Annual Report 2013
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ANNUAL REPORT 2013 Our strategy is clear: we are focused on developing and growing an estate of premium pubs, primarily in London and the south east, with a clear emphasis on managed operations. We will continue to invest to maintain our premium position. We are looking to acquire further managed houses, either packages or individual sites, to increase the size of both our Young’s and Geronimo operations. CONTENTS 3 Chairman’s statement 27 Parent company statement of changes in equity 5 Chief Executive’s report 28 Notes to the financial statements 13 The board of directors 57 Notice of meeting 14 Directors’ report 61 Explanatory notes to the notice of meeting 21 Independent auditor’s report 62 Five year review 22 Group income statement 63 Senior personnel, committees and advisers 23 Statements of comprehensive income 63 Shareholder information 24 Balance sheets 64 Young’s pubs and hotels 25 Statements of cash flow 26 Group statement of changes in equity FINANCIAL HIGHLIGHTS 2013 2012 % £000 £000 CHANGE REVENUE 193,677 178,964 +8.2 ADJUSTED OPERATING PROFIT* 28,935 26,162 +10.6 OPERATING PROFIT/(LOSS)** 27,126 (2,665) ADJUSTED PROFIT BEFORE TAX* 24,128 21,333 +13.1 PROFIT/(LOSS) BEFORE TAX** 22,319 (7,494) ADJUSTED BASIC EARNINGS PER SHARE* 37.77p 33.41p +13.0 BASIC EARNINGS PER SHARE 35.23p (11.13)p DIVIDEND PER SHARE 14.63p 13.93p +5.0 (interim and recommended final) NET ASSETS PER SHARE*** £6.94 £6.59 +5.3 All of the results above are from continuing operations. * Reference to an “adjusted” item means that item has been adjusted to exclude exceptional items (see note 9). ** In the prior period the group changed its policy on valuing property and equipment from the cost model to the revaluation model. This gave rise to a net uplift in the value of property and equipment of £174.0 million. An upward movement of £203.1 million was recognised in equity, while a downward movement of £29.1 million was taken to the income statement resulting in the prior period loss before tax. *** Net assets per share are the group’s net assets divided by the shares in issue at the period end. YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2013 1 2 YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2013 CHAIRMAN’S STATEMENT I am pleased to be able to In his review, Stephen Goodyear, report on another very Chief Executive, reports on a strong positive and successful start to the current financial year, with year for Young’S. managed house revenue in the first seven weeks up 14.7% in total and After a number of years of significant 10.6% on a like-for-like basis. The year change, our focus for the past 12 as a whole will continue to benefit from months has been on achieving recent pub acquisitions and from our profitable growth from an expanding continuing investment in the existing estate of premium managed houses, estate – both pubs and hotels. Overall, and on maximising returns, both for consumer demand remains subdued. It us and for our tenants, from a smaller was therefore encouraging to see, in the tenanted estate. The financial results March budget, the Chancellor’s decision demonstrate our clear success. Against to reduce the tax burden slightly on a challenging backdrop, revenue the beer industry, and his subsequent for the year rose 8.2% to £193.7 assertion that this was not the last word million, adjusted profit before tax from the Government in supporting the was up 13.1% at £24.1 million and pub sector. We will be watching closely adjusted basic earnings per share to see that these welcome words are Nicholas Bryan increased 13.0% to 37.77 pence. This backed by further action. Chairman performance was built on strong like- for-like performances from both the We remain committed to a progressive Young’s and the Geronimo managed dividend policy. In light of our estates. While we continue to invest strong trading performance and heavily in our estate, the group’s sound financial position, the Board balance sheet remains robust with is recommending a final dividend of ADJUSTED BASIC EARNINGS PER a further reduction in net debt to 7.61 pence per share, a 5.0% increase, SHARE (PENCE) £112.6 million at the year end. This resulting in a total dividend for the year of 14.63 pence (2012: 13.93 pence). 37.77 +13.0% positions us well to invest in further growth opportunities. This final dividend, if approved, is expected to be paid on 11 July 2013 37.77 On 2 April 2013 two important Board 33.41 to shareholders on the register at the changes took place to enact a smooth 32.65 close of business on 7 June 2013. This 28.71 and effective succession plan for the would be the sixteenth consecutive management of Geronimo. Rupert year of dividend growth. Clevely, previously an executive 2010 2011 2012 2013 director and Managing Director, A great many people play a part Geronimo, moved to a non-executive in Young’s success, not least our role, and Ed Turner was appointed to customers, the teams in our pubs, our DIVIDEND PER SHARE the Board as an executive director, operational staff, my Board colleagues, (RECOMMENDED) (PENCE) succeeding Rupert as Geronimo’s and, of course, our shareholders. All 14.63 +5.0% Managing Director. Rupert founded deserve my sincere thanks for their Geronimo in 1995 and joined our continued support. 14.63 Board when we acquired the business As always, my colleagues and I look 13.93 in 2010. Ed joined Geronimo in 1999, forward to welcoming shareholders at 13.00 13.26 served as its Commercial Director our Annual General Meeting, to be for a number of years, and became held on 9 July 2013 in the Civic Suite of Commercial Director of Young’s in Wandsworth Town Hall, London SW18. 2010 2011 2012 2013 2011. I am pleased that Ed has joined the Board, and thank Rupert for the excellent job he has done in leading Geronimo during its integration with Young’s. I am delighted that he will continue to contribute his experience NICHOLAS BRYAN in a non-executive capacity. Chairman 22 May 2013 YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2013 3 “ PINT IN HAND ALREADY #SEEYOUATTHEBAR” 4 YOUNG & CO.’S BREWERY, P.L.C. ANNUAL REPORT 2013 CHIEF EXECUTIVE’S REPORT OVERVIEW seven disposals from our tenanted The summer of 2012, representing estate and decided not to renew two the first half of our financial year, was further leaseholds. At the period end dominated in the public consciousness therefore we operated an estate of 237 by the unique events in London – the pubs of which 197 were either freehold Diamond Jubilee and the Olympic and or long leases on peppercorn rents. Paralympic Games. Whilst tempered by The business again generated a strong some decidedly unseasonal weather, operating cash flow of £35.1 million. our like-for-like performance over This, together with the proceeds from that period saw some benefit from disposals and the second instalment these events. In the second half, from the sale of our stake in Wells when London returned to normal, we & Young’s, allowed us to invest £20.5 delivered further like-for-like growth; million whilst still reducing net debt by this was at a slightly lower rate but £5.5 million. Our balance sheet remains still very pleasing as it was achieved strong with net debt at £112.6 million; against the backdrop of a very strong this represents 2.8 times EBITDA of performance in the comparative period. £40.6 million, and gearing of 33.6%. Stephen Goodyear Throughout the year our focus has As always, our success is in large Chief Executive been on driving superior performance part due to the unstinting efforts and across our estate, week in week out, commitment of our colleagues across REVENUE whatever the external forces at play. the group – our senior management, (£000) The strong revenue and profit growth our operations team and those who 193,677 +8.2% that we have generated are a clear look after our customers every day. reflection of our success in this regard. My board colleagues and I are very 193,677 grateful to them all. 178,964 Revenue increased by 8.2% to 142,597 £193.7 million, with strong like-for-like 127,539 managed house growth across both BUSINESS REVIEW Young’s and Geronimo. Adjusted operating profit increased 10.6% to MANAGED OPERATION 2010 2011 2012 2013 £28.9 million. Adjusted profit before tax was up 13.1% at £24.1 million and adjusted basic earnings per share ADJUSTED OPERATING PROFIT increased 13.0% to 37.77 pence. (£000) Our strategy is unchanged: we are 28,935 +10.6% focused on developing and growing 28,935 an estate of premium pubs, primarily 26,162 in London and the south east, 21,746 20,307 with a clear emphasis on managed operations. We run pubs as opposed to restaurants and believe ours are 2010 2011 2012 2013 well balanced providing our customers with an exciting choice of both food Our managed operation, which and drink. We will continue to invest comprises 125 Young’s managed ADJUSTED PROFIT BEFORE TAX in the existing estate to maintain our houses (including 18 hotels) and 34 (£000) premium positioning and to grow Geronimo pubs, increased revenue by 10.0% to £181.6 million, representing 24,128 +13.1% our hotel business.