec Group plc (2019 to date) (now chairman) – a leading global
provider of products and solutions to the “image capture and content
creation” market
9. Torquil Sligo-Young
Non-executive
Commenced role
A R
October 2020 (appointed to the board in January 1997)
Skills and experience
Torquil joined Young’s in 1985, becoming an executive director in
1997. During his time as a director, he was responsible for personnel,
health and safety, and the group’s technological needs, and he also
headed up the company’s in-house CSR team. In 2020, Torquil
stepped down as an executive director and became a non-executive
director. He is chairman of a charitable trust set up by William Allen
Young, a founder of the business, and, due to his length of service and
knowledge of Young’s, is chairman of Young’s Pension Trustees Limited,
the trustee company that manages the Young & Co.’s Brewery, P.L.C.
Pension Scheme. 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
William Allen Young Charitable Trust (chairman of the trustees)
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Corporate governance report
Leadership
Board composition
Details of those on the board, including their skills and experience, appear on pages 48 and 51.
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;
• overseeing the group’s operations, ensuring competent and prudent management, sound planning, adequate accounting and
other records, and compliance with statutory and regulatory obligations;
• ensuring maintenance of sound management and internal control systems; and
• approving acquisitions and disposals.
The board governs mainly 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 fortnightly,
with members of staff invited
to attend as appropriate.
Additional meetings are held
as required.
Its primary focus is on
external corporate reporting
and on monitoring the
company’s internal control
and risk management
systems. Further details
on the committee’s
responsibilities and activities
are on pages 60 to 65.
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 66 to 67.
Its primary function is
to assist the company in
making timely and accurate
disclosure of information
required to be disclosed
in order to meet legal and
regulatory obligations.
Chair
Patrick Dardis
Other members
Mike Owen
Simon Dodd
Tracy Dodd
Chair
Ian McHoul
Chair
Nick Miller
Other members*
Other members*
Stephen Goodyear
Roger Lambert
Nick Miller
Torquil Sligo-Young**
Roger Lambert
Ian McHoul***
Torquil Sligo-Young**
Chair
Mike Owen
Other members
Patrick Dardis
Simon Dodd
Tracy Dodd
* Trish Corzine stepped down from the board and ceased to be a member of this committee in January 2021.
** Torquil Sligo-Young became a member of this committee in October 2020.
*** Ian McHoul became a member of this committee in January 2021.
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.
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Board meetings and reserved matters
Meetings
The board ordinarily meets every two months, with additional
meetings arranged as required. However, in light of the fast-
changing environment facing the business brought on by the
pandemic, the board ended up meeting 12 times during the
period. All bar two of those meetings occurred online, rather
than at Riverside House which is the usual meeting location.
For obvious reasons, no board meetings ended up being held in
any of the group’s pubs; the board would typically look to have
at least one off-site pub meeting each year as it allows the board
to see and feel the group’s business and how a particular pub
is performing.
Formal meeting agendas, made up of regular and other specific
business matters, and supporting packs were provided to board
members sufficiently in advance of each meeting to ensure there
was time for these to be reviewed. The agendas were 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
was a report from the chief executive, a summary of financial
performance in the year to date, a latest financial forecast, a
report from the chief operating officer, 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
expanded upon what was covered in their reports, and the
company secretary updated the board on matters for which he
was responsible. The chairs of the company’s audit, remuneration
and disclosure committees also reported formally on the
proceedings of their committees and minutes of those committee
meetings were also circulated to members of the board.
Due to the specific challenges the business faced during the
year and the necessary focus for the board, there was no real
opportunity for members of staff below board level to present
at any of the board meetings and/or provide updates on
developments in their areas of responsibility. The intention is,
however, to resume this in FY2021/22.
Open and constructive debate in meetings was always
encouraged by the chairman and he ensured that matters were
challenged and discussed before any decision that needed to be
made was made.
The formal flow of information in board meetings was in
addition to information exchanged outside of those meetings,
often in relation to ad hoc matters that needed considering
between meetings. The directors also received, usually on
a weekly basis and while the business remained ‘open’, the
group’s sales numbers and, on a monthly basis, a management
accounts pack that included a summary of the group’s financial
and non-financial performance, sales information for drink and
food for the periods when the business was operating, and the
group’s financial position and cash flow. The non-executives
also met with one or more of the executive directors outside
of board meetings, but in the circumstances these meetings
were less frequent than usual. The chief executive did, however,
continue to manage to meet with all or some of the non-
executive directors between board meetings, with this sometimes
having to be via Zoom; these meetings helped ensure that
the non-executives were kept up to date with developments
in the business, and they usually resulted in valuable
informal discussion.
Throughout the period, the board had a procedure in place
enabling it to consider and authorise situations where a director
had an interest that conflicted, or could possibly conflict, with
the interests of the company; this is set out in article 63 of the
company’s articles of association.
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Corporate governance report continued
Matters reserved for the board
The board maintained a formal written schedule of matters reserved for its review and approval; this schedule includes those matters
described on page 52 under The role of the board and its committees, as well as those in the following table.
Category
Strategy and management
Structure and capital
Financial reporting and controls
Contracts
Communication
Board membership and other appointments
Remuneration
Delegation of authority
Corporate governance
Policies and procedures
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.
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.
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 in the ordinary course of business material strategically or by reason
of size; contracts not in the ordinary course of business; major investments.
Approval of resolutions, circulars, prospectuses and press releases concerning
matters decided by the board.
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 chair 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.
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.
Division of responsibilities between the chairman and the chief executive;
establishing board committees and approving their terms of reference.
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.
Approval of the following: manual on compliance with the AIM Rules and
aspects of the UK Market Abuse Regulation, company’s insider list manual,
dealing code, anti-bribery policy, whistleblowing policy and health and
safety policy.
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Directors and joint company secretaries
Roles and responsibilities
There is a clear division of responsibility at the head of the company.
Chairman
Chief executive
Is responsible for:
•
•
• ensuring appropriate strategic focus and direction.
leading an effective board;
fostering a good corporate governance culture; and
Has overall responsibility for:
• proposing the strategic focus to the board;
•
• managing the group’s business.
implementing the strategy once approved; and
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
48 and 51. They are responsible for the day-to-day running of
the business.
Non-executive directors
Joint company secretaries
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.
Play a key part in helping the board ensure that it is aware of,
and that the company meets, its legal and regulatory obligations.
They act 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 them,
and they provide guidance and information to all of them. They
may act alone as well as together.
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Attendance at board and committee meetings
Meeting attendance
Board
Audit committee
Remuneration committee
Number of meetings
Stephen Goodyear
Patrick Dardis
Mike Owen
Simon Dodd
Tracy Dodd
Roger Lambert
Nick Miller
Ian McHoul*
Torquil Sligo-Young**
Trish Corzine***
12
12
12
12
12
12
12
12
12
12
9
3
3
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–
–
–
3
3
3
2
2
6
–
–
–
–
–
6
6
2
3
4
*
Ian McHoul became a member of the remuneration committee in January 2021 – he attended all the meetings of that committee he was eligible to attend.
** Torquil Sligo-Young stepped down as an executive director at the end of September 2020 and became a non-executive director and member of the audit and remuneration committees
– he attended all committee meetings he was eligible to attend.
*** Trish Corzine stepped down from the board in January 2021 – she attended all meetings she was eligible to attend.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
55
Corporate Governance
Corporate governance report continued
Independence
Based on its experience, the board stresses that all the
non-executive directors act independently in character and
judgement. It is accepted though that only Nick Miller and Ian
McHoul can be considered independent when judged against
the UK Corporate Governance Code (July 2018). The board,
however, considers Roger Lambert to be independent despite
him having served on the board for more than 12 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. Having recently been
the company’s chief executive, Stephen Goodyear is not
independent; for a similar reason (as he was an executive
director of the company until October), Torquil Sligo-Young is
not independent.
Balance and size
In view of the relevant experience, skills and personal qualities
and capabilities that each director brings to the board (as
summarised on pages 48 and 51) and taking into account that
Roger Lambert will be stepping down from the board at the end
of July, 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
(including most recently in relation to the appointments of Mike
Owen and Simon Dodd) 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 believes 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. One of the
company secretaries will spend time with any new director,
ensuring they understand the key policies and procedures they
need to comply with, and they also provide the new director
with an induction pack covering or containing a variety of
matters, including:
• 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 UK Market Abuse
Regulation, the company’s dealing code, 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.
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 at every third AGM after that – this
applies to Roger Lambert, Ian McHoul and Torquil Sligo-Young
at this year’s AGM. All are seeking re-appointment, albeit Roger
will be retiring from the board shortly afterwards.
Subject to shareholder re-appointment, the executive directors
have been appointed for indefinite periods. They are generally
entitled to not less than one year’s notice if the company wishes
to terminate their appointment; in return, they must give not less
than one year’s notice 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 as follows:
Non-executive director
Stephen Goodyear
Roger Lambert
Nick Miller
Ian McHoul
Fixed term expiry dates
3 April 2023
31 July 2021
3 April 2023
23 January 2024
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Young & Co.’s Brewery, P.L.C. | Annual Report 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 and development
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 and 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. Due to coronavirus, trade visits
were, however, severely limited in the period and some other
activities mentioned above weren’t feasible.
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 UK 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.
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Advice
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.
In April last year, HSBC Bank plc and Slaughter and May advised
the company on its successful application to become an eligible
issuer for the HM Treasury and the Bank of England’s Covid
Corporate Financing Facility. As a result, the company established
a euro-commercial paper programme for the purpose of issuing
paper through the CCFF, and partially accessed the liquidity
available to it under the CCFF by issuing paper with a nominal
value of £30.0 million and a maturity date of 13 May 2021.
At the beginning of the period and in connection with the
company’s banking facilities and private placement notes, the
board sought advice from Rothschild & Co. Amongst other
things, Rothschild & Co assisted the company in its choice of
potential new lending banks to approach in connection with the
refinancing of the company’s £50.0 million syndicated facility
due March 2021, advised on pricing and other commercial
terms linked to the refinancing, and they helped negotiate the
documentation for the new and existing facilities. In addition,
Rothschild & Co advised on, and assisted with, amendments
and waivers of the company’s financial covenants from the
company’s debt and private placement noteholders. Legal advice
was provided throughout by Slaughter and May.
In June, J.P. Morgan Cazenove and Panmure Gordon advised
on the company’s placing of new shares, the concurrent offer for
retail investors to subscribe for new shares, and the subscription
by certain directors of the company (and/or persons closely
associated with them) for new shares. This saw the company
raise gross proceeds of £88.4 million. A number of other local
legal advisers were engaged to assist with non-UK aspects of the
arrangements. Again, legal advice was provided by Slaughter
and May.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
57
Corporate Governance
Corporate governance report continued
As regards the agreed actions flowing from the 2018 review:
•
it is now agreed at each board meeting what, if any, non-
routine presentations should be given at the next meeting
– in light of the pandemic and the focus that caused, fewer
presentations have been given than would have ordinarily
been expected;
• presentations by non-director members of staff are to be
given (to help the board assess informally the quality and
depth of the team below board level) – this saw presentations
from a number of team members, including the director
of operations, the director of property and tenancies, the
director of marketing, two of the ops directors, the head of
financial planning and analysis, the chief accountant, the
property accountant, the acquisitions manager, the head of
retail information systems, the IS infrastructure manager,
the head of property and maintenance, and the maintenance
control manager;
• starting in January 2019, the principal risks and uncertainties
facing the business became a standalone item on each
January’s board meeting agenda – the resulting more formal
and separate discussion gave this matter an increased degree
of focus – the risks and uncertainties nevertheless continued
to be discussed by the audit committee and by the board
as a whole as part of the review and sign-off of the annual
report; and
• an annual update was to be provided to the board on senior
level succession (i.e. the level below the board) – updates
were provided informally at various times.
The next formal review is expected to be carried out in
summer 2022.
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.
Performance evaluation
Over the summer, the board carried out its second formal review
of the effectiveness of its performance as a unit; the first review
was undertaken in 2018. Each individual director’s performance
was also appraised. The overall review process was led by the
chairman, and was conducted by him, the senior independent
director and by the chief executive.
The performance review of the board involved the completion
of a questionnaire on an anonymous basis, with anonymity
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, further details of which 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. The average rating was
3.56 (2018: 3.71). At the November board meeting, the
following was agreed, based on the ratings awarded and/or the
comments made:
• board level succession planning will become a standing item
for the board at its March meeting – this will ensure there is
an annual touchpoint sitting alongside informal discussions
that take place during the year;
•
following their annual appraisals, when training needs and
wants are discussed, the executive directors will agree and
update their personal development plans in conjunction
with Patrick Dardis and/or Tracy Dodd – specific training
and development needs of the non-executive directors will
be agreed and identified annually by them with input, as
relevant, from the chairman, Patrick Dardis and the joint
company secretaries – this formalisation of matters should
help identify areas of training needed or wanted by any
particular individual as well as topics that could be applicable
to the board as a whole – the intention is to support
each director in their career with the company and give
them the knowledge and understanding to carry out their
role effectively;
•
the chairman, through his insight and leadership style and
tone, will continue to encourage increasing levels of individual
contributions at board meetings, recognising the different
characteristics and personalities of his board colleagues; and
• where practicable, the board’s executive committee
will consider in advance of a relevant board meeting
any important matter needing full board approval –
notwithstanding that the chairman encourages debate with
challenge and discussions at board meetings, this change
in process should ensure that all executive directors are
fully appraised of a matter in advance of the board meeting
and, following on from the previous bullet point, should
also help increase individual contribution levels of the
executive directors.
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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. Either of the
joint company secretaries can also be contacted by shareholders
on matters of governance and investor relations.
The board particularly supports the use of the AGM to
communicate with private investors. Apart from last year’s
meeting which had to be held as a closed meeting, 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 conclusion of the AGM, 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.
This 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.
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. The key
steps and actions taken by the executive committee in response
to the coronavirus pandemic are summarised in the strategic
report, starting on page 1. 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 strategic report (see pages 26 to 29). 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 60.
Shareholder 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 the company’s website, including the preliminary
and half-year results’ presentations to the City.
The company has an ongoing 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.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
59
Corporate Governance
Audit committee
Ian McHoul
Committee Chair
Given the ongoing impact of
covid-19 and the significant periods
during which the estate was closed,
a key focus for the committee was
the adequacy and appropriateness
of the group’s systems of internal
control and risk management.
The committee also concentrated
on the correct accounting treatment
for the impact of the pandemic
and, once satisfied, focussed on the
adequacy of the disclosures made in
the annual report.
Areas of responsibility
The committee’s responsibilities are split into four main areas, with the following principal tasks:
Financial reporting
• Monitoring the integrity of the company’s financial
statements and results announcements, including
reviewing any key accounting and audit judgements and
assumptions made regarding going concern.
• Advising the board on whether, taken as a whole, the
content of the company’s annual report is fair, balanced
and understandable, and whether it provides members
with the information necessary to assess the company’s
performance, business model and strategy.
• Reviewing the consistency and appropriateness of, and
any changes to, accounting policies and practices.
Internal control and risk management
• Monitoring the integrity, adequacy and effectiveness
of the company’s internal control and risk
management systems.
• Reviewing the company’s systems, procedures and
controls for detecting fraud and for the prevention
of bribery.
• Reviewing the adequacy and security of the company’s
arrangements for its employees and contractors to raise
concerns in confidence about possible wrongdoing in
financial reporting or other matters.
External audit
• Overseeing the company’s relationship with Ernst
& Young LLP (“EY”), the external auditor, reviewing
the effectiveness of the company’s external audit
process, along with EY’s findings, and assessing
EY’s independence.
• Recommending to the board the appointment,
re-appointment and removal of the company’s
external auditor.
• Approving the terms of engagement of, and
the remuneration to be paid to, the company’s
external auditor.
Internal audit
• Reviewing, assessing 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.
• Reviewing periodically reports on the results from the
internal audit manager’s work.
• Monitoring and assessing the role and effectiveness of
the company’s internal audit function.
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.
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Major tasks
During the period, the major tasks undertaken by the committee
comprised reviews of the following:
The committee also considered, and put forward for approval
by the board, an adjusting items policy and an updated policy
for the engagement of the company’s external auditor to supply
non-audit services.
the group’s preliminary announcements of interim and final
results, and the results themselves, all prior to review by
the board;
the appropriateness of adopting a going concern basis of
preparation of the financial statements (including looking
at loan covenant compliance and EY’s material uncertainty
qualification in its audit report);
the value of the group’s pub estate given the impact of the
coronavirus pandemic on the group’s business;
the judgements and estimates made by the company
following the adoption of IFRS 16 Leases;
EY’s performance as the company’s external auditor and the
effectiveness of the audit process;
the group’s systems of internal control and risk management;
the group’s financial controls memorandum;
the group’s whistleblowing procedures and the group’s
internal procedures and controls for detecting fraud and
preventing bribery;
the company’s internal audit plan and the changes made
to it in light of the ongoing pandemic and closure of the
group’s estate;
the results of various internal audit findings;
the group’s information systems security arrangements,
including an updated systems security management
policy; and
the committee’s own performance and the independence,
financial literacy and other skills and experience of the
committee’s members.
After ensuring it was aligned to the key risks of the company’s
business, the committee agreed an internal audit plan for
FY2021/22.
The committee continued to oversee EY so as to ensure the
delivery of a robust audit plan.
Committee membership
The committee, chaired by Ian McHoul, comprises the
board’s five non-executive directors. All served on the
committee throughout the period apart from Torquil
Sligo-Young who joined in October. Trish Corzine was
on the committee until she stepped down from the board
in January. The members of the committee consider that
they have the requisite skills and experience to fulfil the
committee’s responsibilities.
Committee meetings and attendance
The committee met three times during the period (in May,
November and March) and the table on page 55 sets out
each member’s attendance record. The chief executive
and the chief financial officer joined all the meetings.
The company’s audit partner and audit manager at EY
joined the May and November meetings as these related to
the group’s full-year and half-year results; they also joined
the March meeting to provide an update on corporate
reporting and regulatory matters. Other senior members
of staff joined the meetings, as appropriate. At some 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
member of the group’s executive management present; this
gave the committee the opportunity to raise any concerns it
had and any issues arising from their work.
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Corporate Governance
Audit committee continued
Advice, guidance and information
Formal agendas and reports are provided to the committee generally a week before its meetings, along with other information to
enable it to discharge its duties. The following are but some of the information, documents and reports provided to the committee
during the period:
Financial reporting and external audit
Internal control and risk management
Internal audit
Reports from the chief financial officer on various
matters, including key accounting matters and
judgements, the company’s going concern status
and loan covenant compliance
Full and half-year review reports, including
findings, prepared by EY
Draft engagement/management
representation letters
An updated financial controls
memorandum for recommendation
to the board
An internal audit plan and proposed changes in
light of the ongoing pandemic and closure of the
group’s estate
A whistleblowing policy and a summary
of the group’s procedures for detecting
fraud and preventing bribery
IT systems security update and a revised
systems security management policy
for approval
Various internal audit reports covering the results
of findings, including the effectiveness of controls
and various risks associated with them, generally
stemming from the internal audit plan
An actions tracker for any outstanding matters as
a result of findings made
Financial year-end audit planning report
prepared by EY
Operational support managers’
audit results
Schedules of non-audit work performed by EY
An updated non-audit services policy
for recommendation to the board
The FRC’s audit quality inspection of EY, EY’s
audit quality report and EY’s 2020 transparency
report (November 2020)
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 this is addressed
Going concern assessment
and covenant compliance
The group adopted the going concern basis of reporting in the preparation of the financial statements,
albeit subject to material uncertainty. The committee reviewed various financial and scenario-based
models underpinning the going concern assumption, the group’s balance sheet, the rate at which trade
returns, the impact on cash flow and the overall capital position of the group. Note 25(b) on pages
115 and 116 sets out the banking facilities that the group has available. The group expects, by the end
of June 2022 (the ‘going concern’ period), to have available facilities of £235.0 million, having paid
down the £30.0 million Bank of England’s Covid Corporate Financing Facility on 12 May 2021 and
planning not to extend the £20.0 million RCF with NatWest beyond November 2021. All of the group’s
lending banks have waived any technical ‘cessation of business’ breach of banking facilities as a result
of any enforced closure of the group’s pubs and the financial covenant tests at June, September and
December this year have been replaced with a monthly liquidity test. Whilst these models show sufficient
liquidity for the going concern period, under the more severe model there is a material uncertainty
that on reverting to the original banking covenants for the March 2022 and June 2022 quarter end
tests, certain performance-based covenants would risk being breached. EY tested the cash flow forecast
models prepared by management and found that management has made reasonable assumptions in its
cash flow forecasts, which support the group and parent company preparing their financial statements
on a going concern basis. EY also inspected covenant waivers from the group’s lending banks. As a
result of the above, and although it is not possible to fully predict the extent of the ongoing impact that
the coronavirus will have on the business, the committee was satisfied that the going concern basis of
reporting was appropriate, albeit with the material uncertainty disclosed.
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Matter
How this is addressed
Value of the group’s
pub estate
Deferred taxation
Asset impairment
Pandemic-related
government assistance
schemes
This number is by far the largest number on the balance sheet at 29 March 2021; note 18 on pages
109 and 110 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, which
was supported by the company’s valuation experts and included a ‘material valuation uncertainty’ due to
the coronavirus, was also checked by EY’s property specialist, enabling EY 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 29 March 2021.
Management, with help from the group’s in-house tax manager, made certain 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 29 March 2021 was appropriate.
The severely impacted trade for the period due to coronavirus, was an indicator of impairment.
Management completed full impairment tests on certain categories of assets across the group’s pub
estate which included goodwill, right-of-use assets and fixtures and fittings. Having used both internal
and external factors in the impairment testing, including preparing a financial model and forecast on the
expected short-term impact of the coronavirus and future growth prospects, management’s assessment
found there to be no impairment required. EY then challenged those qualitative and quantitative
factors against industry knowledge, prior year audit conclusions and EY’s expectations, as well as
full-year trading performance and future forecasts. The committee acknowledged that certain adverse
changes to the assumptions in the impairment tests could result in a future impairment of those assets,
but concluded that, at this stage, no impairment was necessary, and the disclosures reflected those
sensitivities – note 17 on pages 107 and 108 sets out further information on these sensitivities.
During the period, the group was eligible for a number of government grant schemes which were
introduced to mitigate the impact of covid-19 (note 9 on page 102 sets out further detail on amounts
accessed). The grant schemes accessed include Eat Out to Help Out, Business Rate Grant, Coronavirus
Job Retention Scheme, and the Covid Corporate Financing Facility. The group also took advantage
of the business rate holiday and the reduced VAT level on eligible sales. EY tested the workings and
accounting treatment of all government assistance schemes. The committee concluded that all schemes
were correctly represented in the group’s financial statements for the period ending 29 March 2021.
EY’s audit report on pages 74 to 81 provides further detail on how some of the above matters were addressed.
Non-audit work carried out by EY
Throughout the period, the company had a formal policy in respect of non-audit work carried out by EY whilst appointed as the
company’s external auditor; this was in place to mitigate any risks threatening, or appearing to threaten, EY’s independence and
objectivity arising through the provision of services in addition to the statutory audit. The policy was updated just before the end of the
period to reflect, in part, the Financial Reporting Council’s Revised Ethical Standard 2019. Under the updated policy, non-audit services
are generally prohibited to be performed by EY unless they fall within a narrow list of permitted services where closely related to the
audit and/or required by law or regulation; there are then additional safeguards that apply so as to avoid, amongst other things, EY
auditing its own work and/or making management decisions for the company. Where the carrying out of certain work is permitted,
the committee must still nevertheless approve the engagement. During the period, the company engaged EY for a limited amount of
non-audit work comprising the interim review and preparation of turnover certificates for the Bull (Westfield (Shepherd’s Bush)) and
the Cow (Westfield (Stratford)). The total fees paid to EY during the period for non-audit services amounted to £39,000 (13.0% of
total fees paid to EY during the period) (2020: £39,000 and 21.0%). In the committee’s view, the nature and extent of the non-audit
work carried out by EY did not impair their independence or objectivity.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
63
Corporate Governance
Audit committee continued
Qualification, objectivity, independence etc.
and proposed re-appointment of EY
The committee felt that the qualification, expertise, resources
and effectiveness of EY were appropriate in the context of
the group wanting an effective and high-quality service, and
that EY was independent of the group and not reliant on fees
from the group. The committee concluded that EY’s work
had been robust and perceptive, with EY’s reports showing a
good understanding of the company’s business. As part of its
assessment process, the committee had:
reviewed the audit plan for the period ended 29 March 2021
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;
been provided with a copy of the Financial Reporting
Council’s July 2020 audit quality inspection report in
respect of EY and a copy of EY’s published audit quality and
transparency reports for the UK;
reviewed an independence report prepared by EY, which
contained all significant facts and matters bearing upon EY’s
integrity, 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”;
considered EY’s proposed fees for the group’s audit for the
period ended 29 March 2021 and the additional non-audit
services for that same period; and
obtained the views of management.
The fees paid to EY for audit services for the period ended
29 March 2021 were £0.3 million (2020: £0.2 million).
As a result of the above assessment process, the committee
has recommended the re-appointment of EY as the company’s
auditor, and EY has expressed its willingness to continue.
A resolution to re-appoint EY and a resolution to enable the
directors to set EY’s remuneration will therefore be proposed at
the forthcoming AGM.
Risk and internal control
The board has overall responsibility for the group’s systems
of internal control and risk management and for reviewing
their effectiveness. These systems cannot eliminate risk and are
therefore designed to minimise and manage it – they provide
reasonable but not absolute assurance and seek to:
• mitigate risks which might cause the failure of
business objectives;
• prevent material misstatement or loss;
• help safeguard assets against unauthorised use or disposal;
• ensure the maintenance and reliability of proper accounting
records and financial information used within the business or
for publication; and
• help achieve compliance with applicable laws and regulations.
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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 14. This is not an exhaustive list of all significant risks and
uncertainties; some may currently be unknown (as was originally
the case with the coronavirus outbreak) 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 material claims and legal and accounting
developments to the board;
• regular circulation of the group’s anti-bribery policy to
Riverside House employees and pub general managers, and
assessment of Riverside House employees’ understanding of
that policy;
•
the group’s internal audit function and the group’s in-house
team of operations support managers; and
• ongoing health and safety audits and monitoring of
accident statistics, with audit results being a standing item
at board meetings.
In light of the ongoing impact of covid-19 and the significant
periods during which the estate was closed, the group’s systems
of internal control and risk management were a key focus for the
committee, as were the emergence of new risks and the increase
in existing ones. The committee sought to ensure the adequacy
and appropriateness of these systems and made changes to the
internal audit plan to assist with this.
The group’s internal audit manager sits within the finance team,
with a clear line of communication to both the chairman of
the committee and the joint company secretaries, remaining
independent of the areas under review. He performs internal
reviews of financial, compliance and operational areas according
to a programme set by the committee, following input from the
chief financial officer. Audit findings, management responses
and progress on 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. The internal audit manager also reviewed the design
and operation of the group’s key controls, as documented in the
group’s financial controls memorandum. The results of this work
were shared with the executive directors concerned and with the
committee; with that committee’s approval, the memorandum
was updated.
In the previous period, a cyber security maturity assessment was
completed with assistance from a specialist external provider.
During the period, work was progressed on some of the projects
identified as enhancing and making more secure the group’s IT
infrastructure and ways of working.
Reporting to the internal audit manager is the team of operations
support managers. Throughout the period, they undertook a
programme of retail audits across the managed house estate.
Through these audits, they independently reviewed compliance
with business policies, and they provided best practice support
to pub management, principally in the areas of stock and
cash management. The team holds relevant knowledge and
experience to perform this role, drawn from their time as
members of the finance department after employment in one or
more of the group’s pubs. Aggregate retail audit results for the
group’s operating divisions are presented to senior management,
including the executive directors, and to the committee.
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.
The audit committee believes, based on experience to date,
that this policy is effective and staff members are aware of it.
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65
Corporate Governance
Remuneration committee
Nick Miller
Committee Chair
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 which is designed to
incentivise the executive directors appropriately and support the
delivery of the group’s strategic objectives which are aligned with
the long-term interest of both shareholders and key stakeholders.
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 is made up of four of the board’s non-executive
directors. It is chaired by Nick Miller; the other members are
Roger Lambert, Ian McHoul and Torquil Sligo-Young. Nick and
Roger served on the committee throughout the period; Ian and
Torquil joined in January and October respectively. Trish Corzine
served on the committee until she stepped down from the board
in January. The committee met six times during the period and
the table on page 55 sets out each member’s attendance record.
Advice, guidance and information
General advice and guidance is provided to the committee by
the company secretary.
During the period, additional external advice and assistance was
obtained on:
• aspects of the Investment Association’s Principles of
Remuneration for 2021 and its guidance on shareholder
expectations during the covid-19 pandemic, and
•
the introduction of clawback arrangements for bonus awards
to be made under the company’s deferred annual bonus
scheme for FY2021/22 and later years.
Where possible, agendas and supporting papers are provided to
the committee a week before its meetings.
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The company’s reward policy as
regards the executive directors
focusses on the long term, in line
with the board’s strategy and
business model for long-term
shareholder value creation. It is
consistent with the group’s approach
to risk management and does not
encourage inappropriate risks to be
taken to achieve performance targets.
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 ordinarily comprise:
• a basic salary;
• a range of benefits, including life assurance, regular medical
check-ups, a car scheme or a car allowance (at levels set in
2008), private medical insurance and a pension (see note 8
on page 101); and
•
to satisfy the ‘variable’ element, a stretching deferred annual
bonus scheme.
In light of the pandemic, no bonus scheme was offered for
FY2020/21. Further, despite the executive team’s huge amount
of hard work over the period and their remarkable leadership, the
committee determined that no discretionary bonuses would be
payable either; this is reflected in the ‘Bonus 2021’ column in note
8(b) appearing on page 101, and it is the second year in a row for
which the executive team has not received any bonus pay-out.
As previously reported, the executives’ basic annual salaries were
reduced by 20% for April, May and June 2020 in light of the
pandemic; this is likewise reflected in the remuneration table
appearing in note 8(b) on page 101. For FY2021/22, it is the
committee’s current position that there should be no pay increases
for the executive directors. Within three months of the estate re-
opening, this position will be reviewed in the light of the estate’s
performance. The committee is open to introducing a pay increase,
with this possibly being effective from the start of FY2021/22.
Following the announcement in February of the government’s
roadmap to the easing of lockdown restrictions, the committee
chose to reintroduce, for FY2021/22, the executive deferred
annual bonus scheme. Set out in the following table are the
performance conditions to which the bonus awards are subject
and the overall caps applicable; the percentages shown are
percentages of basic annual salary.
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Patrick Dardis
Mike Owen
Simon Dodd
Tracy Dodd
Adjusted profit before tax
100%
100%
80%
50%
Personal objectives
25%
25%
20%
50%
Cap
125%
125%
100%
100%
The inclusion of personal objectives recognises the specific
executive roles and responsibilities each director has.
The executive directors are aware that the committee will be
taking certain other factors into account at the end of FY2021/22
in deciding whether to pay any bonus. For reasons of
commercial sensitivity, the detail behind these factors isn’t being
disclosed in this report; however, they do relate, amongst other
things, to the company’s available liquidity (see Liquidity position:
strengthening on page 22), the payment and recommendation
of dividends to shareholders, and whether any member of the
group applies for, or receives, any grant or assistance under any
coronavirus-related government support schemes during or in
respect of FY2021/22 outside of certain limited exceptions.
The committee’s view is that the bonus scheme will continue to
support the company’s strategy and business plan: the executive
directors have been incentivised in a way that is aligned with
both the group’s long-term financial performance and the
interests of shareholders.
Further detail of how the bonus scheme operates is in note 31,
starting on page 126. As is explained in that note, the ‘matching’
share part of the bonus scheme is linked to the growth of the
group’s adjusted earnings per share over a set period. For the
‘matching’ shares issued in June 2018 – only relevant to three
directors: Patrick Dardis, Tracy Dodd and Torquil Sligo-Young –
the earnings per share performance condition was determined
to be met as to 0%. This was entirely down to the pandemic’s
impact on trade. As a result, Patrick, Tracy and Torquil will have
to transfer 7,089 A shares, 393 A shares and 3,464 A shares
respectively to the Ram Brewery Trust II for £nil in due course.
Details of the executive directors’ remuneration appear in note
8(b) on page 101. 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 101 and 102
respectively. No executive director is involved in deciding their
own remuneration.
Remuneration: non-executive directors
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.
Apart from any entitlement arising from a previous executive
role in the company, the non-executives 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 executive directors, Stephen Goodyear and Torquil
Sligo-Young are pensioner members of the group’s defined
benefit pension scheme. Torquil continues to make use of a
company car; details of his holding of shares under the terms of
the deferred annual bonus scheme is in note 31(a) starting on
page 126, and his interest in the company’s SAYE share option
scheme is shown in note 8(e) on page 102.
The non-executive directors are entitled to be reimbursed for
certain business-related expenses.
Details of the remuneration of the non-executive directors who
were in office during the period appear in note 8(b) on page
101. As previously reported, their basic fees were reduced by
20% for April, May and June 2020 in light of the pandemic,
hence the year-on-year numbers being lower.
The executive committee has likewise chosen to defer any
decision as to any increase in the non-executives’ basic fees for
FY2021/22.
By order of the board
Anthony Schroeder
Joint Company Secretary
19 May 2021
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
67
Corporate Governance
Directors’ report
For the 52 weeks ended 29 March 2021
Directors
Details of our directors appear on pages 48 and 51. All of them served throughout the period. No other person was a director during
the period other than Trish Corzine who stepped down as a director on 11 January 2021.
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 UK Market Abuse Regulation). These interests are in addition to those shown
in note 8(e) on page 102.
Stephen Goodyear1, 2
Beneficial
Patrick Dardis1, 2
Mike Owen1
Simon Dodd1, 3
Tracy Dodd1, 4
Roger Lambert
Nick Miller
Ian McHoul
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
Torquil Sligo-Young1, 2, 5, 6
Beneficial
Trustee
As at
29 March 2021
30 March 2020
29 March 2021
30 March 2020
29 March 2021
30 March 2020
29 March 2021
30 March 2020
29 March 2021
30 March 2020
29 March 2021
30 March 2020
29 March 2021
30 March 2020
29 March 2021
30 March 2020
29 March 2021
30 March 2020
29 March 2021
30 March 2020
A shares
200,424
202,321
97,906
114,591
3,317
301
4,163
–
11,413
12,763
6,252
5,250
58,587
58,200
3,000
–
279,874
282,340
4,154,340
4,154,340
Non-voting shares
3,265
–
–
–
2,040
–
–
–
–
–
6,818
5,000
408
–
2,000
–
15,081
25,081
499,591
574,671
1 Also interested in 7,652 (2020: 7,526) A shares held in trust by RBT II Trustees Limited – see note 32 on page 129.
2 Also interested in 337,067 (2020: 337,067) A shares held in trust by Young’s Pension Trustees Limited – see note 32 on page 128.
3 This does not include Tracy Dodd’s interest in the company’s share capital as a person closely associated with Simon Dodd.
4 This does not include Simon Dodd’s interest in the company’s share capital as a person closely associated with Tracy Dodd.
5 Torquil Sligo-Young and various members of his immediate family are discretionary beneficiaries under trusts holding 836,368 (2020: 836,368) of the A shares and 453,543 (2020: 478,623)
of the non-voting shares in respect of which Torquil Sligo-Young is shown as trustee in the above table.
6 This does not include Young’s Pension Trustees Limited’s interest in the company’s share capital as a person closely associated with Torquil Sligo-Young (but see (2) above and note 32
on page 128).
Profit and dividends
The loss for the period attributable to shareholders was
£38.3 million. As announced on 17 March 2021, the board is
not recommending payment of a dividend for the company’s
financial year ended on 29 March 2021.
Disclosure of information to the auditor
Each of the directors shown on pages 48 and 51 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.
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Qualifying indemnity provisions
The company’s articles of association contain 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 was in force throughout the period. A further
qualifying third party indemnity provision is also in force at the
date of this report and was in force throughout the period; this
benefits Stephen Goodyear, Patrick Dardis and Torquil Sligo-
Young and relates to certain losses and liabilities which they may
incur as a result of or in connection with anything properly done
by them as attorneys under a property-related power of attorney
made by the company in May 2016.
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 42) 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.
Political donations
No political donations were made during the period.
Financial instruments and related matters
Included in note 25 on page 113, are the group’s financial risk
management objectives and policies and an indication of the
group’s exposure to certain risks. Those elements of that note
form part of this report and are incorporated by reference.
Employee engagement
The company continued to prioritise communications with
employees during the period. Within the practical limitation of
confidentiality and security, information was provided to them
across a range of topics such as the impact of coronavirus,
trading and operational matters, and board and staff changes.
Given the impact of coronavirus, the company employed new
methods of communication which included the use of Zoom by
Patrick Dardis, the chief executive, to deliver the company’s full-
year results presentation to employees based at Riverside House
as well as general managers across the company’s estate, and to
receive and answer questions. The company also set up a closed
Facebook group to provide updates on general arrangements,
address queries from employees and to publish video messages
from Patrick Dardis. All employees were invited to join the group
regardless of whether they remained at work or were designated
as “furloughed”, under the Coronavirus Job Retention Scheme;
this allowed direct engagement across the entire workforce.
The Facebook group encouraged engagement and interaction
across all levels of the workforce and across all locations.
They featured topical elements such as video clips of clapping in
support of the NHS, fundraising efforts in the local community,
community efforts such as cooking meals for NHS staff, window
dressing and supporting local foodbanks. In addition, group
members were encouraged to share pictures and clips of their
pets, their seasonal crafts and their baking, and a Young’s Strava
group was set up for employees to share and encourage each
other with various exercise challenges. These initiatives were
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well received by employees and helped maintain engagement
and interaction, particularly for those who might otherwise have
struggled with isolation.
To address the interruption of normal communication
arrangements for employees due to a significant proportion
of employees and their line managers being designated as
“furloughed”, the company set up a dedicated email address
to receive and deal with employee concerns across a variety
of areas. This ensured employees were able to reach out
for support throughout the year and it saw a number of
positive outcomes, such as assisting an employee who had
become homeless find accommodation within the group’s
staff accommodation and providing mental health support for
employees who were experiencing difficulties.
Within the constraints imposed by the impact of coronavirus,
the company continued to consult with its employees and
their representatives, using the company’s information and
consultation committee. This long-established committee
aims to enhance communications within the company,
supplying information and giving opportunity for feedback and
consultation, improve employee awareness and involvement
and to support ongoing improvement within the business.
Members of the committee are elected by the employees
based at Riverside House, with team members in the group’s
managed pubs having both an elected representative and a
nominated management representative, with the latter being
one of the group’s directors of operations. In the circumstances,
the committee met only once during the period, with the chief
financial officer joining that meeting to update the committee.
A briefing sheet, summarising the outcomes from the meeting,
was communicated within the business – this was initially
emailed to all employees based at Riverside House, with the
group’s operations managers then being responsible for
cascading that information down to the pub managers within
their area via divisional meetings and the pub managers then
having to pass it down further through team briefings within
their pubs. Each representative and pub manager is responsible
for feeding back the information discussed at the committee’s
meetings, acting as a point of contact for individuals wishing
to discuss matters and/or raise agenda items for discussion at
meetings, and seeking further employees’ views and ideas on
matters, all in order to provide feedback to the board.
To encourage further involvement and interest in the group’s
performance, the company operated a savings-related share
option scheme for eight consecutive years to 2019. However,
due to the impact of coronavirus and the disproportionate impact
of furlough on a significant proportion of the group’s employees,
this scheme was not offered for 2020; the intention is to
recommence it in 2021.
In recognition of the vital role that a select group of individuals
(all below board level) played during the covid-19 crisis following
the initial closure of the group’s pubs in March 2020 and in
the lead up to the pubs reopening in July, the company offered
those individuals the opportunity to receive a special one-off
retention and reward bonus. The terms of the offer were such
that the net bonus amount would be used to purchase shares
in the company on their behalf; no cash only alternative was
available. Everyone accepted the offer; this resulted in 13,542
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69
Corporate Governance
Directors’ report continued
A shares being acquired from the Ram Brewery Trust II at
1,300p per share (which was the mid-market closing price of
an A share on 31 December 2020, being the last dealing day
before the shares were purchased). All the shares are subject
to restrictions which ordinarily mean that the individuals who
received them cannot sell them before 18 December 2021.
Further, if the individual ‘leaves’ the company before that date
other than in limited ‘good leaver’ circumstances, he or she will
have to transfer the shares back to the trust for £nil.
The board maintained its support for the company’s wellness
initiatives, paying particular attention to employee mental health
and financial wellbeing, taking into account the extended
impact of government lockdowns and tier restrictions. By way
of example, the company offered fully-funded counselling to
employees at no cost to them on a one-to-one confidential basis
with a qualified counsellor; by using alternative mechanisms
such as FaceTime and WhatsApp chat, this support was available
throughout the year.
Young’s also continued its relationship with Salary Finance,
an independent company authorised and regulated by the
Financial Conduct Authority that offers a range of financial
services, including loans and savings products, as well as
education and financial tools. During the period, over 350
employees sought their help and advice, and a number of
employees took advantage of the loan and debt support they
provide. All employee communications are directly with Salary
Finance, and Young’s does not receive any financial benefit or
commission from offering this service.
During the period, five employees undertook the Level 2
Certificate in understanding mental health first aid and mental
health advocacy in the workplace; this was delivered via distance
learning by Milton Keynes College. These employees will support
the existing mental health first aiders and mental health first
aid champions across the business. An email address remained
available for employees to report concerns about others in
the workplace; all issues reported were fully investigated, with
advice or referral to external services as appropriate. In addition,
information on supporting mental health was published on
the closed Facebook page, signposting employees who may
be experiencing mental health crises to appropriate services.
The company’s corporate social media accounts also supported
the company’s positive stance on mental health and a number of
items about mental health were shared publicly.
The company continued to provide information about the
support available to employees from the Licensed Trade Charity
(the “LTC”) and, in particular, coronavirus-specific assistance.
They were also reminded of the 24/7 helpline and financial
support on offer. The LTC was first established in 1793; it aims
to provide pubs, bar and brewery people facing a crisis with
practical, emotional and financial support each year. During the
period, more than 230 visits were made to the unique Young’s
landing page on the LTC website, and the LTC received over
45 calls from individuals who identified themselves as Young’s
employees. In addition, financial grants of over £4,500 were
made to Young’s employees. Managers were also signposted via
the Facebook group to online mental health training delivered
by the LTC.
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Throughout the period, the company took active steps to
promote government messages about coronavirus in the
workplace and, upon reopening, provided specific training in
a covid-secure workplace to all employees. Where employees
were considered clinically extremely vulnerable and not able
to work from home, the company used the Coronavirus Job
Retention Scheme to support them to remain in employment
until it was safe for them to return to work. Particular attention
was paid to hygiene and cleaning and the ‘stay at home’ /
‘self-isolation’ ‘rules’ if anyone developed any of the symptoms.
Where possible, working from home was encouraged; as a
result all Riverside House teams worked remotely for much
of the period.
Where employees’ furlough pay under the rules of the
Coronavirus Job Retention Scheme exceeded the maximum
payable, the company topped up employees’ pay so that all
employees who were designated as “furloughed” received 80%
of their actual pay.
The impact of government restrictions and use of “tiering”
meant some employees were working below their normal hours
when the company’s pubs and hotels were open. The company
introduced a “pick up a shift” system which allowed employees
to volunteer to work in a similar role at their normal rate of pay
elsewhere within the company. Not only did this help to maintain
employee earnings levels, but it retained trained employees
within the company’s businesses while giving employees
experience of working in a variety of pubs and hotels.
Employment inclusion and diversity
Young’s is an inclusive employer and diversity is important to it.
It therefore maintained its policy of:
• giving full and fair consideration to all applications for
employment, taking account of the applicant’s particular
aptitude and ability;
• seeking to continue to employ anyone who becomes
physically and/or mentally impaired while employed by the
company and arranging training in a role appropriate to the
person’s changed circumstances; and
• giving all employees equal opportunities for training, career
development and promotion.
Greenhouse gas emissions, energy consumption
and energy efficiency action
In this section of this report:
• “BEIS” means the Department for Business, Energy and
Industrial Strategy;
• “kWh” means kilowatt hours; and
• “tCO2e” means tonnes of carbon dioxide equivalent.
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Revenue in £ million
No. of managed houses at the year-end
The annual quantity of emissions in tCO2e resulting from activities for which the group was responsible
involving (i) the combustion of gas or (ii) the consumption of fuel for the purposes of transport
2021
90.6
210
6,323
2020
311.6
207
8,247
The annual quantity of emissions in tCO2e resulting from the purchase of electricity by the group for its
own use, including for the purposes of transport
2,107
8,727
The annual quantity of energy consumed in kWh from activities for which the group was responsible
involving (i) the combustion of gas or (ii) the consumption of fuel for the purposes of transport, together
with the annual quantity of energy consumed in kWh resulting from the purchase of electricity by the
group for its own use, including for the purposes of transport
43,132,027
78,613,804
The group’s annual emissions: ratio of tCO2e per £ million of revenue
93.05:1
54.47:1
The following methodologies were used to calculate the
above quantities:
•
•
•
the kWh consumption figures relevant to gas, electricity,
district heating (i.e. a system for distributing heat generated
in a centralised location through a system of insulated pipes
for residential and commercial heating requirements such
as space heating and water heating) and district cooling
(i.e. a system working on broadly similar principles to district
heating but delivering chilled water to buildings needing
cooling) were taken from invoices received by the groupi –
the kWh figures were then converted to tCO2e figures using
the then current conversion factors published by BEIS;
the consumption figures relevant to propane were taken
from invoices received by the group1 – these were either
in kilograms or litres delivered and were then converted to
kWh and tCO2e using the then current conversion factors
published by BEIS; and
the consumption figures relevant to transport were calculated
using expensed mileage figures – to calculate tCO2e for
company cars, the group then used the car manufacturer’s
gCO2/km data and increased this by 22.9% per guidelines
issued by BEIS – to calculate tCO2e for mileage completed
in other cars, the conversion was made using figures for an
average car per guidance issued by BEIS – in each case, the
resulting tCO2e figures were then converted to kWh using
the then current fuel conversion factors published by BEIS –
where the fuel type used was unknown, the unknown fuel
metric was used in line with guidance published by BEIS.
1 For 2021, the invoices referred to above cover the period April 2020 through to and
including December 2020. They have been supplemented by estimated invoices for January
to March 2021. For 2020, the invoices referred to above cover the period April 2019 through
to and including January 2020, supplemented by estimated invoices for February to March
2020. Estimated invoices have had to be used in both years due to invoices not received from
the group’s energy suppliers.
During the period, the group undertook various activities to
increase the group’s energy efficiency. These principally involved
the roll out of further installations of the following: building
management systems to control heating and cooling, cellar
cooling controls, variable current refrigeration compressor
controls, and additives to wet heating systems to improve their
efficiency. In addition, energy efficient pump units were fitted to
beer coolers in various pubs and a number of waterless urinals
were installed.
Engagement with suppliers, customers
and others in a business relationship with
the company
The following section should be read in conjunction with the
Section 172(1) statement starting on page 18 (as the directors
have chosen to include in that part of the strategic report
further information as regards the company’s engagement
with suppliers, customers and other in a business relationship
with the company, as permitted under section 414C(11) of the
Companies Act 2006).
Young’s has been in business since 1831 when Charles Allen
Young and Anthony Fothergill Bainbridge started a brewery and
pub company, with this leading to the company’s incorporation
in 1890. Understandably, to have remained in business for so
long and have achieved the success it has, the company has
had to build and maintain good, strong and mutually beneficial
business relationships with suppliers, customers and others over
the years. During the period, the board remained alert to the
importance of this continuing and how the company’s long-term
success relies, amongst other things, on good business relations
with this range of external stakeholders.
The company’s long-term strategy and business model
(summarised on page 14) have been tried and tested over a
number of years. As such, many of the company’s business
relationships have been in place for quite some time; things
nevertheless were kept under review during the period to ensure
that, amongst other things, the company offered a responsible
and covid-19 safe environment for its customers and, pandemic
permitting, the company could continue to maintain its
reputation as a provider of a market-leading, premium offering
that new and existing customers would want to enjoy and with
which suppliers and others would want to be associated.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Directors’ report continued
Throughout the period, the company remained actively engaged
with suppliers and customers. It did this in a variety of ways,
some of which became the norm as the company entered
extended periods of restricted trading or lockdown: regular
meetings via Zoom became the order of the day with suppliers,
and an engagement strategy with customers, carried out through
regular e-marketing and social media, ensured strengthened
central, as well as local pub-level, messaging.
Over ten million personalised emails were sent during the year:
these allowed customers to remain in contact with the business
during restricted trading periods and closure, and ensured they
were kept up to date on reopenings and the regularly changing
trading restrictions. The company’s communications were further
bolstered through ongoing social media contact, including
Facebook, Twitter and Instagram. As the company anticipated,
social media provided an agile communications platform that
proved to be particularly useful during the period: in spring
2020, the company had 10,000+ Instagram followers; this
increased by roughly 50% during the period as a result of the
company’s strengthened engagement.
Online review platforms such as Google, TripAdvisor and
DesignMyNight enabled customers to give speedy and
relevant opinion and comment, and a cloud-based reputation
management system used by the company allowed it to assimilate
the feedback received. This was especially helpful in determining
and understanding, on a pub-by-pub basis, customer response
to the stringent covid-19 measures introduced by the company
when the estate was allowed to reopen in July.
It now seems to be very much the case that most customer
journeys start online, and the company’s online bookings have
grown significantly as a huge proportion of the company’s
customers tended to book ahead of their visits. Digital has
proved a key communications channel for the company’s
customers through a period of uncertainty.
The company’s booking terms and conditions were regularly
updated throughout the year to ensure customers were aware
of any changes or restrictions for their visits. This was particularly
important with the frequently changing tier restrictions last autumn.
Across the period and at a time when customers were seeking
reassurance before venturing out to their favourite pubs and
hotels, more than 200,000 customers visited the company’s
‘Things you need to know’ page: this covered the government’s
covid-19 regulations and the responsible and heartening
measures the company was taking in response.
On reopening, every pub in the managed estate was visited
by at least one member of the board or senior management:
this was to reassure the pub’s teams and customers as to the
company’s commitment to them.
The company introduced an ‘order to table’ solution for its
On Tap app, providing a premium, restricted contact, table
service solution for customers. Nearly half a million customers
used On Tap since the reopening of the pubs in July last year,
and, together, they placed over 1.4 million orders to a value of
more than £24 million. The app accounted, on average, for 34%
of transactions on reopening; for those that signed up to this,
it also allowed the company to communicate directly with them
through enhanced in-app content and push notifications.
The Great British Staycation was the focus of the company’s
hotel marketing strategy throughout the summer. It saw the
introduction of a number of different leisure packages for guests,
communicated via e-marketing and social communications,
to encourage guests to come and stay responsibly.
For the mutual benefit of the company and its customers and
suppliers, the company continued to leverage the relationships
it has with its suppliers, especially those providing drink
products (as drink sales historically count for roughly 70% of the
company’s sales in any year). So, rather than just source products
from its drink suppliers and sell them on to its customers, the
company continued to look at ways of working more closely,
proactively and collaboratively with those suppliers to create
or increase consumer demand. Whilst many of the company’s
planned activities were not able to take place due to the
pandemic, a number did happen, and the following are just four
illustrative examples of the benefits ensuing from those close,
proactive and collaborative relationships:
• Camden Town Brewery supported the company’s outdoor
spaces on reopening by providing temporary bars to enhance
speed of service and allow takeaway solutions for selected
pubs – branded merchandise was also provided to encourage
customers to order via On Tap;
• Orchard Thieves Cider provided branded huts for pub
gardens to provide shelter for customers when requirements
for mixed households restricted indoor gatherings;
• as customers were welcomed back safely last summer, Diageo
GB provided high-quality permanent sanitiser dispenser
units, medical grade hand sanitiser and personal protection
equipment for all Young’s managed house pubs; and
• key suppliers (such as Diageo GB, Camden Town Brewery,
Carlsberg Marston’s Brewing Group, Campari Group,
Berkmann Wine Cellars and Heineken) joined forces with
the company to reward selected customers with an exclusive
treat on Young’s Day, 17 September 2020, which could
be redeemed via the Young’s On Tap app: customers
were awarded bar tabs, staycations and/or complimentary
drinks in recognition of their loyalty to the company’s pubs
on reopening.
A customer-focussed central marketing campaign, ‘Socialising
Responsibly since 1831’, was created to convey the company’s
covid-19 safe environment on reopening. This ran across all
digital platforms, including paid digital advertising, and across
welcome boards and communications throughout the pub to
remind customers of the different ways of operating and the
company’s enhanced health and safety measures.
With a roadmap for the end of lockdown restrictions having
been announced in February, work towards the end of the
period turned to ‘Together at Young’s’ and plans for the
company’s 190th birthday in September. These central themes
will underpin the company’s customer communications during
a summer of togetherness and a year of celebrations planned in
partnership with the company’s key suppliers.
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A taster of what’s to come, some of which have already gone
live, includes:
• a new range of bespoke flavoured gin serves, exclusively
paired with Fever-Tree mixers and sodas, as part of the
company’s ”Let the Summer Be Gin” campaign;
• Metroland Shack Sessions, an exclusive beer for the
company’s Burger Shacks, produced by Two Tribes Brewery;
• key events, in conjunction with tournament partners
Heineken and Sipsmith, linked to some of this summer’s
major sporting events such as the delayed UEFA Euro 2020
football tournament and The Championships, Wimbledon;
• a ‘Pints for Prints’ promotion with Camden Town Brewery
which will allow customers to get exclusive Young’s birthday
artwork; and
• a bespoke 190th birthday glass available from
Beavertown Brewery.
Corporate governance arrangements
The report on the company’s corporate governance arrangements
is set out on pages 43 to 67. 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
The notice convening the AGM is set out on pages 131 to 135;
notes explaining the resolutions being proposed are on pages
136 and 137.
Notifications of major holdings of voting rights
As at 29 March 2021, 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
12.76%
11.20%
10.09%
10.05%
5.55%
4.89%
BlackRock Investment Management (UK) Ltd
<5.00%
Alice Parasram
3.30%
On 19 April 2021, Octopus Investments Nominees
Limited notified the company that their holding had then
changed to 11.06%; on 6 May 2021, Blackrock Investment
Management (UK) Ltd notified the company that their
holding had then changed to 5.07%. 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 30 March 2021 and 18 May 2021,
both dates inclusive.
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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 accounting standards
in conformity with the requirements of the Companies Act
2006 (IFRS) and applicable law, and must present fairly the
financial position of the group and the financial performance and
cash flows of the group for the relevant period. As regards the
company’s financial statements (as opposed to the ones for the
group), the directors have chosen to prepare them under IFRS
too. In preparing the financial statements, the directors have to
make judgements and accounting estimates that are reasonable
and prudent, select suitable accounting policies and then apply
them consistently, and information, including accounting policies,
must be presented in a manner that provides relevant, reliable
and comparable information. There also has to be included
a note that the group has complied with IFRS, subject to any
material departures disclosed and explained in the financial
statements. Under the Companies Act 2006, the directors are
responsible for keeping accounting records which disclose with
reasonable accuracy, at any time, the financial position of the
group and the company at that time and are such to enable
them to ensure that the financial statements comply with that
Act. 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 42) and the financial statements for the period ended
29 March 2021, 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
Joint Company Secretary
19 May 2021
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Corporate Governance
Independent auditors’ report
For the 52 weeks ended 29 March 2021
Independent auditor’s report to the members
of Young & Co.’s Brewery, P.L.C.
Opinion
In our opinion:
• 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 29 March
2021 and of the group’s loss for the 52 weeks then ended;
•
•
the group financial statements have been properly prepared
in accordance with international accounting standards
in conformity with the requirements of the Companies
Act 2006;
the parent company financial statements have been properly
prepared in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006 and as applied in accordance with
section 408 of the Companies Act 2006; and
•
the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
We have audited the financial statements of Young & Co.’s
Brewery, P.L.C. (the ‘parent company’) and its subsidiaries
(the ‘group’) for the 52 weeks ended 29 March 2021
which comprise:
Group
Parent company
Group balance sheet as at
29 March 2021
Balance sheet as at
29 March 2021
Group income statement for
the 52 weeks then ended
Statement of changes in equity
for the 52 weeks then ended
Statement of cash flow for the
52 weeks then ended
Related notes 1 to 35 to the
financial statements, including
a summary of significant
accounting policies
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 35 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 accounting
standards in conformity with the requirements of the Companies
Act 2006 and, as regards to the parent company financial
statements, as applied in accordance with section 408 of the
Companies Act 2006.
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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. We are independent of
the group 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.
Material uncertainty related to going concern
We draw attention to note 1 in the financial statements, which
indicates that the ongoing Coronavirus pandemic continues to
result in uncertainty over the group’s ability to operate its pubs
and therefore whether the group will be able to comply with its
banking covenants from 31 March 2022 onwards. As stated in
note 1, these events or conditions, along with the other matters
as set out in note 1, indicate that a material uncertainty exists that
may cast significant doubt on the group and parent company’s
ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
In auditing the financial statements, we have concluded that
the director’s use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group and
parent company’s ability to continue to adopt the going concern
basis of accounting included:
• Obtaining an understanding of management’s basis for use
of the going concern basis of accounting. To challenge the
completeness of this assessment, we independently identified
factors that may indicate events or conditions that may cast
significant doubt on the group’s ability to continue as a
going concern. Events or conditions were identified and we
designed our audit procedures to evaluate the effect of these
risks on the group’s ability to continue as a going concern;
• Agreeing the group’s available financing and related terms,
including the changes in the period, to the original debt
agreements and covenant waivers; and auditing the £85m
June 2020 equity raise back to supporting evidence, including
share issue documentation and bank statements;
• Obtaining the cash flow forecast models used by the Board
in its assessment, reviewing their arithmetical accuracy,
whether they have been approved by the Board and
considering the group’s historical forecasting accuracy;
• Recalculating the group’s banking covenant tests, under their
amended terms through to March 2022 and under their
original terms at the March 2022 test date and the June
2022 test date (both within the going concern period);
• Evaluating whether the assumptions, particularly over the
timing and extent to which trading would recover to pre-
Coronavirus levels, were realistic, achievable and consistent
with the external and/or internal environment as well as other
matters identified in the audit;
• Considering management’s stress testing of the group’s cash
flow forecast models and their impact on forecast liquidity and
banking covenants, specifically whether the stress tests were
of reasonably possible (but not unrealistic) adverse effects that
could arise from these risks individually and collectively;
Overview of our audit approach
Audit scope
• Performing our own reverse stress testing of the group’s cash
flow forecast models and their impact on forecast liquidity and
banking covenants to identify under what circumstances the
group’s liquidity would be compromised;
Key audit
matters
• Considering the likelihood of management’s ability to
execute mitigating actions based on our understanding of
the group and the sector, including whether those mitigating
actions were controllable by management. This assessment
was supported by our analysis of management’s historical
ability to take controllable actions such as non-payment of
dividends, suspension of non-essential capital expenditure and
inventory orders, as well as the likelihood of non-controllable
actions such as obtaining further covenant waivers or raising
additional funds through debt, equity or sale of pubs in the
portfolio being plausible;
• Assessing the appropriateness of the going concern
disclosures in describing the risks associated with the group’s
ability to continue as a going concern for the period to
27 June 2022; and
• Discussing with management whether any events or
conditions beyond 27 June 2022 had been identified that
may cast significant doubt on the group’s ability to continue
as a going concern and considering whether we were aware
of any such events or conditions from our audit work.
The audit engagement partner and senior team members
increased their time directing and supervising the audit
procedures on going concern, in particular in assessing the going
concern model and assumptions and reviewing evidence of
changes to financing arrangements and banking covenants.
We communicated our conclusions to the Audit Committee that,
based on our work performed, we found that management has
made reasonable assumptions in its cash flow forecasts, which
support the group and parent company preparing their financial
statements on a going concern basis. We observed that there
continues to be uncertainty over the impact of Coronavirus
on the group’s ability to trade and communicated the results
of our independent reverse stress testing on liquidity and
covenant compliance. We confirmed that we are satisfied with
management’s conclusion that the group and parent company
are a going concern, but that there is a material uncertainty over
this assumption, and that management has accurately described
this material uncertainty within the financial statements. We also
determined going concern to be a key audit matter.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report. However, because not all future events
or conditions can be predicted, this statement is not a guarantee
as to the group and parent company’s ability to continue as
a going concern.
• We performed an audit of the complete
financial information of the group, which
accounted for 100% of adjusted loss before
taxation, 100% of revenue and 100% of
total assets.
• Valuation of the freehold pub estate
• Asset impairment
• Going concern
• Deferred taxation arising on the valuation of
the pub estate
• Management override in the recognition
of revenue
• Overall group materiality of £1.2m which
represents 3.5% of the prior period’s profit
before taxation, adjusted for the movement
on the revaluation of properties.
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Materiality
An overview of the scope of the group and
parent company audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and
our allocation of performance materiality determine our audit
scope for each company 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 and 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 29 March 2021 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. This approach is consistent with the
prior period.
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Independent auditors’ report continued
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. In addition to
the matter described in the material uncertainty related to going concern section, we have determined the matters described below to
be the key audit matters to be communicated in our report:
Key observations communicated
to the Audit Committee
We concluded that the
methodology applied is
reasonable and that the
external valuations are an
appropriate assessment of
the market value of freehold
properties at 29 March 2021.
We concluded that the values
of the sample of 34 properties
tested by our internal property
valuations specialists were
within the reasonable range
of values as assessed by
them, including the impact
of Coronavirus.
We consider that management
provided an appropriate level
of review and challenge over
the valuations and we did not
identify evidence of undue
management bias.
We reviewed the disclosures
in note 18 to the financial
statements, including those
relating to the material
valuation uncertainty paragraph
included by Savills in its
valuation report, and consider
them to be appropriate.
Risk
Valuation of the freehold pub estate
Our response to the risk
Refer to the Audit Committee Report
(page 60); Accounting policies (page 91); and
Note 18 of the financial statements (page 108)
We performed a walkthrough of each aspect of the group’s
freehold pub valuation process and assessed the design
effectiveness of the key controls that were in place.
In accordance with the group’s accounting policy
for property and equipment, management
applies the revaluation model for the
freehold pub estate, which had a carrying
value of £726.1 million at 29 March 2021
(2020: £722.2 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 freehold pub based on its current
and forecast trading performance, or a
spot valuation;
• A revaluation by Savills, independent
chartered surveyors, of a representative
sample of 20% of the group’s freehold pubs,
including pubs of varying location and type;
and
• A revaluation of the remaining 80% of
the freehold pub estate, led by the group’s
interim director of property and tenancies,
and supported by Savills, 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.
The ongoing uncertainties over the current
economic environment caused by the
Coronavirus pandemic, including the closure or
restricted trading of all pubs in the UK, had an
impact on the valuation of the group’s freehold
pub estate.
As described in note 18, Savills highlighted in
its assessment of the fair value of the freehold
pub estate that the valuation contains material
uncertainty given the lack of comparable
transactional activity since the onset of
Coronavirus and the uncertainty over future
trade at the valuation date. Accordingly, the
group has reported the valuation of the freehold
pub estate at 29 March 2021 on the basis of a
‘material valuation uncertainty’.
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
freehold pub estate. These included the fair maintainable
trade, EBITDA multiples, spot valuations and the assumptions
made in respect of the impact of Coronavirus. They also
included the impact on management’s valuation of the
inclusion in the external valuer’s valuation opinion of a
‘material valuation uncertainty’ clause as a result of the
Coronavirus pandemic.
We assessed the competence and objectivity of the
external valuer, including consideration of its qualifications
and expertise.
We tested the inputs, assumptions and methodology used
by the external valuers. 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 205 freehold pubs, with support from our
property valuation specialists we tested a sample of 34
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.
With support from our property valuations specialists, we
also considered the approach taken to reflect the impact of
the Coronavirus pandemic on freehold pub values, given the
continued level of uncertainty. This included consideration
of the methodology applied compared to the limited market
data available, the approach being taken by other property
companies and the characteristics of the individual pub assets.
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 18 the financial statements and whether
they were compliant with the fair value information required
under IFRS 13. In particular, we considered whether they
adequately described the judgements made in respect of the
impact of Coronavirus on freehold pub values.
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Risk
Asset impairment
Our response to the risk
Key observations communicated
to the Audit Committee
Refer to the Audit Committee Report
(page 60); Accounting policies (page 91); and
Notes 17 and 19 of the financial statements
(pages 107 and 111)
We understood and walked through the methodology applied
by management in performing its impairment test for each of
the relevant pubs, and assessed the design effectiveness of the
key controls that are in place.
We concluded that no material
impairment was required at
29 March 2021, based on the
results of our work.
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However, the impairment
test is sensitive to adverse
changes that could arise given
the uncertainties surrounding
the impact of Coronavirus.
In particular, a decline in the
long-term growth rate could
result in an impairment of a
number of pubs or groups
of pubs.
Management describes these
sensitivities appropriately in
notes 17 and 19 to the financial
statements, in accordance with
IAS 36.
In addition to its freehold property portfolio, the
group has significant other assets connected
with its pub estate, including goodwill of
£32.5 million (2020: £32.5 million), fixtures,
fittings and equipment of £79.5 million
(2020: £89.0 million) and right of use assets of
£158.0 million (2020: £163.4 million).
The continued uncertainties over the current
economic environment caused by the
Coronavirus pandemic, including the closure or
restricted trading of all pubs in the UK, has been
identified as an indicator of impairment.
Impairment is tested on the basis of each
individual cash generating unit (an individual
pub) or in the case of goodwill, the group of
pubs associated with it.
There is a risk that, given the uncertainties
over future trading caused by the Coronavirus,
pubs may not achieve the anticipated business
performance to support their carrying value.
This could lead to an impairment charge that
has not been recognised by management.
Significant judgement is required in forecasting
the future cash flows of each pub, together with
the rate at which they are discounted.
We assessed the appropriateness of management’s
identification of cash generating units being at the individual
pub level and, in the case of goodwill, the fact that the
goodwill was allocated to the group of cash generating units
(individual pubs) associated with it.
We tested the arithmetical accuracy and integrity of the
impairment model and confirmed that the forecasts were
consistent with the Board approved forecasts and those used
in the going concern assessments.
For those pubs or groups of pubs that assumed more than
a long-term growth rate in the short term, we considered
management’s estimates in the context of the actions
already taken to achieve profit improvement, the expected
impact of other external events and management’s historical
forecasting accuracy.
We used our internal valuations specialists to support our
assessment of the discount rate and long term growth rate
applied to cash flows by independently determining an
acceptable range of values for each assumption.
In respect of the impact of Coronavirus on both short-term
trading and the longer-term growth rate, we compared
management’s assumptions against external economic
forecasts and actual performance from the last year.
We calculated the degree to which the key inputs and
assumptions, including location-specific evidence, would
need to fluctuate before an impairment was triggered and
considered the likelihood of this occurring. We performed
our own sensitivities on the group’s forecasts, which included
various scenarios on short term disruption and long-term
growth rate. We then determined whether adequate
headroom remained using these sensitivities and our
independent assessment.
We assessed the disclosures in notes 17 and 19 of the
financial statements against the requirements of IAS 36
Impairment of Assets, in particular the requirement to disclose
further sensitivities for CGUs where a reasonably possible
change in a key assumption would cause an impairment.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
77
Corporate Governance
Independent auditors’ report continued
Risk
Deferred tax arising on the valuation of the pub estate
Our response to the risk
Refer to the Audit Committee Report
(page 60); Accounting policies (page 91); and
Note 26 of the financial statements (page 119)
At 29 March 2021, the group had deferred
tax assets of £8.6 million (2020: £8.3 million)
and deferred tax liabilities of £73.6 million
(2020: £69.9 million).
There is complexity in the group’s accounting
for deferred tax. Specifically, a significant level
of management judgement and complex
calculations are required in accounting for the
deferred tax arising both on the valuation of
each freehold pub and on the right of use asset
for each leasehold 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;
•
•
•
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 freehold pub
and the right of use asset for each leasehold 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, as well as management’s
calculation of the impact of a historical adjustment in the
calculation, which was adjusted in the current period.
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.
recognising the deferred tax at the correct
corporation tax rate, depending on the
underlying assumptions; and
We considered whether the related deferred tax disclosures,
included in note 26 to the group financial statements, were in
line with IAS 12 requirements.
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 the
underlying calculation to be
accurate. We also consider that
the disclosures in note 26 to
the group financial statements
are appropriate.
• calculating the deferred tax associated with
right of use assets recognised under IFRS
16, which have a similar risk profile to the
freehold pub estate.
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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 test 100% of the
group’s revenue transactions
and the extent to which they
converted to trade receivables
or cash, we consider that
revenue is fairly stated.
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Risk
Our response to the risk
Management override in the recognition of revenue
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 are in place.
We applied correlation data analysis over the group’s
revenue journal population to identify how much of the
revenue was converted to cash and to isolate non-standard
revenue transactions for further analysis. This included
identification and further testing of cash received through the
UK Government’s “Eat Out to Help Out” scheme, as well as
analysing revenue recorded for each accounting period to
compare results against our expectations based on the UK
Government’s trading restrictions.
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.
Refer to the Audit Committee Report
(page 60) and Accounting policies (page 91)
The group recorded revenue of £90.6 million
in the year (2020: £311.6 million), including
£87.0 million in the Managed houses
segment (2020: £299.1 million) and
£3.3 million in the Ram Pub Company segment
(2020: £12.1 million). 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 Coronavirus pandemic has resulted in the
group adopting new processes for revenue
recognition in the year, including to account for
the UK Government’s “Eat Out to Help Out”
scheme during Autumn 2020.
In the prior period, our auditor’s report included a key audit
matter in relation to Accounting under IFRS 16 Leases.
Following the initial adoption of IFRS 16 in the prior period,
the risk in the current period has reduced as lease changes
are lower in frequency and value. In addition, our prior period
auditor’s report included a key audit matter in relation to Spring
Pubs preliminary purchase price allocation. As this was a non-
recurring transaction, there is no such key audit matter for the
current period.
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 £1.2 million
(2020: £1.7 million), which is 3.5% (2020: 5.0%) of the prior
period profit before taxation, adjusted for the movement on the
revaluation of properties (2020: profit before taxation, adjusted
for the movement on the revaluation of properties). We believe
that profit before taxation is considered to be the primary area of
focus of the group’s stakeholders. We exclude the impact of the
movement on the revaluation of properties as we consider it to
be a material, non-recurring adjusting item which does not reflect
the underlying trading performance of the group.
The use of the prior period’s profit before taxation as the
basis for determining materiality is appropriate under auditing
standards where there is an expectation of a return to similar
levels of profitability in the short term. Although there is still
uncertainty over the continued impact of Coronavirus on the
group, both external indicators (market forecasts and analyst
reports) and Young’s internal information indicate that it is
reasonable to assume that Young’s will return to a similar
level of profitability within a year. The use of this normalised
earnings basis is also supported by a history of profitability and
clear evidence linking the recent decline in profitability to the
Coronavirus pandemic and resulting enforced pub closures and
trading restrictions. To reflect the uncertainty, we have applied
a lower percentage of 3.5% to this basis in calculating our
materiality (previous periods: 5.0%).
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
79
Corporate Governance
Independent auditors’ report continued
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 period 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 the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law
are not made; or
• we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement
set out on page 73, 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.
We believe that the primary area of focus of the parent
company’s stakeholders are consistent with those of the group
and despite the prior period’s profit before taxation, adjusted for
the movement on the revaluation of properties, being a higher
figure, we have capped materiality at £1.2 million, in line with
the group.
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%
(2020: 75%) of our planning materiality, namely £0.9 million
(2020: £1.3 million). We maintained performance materiality at
this percentage reflecting the results of our testing of the group’s
systems and processes and historical audit findings.
Reporting threshold
An amount below which identified misstatements are considered
as being clearly trivial.
We agreed with the Audit Committee that we would report to
them all uncorrected audit differences in excess of £60,000
(2020: £85,000), 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 within the annual report.
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.
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 course of 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 themselves. 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.
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• We assessed the susceptibility of the group’s financial
statements to material misstatement, including how fraud
might occur by making inquiries of management, those
charged with governance, internal audit and various
other individuals within the financial reporting function.
We corroborated these inquiries by inspecting board minutes,
internal audit reports and findings, reports to the group’s
internal whistleblowing hotline and by understanding both
the group’s bonus scheme structure and the expectations
of investors and analysts, to understand areas in which
individuals may be incentivised to commit fraud.
• Based on this understanding we designed our audit
procedures to identify non-compliance with such laws and
regulations. Our procedures involved making inquiries as
described above, inspecting minutes of all significant board
and committee meetings, reading correspondence with
regulatory authorities, testing manual journal entries with
higher risk characteristics and testing unusual or non-
standard transactions.
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.
Jon Killingley (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
19 May 2021
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.
Explanation as to what extent the audit was considered
capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including
fraud. The risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and
detection of fraud rests with both those charged with governance
of the company and management.
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the group and determined
that the most significant are:
~ Those that relate to the reporting framework: International
Accounting Standards in conformity with the requirements
of the Companies Act 2006, the UK Companies Act 2006
and AIM Rules;
~ Those that relate to the accrual or recognition of expenses
for taxation, such as UK Corporate Tax legislation; and
~ Those that relate to the accrual for or recognition of
expenses for employee benefit costs including post-
employment benefit costs, as well as the treatment of
its employees.
• We understood how the group is complying with those
frameworks by making inquiries of management, those
charged with governance, internal audit, those responsible for
legal and compliance procedures and the company secretary.
We corroborated our inquiries through inspection of board
minutes and correspondence with regulatory authorities and
through attendance at Audit Committee meetings throughout
and subsequent to the period under audit.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
81
Financial Statements
Financial Statements
83 Group income statement
84 Group statement of comprehensive income
85 Balance sheets
86 Statements of cash flow
87 Group statement of changes in equity
88 Parent company statement of changes in equity
89 Notes to the financial statements
130 Five-year review
“Securing our long-term future and
success also means creating value
for all our stakeholders, ensuring
that they are a key consideration
in our decision-making process.”
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Group income statement
For the 52 weeks ended 29 March 2021
Revenue
Other income
Operating costs before adjusting items
Adjusted operating (loss)/profit
Adjusting items
Operating (loss)/profit
Finance costs
Finance charge for pension obligations
(Loss)/profit before tax
Income tax credit/(expense)
(Loss)/profit for the period attributable to shareholders of the parent company
(Loss)/earnings per 12.5p ordinary share
Basic
Diluted
All of the results above are from continuing operations.
Notes
6
9
7
10
12
27
13
16
16
2021
£m
90.6
4.7
(129.3)
(34.0)
(1.1)
(35.1)
(9.9)
(0.2)
(45.2)
6.9
(38.3)
2020
£m
311.6
–
(265.1)
46.5
(8.6)
37.9
(8.6)
(0.2)
29.1
(9.8)
19.3
Pence
Pence
(68.23)
(68.23)
39.37
39.35
i
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c
i
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S
t
a
t
e
m
e
n
t
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The notes on pages 89 to 130 form part of these financial statements.
The independent auditor’s report is set out on pages 74 to 81.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
83
Financial Statements
Group statement of comprehensive income
For the 52 weeks ended 29 March 2021
(Loss)/profit for the period
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Unrealised gain/(loss) on revaluation of property
Remeasurement of retirement benefit schemes
Tax on above components of other comprehensive income
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
Total comprehensive (loss)/income attributable to shareholders of the parent company
All of the results above are from continuing operations.
Notes
2021
£m
(38.3)
2020
£m
19.3
18
27
25
9.0
0.9
(4.0)
2.5
(0.5)
7.9
(30.4)
(9.3)
(0.7)
(3.1)
0.4
–
(12.7)
6.6
The notes on pages 89 to 130 form part of these financial statements.
The independent auditor’s report is set out on pages 74 to 81.
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Balance sheets
At 29 March 2021
Non-current assets
Goodwill
Property and equipment
Right-of-use assets
Investment in subsidiaries
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Income tax receivable
Cash
Asset held for sale
Total assets
Current liabilities
Borrowings
Lease liabilities
Derivative financial instruments
Trade and other payables
Income tax payable
Non-current liabilities
Borrowings
Lease liabilities
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
Group
2021
£m
17
18
19
20
26
21
22
23
25
29
25
24
25
29
25
26
27
28
30
32.5
773.7
158.0
–
8.6
972.8
2.6
10.4
5.8
4.7
23.5
1.2
997.5
(29.8)
(4.9)
(1.8)
(15.8)
–
(52.3)
(143.4)
(75.3)
(1.4)
(73.6)
(6.1)
–
(299.8)
(352.1)
645.4
7.3
7.6
1.8
(2.4)
253.6
377.5
645.4
2020
£m
32.5
771.1
163.4
–
8.3
975.3
3.3
9.3
0.1
1.1
13.8
0.5
989.6
(50.0)
(5.3)
(2.4)
(33.3)
–
(91.0)
(149.2)
(77.0)
(3.3)
(69.9)
(8.2)
(0.2)
(307.8)
(398.8)
590.8
6.1
7.5
1.8
(4.4)
248.4
331.4
590.8
Company
2021
£m
2020
£m
31.0
769.1
149.2
14.3
8.6
972.2
2.6
11.3
6.0
4.7
24.6
1.2
998.0
(29.8)
(4.1)
(1.8)
(27.5)
–
(63.2)
(143.4)
(69.1)
(1.4)
(73.4)
(6.1)
–
(293.4)
(356.6)
641.4
7.3
7.6
1.8
(2.4)
244.4
382.7
641.4
27.7
751.5
136.9
34.4
8.3
958.8
3.2
9.9
–
1.1
14.2
0.5
973.5
(50.0)
(5.0)
(2.4)
(43.2)
(0.1)
(100.7)
(149.2)
(59.6)
(3.3)
(65.7)
(8.2)
(0.2)
(286.2)
(386.9)
586.6
6.1
7.5
1.8
(4.4)
239.2
336.4
586.6
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The company’s loss after tax for the period was £38.1 million (2020: profit after tax £18.1 million).
Approved by the board of directors and signed on its behalf by:
Patrick Dardis
Chief Executive
19 May 2021
Michael Owen
Chief Financial Officer
The notes on pages 89 to 130 form part of these financial statements.
Young & Co.’s Brewery, P.L.C. Registered in England number 32762.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
85
Financial Statements
Statements of cash flow
For the 52 weeks ended 29 March 2021
Operating activities
Net cash generated from operations
Tax paid
Net cash flow from operating activities
Investing activities
Proceeds from disposal of property and equipment
Purchases of property and equipment
Business combinations, net of cash acquired
Right-of-use assets acquired
Acquisition of subsidiary, net of cash acquired
Net cash used in investing activities
Financing activities
Interest paid
Issued equity, net of transaction costs
Equity dividends paid
Payments of principal portion of lease liabilities
Repayment of borrowings
Proceeds from borrowings
Net cash flow used in financing activities
Increase/(decrease) in cash
Cash at the beginning of the period
Cash at the end of the period
Notes
33
18
14
15
Group
2021
£m
(23.0)
–
(23.0)
0.4
(19.1)
–
–
–
(18.7)
(9.8)
84.9
–
(4.3)
(115.5)
90.0
45.3
3.6
1.1
4.7
2020
£m
72.5
(13.5)
59.0
1.0
(32.7)
(35.3)
(0.2)
–
(67.2)
(8.6)
–
(10.5)
(8.1)
(8.5)
36.5
0.8
(7.4)
8.5
1.1
Company
2021
£m
(23.9)
–
(23.9)
0.4
(19.1)
–
–
–
(18.7)
(9.4)
84.9
–
(3.8)
(115.5)
90.0
46.2
3.6
1.1
4.7
2020
£m
71.1
(13.0)
58.1
0.9
(32.5)
(15.3)
(0.2)
(20.1)
(67.2)
(8.2)
–
(10.5)
(7.3)
(8.5)
36.5
2.0
(7.1)
8.2
1.1
The notes on pages 89 to 130 form part of these financial statements.
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Group statement of changes in equity
At 29 March 2021
At 2 April 2019
Total comprehensive income
Profit for the period
Other comprehensive income
Unrealised loss 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
Tax on share based payments
Movement in shares held by The Ram Brewery Trust II
At 30 March 2020
Total comprehensive income
Loss 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 loss
Transactions with owners recorded directly in equity
Share capital issued2
Share based payments
Tax on share based payments
Movement in shares held by The Ram Brewery Trust II
At 29 March 2021
Notes
Share
capital1
£m
12.8
Capital
redemption
reserve
£m
1.8
Hedging
reserve
£m
(4.8)
Revaluation
reserve
£m
261.5
Retained
earnings
£m
322.5
Total
equity
£m
593.8
18
27
25
13
15
31
26
18
27
25
13
31
26
–
–
–
–
–
–
–
0.8
–
–
–
–
0.8
13.6
–
–
–
–
–
–
–
1.3
–
–
–
1.3
14.9
–
–
–
–
–
–
–
–
–
–
–
–
–
1.8
–
–
–
–
–
–
–
–
–
–
–
–
1.8
–
–
19.3
19.3
–
–
0.4
–
0.4
0.4
–
–
–
–
–
–
(4.4)
(9.3)
–
–
(3.8)
(13.1)
(13.1)
–
–
–
–
–
–
248.4
–
(0.7)
–
0.7
–
19.3
–
(10.5)
0.1
(0.3)
0.3
(10.4)
331.4
(9.3)
(0.7)
0.4
(3.1)
(12.7)
6.6
0.8
(10.5)
0.1
(0.3)
0.3
(9.6)
590.8
–
–
(38.3)
(38.3)
–
–
2.5
(0.5)
2.0
2.0
–
–
–
–
–
(2.4)
9.0
–
–
(3.8)
5.2
5.2
–
–
–
–
–
253.6
–
0.9
–
(0.2)
0.7
(37.6)
83.6
(0.1)
–
0.2
83.7
377.5
9.0
0.9
2.5
(4.5)
7.9
(30.4)
84.9
(0.1)
–
0.2
85.0
645.4
1 Total share capital comprises the nominal value of the share capital issued and fully paid of £7.3 million (2020: £6.1 million) and the share premium account of £7.6 million (2020: £7.5 million).
Share capital issued in the period comprises the nominal value of £1.2 million (2020: £nil) and share premium of £0.1 million (2020: £0.8 million).
2 During the period, the group raised equity resulting in gross proceeds of £88.4 million. A cash box structure was used in such a way that merger relief was available under Companies Act 2006,
section 612, and thus no share premium was recorded. As the redemption of the cash box entity’s preference shares was in the form of cash, the transaction was treated as qualifying consideration
and the premium is therefore considered to be a realised profit and £83.6 million was recognised directly in retained earnings.
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The notes on pages 89 to 130 form part of these financial statements.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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Financial Statements
Parent company statement of changes in equity
At 29 March 2021
At 2 April 2019
Total comprehensive income
Profit for the period
Other comprehensive income
Unrealised loss 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
Tax on share based payments
Movement in shares held by The Ram Brewery Trust II
At 30 March 2020
Total comprehensive income
Loss 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 loss
Transactions with owner recorded directly in equity
Share capital issued2
Share based payments
Tax on share based payments
Movement in shares held by The Ram Brewery Trust II
At 29 March 2021
Notes
Share
capital1
£m
12.8
Capital
redemption
reserve
£m
1.8
Hedging
reserve
£m
(4.8)
Revaluation
reserve
£m
252.6
Retained
earnings
£m
328.7
Total
equity
£m
591.1
18
27
25
13
15
31
26
18
27
25
13
31
26
–
–
–
–
–
–
–
0.8
–
–
–
–
0.8
13.6
–
–
–
–
–
–
–
1.3
–
–
–
1.3
14.9
–
–
–
–
–
–
–
–
–
–
–
–
–
1.8
–
–
–
–
–
–
–
–
–
–
–
–
1.8
–
–
18.1
18.1
–
–
0.4
–
0.4
0.4
–
–
–
–
–
–
(4.4)
(9.6)
–
–
(3.8)
(13.4)
(13.4)
–
–
–
–
–
–
239.2
–
(0.7)
–
0.7
–
18.1
–
(10.5)
0.1
(0.3)
0.3
(10.4)
336.4
(9.6)
(0.7)
0.4
(3.1)
(13.0)
5.1
0.8
(10.5)
0.1
(0.3)
0.3
(9.6)
586.6
–
–
(38.1)
(38.1)
–
–
2.5
(0.5)
2.0
2.0
–
–
–
–
–
(2.4)
9.0
–
–
(3.8)
5.2
5.2
–
–
–
–
–
244.4
–
0.9
–
(0.2)
0.7
(37.4)
83.6
(0.1)
–
0.2
83.7
382.7
9.0
0.9
2.5
(4.5)
7.9
(30.2)
84.9
(0.1)
–
0.2
85.0
641.4
1 Total share capital comprises the nominal value of the share capital issued and fully paid of £7.3 million (2020: £6.1 million) and the share premium account of £7.6 million (2020: £7.5 million).
Share capital issued in the period comprises the nominal value of £1.2 million (2020: £nil) and share premium of £0.1 million (2020: £0.8 million).
2 During the period, the group raised equity resulting in gross proceeds of £88.4 million. A cash box structure was used in such a way that merger relief was available under Companies Act 2006,
section 612, and thus no share premium was recorded. As the redemption of the cash box entity’s preference shares was in the form of cash, the transaction was treated as qualifying consideration
and the premium is therefore considered to be a realised profit and £83.6 million was recognised directly in retained earnings.
The notes on pages 89 to 130 form part of these financial statements.
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Notes to the financial statements
For the 52 weeks ended 29 March 2021
1. General information
The group and parent company financial statements of Young & Co.’s Brewery, P.L.C. for the period ended 29 March 2021
were authorised for issue by the board of directors on 19 May 2021. 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 42.
The current period and prior period relate to the 52 weeks ended 29 March 2021 and the 52 weeks ended 30 March
2020 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 42.
At the start of the financial year the group’s financing position was strengthened through raising further debt and equity.
Additional debt facilities have been obtained through accessing the CCFF, whereby £30.0 million of commercial paper with a maturity
date of 13 May 2021 was secured, alongside a new revolving credit facility of £20.0 million with NatWest for an initial period of
one year to May 2021. This has now been extended for a further six months to 28 November 2021, with a final further six month
extension option available subject to NatWest consent. Longer-term, the £50.0 million term loan due to expire in March 2021 was
replaced with a five-year facility expiring in 2025. In June 2020, the group also completed an equity issue raising gross proceeds of
£88.4 million in the period.
At 29 March 2021, the group had cash in bank of £4.7 million and committed borrowing facilities of £285.0 million, of which
£174.8 million was drawn down. The group expects, by the end of June 2022 (the ‘going concern’ period), to have available
facilities of £235.0 million; it has already repaid the £30.0 million due under the CCFF and is not anticipating continuing with the
£20.0 million RCF with NatWest beyond November 2021. In addition to these facilities, the group has a £10.0 million overdraft with
HSBC, which is not committed.
During the period the group has also considered the effects of its then latest forecasts on its compliance with bank covenants, which
were due to be tested each quarter on a 12-month rolling basis. In anticipation of breaches due to the impact of the pandemic,
the group agreed with its lenders in May 2020 that the financial covenants would be replaced by a monthly available liquidity test.
These initial covenant waivers have now been extended until the quarter ending March 2022. The waivers require the group to have
£25.0 million of available liquidity at each month end until the quarter ending March 2022 and for total loan facilities not to exceed
£220.0 million during the waiver period. In addition, they have waived any technical “cessation of business” breach of our banking
facilities as a result of our pubs being closed due to the coronavirus pandemic through to the quarter end June 2021. Although there
is no material uncertainty about the group’s ability to comply with the minimum debt headroom covenant that is in place until March
2022, those banking covenants revert to the group’s original financial covenants for the March 2022 quarterly covenant test onwards.
In response to covid-19, the group’s entire pub estate has endured extended periods of Government-enforced closure and significant
restrictions on trade. Although the Government has provided the roadmap to ultimately remove trade restrictions there remains
a degree of uncertainty ahead. As part of the directors’ consideration of the appropriateness of adopting the going concern basis,
the group has modelled several scenarios for the period to the end of June 2022. The key judgements applied are the extent of
disruption to trading as a result of the Government’s reopening roadmap, the speed at which trade resumes and any potential future
unplanned restrictions or closures. The base case scenario assumes that pubs with outdoor space reopen on 12 April, followed by
all pubs reopening on 17 May and ultimately restrictions dropping away from 21 June. The more severe scenarios include a slower
build of trade in the summer months, further long periods of forced closure and reduced trade through key trading periods such as
December. We have assumed no significant structural changes to the business will be needed in any of the scenarios modelled.
In the base case scenario, there is significant headroom under the revised monthly available liquidity test through to March 2022 and,
when covenants revert to the group’s original financial covenants from March 2022 onwards, there would be significant headroom
and all covenants would be fully complied with through the going concern period. However, under the more severe scenarios where
our pubs may be required to close again for prolonged periods and trade might be suppressed at key times due to the reintroduction
of social distancing measures, the group would still comply with revised covenants to March 2022, but on reverting to the original
financial covenants for the March 2022 and June 2022 quarter end tests, certain performance-based covenants would risk being
breached. Under the reverse stress test, we looked at the impact of pubs remaining closed (the trigger point) indefinitely, combined
with not receiving the final six-month extension on the £20.0 million RCF, effectively dropping away end of November 2021.
Under this scenario Young’s would fail the monthly minimum liquidity test at the end of December 2021 and on revision to the
original banking covenants in March 2022 certain performance-based covenants would be breached.
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89
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
1. General information continued
There are numerous covid-19 impacted trading scenarios which could be modelled highlighting how Young’s might deviate from the
base case. Ultimately, operating profit would need to drop by almost 80% from the base model for banking covenants to fail in March
2022 when we resume the quarterly testing. To realise this level of lost profit would involve significant periods of closure, delay in the
reopening roadmap and the reintroduction of trading restrictions at key periods.
Given there remains uncertainty over trade, compliance with the original banking covenants for the March 2022 test date does
represent a material uncertainty to Young’s that casts doubt about the group’s ability to continue as a going concern. We are in
regular dialogue with our lenders and, should such a scenario arise, we are confident that we would be able to agree remedies,
including an extension of the covenant changes agreed already, well in advance of March 2022.
The coronavirus pandemic will continue to have an impact on Young’s business during the going concern period to 27 June 2022,
as restrictions are relaxed, and trade rebuilds. Based on current forecasts and sensitivities, together with the potential remedy should
a covenant breach occur as described above, the Young’s board is confident that with the current reopening plans, the ongoing debt
structure in place and the June 2020 equity raise there are sufficient financial resources to meet all liabilities until at least 27 June 2022
even with further trading disruption or closure periods.
Accordingly, the board continues to adopt the going concern basis in preparing the financial statements. The financial statements do
not contain the adjustments that would result if the company was unable to continue as a going concern.
2. Basis of preparation
The group and parent company financial statements have been prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 (IFRS). 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
Covid-19-Related Rent Concessions – Amendment to IFRS 16
Amendments were made to IFRS 16 Leases to provide relief to lessees from applying the IFRS 16 guidance on lease modifications to
rent concessions arising as a direct consequence of the covid pandemic.
As a practical expedient, the group elected not to assess whether covid-related rent concessions from a lessor were a lease
modification; this resulted in 23 property leases becoming within scope of the amendment due to payment holidays or rent deferrals
being granted directly as a result of the covid pandemic.
Adoption of the amendment has been applied retrospectively, however had no material impact on opening retained earnings, the
opening lease liabilities or the opening right-of-use assets due to the timing of the rent concessions. The accounting treatment applied
varied on a lease-to-lease basis dependent upon the specific conditions of each rent concession. In general, rent concessions were
treated as a contingency that fixed previously variable lease payments. In such cases, the lease liabilities were remeasured, using
the remeasured consideration, with a corresponding adjustment to the right-of-use assets. Where rent deferrals were agreed with
only short-term timing differences, no changes were made to the lease liability payment schedule. In these cases, the lease liabilities
and right-of-use assets remained unchanged, however a separate payable was reflected within trade and other payables in the
balance sheet.
Other amendments to accounting standards applied from 31 March 2020 were as follows:
• Definition of Material – amendments to IAS 1 and IAS 8;
• Definition of a Business – amendment to IFRS 3;
• Revised Conceptual Framework for Financial Reporting; and
•
Interest Rate Benchmark Reform – amendments to IFRS 9, IAS 39 and IFRS 7.
The application of these did not have a material impact on the group’s accounting treatment and has therefore not resulted in any
material changes.
The group has applied phase 1 of the interest rate benchmark reform and has identified a number of swaps that are linked to the
LIBOR rate. Under phase 1 the group has elected to take the relief provided for continuation of hedge accounting and continues to
hedge account on interest rate swaps. The group is in the process of assessing the transition to alternative interest rate benchmarks
ahead of phase 2 of the reform being implemented.
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The directors will adopt, subject to UK adoption, 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:
New Standard
Interest Rate Benchmark Reform — Phase 2
IFRS 16 (amended)
Annual Improvements to IFRS Standards
IAS 1 (amended)
IAS 1 (amended)
IAS 8 (amended)
Accounting Standard
Amendments to IFRS 9, IAS 39 and IFRS 7
Covid-19 related rent concessions beyond 30 June 2021
Updates to IFRS 9 and IFRS 16
Classification of Liabilities as Current or Non-Current
Disclosure of Accounting Policies
Definition of Accounting Estimates
Effective date
1 January 2021
1 April 2021
1 January 2022
1 January 2023
1 January 2023
1 January 2023
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.
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(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 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. As a result
of covid-19 various rental concessions have been granted to lessees, and where a rent concession has been granted the remaining
consideration has been spread over the remaining lease term. Rental income does not fall within the scope of IFRS 15.
(d) Adjusting items
Adjusting items are separately disclosed in order to draw them to the attention of the reader of the financial statements. This is due
either to their material and non-recurring nature or that, in management’s judgement, they are required to be disclosed separately
in order to present the underlying 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 adjusting items.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
91
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
3. Summary of significant accounting policies continued
Goodwill arising on acquisition represents the excess of the cost of acquisition over the fair value of the net identifiable assets acquired
and liabilities assumed at the date of acquisition. On disposal of a subsidiary, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
(f) Property and equipment
Freehold 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 adjusting
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.
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 buildings.
Useful lives:
Freehold buildings
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(h)).
The gain arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying
amount of the asset, and is recognised in the income statement. Property, plant and equipment are treated as disposals in the period
of their write-down.
(g) Asset held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather
than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and
fair value less costs to sell.
An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is
recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss
previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised at the
date of derecognition.
Non-current assets are not depreciated or amortised while they are classified as held for sale.
(h) Impairment of assets
The carrying values of investments, property and equipment and right-of-use assets 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 cost of disposal 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.
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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.
(i) Right-of-use assets
The group recognises right-of-use assets at the commencement date of a new lease. Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of a right-of-use
asset includes the amount of lease liabilities recognised, initial direct costs incurred, including lease premiums to take on a lease, and
lease payments made at or before the commencement date less any lease incentives received, unless the group is reasonably certain
to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use asset is depreciated on a straight-line
basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment under the group’s
accounting policy for impairment.
(j) Leases
At inception of a contract, the group considers whether the contract is, or contains, a lease. A contract is, or contains a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
(1) Where the group is the lessee
At the commencement date of a new lease, the group recognises a lease liability measured at the present value of lease payments to
be made over the lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also
include payments of penalties for terminating a lease or payments for exercising an extension option, if the lease term reflects the
group exercising the option to terminate or extend the lease. The variable lease payments that do not depend on an index or a rate
are recognised as an expense in the period on which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the group uses the incremental borrowing rate at the lease commencement date
if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a change in the amounts expected to be payable under a residual value guarantee, a change in
variable lease payments based on an index or a rate, a modification that is not accounted for as a separate lease, a change in the lease
term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
The group has taken the recognition exemption for short-term leases and low-value leases. Expenses from such leases have been
recognised in the income statement on a straight-line basis over the lease term.
The group has applied the practical expedient available in assessing whether covid-related rent concessions were a lease modification.
(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. As a result of
covid-19 various rent concessions have been granted to lessees.
(k) Inventories
Inventories are valued at the lower of cost and net realisable value. Cost includes all costs of purchase, costs of conversion and other
costs incurred in bringing the inventories to their present location and condition. The cost formula used is equivalent to a ‘First in, First
out’ method.
(l) Cash
Cash in the balance sheet comprises cash at banks, 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.
(m) 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.
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93
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
3. Summary of significant accounting policies continued
(n) 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.
(o) 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.
Deferred tax relating to items recognised outside the profit and loss is recognised outside profit and loss. Deferred tax on those items
is recognised consistently with the underlying transaction either in other comprehensive income or directly in equity.
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.
(p) 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.
(q) 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.
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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.
(r) 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.
(s) 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.
(t) Share based payments
The group operates two types of share based payment arrangements: a director/senior management employee deferred bonus
scheme (“DAB”) and a Save-As-You-Earn (“SAYE”) scheme.
Under the DAB, 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 31). The ‘matching’ shares constitute shares with non-
market performance based vesting conditions over three years. The group has used the “grant date model” as its valuation model for
recording the fair value of these equity instruments at the date when they were originally granted. The fair value of equity represents
the market value of the shares at grant date, less the nominal value which the employees will pay.
Under the SAYE scheme, eligible employees are encouraged to save over a set period and then, if they choose, purchase shares at
the price set before the start of that period (see note 31). 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.
(u) Use of estimates
The preparation of financial information in conformity with IFRS requires management to make certain judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Although these
estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those
estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised and in any future period affected.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
95
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
3. Summary of significant accounting policies continued
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.
(v) 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 and it is 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.
(w) Government grants and assistance
Government grants represent monetary resources transferred to the group by the Government, government agencies or similar
bodies. These are recognised at fair value when the group has reasonable assurance that it will comply with any conditions attached to
the grant and that the grant will be received. Government grants are recognised in the income statement, on a systematic basis, over
the same period during which the expenses, for which the grant was intended to compensate, are recognised.
Government assistance represents monetary and non-monetary resources received from government agencies or similar bodies.
Where monetary assistance has been received the benefit has been recorded against the associated expense at the time the assistance
was received. See note 9.
Government grants
Coronavirus Job Retention Scheme (‘CJRS’)
Under this scheme, HMRC reimburses up to 80% of the wages of certain employees who have been furloughed up to a maximum
of £2,500 per employee per month. The scheme is designed to compensate for staff costs, so amounts received are recognised in the
income statement over the same period as the costs to which they relate. In the income statement, operating costs are shown net of
CJRS grant income received.
Eat Out to Help Out
From 3 to 31 August, HMRC offered a 50% discount of food and non-alcoholic drinks, capped to £10 per person, when dining out
between Monday and Wednesday. The group took advantage of this scheme. In the income statement, revenue includes amounts
reimbursed from HMRC in respect of the scheme.
Government grant income
Sites with a rateable value between £15,000 and £51,000 were eligible for a £25,000 grant with no further qualifying conditions.
The business also received support from the various local restriction support grants administered by local councils in response to the
various restrictions placed on trading between November 2020 and March 2021. Income relating to the various grants has been
recognised in other income in the income statement.
Covid Corporate Financing Facility (‘CCFF’)
A 364-day commercial paper issued to the Bank of England at a favourable yield is deemed to constitute a government grant.
The debt has been recognised within current borrowings on the balance sheet at fair value, with the grant element, reflecting the
favourable yield, recognised as deferred income within trade and other payables. On amortisation, the grant element has been
recognised within finance costs, consistent with where the cost is recognised, as the group’s policy is to present the income as a
deduction from the related expense.
Government assistance
Business rates relief
Businesses in the retail, hospitality and leisure sectors in England do not have to pay business rates for the 2020 to 2021 tax year.
No business rate charge has therefore been recognised in the income statement for the period ending 29 March 2021.
Deferred VAT payments
Under this assistance, eligible businesses were able to defer VAT payments due between 20 March and 30 June 2020. The VAT
deferred became due for payment by 31 March 2021.
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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.
As a result of covid-19 the group has experienced a significant decline in trading activity. Accordingly, this has had an impact upon
the key estimates, judgements and assumptions used in the year to which the management have considered when determining
the impact upon the valuation of property and equipment, carrying value of goodwill, pension obligations and cash flow forecasts,
including those used in the going concern model.
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 notes
14 and 18.
(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(h). 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(h)
and 17.
(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 18.
(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(r) and 27.
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), 14, 17 and 18.
(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 tax authority will not accept a tax treatment in a previously filed or future tax return. 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(o), 13 and 26.
(g) Leases
IFRS 16 defines the lease term as the non-cancellable period of a lease together with the options to extend or terminate a lease, if the
lessee were reasonably certain to exercise that option. Where a lease includes the option for the group to terminate the lease term, the
group makes a judgement as to whether it is reasonably certain that the option will be taken. This will take into account the length of
time remaining before the option is exercisable, current trading, future trading forecasts as to the ongoing profitability of the asset and
the level and type of planned future capital investment. The group has reviewed long leaseholds and made a judgement to classify
these as right-of-use assets on the basis that none of the leases convey a right or option to purchase at the lease end date and hence
control of the building would never pass to the group, only the right to use it. See note 29.
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97
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
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 adjusting items for the purpose of deciding on the allocation of resources and assessing performance.
The group has two operating segments: managed houses and the Ram Pub Company. The managed house segment operates pubs.
Revenue is derived from sales of drink, food and accommodation. The Ram Pub Company consists of pubs owned or leased by the
company and leased or subleased to third parties. Revenue is derived from rents payable by, and sales of drink made to, tenants.
Unallocated relates to head office income and costs and unlicensed properties.
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
2021
Sales of goods
Accommodation sales
Total revenue from contracts with customers
Rental income
Total revenue recognised
Adjusted operating loss
Adjusting items
Operating loss
2020
Sales of goods
Accommodation sales
Total revenue from contracts with customers
Rental income
Total revenue recognised
Adjusted operating profit/(loss)
Adjusting items
Operating profit/(loss)
Managed
houses
£m
84.5
2.5
87.0
–
87.0
(18.6)
(0.6)
(19.2)
284.5
14.0
298.5
0.6
299.1
59.9
(7.0)
52.9
Ram Pub
Company
£m
2.2
–
2.2
1.1
3.3
(0.7)
0.1
(0.6)
8.8
–
8.8
3.3
12.1
4.3
(1.4)
2.9
Segments
total
£m
86.7
2.5
89.2
1.1
90.3
(19.3)
(0.5)
(19.8)
293.3
14.0
307.3
3.9
311.2
64.2
(8.4)
55.8
£0.3 million of unallocated income (2020: £0.4 million) is rental income derived from unlicensed properties.
The following is a reconciliation of the operating profit to the profit before tax:
Operating (loss)/profit
Finance costs
Finance charge for pension obligations
(Loss)/profit before tax
Unallocated
£m
–
–
–
0.3
0.3
(14.7)
(0.6)
(15.3)
–
–
–
0.4
0.4
(17.7)
(0.2)
(17.9)
2021
£m
(35.1)
(9.9)
(0.2)
(45.2)
Total
£m
86.7
2.5
89.2
1.4
90.6
(34.0)
(1.1)
(35.1)
293.3
14.0
307.3
4.3
311.6
46.5
(8.6)
37.9
2020
£m
37.9
(8.6)
(0.2)
29.1
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Balance sheet
2021
Segment assets
Deferred tax assets
Cash
Asset held for sale
Total assets
Other segmental information
Depreciation of property, equipment and right-of-use
assets (note 18, note 19)
Additions to non-current assets1
Net movements in property valuation through income
statement (note 10, note 18)
2020
Segment assets
Deferred tax assets
Cash
Asset held for sale
Total assets
Other segmental information
Depreciation of property, equipment and right-of-use
assets (note 18, note 19)
Additions to non-current assets (note 18)1
Net movements in property valuation through income
statement (note 10, note 18)
Managed
houses
£m
898.7
–
–
–
898.7
(30.4)
19.3
0.9
Managed
houses
£m
898.4
–
–
–
898.4
(29.8)
79.7
(3.9)
Ram Pub
Company
£m
61.8
–
–
1.2
63.0
(2.2)
0.7
0.9
Ram Pub
Company
£m
67.9
–
–
0.5
68.4
(2.3)
3.8
(1.3)
Segments
total
£m
960.5
–
–
1.2
961.7
(32.6)
20.0
1.8
Segments
total
£m
966.3
–
–
0.5
966.8
(32.1)
83.5
(5.2)
1 Non-current assets for this purpose consist of property and equipment, right-of-use assets and intangible assets.
6. Revenue
The recognition of revenue under each of the group’s material revenue streams is as follows:
Sales of goods
Accommodation sales
Total revenue from contracts with customers
Rental income
Total revenue recognised
Unallocated
£m
22.5
8.6
4.7
–
35.8
(1.1)
1.3
–
Unallocated
£m
13.4
8.3
1.1
–
22.8
(1.0)
0.2
(0.1)
2021
£m
86.7
2.5
89.2
1.4
90.6
Total
£m
983.0
8.6
4.7
1.2
997.5
(33.7)
21.3
1.8
Total
£m
979.7
8.3
1.1
0.5
989.6
(33.1)
83.7
(5.3)
2020
£m
293.3
14.0
307.3
4.3
311.6
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Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
7. Operating costs before adjusting items
Changes in inventories of finished goods and raw materials
Raw materials, consumables and finished goods used
Employment costs (note 8(a))
Depreciation of properties (note 18)
Depreciation of right-of-use assets (note 19)
Expense relating to short-term, low value or variable rent payments (note 29)
Other operating costs1
2021
£m
0.7
20.3
92.1
26.1
7.6
0.2
(17.7)
129.3
2020
£m
0.4
71.0
102.3
25.6
7.5
0.4
57.9
265.1
Auditor’s remuneration in respect of audit of the group financial statements
0.3
0.2
1 Credits of £43.3 million (2020: £1.4 million) in respect of the Coronavirus Job Retention Scheme have been recognised within other operating costs as permitted by IAS 20.
8. Employment
(a) Costs and employee numbers
Wages and salaries
Social security
Pension and health care schemes
Employment costs
Group
2021
£m
84.2
6.2
1.7
92.1
2020
£m
93.1
7.2
2.0
102.3
Company
2021
£m
82.8
6.2
1.7
90.7
2020
£m
93.0
7.2
2.0
102.2
The group’s and the company’s average monthly number of employees was 4,714 and 4,600 respectively (2020 group and
company: 4,763 and 4,742 respectively). The group’s and the company’s number of employees at the period end was 4,185 (2020
group and company: 5,145 and 4,894 respectively).
The group’s and the company’s average monthly number of operational employees was 4,590 and 4,476 respectively (2020 group
and company: 4,632 and 4,611 respectively). The group’s and the company’s number of operational employees at the period end
was 4,071 (2020 group and company: 5,016 and 4,765 respectively).
The group’s and the company’s average monthly number of administration employees was 123 (2020 group and company:132).
The group’s and the company’s number of administration employees at the period end was 114 (2020 group and company: 129).
100 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
(b) Directors’ emoluments
Stephen Goodyear 4
Patrick Dardis
Michael Owen5
Simon Dodd6
Tracy Dodd
Roger Lambert
Nick Miller
Ian McHoul
Torquil Sligo–Young7
Trish Corzine8
Total
Basic
salary
and fees1
2021
£000
92
435
289
220
213
40
40
40
105
31
1,505
Basic
salary
and fees1
2020
£000
95
457
169
131
224
42
42
42
164
42
1,408
Benefits2
2021
£000
–
2
2
17
2
–
–
–
16
–
39
Benefits2
2020
£000
2
1
1
10
3
–
–
–
22
–
39
Bonus3
2021
£000
–
–
–
–
–
–
–
–
–
–
–
Total
excluding
pension
costs
2021
£000
92
437
291
237
215
40
40
40
121
31
1,544
Total
excluding
pension
costs
2020
£000
97
458
170
141
227
42
42
42
186
42
1,447
Bonus3
2020
£000
–
–
–
–
–
–
–
–
–
–
–
1 Certain car-related benefits can be taken as benefits in kind, in cash or as a combination of the two. Where any cash is taken, that sum is included with the amounts shown in the ‘Basic salary
and fees’ columns.
2 These relate to cars and/or private medical insurance.
3 For 2021, no bonus scheme was offered, and the remuneration committee determined that no discretionary bonuses should be paid. For 2020, the remuneration committee determined that
no performance-related bonuses were payable to the executive directors pursuant to the bonus award letters issued in respect of FY2019/20.
4 The amount shown in the ‘Benefits 2020’ column was a cash contribution paid towards private medical insurance. For 2021, it is included in the amount shown in the ‘Basic salary and fees
2021’ column.
5 Mike Owen was appointed to the board on 9 September 2019.
6 Simon Dodd was appointed to the board on 2 September 2019.
7 Torquil Sligo-Young stepped down as an executive director on 30 September 2020 and became a non-executive director. Included within the amount shown in the ‘Benefits 2021’ column
is a cash contribution paid towards private medical insurance. Note 8(e) on page 102 sets out the gains made on the exercise of share options.
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8 Trish Corzine stepped down from the board on 11 January 2021.
(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 27.
No director was accruing any defined benefit under the scheme as at 29 March 2021. Further, no director accrued any defined
benefit under the scheme during the period. Stephen Goodyear, Patrick Dardis and Torquil Sligo-Young are pensioner members
of the scheme.
Defined contribution pension scheme
The company operates a defined contribution pension scheme. As at 29 March 2021, Mike Owen, Simon Dodd and Tracy Dodd
were members of the scheme and accruing retirement benefits under it. For the period, the company paid the following contributions
into the scheme for them in respect of their qualifying services, being an amount equal to not more than 6% of their pensionable
earnings, up to a pensionable earnings cap of £170,400: for Mike Owen – £8,817 (2020: £5,817), for Simon Dodd – £9,972
(2020: £5,817) and for Tracy Dodd – £9,972 (2020: £9,972). The company contribution rates for these three individuals are aligned
with the contribution rates for staff at Riverside House (and certain others) who are members of the scheme.
Post-retirement health care
The company bears the cost of post-retirement health care premia for certain employees and ex-employees (see note 27).
(d) Profit sharing scheme
This scheme, which involved an annual profit share allocation, was closed some time 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. Several years ago, 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. No A shares were released to scheme members during
the period (2020: 3,060). As at 29 March 2021, an accrued entitlement effectively remained in respect of 712 A shares (2020: 712
A shares).
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
101
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
8. Employment continued
(e) Savings-related share option scheme
The company operates a savings-related share option scheme. Ordinarily, 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, generally 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. Due to the impact of coronavirus and the disproportionate impact of furlough on a
significant proportion of the group’s employees, no invitations to join the scheme were sent out in 2020; the intention is to start
sending them out again in 2021.
Of the directors who served throughout or during the period, only the following have an entitlement to A shares under the scheme:
Torquil Sligo-Young2
Tracy Dodd
At 30
March
2020
659
1,013
Granted
–
–
Exercised
–
–
Lapsed
–
1,013
At 29
March
2021
659
–
Ordinarily
exercisable
Ordinarily
exercisable
from
Exercise price
(pence per
share)1
to
1,364 01.09.21 28.02.22
1,066 01.09.20 28.02.21
Gains made
on exercise of
share options
(£)2
–
–
1 The exercise prices of 1,364p per share and 1,066p 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 1,705p per share and 1,332p per share respectively.
2 The gain made on the exercise of a share option is calculated by taking the difference between the exercise price and the opening market price of an A share on the day the option is exercised, and
then multiplying that by the number of A shares in respect of which the option is exercised. Torquil Sligo-Young exercised a share option (over 933 A shares) in the prior period – that option had an
exercise price of 964p per share and its exercise resulted in a gain of £6,400.
9. Government grants and assistance
During the period, the group was eligible for a number of government grant schemes which were introduced to mitigate the impact
of covid-19. The impact of each scheme on the income statement for the period ended 29 March 2021 was as follows:
Government grant scheme
Eat Out to Help Out
Government grant income
Coronavirus Job Retention Scheme ('CJRS')
Covid Corporate Financing Facility ('CCFF')
Total government grants received
Income statement line impacted
Revenue
Other income
Operating costs before adjusting items
Finance costs
2021
£m
2.4
4.7
43.3
0.1
50.5
2020
£m
–
–
1.4
–
1.4
At 29 March 2021, £29.8 million has been recognised within current borrowings in the balance sheet representing the fair value of
the CCFF, with a further £0.2 million recognised within trade and other payables as deferred income, representing the favourable
conditions granted by the Government.
In respect of the CJRS, £4.6 million remained outstanding at 29 March 2021, and a further £1.3 million remains outstanding
at 29 March 2021 in respect of government grant income. Both these amounts have been recognised within trade and
other receivables.
The group additionally took advantage of the business rate holiday, saving £15.6 million in the period, reduced 5% VAT on eligible
sales and the deferral of VAT payments. See note 3(w) for further information.
102 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
10. Adjusting items
Amounts included in operating profit:
Upward movement on the revaluation of properties (note 18)1
Downward movement on the revaluation of properties (note 18)1
Group reorganisation2
Covid restructuring3
Tenant compensation4
Net loss on disposal of properties5
Acquisition costs6
Tax on adjusting items:
Tax attributable to adjusting items
Total adjusting items after tax
2021
£m
3.4
(1.6)
(1.4)
(0.5)
(0.5)
(0.5)
–
(1.1)
0.2
(0.9)
2020
£m
1.7
(7.0)
–
–
(1.7)
(0.6)
(1.0)
(8.6)
(1.6)
(10.2)
1 The movement on the revaluation of properties is a non-cash item that relates to the revaluation exercise that was completed at the period end date. The revaluation was conducted at an individual
pub level and identified an upward movement of £3.4 million (2020: £1.7 million) representing reversals of previous impairments recognised in the income statement, and a downward movement
of £1.6 million (2020: £7.0 million), representing downward movements in excess of amounts recognised in equity. These resulted in a net upward movement of £1.8 million (2020: £5.3 million
net downward) which has been recognised in the income statement. The upward movement for the period ended 29 March 2021 was split between land and buildings of £1.8 million
(2020: £5.3 million downward) and fixtures and fittings of £nil (2020: £nil). See note 5 for segmental information and note 18 for information on the revaluation of properties.
2 The group reorganisation costs of £1.4 million related to the stamp duty land tax and associated legal and professional fees incurred on the transfer of the business and assets of Spring Pub
Company Limited, a group of five sites acquired on 12 March 2020 to Young’s. The cost was foreseen at the time of the acquisition in March 2020, but did not crystallise until the transfer happened
in September 2020.
3 Covid restructuring costs of £0.5 million related to a reorganisation of the group’s head office functions. These were largely made up of severance costs.
4 Tenant compensation of £0.5 million was paid to previous tenants of the Royal Oak (Bethnal Green) and an unlicensed property (Wandsworth) to terminate their lease agreements early. During the
prior period, tenant compensation of £1.7 million was paid to the previous tenants of the White Bear (Tunbridge Wells), New Inn (Ealing), Constitution (Camden) and an unlicensed property
(Wandsworth) to terminate their lease agreements early.
5 The loss on disposal of properties related to the difference between cash, less disposal costs, received from the sale of the Horse Pond Inn (Castle Cary), the lease expiry of the Black Cat (Catford),
the Surprise (Chelsea) and the Greyhound (Hendon) and the carrying value of their assets, including goodwill, at the dates of disposal. In the prior period, the carrying value of the Horse Pond Inn
was previously derecognised from property and equipment and instead classified as an asset held for sale. Proceeds of £0.4 million were recognised in respect of the sale of the Horse Pond Inn in
the current period. During the prior period, the loss on disposal of properties related to the difference between cash, less disposal costs, received from the lease expiry of the Builder’s Arms (Chelsea),
termination of the lease of the Alphabet (Islington) and the sale of the Bristol Ram (Bristol) and the carrying value of their assets, including goodwill, at the dates of disposal.
6 The prior period acquisition costs related to the purchase of Spring Pub Company Limited, a group of five sites acquired on 12 March 2020, along with the White Bear (Tunbridge Wells) and the
Constitution (Camden). They included legal and professional fees and stamp duty land tax (note 14).
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11. Other financial measures
The table below shows how adjusted group EBITDA, operating profit and profit before tax have been arrived at. They exclude
adjusting 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 adjusting items can be seen
in note 10. All the results below are from continuing operations.
EBITDA
Depreciation and net movement on the
revaluation of properties
Operating (loss)/profit
Net finance costs
Finance charge for pension obligations
(Loss)/profit before tax
Unadjusted
£m
(3.2)
(31.9)
(35.1)
(9.9)
(0.2)
(45.2)
2021
Adjusting
items
£m
2.9
(1.8)
1.1
–
–
1.1
Adjusted
£m
(0.3)
Unadjusted
£m
76.3
(33.7)
(34.0)
(9.9)
(0.2)
(44.1)
(38.4)
37.9
(8.6)
(0.2)
29.1
2020
Adjusting
items
£m
3.3
5.3
8.6
–
–
8.6
Adjusted
£m
79.6
(33.1)
46.5
(8.6)
(0.2)
37.7
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
103
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
12. Finance costs
Bank loans and overdrafts
Interest on lease liabilities (note 29)
2021
£m
7.3
2.6
9.9
13. Taxation
The major components of income tax (credit)/expense for the years ended 29 March 2021 and 30 March 2020 are:
Tax (credited)/charged in the group income statement
Current income tax
Current tax (credit)/expense
Deferred tax
Relating to origin and reversal of temporary differences
Adjustment in respect of deferred tax of prior periods
Change in corporation tax rate
Income tax (credited)/charged in the income statement
Deferred tax in the group income statement
Property revaluation and disposals
Capital allowances
Retirement benefit schemes
Share based payments
Trade losses
Deferred tax (credited)/charged in the income statement
Deferred tax in the group statement of other comprehensive income
Property revaluation and disposals
Retirement benefit schemes
Interest rate swaps
Change in corporation tax rate
Deferred tax charged to other comprehensive income
2021
£m
(5.8)
(5.8)
(1.6)
0.5
–
(1.1)
(6.9)
(0.1)
(0.2)
0.2
–
(1.0)
(1.1)
3.8
0.2
0.5
–
4.5
2020
£m
6.1
2.5
8.6
2020
£m
8.6
8.6
(0.4)
–
1.6
1.2
9.8
1.4
(1.2)
0.6
0.3
0.1
1.2
(1.5)
(0.1)
0.1
4.6
3.1
A reconciliation of the tax expense at the group’s effective tax rate to the accounting profit before tax at the statutory tax rate for the
periods ended 29 March 2021 and 30 March 2020 respectively is as follows:
Accounting (loss)/profit before income tax
At the group's statutory income tax rate of 19% (2020: 19%)
Tax effects of:
Expenses not deductible for tax purposes1
Recognition of property revaluation, rollover claim and other property movements
Non-taxable income
Remeasurement of deferred tax – change in corporation tax rate
Prior period adjustment – deferred tax
Total tax (credit)/expense
2021
£m
(45.2)
(8.6)
1.4
(0.1)
(0.1)
–
0.5
(6.9)
2020
£m
29.1
5.6
3.2
(0.3)
(0.3)
1.6
–
9.8
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.
The deferred tax assets and liabilities at the balance sheet date are calculated at the substantively enacted rate of 19%.
104 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
14. Business combinations
Acquisitions in 2021
In the current period, the group and the company have made no business acquisitions and no further amendments to the fair value of
business combinations.
Acquisitions in 2020
Spring Pub Company Limited
In the prior period, the group and the company acquired the entire issued share capital of Spring Pub Company Limited, a non-listed
company incorporated in England and specialising in the operation of pubs. Total cash consideration was £29.9 million, of which
£20.1 million was in respect of share capital and £9.8 million was for the freehold of site leased by Spring Pub Company Limited.
Spring Pub Company Limited consisted of five premium managed houses in prime locations throughout Surrey and South West
London which complement the group’s current pub estate.
The fair values of the identifiable assets and liabilities of Spring Pub Company Limited as at the date of acquisition were:
Identifiable assets and liabilities
Property and equipment (note 18)
Right-of-use assets (note 19)
Inventories
Trade and other receivables
Trade and other payables
Lease liabilities (note 29)
Deferred tax on fair value adjustment
Net assets
Goodwill
Cash consideration on acquisition of Spring Pub Company business
Provisional
fair value
£m
24.3
15.0
0.1
0.5
(1.0)
(8.3)
(4.0)
26.6
3.3
29.9
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The fair value of property and equipment on acquisition was valued externally by Fleurets, independent Chartered Surveyors, taking
into account the properties’ highest and best value. The valuation was based on information such as current and historic levels
of turnover, gross profit, wages and overheads and resultant EBITDA. The valuers had then applied an appropriate multiplier to
the EBITDA.
The group measured the acquired lease liabilities using the present value of the remaining lease payments at the date of acquisition.
The right-of-use assets were measured at an amount equal to the lease liabilities and adjusted to reflect the favourable terms of the
lease relative to market terms.
During the prior period, £3.3 million of goodwill was recognised in respect of the acquisition of Spring Pub Company Limited.
This was largely generated from deferred tax liabilities which arose on the fair value adjustment of property, equipment and right-of-
use assets. None of the goodwill recognised was expected to be deductible for income tax purposes. The group incurred £0.5 million
of costs associated with the acquisition, which had been recorded as adjusting items (note 10).
In the prior period, between the date of acquisition and the balance sheet date, Spring Pub Company Limited contributed £0.2 million
of revenue and £0.1 million of operating loss. If the acquisition had taken place at the beginning of the year, revenue would have
increased by £12.2 million and operating profit would have increased by £3.4 million.
Other business combinations
In the prior period, the group and the company acquired the White Bear (Tunbridge Wells) and the Constitution (Camden) as
business combinations for considerations totalling £5.4 million. The aggregated fair value of the identifiable assets and liabilities of the
acquired businesses was property and equipment of £5.4 million and inventories of £nil. The group incurred £0.5 million of costs
associated with the acquisitions, which have had recorded within operating adjusting items.
In the prior period, between the date of acquisition and the balance sheet date, the White Bear and the Constitution had contributed
£1.2 million of revenue and £nil to the operating profit of the group. If the acquisition had been completed at the beginning of the
previous year, group revenue for the period would have been expected to increase by £2.0 million and the group operating profit
would have increased by £0.3 million.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
105
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
14. Business combinations continued
Cash flow from business combinations
Spring Pub Company Limited
Other business combinations
Total net cash outflow
15. Dividends on equity shares
Final dividend (previous period)
Interim dividend (current period)
2021
£m
–
–
–
2021
£m
–
–
–
2020
£m
(29.9)
(5.4)
(35.3)
2020
£m
5.3
5.2
10.5
2021
pence per share
–
–
–
2020
pence per share
10.81
10.57
21.38
The table above sets out dividends that have been paid. The board has decided that it is not appropriate to recommend payment of a
final dividend in respect of the period ended 29 March 2021.
16. (Loss)/earnings per ordinary share
(a) (Loss)/earnings
(Loss)/profit attributable to equity shareholders of the parent
Adjusting items
Tax attributable to above adjustments
Adjusted (loss)/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 (loss)/earnings per share
Basic
Effect of adjusting items
Adjusted basic (loss)/earnings per share
(c) Diluted (loss)/earnings per share
Diluted
Effect of adjusting items
Adjusted diluted (loss)/earnings per share
2021
£m
(38.3)
1.1
(0.2)
(37.4)
2020
£m
19.3
8.6
1.6
29.5
Number
56,132,368
–
56,132,368
Number
49,018,801
28,901
49,047,702
Pence
(68.23)
1.60
(66.63)
Pence
(68.23)
1.60
(66.63)
Pence
39.37
20.81
60.18
Pence
39.35
20.80
60.15
The basic (loss)/earnings per share figure is calculated by dividing the net (loss)/profit for the period attributable to equity shareholders
of the parent by the weighted average number of ordinary shares in issue during the period.
Diluted (loss)/earnings per share are calculated on a similar basis taking into account dilutive potential shares under our SAYE scheme.
There were 61 potential dilutive shares, which were not included in the calculation of diluted earnings per share, as they were
antidilutive in the period due to the group being loss making. During the prior period, there were 28,901 dilutive shares (see notes
8(e) and 31).
Adjusted (loss)/earnings per share are presented to eliminate the effect of the adjusting items and the tax attributable to those items on
basic and diluted (loss)/earnings per share.
106 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
17. Goodwill
Goodwill is recognised in respect of the following acquisitions for group and company:
Geronimo Inns Limited
Redcomb Pubs Limited
Spring Pub Company Limited
Smiths of Smithfield Limited
580 Limited
At 29 March 2021
Cost
At 2 April 2019
Acquisitions
At 30 March 2020
Acquisitions
At 29 March 2021
Amortisation
At 2 April 2019
Disposals
At 30 March 2020
Disposals
At 29 March 2021
Carrying amount
At 2 April 2019
At 30 March 2020
At 29 March 2021
Group
2021
£m
18.4
8.8
3.3
1.1
0.9
32.5
2020
£m
18.4
8.8
3.3
1.1
0.9
32.5
Company
2021
£m
17.0
8.7
3.3
1.1
0.9
31.0
Group
£m
31.4
3.3
34.7
–
34.7
1.8
0.4
2.2
–
2.2
29.6
32.5
32.5
2020
£m
17.0
8.7
–
1.1
0.9
27.7
Company
£m
18.3
9.8
28.1
3.3
31.4
0.2
0.2
0.4
–
0.4
18.1
27.7
31.0
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The opening group goodwill of £32.5 million arose on the acquisition of Geronimo Group Limited, Redcomb Pubs Limited, Spring
Pub Company Limited, Smiths of Smithfield Limited and 580 Limited.
During the current period, the trade and assets of Spring Pub Company Limited were transferred in full into Young’s at consolidated
book value. As a result, associated goodwill has been transferred into Young’s creating goodwill of £3.3 million within the company.
During the prior period, £3.3 million of goodwill was recognised in respect of the acquisition of Spring Pub Company Limited.
This was largely generated from deferred tax liabilities which arose on the fair value adjustment of property, equipment and right-of-
use assets. None of the goodwill recognised was expected to be deductible for income tax purposes.
During the prior period, the lease of the Builders Arms (Chelsea) expired and no longer formed part of Geronimo group and the
managed houses segment. The relative value of goodwill associated with the Builders Arms, £0.4 million, had been expensed and
classified within adjusting items.
In the prior period, the trade and assets of the Redcomb group, with the exception of a pre-defined list of excluded assets, were transferred
into Young’s at consolidated book value. As a result, associated goodwill had been transferred into Young’s creating goodwill of £8.7 million
within the company. The properties within Smiths of Smithfield also transferred into Young’s. As the goodwill relating to Smiths of Smithfield
arose from deferred tax only, both the goodwill and deferred tax liability transferred into the company accordingly in the prior period.
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 based upon, in management’s view, the most likely impact of coronavirus in the short term, followed by a return to
full trade in the year commencing 30 March 2021. No impairment has been recognised in the current period. For all cash generating
units, cash flows assume 1.4% growth (2020: 2.0%), with the exception of Smiths of Smithfield Limited where growth rates increase
over a five-year period to reflect the anticipated arrival of Crossrail in 2022 and the opening of the Museum of London in 2024.
The pre-tax discount rate applied to all cash flow projections is 8.8% (2020: 7.7%).
The impairment calculation is most sensitive to the pre-tax discount rate and EBITDA assumptions. Management have performed a
sensitivity analysis on the impairment test. Given the uncertainty surrounding future trade levels due to the impact of the coronavirus
pandemic, several scenarios have been modelled. Management have considered the impact of an increase in either the pre-tax
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
107
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
17. Goodwill continued
discount rate to 10.3% or a reduction of EBITDA by 15% and none of the models are sensitive to an impairment with these variables
with the exception of Smiths of Smithfield Limited, which a small impairment would be recognised with a change in these variables.
The model includes a number of assumptions, including those around covid-19, and assumes that Smiths of Smithfield will return to
pre-pandemic trading as the pandemic subsides in the financial year commencing 30 March 2021.
18. Property and equipment
Cost or valuation
At 2 April 2019
Additions
Business combinations
Transfers from subsidiary companies
Disposals
Transfer out to asset held for sale
Fully depreciated assets
Revaluation1
– upward movement in valuation
– downward movement in valuation
At 30 March 2020
Additions
Transfers from subsidiary companies
Disposals
Transfer out to asset held for sale
Fully depreciated assets
Revaluation1
– upward movement in valuation
– downward movement in valuation
At 29 March 2021
Depreciation and impairment
At 2 April 2019
Depreciation charge
Disposals
Transfer out to asset held for sale
Fully depreciated assets
Revaluation1
– upward movement in valuation
– downward movement in valuation
At 30 March 2020
Depreciation charge
Disposals
Transfer out to asset held for sale
Fully depreciated assets
Revaluation1
– upward movement in valuation
– downward movement in valuation
At 29 March 2021
At 2 April 2019
At 30 March 2020
At 29 March 2021
Group
Company
Land &
buildings
£m
693.3
6.6
27.1
–
(1.7)
(0.8)
(0.2)
19.1
(29.3)
714.1
3.9
–
–
(0.9)
(7.7)
14.5
(6.0)
717.9
27.8
1.6
(1.0)
(0.6)
(0.2)
7.0
(2.6)
32.0
1.7
–
–
(7.7)
(3.9)
1.6
23.7
665.5
682.1
694.2
Fixtures,
fittings &
equipment
£m
148.0
26.1
2.6
–
(0.8)
(0.4)
(14.8)
–
–
160.7
15.2
–
(0.2)
(0.4)
(19.1)
–
–
156.2
62.9
24.0
(0.3)
(0.1)
(14.8)
–
–
71.7
24.4
(0.2)
(0.1)
(19.1)
–
–
76.7
85.1
89.0
79.5
Total
£m
841.3
32.7
29.7
–
(2.5)
(1.2)
(15.0)
19.1
(29.3)
874.8
19.1
–
(0.2)
(1.3)
(26.8)
14.5
(6.0)
874.1
90.7
25.6
(1.3)
(0.7)
(15.0)
7.0
(2.6)
103.7
26.1
(0.2)
(0.1)
(26.8)
(3.9)
1.6
100.4
750.6
771.1
773.7
Land &
buildings
£m
668.8
6.5
14.4
20.8
(1.0)
(0.8)
(0.2)
19.1
(28.8)
698.8
3.9
14.7
–
(0.9)
(7.4)
14.5
(6.0)
717.6
26.6
1.4
(0.3)
(0.6)
(0.2)
7.0
(2.6)
31.3
1.6
–
–
(7.4)
(3.9)
1.6
23.2
642.2
667.5
694.4
Fixtures,
fittings &
equipment
£m
141.3
26.0
0.9
2.1
(0.6)
(0.4)
(14.8)
–
–
154.5
15.2
0.1
(0.2)
(0.4)
(19.1)
–
–
150.1
62.2
23.5
(0.3)
(0.1)
(14.8)
–
–
70.5
24.3
(0.2)
(0.1)
(19.1)
–
–
75.4
79.1
84.0
74.7
Total
£m
810.1
32.5
15.3
22.9
(1.6)
(1.2)
(15.0)
19.1
(28.8)
853.3
19.1
14.8
(0.2)
(1.3)
(26.5)
14.5
(6.0)
867.7
88.8
24.9
(0.6)
(0.7)
(15.0)
7.0
(2.6)
101.8
25.9
(0.2)
(0.1)
(26.5)
(3.9)
1.6
98.6
721.3
751.5
769.1
1 The group’s net book value uplift during the period was £10.8 million (2020: an impairment £14.6 million). This uplift was recognised either in the revaluation reserve or the income statement,
as appropriate.
108 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
The impact of the revaluations was as follows:
Income statement
Revaluation loss charged as impairment
Reversal of past impairment
Net uplift/(impairment) recognised in the income statement
Revaluation reserve
Unrealised revaluation surplus
Reversal of past surplus
Net uplift/(impairment) recognised in the revaluation reserve
Net revaluation increase/(decrease) in property
Group
2021
£m
(1.6)
3.4
1.8
15.0
(6.0)
9.0
10.8
2020
£m
(7.0)
1.7
(5.3)
20.0
(29.3)
(9.3)
Company
2021
£m
(1.6)
3.4
1.8
15.0
(6.0)
9.0
2020
£m
(7.0)
1.7
(5.3)
20.0
(29.6)
(9.6)
(14.6)
10.8
(14.9)
(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 on a desktop basis by
Savills and by Brendan Brammer BSc (Hons) MRICS, the group’s interim director of property and tenancies and a Chartered Surveyor,
based upon the information provided by the group.
The valuation is based on information such as current and historical 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. For a small number of properties, a net investment yield valuation approach is considered most
appropriate based upon the nature of site operations.
The valuation contains a material uncertainty given the lack of comparable transactional activity since the onset of coronavirus and the
uncertainty over future trade at the valuation date.
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The external valuations made are consistent and in support with the values derived by Brendan Brammer. 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 (2020: Level 3) in the fair
value hierarchy.
The key inputs to valuation on property and equipment are as follows:
Tenure
Freehold
Freehold
Freehold
Freehold
2021
Managed houses
Ram Pub Company
Managed houses
Ram Pub Company
Segment total
Leasehold properties
Unallocated
Total net book value at 29 March 2021
EBITDA multiple range
Low
7.0
7.0
Spot
Spot
High
12.0
12.0
Spot
Spot
Number
of pubs
92
31
58
23
204
68
–
272
Value
of pubs
£m
434.9
29.8
236.5
24.9
726.1
39.1
8.5
773.7
In addition, the group’s estate includes a pub which has been reclassified as asset held for sale (note 23). The total number of pubs
owned by the group is 273 (2020: 276, including one pub reclassified as asset held for sale at period end).
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
109
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
18. Property and equipment continued
Tenure
Freehold
Freehold
Freehold
Freehold
Freehold
2020
Managed houses
Ram Pub Company
Managed houses
Ram Pub Company
Ram Pub Company
Segment total
Leasehold properties
Unallocated
Total net book value at 30 March 2020
EBITDA multiple range
Low
7.0
7.0
Spot
Spot
Yield
High
12.0
12.0
Spot
Spot
Yield
Number
of pubs
115
42
30
17
1
205
70
–
275
Value
of pubs
£m
551.9
39.3
109.1
17.0
4.9
722.2
41.2
7.7
771.1
If, at 2021, the property estate had been carried at historical cost less accumulated depreciation and impairment losses, its carrying
amount would have been approximately £459.6 million (2020: £467.8 million).
The revaluation surplus represents the amount by which the fair value of the estate exceeds its historic cost.
A sensitivity analysis has been conducted on the property estate to give an indication of the impact of movements in the most sensitive
assumption, EBITDA. The analysis considers this single change with the other assumptions unchanged. In practice, changes in one
assumption may be accompanied by changes in another. Changes in market values may also occur at the same time as any changes
in assumptions. This information should not be taken as a projection of likely future valuation movements. Decreasing the EBITDA
used in the revaluation by 10% would decrease the valuation by £46.2 million (2020: £59.1 million). Increasing the EBITDA used in
the revaluation by 10% would increase the valuation by £46.2 million (2020: £59.1 million).
(b) Disaggregation of property and equipment
The table below sets out the disaggregation of property and equipment between pubs used by the group and pubs leased to tenants.
Land and buildings
As at 2 April 2019
Additions, disposals and transfers
Depreciation charge
Revaluation
As at 30 March 2020
Additions, disposals and transfers
Depreciation charge
Revaluation
As at 29 March 2021
Fixtures, fittings and equipment
As at 2 April 2019
Additions, disposals and transfers
Depreciation charge
As at 30 March 2020
Additions, disposals and transfers
Depreciation charge
As at 29 March 2021
(c) Capital commitments
Used by group
£m
617.1
33.2
(1.5)
(14.2)
634.6
3.8
(1.6)
8.5
645.3
Leased to tenants
£m
48.4
(0.4)
(0.1)
(0.4)
47.5
(0.8)
(0.1)
2.3
48.9
Used by group
£m
78.3
25.2
(22.1)
81.4
14.6
(22.5)
73.5
Leased to tenants
£m
6.8
2.7
(1.9)
7.6
0.3
(1.9)
6.0
Capital commitments not provided for in these financial statements and for which contracts have been
placed amounted to:
2021
£m
10.6
110 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
Total
£m
665.5
32.8
(1.6)
(14.6)
682.1
3.0
(1.7)
10.8
694.2
Total
£m
85.1
27.9
(24.0)
89.0
14.9
(24.4)
79.5
2020
£m
0.8
19. Right-of-use assets
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
Company
Group
As at 2 April 2019
Additions
Business combinations
Lease amendments
Depreciation
As at 30 March 2020
Additions
Lease amendments
Depreciation
As at 29 March 2021
Property
£m
147.8
2.8
15.0
4.7
(7.3)
163.0
2.1
0.1
(7.4)
157.8
Motor vehicles
£m
0.3
0.2
–
–
(0.2)
0.3
0.1
–
(0.2)
0.2
Other assets
£m
0.1
–
–
–
–
0.1
–
(0.1)
–
–
Total
£m
148.2
3.0
15.0
4.7
(7.5)
163.4
2.2
–
(7.6)
158.0
Property
£m
125.4
12.5
–
4.7
(6.1)
136.5
18.3
0.3
(6.2)
148.9
Motor vehicles
£m
0.3
0.2
–
–
(0.2)
0.3
0.1
–
(0.1)
0.3
Other assets
£m
0.1
–
–
–
–
0.1
–
(0.1)
–
–
Total
£m
125.8
12.7
–
4.7
(6.3)
136.9
18.4
0.2
(6.3)
149.2
The depreciation charge has been recognised within operating costs in the income statement.
The group lease amendments include £0.7 million of rent holidays treated as lease modifications which have been offset against
£0.7 million of rent amendments in the period.
The group tests right-of-use assets for impairment when there are indicators that the assets may have been impaired. The loss of trade
following coronavirus was considered an indicator of impairment. There will be an impairment if the recoverable amount is lower
than carrying value. Recoverable amount is value in use. The inputs to the impairment model are consistent with those applied to the
goodwill impairment test (note 17). No impairment has been recognised in the current period.
The impairment calculation is most sensitive to the pre-tax discount rate and EBITDA assumptions. Management have performed a
sensitivity analysis on the impairment test. Given the uncertainty surrounding future trade levels, due to the impact of the coronavirus
pandemic, several scenarios have been modelled. A 50% decline in year 1 and year 2 EBITDA, with trade returning to normal levels
in year 3 and all other assumptions remaining the same, would result in an impairment of £1.0 million on the right-of-use assets.
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20. Investments in subsidiaries
Cost and net book value
At 1 April 2019
Additions
Impairment
At 30 March 2020
Additions
Impairment
At 29 March 2021
The group financial statements include:
Group subsidiary undertakings
580 Limited
BFI Limited1
Geronimo Inns Limited
Old Manor Trading Limited1
Redcomb Pubs & Bars Limited1
Redcomb Pubs Limited
Spring Pub Company Limited2
The Canbury Arms Limited2
1 The shares in this subsidiary undertaking are held indirectly.
2 Expected to be struck off and dissolved at its own request.
Company
£m
35.8
20.1
(21.5)
34.4
–
(20.1)
14.3
Country of
incorporation
and registration
England
England
England
England
England
England
England
England
% of equity
and votes held
100
100
100
100
100
100
100
100
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
111
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
20. Investments in subsidiaries continued
Smiths of Smithfield Limited was struck off and dissolved at its own request on 5 January 2021; before that, it was a wholly owned
subsidiary of the company.
During the current period, impairment losses of £20.1 million were recognised on the investments in Spring Pub Company Limited,
the parent company of The Canbury Arms Limited. This was a result of all the assets being transferred to the company.
During the prior period, Geronimo Airports Limited was dissolved, having gone into members’ voluntary liquidation in December
2017; before that, it was a wholly owned subsidiary of the company.
During the prior period, the company acquired the entire issued share capital of Spring Pub Company Limited, the parent company of
The Canbury Arms Limited. This created an additional investment of £20.1 million.
During the prior period, impairment losses of £6.7 million and £14.8 million were recognised on the investments in Smiths of
Smithfield Limited and the Redcomb group of companies respectively; these were as a result of the majority of the assets within those
companies being transferred to the company.
Each of the company’s subsidiary undertakings has its registered office located at Riverside House, 26 Osiers Road, Wandsworth,
London SW18 1NH.
21. Inventories
Finished goods and raw materials
Group
2021
£m
2.6
2020
£m
3.3
Company
2021
£m
2.6
Inventory is stated net of a provision for obsolete finished goods and raw materials of £nil (2020: £0.2).
22. Trade and other receivables
Trade receivables
Other receivables
Prepayments
Amounts due from subsidiaries
Group
2021
£m
0.8
7.5
2.1
–
10.4
2020
£m
2.7
3.8
2.8
–
9.3
Company
2021
£m
0.8
7.5
2.1
0.9
11.3
2020
£m
3.2
2020
£m
2.7
3.8
2.4
1.0
9.9
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.
Other receivables include £4.6 million (2020: £1.4 million) receivable from the Government in respect of the Coronavirus Job
Retention Scheme, £1.3 million (2020: £nil) in respect of government grant income claimed but not received and £0.6 million
(2020: £1.3 million) for fees in respect of project costs.
Prepayments include an amount due from the pension scheme in respect of payments made to beneficiaries on behalf of the
scheme. The balance outstanding at 29 March 2021 was £0.9 million (2020: £1.1 million). The amount is non-interest bearing and is
repayable on demand.
The 12-month expected credit losses on amounts due from subsidiaries are not material in the current period or prior period.
At 29 March 2021, there were expected lifetime credit losses recognised against the trade receivables of £0.5 million
(2020: £0.6 million). The table below provides an indication of movement during the period.
Opening balance
Amounts written off
112 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
2021
£m
0.6
(0.1)
0.5
2020
£m
0.7
(0.1)
0.6
Management have applied the provision matrix to identify expected credit losses in the current period as follows:
2021
Percentage loss rate
Expected lifetime credit loss
2020
Percentage loss rate
Expected lifetime credit loss
23. Asset held for sale
Property held for sale
Neither past
due nor
impaired
£m
0.5
24%
0.1
2.2
9%
0.2
Total
£m
1.3
0.5
3.3
0.6
<31
days
£m
–
43%
–
0.2
26%
0.1
Group
2021
£m
1.2
31-60
days
£m
0.1
44%
–
0.3
32%
0.1
2020
£m
0.5
61-90
days
£m
0.1
49%
–
0.1
37%
–
Company
2021
£m
1.2
91+
days
£m
0.6
56%
0.4
0.5
42%
0.2
2020
£m
0.5
At 29 March 2021, one property has been classified as held for sale. The property, which sits within the Ram Pub Company
operating segment, has been identified as asset held for sale based on its fit with the remaining Young’s estate. Sale is expected within
12 months from the reporting date. No material change in value was recognised on reclassifying the property as held for sale.
In the prior period, one property, which sat within the Ram Pub Company operating segment, had been reclassified as held for sale
and no material change in value was recognised on reclassification. The sale occurred during the current period.
24. Trade and other payables
Trade payables
Other tax and social security
Other creditors
Accruals and deferred income
Amounts due to subsidiaries
Group
2021
£m
3.1
0.9
5.2
6.6
–
15.8
2020
£m
16.1
5.7
6.1
5.4
–
33.3
Company
2021
£m
3.1
0.9
5.3
6.6
11.6
27.5
2020
£m
16.1
5.7
5.9
5.0
10.5
43.2
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.
25. 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.
All covenants in relation to bank loans are prepared on a pre-IFRS 16 basis. Due to covid-19 the group agreed a covenant waiver
in relation to debt facilities which during the year required the group to maintain a liquidity headroom of at least £20.0 million.
The waiver has been comfortably complied with. The group finances the business with a mixture of equity (note 30) and debt
(note 33).
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. Other sources of funding arise directly from trading activities, such as trade
and other payables. The right-of-use assets are funded by lease liabilities.
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
113
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
25. Capital management and financial instruments continued
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 26. 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.
2021
2020
Increase/
decrease in %
+1.0
-0.5
+1.0
-0.5
Effect on profit
before tax
£m
(0.10)
0.05
(0.70)
0.30
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. Any potential impairments are monitored and, where appropriate, provision is
made for any irrecoverable balances. The group’s maximum credit risk is considered to be limited to its trade receivables (note 22).
The company is not considered to have any exposure to credit risk from amounts due from subsidiaries. In light of covid-19 the group
has considered credit risk in the expected credit loss model and has modified the loss rate to reflect an increased level of risk.
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 group
has considered the effects of its latest forecasts on its compliance with bank covenants, which are tested each quarter on a 12-month
rolling basis. Due to the ongoing covid-19 disruption, the group has agreed with its lending banks and private placement lenders that
the quarterly financial covenants have been replaced by monthly debt headroom covenants. This test will continue to occur at the end
of each Young’s financial period through to and including March 2022. 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 (note 1).
(a) Derivative financial instruments: interest rate swaps
Current liabilities
Non-current liabilities
Total financial liabilities
Fair value movement of interest rate swaps recognised in other comprehensive income
Group and company
2021
£m
(1.8)
(1.4)
(3.2)
2.5
2020
£m
(2.4)
(3.3)
(5.7)
0.4
114 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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.
(b) Loans, borrowings, interest rates and fair values
Group and company
Effective
interest
rate when
hedged
Variable
interest
rate when
unhedged1
Term or
expiry date
March 2023
May 2024
May 2024
May 2025
May 2025
July 2039
5.97%
4.52%
3.71%
3.30%
3.30%
Fixed
November 2021 Variable
March 2025 Variable
L+0.95%
L+3.10%
L+2.50%
L+3.10%
L+3.10%
Fixed
Fixed
L+2.75%
Period
rate fixed
2 years
3 years
3 years
4 years
4 years
18 years
None
None
2021
Secured
£30 million loan swapped into fixed rate
£10 million loan swapped into fixed rate
£10 million loan swapped into fixed rate
£25 million loan swapped into fixed rate
£25 million loan swapped into fixed rate
£35 million private placement at fixed rate2
£20 million revolving credit facility
£100 million revolving credit facility
Unsecured
£30 million CCFF at fixed rate
Financial liabilities
Fair
value
2021
£m
32.9
10.3
10.2
24.6
24.6
34.6
–
9.4
146.6
Book
value
2021
£m
30.0
10.0
10.0
24.7
24.7
34.6
–
9.4
143.4
29.8
173.2
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
1 For variable rate loans, the interest rate payable is either one-month or three-month LIBOR (L) plus the margin shown.
2 £35 million private placement has a fixed rate of interest at 3.3%.
As at 29 March 2021, the group had committed borrowing facilities of £285.0 million, of which £173.2 million was drawn down, net
of arrangement fees of £1.6 million.
Current borrowings
Non-current borrowings
Financial liabilities
Unsecured current lease liabilities
Unsecured non-current lease liabilities
Financial liabilities
2020
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
£35 million private placement at fixed rate2
£100 million revolving credit facility
Term or
expiry date
March 2021
March 2021
March 2023
May 2024
May 2024
July 2039
March 2025
Group and company
Effective
interest
rate
4.34%
2.23%
5.97%
2.77%
2.71%
Fixed
Variable
Variable
interest
rate when
unhedged1
L+1.50%
L+1.50%
L+0.95%
L+1.35%
L+1.50%
Fixed
L+0.75%
Period
rate fixed
1 year
1 year
3 years
4 years
4 years
19 years
None
1 For variable rate loans, the interest rate payable is either one-month or three-month LIBOR (L) plus the margin shown.
2 £35 million private placement has a fixed rate of interest at 3.3%.
Group
2021
£m
29.8
143.4
173.2
4.9
75.3
253.4
Fair
value
2020
£m
30.7
20.1
34.1
10.3
10.3
34.6
64.8
204.9
Company
2021
£m
29.8
143.4
173.2
4.1
69.1
246.4
Book
value
2020
£m
30.0
20.0
30.0
9.9
9.9
34.6
64.8
199.2
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
115
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
25. Capital management and financial instruments continued
Current borrowings
Non-current borrowings
Financial liabilities
Unsecured current lease liabilities
Unsecured non-current lease liabilities
Financial liabilities
Group
2020
£m
50.0
149.2
199.2
5.3
77.0
281.5
Company
2020
£m
50.0
149.2
199.2
5.0
59.6
263.8
The secured borrowings are secured on the freehold assets of the group (other than two pubs, broadly up to a value of £12.8 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
29 March 2021, 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.
Bank overdrafts
Bank overdrafts are used for day-to-day cash management. The group has a £10.0 million overdraft facility with interest linked to the
Bank of England base rate. No amounts were drawn down at 29 March 2021.
Bank loans
The group has a bilateral £10.0 million term loan with Barclays Bank plc and a bilateral £10.0 million term loan with HSBC Bank plc,
both repayable on 23 May 2024.
The group also has a bilateral £30.0 million term loan with the Royal Bank of Scotland and a £50.0 million syndicated facility with the
Royal Bank of Scotland and HSBC. The bilateral loan with the Royal Bank of Scotland is repayable on 28 March 2023. The syndicated
loan is repayable on 19 May 2025 and has two one-year extension options, bringing the potential expiry to 19 May 2027.
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.
In July 2019, the group completed on the addition of a private placement debt facility, raising £35.0 million at a fixed rate of 3.3%
repayable in July 2039.
Revolving credit facility
The group has a £100.0 million revolving credit facility, split evenly with Barclays and HSBC, which matures in March 2025.
At the period end, £10.0 million (2020: £65.5 million) was drawn. Final repayment of the total drawn down balance is due as one
payment on 20 March 2025. 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.
The group also has a £20.0 million revolving credit facility with Royal Bank of Scotland, which matures on 28 November 2021.
To date this facility remains undrawn. The availability of these funds served to maintain the headroom available to the group during
the ongoing period of uncertainty caused by covid-19.
Covid Corporate Financing Facility (‘CCFF’)
In May 2020 Young’s issued commercial paper with a nominal value of £30.0 million and a maturity date of 13 May 2021 under
HM Treasury and the Bank of England’s CCFF.
116 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
(c) Maturity of the group’s financial liabilities and expiry of facilities
The below maturity tables include contractual gross undiscounted cash flows of the borrowings, related interest, net derivatives, finance
leases, trade and other payables and contractual accruals.
2021
Borrowings
Derivative financial instruments
Lease liabilities (note 29)
Trade and other payables
2021
Borrowings
Derivative financial instruments
Lease liabilities (note 29)
Trade and other payables
Amounts due to subsidiaries
2020
Borrowings
Derivative financial instruments
Lease liabilities (note 29)
Trade and other payables
2020
Borrowings
Derivative financial instruments
Lease liabilities (note 29)
Trade and other payables
Amounts due to subsidiaries
Within
one year
£m
31.4
1.9
7.5
14.6
55.4
Within
one year
£m
31.4
1.9
6.2
14.7
11.6
65.8
Within
one year
£m
52.4
2.4
7.7
21.8
84.3
Within
one year
£m
52.4
2.4
6.1
21.8
10.5
93.2
Between
one and
two years
£m
31.5
1.9
7.0
–
40.4
Between
one and
two years
£m
31.5
1.9
5.7
–
–
39.1
Between
one and
two years
£m
2.4
1.6
7.3
–
11.3
Between
one and
two years
£m
2.4
1.6
5.7
–
–
9.7
Group
Between
two and
five years
£m
83.8
0.5
19.6
–
103.9
Company
Between
two and
five years
£m
83.8
0.5
15.5
–
–
99.8
Group
Between
two and
five years
£m
121.4
1.8
19.7
–
142.9
Company
Between
two and
five years
£m
121.4
1.8
18.0
–
–
141.2
After
five years
£m
51.5
–
80.8
–
132.3
After
five years
£m
51.5
–
79.4
–
–
130.9
After
five years
£m
50.0
–
97.9
–
147.9
After
five years
£m
50.0
–
64.9
–
–
114.9
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
Total
£m
198.2
4.3
114.9
14.6
332.0
Total
£m
198.2
4.3
106.8
14.7
11.6
335.6
Total
£m
226.2
5.8
132.6
21.8
386.4
Total
£m
226.2
5.8
94.7
21.8
10.5
359.0
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
117
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
25. Capital management and financial instruments continued
(d) Fair value hierarchy for instruments measured at fair value
Financial liabilities at fair value
Interest rate swaps
Financial liabilities at fair value
Interest rate swaps
Group and company
Fair value
2021
£m
3.2
3.2
Fair value
2020
£m
5.7
5.7
Level 1
2021
£m
–
–
Level 1
2020
£m
–
–
Level 2
2021
£m
3.2
3.2
Level 2
2020
£m
5.7
5.7
Level 3
2021
£m
–
–
Level 3
2020
£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 fair value
approximates their carrying value.
(f) Changes in liabilities arising from financing activities
Bank loans
Lease liabilities
Total liabilities from financing activities
Bank loans
Lease liabilities
Total liabilities from financing activities
At
30 March 2020
£m
199.2
82.3
281.5
At
30 March 2020
£m
199.2
64.6
263.8
Group
Cash flow
£m
(25.5)
(4.3)
(29.8)
Company
Cash flow
£m
(25.5)
(3.8)
(29.3)
Additions
£m
–
2.2
2.2
Additions
£m
–
12.4
12.4
Other
£m
(0.5)
–
(0.5)
Other
£m
(0.5)
–
(0.5)
At
29 March 2021
£m
173.2
80.2
253.4
At
29 March 2021
£m
173.2
73.2
246.4
118 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
Bank loans
Lease liabilities
Total liabilities from financing activities
Bank loans
Lease liabilities
Total liabilities from financing activities
26. 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
Deferred tax assets
At
2 April 2019
£m
171.5
74.6
246.1
At
2 April 2019
£m
171.5
64.3
235.8
Group
Cash flow
£m
28.0
(8.1)
19.9
Company
Cash flow
£m
28.0
(7.3)
20.7
Additions
£m
–
15.8
15.8
Additions
£m
–
7.6
7.6
Group
2021
£m
0.6
1.2
4.8
0.7
0.3
1.0
8.6
2020
£m
1.1
1.6
4.5
0.7
0.3
0.1
8.3
Other
£m
(0.3)
–
(0.3)
Other
£m
(0.3)
–
(0.3)
At
30 March 2020
£m
199.2
82.3
281.5
At
30 March 2020
£m
199.2
64.6
263.8
Company
2021
£m
0.6
1.2
4.8
0.7
0.3
1.0
8.6
2020
£m
1.1
1.6
4.5
0.7
0.3
0.1
8.3
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
Deferred tax liabilities
Rolled over gains on property revaluations
(73.6)
(69.9)
(73.4)
(65.7)
Net deferred tax liabilities
(65.0)
(61.6)
(64.8)
(57.4)
Reconciliation of net deferred tax liabilities:
Opening balance
Tax credit/(charge) in the income statement
Tax charge in the statement of comprehensive income
Adjustment in respect of deferred tax of prior periods
Recognised on acquisition
Tax charge recognised directly in equity
Closing balance
Group
2021
£m
(61.6)
1.6
(4.5)
(0.5)
–
–
(65.0)
2020
£m
(53.2)
(1.2)
(3.1)
–
(4.0)
(0.1)
(61.6)
Company
2021
£m
(57.4)
1.6
(4.5)
(0.5)
(4.0)
–
(64.8)
2020
£m
(50.5)
(1.2)
(3.1)
–
(2.5)
(0.1)
(57.4)
During the year, it was identified that the historical calculation of the deferred tax liability relating to rolled over gains on property
revaluations incorrectly calculated the initial recognition exemption on certain properties. Following a detailed review of all deferred
tax calculations on the group’s properties, it was confirmed that this only affected certain properties that had been revalued upwards
historically. The group considers that as the correcting adjustment has no impact on the group income statement in either period
presented, that the impact on the group statement of comprehensive income, balance sheets, deferred tax liabilities and revaluation
reserve in either period presented is not material and that the impact does not materially affect key performance indicators or
remuneration, the adjustment has been recorded through the current period. The impact of this adjustment was to increase deferred
tax liabilities and to decrease the revaluation reserve by £2.5 million at 29 March 2021, with the adjustment recorded as an expense
in the statement of comprehensive income for the period ended 29 March 2021.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
119
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
26. Deferred tax continued
Movements in the deferred tax assets are shown below:
Deferred tax assets
Balance as at 1 April 2019
(Charged)/credited to the income statement
(Charged)/credited to other comprehensive income
Charged directly to equity
Balance as at 30 March 2020
(Charged)/credited to the income statement
Credited to other comprehensive income
Balance as at 29 March 2021
Interest
rate swap
£m
1.1
–
–
–
1.1
–
(0.5)
0.6
Retirement
benefit
scheme
£m
1.5
(0.6)
0.7
–
1.6
(0.2)
(0.2)
1.2
Decelerated
capital
allowances
£m
3.3
1.2
–
–
4.5
0.3
–
4.8
Capital
losses
£m
0.6
0.1
–
–
0.7
–
–
0.7
Share based
payments
£m
0.7
(0.3)
–
(0.1)
0.3
–
–
0.3
Trade
losses
£m
0.2
(0.1)
–
–
0.1
0.9
–
1.0
Total
£m
7.4
0.3
0.7
(0.1)
8.3
1.0
(0.7)
8.6
The deferred tax assets and liabilities at the balance sheet date are calculated at the substantively enacted rate of 19%. On 3 March
2021, the Chancellor confirmed in his Budget statement that the UK rate of corporation tax will increase to 25% from 1 April 2023.
Deferred tax has been calculated in the period ended 29 March 2021 at the current rate of 19%, the rate that was substantively
enacted at the balance sheet date. The overall impact of the rate change on the net deferred tax liability, based on the deferred tax
liability balance as at 29 March 2021, is expected to increase the deferred tax liability by £20.5 million.
The group has realised capital losses of £5.2 million (2020: £5.0 million), which are available indefinitely to offset against future
capital gains. A deferred tax asset has not been recognised in respect of £1.5 million (2020: £1.5 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
£3.7 million (2020: £3.5 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.
The group has unrealised capital losses of £8.5 million (2020: £12.4 million). No deferred tax asset has been recognised in respect of
these losses (2020: £nil) because it is uncertain whether they will be utilised.
In addition, the group has current year interest restrictions capable of reactivation in future periods of £5.1 million (2020: £nil).
A deferred tax asset has been recognised on the basis that it is probable that profits will arise in future periods, enabling the interest
deduction to be utilised in full.
27. 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 £1.6 million (2020: £1.6 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 26.
The employer contribution to the defined benefit scheme for the period ended 29 March 2021 was £1.4 million of which
£1.2 million were special contributions (2020: £1.4 million of which £1.2 million were special contributions) plus premiums of
£0.2 million (2020: £0.2 million) to the post-retirement health care scheme. The current arrangement as regards contribution rates
specifies that annual special contributions of £1.2 million will be payable until October 2034.
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 2022 financial
period are expected to be £1.4 million which includes a special contribution of £1.2 million. The total contributions to the post-
retirement health care scheme in the 2022 financial period are expected to be £0.2 million.
The defined benefit scheme is closed to new entrants.
120 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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
2021
%
2.00
3.30
2.50
3.30
2.80
N/A
2020
%
2.40
2.80
2.50
2.80
1.80
N/A
Health care
2021
%
2.00
3.30
N/A
N/A
N/A
9.00
2021
Years
21.9
24.3
23.2
25.7
2020
%
2.40
2.80
N/A
N/A
N/A
9.00
2020
Years
21.9
24.2
23.2
25.6
At the period end date, the average age of current pensioners was 74 years (2020: 73 years) and for future pensioners was 56 years
(2020: 55 years).
The weighted average duration of liabilities for the current period was 18.0 years (2020: 17.0 years).
A one percentage point change in the assumed rate of increase in health care costs would have the following effects:
i
F
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
Effect on the aggregate service cost and interest cost
Effect on the defined benefit obligation
Increase
£m
–
0.4
Decrease
£m
–
(0.4)
The sensitivities regarding the principal assumptions used to measure the schemes’ liabilities are set out below. The illustrations
consider the single change shown with the other assumptions assumed to be unchanged. In practice, changes in one assumption may
be accompanied by changes in another assumption. Changes in market values may also occur at the same time as the changes in
assumptions and may or may not offset them.
Assumption
Discount rate
Rate of inflation
Rate of increase in salary
Discretionary pension increases
Rate of revaluation of deferred pensions
Life expectations
Pension scheme and health care scheme assets and liabilities
Equities
Diversified growth fund
Corporate bonds
Insured pensions
Other
Total fair value of assets
Present value of retirement benefit liabilities
Scheme deficit
Change in assumption
Impact on scheme liabilities
Increase/decrease by 0.5% Decrease/increase by 8.6%
Increase/decrease by 0.5% Increase/decrease by 7.1%
Increase/decrease by 0.5%
Increase/decrease by nil
Increase/decrease by 0.5% Increase/decrease by 4.3%
Increase/decrease by 0.5% Increase/decrease by 1.1%
Increase by 4.8%
Increase by 1 year
Group and company
Assets and liabilities
2021
£m
41.3
20.8
63.5
7.9
(0.8)
132.7
(138.8)
(6.1)
2020
£m
31.1
19.2
56.8
7.9
(1.1)
113.9
(122.1)
(8.2)
The pension scheme assets include some of the company’s A shares with a fair value of £4.9 million (2020: £3.6 million). There are
no property assets of the scheme occupied by the company.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
121
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
27. Retirement benefit schemes continued
Of the above assets, £125.6 million (2020: £107.1 million) are quoted securities.
Movement in scheme deficits in the period
(a) Changes in the present value of the schemes are as follows:
Opening deficit
Current service cost
Contributions
Other finance charges
Remeasurement through other
comprehensive income
Closing deficit
(b) Recognised in the income statement
Current service cost included in
operating costs
Net interest expense
Group and company
Pension
scheme
£m
(4.6)
(0.2)
1.4
(0.1)
1.3
(2.2)
(0.2)
(0.1)
2021
Health care
scheme
£m
(3.6)
–
0.2
(0.1)
(0.4)
(3.9)
–
(0.1)
Total
£m
(8.2)
(0.2)
1.6
(0.2)
0.9
(6.1)
(0.2)
(0.2)
(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
Group and company
Pension
scheme
£m
1.4
0.2
(19.3)
(17.7)
19.0
1.3
2021
Health care
scheme
£m
(0.3)
–
(0.1)
(0.4)
–
(0.4)
Total
£m
1.1
0.2
(19.4)
(18.1)
19.0
0.9
(d) Movements in the present value of schemes’ obligations during the period
Opening defined benefit obligations
Current service cost
Interest on obligations
Contributions by schemes' members
Remeasurement of obligations
Benefits paid
Present value of schemes' liabilities
Group and company
Pension
scheme
£m
(118.5)
(0.2)
(2.8)
(0.1)
(17.7)
4.4
(134.9)
2021
Health care
scheme
£m
(3.6)
–
(0.1)
–
(0.4)
0.2
(3.9)
Total
£m
(122.1)
(0.2)
(2.9)
(0.1)
(18.1)
4.6
(138.8)
Pension
scheme
£m
(5.1)
(0.3)
1.4
(0.1)
(0.5)
(4.6)
(0.3)
(0.1)
Pension
scheme
£m
3.3
(0.3)
6.5
9.5
(10.0)
(0.5)
Pension
scheme
£m
(129.2)
(0.3)
(3.2)
(0.1)
9.5
4.8
(118.5)
2020
Health care
scheme
£m
(3.5)
–
0.2
(0.1)
(0.2)
(3.6)
–
(0.1)
2020
Health care
scheme
£m
(0.2)
–
–
(0.2)
–
(0.2)
2020
Health care
scheme
£m
(3.5)
–
(0.1)
–
(0.2)
0.2
(3.6)
Total
£m
(8.6)
(0.3)
1.6
(0.2)
(0.7)
(8.2)
(0.3)
(0.2)
Total
£m
3.1
(0.3)
6.5
9.3
(10.0)
(0.7)
Total
£m
(132.7)
(0.3)
(3.3)
(0.1)
9.3
5.0
(122.1)
122 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
(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
Fair value of schemes' assets
28. Other non-current liabilities
At 2 April 2019
Released
At 30 March 2020
Released
At 29 March 2021
29. Lease liabilities
Group and company
Pension
scheme
£m
113.9
2.7
19.0
1.4
0.1
(4.4)
132.7
2021
Health care
scheme
£m
–
–
–
0.2
–
(0.2)
–
Total
£m
113.9
2.7
19.0
1.6
0.1
(4.6)
132.7
Pension
scheme
£m
124.1
3.1
(10.0)
1.4
0.1
(4.8)
113.9
2020
Health care
scheme
£m
–
–
–
0.2
–
(0.2)
–
Total
£m
124.1
3.1
(10.0)
1.6
0.1
(5.0)
113.9
Deferred income
£m
0.3
(0.1)
0.2
(0.2)
–
i
F
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S
t
a
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m
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t
s
(a) Group as lessee
The group has lease contracts for various items of property, vehicles and other equipment used in its operations. Leases of property
generally have lease terms between 20 and 999 years, while motor vehicles and other equipment generally have lease terms between
three and five years.
There are several lease contracts that include extension and termination options and variable lease payments, which are further
discussed below.
The group also has certain leases of machinery with lease terms of 12 months or less and leases of office equipment with low value.
The group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.
Set out below are the carrying amounts of lease liabilities and the movements during the period:
At 2 April 2019
Additions
Business combinations
Lease amendments
Accretions of interest
Payments
Current
Non-current
As at 30 March 2020
Additions
Lease amendments
Accretions of interest
Payments
As at 29 March 2021
Current
Non-current
Group
£m
74.6
2.8
8.3
4.7
2.5
(10.6)
82.3
5.3
77.0
82.3
2.2
–
2.6
(6.9)
80.2
4.9
75.3
Company
£m
64.3
2.9
–
4.7
2.1
(9.4)
64.6
5.0
59.6
64.6
12.2
0.2
2.3
(6.1)
73.2
4.1
69.1
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
123
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
29. Lease liabilities continued
Group cash flow benefits arising from rent concessions totalled £1.2 million in the period, including £0.5 million of rent deferrals.
This also includes £0.7 million of rent holidays which have been offset against £0.7 million of rent amendments in the period.
Note 25(c) summarises the maturity profile of the group’s lease liability based on contractual undiscounted payments.
The following amounts have been recognised in the income statement:
Depreciation expense of right-of-use assets (note 19)
Interest expense on lease liabilities (note 12)
Expense relating to short-term leases and low-value assets
Variable lease payments
Total amount recognised in the income statement
Depreciation expense of right-of-use assets (note 19)
Interest expense on lease liabilities (note 12)
Expense relating to short-term leases and low-value assets
Variable lease payments
Total amount recognised in the income statement
Group
2021
£m
7.6
2.6
0.2
–
10.4
Group
2020
£m
7.5
2.5
–
0.4
10.4
Company
2021
£m
6.3
2.3
0.2
–
8.8
Company
2020
£m
6.3
2.1
–
0.3
8.7
During the current year the group had total cash outflows for leases of £7.1 million (2020: £11.0 million). The group also had
non-cash additions to right-of-use assets and lease liabilities of £2.2 million (2020: £11.0 million).
The group has lease contracts for properties that contains variable payments based on turnover levels achieved. The following provides
information on the group’s variable lease payments, including the magnitude in relation to fixed payments:
2021
Fixed rent
Variable rent with minimum payment
Variable rent only
2020
Fixed rent
Variable rent with minimum payment
Variable rent only
Fixed payments
£m
5.9
1.0
–
6.9
Fixed payments
£m
9.4
1.2
–
10.6
Group
Variable
payments
£m
–
–
–
–
Group
Variable
payments
£m
–
–
0.4
0.4
Total payments
£m
5.9
1.0
–
6.9
Fixed payments
£m
5.6
0.5
–
6.1
Total payments
£m
9.4
1.2
0.4
11.0
Fixed payments
£m
8.7
0.7
–
9.4
Company
Variable
payments
£m
–
–
–
–
Total payments
£m
5.6
0.5
–
6.1
Company
Variable
payments
£m
–
–
0.3
0.3
Total payments
£m
8.7
0.7
0.3
9.7
The group has several lease contracts that include termination options. These options are negotiated by management to provide
flexibility in managing the leased-asset portfolio and align with the group’s business needs.
Set out below are the undiscounted potential future rental payments relating to periods following the termination options that are not
included in the lease term:
Termination options expected to be exercised
Within five years
£m
2.0
More than
five years
£m
0.3
Total
£m
2.3
124 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
(b) Group as lessor
During the period, the group received lease income from tenants within the Ram Pub Company operating segment which were
designated as operating leases. £1.1 million has therefore been recognised in the income statement for the period ended 29 March
2021 (2020: £3.3 million), of which £0.1 million relates to sublease income received (2020: £0.5 million). All lease income is fixed
rent. Other revenue received within the Ram Pub Company operating segment was generated from sales of drink and accounted for
under IFRS 15 Revenue from contracts with customers.
In the period, the group offered a rent concession to the majority of the tenanted estate from 16 March 2020. It was communicated
to the tenants that any rent concessions would be treated as variable rent payments, under which the variable element of rent is taken
directly to the profit and loss statement in the period that it relates to.
For the period ended 29 March 2021 the rent concessions granted to tenants have resulted in foregone rental income of £2.0 million
for the period.
2021
Undiscounted lease income
2020
Undiscounted lease income
30. Share capital and reserves
Within one
year
£m
2.3
One to two
years
£m
1.4
Two to three
years
£m
0.9
Three to four
years
£m
0.7
Four to five
years
£m
0.7
More than five
years
£m
2.5
Within one
year
£m
2.0
One to two
years
£m
2.0
Two to three
years
£m
1.2
Three to four
years
£m
0.7
Four to five
years
£m
0.7
More than five
years
£m
3.5
Issued and fully paid shares – 12.5p each
Opening balance
Issued under employee share schemes
Issued in connection with the June 2020 equity issue
Closing balance
2021
Shares
2021
£000
2020
Shares
49,036,547
14,865
9,424,148
58,475,560
6,130 48,965,040
71,507
–
49,036,547
2
1,178
7,310
Total
£m
8.5
Total
£m
10.1
2020
£000
6,121
9
–
6,130
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Of the opening balance, 29,876,547 are A shares and 19,160,000 are non-voting shares (2020: 29,805,040 A shares, 19,160,000
non-voting shares). Of the closing balance, 34,404,808 are A shares and 24,070,755 are non-voting shares (2020: 29,876,547 A
shares, 19,160,000 non-voting shares).
For details of the shares issued in the current period under employee share schemes, see Share Awards (note 31).
The June 2020 equity issue comprised (a) the placing of 4,263,453 new A shares and 4,900,000 new non-voting shares (together,
the “Placing Shares”), (b) the subscription of 236,547 new A shares pursuant to an offer made by the company, concurrent to the
placing, for retail investors to subscribe for new A shares and (c) the subscription, in conjunction with the placing, of 13,393 new
A shares and 10,755 new non-voting shares by certain of the company’s directors and/or persons closely associated with them.
The new A shares were placed or issued at 1,160p per share and the new non-voting shares were placed or issued at 735p per
share. The allotment and issue of the Placing Shares was effected by way of a placing of new A shares and new non-voting shares for
non-cash consideration: J.P. Morgan Securities plc, which conducts its UK investment banking activities as J.P. Morgan Cazenove (“J.P.
Morgan”), subscribed for ordinary shares and redeemable preference shares in Project Uppercase No. 1 Limited (“JerseyCo”), a Jersey
incorporated wholly owned subsidiary of the company, for an amount approximately equal to the net proceeds of the placing, and the
company allotted and issued the Placing Shares on a non-pre-emptive basis to placees in consideration for the transfer of the ordinary
shares and redeemable preference shares in JerseyCo that were issued to J.P. Morgan.
A cash box structure was used in such a way that merger relief was available under Companies Act 2006, section 612, and thus no
share premium was recorded. As the redemption of the cash box entity’s preference shares was in the form of cash, the transaction
was treated as qualifying consideration and the premium is therefore considered to be a realised profit. Transaction costs incremental
to the equity issue totalled £3.6 million and have been recorded directly in retained earnings, resulting in net realised profit recorded
in retained earnings of £83.6 million. Including the nominal share capital of £1.2 million, total gross equity raised was £88.4 million.
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.
Share premium account
The share premium account represents the excess of proceeds received over the nominal value of new shares issued.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
125
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
30. Share capital and reserves continued
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.
Retained earnings
Retained earnings consists of cumulative historic realised gains and losses net of dividends paid. It also includes a non-distributable
reserve of £16.4 million (2020: £17.1 million) arising on the transfer of assets from subsidiaries to the parent at consolidated book
value, and a non-distributable reserve of £33.6 million (2020: £33.6 million) arising from the transfer of revaluation reserves relating
to leasehold assets following the adoption of IFRS 16.
31. Share awards
The group operates two types of share-based payment arrangements: an executive director/senior management employee deferred
annual bonus (“DAB”) scheme and a Save-As-You-Earn (“SAYE”) scheme.
In addition, during the period, the group offered a special one-off retention and reward bonus in the form of shares.
(a) DAB scheme
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. For the non-director 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 other senior management employee, the individual can 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 an
individual may make. So, if the company decides to pay a bonus entirely in cash, no ‘matching’ shares are receivable. The individuals
are not 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 grow over a particular period; in relation to this, the remuneration committee (in respect
of the directors) and the executive committee (in respect of the other senior management employees) may adjust the group’s adjusted
earnings per ordinary share outcome. In certain circumstances, the shares received 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).
126 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
The following table summarises, at 30 March 2020 and at 29 March 2021, the outstanding entitlements to A shares under the
DAB scheme of the directors and those other senior management employees who served during the period ended 29 March 2021.
Neither Mike Owen nor Simon Dodd had any outstanding entitlement to A shares under the DAB scheme at 30 March 2020 or at
29 March 2021. All shares listed in the table are registered in the relevant individual’s name and, save as explained above, are fully
vested. No A shares were awarded during the period, and the weighted fair value of the A shares awarded during the prior period
was 1,765 pence per share. During the prior period, the ‘matching’ shares were issued on the same date as the ‘non-matching’ shares
which had a market value of 1,765 pence per share.
Patrick Dardis
Torquil Sligo–Young
Tracy Dodd
Senior management
employees
Date
of award
June 2017
June 2017
June 2018
June 2018
June 2019
June 2019
June 2017
June 2017
June 2018
June 2018
June 2019
June 2019
June 2017
June 2018
June 2018
June 2019
June 2019
June 2017
June 2017
June 2018
June 2018
June 2019
June 2019
Matching
shares
(Y/N)
At
30 March
2020
N 17,671
Y
8,835
N 14,179
Y
7,089
N 21,671
10,835
Y
7,045
N
3,522
Y
6,929
N
3,464
Y
6,371
N
3,185
Y
2,579
N
4,329
N
393
Y
4,682
N
780
Y
4,609
N
6,936
Y
4,315
N
6,807
Y
5,982
N
5,982
Y
Awarded
during
the period
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Restrictions
ceased to
apply during
the period
(17,671)
(2,650)
–
–
–
–
(7,045)
(1,056)
–
–
–
–
(2,579)
–
–
–
–
(4,609)
(2,079)
(2,114)
–
(1,557)
–
Transferred
during
period1
–
(6,185)
–
–
–
–
–
(2,466)
–
–
–
–
–
–
–
–
–
–
(4,857)
–
–
(839)
(839)
At
29 March
2021
–
–
14,719
7,089
21,671
10,835
–
–
6,929
3,464
6,371
3,185
–
4,329
393
4,682
780
–
–
2,201
6,807
3,586
5,143
Issue
price
(pence
per share)2
1,332.0
12.5
1,705.0
12.5
1,765.0
12.5
1,332.0
12.5
1,705.0
12.5
1,765.0
12.5
1,332.0
1,705.0
12.5
1,765.0
12.5
1,332.0
12.5
1,705.0
12.5
1,765.0
12.5
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1 These shares were transferred to the Ram Brewery Trust II, an employee benefit trust designated by the company. The transfers were for no consideration, apart from the 839 A shares with an issue
price of 1,765 pence per share which were transferred at 812 pence per share, being the price for an A share as shown in the online version of the Financial Times published on the day of the
transfer, 31 October 2020.
2 For ‘matching’ shares, the price shown is the nominal value.
The group’s adjusted earnings per share measurement growth periods for the 2018 and 2019 awards are the group’s four-year
financial periods ending in 2021 and 2022 respectively. The related performance conditions set a range for the growth target; they
are not disclosed due to commercial sensitivity. Due to the impact of the coronavirus pandemic, it has been determined that the
condition was met as to 0% for the 2018 awards. It is anticipated that the condition for the 2019 awards will be met only as to 15%,
likewise due to the impact of covid-19.
A charge of £nil (2020: £nil) was made to the group and company income statements in respect of the outstanding 37,696
’matching’ shares at 29 March 2021 (2020: 57,828).
(b) SAYE scheme
This 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.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
127
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
31. Share awards continued
In the current period, no options over A shares (2020: 68,511 A shares) were granted under the scheme (as explained in the
Employee engagement section of the directors’ report on page 69). The options granted in the prior period had an exercise price of
1,412 pence per share.
Options over 140,031 A shares were outstanding at the beginning of the period. During the period, options over 65,062 A shares
lapsed, and options over 16,383 A shares were exercised at 1,066 pence per share. The weighted average share price of options
exercised during the period was 1,379 pence (2020: 1,621 pence). The options that were exercised (and in respect of which new
shares were issued) resulted in an increase in share capital of £1,858.125 (2020: £1,502.375) and an increase in share premium of
£156,602.775 (2020: £114,360.785). A credit of £0.1 million (2020: a charge of £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. The cumulative fair
value of the share options outstanding at 29 March 2021 was £0.1 million (2020: £0.2 million). Options over 58,586 A shares were
outstanding at the end of the period.
Valuation assumptions
Assumptions used in the Black-Scholes model to determine the fair value of share options at grant date for the period ending
29 March 2021 and 30 March 2020 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 (%)
During the current period SAYE scheme was not introduced.
Group and company
2019 plan
1,765.0
1,412.0
24.9
3
0.9
0.3
18.3
2018 plan
1,705.0
1,364.0
21.0
3
1.3
0.7
17.2
2017 plan
1,332.0
1,066.0
8.5
3
1.3
2.4
33.7
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.
(c) Reward and retention bonus
In recognition of the vital role that a select group of individuals (all below board level) played during the covid-19 crisis following
the initial closure of the group’s pubs in March 2020 and in the lead-up to the pubs reopening in July, the company offered
those individuals the opportunity to receive a special one-off retention and reward bonus. The terms of the offer were such that
the net bonus amount would be used to purchase shares in the company on their behalf; no cash only alternative was available.
Everyone accepted the offer; this resulted in 13,542 A shares being acquired from the Ram Brewery Trust II at 1,300p per share at a
cost of £0.2 million (which was the mid-market closing price of an A share on 31 December 2020, being the last dealing day before
the shares were purchased). All the shares are subject to restrictions which ordinarily mean that the individuals who received them
cannot sell them before 18 December 2021. Further, if the individual ‘leaves’ the company before that date other than in limited
‘good leaver’ circumstances, he or she will have to transfer the shares back to the trust for £nil.
32. 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 68 and in notes 8(e) and 31. 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 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. Torquil Sligo-Young, a non-executive
director of the company, and two other individuals, neither of whom is a director of the company, are the directors of the pension
trustee company. At 29 March 2021, the scheme held 337,067 A shares (2020: 337,067), being 0.98% 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
it was appropriate to agree to this so as to demonstrate its commitment to the scheme and to provide the pension trustee company
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.
128 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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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. Two individuals, neither of whom is a director of the company, are the directors of the employee benefit trustee
company. At 29 March 2021, the trust held 7,652 A shares (2020: 7,526), being 0.02% of the class.
During the period:
• nil A shares (2020: 3,060) were transferred from the trust in connection with the company’s profit sharing scheme (note 8(d));
• 1,518 A shares (2020: 28,127) were transferred from the trust in connection with the company’s savings-related share option
scheme (note 8(e));
• 13,542 A shares (2020: nil) were transferred from the trust in connection with the special one-off retention and reward bonus
referred to in the directors’ report on pages 69 and 70; and
• 15,186 A shares (2020: 8,973) were transferred to the trust in connection with the company’s deferred annual bonus scheme
(note 31(a)).
Neither the pension trustee company nor the employee benefit trustee company is a related party of the company for the purposes of
the AIM Rules for Companies.
Key management
The group considers key management personnel to be solely the directors of the company as they are the only ones 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 £0.2 million (2020: £0.3 million) and
incurred a share based payment charge of £nil (2020: £nil).
33. Net cash generated from operations and analysis of net debt
(Loss)/profit before tax on continuing operations
Net finance cost
Finance charge for pension obligations
Operating (loss)/profit on continuing operations
Depreciation of property and equipment
Depreciation of right-of-use assets
Movement on revaluation of properties
Net loss on disposal of property
Difference between pension service cost and cash contributions paid
Business transfer from subsidiary to parent
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 and loan capital
Current lease liability
Non-current borrowings and loan capital
Non-current lease liability
Net debt
Group
2021
£m
(45.2)
9.9
0.2
(35.1)
26.1
7.6
(1.8)
0.5
(1.4)
–
–
(0.1)
0.7
(1.2)
(18.3)
(23.0)
Group
2021
£m
4.7
(29.8)
(4.9)
(143.4)
(75.3)
(248.7)
2020
£m
29.1
8.6
0.2
37.9
25.6
7.5
5.3
0.6
(1.3)
–
–
0.1
0.5
(1.8)
(1.9)
72.5
2020
£m
1.1
(50.0)
(5.3)
(149.2)
(77.0)
(280.4)
Company
2021
£m
(45.1)
9.5
0.2
(35.4)
25.9
6.3
(1.8)
0.5
(1.4)
–
–
(0.1)
0.6
(1.5)
(17.0)
(23.9)
2020
£m
28.0
8.4
0.2
36.6
24.9
6.3
5.3
0.3
(1.3)
0.8
0.6
0.1
0.4
(1.2)
(1.7)
71.1
Company
2021
£m
4.7
(29.8)
(4.1)
(143.4)
(69.1)
(241.7)
2020
£m
1.1
(50.0)
(5.0)
(149.2)
(59.6)
(262.7)
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
129
Financial Statements
Notes to the financial statements continued
For the 52 weeks ended 29 March 2021
34. Post balance sheet events
There were no post balance sheet events except the acquisition of the Greenwich Union and the sale of the Grove House
(Camberwell) which was classified as asset held for sale at 29 March 2021.
35. Contingent liabilities
There were no contingent liabilities at the current or prior period balance sheet date.
Five-year review
Revenue
Adjusted operating (loss)/profit
Adjusting items
Net finance costs and other finance charges
(Loss)/profit before tax
Taxation credit/(charge)
(Loss)/profit for the period from continuing operations
Adjusted (loss)/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
2021
52 weeks
£m
90.6
(34.0)
(1.1)
(10.1)
(45.2)
6.9
(38.3)
(44.1)
972.8
24.7
(52.3)
(299.8)
645.4
7.3
638.1
645.4
2020
52 weeks
£m
311.6
46.5
(8.6)
(8.8)
29.1
(9.8)
19.3
37.7
975.3
14.3
(91.0)
(307.8)
590.8
6.1
584.7
590.8
2019
52 weeks
£m
303.7
48.5
(3.9)
(5.1)
39.5
(8.0)
31.5
43.4
860.8
21.2
(51.2)
(237.5)
593.3
6.1
587.2
593.3
2018
52 weeks
£m
279.3
46.9
(3.4)
(5.9)
37.6
(7.5)
30.1
41.0
782.6
18.0
(47.1)
(204.3)
549.2
6.1
543.1
549.2
2017
53 weeks
£m
268.9
46.1
(3.4)
(5.7)
37.0
(7.0)
30.0
40.4
724.0
18.5
(71.4)
(178.1)
493.0
6.1
486.9
493.0
Purchase of fixed assets, lease premiums
and business combinations
19.1
62.4
67.0
53.0
38.3
Net debt
(248.7)
(280.4)
(163.6)
(140.5)
(126.6)
Per 12.5p ordinary share
Adjusted basic (loss)/earnings from continuing operations
Basic (loss)/earnings from continuing operations
Dividends – paid in period
Gearing
Average number of employees
Pence
Pence
Pence
Pence
Pence
(66.63)
(68.23)
–
38.5%
4,714
60.18
39.37
21.38
47.5%
4,763
72.13
64.36
20.17
27.6%
4,735
67.74
61.60
19.03
25.6%
4,116
66.43
61.51
17.95
25.7%
3,924
130 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
Notice of meeting
If you hold any A shares, this notice is important and requires your immediate attention. If you are in any doubt as to the
action you should take, you should immediately consult your stockbroker, solicitor, accountant or other duly authorised
professional adviser.
If you have sold or otherwise transferred all your shares, please pass this annual report and any accompanying documents (except
any personalised proxy form, if applicable) to the purchaser or transferee, or to the person through whom the sale or transfer was
arranged, so they can pass it or them to the person who now holds the shares.
If you hold any A shares, you should have received a proxy form for use in respect of 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. In view of the uncertainty around
whether shareholders will be able to attend the meeting in person, and because tighter Government restrictions may be
introduced due to a change in the covid-19 pandemic situation, you are encouraged to complete and return your proxy form
appointing the chair of the meeting as your proxy. This will ensure that your vote will be counted even if you (or any other
proxy you might otherwise appoint) are unable to attend the meeting. Completed forms must be received by Computershare
Investor Services PLC by 11.30am on Sunday, 18 July 2021. Appointing a proxy does not stop you from attending the meeting,
should this be permitted under applicable covid-19 restrictions in place at the time of the meeting, and voting). An attendance card
is attached to the proxy form; please bring this with you to the meeting, should attendance in person be permitted under applicable
covid-19 restrictions.
If you do not hold any A shares, this notice is for information purposes only.
Notice is hereby given that the 132nd 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, 20 July 2021
at 11.30am. Resolutions 1 to 9 will be proposed as ordinary resolutions, and resolutions 10 and 11 will be proposed as special
resolutions. All A shareholders are asked to vote on these resolutions in advance of the AGM by filling in the accompanying
proxy form.
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.
Annual accounts and reports
Re-appointment of directors
1. To receive the Company’s annual accounts for the financial
year ended 29 March 2021, together with the strategic
report, directors’ report and the auditor’s report on those
accounts and reports.
Auditor appointment
2. To resolve that Ernst & Young LLP be, and is hereby,
re-appointed as the Company’s auditor to hold office 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.
Auditor remuneration
3. To resolve that the directors be, and are hereby, authorised
to determine the remuneration of the Company’s auditor.
4. To resolve that Roger Lambert be, and is hereby,
re-appointed as a director.
5. To resolve that Ian McHoul be, and is hereby, re-appointed
as a director.
6. To resolve that Torquil Sligo-Young be, and is hereby,
re-appointed as a director.
Political donations and expenditure
7. To resolve 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 11.59pm on
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
131
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Disapplication of pre-emption rights
10. To resolve that, if resolution 9 is passed, the directors be, and
are hereby, given power to allot equity securities (as defined
in the Companies Act 2006) for cash under the authority
given by that resolution and/or to sell 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 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 9,
by way of a rights issue only):
(i) to ordinary shareholders 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 9 and/or in the case of any sale of treasury
shares, to the allotment of equity securities or sale of
treasury shares (otherwise than under paragraph (a)
above) up to a nominal amount of £365,472,
such power to apply until the end of next year’s annual
general meeting (or, if earlier, until 11.59pm on
30 September 2022) but, in each case, 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.
Shareholder Information
Notice of meeting continued
30 September 2022) 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.
Increased limit on the amount payable in
respect of directors’ fees
8. That, for the purposes of article 52(A) of the Company’s
articles of association, a higher sum of £375,000 be, and is
hereby, decided.
Directors’ authority to allot shares etc.
9. To resolve that the directors be, and are hereby, generally
and unconditionally authorised to allot shares in the
Company and to grant rights to subscribe for or convert any
security into shares in the Company:
(a)
up to a nominal amount of £2,436,485 (such amount
to be reduced by any allotments or grants made 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 £4,872,970 (such amount to be reduced
by any allotments or grants made under paragraph
(a) above) in connection with an offer by way of a
rights issue:
(i) to ordinary shareholders 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 authority to apply until the end of next year’s
annual general meeting (or, if earlier, until 11.59pm on
30 September 2022) 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 convert securities into shares to be
granted after the authority ends and the directors may allot
shares or grant rights to subscribe for or convert securities
into shares under any such offer or agreement as if the
authority had not ended.
132 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
Authority to purchase own shares
Notes
11. To resolve 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 shares of
12.5p each, provided that:
(a)
the maximum number of shares hereby authorised to
be purchased (which may be all A shares, all Non-
Voting shares or a mix) is 5,847,564;
(b) the minimum price, exclusive of expenses, which may
be paid for a share is 12.5p; and
(c) the maximum price, exclusive of expenses, which may
be paid for a share is the highest of:
Covid-19: intention to attend and attendance
If you wish to attend the meeting (should this be possible
in light of covid-19 restrictions in place at the time of
the meeting), please register your attendance as soon as
practicable by completing your proxy form in the usual
manner, and entering a tick in the ‘Intention to Attend’ box,
which is located below the resolutions on the second page
of the proxy form. Please note that rules around capacity at
the meeting venue and changes in public health guidance
and legislation issued by the UK Government may mean that
you will not be able attend the meeting. The following notes
should be read in this context.
(i) an amount equal to 5% above the average of the
middle market quotations for a share of that class 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; and
(ii) the higher of the price of the last independent trade
and the highest current independent bid on the
trading venues where the purchase is carried out at
the relevant time,
such authority to apply until the end of next year’s
annual general meeting (or, if earlier, until 11.59pm on
30 September 2022) but during this period the Company
may enter into a contract to purchase shares which would,
or might, be completed or executed wholly or partly
after the authority ends and the Company may purchase
shares pursuant to any such contract as if the authority had
not ended.
By order of the board
Anthony Schroeder
Joint Company Secretary
19 May 2021
Registered office:
Riverside House
26 Osiers Road
Wandsworth
London
SW18 1NH
Registered in England and Wales No. 32762
Covid-19: safety constraints and Government
guidelines
The health and safety of shareholders, employees and other
stakeholders remains the Company’s primary concern, and
at time of preparing this document, covid-19 restrictions
issued by the UK Government remain in place. As such,
indoor events of up to 1,000 people or half a venue’s capacity
(if lower) are allowed to take place. Currently this means,
amongst other things, that A shareholders will not be able to
mix beyond what is permitted by social contact restrictions,
namely the rule of six or two households. The Company
will also put in place further arrangements to seek to ensure
that the meeting is safe. In light of this, attendance by guests
(other than carers accompanying a shareholder) will not be
permitted. In the absence of a full relaxation of covid-19
restrictions and social distancing rules, the Company’s
directors will not be mingling before or after the meeting, and
no refreshments will be provided before or after the meeting.
You will also need to observe any rules on social distancing
that are in place at the time of the meeting, be prepared to
wear a face covering (unless exempt from that requirement),
have your temperature checked, and confirm on arrival
that you have not recently developed symptoms or been
exposed to someone who has tested positive or is displaying
covid-19 symptoms.
Covid-19: updates on meeting arrangements
Given the constantly evolving nature of the covid-19
situation, it may be necessary to adapt the meeting
arrangements to respond to changes in circumstances.
You should therefore continue to monitor the Company’s
website at www.youngs.co.uk/investors as well as the
Company’s stock exchange announcements for any updates
to the arrangements.
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
133
Shareholder Information
Notice of meeting continued
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,
19 July 2021 (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,
18 July 2021.
Who to appoint as a proxy
A proxy does not have to be a member of the Company but
must attend the meeting in order for you to be represented
and for your vote to be counted. Your proxy could be the
chair of the meeting, a director of the Company or another
person who has agreed to attend the meeting to represent you.
If you appoint a proxy, you may still attend the meeting and
vote in person, but in that case your proxy appointment will
automatically terminate. Given the uncertainty around whether
shareholders will be able to attend the meeting due to safety
related capacity constraints at the meeting venue or due to
a change in the covid-19 pandemic situation, the Company
strongly encourages all shareholders to appoint the chair
of the meeting as their proxy rather than a named person.
This will ensure that your vote is counted even if attendance
at the meeting is restricted or you or any other proxy you
might appoint are unable to attend in person.
134 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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.
(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.
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 registrar
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 at the meeting venue until the end of
the meeting.
Changing proxy instructions
Communication
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 duly authorised professional adviser.
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 2021 annual report, which
includes this notice of meeting, or any proxy form for the
Company’s 132nd annual general meeting may not be used to
communicate with the Company for any purpose other than any
expressly stated.
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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.
Young & Co.’s Brewery, P.L.C. | Annual Report 2021
135
Shareholder Information
Explanatory notes to the notice of meeting
Resolution 8: increased limit on the amount
payable in respect of directors’ fees
Broadly, article 52(A) of the Company’s articles of association
provides that the total fees to be paid to all the directors must
not exceed £300,000 a year or any higher sum decided on
by an ordinary resolution at a general meeting – a fee payable
to a director pursuant to this article is distinct from any salary,
remuneration or other amount payable to him or her pursuant
to any other provision of the articles. On the basis of the
Company’s board including a non-executive chair and four other
non-executive directors, the Company would currently expect
the total fees payable to directors in any year to amount to
c.£270,000. Therefore, to ensure that the £300,000 cap (which
was set in 2017) is not inadvertently breached and to ensure that
the Company is able to continue to recruit and retain suitable
candidates, it is proposed that the higher sum authority for article
52(A) be increased to £375,000. The directors have no present
intention of making any further board appointments that would
cause the existing £300,000 cap to be exceeded, however the
increased amount provides the board with the flexibility to allow
it to do so should it be considered appropriate.
Resolution 9: directors’ authority to allot shares etc.
Paragraph (a) of this resolution would give the directors the
authority to allot shares or grant rights to subscribe for or convert
any securities into shares up to an aggregate nominal amount
equal to £2,436,485 (representing 19,491,880 shares of 12.5p
each). This amount represents approximately one-third of the
Company’s issued share capital as at 18 May 2021. In line with
guidance issued by the Investment Association in July 2016,
paragraph (b) of this resolution would give the directors authority
to allot shares or grant rights to subscribe for or convert any
securities into shares in connection with a rights issue in favour of
ordinary shareholders up to an aggregate nominal amount equal
to £4,872,970 (representing 38,983,760 shares), as reduced by
the nominal amount of any shares issued under paragraph (a) of
this resolution). This amount (before any reduction) represents
approximately two-thirds of the Company’s issued share capital
as at 18 May 2021. The authority sought under this resolution
will expire at the end of next year’s annual general meeting (or, if
earlier, at 11.59pm on 30 September 2022). The directors have
no present intention to exercise the authority sought under this
resolution. As at the date of the notice, no shares are held by the
Company in treasury.
Notice of the 132nd annual general meeting of
Young & Co.’s Brewery, P.L.C. (the “Company”)
to be held on Tuesday, 20 July 2021 is set out
on pages 131 to 135.
Resolutions 1 to 9 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: auditor appointment
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 3: auditor remuneration
In accordance with normal practice, the directors are asking for
your authority to determine the auditor’s remuneration.
Resolutions 4, 5 and 6: re-appointment of
directors
Roger Lambert, Ian McHoul and Torquil Sligo-Young are all
retiring as directors at this meeting; this is because they were
directors at the last two annual general meetings and did not
retire at either of them. All are seeking re-appointment; their
brief biographical and other details are on page 51.
Resolution 7: political donations and expenditure
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.
136 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
Resolutions 10 and 11 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 10: disapplication of pre-emption rights
This resolution would give the directors the 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 power would 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 £365,472 (representing
2,923,776 shares). This amount represents approximately 5%
of the Company’s issued share capital as at 18 May 2021.
The power sought under this resolution will expire at the end of
next year’s annual general meeting (or, if earlier, at 11.59pm on
30 September 2022).
Resolution 11: authority to purchase own shares
This resolution would give the Company the authority to
purchase just under 10% of the Company’s issued shares
(excluding any treasury shares). The directors have no present
intention to exercise 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. Shares purchased by the Company
pursuant to this authority may be held in treasury or may be
cancelled. The Company currently has no shares in treasury.
The minimum price, exclusive of expenses, which may be paid
for a share is 12.5p. The maximum price, exclusive of expenses,
which may be paid for a share is the highest of (i) an amount
equal to 5% above the average of the middle market quotations
for a share of that class as derived from the AIM appendix to
the Daily Official List of the London Stock Exchange for the five
business days immediately preceding the date of the purchase
and (ii) the higher of the price of the last independent trade
and the highest current independent bid on the trading venues
where the purchase is carried out at the relevant time. As at
1 May 2021, the Company had options outstanding over
58,015 A shares, representing 0.10% 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 by this resolution,
these options would then represent 0.12% of the Company’s
issued share capital. No warrants to subscribe for shares are
outstanding. The authority sought under this resolution will
expire at the end of next year’s annual general meeting (or, if
earlier, at 11.59pm on 30 September 2022).
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
137
Shareholder Information
Senior personnel, committees, banks, advisers and others
Directors
Stephen Goodyear
Non-executive Chairman
Patrick Dardis
Chief Executive
Mike Owen
Chief Financial Officer
Simon Dodd
Chief Operating Officer
Tracy Dodd
People
Roger Lambert
Non-executive and senior independent
Nick Miller
Non-executive
Ian McHoul
Non-executive
Torquil Sligo-Young
Non-executive
Joint Company Secretaries
Anthony Schroeder
Chris Taylor
Audit committee
Ian McHoul (Chair)
Stephen Goodyear
Roger Lambert
Nick Miller
Torquil Sligo-Young
Remuneration committee
Nick Miller (Chair)
Roger Lambert
Ian McHoul
Torquil Sligo-Young
Banks
HSBC Bank plc
8 Canada Square
London E14 5HQ
Royal Bank of Scotland Group plc
Corporate Banking London
250 Bishopsgate
London EC2M 4RB
Barclays Bank plc
1 Churchill Place
London E14 5HP
Shareholder information
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) Limited
One New Change
London EC4M 9AF
Solicitors
Gowling WLG (UK) LLP
Two Snowhill
Birmingham
B4 6WR
Slaughter and May
One Bunhill Row
London EC1Y 8YY
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 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/electronic-
communications
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
138 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
Notes
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Young & Co.’s Brewery, P.L.C. | Annual Report 2021
139
Shareholder Information
Notes continued
140 Young & Co.’s Brewery, P.L.C. | Annual Report 2021
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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