TIDMMARS
RNS Number : 9040X
Marston's PLC
30 November 2017
30 November 2017
MARSTON'S PLC
PRELIMINARY RESULTS FOR THE 52 WEEKSED 30 SEPTEMBER 2017
A high quality pub and beer business continuing to deliver
growth
-- Revenue and earnings growth
Underlying Statutory
--------------- ------------------- ---------------------
Revenue GBP992.2m Up 10% GBP1,011.3m Up 8%
--------------- ---------- ------- ------------ -------
Profit before GBP100.1m Up 3% GBP100.3m Up 24%
tax
--------------- ---------- ------- ------------ -------
Earnings per
share 14.2p Up 2% 14.2p Up 12%
--------------- ---------- ------- ------------ -------
- Profit growth in all trading segments
- Operating cash flow up 17% to GBP213.6 million, offset by
initial working capital impact from Charles Wells Beer Business
("CWBB")
- Pro-forma leverage down 0.1x to 4.7x, fixed charge cover
unchanged at 2.6x
- Return on capital of 10.7%, 94% freehold asset base, NAV 147p
per share
-- Improving quality of pub estate
- Average profit per pub up 2%
- 19 pubs and bars opened, 9 pubs and bars acquired
- Eight lodges opened, taking estate to over 1,250 rooms
-- Market-leading beer business continues to demonstrate growth
- Acquisition of CWBB
- Strong brand portfolio continues to outperform market
- Further market share growth, with 21% share of premium
packaged ale and 20% share of premium cask ale
- Supply chain expertise secures three significant distribution
contracts with Punch B, Hawthorn Leisure and Brakspear, totalling
c.1,700 pubs
-- Final dividend up 0.1p to 4.8p per share; full year dividends up 2.7% to 7.5p per share. Dividend cover maintained at 1.9x.
-- Well positioned for growth in 2018
- Like-for-like sales growth in pub estate in first seven weeks
of period
- Target to open 15 pubs and bars and 6 lodges in the coming
year including our largest 100+ room lodge to date in Ebbsfleet
- Integration of CWBB going well and synergies on track
Commenting, Ralph Findlay, CEO said:
"We have achieved strong revenue growth and higher earnings,
despite increasing employment and property costs. Our business has
been transformed in recent years with a significant improvement in
the quality of both our pub and beer businesses. While political
and economic uncertainty is likely to continue, we remain confident
that our proposition founded on providing great customer
experiences, the very best service and value for money, leaves
Marston's positioned to deliver further growth in the year
ahead."
Forthcoming Events
Please find below the forthcoming reporting dates for the Group,
which are also available on the investor calendar on our website -
www.marstons.co.uk/investors
AGM Trading update 23 January 2018
2018 Interim results 16 May 2018
2018 Preliminary results 21 November 2018
ENQUIRIES:
Marston's PLC Tel: 01902 Instinctif Partners Tel:
329516 020 7457 2020
Ralph Findlay, Chief Executive Justine Warren
Officer
Andrew Andrea, Chief Financial Matthew Smallwood
and Corporate
Development Officer
An audio webcast of the results presentation will be available
at
http://webcast.instinctif.tv/886-1178-18944/en on 30 November
2017
NOTES TO EDITORS
-- Marston's is a leading pub operator and independent brewer.
-- It has an estate of 1,568 pubs situated nationally,
comprising managed, franchised and leased pubs.
-- It is the UK's leading brewer of premium cask and packaged
ales, including Marston's Pedigree, Wainwright, Lancaster Bomber
and Hobgoblin. The beer portfolio also includes Banks's, Jennings,
Wychwood, Ringwood, Brakspear and Mansfield beers. Following the
acquisition of CWBB, Marston's has added Bombardier, Courage and
McEwan's to its brand portfolio most recently, as well as a range
of licensed brands including Young's, Founders and Estrella
Damm.
-- Marston's employs around 14,500 people.
-- Leverage is defined as the ratio of net debt before property
leases to underlying EBITDA. The calculation has been adjusted to
reflect the proforma earnings from the acquisitions of CWBB and the
Whitbread pubs during the period.
-- Return on Capital is defined as Cash Return on Cash Capital
Employed. The calculations are provided in the footnote to the
statement.
-- 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.
GROUP OVERVIEW
We are pleased to report growth in earnings in each of our
trading divisions despite the subdued trading experienced across
the sector over the summer. We continued our track record for
outperformance in each of our pub businesses for the third year in
succession and we continued to grow market share in our leading
beer business.
Total underlying revenue increased by 9.5% reflecting the
acquisition of the Charles Wells Beer Business ("CWBB"), the
contribution from new openings and pub acquisitions and positive
like-for- like sales in our pub business. Group operating margins
were in line with guidance but behind last year reflecting
increased costs in Destination and Premium, the continued impact of
converting pubs from tenancy to franchise and the short-term
dilution impact of the CWBB acquisition which operates at a lower
margin than our existing beer businesses ahead of the synergies to
be generated in the next financial year.
Underlying operating profit of GBP174.5 million (2016: GBP172.7
million) was up 1.0%.
Underlying profit before tax was up 2.9% to GBP100.1 million
(2016: GBP97.3 million), principally reflecting the contribution
from new pubs and bars and the strong Brewing performance. Basic
underlying earnings per share for the period of 14.2 pence per
share (2016: 13.9 pence per share) were up 2.2% on last year,
reflecting a lower tax rate in the period, and despite the higher
number of shares following the equity issuance referred to
below.
On a statutory basis, profit before tax was GBP100.3 million
(2016: GBP80.8 million) and earnings per share were 14.2 pence per
share (2016: 12.7 pence per share). The year-on-year change
principally reflects the positive movement in the fair value of
interest rate swaps in the period.
In June we acquired CWBB for an initial cash consideration of
GBP55 million, plus working capital and fair value adjustments of
GBP36 million. The acquisition was funded through a GBP76 million
equity raise in May. The business incorporates a portfolio of
well-known brands including Bombardier, Young's and McEwan's ale,
together with the UK distribution rights for Estrella Damm, the
Catalan lager. The acquisition is consistent with our strategy of
focusing on premium beer brands with local provenance, as well as
providing opportunities for growth in the developing free trade
market. Additionally, the acquisition further strengthens Marston's
presence in London and the South East and presents a platform to
expand our beer business into Scotland. The integration continues
to proceed as planned and we expect to deliver synergies of GBP2
million in financial year 2018 and total synergies of GBP4 million
by 2019, in line with the previous guidance.
During the year the Group also acquired a small package of pubs
from Whitbread, to further enhance our Destination and Premium
estate, for a consideration of GBP13 million with a refurbishment
investment of GBP3 million. In addition, in May, we acquired three
Pointing Dog premium bars for a total consideration of GBP8
million. The profit contribution of these acquisitions was minimal
in 2017 as we undertook a refurbishment programme.
Operating cash flow of GBP213.6 million is GBP30.8 million
higher than last year principally reflecting higher creditors. This
is offset in part by the initial working capital impact of the CWBB
acquisition.
Net debt at the period end was GBP1,329 million (2016: GBP1,269
million), with the differential driven by working capital from CWBB
described above and the timing of new-site expenditure. Net debt
excluding property leases is in line with last year. Since the year
end we have recovered GBP15 million of the debtors arising from
CWBB. Excluding property leases with freehold reversion
entitlement, and on a pro-forma basis (incorporating the post
synergy benefits of CWBB and the benefits of the acquisition of the
pubs from Whitbread during the year) the ratio of net debt to
underlying EBITDA was 4.7 times at the period end (2016: 4.8 times)
which is expected to reduce over time as the business grows and our
long-term debt amortises. In addition, fixed charge cover remains
at 2.6 times (2016: 2.6 times).
Cash Return on Cash Capital Employed (CROCCE) of 10.7% was
slightly below last year as a result of the timing of the
acquisitions and new openings. In 2018 our CROCCE will benefit from
the anticipated synergies from CWBB and the full year benefits of
the pub acquisitions described above.
The proposed final dividend of 4.8 pence per share provides a
total dividend for the year of 7.5 pence per share and represents a
2.7% increase on 2016. Dividend cover is 1.9 times and our dividend
policy remains to target progressive increases in the dividend at a
cover of around 2 times in the medium term.
Current trading and outlook
Trading in the current financial year is in line with our plans.
Pub like-for-like sales and beer volumes have been in growth for
the first seven weeks of the period. Albeit early in the year,
there have not been any material changes to market conditions that
would impact on our expectations for the full year.
With regard to cost guidance for 2018 there are no material
changes to the cost trends highlighted previously. We have
protected a significant proportion of our cost base through
long-term relationships with suppliers and fixed price contracts,
actively managing the risk to our margins.
As set out in October, we have identified cost savings of
approximately GBP5 million per annum demonstrating that we are
alert to opportunities to mitigate ongoing cost increases. We
anticipate underlying operating margins in our pub business to be
slightly below those achieved in 2017.
In summary, we are targeting further growth in the current
financial year, reflecting organic growth and the rollover benefit
of the CWBB and pub acquisitions described above, and to make
progress against our key financial objectives.
Allocation of growth capital
In 2018, we expect to open 15 pubs and bars and 6 lodges. We
believe that investment in new pubs and bars continues to create
shareholder value, and remains an important component of our
strategy to achieve organic growth. The site pipeline remains
strong and we will maintain the current pace of site acquisition to
continue similar levels of expansion beyond 2018.
Strategy and market
These results demonstrate the continued merit of our strategy,
with growth in revenue and earnings despite challenging market
conditions in the second half year which have been well documented.
They also demonstrate the resilience of our business model through
operating across the breadth of the pub sector, investing in
accommodation, and continuing to grow our beer business which now
accounts for around 15% of earnings, having risen from 10% in
2007.
We remain focused on delivering sustainable growth and
maximising return on capital, with six key components to our
strategy as outlined 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 that 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 - 397 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 and competitive market.
Our Pitcher & Piano bars and Revere bars and pubs offer
premium food and drink in attractive, often iconic town centre and
suburban locations.
-- Taverns - 806 pubs. Our community pubs are great 'locals'
with a more traditional pub ambience in strong locations. The
contribution of the licensee, together with 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.
-- Leased - 365 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, dealing in a fair manner and providing business
support.
2. Targeting pub growth.
New pubs and bars. In our Destination business, we have opened
over 200 pub-restaurants in the last 10 years, representing around
60% of the current Destination estate. These pubs offer family
dining at reasonable prices and generate high turnover, with target
sales of around GBP25,000 per week and a food sales mix of around
60%.
Competition and differentiation are key considerations. We
operate in a market with significant investment 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.
In recent years we have invested in, and developed our skills
and expertise in our Premium pub business, comprising Pitcher &
Piano and Revere. We are seeking to selectively expand the estate
through both new site development and acquisition.
In 2017 we completed 19 pubs and bars in the Destination and
Premium estate. In addition, we acquired the three-pub Pointing Dog
Group in May and the pubs from Whitbread in June. As described
above, we expect to open 15 pubs and bars in 2018.
Development of the franchise model. 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
convert most of our pubs in the Taverns business to this model over
time and we continue to review the feasibility of rolling out the
franchise model into the Destination estate.
During the year we have taken operational responsibility for 22
pubs from New River Retail. These pubs will be operated under our
franchise model on a 15 year lease arrangement.
3. Increased investment in rooms.
Accommodation acts as a highly complementary income stream to an
existing pub. Organic room income has been consistently strong with
growth in both sales and RevPAR for each of the last four years and
we anticipate similar trends in the future with growth in leisure
and business visitors. We operate around 1,250 rooms across our
Destination and Premium pub estate, including 22 lodges. During the
year we opened eight lodges and expect to open six during 2018
including our largest lodge to date in Ebbsfleet.
New lodges. Looking forward, we expect accommodation to be
increasingly important to our investment plans, and we are
acquiring sites for development this year and thereafter. The
combination of pub-restaurant with an adjacent lodge is attractive
in the context of increasing business and leisure travel.
4. Offering the best consumer experience: quality, service, value and innovation.
Quality of food and drink. Given the pace of change and
competition in the sector, we prioritise quality and target a food
offer with appeal spanning a broad range of demographics. As
previously reported, we have introduced Pizza Kitchens, Milestone
Rotisserie and Smokehouse into our pub estate as well as updating
traditional pub offers such as the Carvery to ensure they are
relevant to all customers, young and old.
We continue to develop our offers to ensure we can remain
attractive to all customers both now and in the future. In 2017 we
have introduced new concepts including Firebrand, a new Grill &
Pizza offer, and Accent, a premiumised offer with broad demographic
appeal, which are intended to enhance the experience for our
customers whilst continuing to offer everyday value.
Similarly, we are seeing constant change in trends in beer,
wines, spirits and non-alcoholic drinks. Growth in premium drinks
continues, with strong consumer interest in new brands and styles,
including non-alcoholic drinks. In our Taverns business we are
creating the community pubs of the future, incorporating changes to
the drinks category to ensure our community pubs are attractive to
younger customers, without alienating our more traditional
clientele.
We are also utilising the benefits of the integrated model, with
our pub and brewing teams working closely together to improve our
understanding of the drinks category and deliver growth across the
Group. Following the acquisition of CWBB, there are excellent
opportunities to develop the drinks range further. In addition to
the excellent cask ale brands, there are significant retail
opportunities through extending the distribution of Estrella Damm
and Founders. Initiatives such as "Masters of Cask" and "Drinks
Doctors" between the teams are helping to define optimum ranging in
our pubs and enhance the category knowledge in our Brewing sales
teams.
Service. We measure service on a pub-by-pub basis through a
combination of internal and external mechanisms. We are in the
process of investing significantly in high speed broadband and
state-of-the-art EPOS equipment which will provide us with better
customer information, improved service and are expected to
contribute to profit improvement in 2018.
We continue to make focused developments in our digital plans,
having developed in house: "Sentifeed" a social media listening
tool, "Tap-In" an app-based customer loyalty scheme and "Nudge" an
application to develop engagement and performance of our pub teams.
Although in the early stages of implementation, all three are
providing positive results.
Value. Value for money is a key element of our offer. We do not
aim to offer the lowest prices in the market but aim to offer a
fantastic experience that represents great value for money. Our
approach to pricing is to offer "everyday" pricing rather than
recourse to heavy discounting and vouchering activity, which has
been prevalent in the sector. We believe this approach is preferred
by our customers and demonstrated by our continued outperformance
of the market over the last three years.
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 in respect of these
trends. We have evolved our business significantly with pro-forma
operating profits (accounting for a full year of CWBB and
synergies) almost double that from 10 years ago, exploiting the
market trends starting with the acquisition of Refresh in 2008
which increased our scale and expertise in the off-trade, and the
acquisitions of Ringwood, Jennings and the Thwaites' beer business,
which strengthened our local footprint. The acquisition of CWBB
will further consolidate our leading position in this regard.
We have a wide portfolio of beers from our own six 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. Premium ales now account
for around 72% of sales and the mix of sales to the off-trade is
53%.
Our position as category leaders has been recognised across the
industry, further evidenced by the number of national awards we
received over the year. 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, 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, behind two global
beer brands. It remains after 10 years "The Unofficial Beer of
Halloween".
We also revitalised the Marston's beer brand in 2017,
repositioned to be more attractive to younger consumers under the
marketing banner "From Burton with Love". Although it remains early
days, the consumer feedback has been strong and we have gained new
national listings for "61 Deep" Pale Ale and "Pearl Jet" Stout.
Two brands from our recent acquisitions have also received
national marketing awards, with both Bombardier "March To Your Own
Drum" and Wainwright "Find Your Mountain" achieving awards at the
Beer and Cider Marketing Awards.
Outside our own ale brands, collaboration brands also form part
of our strategy. We have the UK licences for Estrella Damm,
Shipyard, Warsteiner, Kirin, Erdinger, Krusovice and Founders
brands and in cider we have the licence for Kingstone Press Cider.
All have performed extremely well in the year, and of particular
note, Shipyard is the number 1 craft beer in the UK.
We have a highly experienced and talented brewing and logistics
team, who ensure that we are operating at maximum 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 response to the
growth in our own brands and our contract business.
During the year we entered into a five year agreement to become
the exclusive distributor to Punch B, comprising a portfolio of
c.1,355 leased and tenanted pubs nationwide, in addition to a
similar contract to exclusively distribute to Hawthorn Leisure's
c.250-strong pub estate in England and Wales. Since the year end we
have entered an agreement to be the exclusive distributor to the
Brakspear Pub Company with effect from November 2017. As well as
driving strong organic growth, we have successfully integrated the
acquisition of Thwaites' beer business into the organisation, with
earnings slightly ahead of our expectations, and the transformation
of Wainwright into one of our fastest growing brands.
6. Our People - 'The Place to Be'.
Marston's employs around 14,500 people and, although many
businesses claim that 'people are our most important asset', it is
the case that nothing makes a bigger difference to our business
than our people.
At Marston's we know if we develop and inspire our people, they
will grow our business. It's their passion for customer service and
quality products that makes our business successful - that's why
our shared ambition is to keep our people at the heart of all we
do.
Key to unlocking the potential of our people is to engage and
unite them through our Ways of Working, while also enabling them by
providing skills, tools and environments so they can play their
part and contribute. As such, we measure both engagement and
enablement of our people through our employee survey and whilst our
scores are significantly above the comparator group, we continually
develop our work in this critical area.
We've also made it easier than ever for our people to access the
training and development they need and want by launching a new
online training portal, also available as an app for our front-line
team members. It's called the 'Marston's Talent Academy Online' and
it's designed to support a blended approach to our training and
development, offering both formal courses, as well as employee
self-development. This further enhances our commitment to training
which sees over 40% of our workforce receiving formal training.
Attracting new people to work with us is also key to our future
success, which is why we've continued to focus on enhancing our
established apprenticeship programme. We've been busy developing
and introducing apprenticeships across our entire business to
increase our pipeline of talent across pub, brewery, logistics and
Group service roles. We have developed 304 apprentices this year so
far and are on track to train a total of just over 450 by the end
of the year. In October, the National Apprenticeship Service highly
commended our apprenticeship provision as part of the National
Apprenticeship Awards 2017.
We continue to strive to make Marston's 'The Place to Be' for
our existing and prospective employees by providing an experience
that's attractive and fulfilling for our people and beneficial for
our business.
PERFORMANCE AND FINANCIAL REVIEW
Underlying Underlying
revenue operating Margin
profit
2017 2016 2017 2016 2017 2016
GBPm GBPm GBPm GBPm % %
Destination and
Premium 438.0 419.0 88.9 86.9 20.3 20.7
Taverns 246.7 238.5 57.0 56.6 23.1 23.7
Leased 54.6 55.0 27.1 26.9 49.6 48.9
Brewing 252.9 193.3 25.5 23.2 10.1 12.0
Group Services - - (24.0) (20.9) (2.4) (2.3)
---------- ---------- ----------- ----------- -------- ----------
Group 992.2 905.8 174.5 172.7 17.6 19.1
---------- ---------- ----------- ----------- -------- ----------
As we guided in our 2016 Preliminary Results, the segmental
revenue and profits for the prior year have been restated to
reflect the movement of pubs between segments.
Destination and Premium
Total revenue increased by 4.5% to GBP438.0 million reflecting
the continued strong performance of our new-build pub-restaurants
and growth in like-for-like sales. Underlying operating profit of
GBP88.9 million was up 2.3% (2016: GBP86.9 million). Profit per pub
is 1% up compared to last year.
Total like-for-like sales were 0.9% above last year.
Reported operating margin of 20.3% is slightly below last year,
reflecting anticipated cost increases in labour, business rates and
energy costs.
Taverns
Total revenue increased by 3.4% to GBP246.7 million, principally
reflecting the continued conversion of pubs to our franchise model.
Operating profit was up 0.7% on last year reflecting growth in the
core business offset by disposals. Profit per pub was up 2% on last
year.
In our managed and franchised pubs like-for-like sales were up
1.6%.
Operating margin was 0.6% below last year at 23.1%, reflecting
the impact of franchise conversions.
Leased
Total revenue decreased by 0.7% to GBP54.6 million and
underlying operating profit of GBP27.1 million was up 0.7% on last
year. The performance of the core estate was strong with rental
income per pub up 2%. Operating margin of 49.6% was up 0.7%,
reflecting a higher mix of rental income and sales from premium
products. Profit per pub was up 2% on last year.
Brewing
Total revenue increased by 30.8% to GBP252.9 million,
principally reflecting the acquisition of CWBB in June 2017 and
continued growth in ale volumes in the core business excluding
CWBB. Underlying operating profit increased by 9.9% to GBP25.5
million.
Operating margin of 10.1% was below last year reflecting the
CWBB business which has historically operated at a lower margin. We
would expect margins to recover as synergies are delivered in
2018.
Group Services
Central costs as a proportion of turnover were broadly in line
with 2016, absolute costs increased reflecting inflationary pay
increases, the impact of both the apprenticeship and pub code
levies, and higher training and IT costs.
Taxation
The underlying rate of taxation of 15.6% in 2017 (2016: 17.9%)
is below the standard rate of corporation tax due to (i)
significant deferred tax movements in the year at the future
enacted rate of 17%, (ii) increased credits in respect of deferred
tax on the Group's property portfolio as a result of higher
inflation, and (iii) the cumulative deferred tax benefit of
property disposals.
Non-underlying items
There is a net non-underlying credit of GBP0.2 million after tax
(2016: charge of GBP6.9 million). This includes credits of GBP1.6
million in respect of the change in the rate assumptions used in
calculating our onerous lease provisions and GBP6.4 million in
respect of the mark-to-market movement in the fair value of certain
interest rate swaps. These are offset by reorganisation and
integration costs of GBP5.5 million, principally from the
acquisition of CWBB, a GBP1.4 million write-off of the unamortised
finance costs in respect of our old bank facility and a charge of
GBP0.7 million in respect of the net interest on the net defined
benefit pension liability. The revenue of GBP19.1 million and
expenses of GBP19.3 million in respect of the ongoing management of
the remaining pubs from the portfolio disposal in December 2013
have also been included within non-underlying items.
Capital expenditure and disposals
Capital expenditure was GBP196.3 million in the year (2016:
GBP143.7 million) including GBP111 million on new pubs including
the pub acquisitions described above. We expect that capital
expenditure will be around GBP150-155 million in 2018, including
around GBP70-75 million for the construction of 15 pubs and bars
and 6 lodges. In addition the acquisition cost of CWBB was GBP90.5
million.
Cash proceeds of GBP61.2 million have been received from the
sale of 41 pubs and other assets, including GBP38.4 million of
leasing transactions. Disposal proceeds of around GBP45-50 million
are anticipated in 2018.
Financing
During the period the Group entered into a new GBP320 million
bank facility to March 2022, with an additional GBP40 million
accordion facility at improved terms. This facility, together with
a long-term securitisation of approximately GBP806 million and the
lease financing arrangements described below, provide 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.
In recent years, the Group has entered into lease financing
arrangements which have a total value of GBP301 million as at 30
September 2017. 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 GBP1,028 million at 30
September 2017 is in line with last year. Operating cash flow of
GBP213.6 million is GBP30.8 million ahead of last year principally
due to an increase in trade creditors, part of which relates to the
acquisition of CWBB and offsets some of the acquisition working
capital adjustment.
For the period ended 30 September 2017 the ratio of net debt
before lease financing to underlying EBITDA was 4.8 times (2016:
4.8 times). On a pro-forma basis (incorporating the post synergy
EBITDA from CWBB) the leverage figure is 4.7 times. It remains our
intention to reduce this ratio over time, principally through
EBITDA growth generated from our new-build investment
programme.
In May the Group raised GBP75.5 million from the issuance of
9.9% of the ordinary share capital of the Company to fund the
acquisition of CWBB and the Whitbread pubs described above.
Pensions
The deficit on our final salary scheme was GBP5.4 million at 30
September 2017 which compares to the GBP34.0 million deficit at
last year end. This movement is principally due to the fall in
liabilities as a consequence of the increase in corporate bond
yields.
Footnote:
CROCCE has been calculated as follows. For 2017 a weighted
average net asset value has been used to reflect the timing of
acquisitions in the second half year.
Balance Depreciation Revaluation Adjustment
------------------- ------- ------------ ----------- ----------
NON-CURRENT
ASSETS: GBPm GBPm GBPm GBPm
------------------- ------- ------------ ----------- ----------
Goodwill 230.3 230.3
------------------- ------- ------------ ----------- ----------
Other intangible
assets 67.6 6.8 74.4
------------------- ------- ------------ ----------- ----------
Property, plant
and equipment 2,360.7 196.6 (624.2) 1,933.1
------------------- ------- ------------ ----------- ----------
Other non-current
assets 10.3 10.3
------------------- ------- ------------ ----------- ----------
CURRENT ASSETS:
------------------- ------- ------------ ----------- ----------
Inventories 40.2 40.2
------------------- ------- ------------ ----------- ----------
Assets held
for sale 2.7 2.7
------------------- ------- ------------ ----------- ----------
Trade and other
receivables 108.4 108.4
------------------- ------- ------------ ----------- ----------
LIABILITIES:
------------------- ------- ------------ ----------- ----------
Creditors* (286.9) (286.9)
------------------- ------- ------------ ----------- ----------
CASH CAPITAL
EMPLOYED 2,533.3 203.4 (624.2) 2,112.5
------------------- ------- ------------ ----------- ----------
Weighted average 2,001.9
------------------- ------- ------------ ----------- ----------
EBITDA 213.7
------------------- ------- ------------ ----------- ----------
CROCCE 10.7%
------------------- ------- ------------ ----------- ----------
*Creditors comprise trade and other payables, other non-current
liabilities and provisions for other liabilities and charges.
GROUP INCOME STATEMENT
For the 52 weeks ended 30 September 2017
2017 2016
Non- Non-
Underlying underlying Underlying underlying
items items Total items items Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ---- ----------- ------------ -------- ----------- ------------ --------
Revenue 992.2 19.1 1,011.3 905.8 31.5 937.3
Operating expenses (817.7) (23.2) (840.9) (733.1) (40.3) (773.4)
------------------------------- ----------- ------------ -------- ----------- ------------ --------
Operating profit 174.5 (4.1) 170.4 172.7 (8.8) 163.9
------------------------------- ----------- ------------ -------- ----------- ------------ --------
Finance costs (74.8) (2.1) (76.9) (75.9) - (75.9)
Finance income 0.4 - 0.4 0.5 0.7 1.2
Movement in
fair value of
interest rate
swaps - 6.4 6.4 - (8.4) (8.4)
------------------------------- ----------- ------------ -------- ----------- ------------ --------
Net finance
costs (74.4) 4.3 (70.1) (75.4) (7.7) (83.1)
--------
Profit before
taxation 100.1 0.2 100.3 97.3 (16.5) 80.8
Taxation (15.6) - (15.6) (17.4) 9.6 (7.8)
------------------------------- ----------- ------------ -------- ----------- ------------ --------
Profit for the
period attributable
to equity shareholders 84.5 0.2 84.7 79.9 (6.9) 73.0
------------------------------- ----------- ------------ -------- ----------- ------------ --------
Earnings per share:
Basic earnings
per share 14.2p 12.7p
Basic underlying
earnings per
share 14.2p 13.9p
Diluted earnings
per share 14.1p 12.6p
Diluted underlying
earnings per
share 14.0p 13.8p
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the 52 weeks ended 30 September 2017
2017 2016
GBPm GBPm
-------------------------------------------- ------ -------
Profit for the period 84.7 73.0
--------------------------------------------- ------ -------
Items of other comprehensive income
that may subsequently be reclassified
to profit or loss
Gains/(losses) arising on cash flow
hedges 35.7 (50.9)
Transfers to the income statement on
cash flow hedges 10.7 11.3
Tax on items that may subsequently
be reclassified to profit or loss (7.9) 2.0
--------------------------------------------- ------ -------
38.5 (37.6)
--------------------------------------------- ------ -------
Items of other comprehensive income
that will not be reclassified to profit
or loss
Remeasurement of retirement benefits 21.8 (56.3)
Unrealised surplus on revaluation of
properties 2.3 2.0
Reversal of past revaluation surplus (0.8) -
Tax on items that will not be reclassified
to profit or loss 0.2 27.7
--------------------------------------------- ------ -------
23.5 (26.6)
--------------------------------------------- ------ -------
Other comprehensive income/(expense)
for the period 62.0 (64.2)
--------------------------------------------- ------ -------
Total comprehensive income for the
period 146.7 8.8
--------------------------------------------- ------ -------
GROUP CASH FLOW STATEMENT
For the 52 weeks ended 30 September 2017
2017 2016
GBPm GBPm
---------------------------------------------- -------- --------
Operating activities
Underlying operating profit 174.5 172.7
Depreciation and amortisation 39.2 40.0
----------------------------------------------- -------- --------
Underlying EBITDA 213.7 212.7
Non-underlying operating items (4.1) (8.8)
----------------------------------------------- -------- --------
EBITDA 209.6 203.9
Working capital movement 38.8 8.9
Non-cash movements (7.9) (7.9)
Decrease in provisions and other non-current
liabilities (9.1) (4.7)
Difference between defined benefit
pension contributions paid and amounts
charged (8.3) (7.6)
Income tax paid (9.5) (9.8)
----------------------------------------------- -------- --------
Net cash inflow from operating activities 213.6 182.8
----------------------------------------------- -------- --------
Investing activities
Interest received 0.3 0.7
Sale of property, plant and equipment
and assets held for sale 61.2 45.9
Purchase of property, plant and equipment
and intangible assets (196.3) (143.7)
Acquisition of subsidiary (90.5) -
Movement in other non-current assets 0.7 1.7
Transfer to other cash deposits (120.0) -
Net cash outflow from investing activities (344.6) (95.4)
----------------------------------------------- -------- --------
Financing activities
Equity dividends paid (44.1) (40.8)
Interest paid (70.2) (70.3)
Arrangement costs of bank facilities (3.3) -
Arrangement costs of other lease related
borrowings (4.6) (2.8)
Issue of shares 75.5 -
Purchase of own shares - (0.1)
Proceeds from sale of own shares 0.3 0.9
Repayment of securitised debt (28.4) (26.7)
Repayment of bank borrowings (263.0) -
Advance of bank borrowings 280.0 13.0
Capital element of finance leases
repaid (0.1) (0.1)
Advance of other lease related borrowings 57.9 40.7
Net cash outflow from financing activities - (86.2)
----------------------------------------------- -------- --------
Net (decrease)/increase in cash and
cash equivalents (131.0) 1.2
----------------------------------------------- -------- --------
GROUP BALANCE SHEET
As at 30 September 2017
30 September 1 October
2017 2016
GBPm GBPm
---------------------------------- -------------- -----------
Non-current assets
Goodwill 230.3 227.5
Other intangible assets 67.6 37.3
Property, plant and equipment 2,360.7 2,199.4
Other non-current assets 10.3 10.4
Deferred tax assets 0.6 16.7
2,669.5 2,491.3
---------------------------------- -------------- -----------
Current assets
Inventories 40.2 28.7
Trade and other receivables 108.4 85.0
Other cash deposits* 120.0 -
Cash and cash equivalents* 54.6 185.6
----------------------------------- -------------- -----------
323.2 299.3
---------------------------------- -------------- -----------
Assets held for sale 2.7 6.6
Current liabilities
Borrowings* (148.8) (176.9)
Derivative financial instruments (28.7) (38.0)
Trade and other payables (256.1) (194.9)
Current tax liabilities (3.5) (3.6)
Provisions for other liabilities
and charges (3.3) (4.3)
(440.4) (417.7)
---------------------------------- -------------- -----------
Non-current liabilities
Borrowings (1,354.9) (1,278.1)
Derivative financial instruments (159.2) (202.7)
Other non-current liabilities (0.6) (0.6)
Provisions for other liabilities
and charges (26.9) (34.5)
Deferred tax liabilities (76.6) (77.5)
Retirement benefit obligations (5.4) (34.0)
(1,623.6) (1,627.4)
---------------------------------- -------------- -----------
Net assets 931.4 752.1
Shareholders' equity
Equity share capital 48.7 44.4
Share premium account 334.0 334.0
Revaluation reserve 624.2 623.1
Merger reserve 71.2 -
Capital redemption reserve 6.8 6.8
Hedging reserve (127.2) (165.7)
Own shares (111.3) (113.7)
Retained earnings 85.0 23.2
----------------------------------- -------------- -----------
Total equity 931.4 752.1
----------------------------------- -------------- -----------
* Other cash deposits includes GBP120.0 million drawn down under
the liquidity facility (2016: GBP120.0 million included within cash
and cash equivalents) and borrowings includes the corresponding
liability.
GROUP STATEMENT OF CHANGES IN EQUITY
For the 52 weeks ended 30 September 2017
Equity Share Capital
share premium Revaluation Merger redemption Hedging Own Retained Total
capital account reserve reserve reserve reserve shares earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
At 2 October
2016 44.4 334.0 623.1 - 6.8 (165.7) (113.7) 23.2 752.1
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
Profit for the
period - - - - - - - 84.7 84.7
Remeasurement
of retirement
benefits - - - - - - - 21.8 21.8
Tax on
remeasurement
of retirement
benefits - - - - - - - (3.7) (3.7)
Gains on cash
flow hedges - - - - - 35.7 - - 35.7
Transfers to
the income
statement
on cash flow
hedges - - - - - 10.7 - - 10.7
Tax on hedging
reserve
movements - - - - - (7.9) - - (7.9)
Property
revaluation - - 2.3 - - - - - 2.3
Property
impairment - - (0.8) - - - - - (0.8)
Deferred tax
on properties - - 3.9 - - - - - 3.9
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
Total
comprehensive
income - - 5.4 - - 38.5 - 102.8 146.7
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
Share-based
payments - - - - - - - 0.9 0.9
Issue of
shares 4.3 - - 71.2 - - - - 75.5
Sale of own
shares - - - - - - 2.4 (2.1) 0.3
Disposal of
properties - - (4.1) - - - - 4.1 -
Tax on
disposal
of properties - - 0.7 - - - - (0.7) -
Transfer to
retained
earnings - - (0.9) - - - - 0.9 -
Dividends paid - - - - - - - (44.1) (44.1)
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
Total
transactions
with owners 4.3 - (4.3) 71.2 - - 2.4 (41.0) 32.6
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
At 30
September
2017 48.7 334.0 624.2 71.2 6.8 (127.2) (111.3) 85.0 931.4
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
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
----------------------- --------- --------- ------------ ------------ --------- -------- ---------- --------
NOTES
1 Accounting policies
Basis of preparation
The financial information for the 52 weeks ended 30 September
2017 (2016: 52 weeks ended 1 October 2016) 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.
In the prior period provisions for other liabilities and charges
were originally presented wholly within non-current liabilities in
the balance sheet. Amounts due within one year have now been
represented within current liabilities to better reflect the timing
of the amounts falling due and to be consistent with the current
period presentation.
In the prior period the net interest on the net defined benefit
asset/liability was presented within underlying items. This has now
been represented within non-underlying items to better reflect the
nature of this item and to be consistent with the current period
presentation.
2 Segment reporting
2017 2016
Underlying revenue by segment GBPm GBPm
------------------------------- -------- ------
Destination and Premium 438.0 419.0
Taverns 246.7 238.5
Leased 54.6 55.0
Brewing 252.9 193.3
Group Services - -
Underlying revenue 992.2 905.8
Non-underlying items 19.1 31.5
------------------------------- -------- ------
Revenue 1,011.3 937.3
------------------------------- -------- ------
2017 2016
Underlying operating profit by segment GBPm GBPm
---------------------------------------- ------- -------
Destination and Premium 88.9 86.9
Taverns 57.0 56.6
Leased 27.1 26.9
Brewing 25.5 23.2
Group Services (24.0) (20.9)
Underlying operating profit 174.5 172.7
Non-underlying operating items (4.1) (8.8)
---------------------------------------- ------- -------
Operating profit 170.4 163.9
Net finance costs (70.1) (83.1)
---------------------------------------- ------- -------
Profit before taxation 100.3 80.8
---------------------------------------- ------- -------
During the current period the Group changed the structure of its
internal organisation in a manner that caused the composition of
its operating segments to change. The results for the prior period
have been restated to reflect these changes.
3 NON-Underlying items
2017 2016
GBPm GBPm
----------------------------------------------------- ------ ------
Exceptional operating items
Impact of change in rate assumptions used
for onerous lease provisions (1.6) 4.4
Reorganisation, relocation and integration
costs 5.5 3.8
Non-core estate disposal and reorganisation
costs - 1.7
Profit on sale of surplus land for residential
development - (1.5)
Tax advisory fees -- 0.5
3.9 8.9
----------------------------------------------------- ------ ------
Other adjusting operating items
Results in respect of the ongoing management
of pubs in the portfolio disposal 0.2 (0.1)
0.2 (0.1)
Non-underlying operating items 4.1 8.8
Exceptional non-operating items
Net interest on net defined benefit asset/liability 0.7 (0.7)
Write-off of unamortised finance costs 1.4 -
Movement in fair value of interest rate
swaps (6.4) 8.4
----------------------------------------------------- ------ ------
(4.3) 7.7
----------------------------------------------------- ------ ------
Total non-underlying items (0.2) 16.5
----------------------------------------------------- ------ ------
Impact of change in rate assumptions used for onerous lease
provisions
The update of the discount rate assumptions used in the
calculation of the Group's onerous property lease provisions at the
current period end resulted in a decrease of GBP1.6 million (2016:
increase of GBP4.4 million) in the total provision.
Reorganisation, relocation and integration costs
During the current period the Group incurred reorganisation and
integration costs of GBP4.6 million as a result of the acquisition
of the beer business of Charles Wells.
A head office restructuring exercise was also undertaken in the
current period incurring costs of GBP0.9 million.
During the prior period the redevelopment of the Group's head
office building in Wolverhampton was completed along with a
reorganisation of certain head office functions. Costs of GBP0.5
million were incurred in the prior period 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 in the prior period as a result of the acquisition
of the trading operations of Daniel Thwaites PLC's beer division in
the period ended 3 October 2015.
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. A
number of the pubs have since been removed from these arrangements
by the purchaser. During the current period the Group has entered
into new 15 year leases in respect of 22 of the properties and
these have also been removed from the management agreement. The
Group no longer has strategic control of the pubs still subject to
the management agreement 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:
2017 2016
GBPm GBPm
-------------------- ------- -------
Revenue 19.1 31.5
Operating expenses (19.3) (31.4)
(0.2) 0.1
-------------------- ------- -------
Net interest on net defined benefit asset/liability
The net interest on the net defined benefit asset/liability in
respect of the Group's defined benefit pension plan was a charge of
GBP0.7 million (2016: credit of GBP0.7 million).
Write-off of unamortised finance costs
During the current period the Group entered into a new bank
facility. As such the unamortised finance costs relating to the
previous facility have been written off.
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
gain of GBP6.4 million (2016: loss of GBP8.4 million) is shown as
an exceptional item.
Impact of taxation
The current tax credit relating to the above non-underlying
items amounts to GBP0.9 million (2016: GBP1.7 million). The
deferred tax charge relating to the above non-underlying items
amounts to GBP0.9 million (2016: credit of GBP1.4 million). In
addition, there is a non-underlying deferred tax credit of GBPnil
(2016: GBP2.4 million) in relation to the change in corporation tax
rate.
During the prior 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 was classified as a non-underlying item along with
the associated advisory fees of GBP0.5 million.
Prior period non-underlying items
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 the prior
period.
During the prior 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.
4 Taxation
2017 2016
Income statement GBPm GBPm
Current tax
Current period 10.7 13.9
Adjustments in respect of prior periods (0.3) (0.6)
Credit in respect of tax on non-underlying
items (0.9) (1.7)
Non-underlying credit in relation to
additional relief for prior periods - (3.7)
9.5 7.9
-------------------------------------------- ------ ------
Deferred tax
Current period 6.1 4.2
Adjustments in respect of prior periods (0.9) (0.1)
Charge/(credit) in respect of tax on
non-underlying items 0.9 (1.4)
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)
6.1 (0.1)
-------------------------------------------- ------ ------
Taxation charge reported in the income
statement 15.6 7.8
-------------------------------------------- ------ ------
5 Ordinary dividends on equity shares
2017 2016
Paid in the period GBPm GBPm
--------------------------------------- ----- -----
Final dividend for 2016 of 4.7p per
share (2015: 4.5p) 27.0 25.9
Interim dividend for 2017 of 2.7p per
share (2016: 2.6p) 17.1 14.9
--------------------------------------- ----- -----
44.1 40.8
--------------------------------------- ----- -----
A final dividend for 2017 of 4.8p per share amounting to GBP30.4
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 29 January 2018 to those shareholders on the
register at close of business on 15 December 2017.
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.
2017 2016
Earnings Per Per
share Earnings share
amount amount
GBPm p GBPm p
--------------------------- --------- -------- ----------- --------
Basic earnings per
share 84.7 14.2 73.0 12.7
Diluted earnings per
share 84.7 14.1 73.0 12.6
----------------------------- --------- -------- ----------- --------
Underlying earnings
per share figures
Basic underlying earnings
per share 84.5 14.2 79.9 13.9
Diluted underlying
earnings per share 84.5 14.0 79.9 13.8
----------------------------- --------- -------- ----------- --------
2017 2016
m m
------------------------------------------- ------ ------
Basic weighted average number of shares 596.9 574.6
Dilutive options 4.8 6.0
------------------------------------------- ------ ------
Diluted weighted average number of shares 601.7 580.6
------------------------------------------- ------ ------
7 Net debt
Non-cash
movements
and
deferred
Cash issue
2017 flow costs 2016
Analysis of net debt GBPm GBPm GBPm GBPm
---------------------------- ---------- -------- ----------- ----------
Cash and cash equivalents
Cash at bank and
in hand 54.6 (131.0) - 185.6
54.6 (131.0) - 185.6
--------------------------- ---------- -------- ----------- ----------
Financial assets
Other cash deposits 120.0 120.0 - -
120.0 120.0 - -
Debt due within one
year
Unsecured bank borrowings 0.7 30.0 (0.1) (29.2)
Securitised debt (29.5) 28.4 (30.1) (27.8)
Finance leases (0.2) 0.1 (0.2) (0.1)
Other lease related
borrowings 0.2 - - 0.2
Other borrowings (120.0) - - (120.0)
---------------------------- ---------- -------- ----------- ----------
(148.8) 58.5 (30.4) (176.9)
--------------------------- ---------- -------- ----------- ----------
Debt due after one
year
Unsecured bank borrowings (277.7) (47.0) 1.3 (232.0)
Securitised debt (776.3) - 29.5 (805.8)
Finance leases (27.6) - (7.1) (20.5)
Other lease related
borrowings (273.2) (57.9) 4.4 (219.7)
Preference shares (0.1) - - (0.1)
---------------------------- ---------- -------- ----------- ----------
(1,354.9) (104.9) 28.1 (1,278.1)
Net debt (1,329.1) (57.4) (2.3) (1,269.4)
---------------------------- ---------- -------- ----------- ----------
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 held in the relevant bank account is included
within other cash deposits (2016: GBP120.0 million in cash and cash
equivalents). The amount 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 this amount is considered to be
restricted cash.
Included within cash and cash equivalents is an amount of GBP0.5
million (2016: GBP0.6 million) relating to a letter of credit with
Royal Sun Alliance Insurance, an amount of GBP1.4 million (2016:
GBP1.5 million) relating to a letter of credit with Aviva, and an
amount of GBP7.7 million (2016: 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.
2017 2016
Reconciliation of net cash flow to
movement in net debt GBPm GBPm
--------------------------------------- ---------- ----------
(Decrease)/increase in cash and cash
equivalents in the period (131.0) 1.2
Increase in other cash deposits 120.0 -
Cash inflow from movement in debt (46.4) (26.9)
--------------------------------------- ---------- ----------
Change in debt resulting from cash
flows (57.4) (25.7)
Non-cash movements and deferred issue
costs (2.3) 1.3
--------------------------------------- ---------- ----------
Movement in net debt in the period (59.7) (24.4)
Net debt at beginning of the period (1,269.4) (1,245.0)
Net debt at end of the period (1,329.1) (1,269.4)
--------------------------------------- ---------- ----------
2017 2016
Reconciliation of net debt before lease
financing to net debt GBPm GBPm
----------------------------------------- ---------- ----------
Cash and cash equivalents 54.6 185.6
Other cash deposits 120.0 -
Unsecured bank borrowings (277.0) (261.2)
Securitised debt (805.8) (833.6)
Other borrowings (120.0) (120.0)
Preference shares (0.1) (0.1)
----------------------------------------- ---------- ----------
Net debt before lease financing (1,028.3) (1,029.3)
Finance leases (27.8) (20.6)
Other lease related borrowings (273.0) (219.5)
Net debt (1,329.1) (1,269.4)
----------------------------------------- ---------- ----------
8 CHARLES WELLS ACQUISITION
On 2 June 2017, the Group acquired Bedford Canning Company
Limited, containing the beer business of Charles Wells. The
business incorporates a portfolio of well-known brands including
Bombardier, Young's and McEwan's. The acquisition is consistent
with the Group's strategy of focussing on premium beer brands with
local provenance, and provides further opportunities for growth in
the developing free trade market. Additionally, the acquisition
further strengthens the Group's presence in London and the South
East and presents a platform to expand into Scotland.
The table below summarises the consideration paid, the
provisional fair values of the assets acquired and liabilities
assumed and the resulting goodwill.
2017
GBPm
------------------------------- ------
Brands 30.0
Property, plant and equipment 25.5
Trade loans 0.6
Inventories 8.5
Trade and other receivables 27.3
Trade and other payables (2.8)
Deferred tax (1.4)
Goodwill 2.8
Cash consideration 90.5
-------------------------------- ------
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 30 September 2017,
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 1 October 2016 have been delivered to the Registrar of
Companies.
(b) The Annual Report and Accounts for the 52 weeks ended 30
September 2017 will be posted to shareholders on 18 December 2017.
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 OKCDDOBDDQDB
(END) Dow Jones Newswires
November 30, 2017 02:00 ET (07:00 GMT)
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