TIDMMARS
RNS Number : 5265Y
Marston's PLC
18 May 2016
18 May 2016
MARSTON'S PLC
INTERIM RESULTS FOR THE 26 WEEKSED 2 APRIL 2016
Profit and cash flow growth from high quality pub and beer
business
-- Strong trading performance:
- Underlying Group revenue up 11.5% to GBP428.7 million
- Underlying profit before tax up 11.8% to GBP33.1 million
- Underlying earnings per share up 11.9% to 4.7 pence per
share
- Profit growth in all trading segments
- Operating cash flow up GBP23.1 million to GBP81.3 million
- Leverage reduced 0.4x to 5.0x. Fixed charge cover up 0.2x to
2.6x
- Statutory profit before tax up GBP50.3 million to GBP22.8
million
-- High quality pub estate delivering strong growth:
- Like-for-like sales growth of 3% across managed and franchised
pubs
- Seven pubs and three lodges opened in the period
- First new-build Tavern successfully opened under franchise
model
- High quality Leased business delivered like-for-like profit
and rental growth
- Average profit per pub up 13% in 2016, up 44% since 2012
-- Market-leading beer business continues to grow strongly:
- Underlying operating profit growth of 16% driven by Thwaites acquisition
- Strong brand portfolio continues to outperform market with volumes up 22%
- Market share up 1.5% in premium cask ale and 1.1% in bottled ale
- Hobgoblin Gold (2014 launch) now a 'top 15' premium bottled ale
-- Interim dividend up 4% to 2.6p per share; cover of 1.8 times improved vs H1 2015
-- Full year plans on track
- Performance to date in line with expectations
- At least 20 new pubs this financial year, including two Revere bars
- Five new lodges
Commenting, Ralph Findlay, CEO said:
"We are encouraged by our first half performance and are on
track to meet our expectations for the year. In pubs, we have
driven our growth by the organic development of pub-restaurants and
franchise-style pubs, and more recently through investment in
lodges and premium bars, widening our appeal. In Brewing, we had an
excellent first half year and achieved good growth through our
industry-leading brands and service."
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
Officer
An audio webcast of the results presentation will be available
at
http://webcast.instinctif.tv/886-1178-17197 on 18 May 2016.
NOTES TO EDITORS
-- Marston's is a leading pub operator and independent
brewer.
-- It has an estate of around 1,600 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
and Hobgoblin. The portfolio also includes Banks's,
Jennings, Wychwood, Ringwood, Brakspear, Thwaites
and Mansfield beers.
-- Marston's employs around 13,500 people.
o 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.
o Leverage excludes property leasing.
o Average profit per pub is on an MAT basis.
GROUP OVERVIEW
We are pleased to report good progress in implementing our
strategy, including double digit growth in underlying earnings and
profit growth in all of our trading segments.
Total underlying revenue increased by 11.5% 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. Underlying operating margin increased in
both our Destination and Premium and Leased businesses, with Group
operating margin 0.9% below last year as a consequence of the
acquisition in 2015.
Underlying operating profit of GBP70.5 million (2015: GBP66.5
million) was up 6.0%.
Underlying profit before tax was up 11.8% to GBP33.1 million
(2015: GBP29.6 million) principally reflecting the contribution
from new pub-restaurants and the benefits of the Thwaites
acquisition. Basic underlying earnings per share for the period
increased by 11.9% to 4.7 pence per share (2015: 4.2 pence per
share).
On a statutory basis profit before tax was GBP22.8 million
(2015: loss of GBP27.5 million) and earnings per share were 4.2
pence per share (2015: loss of 4.2 pence per share).
Operating cash flow improved by GBP23.1 million to GBP81.3
million in the period principally reflecting improvements in both
EBITDA and working capital.
Net debt at the period end was GBP1,273 million. Excluding
property leases with freehold reversion entitlement, the ratio of
net debt to underlying EBITDA was 5.0 times at the period end
(2015: 5.4 times) and net debt to EBITDA is expected to reduce over
time as our long-term debt amortises. In addition, fixed charge
cover has increased to 2.6 times (2015: 2.4 times).
Outlook and Dividend
After the first few weeks of the second half year, performance
remains in line with expectations. Despite more challenging
comparatives in the second half year, we remain confident of
achieving our targets for the full financial year and are on track
to complete the new-build and lodge expansion plans outlined below.
We are pleased to declare an interim dividend of 2.6 pence per
share representing a 4.0% increase on 2015.
There are two pieces of Government legislation that come into
effect in the second half year. The planned introduction of the
Pubs Code in the second half-year will impact the tenanted and
leased pub sector. Marston's Leased pubs generate approximately 15%
of our total pub profits, and we are therefore not materially
exposed to potential adverse consequences of the legislation. The
Living Wage was introduced on 1(st) April and will increase staff
costs in pubs. We had anticipated that staff costs would increase
over time, and that the Minimum Wage and Living Wage would
converge, so the impact over and above our existing forecasts was
relatively modest. We have no plans to review other staff benefits
as a consequence of the introduction of the Living Wage.
Strategy
Marston's strategic objectives remain focused on delivering
sustainable growth and maximising return on capital, with five key
components as described below.
1. Operating a high quality pub estate.
We have an outstanding range of food-led, community and premium
pubs and bars. We derive many benefits by operating across the full
breadth of the market. We have more investment opportunities
available to us, our risk is spread, and we anticipate market
trends and can respond quickly to change. Our main areas of
operation are:
-- Destination and Premium - 403 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. 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.
Our Pitcher & Piano bars and Revere pubs offer premium food
and drink in attractive town centre and suburban locations, with a
preference for iconic settings.
-- Taverns - 828 pubs. Our community pubs are great locals with
a more traditional pub ambience in strong locations. The
contribution of the licensee is critical to success as atmosphere
is promoted by strong community engagement, with entertainment,
teams and games often at the heart of the pub's activities.
-- Leased - 339 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.
-- Marston's Inns. We offer high quality accommodation in 51
pubs and 10 lodges within the Destination and Premium segment. In
total, we have around 850 rooms and we have opened three lodges
during the first half year.
2. Targeting growth: building pub-restaurants, lodges and Premium pubs.
New pub-restaurants. In our Destination business, we have opened
over 130 pub-restaurants since 2009, 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 site selection process and strong relationships
with the major property developers. This expansionary investment
has generated consistent returns and enabled us to extend our
trading geography to include southern England and Scotland. New pub
investment creates significant value for shareholders, as
demonstrated in the 2015 pub estate valuation. This year we have
opened seven new-build pub-restaurants in the first half year, and
are targeting at least 20 for the full year and each year
thereafter.
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.
New lodges. Investment in new-build lodges adjacent to pubs has
been increased in 2016. Having opened three in 2015, we will open
at least five in 2016, with three open in the first half year.
Looking forward, we expect accommodation to be increasingly
important to our investment plans, and we are acquiring sites for
development in 2017 and thereafter. The combination of
pub-restaurant with an adjacent lodge is attractive in the context
of increasing business and leisure travel.
New Premium pubs. In recent years we have invested in, and
developed our skills and expertise in, our Premium pub business,
comprising Pitcher & Piano and Revere. In 2016 we have
converted one pub from the existing estate to our Revere format,
with a further two sites acquired for development and opening in
the second half year.
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.
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, with weekly sales exceeding
GBP30,000 per week over the Christmas period. Furthermore, we have
opened our first new-build Tavern operating under the franchise
operating model, with early trading in line with expectations. We
are also evaluating the potential for franchise-style agreements in
the Destination estate and anticipate trialling this in the next
two years.
3. 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 age groups and
demographics. Traditional favourites such as fish and chips are
staple pub classics but we continue to develop and evolve our food
offers and introduce new tastes and flavours. Pizza Kitchen is a
good example: in 2016 we have continued the rollout of Pizza
Kitchen, offering fabulous fresh-made pizza with theatre, which now
operates in 60 pubs. Equally, in Premium we have developed new
'better burger and pizza' and 'smokehouse' concepts which are
proving successful.
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,
including non-alcoholic drinks. In Destination and Premium, premium
beer accounts for over 56% of beer sold. We sell 15 million glasses
of wine and five million cups of coffee a year, and soft drinks
account for 25% of total drinks volume. In our Revere pubs,
cocktails account for 13% of drinks sales, reflecting the premium
nature of the experience.
We aim to be the best place locally for our drinks range and
quality, underpinned through initiatives such as "Masters of Cask"
in our Taverns pubs, and supported by the fact that we have our own
beer quality specialists visiting pubs to help ensure we only serve
top quality beer.
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 (to be completed in 2017) which
will provide us with better customer information and contribute to
improved service. We have recently developed a social media
listening tool which provides our pub managers with the ability to
respond quickly to any customer feedback.
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.
4. 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.
Our established strategy is well positioned in respect of these
trends. We have a wide portfolio of beers from our five breweries,
a national distribution network and a local approach to beer brand
management. Around 1 in 5 bottled ales and almost 1 in 5 premium
cask ales in the UK are Marston's brands. Premium ales now account
for around 74% of sales and the mix of sales to the off-trade is
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.
Innovation is key to maintaining our competitive advantage. We
continue to introduce new beers into the market with the most
notable recent launch being Wychwood King Star Craft Lager, the
latest in a series of new beers which includes Hobgoblin Gold,
Shipyard and the Revisionist range.
5. Our People - 'Marston's - The Place to Be'.
Marston's employs around 13,500 people and it is our intention
to build on being 'The Place to Be' not just for our customers but
also for all our employees. Following the appointment of a Group
People Director in 2015 we have reviewed and reinvigorated our
approach to ways of working, aiming to modernise and build on the
excellent values and culture the business has developed over many
years. The output of that is a very clear set of ambitions, values
and ways of working that apply across the business, promoting a
culture of "People at the Heart" of everything we do.
PERFORMANCE AND FINANCIAL REVIEW
Underlying Underlying
revenue operating Margin
profit
2016 2015 2016 2015 2016 2015
GBPm GBPm GBPm GBPm % %
Destination and
Premium 204.8 187.2 34.8 31.6 17.0 16.9
Taverns 107.1 104.4 24.2 24.1 22.6 23.1
Leased 24.2 25.1 12.7 12.4 52.5 49.4
Brewing 92.6 67.8 10.0 8.6 10.8 12.7
Group Services - - (11.2) (10.2) (2.6) (2.7)
---------- ---------- ----------- ----------- -------- ----------
Group 428.7 384.5 70.5 66.5 16.4 17.3
---------- ---------- ----------- ----------- -------- ----------
Destination and Premium
Total revenue increased by 9.4% to GBP204.8 million reflecting
the continued strong performance of our new-build, pub-restaurants
and growth in like-for-like sales. Underlying operating profit of
GBP34.8 million was up 10.1% (2015: GBP31.6 million).
Total like-for-like sales were 3.0% above last year, with
like-for-like food sales up by 2.2%, assisted by strong growth in
sales of starters, desserts and coffee. In addition, like-for-like
room income was up 11.8%. In Destination pubs, food now accounts
for 59% of total sales (2015: 58%) and in Premium pubs and bars
food is 29% of sales (2015: 28%).
Like-for-like wet sales increased by 3.5%, outperforming the
declining UK on-trade drinks market. We continue to see growth in
more premium products, with own-brewed premium ale volumes up 7%
and premium lager up 15%.
We achieved a 0.1% improvement in operating margin through a
disciplined approach to discounting and tight cost management.
Taverns
Total revenue increased by 2.6% to GBP107.1 million, principally
reflecting the continued conversion of pubs to our franchise model.
Operating profit was up 0.4% on last year, reflecting the strong
performance of franchised pubs within our estate, offset by the
impact of disposals.
In our managed and franchised pubs like-for-like sales were up
3.0% and operating margins up 0.1% versus last year, reflecting the
continued success of pubs operating under the franchise model.
Operating margin was 0.5% below last year at 22.6%, primarily
reflecting the impact of franchise conversions.
Leased
Total revenue decreased by 3.6% to GBP24.2 million and
underlying operating profit of GBP12.7 million was up 2.4% on last
year. The performance of the core estate was strong with rental
income growth of 2%. Operating margin of 52.5% was up 3.1%,
reflecting a higher mix of rental income and sales from premium
products.
Brewing
Total revenue increased by 36.6% to GBP92.6 million, primarily
reflecting the benefits of the Thwaites acquisition described
above. Underlying operating profit increased by 16.3% to GBP10.0
million.
Overall ale volumes were up 22% on last year reflecting the
benefits of the Thwaites acquisition. Premium cask ale volumes were
up 22% and bottled ale volumes up 10%. Hobgoblin, our largest
brand, continues to grow with sales up 15% 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 down versus last year at 10.8% which, as
previously described, reflects the impact of the pub supply
arrangement with Thwaites which generates a positive profit
contribution, albeit at a low margin percentage.
Capital expenditure and disposals
Capital expenditure was GBP72.9 million in the first half year
(2015: GBP70.9 million) including GBP33.6 million on new pubs. We
expect that capital expenditure will be around GBP140 million this
financial year, including around GBP70 million for the construction
of at least 20 pub-restaurants, two Revere bars and five
lodges.
Proceeds of GBP27.1 million of cash have been received from the
sale of 34 pubs and other assets.
Financing
At 2 April 2016, the Group had a GBP257.5 million bank facility
to November 2018. In addition, we have a GBP30 million two-year
facility for the Thwaites acquisition. These facilities, together
with a long-term securitisation of approximately GBP850 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.
The Group has entered into lease financing arrangements which
have a total value of GBP223 million as at 2 April 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 GBP1,049 million at 2
April 2016 is broadly in line with last year, despite the
additional GBP30 million facility for Thwaites taken out in April
2015. Operating cash flow of GBP81.3 million was 40% above last
year due to improved profit performance and working capital
management.
For the period ended 2 April 2016 the ratio of net debt before
lease financing to underlying EBITDA was 5.0 times (2015: 5.4
times). It remains our intention to reduce this ratio over time,
principally through EBITDA growth generated from our new-build
investment programme.
Pensions
The deficit on our final salary scheme was GBP1.6 million which
compares to the GBP15.0 million surplus at the year end.
Taxation
The underlying rate of taxation of 18.7% in 2016 is below the
standard rate of corporation tax primarily due to credits in
respect of deferred tax on property.
Non-underlying items
There is a net non-underlying charge of GBP3.0 million after
tax. This includes charges of GBP0.7 million relating to non-core
estate disposal and reorganisation costs, GBP1.2 million in respect
of the change in the rate assumptions used in calculating our
onerous lease provisions, GBP0.9 million in respect of relocation,
reorganisation and integration costs and GBP7.0 million in respect
of the mark-to-market movement in the fair value of certain
interest rate swaps. The revenue of GBP15.6 million and expenses of
GBP15.6 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 HM Revenue & Customs,
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 GBP1.1
million in relation to the change in corporation tax rate and a
credit of GBP2.1 million relating to the tax on non-underlying
items.
Independent review report to Marston's PLC
Report on the interim financial information
Our conclusion
We have reviewed the interim financial information, defined
below, in the Interim Report of Marston's PLC for the 26 weeks
ended 2 April 2016. Based on our review, nothing has come to our
attention that causes us to believe that the interim financial
information is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
This conclusion is to be read in the context of what we say in
the remainder of this report.
What we have reviewed
The interim financial information, which is prepared by
Marston's PLC, comprises:
-- the Group balance sheet as at 2 April 2016;
-- the Group income statement and Group statement of
comprehensive income for the period then ended;
-- the Group cash flow statement for the period then ended;
-- the Group statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial information.
As disclosed in note 1, the financial reporting framework that
has been applied in the preparation of the full annual financial
statements of the Group is applicable law and International
Financial Reporting Standards (IFRS) as adopted by the European
Union.
The interim financial information included in the Interim Report
has been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
What a review of interim financial information involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and
Ireland) and, consequently, does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the Interim
Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial information.
Responsibilities for the interim financial information and the
review
Our responsibilities and those of the Directors
The Interim Report, including the interim financial information,
is the responsibility of, and has been approved by, the Directors.
The Directors are responsible for preparing the Interim Report in
accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express to the Company a conclusion on
the interim financial information in the Interim Report based on
our review. This report, including the conclusion, has been
prepared for and only for the Company for the purpose of complying
with the Disclosure and Transparency Rules of the Financial Conduct
Authority and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
18 May 2016
Birmingham
Notes:
a) The maintenance and integrity of the Marston's PLC website is
the responsibility of the Directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Responsibility Statement of the Directors in respect of the
Interim Report
The Directors confirm that these condensed consolidated interim
financial statements have been prepared in accordance with IAS 34
as adopted by the European Union and that the interim management
report includes a fair review of the information required by DTR
4.2.7R and DTR 4.2.8R, namely:
-- an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
-- material related party transactions in the first six months
of the financial year and any material changes in the related party
transactions described in the last Annual Report and Accounts.
The Directors of Marston's PLC are listed in the Marston's PLC
Annual Report and Accounts for 3 October 2015. A list of current
Directors is maintained on the Marston's PLC website:
www.marstons.co.uk.
By order of the Board:
Ralph Findlay Andrew Andrea
Chief Executive Officer Chief Financial Officer
18 May 2016 18 May 2016
GROUP INCOME STATEMENT (UNAUDITED)
for the 26 weeks ended 2 April 2016
52 weeks
to
26 weeks to 2 April 26 weeks to 4 April 3 October
2016 2015 2015
Non- Non-
Underlying underlying Underlying underlying
items items Total items items Total Total
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- ----- ------------- ------------ -------- ------------- ------------ -------- -----------
2,
Revenue 3 428.7 15.6 444.3 384.5 16.0 400.5 878.6
Operating expenses* (358.2) (18.9) (377.1) (318.0) (64.5) (382.5) (764.8)
-------------------- ----- ------------- ------------ -------- ------------- ------------ -------- -----------
2,
Operating profit 3 70.5 (3.3) 67.2 66.5 (48.5) 18.0 113.8
-------------------- ----- ------------- ------------ -------- ------------- ------------ -------- -----------
Finance costs 4 (37.6) - (37.6) (37.1) - (37.1) (74.5)
Finance income 4 0.2 - 0.2 0.2 - 0.2 0.6
Movement in
fair value
of interest 3,
rate swaps 4 - (7.0) (7.0) - (8.6) (8.6) (8.6)
-------------------- ----- ------------- ------------ -------- ------------- ------------ -------- -----------
Net finance 3,
costs 4 (37.4) (7.0) (44.4) (36.9) (8.6) (45.5) (82.5)
Profit/(loss)
before taxation 33.1 (10.3) 22.8 29.6 (57.1) (27.5) 31.3
3,
Taxation 5 (6.2) 7.3 1.1 (5.8) 9.5 3.7 (8.0)
-------------------- ----- ------------- ------------ -------- ------------- ------------ -------- -----------
Profit/(loss)
for the period
attributable
to equity
shareholders 26.9 (3.0) 23.9 23.8 (47.6) (23.8) 23.3
-------------------- ----- ------------- ------------ -------- ------------- ------------ -------- -----------
Earnings/(loss)
per share:
Basic
earnings/(loss)
per share 6 4.2p (4.2)p 4.1p
Basic underlying
earnings per
share 6 4.7p 4.2p 12.9p
Diluted
earnings/(loss)
per share 6 4.1p (4.2)p 4.0p
Diluted underlying
earnings per
share 6 4.6p 4.1p 12.8p
GROUP STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
for the 26 weeks ended 2 April 2016
26 weeks 26 weeks 52 weeks
to to to
2 April 4 April 3 October
2016 2015 2015
GBPm GBPm GBPm
-------------------------------------------- --------- --------- -----------
Profit/(loss) for the period 23.9 (23.8) 23.3
--------------------------------------------- --------- --------- -----------
Items of other comprehensive income
that may subsequently be reclassified
to profit or loss
Losses arising on cash flow hedges (22.3) (56.4) (56.1)
Transfers to the income statement on
cash flow hedges 5.8 6.0 12.2
Tax on items that may subsequently
be reclassified to profit or loss (0.2) 10.1 8.7
--------------------------------------------- --------- --------- -----------
(16.7) (40.3) (35.2)
--------------------------------------------- --------- --------- -----------
Items of other comprehensive income
that will not be reclassified to profit
or loss
Remeasurement of retirement benefits (20.9) (22.2) (6.7)
Unrealised surplus on revaluation of
properties* 1.3 213.0 216.5
Reversal of past revaluation surplus* - (120.6) (120.6)
Tax on items that will not be reclassified
to profit or loss 14.9 (13.3) (17.1)
--------------------------------------------- --------- --------- -----------
(4.7) 56.9 72.1
--------------------------------------------- --------- --------- -----------
Other comprehensive (expense)/income
for the period (21.4) 16.6 36.9
--------------------------------------------- --------- --------- -----------
Total comprehensive income/(expense)
for the period 2.5 (7.2) 60.2
--------------------------------------------- --------- --------- -----------
* During the prior period a revaluation of the Group's freehold
and leasehold properties was undertaken, resulting in a net
increase in property values of GBP53.8 million. An unrealised
surplus on revaluation of GBP213.0 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. Further detail is provided in
notes 3 and 7 to the interim financial information.
GROUP CASH FLOW STATEMENT (UNAUDITED)
for the 26 weeks ended 2 April 2016
26 weeks 26 weeks 52 weeks
to to to
2 April 4 April 3 October
2016 2015 2015
Note GBPm GBPm GBPm
-------------------------------------------- ----- --------- --------- -----------
Operating activities
Underlying operating profit 70.5 66.5 165.4
Depreciation and amortisation 20.1 18.4 37.9
-------------------------------------------- ----- --------- --------- -----------
Underlying EBITDA 90.6 84.9 203.3
Non-underlying operating items 3 (3.3) (48.5) (51.6)
-------------------------------------------- ----- --------- --------- -----------
EBITDA 87.3 36.4 151.7
Working capital movement 8.3 (1.3) 10.7
Non-cash movements (4.1) 36.7 30.0
(Decrease)/increase in provisions
and other non-current liabilities (2.7) 0.1 0.1
Difference between defined benefit
pension contributions paid and amounts
charged (4.1) (7.1) (14.0)
Income tax paid (3.4) (6.6) (16.2)
-------------------------------------------- ----- --------- --------- -----------
Net cash inflow from operating activities 81.3 58.2 162.3
-------------------------------------------- ----- --------- --------- -----------
Investing activities
Interest received 0.3 0.3 0.7
Sale of property, plant and equipment
and assets held for sale 27.1 26.4 69.6
Purchase of property, plant and equipment
and intangible assets (72.9) (70.9) (142.3)
Acquisition of business - - (28.8)
Movement in other non-current assets 0.8 0.5 2.4
Net cash outflow from investing activities (44.7) (43.7) (98.4)
-------------------------------------------- ----- --------- --------- -----------
Financing activities
Equity dividends paid (25.9) (24.6) (38.9)
Interest paid (37.6) (36.0) (71.8)
Arrangement costs of bank facilities - - (0.2)
Arrangement costs of other lease
related borrowings (1.2) (2.9) (2.9)
Proceeds from sale of own shares 0.2 0.1 1.5
Repayment of securitised debt (13.1) (12.4) (25.4)
Advance of bank loans 60.0 23.0 38.0
Capital element of finance leases
repaid - - (0.1)
Advance of other lease related borrowings 22.1 47.0 47.0
Net cash inflow/(outflow) from financing
activities 4.5 (5.8) (52.8)
-------------------------------------------- ----- --------- --------- -----------
Net increase in cash and cash equivalents 8 41.1 8.7 11.1
-------------------------------------------- ----- --------- --------- -----------
GROUP BALANCE SHEET (UNAUDITED)
as at 2 April 2016
2 April 4 April 3 October
2016 2015 2015
Note GBPm GBPm GBPm
---------------------------------- ----- ---------- ---------- ----------
Non-current assets
Goodwill 227.5 224.2 227.5
Other intangible assets 37.3 24.7 37.6
Property, plant and equipment 7 2,154.2 2,083.5 2,122.6
Deferred tax assets 64.8 61.1 67.8
Retirement benefit surplus - - 15.0
Other non-current assets 11.3 11.0 12.1
2,495.1 2,404.5 2,482.6
---------------------------------- ----- ---------- ---------- ----------
Current assets
Inventories 28.3 23.7 28.2
Trade and other receivables 74.7 72.6 84.3
Cash and cash equivalents* 8 231.9 189.1 193.1
---------------------------------- ----- ---------- ---------- ----------
334.9 285.4 305.6
---------------------------------- ----- ---------- ---------- ----------
Assets held for sale 18.8 27.1 18.0
---------------------------------- ----- ---------- ---------- ----------
Current liabilities
Borrowings* 8 (212.5) (151.8) (154.0)
Derivative financial instruments (31.5) (26.5) (25.7)
Trade and other payables (183.9) (155.7) (185.2)
Current tax liabilities (3.5) (10.1) (7.2)
(431.4) (344.1) (372.1)
---------------------------------- ----- ---------- ---------- ----------
Non-current liabilities
Borrowings 8 (1,291.9) (1,282.2) (1,284.1)
Derivative financial instruments (184.7) (172.7) (167.0)
Retirement benefit obligations (1.6) (7.3) -
Deferred tax liabilities (138.2) (140.2) (156.8)
Other non-current liabilities (1.2) (2.4) (1.8)
Provisions for other liabilities
and charges (39.9) (40.5) (41.5)
---------------------------------- ----- ---------- ---------- ----------
(1,657.5) (1,645.3) (1,651.2)
---------------------------------- ----- ---------- ---------- ----------
Net assets 759.9 727.6 782.9
Shareholders' equity
Equity share capital 44.4 44.4 44.4
Share premium account 334.0 334.0 334.0
Revaluation reserve 626.8 616.9 616.0
Capital redemption reserve 6.8 6.8 6.8
Hedging reserve (144.8) (133.2) (128.1)
Own shares (116.2) (126.3) (118.7)
Retained earnings 8.9 (15.0) 28.5
---------------------------------- ----- ---------- ---------- ----------
Total equity 759.9 727.6 782.9
---------------------------------- ----- ---------- ---------- ----------
* Cash and cash equivalents includes GBP120.0 million (3 October
2015: GBP120.0 million) drawn down under the liquidity facility and
borrowings includes the corresponding liability (note 8).
GROUP STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
for the 26 weeks ended 2 April 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 - - - - - - 23.9 23.9
Remeasurement
of retirement
benefits - - - - - - (20.9) (20.9)
Tax on remeasurement
of retirement
benefits - - - - - - 4.0 4.0
Losses on cash
flow hedges - - - - (22.3) - - (22.3)
Transfers to
the income statement
on cash flow
hedges - - - - 5.8 - - 5.8
Tax on hedging
reserve movements - - - - (0.2) - - (0.2)
Property revaluation - - 1.3 - - - - 1.3
Deferred tax
on properties - - 10.9 - - - - 10.9
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Total comprehensive
income/(expense) - - 12.2 - (16.7) - 7.0 2.5
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Share-based
payments - - - - - - 0.2 0.2
Sale of own
shares - - - - - 2.5 (2.3) 0.2
Disposal of
properties - - (1.3) - - - 1.3 -
Tax on disposal
of properties - - 0.4 - - - (0.4) -
Transfer to
retained earnings - - (0.5) - - - 0.5 -
Dividends paid - - - - - - (25.9) (25.9)
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Total transactions
with owners - - (1.4) - - 2.5 (26.6) (25.5)
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
At 2 April 2016 44.4 334.0 626.8 6.8 (144.8) (116.2) 8.9 759.9
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
for the 26 weeks ended 4 April 2015
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
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Loss for the
period - - - - - - (23.8) (23.8)
Remeasurement
of retirement
benefits - - - - - - (22.2) (22.2)
Tax on remeasurement
of retirement
benefits - - - - - - 4.4 4.4
Losses on cash
flow hedges - - - - (56.4) - - (56.4)
Transfers to
the income statement
on cash flow
hedges - - - - 6.0 - - 6.0
Tax on hedging
reserve movements - - - - 10.1 - - 10.1
Property revaluation - - 213.0 - - - - 213.0
Property impairment - - (120.6) - - - - (120.6)
Deferred tax
on properties - - (17.7) - - - - (17.7)
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Total comprehensive
income/(expense) - - 74.7 - (40.3) - (41.6) (7.2)
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Share-based
payments - - - - - - 0.2 0.2
Tax on share-based
payments - - - - - - 0.1 0.1
Sale of own
shares - - - - - 0.5 (0.4) 0.1
Disposal of
properties - - (4.0) - - - 4.0 -
Tax on disposal
of properties - - 0.6 - - - (0.6) -
Transfer to
retained earnings - - (0.3) - - - 0.3 -
Dividends paid - - - - - - (24.6) (24.6)
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Total transactions
with owners - - (3.7) - - 0.5 (21.0) (24.2)
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
At 4 April 2015 44.4 334.0 616.9 6.8 (133.2) (126.3) (15.0) 727.6
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
NOTES
1 BASIS OF PREPARATION OF INTERIM FINANCIAL INFORMATION
This interim financial information has been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted by
the European Union. The same accounting policies, presentation and
methods of computation are followed in the interim financial
information as applied in the Group's audited financial statements
for the 52 weeks ended 3 October 2015, with the exception of new
standards and interpretations that were only applicable from the
beginning of the current financial year.
The audited financial statements for the 52 weeks ended 3
October 2015 contain details of the new standards and
interpretations now applicable to the Group. The adoption of these
standards and interpretations has had no impact on the interim
financial information.
The financial information for the 52 weeks ended 3 October 2015
is extracted from the audited accounts for that period, which have
been delivered to the Registrar of Companies. The Auditors' report
was unqualified and did not contain a statement under section 498
(2) or (3) of the Companies Act 2006.
The interim financial information does not constitute statutory
accounts within the meaning of section 434 of the Companies Act
2006. The interim financial information for the 26 weeks ended 2
April 2016 and the comparatives to 4 April 2015 are unaudited, but
have been reviewed by the Auditors.
The Group does not consider that any standards or
interpretations issued by the International Accounting Standards
Board, but not yet applicable, will have a significant impact on
the financial statements for the 52 weeks ending 1 October
2016.
The Directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing this interim financial information.
2 SEGMENT REPORTING
2 April 4 April
2016 2015
Underlying revenue by segment GBPm GBPm
------------------------------- -------- --------
Destination and Premium 204.8 187.2
Taverns 107.1 104.4
Leased 24.2 25.1
Brewing 92.6 67.8
Group Services - -
------------------------------- -------- --------
Underlying revenue 428.7 384.5
Non-underlying items 15.6 16.0
------------------------------- -------- --------
Revenue 444.3 400.5
------------------------------- -------- --------
2 April 4 April
2016 2015
Underlying operating profit by segment GBPm GBPm
---------------------------------------- -------- --------
Destination and Premium 34.8 31.6
Taverns 24.2 24.1
Leased 12.7 12.4
Brewing 10.0 8.6
Group Services (11.2) (10.2)
---------------------------------------- -------- --------
Underlying operating profit 70.5 66.5
Non-underlying operating items (3.3) (48.5)
---------------------------------------- -------- --------
Operating profit 67.2 18.0
Net finance costs (44.4) (45.5)
---------------------------------------- -------- --------
Profit/(loss) before taxation 22.8 (27.5)
---------------------------------------- -------- --------
Underlying operating profit is a key measure of profitability
used by the chief operating decision maker.
3 NON-underlying items
In order to illustrate the underlying trading performance of the
Group, presentation has been made of performance measures excluding
those items which it is considered would distort the comparability
of the Group's results. These non-underlying items comprise
exceptional items and other adjusting items.
Exceptional items are defined as those items that, by virtue of
their nature, size or expected frequency, warrant separate
additional disclosure in the financial statements in order to fully
understand the underlying performance of the Group. As management
of the freehold and leasehold property estate is an essential and
significant area of the business, the threshold for classification
of property related items as exceptional is higher than other
items.
Other adjusting items comprise the revenue and expenses in
respect of the ongoing management of the portfolio of pubs disposed
of in the period ended 4 October 2014. Following their disposal
these pubs no longer form part of the Group's core activities and
the Group does not have the ability to make strategic decisions in
respect of them. As such it is considered appropriate to exclude
the results of these pubs from the Group's underlying results.
2 April 4 April
2016 2015
GBPm GBPm
------------------------------------------------- -------- --------
Exceptional operating items
Non-core estate disposal and reorganisation
costs 0.7 1.6
Impact of change in rate assumptions used
for onerous lease provisions 1.2 5.9
Relocation, reorganisation and integration
costs 0.9 0.9
Impairment of freehold and leasehold properties - 39.0
Tax advisory fees 0.5 -
3.3 47.4
------------------------------------------------- -------- --------
Other adjusting operating items
Results in respect of the ongoing management
of pubs in the portfolio disposal - 1.1
------------------------------------------------- -------- --------
- 1.1
------------------------------------------------- -------- --------
Non-underlying operating items 3.3 48.5
------------------------------------------------- -------- --------
Exceptional non-operating items
Movement in fair value of interest rate swaps 7.0 8.6
------------------------------------------------- -------- --------
7.0 8.6
------------------------------------------------- -------- --------
Total non-underlying items 10.3 57.1
------------------------------------------------- -------- --------
Non-core estate disposal and reorganisation costs
During the period ended 5 October 2013 the Group commenced a
restructuring of its pub estate and its 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 GBP1.2 million
(2015: GBP5.9 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
GBP0.4 million (2015: GBP0.9 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
GBP0.5 million (2015: GBPnil) 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. 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:
2 April 4 April
2016 2015
GBPm GBPm
-------------------- -------- --------
Revenue 15.6 16.0
Operating expenses (15.6) (17.1)
-------------------- -------- --------
- (1.1)
-------------------- -------- --------
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 GBP7.0 million (2015: GBP8.6 million) is shown as an
exceptional item. In addition to this, a loss of GBP16.5 million
(2015: GBP50.4 million) has been recognised in the hedging reserve,
in relation to the effective portion of the movement in fair value
of interest rate swaps which are accounted for as hedging
instruments.
Impact of taxation
The current tax credit relating to the above non-underlying
items amounts to GBP0.5 million (2015: GBP1.5 million). The
deferred tax credit relating to the above non-underlying items
amounts to GBP1.6 million (2015: GBP8.0 million). In addition,
there is a non-underlying deferred tax credit of GBP1.1 million
(2015: GBPnil) in relation to the change in corporation tax rate
(note 5).
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:
4 April
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 FINANCE COSTS AND INCOME
2 April 4 April
2016 2015
GBPm GBPm
----------------------------------------------- -------- --------
Finance costs
Unsecured bank borrowings 6.1 5.7
Securitised debt 24.1 24.7
Finance leases 0.5 0.5
Other lease related borrowings 6.0 5.1
Net finance cost in respect of retirement
benefits 0.2 -
Other interest payable 0.7 1.1
Total finance costs 37.6 37.1
----------------------------------------------- -------- --------
Finance income
Deposit and other interest receivable (0.2) (0.2)
Total finance income (0.2) (0.2)
----------------------------------------------- -------- --------
Movement in fair value of interest rate swaps
Loss on movement in fair value of interest
rate swaps 7.0 8.6
----------------------------------------------- -------- --------
7.0 8.6
----------------------------------------------- -------- --------
Net finance costs 44.4 45.5
----------------------------------------------- -------- --------
5 TAXATION
The underlying taxation charge for the 26 weeks ended 2 April
2016 has been calculated by applying an estimate of the underlying
effective tax rate for the 52 weeks ending 1 October 2016 of
approximately 18.7% (26 weeks ended 4 April 2015: approximately
19.6%).
2 April 4 April
2016 2015
GBPm GBPm
-------------- -------- --------
Current tax 0.6 3.9
Deferred tax (1.7) (7.6)
-------------- -------- --------
(1.1) (3.7)
-------------- -------- --------
The taxation credit includes a current tax credit of GBP0.5
million (2015: GBP1.5 million) and a deferred tax credit of GBP1.6
million (2015: GBP8.0 million) relating to the tax on
non-underlying items. In addition, there is a non-underlying
deferred tax credit of GBP1.1 million (2015: GBPnil) in relation to
the change in corporation tax rate. There is also a non-underlying
current tax credit of GBP3.7 million (2015: GBPnil) and a
non-underlying deferred tax credit of GBP0.4 million (2015: GBPnil)
in relation to the additional tax relief claimed by the Group for
previous periods following the agreement of the tax treatment of
certain items with HM Revenue & Customs (note 3).
6 EARNINGS PER ORDINARY SHARE
Basic earnings per share are calculated by dividing the
profit/(loss) 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.
2 April 2016 4 April
2015
Per Per
share share
Earnings amount Earnings amount
GBPm p GBPm p
--------------------------------------- --------- -------- --------- --------
Basic earnings/(loss) per share 23.9 4.2 (23.8) (4.2)
Diluted earnings/(loss) per share* 23.9 4.1 (23.8) (4.2)
--------------------------------------- --------- -------- --------- --------
Underlying earnings per share figures
Basic underlying earnings per share 26.9 4.7 23.8 4.2
Diluted underlying earnings per
share 26.9 4.6 23.8 4.1
--------------------------------------- --------- -------- --------- --------
* The 2015 diluted loss per share is the same as the basic loss
per share, as the inclusion of the dilutive potential ordinary
shares would reduce the loss per share and as such is not dilutive
in accordance with IAS 33 'Earnings per Share'.
2 April 4 April
2016 2015
m m
------------------------------------------- -------- --------
Basic weighted average number of shares 574.4 572.0
Dilutive options 5.7 6.4
------------------------------------------- -------- --------
Diluted weighted average number of shares 580.1 578.4
------------------------------------------- -------- --------
7 PROPERTY, PLANT AND EQUIPMENT
GBPm
----------------------------------------------------- --------
Net book amount at 4 October 2015 2,122.6
Additions 71.9
Net transfers to assets held for sale and disposals (22.4)
Depreciation, revaluation and other movements (17.9)
----------------------------------------------------- --------
Net book amount at 2 April 2016 2,154.2
----------------------------------------------------- --------
GBPm
----------------------------------------------------- --------
Net book amount at 5 October 2014 1,990.0
Additions 71.4
Net transfers to assets held for sale and disposals (18.9)
Depreciation, revaluation and other movements 41.0
----------------------------------------------------- --------
Net book amount at 4 April 2015 2,083.5
----------------------------------------------------- --------
Revaluation/impairment
During the prior period independent chartered surveyors revalued
the Group's freehold and leasehold properties on an open market
value basis. These valuations were incorporated in the financial
statements and the resulting revaluation adjustments were
recognised in the revaluation reserve or income statement as
appropriate.
During the current period various properties were reviewed for
impairment and/or material changes in value.
The impact of the revaluations/impairments described above is as
follows:
2 April 4 April
2016 2015
GBPm GBPm
------------------------------------------------ -------- --------
Income statement:
Revaluation loss charged as an impairment - (60.1)
Reversal of past impairment - 26.3
------------------------------------------------ -------- --------
- (33.8)
Revaluation reserve:
Unrealised revaluation surplus 1.3 213.0
Reversal of past revaluation surplus - (120.6)
------------------------------------------------ -------- --------
1.3 92.4
------------------------------------------------ -------- --------
Net increase in shareholders' equity/property,
plant and equipment 1.3 58.6
------------------------------------------------ -------- --------
8 NET DEBT
Non-cash
movements
and
deferred
2 April Cash issue 3 October
2016 flow costs 2015
Analysis of net debt GBPm GBPm GBPm GBPm
-------------------------------- ---------- ------- ----------- ------------
Cash and cash equivalents
Cash at bank and in hand 231.9 38.8 - 193.1
Bank overdrafts (6.4) 2.3 - (8.7)
225.5 41.1 - 184.4
-------------------------------- ---------- ------- ----------- ------------
Debt due within one year
Unsecured bank borrowings (59.1) (30.0) (30.0) 0.9
Securitised debt (27.0) 13.1 (13.9) (26.2)
Finance leases (0.1) - - (0.1)
Other lease related borrowings 0.1 - - 0.1
Other borrowings (120.0) - - (120.0)
(206.1) (16.9) (43.9) (145.3)
-------------------------------- ---------- ------- ----------- ------------
Debt due after one year
Unsecured bank borrowings (248.7) (30.0) 29.5 (248.2)
Securitised debt (820.0) - 13.6 (833.6)
Finance leases (20.6) - - (20.6)
Other lease related borrowings (202.5) (22.1) 1.2 (181.6)
Preference shares (0.1) - - (0.1)
(1,291.9) (52.1) 44.3 (1,284.1)
-------------------------------- ---------- ------- ----------- ------------
Net debt (1,272.5) (27.9) 0.4 (1,245.0)
--------------------------------- ---------- ------- ----------- ------------
Other lease related borrowings represent amounts due under sale
and leaseback arrangements that do not fall within the scope of IAS
17 'Leases'.
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 (at 3 October 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 GBP1.0
million (at 3 October 2015: GBP1.6 million), which relates to a
letter of credit with Royal Sun Alliance Insurance, an amount of
GBP1.4 million (at 3 October 2015: GBP1.0 million), which relates
to a letter of credit with Aviva, and an amount of GBP7.9 million
(at 3 October 2015: GBP7.8 million), which relates 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.
2 April 4 April
2016 2015
Reconciliation of net cash flow to movement
in net debt GBPm GBPm
---------------------------------------------- ---------- ----------
Increase in cash and cash equivalents in the
period 41.1 8.7
Cash inflow from movement in debt (69.0) (57.6)
---------------------------------------------- ---------- ----------
Change in debt resulting from cash flows (27.9) (48.9)
Non-cash movements and deferred issue costs 0.4 2.2
---------------------------------------------- ---------- ----------
Movement in net debt in the period (27.5) (46.7)
Net debt at beginning of the period (1,245.0) (1,198.2)
---------------------------------------------- ---------- ----------
Net debt at end of the period (1,272.5) (1,244.9)
---------------------------------------------- ---------- ----------
2 April 4 April
2016 2015
Reconciliation of net debt before lease financing
to net debt GBPm GBPm
--------------------------------------------------- ---------- ----------
Cash and cash equivalents 231.9 189.1
Unsecured bank borrowings (including bank
overdrafts) (314.2) (239.2)
Securitised debt (847.0) (872.5)
Other borrowings (120.0) (120.0)
Preference shares (0.1) (0.1)
--------------------------------------------------- ---------- ----------
Net debt before lease financing (1,049.4) (1,042.7)
Finance leases (20.7) (20.8)
Other lease related borrowings (202.4) (181.4)
--------------------------------------------------- ---------- ----------
Net debt (1,272.5) (1,244.9)
--------------------------------------------------- ---------- ----------
9 FINANCIAL INSTRUMENTS
The only financial instruments which the Group holds at fair
value are derivative financial instruments, which are classified as
at fair value through profit or loss or derivatives used for
hedging.
Fair value hierarchy
IFRS 13 'Fair Value Measurement' requires fair value
measurements to be recognised using a fair value hierarchy that
reflects the significance of the inputs used in the measurements,
according to the following levels:
Level 1 - unadjusted quoted prices in active markets for
identical assets or liabilities.
Level 2 - inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly
or indirectly.
Level 3 - inputs for the asset or liability that are not based
on observable market data.
The table below shows the level in the fair value hierarchy
within which fair value measurements have been categorised:
2 April 2016 3 October 2015
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
Liabilities as per
the balance sheet GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- ------- ------ ------ ------ ------ ------ ------ ------
Derivative financial
instruments - 216.2 - 216.2 - 192.7 - 192.7
---------------------- ------- ------ ------ ------ ------ ------ ------ ------
There were no transfers between Levels 1, 2 and 3 fair value
measurements during the current or prior period.
The Level 2 fair values of derivative financial instruments have
been obtained using a market approach and reflect the estimated
amount the Group would expect to pay on termination of the
instruments. The Group obtains such valuations from counterparties
who use a variety of assumptions based on market conditions
existing at each balance sheet date.
The fair values of all non-derivative financial instruments are
equal to their book values, with the exception of borrowings. The
carrying amount less impairment provision of trade receivables,
other receivables and trade loans, and the carrying amount of trade
payables and other payables, are assumed to approximate their fair
values. The carrying amount (excluding unamortised issue costs) and
the fair value of the Group's borrowings are as follows:
Carrying amount Fair value
2 April 3 October 2 April 3 October
2016 2015 2016 2015
GBPm GBPm GBPm GBPm
-------------------------------- -------- ---------- -------- ----------
Unsecured bank borrowings 316.4 258.7 316.4 258.7
Securitised debt 853.1 866.2 853.1 892.2
Finance leases 20.7 20.7 20.7 20.7
Other lease related borrowings 217.2 195.1 217.2 195.1
Other borrowings 120.0 120.0 120.0 120.0
Preference shares 0.1 0.1 0.1 0.1
1,527.5 1,460.8 1,527.5 1,486.8
-------------------------------- -------- ---------- -------- ----------
10 MATERIAL TRANSACTIONS
Additional contributions of GBP4.5 million (26 weeks ended 4
April 2015: GBP6.6 million) were made in the period to the
Marston's PLC Pension and Life Assurance Scheme.
There were no significant related party transactions during the
period (26 weeks ended 4 April 2015: none).
11 CAPITAL COMMITMENTS
Capital expenditure authorised and committed at the period end
but not provided for in this interim financial information was
GBP11.6 million
(at 3 October 2015: GBP11.4 million).
12 CONTINGENT LIABILITIES
There have been no material changes to contingent liabilities
since 3 October 2015.
13 SEASONALITY OF INTERIM OPERATIONS
The Group's financial results and cash flows have, historically,
been subject to seasonal trends between the first and second half
of the financial year. Traditionally, the second half of the
financial year sees higher revenue and profitability, as a result
of better weather conditions.
There is no assurance that this trend will continue in the
future.
14 EVENTS AFTER THE BALANCE SHEET DATE
An interim dividend of GBP14.9 million, being 2.6p (2015: 2.5p)
per ordinary share, has been proposed and will be paid on 5 July
2016 to those shareholders on the register at the close of business
on 27 May 2016. This interim financial information does not reflect
this dividend payable.
15 PRINCIPAL RISKS AND UNCERTAINTIES
The Group set out on pages 22 and 23 of its 2015 Annual Report
and Accounts the principal risks and uncertainties that could
impact its performance. These remain unchanged since the Annual
Report and Accounts was published and are expected to remain
unchanged for the second half of the financial year. These risks
and uncertainties are summarised as follows:
-- Economic uncertainty
-- Changes in regulation impacting upon the cost of business or
obstructing growth
-- Investment plans not meeting expectations
-- Network outage or denial of service
-- Loss, theft or corruption of data
-- Failure to attract or retain the best people
-- Incorrect reporting of financial results
-- Unauthorised transactions
-- Breach of financial covenants with lenders
16 INTERIM RESULTS
The interim results were approved by the Board on 18 May
2016.
17 COPIES
Copies of these results are available on the Marston's PLC
website (www.marstons.co.uk) and on request 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
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