TIDMMARS
RNS Number : 9962P
Marston's PLC
24 November 2016
24 November 2016
MARSTON'S PLC
PRELIMINARY RESULTS FOR THE 52 WEEKSED 1 OCTOBER 2016
A high quality pub and beer business continuing to deliver
profit and returns growth
-- Revenue and earnings growth, stronger balance sheet:
Underlying Statutory
------------------ ----------------- -------------------
Revenue GBP905.8m + 7% GBP937.3m + 7%
------------------ ---------- ----- ---------- -------
Operating profit GBP172.7m + 4% GBP163.9m + 44%
------------------ ---------- ----- ---------- -------
Profit before
tax GBP98.0m + 7% GBP80.8m + 158%
------------------ ---------- ----- ---------- -------
Earnings per
share 14.0p + 9% 12.7p + 210%
------------------ ---------- ----- ---------- -------
- Profit growth in all trading segments
- Operating cash flow up 13% to GBP182.8 million
- Leverage reduced 0.3x to 4.8x, fixed charge cover up 0.1x to
2.6x
- Return on capital up 0.1% to 10.9%
-- Transformed pub estate generating growth opportunities:
- Average profit per pub up 8% in 2016, up around 50% since
2012
- 22 new pubs and bars completed this year, creating around
1,000 jobs
- Six lodges opened, taking estate to over 950 rooms
- Like-for-like sales up 2.3% in Destination and Premium, up
2.7% in Taverns
- Leased average profit per pub up 3%
-- Local strategy and innovation creating growth in Brewing:
- Strong brand portfolio continues to outperform market with
volumes up 13%
- Increased market share to 27% of premium bottled ale and 20%
of premium cask ale markets
- Thwaites' beer business fully integrated and achieving
targets
-- Final dividend up 4.4% to 4.7p. Dividend cover up 0.1x to 1.9x.
-- Well positioned for growth in 2017:
- Encouraging start to new financial year
- Target to open at least 20 new-build pub-restaurants in the
coming year, including 3 Revere bars and
5-10 lodges, weighted towards the second half
- Continued focus on premium and craft beer to drive growth,
energized branding of Marston's beer
brands and development of DE14 craft micro-brewery
Commenting, Ralph Findlay, CEO said:
"We have delivered another year of good growth across the
business, with the outstanding performance of our beer company
particularly encouraging.
Trading has been solid in the first few weeks of the new
financial year and we have seen no discernible change to the trends
experienced in 2016. The majority of our major product cost lines
are contracted for 2017 and well into 2018.
We have a high quality pub and beer business which is displaying
positive momentum and is consistently outperforming the market. We
believe that, despite some continuing market headwinds, our
expansion plans for new pub-restaurants, lodges and Revere bars
will further enhance our ability to deliver attractive
returns."
ENQUIRIES:
Marston's PLC Tel: 01902 329516 Instinctif Partners Tel: 020 7457 2020
Ralph Findlay, Chief Executive Officer Justine Warren
Andrew Andrea, Chief Financial and Corporate Matthew
Smallwood
Development Officer
An audio webcast of the results presentation will be available
at
http://webcast.instinctif.tv/886-1178-17719/en on 24 November
2016.
NOTES TO EDITORS
-- Marston's is a leading pub operator and independent brewer.
-- It has an estate of 1,559 pubs situated nationally,
comprising managed, franchised and leased pubs.
-- It is the UK's leading brewer of premium cask and bottled
ales, including Marston's Pedigree, Wainwright, Lancaster Bomber
and Hobgoblin. The beer portfolio also includes Banks's, Jennings,
Wychwood, Ringwood, Brakspear and Mansfield beers.
-- Marston's employs around 14,000 people.
-- The underlying results reflect the performance of the Group
before exceptional and other adjusting items. The Directors
consider that these figures provide a useful indication of the
underlying performance of the Group.
-- Leverage is the ratio of net debt excluding lease financing to underlying EBITDA.
GROUP OVERVIEW
We are pleased to report that we have again achieved profit
growth across all of our trading segments, with solid underlying
earnings growth, demonstrating further good progress in
implementing our strategy.
Our strategy remains consistent, focusing on operating and
expanding a high quality pub estate through investment in new pubs
and bars as well as increasing our investment in accommodation. In
addition, our beer business focuses on increasing market share in
the growth areas of premium beers and bottled ale where we are the
market leader.
The new-build programme remains our key growth driver. Since
2009, when the current investment plan started, we have opened over
150 new pub-restaurants generating consistently high levels of
profitability and strong returns, thereby creating significant
shareholder value. Where possible, accommodation is added alongside
a new pub-restaurant to generate additional income and enhance
returns. We opened six new lodges under the Marston's Inns brand in
2016. We also see expansion opportunities in premium bars, having
opened three new bars in 2016 on a leasehold basis.
We identified several years ago, that in locations where
Marston's has direct control over the retail offer we are better
able to deliver a stronger consumer proposition with more
consistent standards across the estate. We therefore pioneered an
innovative franchise-style agreement in 2009, and as at the end of
2016, approximately 80% of profits from our pubs are generated by
managed or franchise-style pubs.
In Brewing, our focus remains on the growth market of premium
beers underpinned by local provenance, our strong brewing heritage
and state-of-the-art logistics capability. Our core brewing
business grew strongly, in terms of revenue and earnings in the
year, supplemented by the successful integration of the Thwaites'
beer business acquired in April 2015.
Total underlying revenue increased by 7.1% from 2015 reflecting
like-for-like growth in our pubs, the positive impact of new
openings, growth in our beer brands and the acquisition of
Thwaites' beer business. As previously highlighted, our operating
margin was 0.5% below last year reflecting lower margins in Brewing
as a result of the contract to supply Thwaites' pubs and the
continued impact of franchise conversion within Taverns. In
Destination and Premium operating margins were in line with last
year, despite the introduction of the National Living Wage in April
2016.
Underlying operating profit of GBP172.7 million (2015: GBP165.4
million) was up 4.4% with profit growth in each of our trading
segments.
Underlying profit before tax was up 7.1% to GBP98.0 million
(2015: GBP91.5 million) principally reflecting the contribution
from new pub-restaurants and a strong performance from Brewing.
Basic underlying earnings per share for the period increased by
8.5% to 14.0 pence per share (2015: 12.9 pence per share).
On a statutory basis, profit before tax was GBP80.8 million
(2015: GBP31.3 million) and earnings per share were 12.7 pence per
share (2015: 4.1 pence per share).
Operating cash flow continued to improve, increasing 12.6% to
GBP182.8 million, principally driven by higher profits and a
reduced level of pension contribution. Our fixed charge cover has
again improved by 0.1x to 2.6x, demonstrating our increased balance
sheet strength.
Net debt at the period end was GBP1,269 million. Net debt
includes GBP1,074 million of long-term, structured finance with a
stable repayment profile and no exposure to increases in interest
rates, underpinned by an estate which is 97% freehold. Excluding
property leases with freehold reversion entitlement, the ratio of
net debt to underlying EBITDA was 4.8 times at the period end
(2015: 5.1 times) and this ratio is expected to reduce further over
time.
Cash return on cash capital employed improved to 10.9% (2015:
10.8%) reflecting the positive contribution of the new-build
pub-restaurants and the disposal of non-core pubs. This represents
a 1.4% improvement in returns since 2009. We remain focused on
improving returns and are confident that the implementation of our
strategy will continue to increase returns over time.
The proposed final dividend of 4.7 pence per share provides a
total dividend for the year of 7.3 pence per share, and represents
a 4.3% increase on 2015. Dividend cover was 1.9 times (2015: 1.8
times). Our dividend policy remains to target progressive increases
in the dividend at a cover of around 2 times over the medium
term.
Current trading and outlook
Trading in the current financial year is in line with our plans,
our new site development is on track, and there have been no
material changes to market conditions that would impact upon our
expectations for the full year.
Accepting there are wider concerns regarding the possible impact
of Brexit on consumer sentiment and input costs as a consequence of
sterling weakness since the vote; to date there has been no
discernible change in the spending habits of our customers, and we
have forward contracts in place for 2017 and much of 2018 which
will mitigate the risk of higher input costs due to exchange rate
fluctuation. We have planned for modest increases in business rates
in 2017, but are protected from more significant increases by our
low exposure on the high street and in city centres. Non-cash
pension interest costs will increase by GBP1.4 million this year as
a consequence of the impact of falling gilt yields on pension
deficits.
In summary, we are well placed to continue our track record of
growth and to make further progress against our key financial
objectives.
Strategy
Marston's strategic objectives remain focused on delivering
sustainable growth and maximising return on capital, with six key
components as described below.
1. Operating a high quality pub estate
We operate a pub estate that caters for a broad range of
customers, with flexible operating models. As a consequence we
ensure we have the right consumer offer, accompanied by the most
appropriate operating model, to maximise sales and profits for each
individual pub. The key elements of this are as follows:
Destination and Premium - 416 pubs. Our Destination pubs offer
family dining and great value in a relaxed pub environment. We aim
to retain strong pub values while reflecting modern tastes and
trends in a fast moving market. We operate several formats
depending upon local preferences: Marston's "Two for One",
"Milestone Rotisserie", "Milestone Carvery", and "Generous George",
allowing us to have the right consumer offer in each pub. The food
sales mix is 60%.
Our Pitcher & Piano and Revere bars and restaurants offer
premium food and drink in attractive, often iconic, town centre and
suburban locations. The food sales mix is 29%.
Taverns - 812 pubs. Our community pubs are great 'locals' with a
more traditional pub ambience in strong locations. The contribution
of the licensee, and strong community engagement, are critical to
the success of the pub, with entertainment, teams and games often
at the heart of the pub's activities. Typically, these are wet-led
pubs although food sales are growing and represented 19% of sales
in 2016.
Leased - 331 pubs. These distinctive pubs benefit from a high
degree of independence and committed licensees. The leased model,
with longer-term assignable agreements, attracts skilled
entrepreneurs who build value through developing their own
businesses. We contribute through our expertise in attracting the
right lessee, having a partnership approach with our licensees and
providing business support.
2. Targeting pub growth: investing in pub-restaurants and
Premium pubs, further developing Franchise
New pub-restaurants. In our Destination business, since 2009 we
have opened over 150 pub-restaurants offering family dining at
reasonable prices. These pubs generate high turnover, with target
sales of GBP25,000 per week and a food sales mix in excess of 60%.
We have an experienced site acquisition team and a well-established
and proven site selection process. This expansionary investment has
generated consistently strong returns and has enabled us to extend
the locations in which we trade to include southern England and
Scotland. New pub-restaurant investment creates significant value
for shareholders, as demonstrated in the 2015 pub estate valuation.
In 2016 we opened 19 pub-restaurants, and we are targeting at least
20 for 2017.
Competition and differentiation remain key considerations. We
operate in a market with significant investment supply in casual
dining, fast food and restaurants, therefore our pub-restaurant
investment is targeted in areas that are less exposed to intense
competition, particularly outside London and city centres. We
benefit from the broad appeal of the "pub" brand which occupies a
unique position in the market and has demonstrated longevity.
New Premium pubs. In recent years we have invested in our
Premium pub business, including Pitcher & Piano and Revere.
Through this investment we have been able to operate Premium pubs
as an "innovation-hub" from which learnings can be extended into
our broader pub business.
Given the success to date, we are seeking to further expand the
Premium estate. In 2016 we converted one pub from the Destination
estate to the Revere format, with a further three Revere Town bars
opened in Leeds, Edinburgh and Knutsford. We expect to open at
least three bars per annum in future, with openings in Hammersmith,
Harrogate and Sheffield planned in 2017.
Development of the franchise model. In 2009 we pioneered the
introduction of franchise-style agreements in the pub sector. We
believe that the franchise operating model in community pubs
creates the best experience for our customers and is the most
flexible and attractive model for licensees. It is our intention to
continue to roll out this model into most of our pubs within the
Taverns estate over time.
We have also been successful in expanding franchise-style
agreements into higher turnover pubs. This year some of our most
successful franchisees have generated turnover levels similar to
those in the Destination estate, and we have opened our first
new-build Tavern operating under the franchise operating model. We
are also evaluating the potential for franchise-style agreements in
the Destination estate, and anticipate trialing this in the next
two years.
3. Increased investment in rooms
We operate around 950 rooms across 54 pubs within our
Destination and Premium estate. Accommodation acts as a
complementary income stream to an existing pub, making the total
pub revenue more consistent and less dependent on weather. Organic
room income has been consistently strong with double-digit sales
growth for each of the last four years and we anticipate similar
trends in the future with continued growth in leisure and business
visitors.
In recent years the focus of this investment has been on two key
areas:
Lodge development within Marston's Inns. Within our Destination
estate we currently operate 13 lodges with 25-40 rooms, having
added six new lodges in 2016. The accommodation has a typical room
rate of between GBP60 - GBP90 per night, including breakfast and
high-speed broadband. In addition, we have developed a new
Marston's Inns website and have recently recruited additional
accommodation sales and marketing expertise into our business to
maximise the opportunity for this income stream.
The performance of this investment has been encouraging and as a
consequence we expect accommodation to be an increasingly important
component of our investment plans. In future, we expect to open
between 5-10 lodges per annum and we have clear visibility on sites
for 2017 and 2018.
Development of Premium rooms. In our Premium business we operate
around 120 rooms out of 10 pubs, all of which have been transferred
from the Destination pub estate. These have a typical room rate of
GBP90 - GBP120 per night and offer a premium boutique room
experience. We continue to review the existing pub estate to
identify additional opportunities to develop premium rooms in
future.
4. Offering the best consumer experience: quality, service, value and innovation
Quality of food and drink. Given the pace of change and
competitive nature of our industry we prioritise quality and target
a food offer with broad demographic appeal. Our food quality scores
improved in 2016, underpinned by consistent food and service brand
values. Traditional favourites such as fish and chips are staple
pub classics on our menus, although we continue to develop and
evolve our food offers, introducing new tastes and flavours to
maintain our reputation for innovation and keep ahead of the
competition.
As outlined above, the Revere business acts as an
"innovation-hotbed" where we trial new food styles and concepts
that can then be extended to the broader pub estate. Pizza is a
good example and in 2016 we continued the rollout of Pizza Kitchen,
offering fabulous fresh-made pizza with "theatre", which now
operates in 70 pubs. Similarly, we have introduced "smoke-house
food" and "better-burger" concepts in our Generous George pubs
following successful trials in the Revere business.
We are also well placed to benefit from current trends in beer,
wines, spirits and non-alcoholic drinks. Growth in premium drinks
continues, with strong consumer interest in new brands and styles,
particularly in craft beer, spirits and non-alcoholic drinks.
Premium beers account for over 70% of beer sold, we sell 16 million
glasses of wine and five million cups of coffee a year, with soft
drinks accounting for 15% of total drinks volume. In our Revere
bars, cocktails account for 12% of drinks sales reflecting the
premium nature of the experience, and we have enhanced our cocktail
offer in both our Destination and Taverns pubs to capitalise on
this growing area of the market.
Non-alcoholic drinks are becoming an increasingly important part
of our offer, particularly for younger customers. This year we have
introduced more premium branded soft drinks and are also developing
freshly prepared drinks such as mocktails, milkshakes and
smoothies.
We benefit from having a market-leading beer business. Our pub
and beer teams work closely together to ensure our pubs have the
best beer range locally, underpinned through initiatives such as
"Masters of Cask" in our Taverns pubs, and supported by our own
beer quality specialists visiting pubs to help ensure the beer
served in our own pubs and those of our customers is of the highest
quality.
Service. We believe there is a direct link between relative
market performance and service. As such, we are focused on ensuring
we offer our customers the highest level of service. We measure
service at pub level using a combination of both internal and
external measures, and data from InMoment suggests that we have
consistently outperformed the hospitality sector over the last two
years.
In order to maintain this differential, we have introduced an
internally developed social media listening tool this year which
provides our pub managers with the ability to quickly respond to
any customer feedback. Looking forward, we are in the process of
investing significantly in high speed broadband and state of the
art EPOS equipment (to be completed in 2017) which will provide us
with better customer information and contribute further to improved
service.
Value. Value for money is a key element of our offer.
Importantly, value does not necessarily mean the cheapest -
customers are prepared to pay for a quality experience. We do not
seek to be the lowest priced offer locally but to be perceived as
offering great value for money. Similarly, we do not participate in
significant voucher activity, believing a consistent offer based
upon everyday value is important to our customers.
5. Leadership in the UK beer market
The UK beer market is evolving with consumers seeking a wider
choice of beers with local provenance and taste, including craft
beers. The off-trade continues to grow, with the strongest growth
in the premium bottled ale segment and the Craft Beer category.
Our established strategy is well positioned to benefit from
these trends. We have a wide portfolio of beers from our own five
breweries, a national distribution network and a local approach to
beer brand management. Around 1 in 4 premium bottled ales and 1 in
5 premium cask ales in the UK are Marston's brands and Premium ales
now account for around 70% of sales with the mix of sales to the
off-trade being around 54%.
Our position as category leaders has been recognised across the
industry, most recently by being awarded the Publican National Cask
Ale Supplier of the Year for the third year in succession. Our own
annual publications, the Cask Ale Report and Premium Bottled Ale
Report, continue to be highly valued by both our on-trade and
off-trade customers, for insight into current and future market
trends.
Our largest brand, Hobgoblin, continues to grow, with total
brand volumes of around 130,000 barrels. The introduction of
Hobgoblin Gold has proved extremely successful, with volumes now at
30,000 barrels since its launch in 2014. The brand is the most
followed beer brand on social media, and in a recent YouGov survey,
Hobgoblin was voted the third most recognised beer brand in the UK,
only sitting behind two global beer brands. It remains after nine
years the "unofficial Beer of Halloween".
We will be energising the Marston's brand in 2017, including the
iconic Pedigree, to capitalise on its growing appeal to younger
consumers. This campaign will include a redesign of pump clips and
bottles, together with an urban marketing campaign under the banner
"From Burton with Love".
Following the Thwaites' acquisition in 2015, it has been
successfully integrated into the wider beer business and the
anticipated synergies realised. The Wainwright brand has performed
strongly since acquisition and we have repositioned the branding
resulting in significant growth.
Innovation is key to maintaining our competitive advantage.
During the year, we invested in the DE14 microbrewery in Burton,
enabling us to test new and innovative beer styles to introduce
into the market in the future.
Alongside our own beers and ales, collaboration brands also form
an integral part of our strategy. Within our portfolio, we have the
UK licences for the Shipyard, Warsteiner and KruĊĦovice beer brands
and for Kingstone Press Cider in the growing cider category. All
have performed extremely well in the year, and of particular note,
Shipyard is now the second most popular craft beer in the UK. We
anticipate increasing the number of these partnerships in the
future.
We also have a highly experienced and talented brewing and
logistics team, who ensure that we are operating at optimal cost
efficiency. In addition, we undertake extensive contract services
work on behalf of a broad range of competitors who also recognise
the benefits of working in partnership with us. In 2016 we invested
in additional warehousing at the Marston's Brewery in Burton in
response to the growth in our own brands as well as the needs of
our expanding contract business.
6. Our People - 'People at the Heart'
Marston's employs around 14,000 people and, although many
businesses claim that 'people are our most important asset', it is
truly the case that nothing makes a bigger difference to our
business than our people.
We want Marston's to be 'The Place to Be' for our employees as
well as our customers. Following recruitment of a new People
Director last year we have continued to invest in our People
Support team, with senior appointments in Talent Development and
Internal Communications. We have reviewed and reinvigorated our
approach to ways of working, aiming to modernise and build on the
excellent values and culture which the business has developed over
many years. There are three key components to our People
Strategy:
Recruit the best people. Differentiation is essential in our
industry and we recognise that the way our people think, feel and
act will make Marston's stand out. As such, we aim to recruit,
retain and develop the very best people, those who can truly
deliver best practice, bring fresh thinking and have the passion
and drive to help our business go from strength to strength.
Investment in training and development. We have a strong, caring
and collegiate culture at Marston's. Our people are trusted and
empowered to play their part in exceeding our customers'
expectations and in turn we support the development of their skills
and careers in partnership. We are committed to training: this year
1 in 4 employees received formal training encompassing pub, brewing
and finance related courses, degree courses and training with the
Wine & Spirit Education Trust and Chartered Institute of
Management. Around 50% of our people are below the age of 25 and we
have completed around 1,500 apprenticeships in the last four
years.
Engaged and empowered workforce. People come first at Marston's
- making people feel good is what we're all about, whether that's
our team, our customers, or our suppliers. By keeping people at the
heart of the business we ensure they are engaged and loyal in all
they do. We act as one team, we are proud of our heritage and are
always striving for success. The results of the 2016 engagement
survey have been extremely encouraging with an employee engagement
score of 76%, which is 9% above the UK average and 2% above the UK
High Performers. In addition, our internal magazine "The Place" won
the best new internal communication at the 2016 Institute of
Internal Communications Awards.
PERFORMANCE AND FINANCIAL REVIEW
Underlying Underlying
revenue operating profit Margin
2016 2015 2016 2015 2016 2015
GBPm GBPm GBPm GBPm % %
Destination and Premium 440.8 408.1 90.2 83.6 20.5 20.5
Taverns 221.0 214.7 56.0 55.9 25.3 26.0
Leased 50.7 53.6 24.2 23.8 47.7 44.4
Brewing 193.3 169.1 23.2 20.7 12.0 12.2
Group Services - - (20.9) (18.6) (2.3) (2.2)
Group 905.8 845.5 172.7 165.4 19.1 19.6
Destination and Premium
Total revenue increased 8.0% to GBP440.8 million reflecting the
continued strong performance of our new-build pub-restaurants and
growth in like-for-like sales. Underlying operating profit of
GBP90.2 million was up 7.9% (2015: GBP83.6 million). Average profit
per pub increased to GBP223k, up 2%.
Total like-for-like sales were 2.3% above last year, with
like-for-like food sales up by 1.7%, assisted by strong growth in
sales of starters, desserts and coffee. In addition, like-for-like
room income was up 15.8%. In Destination pubs, food now accounts
for 58% of total sales (2015: 57%) and in Premium pubs and bars
food is 29% of sales (2015: 28%).
Like-for-like wet sales increased by 2.3%, outperforming the
declining UK on-trade drinks market. We continue to see growth in
more premium products, with own-brewed premium ale volumes up 2%,
premium lager up 17% and wine up 4%.
Operating margins were in line with last year.
Taverns
Total revenue increased by 2.9% to GBP221.0 million, with strong
franchised growth offsetting the impact of disposals. The quality
of the remaining pub estate has improved significantly with average
profit per pub up 10% to GBP67k.
In our managed and franchised pubs like-for-like sales were up
2.7% and operating profits were up 5.7% versus last year,
reflecting the continued success of pubs operating under the
franchise model. Operating margins were in line with last year.
Operating profit was up 0.2% to GBP56.0 million despite the
impact of disposals, reflecting the strong performance of
franchised pubs within our estate.
Operating margin was 0.7% below last year at 25.3%, primarily
reflecting the impact of conversion of pubs to the franchise
model.
Leased
Total revenue decreased by 5.4% to GBP50.7 million, reflecting
disposals and transfers, and underlying operating profit of GBP24.2
million was up 1.7% on last year. The performance of the core
estate was strong with like-for-like earnings growth of 2%,
including rental income growth of 2%. Average profit per pub
increased by 3% to GBP72k and licensee stability remained stable at
over 90%. Operating margin of 47.7% was up 3.3%.
Brewing
Total revenue increased by 14.3% to GBP193.3 million, reflecting
the benefits of the Thwaites' acquisition described above.
Underlying operating profit increased by 12.1% to GBP23.2
million.
Overall ale volumes were up 13% with premium cask ale volumes up
6% and premium bottled ale volumes up 5%. Hobgoblin, our largest
brand, continues to grow with sales up 13% on last year, supported
by the introduction of Hobgoblin Gold. We have maintained our
position as 'category market leader' in both the premium bottled
ale and premium cask ale markets.
Operating margin was slightly down on last year at 12.0%,
reflecting the impact of the pub supply arrangement with Thwaites
which generates a positive profit contribution, albeit at a low
margin percentage.
Central costs in the period were GBP2.3 million higher than last
year, reflecting higher IT depreciation, head office rental costs,
and increased investment in our people team.
Cash flow, capital expenditure and disposals
Operating cash flow of GBP182.8 million was 12.6% above last
year due to the improved profit performance, lower pension
contributions and lower taxation payments.
Capital expenditure was GBP143.7 million in 2016 (2015: GBP142.3
million), including GBP65 million on the construction of 22 pubs
and bars and 6 lodges. We expect that capital expenditure will be
around GBP140 million in 2017, including around GBP70 million for
the construction of at least 20 new pub-restaurants, 3 Revere bars
and 5 lodges.
During the year we generated GBP45.9 million of cash from the
disposal of assets including GBP30.9 million of leasing
transactions.
Taxation
The underlying rate of taxation of 18.0% in 2016 is below the
standard rate of corporation tax of 20% primarily due to credits in
respect of deferred tax on property.
The underlying tax rate has decreased by 1.3% from 19.3% in
2015.
Following the agreement of the tax treatment of certain items
with HM Revenue & Customs (HMRC), the Group has recognised a
non-underlying tax credit of GBP4.1 million in respect of the
additional tax relief claimed by the Group for previous periods,
along with a non-underlying charge of GBP0.5 million in respect of
the associated advisory fees. Following this agreement, the Group's
corporation tax affairs are now agreed up to and including the year
ended 4 October 2014.
Financing
At 1 October 2016 the Group had a GBP257.5 million bank facility
to November 2018, and the amount drawn down at 1 October 2016 was
GBP233.0 million. In addition, we have a GBP30 million two-year
facility for the Thwaites acquisition. These facilities, together
with a long-term securitisation of approximately GBP834 million and
the lease financing arrangements described below, provides us with
an appropriate level of financing headroom for the medium term. The
Group has sufficient headroom on both the banking and
securitisation covenants and also has flexibility to transfer pubs
between the banking and securitisation groups.
The Group has entered into lease financing arrangements which
have a total value of GBP240.1 million (2015: GBP202.2 million) as
at 1 October 2016. This financing is a form of sale and leaseback
agreement whereby the freehold reverts to the Group at the end of
the term at nil cost, consistent with our preference for
predominantly freehold asset tenure. The agreements range from 35
to 40 years and provide the Group with an extended debt maturity
profile at attractive rates of interest. Unlike a traditional sale
and leaseback, the associated liability is recognised as debt on
the balance sheet due to the reversion of the freehold.
Net debt excluding lease financing of GBP1,029 million at 1
October 2016 is GBP14 million below last year. For the period ended
1 October 2016 the ratio of net debt excluding lease financing to
underlying EBITDA was 4.8 times (2015: 5.1 times). It remains our
intention to reduce this ratio over time, principally through
EBITDA growth generated from our new-build investment
programme.
Pensions
Our final salary pension scheme at the year end showed a deficit
of GBP34.0 million before tax (2015: GBP15.0 million surplus). This
position reflects the impact of deteriorating gilt yields on
discount rate assumptions during the course of the last year.
Non-underlying items
There is a net non-underlying charge of GBP7.4 million after
tax. This includes charges of GBP1.7 million relating to non-core
estate disposal and reorganisation costs, GBP4.4 million in respect
of the change in the rate assumptions used in calculating our
onerous lease provisions, GBP3.8 million in respect of relocation,
reorganisation and integration costs and GBP8.4 million in respect
of the mark-to-market movement in the fair value of certain
interest rate swaps. These are offset by the GBP1.5 million profit
on disposal of a parcel of surplus land for residential
development. The revenue of GBP31.5 million and expenses of GBP31.4
million in respect of the ongoing management of the pubs from the
portfolio disposal in December 2013 have also been included within
non-underlying items. Following the agreement of the tax treatment
of certain items with HMRC the Group has recognised a
non-underlying tax credit of GBP4.1 million in respect of the
additional tax relief claimed by the Group for previous periods,
along with a non-underlying charge of GBP0.5 million in respect of
the associated advisory fees. In addition, there is a
non-underlying deferred tax credit of GBP2.4 million in relation to
the change in corporation tax rate and a credit of GBP3.3 million
relating to the tax on non-underlying items.
GROUP INCOME STATEMENT
For the 52 weeks ended 1 October 2016
2016 2015
Non- Non-
Underlying underlying Underlying underlying
items items Total items items Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ ----- ----------- ------------ --------- ----------- ------------ ---------
Revenue 905.8 31.5 937.3 845.5 33.1 878.6
Operating expenses* (733.1) (40.3) (773.4) (680.1) (84.7) (764.8)
------------------------------- ----------- ------------ --------- ----------- ------------ ---------
Operating profit 172.7 (8.8) 163.9 165.4 (51.6) 113.8
------------------------------- ----------- ------------ --------- ----------- ------------ ---------
Finance costs (75.2) - (75.2) (74.5) - (74.5)
Finance income 0.5 - 0.5 0.6 - 0.6
Movement in fair
value of interest
rate swaps - (8.4) (8.4) - (8.6) (8.6)
------------------------------- ----------- ------------ --------- ----------- ------------ ---------
Net finance costs (74.7) (8.4) (83.1) (73.9) (8.6) (82.5)
---------
Profit before taxation 98.0 (17.2) 80.8 91.5 (60.2) 31.3
Taxation (17.6) 9.8 (7.8) (17.7) 9.7 (8.0)
------------------------------- ----------- ------------ --------- ----------- ------------ ---------
Profit for the period
attributable to
equity shareholders 80.4 (7.4) 73.0 73.8 (50.5) 23.3
------------------------------- ----------- ------------ --------- ----------- ------------ ---------
Earnings per share:
Basic earnings per
share 12.7p 4.1p
Basic underlying
earnings per share 14.0p 12.9p
Diluted earnings
per share 12.6p 4.0p
Diluted underlying
earnings per share 13.8p 12.8p
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the 52 weeks ended 1 October 2016
2016 2015
GBPm GBPm
----------------------------------------------------------- ------- --------
Profit for the period 73.0 23.3
------------------------------------------------------------ ------- --------
Items of other comprehensive income that may subsequently
be reclassified to profit or loss
Losses arising on cash flow hedges (50.9) (56.1)
Transfers to the income statement on cash flow
hedges 11.3 12.2
Tax on items that may subsequently be reclassified
to profit or loss 2.0 8.7
------------------------------------------------------------ ------- --------
(37.6) (35.2)
------------------------------------------------------------ ------- --------
Items of other comprehensive income that will not
be reclassified to profit or loss
Remeasurement of retirement benefits (56.3) (6.7)
Unrealised surplus on revaluation of properties* 2.0 216.5
Reversal of past revaluation surplus* - (120.6)
Tax on items that will not be reclassified to profit
or loss 27.7 (17.1)
------------------------------------------------------------ ------- --------
(26.6) 72.1
------------------------------------------------------------ ------- --------
Other comprehensive (expense)/income for the period (64.2) 36.9
------------------------------------------------------------ ------- --------
Total comprehensive income for the period 8.8 60.2
------------------------------------------------------------ ------- --------
* During the prior period revaluations of the Group's freehold
and leasehold properties were undertaken, resulting in a net
increase in property values of GBP57.3 million. An unrealised
surplus on revaluation of GBP216.5 million and a reversal of past
revaluation surplus of GBP120.6 million were recognised in the
revaluation reserve, and a net charge of GBP38.6 million was
recognised in the income statement.
GROUP CASH FLOW STATEMENT
For the 52 weeks ended 1 October 2016
2016 2015
GBPm GBPm
---------------------------------------------------------- -------- --------
Operating activities
Underlying operating profit 172.7 165.4
Depreciation and amortisation 40.0 37.9
----------------------------------------------------------- -------- --------
Underlying EBITDA 212.7 203.3
Non-underlying operating items (8.8) (51.6)
----------------------------------------------------------- -------- --------
EBITDA 203.9 151.7
Working capital movement 8.9 10.7
Non-cash movements (7.9) 30.0
(Decrease)/increase in provisions and other non-current
liabilities (4.7) 0.1
Difference between defined benefit pension contributions
paid and amounts charged (7.6) (14.0)
Income tax paid (9.8) (16.2)
----------------------------------------------------------- -------- --------
Net cash inflow from operating activities 182.8 162.3
----------------------------------------------------------- -------- --------
Investing activities
Interest received 0.7 0.7
Sale of property, plant and equipment and assets
held for sale 45.9 69.6
Purchase of property, plant and equipment and
intangible assets (143.7) (142.3)
Acquisition of business - (28.8)
Movement in other non-current assets 1.7 2.4
Net cash outflow from investing activities (95.4) (98.4)
----------------------------------------------------------- -------- --------
Financing activities
Equity dividends paid (40.8) (38.9)
Interest paid (70.3) (71.8)
Arrangement costs of bank facilities - (0.2)
Arrangement costs of other lease related borrowings (2.8) (2.9)
Purchase of own shares (0.1) -
Proceeds from sale of own shares 0.9 1.5
Repayment of securitised debt (26.7) (25.4)
Advance of bank borrowings 13.0 38.0
Capital element of finance leases repaid (0.1) (0.1)
Advance of other lease related borrowings 40.7 47.0
Net cash outflow from financing activities (86.2) (52.8)
----------------------------------------------------------- -------- --------
Net increase in cash and cash equivalents 1.2 11.1
----------------------------------------------------------- -------- --------
GROUP BALANCE SHEET
As at 1 October 2016
1 October 3 October
2016 2015
GBPm GBPm
---------------------------------------------- ----------- -----------
Non-current assets
Goodwill 227.5 227.5
Other intangible assets 37.3 37.6
Property, plant and equipment 2,199.4 2,122.6
Deferred tax assets 16.7 3.2
Retirement benefit surplus - 15.0
Other non-current assets 10.4 12.1
2,491.3 2,418.0
---------------------------------------------- ----------- -----------
Current assets
Inventories 28.7 28.2
Trade and other receivables 85.0 84.3
Cash and cash equivalents* 185.6 193.1
----------------------------------------------- ----------- -----------
299.3 305.6
---------------------------------------------- ----------- -----------
Assets held for sale 6.6 18.0
Current liabilities
Borrowings* (176.9) (154.0)
Derivative financial instruments (38.0) (25.7)
Trade and other payables (194.9) (185.2)
Current tax liabilities (3.6) (7.2)
(413.4) (372.1)
---------------------------------------------- ----------- -----------
Non-current liabilities
Borrowings (1,278.1) (1,284.1)
Derivative financial instruments (202.7) (167.0)
Deferred tax liabilities (77.5) (92.2)
Retirement benefit obligations (34.0) -
Other non-current liabilities (0.6) (1.8)
Provisions for other liabilities and charges (38.8) (41.5)
----------------------------------------------- ----------- -----------
(1,631.7) (1,586.6)
---------------------------------------------- ----------- -----------
Net assets 752.1 782.9
Shareholders' equity
Equity share capital 44.4 44.4
Share premium account 334.0 334.0
Revaluation reserve 623.1 616.0
Capital redemption reserve 6.8 6.8
Hedging reserve (165.7) (128.1)
Own shares (113.7) (118.7)
Retained earnings 23.2 28.5
----------------------------------------------- ----------- -----------
Total equity 752.1 782.9
----------------------------------------------- ----------- -----------
* Cash and cash equivalents includes GBP120.0 million (2015:
GBP120.0 million) drawn down under the liquidity facility and
borrowings includes the corresponding liability.
GROUP STATEMENT OF CHANGES IN EQUITY
For the 52 weeks ended 1 October 2016
Equity Share Capital
share premium Revaluation redemption Hedging Own Retained Total
capital account reserve reserve reserve shares earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
At 4 October 2015 44.4 334.0 616.0 6.8 (128.1) (118.7) 28.5 782.9
------------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
Profit for the period - - - - - - 73.0 73.0
Remeasurement of
retirement benefits - - - - - - (56.3) (56.3)
Tax on remeasurement
of retirement benefits - - - - - - 10.3 10.3
Losses on cash flow
hedges - - - - (50.9) - - (50.9)
Transfers to the
income statement
on cash flow hedges - - - - 11.3 - - 11.3
Tax on hedging reserve
movements - - - - 2.0 - - 2.0
Property revaluation - - 2.0 - - - - 2.0
Deferred tax on
properties - - 17.4 - - - - 17.4
------------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
Total comprehensive
income/(expense) - - 19.4 - (37.6) - 27.0 8.8
------------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
Share-based payments - - - - - - 0.4 0.4
Purchase of own
shares - - - - - (0.1) - (0.1)
Sale of own shares - - - - - 5.1 (4.2) 0.9
Disposal of properties - - (14.1) - - - 14.1 -
Tax on disposal
of properties - - 2.7 - - - (2.7) -
Transfer to retained
earnings - - (0.9) - - - 0.9 -
Dividends paid - - - - - - (40.8) (40.8)
------------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
Total transactions
with owners - - (12.3) - - 5.0 (32.3) (39.6)
------------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
At 1 October 2016 44.4 334.0 623.1 6.8 (165.7) (113.7) 23.2 752.1
------------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
Equity Share Capital
share premium Revaluation redemption Hedging Own Retained Total
capital account reserve reserve reserve shares earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
At 5 October 2014 44.4 334.0 545.9 6.8 (92.9) (126.8) 47.6 759.0
------------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
Profit for the period - - - - - - 23.3 23.3
Remeasurement of
retirement benefits - - - - - - (6.7) (6.7)
Tax on remeasurement
of retirement benefits - - - - - - 1.4 1.4
Losses on cash flow
hedges - - - - (56.1) - - (56.1)
Transfers to the
income statement
on cash flow hedges - - - - 12.2 - - 12.2
Tax on hedging reserve
movements - - - - 8.7 - - 8.7
Property revaluation - - 216.5 - - - - 216.5
Property impairment - - (120.6) - - - - (120.6)
Deferred tax on
properties - - (18.5) - - - - (18.5)
------------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
Total comprehensive
income/(expense) - - 77.4 - (35.2) - 18.0 60.2
------------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
Share-based payments - - - - - - 0.8 0.8
Tax on share-based
payments - - - - - - 0.3 0.3
Sale of own shares - - - - - 8.1 (6.6) 1.5
Disposal of properties - - (7.4) - - - 7.4 -
Tax on disposal
of properties - - 0.9 - - - (0.9) -
Transfer to retained
earnings - - (0.8) - - - 0.8 -
Dividends paid - - - - - - (38.9) (38.9)
------------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
Total transactions
with owners - - (7.3) - - 8.1 (37.1) (36.3)
------------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
At 3 October 2015 44.4 334.0 616.0 6.8 (128.1) (118.7) 28.5 782.9
------------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
NOTES
1 Accounting policies
Basis of preparation
The financial information for the 52 weeks ended 1 October 2016
(2015: 52 weeks ended 3 October 2015) has been extracted from the
audited financial statements, which have been prepared in
accordance with International Financial Reporting Standards (IFRS)
and IFRS Interpretations Committee and Standing Interpretations
Committee interpretations adopted by the European Union and with
those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. The financial statements have been prepared
under the historical cost convention as modified by the revaluation
of certain items, principally land and buildings, derivative
financial instruments, retirement benefits and share-based
payments.
The prior period deferred tax balances that were originally
presented on a gross basis in the balance sheet have been
represented on a net basis to better reflect the offsetting
requirements of IAS 12 'Income Taxes' and to be consistent with the
current period presentation.
2 Segment reporting
2016 2015
Underlying revenue by segment GBPm GBPm
------------------------------------------------------- ------ ------
Destination and Premium 440.8 408.1
Taverns 221.0 214.7
Leased 50.7 53.6
Brewing 193.3 169.1
Group Services - -
Underlying revenue 905.8 845.5
Non-underlying items 31.5 33.1
------------------------------------------------------- ------ ------
Revenue 937.3 878.6
------------------------------------------------------- ------ ------
2016 2015
Underlying operating profit by segment GBPm GBPm
------------------------------------------------------- ------- -------
Destination and Premium 90.2 83.6
Taverns 56.0 55.9
Leased 24.2 23.8
Brewing 23.2 20.7
Group Services (20.9) (18.6)
Underlying operating profit 172.7 165.4
Non-underlying operating items (8.8) (51.6)
------------------------------------------------------- ------- -------
Operating profit 163.9 113.8
Net finance costs (83.1) (82.5)
------------------------------------------------------- ------- -------
Profit before taxation 80.8 31.3
------------------------------------------------------- ------- -------
3 NON-Underlying items
2016 2015
GBPm GBPm
------------------------------------------------------------ ------ -----
Exceptional operating items
Non-core estate disposal and reorganisation costs 1.7 2.5
Impact of change in rate assumptions used for onerous
lease provisions 4.4 4.9
Relocation, reorganisation and integration costs 3.8 2.6
Impairment of freehold and leasehold properties - 39.0
Profit on sale of surplus land for residential development (1.5) -
Tax advisory fees 0.5 -
8.9 49.0
------------------------------------------------------------ ------ -----
Other adjusting operating items
Results in respect of the ongoing management of pubs
in the portfolio disposal (0.1) 2.6
(0.1) 2.6
Non-underlying operating items 8.8 51.6
Exceptional non-operating items
Movement in fair value of interest rate swaps 8.4 8.6
------------------------------------------------------------ ------ -----
8.4 8.6
------------------------------------------------------------ ------ -----
Total non-underlying items 17.2 60.2
------------------------------------------------------------ ------ -----
Non-core estate disposal and reorganisation costs
During the period ended 5 October 2013 the Group commenced a
restructuring of its pub estate and operating segments. Costs in
respect of this restructuring were incurred in both the current and
prior period.
Impact of change in rate assumptions used for onerous lease
provisions
The update of the discount and inflation rate assumptions used
in the calculation of the Group's onerous property lease provisions
at the current period end resulted in an increase of GBP4.4 million
(2015: GBP4.9 million) in the total provision.
Relocation, reorganisation and integration costs
During the current and prior period a redevelopment of the
Group's head office building in Wolverhampton was undertaken along
with a reorganisation of certain head office functions. Costs of
GBP0.5 million (2015: GBP1.6 million) were incurred in respect of
temporarily relocating to alternative premises nearby during the
period of redevelopment and in undertaking the reorganisation.
The Group also incurred reorganisation and integration costs of
GBP3.3 million (2015: GBP1.0 million) as a result of the
acquisition of the trading operations of Daniel Thwaites PLC's beer
division in the prior period.
Profit on sale of surplus land for residential development
During the current period the Group sold a parcel of surplus
land for residential development for GBP9.5 million realising a
profit of GBP1.5 million on disposal.
Portfolio disposal of pubs
During the period ended 4 October 2014 the Group disposed of a
portfolio of 202 pubs and subsequently entered into a four year
lease and five year management agreement in respect thereof. The
Group no longer has strategic control of these pubs and they do not
form part of its core activities. As such the results in respect of
the ongoing operation and management of these pubs post disposal
have been classified as a non-underlying item, comprised as
follows:
2016 2015
GBPm GBPm
-------------------- ------- -------
Revenue 31.5 33.1
Operating expenses (31.4) (35.7)
0.1 (2.6)
-------------------- ------- -------
Movement in fair value of interest rate swaps
The Group's interest rate swaps are revalued to fair value at
each balance sheet date. The movement in fair value of interest
rate swaps which are not designated as part of a hedging
relationship, and the ineffective portion of the movement in fair
value of interest rate swaps which are accounted for as hedging
instruments are both recognised in the income statement. The net
loss of GBP8.4 million (2015: GBP8.6 million) is shown as an
exceptional item.
Impact of taxation
The current tax credit relating to the above non-underlying
items amounts to GBP1.7 million (2015: GBP1.9 million). The
deferred tax credit relating to the above non-underlying items
amounts to GBP1.6 million (2015: GBP7.8 million). In addition,
there is a non-underlying deferred tax credit of GBP2.4 million
(2015: GBPnil) in relation to the change in corporation tax
rate.
During the current period the Group agreed the tax treatment of
certain items with HM Revenue & Customs. The tax credit of
GBP4.1 million in respect of the additional tax relief claimed for
previous periods has been classified as a non-underlying item along
with the associated advisory fees of GBP0.5 million.
Prior period non-underlying items
At 1 February 2015 the Group's freehold and leasehold properties
were revalued by independent chartered surveyors on an open market
value basis. The resulting revaluation adjustments were recognised
in the revaluation reserve or income statement as appropriate. The
amount recognised in the income statement comprised:
2015
GBPm
--------------------------------------------------------- -------
Impairment of other intangible assets 0.1
Reversal of impairment of other intangible assets (0.2)
Impairment of property, plant and equipment 60.1
Reversal of impairment of property, plant and equipment (26.3)
Impairment of assets held for sale 5.0
Reversal of impairment of assets held for sale (0.1)
Valuation fees 0.4
39.0
--------------------------------------------------------- -------
4 Taxation
2016 2015
Income statement GBPm GBPm
Current tax:
Current period 14.1 14.2
Adjustments in respect of prior periods (0.6) 0.1
Credit in respect of tax on non-underlying items (1.7) (1.9)
Non-underlying credit in relation to additional relief
for prior periods (3.7) -
8.1 12.4
-------------------------------------------------------- ------ ------
Deferred tax:
Current period 4.2 3.5
Adjustments in respect of prior periods (0.1) (0.1)
Credit in respect of tax on non-underlying items (1.6) (7.8)
Non-underlying credit in relation to the change in
tax rate (2.4) -
Non-underlying credit in relation to additional relief
for prior periods (0.4) -
(0.3) (4.4)
-------------------------------------------------------- ------ ------
Taxation charge reported in the income statement 7.8 8.0
-------------------------------------------------------- ------ ------
5 Ordinary dividends on equity shares
2016 2015
Paid in the period GBPm GBPm
-------------------------------------------------------- ----- -----
Final dividend for 2015 of 4.5p per share (2014: 4.3p) 25.9 24.6
Interim dividend for 2016 of 2.6p per share (2015:
2.5p) 14.9 14.3
-------------------------------------------------------- ----- -----
40.8 38.9
-------------------------------------------------------- ----- -----
A final dividend for 2016 of 4.7p per share amounting to GBP27.0
million has been proposed for approval at the Annual General
Meeting, but has not been reflected in the financial
statements.
Subject to approval at the Annual General Meeting, this dividend
will be paid on 30 January 2017 to those shareholders on the
register at close of business on 16 December 2016.
6 Earnings per ordinary share
Basic earnings per share are calculated by dividing the profit
attributable to equity shareholders by the weighted average number
of ordinary shares in issue during the period, excluding treasury
shares and those held on trust for employee share schemes.
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. These represent share options
granted to employees where the exercise price is less than the
weighted average market price of the Company's shares during the
period.
Underlying earnings per share figures are presented to exclude
the effect of exceptional and other adjusting items. The Directors
consider that the supplementary figures are a useful indicator of
performance.
2016 2015
Per share Per share
Earnings amount Earnings amount
GBPm p GBPm p
----------------------------- --------- ---------- ----------- ----------
Basic earnings per share 73.0 12.7 23.3 4.1
Diluted earnings per share 73.0 12.6 23.3 4.0
------------------------------- --------- ---------- ----------- ----------
Underlying earnings per
share figures
Basic underlying earnings
per share 80.4 14.0 73.8 12.9
Diluted underlying earnings
per share 80.4 13.8 73.8 12.8
------------------------------- --------- ---------- ----------- ----------
2016 2015
m m
------------------------------------------- ------ ------
Basic weighted average number of shares 574.6 572.2
Dilutive options 6.0 6.1
------------------------------------------- ------ ------
Diluted weighted average number of shares 580.6 578.3
------------------------------------------- ------ ------
7 Net debt
Non-cash
movements
and deferred
issue
2016 Cash flow costs 2015
Analysis of net debt GBPm GBPm GBPm GBPm
--------------------------------- ---------- ------------ -------------- ----------
Cash and cash equivalents
Cash at bank and in hand 185.6 (7.5) - 193.1
Bank overdrafts - 8.7 - (8.7)
185.6 1.2 - 184.4
-------------------------------- ---------- ------------ -------------- ----------
Debt due within one year
Unsecured bank borrowings (29.2) - (30.1) 0.9
Securitised debt (27.8) 26.7 (28.3) (26.2)
Finance leases (0.1) 0.1 (0.1) (0.1)
Other lease related borrowings 0.2 - 0.1 0.1
Other borrowings (120.0) - - (120.0)
--------------------------------- ---------- ------------ -------------- ----------
(176.9) 26.8 (58.4) (145.3)
-------------------------------- ---------- ------------ -------------- ----------
Debt due after one year
Unsecured bank borrowings (232.0) (13.0) 29.2 (248.2)
Securitised debt (805.8) - 27.8 (833.6)
Finance leases (20.5) - 0.1 (20.6)
Other lease related borrowings (219.7) (40.7) 2.6 (181.6)
Preference shares (0.1) - - (0.1)
--------------------------------- ---------- ------------ -------------- ----------
(1,278.1) (53.7) 59.7 (1,284.1)
Net debt (1,269.4) (25.7) 1.3 (1,245.0)
--------------------------------- ---------- ------------ -------------- ----------
Other borrowings represent amounts drawn down under the
securitisation's liquidity facility. During the period ended 4
October 2014 the facility's provider, the Royal Bank of Scotland
Group plc, had its short-term credit rating downgraded below the
minimum prescribed in the facility agreement and as such the Group
exercised its entitlement to draw the full amount of the facility
and hold it in a designated bank account. The corresponding balance
of GBP120.0 million (2015: GBP120.0 million) held in this bank
account is included within cash and cash equivalents. The amounts
drawn down can only be used for the purpose of meeting the
securitisation's debt service obligations should there ever be
insufficient funds available from operations to meet such payments.
As such these amounts are considered to be restricted cash.
Included within cash and cash equivalents is an amount of GBP0.6
million (2015: GBP1.6 million) relating to a letter of credit with
Royal Sun Alliance Insurance, an amount of GBP1.5 million (2015:
GBP1.0 million) relating to a letter of credit with Aviva, and an
amount of GBP7.8 million (2015: GBP7.8 million) relating to
collateral held in the form of cash deposits. These amounts are
also considered to be restricted cash.
In addition, any other cash held in connection with the
securitised business is governed by certain restrictions under the
covenants associated with the securitisation.
2016 2015
Reconciliation of net cash flow to movement in net
debt GBPm GBPm
------------------------------------------------------- ---------- ----------
Increase in cash and cash equivalents in the period 1.2 11.1
Cash inflow from movement in debt (26.9) (59.5)
------------------------------------------------------- ---------- ----------
Change in debt resulting from cash flows (25.7) (48.4)
Non-cash movements and deferred issue costs 1.3 1.6
------------------------------------------------------- ---------- ----------
Movement in net debt in the period (24.4) (46.8)
Net debt at beginning of the period (1,245.0) (1,198.2)
Net debt at end of the period (1,269.4) (1,245.0)
------------------------------------------------------- ---------- ----------
2016 2015
Reconciliation of net debt before lease financing to
net debt GBPm GBPm
------------------------------------------------------- ---------- ----------
Cash and cash equivalents 185.6 193.1
Unsecured bank borrowings (including bank overdrafts) (261.2) (256.0)
Securitised debt (833.6) (859.8)
Other borrowings (120.0) (120.0)
Preference shares (0.1) (0.1)
------------------------------------------------------- ---------- ----------
Net debt before lease financing (1,029.3) (1,042.8)
Finance leases (20.6) (20.7)
Other lease related borrowings (219.5) (181.5)
Net debt (1,269.4) (1,245.0)
------------------------------------------------------- ---------- ----------
Notes:
(a) The financial information contained in this preliminary
announcement does not constitute the Group's statutory accounts
within the meaning of Section 434 of the Companies Act 2006. The
financial information has been extracted from the audited statutory
accounts of the Group for the 52 weeks ended 1 October 2016, which
will be filed with the Registrar of Companies in due course. The
independent auditors' report on these accounts is unqualified and
does not contain any statements under section 498 (2) or (3) of the
Companies Act 2006. The statutory accounts for the 52 weeks ended 3
October 2015 have been delivered to the Registrar of Companies.
(b) The Annual Report and Accounts for the 52 weeks ended 1
October 2016 will be posted to shareholders on 16 December 2016.
The Annual Report and Accounts can be downloaded from the Marston's
PLC website: www.marstons.co.uk. Alternatively, copies will be
obtainable from Instinctif Partners (020 7457 2020) or from the
Group Secretary, Marston's PLC, Marston's House, Brewery Road,
Wolverhampton, WV1 4JT.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AKNDQOBDDQDB
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