TIDMWTB
RNS Number : 3908U
Whitbread PLC
24 October 2017
24 October 2017 - Whitbread PLC results for six months to 31
August 2017
Significant strategic progress in the UK and Internationally
-- Over 2,000 new Premier Inn rooms opened in the UK in the first half and maturing well
-- New Costa breakfast and lunch ranges successfully launched throughout the UK
-- Premier Inn Germany accelerating new hotel pipeline - 1 open & 9 secured pipeline hotels
-- Costa South China joint venture partner buy-out in October
for GBP35 million enabling full control
-- Efficiency programme gaining momentum with over GBP60 million delivered over last two years
Good financial performance in line with expectations and on track
for the full year
=========================================================================
H1 FY18 H1 FY17 Change
========== ========== =======
Revenue GBP1,671m GBP1,556m 7.4%
Underlying operating profit(1) GBP342m GBP320m 7.1%
Underlying profit before tax(1) GBP328m GBP307m 6.7%
Statutory operating profit GBP336m GBP282m 19.3%
Statutory profit before tax GBP316m GBP264m 19.9%
Underlying basic earnings per share(1) 143.7p 133.9p 7.4%
Statutory basic earnings per share 137.7p 111.4p 23.6%
Interim dividend per share 31.4p 29.9p 5.0%
Discretionary free cash flow(2) GBP293m GBP269m 9.3%
Capital expenditure GBP269m GBP329m GBP60m
Return on capital(3) 15.4% 15.1% 30bps
======================================== ========== ========== =======
-- Strong revenue growth of 7.4% and market share gains in both Premier Inn(4) and Costa
-- Disciplined cost management enabling underlying profit growth of 6.7% to GBP328 million
-- Premier Inn underlying operating profit growth to GBP295
million, Costa constant at GBP65 million
-- Good discretionary free cash flow conversion of 86%, delivering GBP293 million to reinvest
-- Strong balance sheet with net debt(5) reduced to GBP852 million
-- Return on capital increased 30 bps to 15.4%, despite scale of recent investment
Alison Brittain, Whitbread Chief Executive Officer,
commented:
"I am pleased with the progress we have made in executing the
plan we set out in November last year, with earnings per share up
7.4% in the half and return on capital of 15.4%. Our plan is based
on growing in our core UK markets; focusing on structural growth
opportunities for Premier Inn in Germany, Costa in China and Costa
Express; and strengthening our capabilities and efficiency to
deliver these attractive opportunities.
In our core UK markets, we have:
-- opened over 2,000 Premier Inn rooms in the last six months;
-- developed digital capabilities central to our operating model
in Premier Inn, which has enabled new tools such as our automated
trading engine and business booker;
-- increased the proportion of hotel customers booking with us directly to 95%;
-- strengthened new Costa store pipeline, focused on growth channels; and
-- developed product innovation capability in Costa which has
already launched new breakfast and lunch ranges, combined with new
coffees and cold drinks.
We have also made significant progress in simplifying our
international business and creating platforms for sustainable
growth over the longer term. This progress includes:
-- completion of the exit of non-core international operations,
including hotels in India, Thailand, Singapore and Indonesia and
our equity owned Costa business in France;
-- the buy-out of our joint venture partner for Costa in South
China giving us full strategic and funding flexibility to unlock
Costa's potential in China; and
-- accelerating the expansion of Premier Inn in Germany, with
nine hotels now in our committed pipeline in addition to our
existing hotel, resulting in an open and secured pipeline of over
2,000 rooms.
This amount of change and growth requires us to manage and
execute in a more efficient and technology enabled manner.
Whitbread's investment in improving shared capabilities are
critical to enable both Premier Inn and Costa to deliver their
plans in the UK and internationally. Work to improve our
capabilities over the last two years has included:
-- building a strong management team, completed with the new Group Transformation Director;
-- creating a shared digital and technology infrastructure;
-- delivering over GBP60 million of efficiency savings over the
last two years as part of our GBP150 million target with growing
confidence on the long-term potential; and
-- enhancing our property capability and strategy.
We have significant structural growth opportunities, in the UK
and internationally, and confidence in our plans to capitalise on
these opportunities. Despite the well known short-term economic
uncertainty, our performance in the first half was good and we
expect to meet expectations for the full year. Although we remain
cautious on the current environment, we are confident that ongoing
disciplined allocation of capital and focus on executing our plans
will deliver long-term growth in earnings and dividends and a
strong return on capital."
Richard Baker, Whitbread Chairman commented:
"In the year that Whitbread celebrates its 275(th) birthday, I
am pleased to see another good performance as we continue to invest
in the compelling long-term opportunities available to our
businesses. We have maintained a strong balance sheet and continue
to generate excellent cash flow, which together provides the Board
with confidence to increase the interim dividend to 31.4p."
For more information please contact:
Investor queries
Matt Johnson, Whitbread PLC | matt.johnson@whitbread.com | +44
(0) 7848 146 761
Ann Hyams, Whitbread PLC | ann.hyams@whitbread.com | +44 (0)
7796 709 087
Matt Holman, Whitbread PLC | matt.holman@whitbread.com | +44 (0)
7712 243 322
Media queries
Anna Glover, Whitbread PLC | +44 (0) 7768 917 651
David Allchurch, Tulchan Communications | +44 (0) 20 7353
4200
Footnotes and definitions are contained immediately prior to the
financial statements.
For photographs and video please visit our media library on
www.whitbreadimages.co.uk.
A presentation for analysts will be at 9.30am on 24 October 2017
at Deutsche Bank, 1 Great Winchester Street, London, EC2N 2DB. A
webcast of the presentation will be available through
www.whitbread.co.uk/investors or
https://3xscreen.videosync.fi/2017-10-24_whitbread.
Strong progress with our clear plan for growth
In November 2016, Whitbread set out a plan for sustainable
long-term growth. This plan was based on the strong fundamentals
that underpin Whitbread, Premier Inn and Costa:
-- there are significant structural growth opportunities for
Premier Inn and Costa, both in the UK and internationally;
-- Premier Inn and Costa both have unrivalled brand strengths;
-- Whitbread has a strong track record for disciplined capital management;
-- Whitbread has clear plans to grow Premier Inn and Costa at a good return on capital; and
-- Whitbread has a consistent history of focusing on creating shareholder value.
Despite continued uncertainty in the near term economic and
political environment, these fundamentals are as relevant as
ever.
The plan remains consistent in focusing on:
1. Grow and innovate in the core UK markets for Premier Inn and
Costa
2. Focus on the strengths developed by Whitbread in the UK to
grow internationally, in particular in Premier Inn in Germany,
Costa in China, and Costa Express in multiple countries
3. Build and enhance the necessary capabilities and
infrastructure to support long-term growth and efficiency.
Disciplined execution of this plan will enable long-term growth
in earnings and dividends, combined with a strong return on
capital.
Significant structural opportunities
Whitbread's plan for growth is centred on compelling structural
growth opportunities being available for both Premier Inn and Costa
in the UK and select markets internationally.
UK - Premier Inn
Premier Inn has a unique business model and position in the UK
budget branded hotel market, supported by a significant food and
beverage offer. Through a significant degree of freehold property
ownership and an owner-manager approach, Premier Inn ensures high
quality, consistency and good value for money throughout its hotel
estate. This ensures hotel guests have a strong preference for
Premier Inn, which provides an industry leading proportion of
direct bookings that has recently increased to 95%.
This unique business model provides Premier Inn with a strong
opportunity to grow market share versus the structurally
disadvantaged independent segment. The independent segment
currently holds more than 50% market share, but this has been
declining by approximately one percentage point per annum. Through
building new hotels, extending existing hotels, and further
enhancing the operational model, Premier Inn expects to continue to
win market share, increasing its position from approximately 9% in
2016 to over 12% beyond 2020. Premier Inn has a strong track record
of maintaining occupancy above 80%, despite increasing room
capacity by 25% over the last three years.
UK - Costa
Costa has a leading position in the structurally attractive UK
coffee market, with more than 2,300 stores throughout the country.
This leading position has been built on Costa's strong coffee
credentials, combined with Whitbread's strengths as an employer of
choice and in property management.
Allegra, the leading coffee industry body in the UK, has
forecast coffee outlets to grow in the UK by 5-6% per annum over
the next few years. The UK is also entering the 'third wave' of
coffee - a period in which consumers' preferences for coffee become
more sophisticated and are willing to spend more per cup for higher
quality and innovative drinks. As market leader, Costa has a prime
opportunity to capitalise on these attractive structural
trends.
International - Premier Inn in Germany
The hotel market in Germany is a highly attractive
opportunity:
-- the hotel market is currently 35% larger than the UK;
-- the budget branded sector is less mature with 6% market share (24% in the UK);
-- the market is highly fragmented with independents accounting
for approximately 75% of the hotel market;
-- there is currently no clear market leader, with the largest
hotel operator having just 2% market share; and
-- given the regional dispersal of industrial development, there
is a higher degree of business travel.
Premier Inn's unique business model of high quality, consistency
and value for money resonates well with guests in the first Premier
Inn hotel, which was opened in Frankfurt in 2016.
International - Costa in China
The coffee market in China is still relatively new, with fewer
than 4,000 specialist coffee shops - half of which being the market
leader. The coffee shop market in China is expected to more than
double in size by 2020 and an opportunity exists to position Costa
as the strongest challenger to the market leader.
1. Grow and innovate in our core UK markets
Premier Inn
-- Majority of 85,000 rooms target now secured in new hotel pipeline
-- Around 85% of rooms now refurbished to our modern room formats
-- Over 95% of customers booking direct
-- The clear first choice hotel for business and leisure travellers with over 80% occupancy
Premier Inn UK estate metrics
=========================================================================
H1 FY18 H1 FY17 Change
========= ========= ========
# hotels 771 746 3.4%
# rooms 70,120 65,770 6.6%
Direct booking 95% 93% 200bps
Occupancy 81.8% 82.6% (80)bps
Average rate per room GBP65.40 GBP63.62 2.8%
Revenue per available room GBP53.46 GBP52.53 1.8%
Total hotel & restaurant revenue growth 6.4% 6.5% (10)bps
========================================= ========= ========= ========
Premier Inn is firmly on track to have 85,000 rooms by 2020 from
70,120 rooms at the end of the half, with over 2,000 new rooms
opened in the last six months. The majority of the pipeline to
85,000 rooms is now secure, with property and network planning
teams now turning their attention to capacity growth beyond this
milestone.
Despite the significant increase in rooms over recent years,
occupancy remained above 80% and the proportion of rooms being sold
directly increased to 95%. This industry-leading rate of 95% was
made possible through recent investments in premierinn.com which
further enhanced the automated trading engine, improved the overall
online and booking experience and introduced a new business booking
tool. Approximately 24% of Premier Inn revenue is generated from
business account customers. These customers now have access to a
dedicated online portal, which provides enhanced management
information and offers special rates.
Improvements in the booking tool have been matched by further
investment in improving quality and consistency throughout the
hotel network. Around 85% of Premier Inn rooms are now in the most
recent room formats, ensuring more customers can enjoy a high
quality and consistent experience.
Our Hub by Premier Inn hotel format has gained further traction,
with eight hotels comprising 1,600 rooms now open in London and
Edinburgh. Hub provides a high quality and affordable experience in
inner city locations and embeds technology throughout the customer
journey, from booking via mobile, paperless check-in and in-room
functions controlled via a dedicated mobile app. Strong customer
response to this innovative format and integrated direct booking
through premierinn.com enables new Hub hotels to mature quickly,
with all hotels achieving a 4.5 rating on TripAdvisor.
Costa
-- Over 230 new equity & franchised stores (net 205) opened in the last year with 32 closures
-- Network plan focusing on fast growing retail and travel channels
-- Costa Express expanding with 25% increase in machines over last 12 months and new partners
-- New breakfast and lunch ranges launched throughout the UK
-- Loyalty technology re-platformed to enable better digital interaction
-- Upweighted coffee and food innovation capability in place
Costa UK metrics
===================================================================
H1 FY18 H1 FY17 Change
======== ======== =======
H1 UK equity stores like for like
sales growth(6) 0.6% 2.3%
# high street stores 447 426 4.9%
# shopping mall & retail park stores 393 376 4.5%
# drive thru stores 68 42 61.9%
# concessions & transport stores 384 356 7.9%
# office stores 33 32 3.1%
# franchise 1,001 889 12.6%
# Costa Express machines 6,688 5,323 25.6%
====================================== ======== ======== =======
Costa has undertaken a significant amount of strategic activity
over the past 18 months. This has included reshaping store network
plans towards growth channels, creating a strong pipeline of coffee
and food product innovation and progress with our digital
initiatives.
Costa has a large store estate of 2,326 stores throughout the UK
in a number of channels and formats. Costa generates a high return
on capital and, with a short-leasehold model, ensures estate
management is focused on higher growth channels and provides
flexibility in churning the existing estate. In the year ahead,
approximately two-thirds of new stores will be in the high growth
channels of drive thru stores, transport locations and retail
parks.
Following the development of our new product innovation team, a
new range of breakfast food was launched in the first quarter.
Customer feedback has been strong with like for like breakfast food
volume growing by 9% in the period since launch. Further work is
underway to supplement this new breakfast offering. To complement
the strong launch of the breakfast range, a new range of salads was
launched over the summer and new hot food in September. Initial
performance has been encouraging.
In addition to the introduction of the new food range, Costa
launched new cold drinks in advance of the summer, including cold
brew coffee, frostino iced drinks and a trial of nitro coffee. The
recently formed innovation team has also created a strong pipeline
of new hot and cold drinks to launch in the year ahead.
Costa and Whitbread digital teams continued to work at pace
during the half, which resulted in the completion of a new loyalty
data platform. This platform will enable further improvements in
2018 to the Costa Club digital application, enhanced direct
communication with customers and improvements to the in-store
experience for Costa Club members.
The growth of Costa Express also continued with 1,365 new
machines in the last 12 months in the UK, adding 25% capacity.
Costa Express machines offer a high incremental return on capital
to Whitbread and provide partners with an attractive income stream.
All Costa Express machines are connected through in-house developed
telemetry, which ensures low maintenance for partners and greater
consistency of availability. During the period a new partnership
was agreed with WM Morrisons Supermarkets.
2. Focus on our strengths to grow internationally
Completed exit of non-core and underperforming operations
We have now completed the exit of all non-core international
operations for both Premier Inn and Costa. This activity has
included the closure of the equity owned Costa business in France
and the disposal and exit of all 11 hotels and management
agreements in India, Thailand, Singapore and Indonesia. These exits
have been completed slightly ahead of previous financial guidance
and now enable the teams to focus international efforts on
developing Premier Inn in Germany and Costa in China.
Premier Inn Germany
Given the scale and attractive nature of the opportunity in
Germany, a further four property deals have been completed,
bringing the total committed pipeline to nine hotels, comprising
2,000 rooms. This is in addition to the existing 210 room hotel in
Frankfurt, which continues to perform well and consistently ranks
as the #1 hotel of 272 listed in Frankfurt by TripAdvisor.
The 10 open or committed hotels, and supporting team, provide a
strong platform for further organic expansion and the evaluation of
other opportunities to accelerate Premier Inn's ambition in this
attractive market.
Costa China | Completed buy-out of South China joint venture
partner
On 10 October 2017 Whitbread announced the buy-out of the 49%
share in the South China joint venture held by Yueda for RMB 310
million (GBP35 million). The South China operation comprises
approximately 250 stores. The partnership with Yueda was essential
in the first phase of Costa's development in China, but full
control will enable a greater level of focus on improving the
overall proposition and reshaping the store network to have broader
and deeper representation in key cities. The strong partnership
with BHG in North China will continue unaffected.
Work to improve the proposition in China has continued alongside
the ownership changes, to ensure store level economics support the
strong growth planned. Last year, five underperforming stores were
selected to trial a new concept. The improvements included
significant changes in store design, new products and team
training. These stores have delivered a strong uplift in sales.
This strong performance provides confidence in the customer offer
and the opportunity to extend the store network to approximately
700 stores by 2020, with significant opportunity beyond this over
the longer term.
Other international activity
Costa Express continued its international expansion with a
further 140 machines in Europe, the Middle East and Malaysia. Costa
Express has been introduced to Malaysia, with over 100 machines
installed to date. This has been received well, following a
tailored launch with iced coffees. Customer feedback has been
excellent, with many machines serving more than 70 cups per
day.
Costa Poland performed well with good like for like sales
growth. There are now approximately 140 Costa stores across 21
cities. During the half, new products were successfully launched
including bacon baguettes and cold brew coffee.
Premier Inn in the Middle East continues to perform well against
tough market conditions, with good occupancy levels and strong
customer feedback. We have a productive partnership with Emirates,
with a hotel recently opened in Doha, comprising 219 rooms, and
plans for one further 389 room hotel in Dubai, due to open in 2018.
Costa in the Middle East has also experienced tough market
conditions, resulting in a decline in sales during the half.
3. Build capability to support long-term growth
Winning teams
The breadth and scale of Whitbread enables superior attraction
and retention of talented people. As Whitbread entered a new phase
of growth, a different mix of skills was required. The Executive
Team was completed in September with the appointment of a new Group
Transformation Director, responsible for improving our supply chain
and procurement capabilities. New labour scheduling tools have also
been implemented in both Restaurants and Costa to ensure that the
right level of service can be delivered, at the right time.
Everyday efficiency
Last year Whitbread began a multi-year programme to generate
GBP150 million of efficiency savings. This programme has already
delivered approximately GBP60 million of savings from a combination
of procurement benefits and shared services, which provides growing
confidence in the longer-term potential. The new Group
Transformation Director will oversee the second phase of activity
involving further shared procurement and evolving the supply chains
across Premier Inn and Costa. Work in the period included
consolidation of housekeeping supply and laundry contracts in
Premier Inn and shared procurement of software and IT services.
Property expertise
Whitbread owns and manages more than 3,000 sites in the UK and
internationally, and supports more than 1,400 franchised outlets.
As such, property site selection, development, management and
longer-term optimisation is a core capability. Freehold property
development and ownership is a core competitive advantage as it
provides superior access to sites (which may not be available
through leasehold) and ensures hotels are designed and constructed
to the best possible specification for the Premier Inn model.
Ongoing freehold ownership provides flexibility to extend hotels,
reduces profit volatility through the cycle and provides Whitbread
with a strong covenant for superior access to leasehold properties.
During the half, the property teams added 1,870 rooms to the
Premier Inn pipeline, including six new hotels.
As laid out in our property strategy in November 2016, the level
of freehold sale and leaseback transactions has been increased in
order to recycle capital into new developments, improve liquidity
and demonstrate the strength of Whitbread's balance sheet. To this
end, a forward funding transaction was completed in relation to a
246-room Hub hotel development in Shoreditch in London. Whitbread
receives GBP52 million and will enter into a 25-year lease, at a
yield of 3.9%, on completion of the development. Total proceeds of
circa GBP100 million are expected to be received from sale and
leaseback transactions in the year.
Improving digital capabilities
Whitbread's scale enabled the creation of a shared digital and
technology function. This team has been instrumental in the
advances made in developing premierinn.com and re-platforming
Costa's legacy loyalty platform. During the half, the replacement
of core finance systems in Premier Inn was also completed, which
enables enhanced performance insight and reduces manual
intervention. Work has already begun to extend these systems to
support improvements in the finance function of Costa. The roll-out
of new tills in Costa is also progressing, which will speed up
transactions and enable click and collect to be completed in
2018.
A Force for Good
Earlier this year the Force for Good programme was initiated to
integrate the numerous activities Whitbread conducts to ensure the
long-term sustainability of its businesses. The Force for Good
programme focuses on three central themes:
-- Providing a working environment where all team members can reach their potential;
-- Making meaningful contributions to the communities in which Whitbread operates; and
-- Treating people and the environment with respect.
Whitbread's attractiveness as an employer includes a large-scale
apprenticeship programme, broad training and development
programmes, and pay for progression as a key underlying principle.
This enables Whitbread to compete well in attracting people to all
positions and provide rewarding careers, which increases team
retention. Whitbread has invested almost GBP2 million to date and
over 11,000 qualifications have been gained. Over 2,000 full
apprenticeships have been achieved since 2009 and more than 750 are
currently underway. This year, Whitbread was also listed 8(th) in
the Sunday Times 'Best Big Companies to Work For' ranking.
The Premier Inn team completed fund raising activities to
support the construction of a new clinical building at Great Ormond
Street Hospital, which is set to open in November. The Costa
Foundation provides education through 75 schools in nine coffee
growing regions and, to date, more than 60,000 children have
benefitted.
The initiative begun by Costa to recycle not only its own cups,
but also those from other coffee shops, gained further traction,
with now over 9 million cups recycled through us in 8 months. This
year, Whitbread also moved to a 100% renewable supply contract,
under which all electricity comes from green sources including wind
and hydro power.
Long-term ambition
Whitbread has achieved a significant amount in the past 18
months to improve capabilities and ensure a strong platform is in
place to deliver sustainable growth over the medium-term in the UK
and internationally. Progress has been made whilst maintaining a
strong balance sheet, growing revenue and earnings and maintaining
a strong return on capital.
In the UK, Premier Inn has a secure pipeline to 85,000 rooms and
clear ambition to beyond 100,000 rooms. Despite significant
capacity growth, Premier Inn remains the hotel group with the
highest value for money scores. Costa has made good progress in
building a pipeline of innovation for new drinks, new food ranges,
improvements in digital technology and investment in store
standards. These improvements enable Costa to continue to be the
UK's favourite coffee shop(7) and grow to 3,000 stores over the
longer term.
Internationally, Premier Inn's expansion into Germany has
accelerated and a strong foundation has been established to enable
longer-term growth, in order to replicate the success of Premier
Inn in the UK. Costa in China is now in a stronger position to
deliver its plans following the buyout of its joint venture in
South China, combined with its existing successful partnership with
BHG in North China.
Investing in Whitbread's capabilities to achieve these ambitious
plans has continued, but more remains to be done. Supply chain
development, procurement efficiency and technology advancements are
now possible following the improvements in the team over the past
two years. The property strategy has been refined, with an increase
in sale and leaseback transactions, whilst remaining majority
freehold in the Premier Inn estate. These improvements enable the
plan to be executed which will deliver long-term, sustainable
growth in earnings and dividends, combined with strong return on
capital.
Good financial performance in line with expectations
-- Strong revenue growth across all businesses
-- Disciplined cost management delivering profit growth of 6.7%
to GBP328 million, in line with expectations
-- Strong discretionary cash generation of GBP293 million supports ongoing investment
-- Strong balance sheet with net debt reduced to GBP852 million
-- Return on capital increased to 15.4%, despite recent investments yet to mature
-- Confidence in sustainable growth supports increase in interim dividend to 31.4p
Premier Inn | Continued strong financial performance
-- Good revenue growth of 6.4% delivered through market leading occupancy and room growth
-- Restaurants performance improved with 1.1% like for like sales growth
-- Efficiency programmes supporting sustainable profit growth
-- International exits reducing losses and profitability drag
-- Maintaining high return on capital on a growing capital base
Premier Inn financial highlights
======================================================================
H1 FY18 H1 FY17 Change
========== ======== =======
Revenue GBP1,052m GBP988m 6.4%
UK (inc. restaurants / F&B) GBP1,049m GBP985m 6.4%
International GBP3m GBP3m n.m.
Underlying operating profit GBP295m GBP272m 8.9%
UK (inc. restaurants / F&B) GBP297m GBP275m 8.1%
International GBP(2)m GBP(3)m n.m.
Statutory profit before tax GBP295m GBP233m 26.5%
Other metrics
H1 Premier Inn total sales growth* 8.3% 8.9%
H1 UK Premier Inn like for like sales
growth* 3.6% 2.4%
Q2 UK Premier Inn like for like sales
growth* 2.6% 2.7%
H1 Restaurants like for like sales
growth 1.1% 0.3%
Q2 Restaurants like for like sales
growth 1.6% 0.5%
Return on capital 13.4% 13.0%
======================================= ========== ======== =======
*Excludes Restaurants
Premier Inn (including Restaurants) had another good performance
in the first half, with revenue increasing 6.4% to GBP1,052 million
(H1 FY17: GBP988 million) and underlying operating profit growing
8.9% to GBP295 million (H1 FY17: GBP272 million). This strong
profit growth led to an increase in return on capital to 13.4% (H1
FY17: 13.0%), despite further capital investment in Premier Inn of
GBP214 million.
In the UK, Premier Inn (including Restaurants) increased revenue
by 6.4% to GBP1,049 million (H1 FY17: GBP985 million) and grew
underlying operating profit at a faster rate of 8.1% to GBP297
million (H1 FY17: GBP275 million). Good revenue growth was a mix of
high like for like room sales growth and the benefit of new rooms
opened in the last 12 months. Like for like Premier Inn sales
growth (excluding Restaurants) of 3.6% (H1 FY17: 2.4%) was the
result of an increase in the average rate charged per room of 2.8%
to GBP65.26 (H1 FY17: GBP63.48) and the benefit of hotel
extensions, offset by a modest reduction in occupancy to 81.8% (H1
FY17: 82.6%). Like for like RevPAR was up 1.8% with RevPAR in
catchments with no Premier Inn capacity growth up circa 3.3%,
comparable with the midscale and economy market RevPAR growth of
3.5%.
In London, we were pleased with Premier Inn's performance with
total sales up 9.9%, with 8.2% growth coming from new hotels.
Despite the additional capacity, like for like occupancy was high
at 86.4% and like for like RevPAR increased 2.2%. The midscale and
economy market RevPAR was up 4.9%.(8)
In the regions, Premier Inn's total sales growth was again
strong, increasing 7.7%, with like for like RevPAR up 1.9% and like
for like sales growth of 4.0%, supported by 1,400 extension rooms
opened over the last 12 months. The midscale and economy market
RevPAR was up 3.2%.
This strong growth is due to maintaining consistent high quality
throughout the hotel estate, combined with offering excellent value
for money, which has been enhanced through the introduction of the
automated trading engine last year.
Strong progress in efficiency activities, combined with the
benefit of sales growth, enabled underlying operating profit
margins to increase to 28.1% (H1 FY17: 27.5%). The ongoing everyday
efficiency programme provided a benefit to underlying operating
margin of 160 basis points, whilst increased sales and new capacity
contributed 180 basis points. This ensured that that the increase
in product costs, labour costs and business rates, which impacted
margins by 260 basis points, could be offset. However, the timing
of investment in FY18 is more weighted towards the second half of
the year.
The food and beverage offer, which is integral to the overall
Premier Inn experience, also performed well. Restaurants revenue
grew 2.0%, with like for like sales growth of 1.1% (H1 FY17: 0.3%).
The good like for like growth was a result of all Beefeater
restaurants now being refurbished to the latest "orange cow"
format, enhancements to menus across Thyme, Beefeater and Brewers
Fayre restaurants and increased take-up of hotel guests for
breakfast.
During the half the exit of all hotels in India, Thailand,
Singapore and Indonesia was completed. As a result of these exits,
underlying operating losses from Premier International were reduced
to GBP(2) million (H1 FY17: GBP(3) million).
Costa | Revenue growth and earnings as expected
-- Strong revenue growth underpinned by ongoing UK & international expansion
-- UK like for like sales remain positive against tough market conditions
-- Improvement in like for like performance in China
-- Costa Express growth in the UK and international continues with 767 net new machines
-- Underlying operating profit in line with expectations
-- Strong return on capital returning to normalised levels following recent investment
Costa financial highlights
================================================================
H1 FY18 H1 FY17 Change
======== ======== =======
Revenue GBP622m GBP570m 9.1%
UK GBP542m GBP500m 8.3%
International GBP80m GBP70m 15.4%
Underlying operating profit GBP65m GBP65m 0.3%
UK GBP61m GBP64m (4.6)%
International GBP4m GBP1m n.m.
Statutory profit before tax GBP59m GBP65m (9.8)%
Other metrics
H1 UK equity stores like for like
sales growth 0.6% 2.3%
Q2 UK equity stores like for like
sales growth 0.1% 2.0%
H1 UK Express total sales growth 17.7% 21.9%
Return on capital 39.9% 41.8%
=================================== ======== ======== =======
Costa grew well during the half, with revenue increasing 9.1% to
GBP622 million (H1 FY17: GBP570 million). Recent significant
increases in industry cost structures were offset to an extent by
volume benefits and efficiency savings which enabled underlying
operating profit to remain flat at GBP65 million (H1 FY17: GBP65
million). Holding underlying operating profit flat, combined with
recent investment in technology, new stores and the new Roastery,
led to return on capital returning to normalised levels at 39.9%
(H1 FY17: 41.8%).
In the UK, Costa increased revenue by 8.3% to GBP542 million (H1
FY17: GBP500 million). This strong sales growth was principally
driven by the addition of 108 net new stores, and the continued
strong performance of Costa Express, which grew revenues by 17.7%
to GBP98 million (H1 FY17: GBP83 million). Like for like sales
growth in UK equity Costa stores remained positive at 0.6%
following the introduction of an improved breakfast food range and
a broader range of cold drinks.
Costa UK underlying operating profit declined by 4.6% to GBP61
million (H1 FY17 GBP64 million), in line with previous margin
guidance, resulting from a mix of significant increases in labour
costs, business rates and foreign exchange impacts on coffee
imports, together impacting underlying operating profit margins by
180 basis points. However, these expected cost increases were
largely offset by efficiency savings, which delivered a benefit of
150 basis points to underlying margins.
The contribution from Costa's international operations grew to
GBP4 million during the half (H1 FY17: GBP1 million), following the
completion of the exit of operations in France and improvements in
China. With further improvements to come in China, along with the
buy-out of the joint venture partner in South China, continued
growth is expected, requiring greater investment in the short
term.
Profit growth | Disciplined cost control underpins profit
growth
H1 FY18 H1 FY17 Change
========== ========== ========
Premier Inn underlying operating profit GBP295m GBP272m 8.9%
Costa underlying operating profit GBP65m GBP65m 0.3%
Central costs GBP(18)m GBP(17)m (9.8)%
========== ========== ========
Underlying operating profit GBP342m GBP320m 7.1%
Underlying net finance costs GBP(14)m GBP(13)m (16.5)%
========== ========== ========
Underlying profit before tax GBP328m GBP307m 6.7%
Non-underlying items GBP(12)m GBP(43)m -
========== ========== ========
Profit before tax GBP316m GBP264m 19.9%
Tax GBP(66)m GBP(63)m (4.6)%
========== ========== ========
Profit for H1 GBP250m GBP201m 24.7%
========================================= ========== ========== ========
Growth in profits was due to the strong performance of Premier
Inn with an 8.9% increase in underlying operating profit to GBP295
million (H1 FY17: GBP272 million). This was partially offset by a
small increase in central costs to GBP18 million (H1 FY17: GBP17
million), reflecting the ongoing investment building the
capabilities across technology, property, supply chain and
procurement functions.
Non-underlying items
H1 FY18 H1 FY17
========= =========
Disposal of PPE and property provisions GBP(8)m GBP4m
PI international business exit GBP6m GBP(35)m
UK restructuring - GBP(11)m
Historic indirect tax disputes GBP(4)m GBP5m
IAS 19 pension finance cost GBP(5)m GBP(5)m
Amortisation of acquired intangibles GBP(1)m GBP(1)m
========= =========
Total non-underlying items GBP(12)m GBP(43)m
======================================== ========= =========
During the first half, the international business exits were
substantially completed, ahead of schedule and at a lower cost than
expected, resulting in a GBP6 million benefit in the period.
The cash impact of the above non-underlying operating costs was
a net cash inflow of GBP72 million (H1 FY17: GBP39 million net cash
inflow) made up of a cash outflow from operating activities of
GBP14 million (H1 FY17: GBP15 million outflow) and a cash inflow
from investing activities of GBP86 million (H1 FY17: GBP54 million
inflow).
Further information on non-underlying items is contained in note
3 to the financial statements.
Net finance costs
The underlying net finance cost for the half year was GBP1
million higher than last year at GBP14 million (H1 FY17: GBP13
million), which was principally due to a lower proportion of
interest being capitalised against construction projects in
progress.
Total net finance costs were GBP20 million (H1 FY17 GBP18
million) including the IAS19 pension finance charge of GBP5 million
(H1 FY17: GBP5 million charge).
Taxation
Underlying tax for the half year amounted to GBP66 million at an
effective tax rate of 20.2% (H1 FY17: 21.2%). Total tax for the
half year amounted to GBP66 million at an effective tax rate of
20.8% (H1 FY17: 23.9%).
Earnings per share
H1 FY18 H1 FY17 Change
======== ======== =======
Statutory basic earnings per share 137.7p 111.4p 23.6%
Statutory diluted earnings per share 137.3p 111.1p 23.6%
Underlying basic earnings per share 143.7p 133.9p 7.4%
Underlying diluted earnings per share 143.3p 133.4p 7.4%
======================================= ======== ======== =======
Full details are set out in Note 5 to the financial
statements.
Dividend
The interim dividend is 31.4 pence, an increase on last year of
5.0%. Full details are set out in Note 6 to the financial
statements. The dividend will be paid on 15 December 2017 to all
shareholders on the register at the close of business on 10
November 2017. Shareholders will again be offered the option to
participate in a dividend re-investment plan.
Cash generation | Consistent & strong to fund
investments
H1 FY18 H1 FY17
========== ==========
Underlying operating profit GBP342m GBP320m
Non-cash items GBP126m GBP113m
Change in working capital GBP(27)m GBP(1)m
Maintenance capital expenditure GBP(90)m GBP(117)m
Interest GBP(8)m GBP(10)m
Tax GBP(50)m GBP(36)m
========== ==========
Discretionary free cash flow GBP293m GBP269m
Pensions GBP(48)m GBP(44)m
Dividends GBP(120)m GBP(113)m
Expansionary capital expenditure GBP(179)m GBP(212)m
Proceeds from sale & leaseback transactions GBP41m GBP46m
Proceeds from disposal of business GBP45m GBP8m
Other GBP6m GBP(32)m
========== ==========
Net cash flow GBP38m GBP(78)m
Opening net debt GBP890m GBP910m
========== ==========
Closing net debt GBP852m GBP988m
============================================ ========== ==========
Cash generation remained strong in the first half, converting
86% of underlying operating profit into discretionary free cash.
This discretionary free cash flow was used to fund our pension
contributions of GBP48 million, dividends payments of GBP120
million and expansionary capital expenditure of GBP179 million.
Capital investment | Compelling opportunities to invest at high
ROC
H1 FY18 H1 FY17 Last 2 years
======== ======== =============
Maintenance and product improvement
Premier Inn GBP72m GBP92m GBP316m
Costa GBP18m GBP25m GBP108m
Growth
New / extended UK hotels GBP122m GBP148m GBP626m
Premier Inn Germany & International GBP20m GBP29m GBP127m
New Costa stores & Express machines GBP37m GBP35m GBP133m
Total GBP269m GBP329m GBP1,310m
==================================== ======== ======== =============
Capital expenditure during the half decreased to GBP269 million
(H1 FY17: GBP329 million). The reduction was principally due to the
timing of new hotels and hotel refurbishments. Investments in new
and extended hotels mature over a 1-3 year period and deliver
return on capital above 13%. The pace of investment in new Costa
stores and Costa Express machines continued in the half, with a
further GBP37 million of capital. New Costa stores take 1-3 years
to reach maturity and deliver return on capital of 30-40%.
Capital discipline | Asset-backed balance sheet provides
flexibility
H1 FY18 FY17 H1 FY17
========== ========== ==========
Net debt GBP852m GBP890m GBP988m
Pension (net of tax) GBP335m GBP377m GBP356m
Lease commitments (@8x) GBP2,128m GBP2,058m GBP1,985m
========== ========== ==========
Adjusted net debt GBP3,315m GBP3,325m GBP3,329m
========== ========== ==========
Freehold / leasehold mix 64:36% 64:36% 63:37%
Adjusted net debt : EBITDAR(9) 3.0x 3.2x 3.3x
Net debt : EBITDA(10) 1.0x 1.1x 1.3x
Fixed charge cover(11) 3.0x 3.0x 3.0x
================================ ========== ========== ==========
Whitbread is focused on maintaining its strong financial
position and capital structure. To this end, we work within the
financial framework of pension and lease adjusted net debt to
EBITDAR of less than 3.5 times. At the half year leverage was 3.0
times, providing us with appropriate headroom.
Whitbread has a preference for freehold hotel properties, which
provides significant capital flexibility and reduces profit
volatility of earnings. Freehold ownership also provides the
opportunity to realise development profits through sale and
leaseback transactions for properties with limited further
development potential.
Sufficient headroom in debt funding facilities are also in place
to finance short and medium-term requirements with total committed
facilities of approximately GBP1.8 billion, compared to net debt as
at 31 August 2017 of GBP852 million. Committed debt facilities
include US Private Placement loans of GBP432 million (at the hedged
rate), a GBP450 million bond and a syndicated bank revolving credit
facility ("RCF") of GBP950 million which has recently been extended
to September 2022.
Pension
As at 31 August 2017 there was an IAS19 pension deficit of
GBP375 million, which compares to GBP425 million at 2 March 2017
and GBP404 million at 1 September 2016. The reduction in deficit of
GBP50 million was primarily due to deficit contributions of GBP48
million.
Return on capital | Consistently delivering above cost of
capital
H1 FY18 FY17 H1 FY17
========= ========= =========
Premier Inn 13.4% 13.0% 13.0%
Costa 39.9% 45.4% 41.8%
Whitbread 15.4% 15.2% 15.1%
Impact on the Group of capital (130)bps (170)bps (190)bps
invested for future openings
================================ ========= ========= =========
There is currently GBP253 million of capital invested for future
openings. This has an impact on reported return on capital of both
Premier Inn and Whitbread of (130)bps.
FY18 outlook | No overall change to Group expectations
We have significant structural growth opportunities in the UK
and internationally and confidence in our plans to capitalise on
these opportunities. Despite the well known short-term economic
uncertainty, our performance in the first half was good and we
expect to meet expectations for the full year. Although we remain
cautious on the current environment, we are confident that ongoing
disciplined allocation of capital and focus on executing our plans
will deliver sustainable growth in earnings and dividends and a
strong return on capital.
New hotels within the UK are expected to contribute
approximately 5-6% to total sales growth for the full year,
comprising approximately 4,200 rooms openings this year. Costa
remains on track to deliver 230-250 new stores and approximately
1,200 new Costa Express machines in the full year.
Going concern
A combination of the strong operating cash flows generated by
the business and the significant headroom on its credit facilities
supports the Directors' view that the Group has sufficient funds
available for it to meet its foreseeable working capital
requirements. The Directors have concluded that the going concern
basis remains appropriate.
Related parties
Related parties have been considered in Note 10 and are
therefore not included within this Finance Review.
Post balance sheet events
On 10 October 2017, the Group announced it had acquired the
non-controlling interest in Yueda Costa (Shanghai) Food &
Beverage Management Company Limited for GBP35 million. The
enterprise was previously fully consolidated, therefore the
acquisition will not have an impact on underlying earnings.
An interim dividend of 31.4 pence per share (H1 FY17: 29.9p)
amounting to a total of GBP57 million was declared by the Board on
23 October 2017.
Risks and uncertainties
The directors have reconsidered the principle risks and
uncertainties of the Group and these remain unchanged from those
reported in the Annual Report and Accounts 2017. The risk of a
wider macro-economic effect as a result of the UK leaving the EU,
including foreign exchange and interest rate fluctuations, is
addressed by the Group's existing economic climate risk. Going
forward we will closely monitor and evaluate any potential areas of
risk.
Supplementary information
Further information is available in MS Excel and PDF form from
www.whitbread.co.uk/investors. This information includes:
-- Premier Inn and Costa hotel and store estate data;
-- Premier Inn and Costa sales, profit and return on capital information;
-- Comparison of Premier UK sales performance to market trends;
-- Group income statement; and
-- Lease commitments.
American Depositary Receipts
Whitbread has established a sponsored Level I American
Depositary Receipt (ADR) programme for which Deutsche Bank perform
the role of depositary bank. The Level I ADR programme trades on
the U.S. over-the-counter (OTC) markets under the symbol WTBDY (it
is not listed on a U.S. stock exchange).
Notes
The performance of the Group is monitored internally using a
variety of statutory and alternative performance measures (APMs).
APMs are not defined within IFRS and are used to assess the
underlying operational performance of the Group and as such these
measures should be considered alongside IFRS measures. APMs used in
this announcement include like for like sales, underlying operating
profit, underlying profit, underlying basic earnings per share, net
debt, return on capital, and discretionary free cash flow.
1 Underlying profit and underlying EPS
Profit excluding non-underlying items. Full details of the non-underlying
items are set out note 3 to the financial statements. Underlying
earnings per share based on the above underlying profit definition
and the tax thereon.
2 Discretionary free cash flow
Cash generated from operations after payments for interest,
tax and maintenance capital
3 Return on capital
Calculated by dividing the underlying operating profit for the
12 months to 31 August 2017 by net assets at the balance sheet
date adding back debt, taxation liabilities and the pension
deficit.
4 Unless otherwise stated, "Premier Inn" includes Premier Inn
UK, Premier Inn Germany, Premier Inn International and Restaurants.
This was previously referred to as Premier Inn & Restaurants.
5 Net Debt
Total company borrowings after deducting cash and cash equivalents
6 Like for like sales
Period over period change in total sales, less sales generated
by businesses acquired or disposed of and retail outlets opened
or closed during the current year and the previous year. This
is stated pre-IFRIC 13 for Premier Inn - UK and Ireland, Costa
and Restaurants - UK
7 Source: Allegra
8 Source: STR Global
9 EBITDAR
Underlying earnings before interest, tax, depreciation, amortisation
and rent excluding income from Joint Ventures and Associates.
10 EBITDA
Underlying earnings before interest, tax, depreciation and amortisation
excluding income from Joint Ventures and Associates.
11 Fixed charge cover
Ratio of underlying operating profit before rent compared to
interest plus rent
Responsibility statement
We confirm that to the best of our knowledge:
a) The condensed set of financial statements, which has been
prepared in accordance with IAS 34, gives a true and fair view of
the assets, liabilities, financial position and profit or loss of
the issuer, or the undertakings included in the consolidation as a
whole as required by DTR 4.2.4R;
b) The interim management report includes a fair review of the
information required by the Financial Statements Disclosure and
Transparency Rules (DTR) 4.2.7R - indication of important events
during the first six months and their impact on the financial
statements and description of principal risks and uncertainties for
the remaining six months of the year; and
c) The interim management report includes a fair review of the
information required by DTR 4.2.8R - disclosure of related party
transactions and changes therein.
By order of the Board
Alison Brittain Nicholas Cadbury
Chief Executive Finance Director
Interim consolidated income statement
(Reviewed) (Reviewed) (Audited)
6 months to 6 months to Year to
31 August 1 September
2017 2016 2 March 2017
Notes GBPm GBPm GBPm
--------------------------------------- -----
Revenue 2 1,671.4 1,555.9 3,106.0
Operating costs (1,336.2) (1,275.9) (2,557.2)
------------ ------------ -------------
Operating profit before joint ventures
and associate 335.2 280.0 548.8
Share of profit from joint ventures 0.8 1.0 3.2
Share of profit from associate - 0.7 0.7
------------ ------------ -------------
Operating profit 336.0 281.7 552.7
Finance cost 4 (20.2) (18.3) (37.6)
Finance revenue 4 0.2 0.2 0.3
------------ ------------ -------------
Profit before tax 316.0 263.6 515.4
Analysed as:
Underlying profit before tax 327.6 307.0 565.2
Non-underlying items 3 (11.6) (43.4) (49.8)
------------ ------------ -------------
Profit before tax 316.0 263.6 515.4
--------------------------------------- ----- ------------ ------------ -------------
Tax expense (65.8) (62.9) (99.5)
Analysed as:
Underlying tax expense (66.1) (65.0) (119.1)
Non-underlying tax credit 3 0.3 2.1 19.6
------------ ------------ -------------
Tax expense (65.8) (62.9) (99.5)
--------------------------------------- ----- ------------ ------------ -------------
Profit for the period 250.2 200.7 415.9
------------ ------------ -------------
Attributable to:
Parent shareholders 251.6 202.9 421.6
Non-controlling interest (1.4) (2.2) (5.7)
------------ ------------ -------------
250.2 200.7 415.9
------------ ------------ -------------
(Reviewed) (Reviewed) (Audited)
6 months to 6 months to Year to
31 August 1 September
2017 2016 2 March 2017
Earnings per share (Note 5) pence pence pence
------------------------------ ------------ ------------ -------------
Earnings per share
Basic 137.71 111.42 231.39
Diluted 137.26 111.06 230.89
Underlying earnings per share
Basic 143.74 133.88 246.48
Diluted 143.26 133.44 245.95
Interim consolidated statement of comprehensive income
(Reviewed) (Reviewed) (Audited)
6 months to 6 months to Year to
31 August 1 September
2017 2016 2 March 2017
Notes GBPm GBPm GBPm
-------------------------------------------- ----- ------------ ------------ -------------
Profit for the period 250.2 200.7 415.9
Items that will not be reclassified
to the income statement:
Re-measurement gain / (loss) on defined
benefit pension scheme 9 9.2 (152.5) (214.8)
Current tax on pensions 8.9 8.6 15.6
Deferred tax on pensions (9.7) 20.4 26.7
Deferred tax: change in rate of corporation
tax on pensions (0.9) - (3.1)
7.5 (123.5) (175.6)
Items that may be reclassified subsequently
to the income statement:
Net gain / (loss) on cash flow hedges 2.2 (1.5) (0.2)
Current tax on cash flow hedges (0.2) 0.5 0.5
Deferred tax on cash flow hedges (0.2) (0.2) (0.6)
Deferred tax: change in rate of corporation
tax on cash flow hedges - - (0.1)
1.8 (1.2) (0.4)
Exchange differences on translation
of foreign operations 8.4 13.8 22.9
Other comprehensive income / (loss)
for the period, net of tax 17.7 (110.9) (153.1)
Total comprehensive income for the period,
net of tax 267.9 89.8 262.8
------------ ------------ -------------
Attributable to:
Parent shareholders 269.3 91.9 268.4
Non-controlling interest (1.4) (2.1) (5.6)
------------ ------------ -------------
267.9 89.8 262.8
------------ ------------ -------------
Interim consolidated statement of changes in equity
6 months to 31 August 2017 (Reviewed)
Capital Currency
Share Share redemption Retained translation Other Non-controlling Total
capital premium reserve earnings reserve reserves Total interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- -------- -------- ---------- --------- ----------- --------- ------- --------------- -------
At 2 March
2017 150.2 68.0 12.3 4,330.9 28.4 (2,061.5) 2,528.3 (3.5) 2,524.8
Profit for the
period - - - 251.6 - - 251.6 (1.4) 250.2
Other
comprehensive
income - - - 7.1 8.4 2.2 17.7 - 17.7
-------- -------- ---------- --------- ----------- --------- ------- --------------- -------
Total
comprehensive
income - - - 258.7 8.4 2.2 269.3 (1.4) 267.9
Ordinary
shares
issued - 1.4 - - - - 1.4 - 1.4
Loss on ESOT
shares
issued - - - (1.7) - 1.7 - - -
Accrued
share-based
payments - - - 7.9 - - 7.9 - 7.9
Equity
dividends - - - (120.3) - - (120.3) - (120.3)
At 31 August
2017 150.2 69.4 12.3 4,475.5 36.8 (2,057.6) 2,686.6 (4.9) 2,681.7
-------- -------- ---------- --------- ----------- --------- ------- --------------- -------
6 months to 1 September 2016 (Reviewed)
Capital Currency
Share Share redemption Retained translation Other Non-controlling Total
capital premium reserve earnings reserve reserves Total interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- -------- -------- ---------- --------- ----------- --------- ------- --------------- -------
At 3 March
2016 150.0 62.6 12.3 4,239.8 5.6 (2,067.7) 2,402.6 2.1 2,404.7
Profit for the
period - - - 202.9 - - 202.9 (2.2) 200.7
Other
comprehensive
loss - - - (123.2) 13.7 (1.5) (111.0) 0.1 (110.9)
-------- -------- ---------- --------- ----------- --------- ------- --------------- -------
Total
comprehensive
income - - - 79.7 13.7 (1.5) 91.9 (2.1) 89.8
Ordinary
shares
issued 0.1 1.6 - - - - 1.7 - 1.7
Loss on ESOT
shares
issued - - - (5.6) - 5.6 - - -
Accrued
share-based
payments - - - 8.2 - - 8.2 - 8.2
Equity
dividends - - - (112.6) - - (112.6) - (112.6)
At 1 September
2016 150.1 64.2 12.3 4,209.5 19.3 (2,063.6) 2,391.8 - 2,391.8
-------- -------- ---------- --------- ----------- --------- ------- --------------- -------
Year to 2 March 2017 (Audited)
Capital Currency
Share Share redemption Retained translation Other Non-controlling Total
capital premium reserve earnings reserve reserves Total interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- -------- -------- ---------- --------- ----------- --------- ------- --------------- -------
At 3 March
2016 150.0 62.6 12.3 4,239.8 5.6 (2,067.7) 2,402.6 2.1 2,404.7
Profit for the
year - - - 421.6 - - 421.6 (5.7) 415.9
Other
comprehensive
loss - - - (175.8) 22.8 (0.2) (153.2) 0.1 (153.1)
-------- -------- ---------- --------- ----------- --------- ------- --------------- -------
Total
comprehensive
income - - - 245.8 22.8 (0.2) 268.4 (5.6) 262.8
Ordinary
shares
issued 0.2 5.4 - - - - 5.6 - 5.6
Loss on ESOT
shares
issued - - - (6.4) - 6.4 - - -
Accrued
share-based
payments - - - 17.7 - - 17.7 - 17.7
Tax on
share-based
payments - - - 0.4 - - 0.4 - 0.4
Tax rate
change
on historical
revaluation - - - 0.7 - - 0.7 - 0.7
Equity
dividends - - - (167.1) - - (167.1) - (167.1)
At 2 March
2017 150.2 68.0 12.3 4,330.9 28.4 (2,061.5) 2,528.3 (3.5) 2,524.8
-------- -------- ---------- --------- ----------- --------- ------- --------------- -------
Interim consolidated balance sheet
Notes (Reviewed) (Reviewed) (Audited)
31 August 1 September
2017 2016 2 March 2017
GBPm GBPm GBPm
-------------------------------------- ----- ---------- ------------ -------------
ASSETS
Non-current assets
Intangible assets 282.2 263.2 275.7
Property, plant and equipment 4,040.0 3,970.9 3,972.4
Investment in joint ventures 51.7 50.2 53.0
Derivative financial instruments 8 35.9 31.6 43.3
Trade and other receivables 6.4 8.3 6.8
4,416.2 4,324.2 4,351.2
Current assets
Inventories 52.0 46.7 48.2
Derivative financial instruments 8 3.3 6.8 12.3
Trade and other receivables 221.0 147.9 163.6
Cash and cash equivalents 7 129.7 73.2 63.0
406.0 274.6 287.1
Assets held for sale 5.1 2.6 50.5
Total assets 4,827.3 4,601.4 4,688.8
LIABILITIES
Current liabilities
Borrowings 7 18.3 132.7 157.4
Provisions 38.9 12.9 36.3
Derivative financial instruments 8 2.6 1.1 2.3
Current tax liabilities 53.6 60.1 45.9
Trade and other payables 579.3 529.8 596.9
---------- ------------ -------------
692.7 736.6 838.8
Non-current liabilities
Borrowings 7 963.8 928.7 795.6
Provisions 10.7 33.1 12.3
Derivative financial instruments 8 7.4 12.5 8.3
Deferred tax liabilities 72.6 73.4 62.0
Pension liability 9 374.5 403.5 425.1
Trade and other payables 23.9 21.8 21.9
---------- ------------ -------------
1,452.9 1,473.0 1,325.2
Total liabilities 2,145.6 2,209.6 2,164.0
Net assets 2,681.7 2,391.8 2,524.8
---------- ------------ -------------
EQUITY
Share capital 150.2 150.1 150.2
Share premium 69.4 64.2 68.0
Capital redemption reserve 12.3 12.3 12.3
Retained earnings 4,475.5 4,209.5 4,330.9
Currency translation reserve 36.8 19.3 28.4
Other reserves (2,057.6) (2,063.6) (2,061.5)
---------- ------------ -------------
Equity attributable to equity holders
of the parent 2,686.6 2,391.8 2,528.3
Non-controlling interest (4.9) - (3.5)
Total equity 2,681.7 2,391.8 2,524.8
---------- ------------ -------------
Interim consolidated cash flow statement
(Reviewed) (Reviewed) (Audited)
6 months to 6 months to Year to
31 August 1 September
2017 2016 2 March 2017
Notes GBPm GBPm GBPm
--------------------------------------------- ----- ------------ ------------ -------------
Profit for the period 250.2 200.7 415.9
Adjustments for:
Tax expense 65.8 62.9 99.5
Net finance cost 4 20.0 18.1 37.3
Share of profit from joint ventures (0.8) (1.0) (3.2)
Share of profit from associate - (0.7) (0.7)
Non-underlying operating costs 3 6.4 38.0 39.7
Cash outflow from non-underlying operating
costs - (2.8) (7.3)
Underlying depreciation and amortisation 2 112.8 104.2 217.6
Share-based payments 7.9 8.2 17.7
Other non-cash items 5.9 5.2 8.6
------------ ------------ -------------
Cash generated from operations before
working capital changes 468.2 432.8 825.1
Increase in inventories (3.7) (1.7) (3.1)
Increase in trade and other receivables (33.3) (7.1) (7.1)
Increase in trade and other payables 9.9 7.4 45.2
Cash generated from operations 441.1 431.4 860.1
Payments against provisions (14.1) (12.1) (22.3)
Pension payments 9 (48.1) (43.7) (90.3)
Interest paid (8.2) (9.7) (34.9)
Interest received 0.2 0.2 0.3
Corporation taxes paid (49.7) (35.9) (86.8)
------------ ------------ -------------
Net cash flows from operating activities 321.2 330.2 626.1
Cash flows from investing activities
Purchase of property, plant and equipment 2 (252.0) (312.9) (571.2)
Investment in intangible assets 2 (16.8) (16.1) (38.6)
Proceeds from disposal of property,
plant and equipment 41.3 53.6 192.9
Proceeds from disposal of investment
in associate - - 14.1
Proceeds from disposal of business 44.9 - -
Capital contributions and loans to joint
ventures - (7.6) (7.7)
Dividends from associate - 0.4 0.4
Net cash flows from investing activities (182.6) (282.6) (410.1)
Cash flows from financing activities
Proceeds from issue of share capital 1.4 1.7 5.6
(Reduction) / increase in short-term
borrowings 7 (109.6) 4.5 17.6
Proceeds from long-term borrowings 7 200.0 - -
(Repayments of) / increases in long-term
borrowings 7 (43.5) 73.9 (67.4)
Renegotiation costs of long-term borrowings 7 (0.8) (0.6) (0.6)
Dividends paid 6 (120.3) (112.6) (167.1)
------------ ------------ -------------
Net cash flows from financing activities (72.8) (33.1) (211.9)
Net increase in cash and cash equivalents 65.8 14.5 4.1
Opening cash and cash equivalents 63.0 57.1 57.1
Foreign exchange differences 0.9 1.6 1.8
------------ ------------ -------------
Closing cash and cash equivalents 7 129.7 73.2 63.0
------------ ------------ -------------
Notes to the accounts
1. Basis of accounting and preparation
The interim condensed consolidated financial statements were
authorised for issue in accordance with a resolution of the Board
of Directors on 23 October 2017.
The interim condensed consolidated financial statements are
prepared in accordance with UK listing rules and with IAS 34
'Interim Financial Reporting'. The interim financial report does
not constitute statutory accounts within the meaning of section 434
of the Companies Act 2006.
The financial information for the year ended 2 March 2017 is
extracted from the statutory accounts of the Group for that year
and does not constitute statutory accounts as defined in Section
435 of the Companies Act 2006. These published accounts were
prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted for use in the European Union, and
reported on by the auditor without qualification or statement under
Sections 498(2) or (3) of the Companies Act 2006 and have been
delivered to the Registrar of Companies.
The interim condensed consolidated financial statements for the
six months ended 31 August 2017 and the comparatives to 1 September
2016 are unaudited but have been reviewed by the auditor; a copy of
their review report is included at the end of this report.
A combination of the strong cash flows generated by the
business, and the significant available headroom on its credit
facilities, support the directors' view that the Group has
sufficient funds available for it to meet its foreseeable working
capital requirements. The directors have concluded therefore that
the going concern basis of preparation remains appropriate.
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
financial statements for the year ended 2 March 2017.
2. Segmental analysis
For management purposes, the Group is organised into two
strategic business units (Premier Inn and Costa) based upon their
different products and services:
-- Premier Inn provide services in relation to accommodation and food; and
-- Costa generates income from the operation of its branded,
owned and franchised coffee outlets.
The UK and International Premier Inn segments have been
aggregated on the grounds that the International segment is
immaterial.
Management monitors the operating results of its strategic
business units separately for the purpose of making decisions about
allocating resources and assessing performance. Segment performance
is measured based on underlying operating profit. Included within
the unallocated and elimination columns in the tables below are the
costs of running the public company. The unallocated assets and
liabilities are cash and debt balances (held and controlled by the
central treasury function), taxation, pensions, certain property,
plant and equipment, centrally held provisions and central working
capital balances.
Inter-segment revenue is from Costa to the Premier Inn segment
and is eliminated on consolidation. Transactions were entered into
on an arm's length basis in a manner similar to transactions with
third parties.
The following tables present revenue and profit information and
certain asset and liability information regarding business
operating segments for the six months to 31 August 2017 and 1
September 2016 and for the full year ended 2 March 2017.
Unallocated
and Total
Premier Costa elimination Operations
Inn
6 months to 31 August 2017 GBPm GBPm GBPm GBPm
-------------------------------------------- ------- ------- ----------- ----------
Revenue
Revenue from external customers 1,051.7 619.7 - 1,671.4
Inter-segment revenue - 2.0 (2.0) -
Total revenue 1,051.7 621.7 (2.0) 1,671.4
Underlying operating profit 295.6 64.8 (18.0) 342.4
Underlying net finance cost (Note 4) - - (14.8) (14.8)
------- ------- ----------- ----------
Underlying profit before tax 295.6 64.8 (32.8) 327.6
Non-underlying items (Note 3):
Disposal of property, plant and equipment
and property provisions (7.4) (0.6) - (8.0)
PI International business exit 6.7 - - 6.7
Historic indirect tax disputes - (4.0) - (4.0)
Amortisation of acquired intangibles - (1.1) - (1.1)
IAS 19 pension finance cost - - (5.2) (5.2)
------- ------- ----------- ----------
Total non-underlying items (0.7) (5.7) (5.2) (11.6)
Profit before tax 294.9 59.1 (38.0) 316.0
Tax expense (65.8)
----------
Profit for the period 250.2
----------
Assets and liabilities
Segment assets 4,082.5 543.5 - 4,626.0
Unallocated assets - - 201.3 201.3
------- ------- ----------- ----------
Total assets 4,082.5 543.5 201.3 4,827.3
------- ------- ----------- ----------
Segment liabilities (403.7) (147.0) - (550.7)
Unallocated liabilities - - (1,594.9) (1,594.9)
------- ------- ----------- ----------
Total liabilities (403.7) (147.0) (1,594.9) (2,145.6)
------- ------- ----------- ----------
Net assets 3,678.8 396.5 (1,393.6) 2,681.7
------- ------- ----------- ----------
Other segment information
Share of profit from joint ventures 0.5 0.3 - 0.8
Investment in joint ventures 39.5 12.2 - 51.7
Total property rent 73.8 61.9 - 135.7
Capital expenditure:
Property, plant and equipment - cash basis 199.5 52.5 - 252.0
Property, plant and equipment - accruals
basis 160.7 46.7 - 207.4
Intangible assets 14.4 2.4 - 16.8
Depreciation - underlying (66.4) (37.1) - (103.5)
Amortisation - underlying (7.6) (1.7) - (9.3)
Unallocated
and Total
Premier Costa elimination Operations
Inn
6 months to 1 September 2016 GBPm GBPm GBPm GBPm
-------------------------------------------- ------- ------- ----------- ----------
Revenue
Revenue from external customers 988.1 567.8 - 1,555.9
Inter-segment revenue - 1.9 (1.9) -
Total revenue 988.1 569.7 (1.9) 1,555.9
Underlying operating profit 271.5 64.6 (16.4) 319.7
Underlying net finance cost (Note 4) - - (12.7) (12.7)
------- ------- ----------- ----------
Underlying profit before tax 271.5 64.6 (29.1) 307.0
Non-underlying items (Note 3):
Disposal of property, plant and equipment
and property provisions 6.3 (1.7) (0.7) 3.9
PI International business exit (35.0) - - (35.0)
UK restructuring (9.6) (1.1) - (10.7)
Historic indirect tax disputes - 5.0 - 5.0
Amortisation of acquired intangibles - (1.2) - (1.2)
IAS 19 pension finance cost - - (5.0) (5.0)
Unwinding of discount on provisions - (0.1) (0.3) (0.4)
------- ------- ----------- ----------
Total non-underlying items (38.3) 0.9 (6.0) (43.4)
Profit before tax 233.2 65.5 (35.1) 263.6
Tax expense (62.9)
----------
Profit for the period 200.7
----------
Assets and liabilities
Segment assets 3,963.5 495.3 - 4,458.8
Unallocated assets - - 142.6 142.6
------- ------- ----------- ----------
Total assets 3,963.5 495.3 142.6 4,601.4
------- ------- ----------- ----------
Segment liabilities (367.9) (134.2) - (502.1)
Unallocated liabilities - - (1,707.5) (1,707.5)
------- ------- ----------- ----------
Total liabilities (367.9) (134.2) (1,707.5) (2,209.6)
------- ------- ----------- ----------
Net assets 3,595.6 361.1 (1,564.9) 2,391.8
------- ------- ----------- ----------
Other segment information
Share of profit from joint ventures 0.7 0.3 - 1.0
Share of profit from associate 0.7 - - 0.7
Investment in joint ventures 39.0 11.2 - 50.2
Total property rent 68.7 58.2 - 126.9
Capital expenditure:
Property, plant and equipment - cash basis 257.6 55.3 - 312.9
Property, plant and equipment - accruals
basis 227.5 57.4 - 284.9
Intangible assets 11.1 5.0 - 16.1
Depreciation - underlying (62.9) (34.2) - (97.1)
Amortisation - underlying (6.2) (0.9) - (7.1)
Unallocated
and Total
Premier Costa elimination operations
Inn
Year to 2 March 2017 GBPm GBPm GBPm GBPm
-------------------------------------------------- ------- ------- ----------- ----------
Revenue
Revenue from external customers 1,907.9 1,198.1 - 3,106.0
Inter-segment revenue - 3.6 (3.6) -
Total revenue 1,907.9 1,201.7 (3.6) 3,106.0
Underlying operating profit 468.0 158.0 (33.6) 592.4
Underlying net finance cost (Note 4) - - (27.2) (27.2)
------- ------- ----------- ----------
Underlying profit before tax 468.0 158.0 (60.8) 565.2
Non-underlying items (Note 3):
Disposal of property, plant and equipment
and property provisions 23.1 (10.5) (0.8) 11.8
PI International business exit (30.0) - - (30.0)
Costa international restructuring - (14.5) - (14.5)
UK restructuring (15.6) (5.9) (0.1) (21.6)
Historic indirect tax disputes - 5.3 - 5.3
Net gain on disposal of investment in associate 11.8 - - 11.8
Amortisation of acquired intangibles - (2.5) - (2.5)
IAS 19 pension finance cost - - (9.4) (9.4)
Unwinding of discount on provisions - (0.2) (0.5) (0.7)
------- ------- ----------- ----------
Total non-underlying items (10.7) (28.3) (10.8) (49.8)
Profit before tax 457.3 129.7 (71.6) 515.4
Tax expense (99.5)
----------
Profit for the year 415.9
----------
Assets and liabilities
Segment assets 4,020.2 511.4 - 4,531.6
Unallocated assets - - 157.2 157.2
------- ------- ----------- ----------
Total assets 4,020.2 511.4 157.2 4,688.8
------- ------- ----------- ----------
Segment liabilities (427.8) (163.3) - (591.1)
Unallocated liabilities - - (1,572.9) (1,572.9)
------- ------- ----------- ----------
Total liabilities (427.8) (163.3) (1,572.9) (2,164.0)
------- ------- ----------- ----------
Net assets 3,592.4 348.1 (1,415.7) 2,524.8
------- ------- ----------- ----------
Other segment information
Share of profit from joint ventures 2.5 0.7 - 3.2
Share of profit from associate 0.7 - - 0.7
Investment in joint ventures 41.0 12.0 - 53.0
Total property rent 139.8 121.4 - 261.2
Capital expenditure:
Property, plant and equipment - cash basis 459.7 111.5 - 571.2
Property, plant and equipment - accruals
basis 455.7 121.5 - 577.2
Intangible assets 25.8 12.8 - 38.6
Depreciation - underlying (131.0) (71.5) - (202.5)
Amortisation - underlying (13.3) (1.8) - (15.1)
3. Non-underlying items
6 months to 6 months to
31 August 1 September Year to
2017 2016 3 March 2017
GBPm GBPm GBPm
--------------------------------------------------------- ----------- ------------ -------------
Non-underlying items are as follows:
Operating costs:
Disposal of property, plant and equipment and property
provisions (a) (8.0) 3.9 11.8
PI International business exit (b) 6.7 (35.0) (30.0)
Costa international restructuring - - (14.5)
UK restructuring - (10.7) (21.6)
Historic indirect tax disputes (4.0) 5.0 5.3
Net gain on disposal of investment in associate - - 11.8
Amortisation of acquired intangibles (1.1) (1.2) (2.5)
Non-underlying operating costs (6.4) (38.0) (39.7)
Net finance cost:
IAS 19 pension finance cost (5.2) (5.0) (9.4)
Unwinding of discount on provisions - (0.4) (0.7)
----------- ------------ -------------
Non-underlying net finance cost (5.2) (5.4) (10.1)
----------- ------------ -------------
Non-underlying items before tax (11.6) (43.4) (49.8)
----------- ------------ -------------
Tax adjustments included in reported profit after
tax, but excluded in arriving at underlying profit
after tax:
Tax on non-underlying items 0.3 1.0 12.3
Non-underlying tax items - tax base cost - 1.1 2.1
Deferred tax relating to UK tax rate change - - 5.2
----------- ------------ -------------
Non-underlying tax credit 0.3 2.1 19.6
----------- ------------ -------------
(a) During the period, the Group made a net gain of GBP18.5m
from disposal and development profit on sale and leaseback
transactions, disposal of sites previously held for sale and other
minor disposals, offset by impairment losses on hotel sites
transferred to assets held for sale of GBP11.3m, and provision for
other one-off property costs of GBP15.2m.
(b) On 13 July 2016, the Group announced its intention to exit
hotel operations in South East Asia. In the prior year the Group
recognised impairment losses of GBP14.9m and a provision of
GBP15.1m for costs of exiting management agreements and closure of
regional offices. During the current period the Group disposed of
its businesses in Thailand, India and Indonesia, achieving net
sales proceeds in excess of those assumed in the initial impairment
calculation resulting in a net credit of GBP6.7m in the period.
4. Finance (costs) / revenue
6 months to 6 months to
31 August 1 September Year to
2017 2016 2 March 2017
GBPm GBPm GBPm
Finance cost
Bank loans and overdrafts (1.9) (2.8) (5.3)
Other loans (15.8) (15.5) (31.0)
Interest capitalised 2.9 5.5 8.9
Impact of ineffective portion of cash flow
and fair value hedges (0.2) (0.1) (0.1)
(15.0) (12.9) (27.5)
Finance revenue
Bank interest receivable 0.1 0.1 0.1
Other interest receivable 0.1 0.1 0.2
0.2 0.2 0.3
Underlying net finance cost (14.8) (12.7) (27.2)
----------- ------------ -------------
Non-underlying net finance cost
IAS 19 pension finance cost (Note 9) (5.2) (5.0) (9.4)
Unwinding of discount on provisions - (0.4) (0.7)
----------- ------------ -------------
(5.2) (5.4) (10.1)
----------- ------------ -------------
Total net finance cost (20.0) (18.1) (37.3)
----------- ------------ -------------
Total finance cost (20.2) (18.3) (37.6)
Total finance revenue 0.2 0.2 0.3
Total net finance cost (20.0) (18.1) (37.3)
----------- ------------ -------------
5. Earnings per share
The basic earnings per share (EPS) figures are calculated by
dividing the net profit for the period attributable to parent
shareholders, therefore before non-controlling interests, by the
weighted average number of ordinary shares in issue during the
period after deducting treasury shares and shares held by an
independently managed employee share ownership trust (ESOT).
The diluted earnings per share figures allow for the dilutive
effect of the conversion into ordinary shares of the weighted
average number of options outstanding during the period. Where the
average share price for the period is lower than the option price,
the options become anti-dilutive and are excluded from the
calculation. The number of such options for all disclosed periods
was nil.
The numbers of shares used for the earnings per share
calculations are as follows:
6 months to 6 months to
31 August 1 September Year to
2017 2016 2 March 2017
million million million
---------------------------------------------------------- ----------- ------------ -------------
Basic weighted average number of ordinary shares 182.7 182.1 182.2
Effect of dilution - share options 0.6 0.6 0.4
----------- ------------ -------------
Diluted weighted average number of ordinary shares 183.3 182.7 182.6
----------- ------------ -------------
The profits used for the earnings per share calculations
are as follows:
6 months to 6 months to
31 August 1 September Year to
2017 2016 2 March 2017
GBPm GBPm GBPm
Profit for the period attributable to parent shareholders 251.6 202.9 421.6
Non-underlying items- gross 11.6 43.4 49.8
Non-underlying items - taxation (0.3) (2.1) (19.6)
Non-underlying items - non-controlling interest (0.3) (0.4) (2.7)
----------- ------------ -------------
Underlying profit for the period attributable to
parent shareholders 262.6 243.8 449.1
6 months to 6 months to
31 August 1 September Year to
2017 2016 2 March 2017
pence pence pence
Basic on profit for the period 137.71 111.42 231.39
Non-underlying items - gross 6.35 23.83 27.33
Non-underlying items - taxation (0.16) (1.15) (10.76)
Non underlying items - non-controlling interest (0.16) (0.22) (1.48)
----------- ------------ -------------
Basic on underlying profit for the period 143.74 133.88 246.48
Diluted on profit for the period 137.26 111.06 230.89
Diluted on underlying profit for the period 143.26 133.44 245.95
6. Dividends paid
6 months to 6 months to Year to
31 August 2017 1 September 2016 2 March 2017
pence pence
pence per per
per share GBPm share GBPm share GBPm
------------------------------------- ---------- ----- ---------- ------- -------- -----
Equity dividends on ordinary shares:
Final dividend for prior year 65.90 120.3 61.85 112.6 61.85 112.6
Interim dividend for the year - - 29.90 54.5
120.3 112.6 167.1
Dividends on other shares:
B share dividend - - 0.80 -
C share dividend - - 0.80 -
----- ------- -----
- - -
Total dividends paid 120.3 112.6 167.1
----- ------- -----
An interim dividend of 31.40p per share (2016: 29.90p) amounting
to a dividend of GBP57.3m (2016: GBP54.5m) was declared by the
directors. A dividend reinvestment plan (DRIP) alternative will be
offered. These consolidated financial statements do not reflect
this dividend payable.
7. Movements in cash and net debt
Fair value
adjustments Amortisation
2 March Cost of Foreign to loan of premiums 31 August
2017 borrowings Cash flow exchange capital and discounts 2017
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ------- ----------- --------- --------- ------------ --------------- ---------
Cash at bank and
in hand 62.9 40.5
Short-term deposits 0.1 89.2
Overdrafts - -
------- ---------
Cash and cash equivalents 63.0 - 65.8 0.9 - - 129.7
Short-term bank
borrowings (109.6) - 109.6 - - - -
Loan capital under
one year (47.8) (18.3)
Loan capital over
one year (795.6) (963.8)
------- ---------
Total loan capital (843.4) 0.8 (156.5) 14.7 3.0 (0.7) (982.1)
------- ----------- --------- --------- ------------ --------------- ---------
Net debt (890.0) 0.8 18.9 15.6 3.0 (0.7) (852.4)
------- ----------- --------- --------- ------------ --------------- ---------
Net debt includes US$ denominated loan notes of US$285.0m (March
2017: US$325.0m) retranslated at period end to GBP223.5m (March
2017: GBP267.8m). These notes have been hedged using cross-currency
swaps. At maturity, GBP181.6m (March 2017: GBP208.3m) will be
repaid taking into account the cross-currency swaps. If the impact
of these hedges is taken into account, reported net debt would be
GBP810.5m (March 2017: GBP830.5m).
8. Financial instruments
The Group entered into a number of cross-currency swap
agreements in relation to the US$ denominated loan notes to
eliminate any foreign currency exchange risk on interests or on the
repayment of principle borrowed.
IFRS 13 requires that the classification of financial
instruments measured at fair value be determined by reference to
the source of inputs used to derive the fair value. The
classification uses the following three-level hierarchy:
Level 1 - Quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2 - Other techniques for which all inputs, which have a
significant effect on the recorded fair value, are observable,
either directly or indirectly; and
Level 3 - Techniques which use inputs, which have a significant
effect on the recorded fair value, that are not based on observable
market data.
The fair value of derivative instruments is calculated by
discounting all future cash flows by the market yield curve at the
balance sheet date:
31 August 1 September 2 March
2017 2016 2017
GBPm GBPm GBPm
Financial assets
Derivative financial instruments - level 2 39.2 38.4 55.6
--------- ----------- -------
Financial liabilities
Derivative financial instruments - level 2 10.0 13.6 10.6
--------- ----------- -------
There were no transfers between levels during any period
disclosed.
9. Pension liability
During the six month period to 31 August 2017, the pension
liability has decreased from GBP425.1m to GBP374.5m. The main
movements in the deficit are as follows:
GBPm
------------------------------------------------- ------ ------
Pension liability at 2 March 2017 425.1
Re-measurement due to:
Changes in financial assumptions 48.2
Experience adjustments 11.3
Return on plan assets greater than discount rate (68.7)
------
(9.2)
Contributions from employer (48.1)
Net interest on pension liability 5.2
Administrative expenses 1.5
------
Pension liability at 31 August 2017 374.5
------
The deficit has decreased by GBP50.6m from 2 March 2017 driven
by deficit contributions of GBP48.1m and actual returns on assets
being higher than the discount rate offset by a reduction in the
discount rate from 2.60% to 2.40%
10. Related party disclosure
In note 30 to the Annual Report and Accounts for the year ended
2 March 2017, the Group identified its related parties as its key
management personnel (including directors), the Group pension
schemes, its joint ventures and its associate for the purpose of
IAS 24 'Related Party Disclosure'. There have been no significant
changes in those related parties identified at the year end and
there have been no transactions with those related parties during
the six months to 31 August 2017 that have materially effected, or
are expected to materially effect, the financial position or
performance of the Group during this period. Details of the
relevant relationships with those related parties will be disclosed
in the Annual Report and Accounts for the year ending 1 March 2018.
All transactions with subsidiaries are eliminated on
consolidation.
11. Capital expenditure commitments
Capital expenditure commitments for which no provision has been
made are set out in the table below:
31 August 1 September 2 March
2017 2016 2017
GBPm GBPm GBPm
Property, plant and equipment 208.0 191.2 156.4
Intangible assets 5.5 12.5 8.2
12. Events after the balance sheet date
On 10 October 2017 the Group announced it had acquired the
non-controlling interest in Yueda Costa (Shanghai) Food &
Beverage Management Company Limited for GBP35m.
Independent review report to Whitbread PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 August 2017 which comprise the interim
consolidated income statement, the interim consolidated statement
of comprehensive income, the interim consolidated statement of
changes in equity, the interim consolidated balance sheet, the
interim consolidated cash flow statement and the related notes 1 to
12. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
Company those matters we are required to state to it in an
independent review 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, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in the accounting policies, the annual financial
statements of the Group are prepared in accordance with IFRSs as
adopted by the European Union. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting", as adopted by the European
Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board for use in the
United Kingdom. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
August 2017 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
London, UK
23 October 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGGRUUUPMGRW
(END) Dow Jones Newswires
October 24, 2017 02:00 ET (06:00 GMT)
Whitbread (LSE:WTB)
Historical Stock Chart
From Apr 2024 to May 2024
Whitbread (LSE:WTB)
Historical Stock Chart
From May 2023 to May 2024