Record levels of profit and
cashflow delivered by Premier Inn UK with continued progress in
Germany
Increased dividend plus
further £150m share buy-back in H1 FY25
Optimisation of F&B to
unlock 3,500 room extensions and drive increased margins and
returns
Throughout this release all percentage growth comparisons are
made comparing the current year (FY24) performance for the 52 weeks
to 29 February 2024 with FY23 (52 weeks to
2 March 2023).
Overview
• Premier Inn UK delivered record adjusted profit before tax
with 15.5% return on capital employed†('ROCE') and
continues to outperform the UK midscale and economy ('M&E')
market1
• In Germany, we are encouraged by our recent performance and
remain on track to break-even on a run-rate basis in 2024 as we
progress towards our long-term target of 10% - 14% return on
capital
• The Board is recommending a 26% increase in the final
dividend per share to 62.9p and intends to commence a further £150m
share buy-back, to be completed during H1 FY25
• Cost efficiencies of £50m delivered in FY24; launch of new
efficiency programme to deliver £150m of cost savings over the next
three years
• Accelerating Growth Plan ('AGP') will optimise our food and
beverage ('F&B') offer through converting 112 and exiting 126
branded restaurants; we plan to unlock 3,500 new room extensions
that will see us reach at least 97,000 open rooms in the UK by
FY29
• We have significant growth potential in both the UK and
Germany; the plans outlined today will deliver a step change in our
margins and returns, further underpinning our confidence in the
medium-term outlook for the Group
FY24 Group Financial Summary
|
|
|
£m
|
|
FY24
|
FY23
|
vs FY23
|
Statutory revenue
|
|
2,960
|
2,625
|
13%
|
|
|
|
|
|
Adjusted
EBITDARâ€
|
|
1,057
|
888
|
19%
|
|
|
|
|
|
Adjusted profit before
taxâ€
|
|
561
|
413
|
36%
|
Statutory profit before
tax
|
|
452
|
375
|
21%
|
Statutory profit after
tax
|
|
312
|
279
|
12%
|
|
|
|
|
|
Adjusted basic
EPSâ€
|
|
206.9p
|
162.9p
|
27%
|
Statutory basic EPS
|
|
161.0p
|
138.4p
|
16%
|
Dividend per share
|
|
97.0p
|
74.2p
|
31%
|
|
|
|
|
|
Group ROCEâ€
|
|
13.1%
|
10.5%
|
260bps
|
|
|
|
|
|
Net (debt) /
cashâ€
|
|
(298)
|
171
|
(274)%
|
Lease-adjusted
leverageâ€
|
|
2.9x
|
2.6x
|
n/a
|
|
|
|
|
|
| |
Financial highlights
• Group statutory revenue grew by 13%, driven by strong growth
in the UK and continued progress in Germany
• Premier Inn UK: total accommodation sales up 12%; RevPAR up
10% with total accommodation sales 3.1pp and RevPAR £5.95 ahead of
the M&E market
• UK F&B sales up 7% driven by strong occupancy in our
hotels that has supported strong breakfast sales
• UK adjusted pre-tax profit margins†increased to
21.2% (FY23: 19.6%), reflecting the strength of our commercial
strategy, vertically integrated operating model and cost efficiency
programme
• Record levels of UK ROCE†that increased to 15.5%,
up from 12.9% in FY23
• Premier Inn Germany: total sales up 62%, driven by network
expansion and the increasing maturity of our estate that delivered
a reduced adjusted loss before tax†of £36m (FY23:
£50m); our cohort of 17 more established hotels performed ahead of
the M&E market2
• Group: adjusted profit before tax†was up 36% to £561m (FY23:
£413m) and statutory profit before tax was £452m (FY23: £375m)
after charging £109m of adjusting items (FY23: £39m) including a
non-cash, net impairment charge of £107m, most of which relates to
the write-down of UK branded restaurants held for sale in
connection with our AGP, the impairment of seven German properties
and £27m of costs relating to the Group's strategic IT
programmes
• Group: adjusted EBITDAR†up 19% to £1,057m (FY23:
£888m) driven by our strong profit performance
• Total cash returned to shareholders via dividends and share
buy-backs in FY24 of £756m (FY23: £119m)
• Strong balance sheet: lease adjusted leverage†increased to
2.9x (FY23: 2.6x) and net debt†was £298m (FY23: net cash of
£171m); pension fund surplus was £165m at the end of the year
(FY23: £325m)
Segment highlights
Premier Inn UK
|
|
|
£m
|
|
FY24
|
FY23
|
vs FY23
|
Statutory revenue
|
|
2,770
|
2,508
|
10%
|
Adjusted profit before
taxâ€
|
|
588
|
492
|
19%
|
Revenue per available room
(£)â€
|
|
65.56
|
59.45
|
10%
|
|
|
|
|
|
| |
Premier Inn Germany
|
|
|
£m
|
|
FY24
|
FY23
|
vs FY23
|
Statutory revenue
|
|
190
|
118
|
62%
|
Adjusted loss before
taxâ€
|
|
(36)
|
(50)
|
28%
|
Revenue per available room
(£)â€
|
|
44.44
|
37.04
|
20%
|
|
|
|
|
|
| |
Current trading (seven weeks to 18 April
2024)
• Premier Inn UK:
o As evidenced by the published market data, whilst midweek
demand has been robust, the phasing of public holidays impacted
weekend demand in certain leisure locations; this meant that total
accommodation sales were 1% behind FY24
o However, the strength of our brand and commercial programme
meant that we continued to outperform the M&E
market3 with total accommodation sales 1.2pp ahead and a
RevPAR premium of £5.68
o We are expecting a positive step-up in demand across business
and leisure over the next few weeks supported by our forward booked
revenue position which is ahead of last year. This, together with
our strong commercial programme, means that we remain confident in
continuing to outperform the market
• UK F&B: sales were 2% behind FY24, with a strong
performance in our integrated restaurants offset by softer trading
in a number of our branded restaurants
• Premier Inn Germany: total
accommodation sales up 21% versus FY24 and
RevPAR was €54; RevPAR for
our cohort of 17 more established hotels was
€57, ahead of the
wider M&E market4
1: STR data, standard basis, 3 March 2023 to 29 February
2024, UK M&E market excludes Premier Inn
2: STR data, standard basis, 3 March 2023 to 29 February
2024, Germany M&E market excludes Premier Inn
3: STR data, standard basis, 1 March 2024 to 18 April 2024,
UK M&E market excludes Premier Inn
4:
STR data, standard basis, 1 March 2024 to 18 April 2024, Germany
M&E market excludes Premier Inn
Accelerating Growth Plan ('AGP')
• Optimisation of our F&B offer to enhance the proposition
for our hotel guests and increase efficiencies through:
o converting 112 lower-returning branded restaurants into new
hotel rooms having first transferred the delivery of F&B to an
integrated restaurant; and
o exiting 126 lower-returning branded restaurants; they will
continue to operate as they do now so that they can be sold as
going concerns and we have already agreed to sell 21 of these restaurants for £28m
• We plan to unlock 3,500 new room extensions, that
will see us reach at least 97,000 open rooms in
the UK by the end of FY29; the plan will require c.£500m of
investment over the next four years which will be funded through
our existing annual capital expenditure programme
• AGP will result in the reduction of around 1,500 roles out of
a total UK workforce of 37,000. While these plans are still
subject to consultation, we will seek to find alternative
opportunities wherever possible through the roles created by this
plan and our existing recruitment process that makes c.15,000 hires
each year
• This plan will drive increased margins and returns for our UK
business. A one-off impact of £20m - £25m reduction to UK adjusted
PBT in FY25 will be fully recovered in FY26 and deliver incremental
adjusted PBT of £30m - £40m in FY27; by FY29 the plan should
deliver increased adjusted PBT of £80m - £90m
FY25 guidance
• As previously announced, we continue to expect net inflation
on our £1.72bn UK cost base of between 3% and 4% in FY25, after
£40m - £50m of efficiency savings
• In Germany, we remain on course to break-even on a run-rate
basis during calendar year 2024
• Expected £20m - £25m reduction in net finance income versus
FY24 reflecting lower cash balances and based on the current
outlook for Bank of England rates
• In FY25 we expect to open 750 - 1,250 rooms in the UK and
c.400 rooms in Germany
• We expect gross capital expenditure in FY25, including our
AGP to be between £550m - £600m, partially offset by proceeds from
property transactions of £175m - £225m, including sale and
leasebacks and disposals
Medium-term outlook
We remain confident about the
Group's prospects. We are the clear market leader in the UK and
have a number of strategic and commercial initiatives, as set out
in the Business Strategy section below, that will strengthen our
position further. In Germany, we are building a business of real
scale and remain on course to become the number one hotel
brand1 achieving our long-term
target of 10% - 14% return on capital. Together with our new efficiency programme, these initiatives
will deliver a step change in our profitability, margins and
returns.
1: Based on number of open hotel rooms
†Signifies an alternative performance measure ('APM') -
further information can be found in the glossary and reconciliation
of APMs at the end of this
document
Commenting on today's results, Dominic Paul, Whitbread Chief
Executive, said:
"We have delivered an outstanding set of results in FY24, led
by the strength of our UK hotels business. Our increased levels of
profitability, operating cashflow and return on capital reflect the
power of our unique operating model. Our freehold-backed balance
sheet, together with our strategy of continuing to invest, is
allowing us to take advantage of the significant structural growth
opportunity that exists following the decline in UK hotel
supply.
"Against this backdrop, we are increasing our momentum to
deliver long-term profitable growth. In addition to our strong
commercial programme, we plan to optimise our F&B offer at a
number of our sites to unlock up to 3,500 room extensions that will
enhance the service for our hotel guests and deliver increased
operational efficiencies. We recognise that our transition will
impact some of our team members so we will be providing support
throughout this process and we are committed to working hard to
enable as many as possible of those affected to remain with us. The
short-term impact on our profit performance this year will be more
than offset by an uplift from FY27 with further increases
thereafter in both margins and returns as we open more of the new
extensions.
"In Germany, we are encouraged by our progress to date and
the opportunities we now have to both build our brand awareness and
refine our trading strategies further. We are on track to
break-even on a run-rate basis during calendar year 2024 and with
10,500 rooms now open and a further 6,000 in the pipeline, we are
on course to fulfil our ambition of becoming the number one hotel
brand in Germany.
"Our scale and vertically integrated model mean we have the
commercial and operational levers to underpin long-term profitable
growth, strong cashflow and increasing returns on capital. We are
on course to deliver a step change in our performance and look
forward with confidence, as reflected by our increased recommended
final dividend and proposed further share
buy-back."
For more information please contact:
Investor Relations - Whitbread
investorrelations@whitbread.com
Peter Reynolds, Director of
Investor Relations
peter.reynolds@whitbread.com
Sophie Nottage, Investor Relations
Manager
sophie.nottage@whitbread.com
Kirsten O'Reilly, Investor
Relations Manager
kirsten.oreilly@whitbread.com
Media - Teneo
whitbread@teneo.com
Jessica Reid
+44
(0) 20 7353 4200
A webcast for investors and analysts will be made available
at 8:00am on 30 April 2024 and will be followed by a live Q&A
teleconference at 9:15am. Details of both can be found on
Whitbread's website (www.whitbread.co.uk/investors).
†Alternative performance
measures
We use a range of measures to monitor the financial
performance of the Group. These measures include both statutory
measures in accordance with IFRS and alternative performance
measures (APMs) which are consistent with the way that the business
performance is measured internally. We report adjusted measures
because we believe they provide both management and investors with
useful additional information about the financial performance of
the Group's businesses.
Adjusted measures of profitability represent the equivalent
IFRS measures adjusted for specific items that we consider relevant
for comparison of the financial performance of the Group's
businesses either from one period to another or with other similar
businesses. APMs are not defined by IFRS and therefore may not be
directly comparable with similarly titled measures reported by
other companies. APMs should be considered in addition to, and are
not intended to be a substitute for, or superior to, IFRS measures.
Further information can be found in the glossary and reconciliation
of APMs at the end of this document.
Chief Executive's Review
Group Results
The Group has once again delivered
an excellent financial performance. Whilst Premier Inn UK remains
the driving force behind these results, our growing German business
also made encouraging progress throughout the year. Total statutory
revenue increased by 13% to £2,960m while adjusted operating profit
increased by 24% to £674m, reflecting the inherent operating
leverage of our model.
The drivers of this strong
performance include our scale, brand strength and our vertically
integrated operating model. We have continued to build on our
advantage across all areas of our operations, with a determined
focus on growing our revenues, managing our costs and ensuring a
high-quality service for our guests. As a result, the Group
delivered a 36% increase in adjusted profit before tax to £561m
(FY23: £413m). Adjusting items in the year resulted in a charge of
£109m,
including a non-cash, net impairment charge of
£107m, most of which relates to UK branded restaurants held for
sale in connection with our AGP, the impairment of
seven properties in
Germany and £27m of costs relating to the Group's strategic IT
programmes. The result was a 21% increase
in statutory profit before tax to £452m (FY23: £375m). A tax charge of
£140m led to a
statutory profit after tax of £312m (FY23: £279m). With a reduction
in the number of weighted average shares following share buy-backs
during the year, adjusted basic earnings per share increased
by 27% to 206.9p
(FY23: 162.9p) and statutory basic earnings per share increased
by 16% to 161.0p (FY23: 138.4p).
Our model means that we can
translate strong financial performance into substantial free
cashflow. Adjusted EBITDAR increased by 19% to over £1bn for the
first time meaning we were able to continue to fund our ongoing
programme of investment in our growth, infrastructure and customer
proposition resulting in total capital expenditure of
£509m (FY23:
£546m).
Our financial strength means we
can continue to deliver attractive returns to shareholders, through
a combination of dividends as well as share buy-backs. The Board is
therefore recommending a 26% increase in the final dividend to
62.9p per share that will be paid to eligible shareholders on 5
July 2024 (see note 10).
Having returned £600m to
shareholders over the past year through two £300m share buy-backs,
the Board has reapplied its capital allocation framework and is
pleased to announce its plans for a further £150m share buy-back,
to be completed during the first half of FY25. The new programme is
expected to start today and end no later than 14 October 2024.
Further details regarding the Group's latest proposed share
buy-back can be found in a separate announcement to be issued
today.
A more detailed review of the
Group's FY24 performance, both in the UK and Germany, is set out
below.
Premier Inn UK - Extending our market
leadership
With a favourable supply backdrop
and strong demand, total UK accommodation sales increased by 12%,
with strong growth across London (+17%) and the Regions (+10%),
driven by continued high levels of occupancy and increased average
room rates ('ARR'). We maintained a well-balanced customer mix
between business and leisure and whilst leisure demand
remained strong during the peak summer months, we did see some
softening at short-lead during the fourth quarter, reflecting the
normal seasonal pattern. The result was that Premier Inn UK again
outperformed the wider M&E market and total accommodation sales
grew 3.1pp ahead of the market with an increased RevPAR premium of
£5.95 in FY24 (FY23: £4.96).
A combination of both external and
internal factors contributed to this outperformance, further
details of which are outlined below:
· Market-leading
position: Premier Inn is the UK's
largest hotel group with approximately 12% market share of total
hotel room supply. During the year we opened 2,253 rooms and closed
386 rooms; as at 29 February 2024, we had 853 hotels and over
85,000 rooms open.
· Continued favourable market
supply: Given our scale and
national coverage, we have been able to take advantage of strong
demand at a time when hotel supply has been more constrained. This
is following a significant decline in the number of independent
hotel rooms, as well as a marked reduction in hotel and leisure
construction starts that were down over 50% over the past
year1. Based on our detailed analysis, we believe it is
unlikely that the total market will return to 2019 levels of supply
until at least 2028, creating further opportunities for Premier
Inn.
1: Glenigan Construction Review - March
2024
· Proprietary automated
trading engine ('ATE'): Strong
yield management is fundamental to our success and our in-house
trading teams are committed to a continuous process of improvement,
seeking ways that we can refine and optimise our trading
strategies. As the vast majority of our distribution is direct, we
have been able to integrate our digital marketing with ATE,
providing us with a further driver of demand that we can use to
maximise revenue and profit.
· Guest experience and
choice: As part of our regular
refurbishment programme, we have started to roll-out our new
standard room format ('ID5') and are also making great progress
with our 'Bed of the Future' bed-replacement initiative. Our
enhanced room format, Premier Plus, is achieving high levels of
occupancy, resulting in a RevPAR uplift versus a standard room in
the same hotel. We have also introduced our new Twin room format,
which has two full-size single beds and attracts a £5 price
supplement. We continue to offer a variety of rate classes
providing both value and flexibility for our guests, with over 80%
of bookings made using a flexible rate.
· Driving our business
proposition: Business guests tend
to travel more frequently, are more likely to book a flexible rate
and generally cost less to serve than leisure guests. As a result,
we have continued to broaden our appeal through a variety of
different channels including our dedicated Business Booker portal
as well as via Travel Management Companies ('TMCs'). Together,
these channels represented approximately 20% of total accommodation
sales in FY24, up from 17% in FY23.
· Operational
excellence: Premier Inn retained
the YouGov 'Best Value Hotel Chain' ranking, reflecting our focus
on quality and value. Whilst we do not
have a loyalty programme, we continue to attract large numbers of
repeat guests. Despite high levels of occupancy in our hotels, we
are continuing to receive high guest scores, which is thanks to the
hard work of our dedicated teams that deliver for our guests every
day. Our focus on maintaining a strong business culture, as well as
investing in competitive rates of pay and skills and development
training, supports our staff retention and approximately 69% of our
team members now have more than one year's service (FY23:
59%).
Whilst difficult to attribute the
individual impact of these factors on our overall performance, we
believe each is contributing to our continued outperformance versus
the M&E market.
Food and beverage ('F&B'),
especially a hot breakfast, is an important part of our hotel offer
and helps drive incremental RevPAR. F&B sales were up 7% versus
FY23, with high levels of occupancy in our UK hotels driving strong
breakfast sales that were up 14% year-on-year and a series of
commercial initiatives supporting the performance of our branded
restaurants.
As expected, with the addition of
over 2,000 new hotel rooms and 8% cost inflation, total operating
costs increased by 8% versus the prior year. However, the power of
our operating model meant that with positive like-for-like sales
growth, and £50m of efficiency savings, adjusted pre-tax profits
increased by 19% to £588m (FY23: £492m) and margins increased to
21.2%, 1.6pp ahead of the prior year (FY23: 19.6%). The strength of
this performance meant that we delivered record levels of UK ROCE
that increased to 15.5% (FY23: 12.9%).
Gross impairment of £84m (FY23:
£nil) has been recognised in respect of sites impacted by changes
to facilitate our AGP. Included within this amount is £81m where
the carrying value exceeds the expected sale proceeds less costs to
sell and a further impairment of £4m to reflect the impact of the
reduced cashflows as a result of the announcement of the
plan. This was offset by the
reversal of previous impairments relating to these disposal sites
of £7m.
In addition, gross impairment
charges of £8m (FY23: £54m) have been driven by changes to forecast
cashflows at a small number of sites and an amount of £10m (FY23:
£55m) was recognised as reversals of previous impairment driven by
a strong performance across other sites, particularly those in
London. This amount includes £1m relating to the Premier Inn hotel
remaining following the expected disposal of the neighbouring
branded restaurant.
Premier Inn Germany - On course to break-even on a run-rate
basis in calendar year 2024
In Germany, we made encouraging
progress in FY24, building our momentum with further network
expansion and improved trading performance. Whilst we did
experience a dip in performance during the second quarter, this was
short-lived and our overall performance has been encouraging. Our
cohort of more established hotels in aggregate performed well
during the year and is achieving RevPAR ahead of the rest of the
German M&E market.
We continued to enhance our
operating model for the German market with a number of important
developments. These include: the addition of new payment methods
that are particularly popular with German guests; and on
distribution, we have extended our trial using Online Travel Agents
('OTAs') to see whether being on these platforms can drive
incremental revenue and profitability, as well as increase our
brand awareness. These changes, together with further initiatives
being overseen by our recently appointed in-country leadership
team, are keeping us on track as we progress towards our ambition
of becoming Germany's number one hotel brand.
We added 1,464 rooms during the
year and now have over 10,500 rooms open with a further 6,000 rooms
in our committed pipeline. As our brand is not yet well known and
with only a limited trading history since the end of the pandemic,
our hotels are not yet at their full potential. However, we
continue to be encouraged by our improving performance, led by our
cohort of 17 more established hotels1 which achieved a
profit2 of £9m in FY24 (FY23: profit of £3m). The net
result was that Germany as a whole delivered a reduced adjusted
loss before tax of £36m (FY23: loss of £50m) which was in line with
our FY24 guidance.
In order to reach scale at pace
and gain access to a number of key markets, we have invested in
freehold and leasehold sites through organic opportunities as well
as through acquisitions. Now having a recent period of trading
history, we have updated our cashflow assumptions which has
resulted in an impairment charge of £32m, relating to seven of our
German hotels.
With an encouraging forward booked
position and a clear plan in place, we remain on track to reach
break-even3 on a run-rate basis during calendar year
2024 and are making good progress towards our long-term target of
generating 10% - 14% returns on the £1.1bn of invested and
committed capital.
1: Cohort of 17 more established German hotels that were open
and trading under the Premier Inn brand for 12 consecutive months
as at 4 March 2022
2: In aggregate, adjusted profit before tax excluding
non-site related administration and overhead
costs
3: On an adjusted profit before tax basis
Our teams
Our teams are at the heart of our
guest experience, and thanks to their continued hard work and
dedication we are continuing to deliver the great quality, service
and value that our guests expect from us. Operating at high levels
of occupancy requires that our team members have to go the extra
mile to deliver for our guests and the fact that we have been able
to improve our high guest scores over the past year sets us apart
from many of our competitors.
Recognising the challenges created
by the cost-of-living crisis, we have continued to invest in our
teams, not just through increased rates of pay - all of our team
members are paid above the National Minimum Wage and National
Living Wage - but also through our investments in their development
and wellbeing, so they can receive the support that they need to
help build their careers with us. These initiatives have been
rewarded with high levels of engagement and retention, both of
which help us to maintain a high quality of service for our guests
whilst continuing to deliver operational efficiencies.
We recognise that the changes we
are making to our F&B offer will be unsettling for our teams
and are committed to working hard to support all of those affected.
More detail is set out in the Business Strategy section
below.
Capital allocation - increased dividend and further £150m
share buy-back
Having a strong balance sheet with
investment grade metrics remains a key pillar of our capital
allocation framework. Our approach has not changed and we remain
focused on the following key priorities:
·
maintaining our investment grade status by
operating within our leverage threshold;
·
continuing to fund our ongoing capital
expenditure requirements and investing through the
cycle;
·
completing selective freehold acquisitions and
M&A opportunities that meet our returns thresholds;
·
growing dividends in line with earnings;
and
·
returning excess capital to shareholders,
dependent on outlook and market conditions.
The cash generated by our
vertically integrated model meant that, even after gross capital
expenditure of £509m (FY23: £546m), £591m of share buy-backs and
£165m of dividend payments during the year, our balance sheet
remained strong and we were pleased to receive an upgrade to our
credit rating to BBB (previously BBB-)3.
During the year, Fitch Ratings
('Fitch') amended the methodology used to assess the Group's credit
rating by switching to a lease-adjusted net debt: adjusted EBITDAR
multiple, aligning their approach with that of other hotel groups.
Lease liabilities at the end of the year were £4.1bn (FY23: £4.0bn)
and after adjustments in accordance with the Fitch methodology, our
ratio of adjusted EBITDAR to lease-adjusted net debtâ€
was 2.9x, which is below our internal threshold of 3.5x.
Having now completed £600m of
share buy-backs, the Board has reapplied the Group's capital
allocation framework. Given the strength of our financial
performance, our balance sheet and our confidence in the
medium-term outlook, the Board believes that the Group has
sufficient headroom to recommend an increased final dividend
totalling £115m and intends to conduct an additional £150m share
buy-back, to be completed during the first half of FY25.
3: Fitch Ratings, 17 August 2023
Business strategy
Our strategy is focused on driving
long-term, sustainable returns for our shareholders whilst working
with our other stakeholders to ensure we are driving positive
change through our Force for Good sustainability
programme.
Our vertically integrated model
and strong balance sheet underpin the three pillars of our business
strategy:
•
continuing to grow and innovate in
the UK
•
focus on our strengths to grow in Germany;
and
•
enhancing our capabilities to support long-term
growth.
The following sections highlight
our future plans that remain central to our long-term success and
will underpin our future financial performance.
1. Continuing to grow and innovate in the
UK
We are determined to extend our
leadership position as the UK's number one hotel chain, driving
strong revenue growth and maximising returns for our shareholders.
To achieve these objectives, we have developed a series of
strategic and commercial initiatives, each of which are described
in more detail below.
Accelerating Growth Plan ('AGP') - optimising our F&B
offer will unlock 3,500 room extensions and drive increased margins
and returns
F&B is a core part of our
guest experience. Over half of our hotel guests are served by an
unbranded integrated restaurant, which is located inside the hotel
and tailored to the needs of our hotel guests. We also have a
number of hotels where F&B is provided through a neighbouring
branded restaurant, owned by the Group or a third party, that sits
next to the hotel and is also open to non-hotel guests.
Whilst our UK hotel performance
has gone from strength-to-strength, the performance of some of our
branded restaurants has been impacted by a reduction in footfall
from non-hotel guests with the result that they have struggled to
meet their targeted levels of return. Having responded to this
shift in demand with several commercial initiatives during FY24, we
have continued to explore ways that can further improve the service
to our hotel guests whilst also increasing our financial
returns.
At the same time, a marked
reduction in hotel supply and a shortage of development funding has
created an opportunity to grow our UK rooms pipeline at a time when
many competitors cannot. As 56% of our UK sites are freeholds, we
are in a unique position to commence a significant hotel extensions
programme that will grow our rooms pipeline and generate a high
return on capital.
Our plan
We are today announcing our
Accelerating Growth Plan ('AGP') to optimise our F&B offer and
unlock 3,500 new room extensions. This will enhance the offer for
our hotel guests and increase our rooms pipeline1. The
new rooms will be in high-demand locations where we have identified
a shortfall in supply and will help to underwrite our new room
openings programme for several years. With this plan, together with
our existing committed and future pipeline, we expect our total
open estate to reach at least 97,000 rooms by the end of
FY29.
The details of our plan are as
follows:
1. over the next
24 months we plan to add 3,500 new rooms to our pipeline through a
new extensions programme. This includes converting 112
branded restaurants into new hotel rooms having
first transferred the delivery of F&B for our hotel guests at
these sites to a more tailored, integrated restaurant, that will be
built inside the neighbouring hotel, mirroring the popular format
already available at 387 of our hotels. In FY24, these branded
restaurants generated revenue of £121m and
a PBT loss2 of £19m;
and
2. we are
planning to exit 126 branded restaurants over the next 24 months;
they will continue to operate as they do now so that they can be
sold as going concerns; we have already agreed to sell 21 of these restaurants for £28m. In FY24, these 126
restaurants in aggregate generated revenue of £147m and a PBT loss2 of £9m.
The proceeds from these disposals will be used to
help fund our investment in building a more tailored, integrated
restaurant in our hotels as well as the construction of new hotel
rooms across the estate.
The majority of our sites,
including our existing 387 integrated restaurants and our remaining
portfolio of 196 higher returning branded restaurants, will
continue to operate as normal and are not affected in any way.
While the vast majority of our hotels will be unaffected, where we
are making a change to the way F&B is delivered, we have
ensured that the famous Premier Inn breakfast, as well as a range
of meal choices at other times of the day, will continue to be
available. The construction of new integrated restaurants will
commence shortly and will be completed over the next few years. The
result will be a more efficient, integrated F&B offering in
these locations that is better tailored for the needs of our hotel
guests.
Financial
impact
The plan will require c.£500m of
investment over the next four years which will be funded through
our existing annual capital expenditure programme.
The changes we have outlined are expected to
result in a one-off reduction to UK adjusted PBT in FY25 of between
£20m - £25m, as we transition the selected sites to the new
integrated format. Thereafter, with the removal of lower-returning
restaurants, the one-off adjusted PBT impact in FY25 will be fully
recovered in FY26 and by FY27, as further restaurants are sold and
the addition of new high-returning hotel rooms starts to come
through, we expect the plan to deliver a net incremental adjusted
PBT benefit of between £30m - £40m. As the new extensions mature,
we expect further improvement in subsequent years will deliver an
uplift to adjusted PBT of between £80m - £90m per
annum, driving increased margins and returns.
At this time the Group expects to
incur further net impairment charges and write-downs including
accelerated depreciation within adjusting items totalling between
£80m and £100m over the next three financial years. The Group also
expects to incur future cash costs presented within this adjusting
item across the next three financial years totalling between £20m
and £25m.
1: Sites where the Group has a legal interest in a property
(that may be subject to planning/other conditions) with the
intention of opening a hotel in the future
2:
In aggregate adjusted profit before tax excluding non-site related
administration and overhead costs.
Supporting our
teams
The plan we are announcing today
will result in the reduction of around 1,500 roles out of a total
UK workforce of 37,000. While these plans are still subject to
consultation, we will seek to find alternative opportunities
wherever possible through the roles created by this plan and our
existing recruitment process that makes c.15,000 hires each year.
We expect to retain a significant proportion of those affected who
wish to remain with us and we will be providing dedicated support
to our teams.
Other commercial initiatives
In addition to our plan to add
room extensions and optimise our F&B offer outlined above, we
are also continuing to deploy a series of other commercial
initiatives to help drive our UK business during FY25. These are
summarised below:
· Improving our trading
strategies: Our proprietary
automated trading engine ('ATE') is a major source of competitive
advantage for the Group. Its responsive and highly dynamic
performance optimises the balance between occupancy and ARR in
order to maximise revenue. Being integrated with our digital
marketing provides us with additional tools to respond to shifts in
demand and increase conversion, as well as reduce customer
acquisition costs. Drawing upon our significant databank and
in-house expertise, our trading teams continue to refine our
trading strategies so that we remain ahead of the M&E
market.
· Broadening our guest
experience and choice: We will
continue to roll-out our new standard room format ('ID5') with
5,000 rooms planned this year and are also expecting to complete
our 'Bed of the Future' bed-replacement initiative. We continue to
add more Twin and Premier Plus rooms to our estate, both of which
broaden our appeal and attract a premium to our standard room rate.
Having successfully completed the roll-out of our new reservation
system across all of our hotels in the UK and Germany, we plan to
deliver further commercial benefits in the future, including more
dynamic pricing of product upgrades and by adding the ability to
book different room options as well as early check-in and late
check-out as part of the online journey.
· Enhancing our business
proposition: Our business guests
tend to drive higher RevPAR and travel more frequently than leisure
guests. Having grown both Business Booker and Business Account
substantially over the past few years, we now plan to simplify our
set-up by integrating both channels into a single offering called
"InnBusiness". We also plan to expand our TMC addressable customer
base and strengthen our existing relationships in order to drive
higher volumes of business customers.
· Making further improvements
in F&B: In addition to our AGP
to optimise our F&B offer, we will roll-out our new integrated
ground floor concept across our estate, to improve the guest
experience and generate additional F&B revenue. Commercial
initiatives in our focused branded restaurants portfolio are in
place to help drive sales and profitability, including enhanced
pricing mechanics and a greater focus on key event dates such as
Father's Day.
· Investing in operational
excellence: Maintaining operational
focus is pivotal to us ensuring a high-quality guest experience
underpinning our long-term success. We are continuing to deliver
process and product improvements to drive cost efficiencies. Our
teams are at the heart of the guest experience and we will continue
to invest in pay as well as training and development to help
further drive engagement and retention.
2. Focus on our strengths to grow in
Germany
We have a clear objective: to
become the number one hotel brand in Germany, replicating our
success in the UK and creating significant value for our
shareholders. The German hotel market is an exciting opportunity
for the Group, with no brand having more than 2% share and a
significant independent sector that has declined materially since
the pandemic.
Our open estate now stands at 59
hotels, with over 10,500 open rooms and a further 6,000 rooms in
our committed pipeline. We plan to continue growing our network
through a combination of organic growth and bolt-on M&A. We
have expanded rapidly in recent years and we now have a presence in
most major cities. We remain encouraged by our overall performance
that has been led by our cohort of more established1
hotels that, whilst not yet mature, is already performing ahead of
the M&E market.
We remain on course, both to
break-even on a run-rate basis in calendar year 2024 and thereafter
to achieve our long-term goal of 10% - 14% return on capital.
Having invested and committed £1.1bn of capital, we have a clear
plan for replicating our UK success in this large and exciting
market. Although not immune from macroeconomic headwinds, we have
several levers that will have a more significant and positive
impact on our performance, helping us to drive future
growth.
Ongoing commercial
initiatives
We are implementing the following
initiatives during FY25:
· Refining our commercial
strategy: We are continuing to
adapt ATE for the German market. Drawing upon an expanding pool of
trading data, we are improving our performance and applying the
learnings from trading our growing estate. Events are a key feature
of the German market and it is important that we have the right
trading strategies in place in order to maximise revenue and
profit. Changes made earlier in the year are already having a
positive effect and we expect will help improve our performance
further. To help drive brand awareness we will launch our first
online-focused brand campaign later this year and are also
trialling the use of OTAs so that we can better understand the
commercial impact of this channel on our business.
· Evolving our model and
product offer: As a budget hotel
brand, we are always looking at ways to increase sales and reduce
costs. Examples include mirroring market practice in Germany and
adding a second person supplement when there are two people staying
in a room. Whilst replicating our successful UK model is resulting
in great guest scores, we have identified some changes that will
better tailor our proposition for the German guest and generate
additional revenue. For example, new payment options will make it
easier to book with us and we are also rolling out Premier Plus
rooms in a number of our hotels.
· Enhancing our business
proposition: Maintaining a balanced
mix of business and leisure guests helps us to maximise occupancy.
With high levels of domestic business travel in Germany, we want to
ensure our platform is easy to use, with all the key attributes our
guests need, in order to maximise the appeal of our offer. As in
the UK, we are in the process of combining our current business
channels into a single platform named "InnBusiness", making it even
easier to book directly with us. This is alongside our efforts to
strengthen our existing TMC relationships and expand our
addressable customer base.
1: Cohort of 17 more established German hotels that were open
and trading under the Premier Inn brand for 12 consecutive months
as at 4 March 2022
3. Enhancing our capabilities to support long
term growth
By continuing to invest in our
supporting infrastructure, we seek to ensure the smooth execution
of our plans, both in the UK and Germany. Maintaining a strong
balance sheet gives us the confidence to invest and make long-term
decisions that will enhance our returns.
Financial strength: Our
vertically integrated operating model means that the conversion of
profit into cashflow is high and we generated adjusted operating
cashflow of £787m (FY23: £719m). Having purchased a number of
freehold properties during the year, coupled with our accelerated
refurbishment programme, total expansionary and non-expansionary
capex was £509m (FY23: £546m). We also returned £756m to
shareholders through dividends and share buy-backs. With the
benefit of some property-related transactions during the year, even
after these outflows, the Group's balance sheet remains strong with
a ratio of lease adjusted net debt to EBITDAR of 2.9x (FY23: 2.6x).
This was confirmed by the improvement in the Group's credit rating
to BBB1 (previously BBB-), ensuring access to the debt
markets on attractive terms and maintaining our strong financial
covenant. Our financial strength underpins our confidence in
continuing to grow our estate, improve our customer offer, invest
in our teams and enhance our systems infrastructure, each of which
help us to both drive revenues and reduce costs. It also means that
we can take advantage of M&A opportunities that meet our
rigorous returns requirements to deliver incremental
growth.
1: Fitch Ratings - 17 August 2023
Asset-backed balance sheet:
Our freehold property estate was last valued at £4.9bn - £5.8bn in
2018 and it is a key point of difference versus other more
asset-light business models. It also provides us with a number of
commercial and operational advantages:
o total control over the location and initial development of
the hotel as well as all maintenance and redevelopment, including
extensions;
o enables the commercial opportunity in any location to be
maximised for the Group;
o protection from increasing property costs and therefore lower
earnings volatility during periods of high or persistent
inflation;
o access to development profits through sale and
leasebacks;
o a
strong financial covenant, helping to secure more favourable lease
terms with landlords and attractive financing terms with lenders;
and
o an additional and flexible source of funding, one that can
often be available at more attractive rates than other sources of
finance.
Having access to both freehold and
leasehold opportunities means that we maximise our chances of
securing the assets and locations we want. We are also able to
optimise the size and format of our estate in order to increase
returns as evidenced by our AGP that includes repurposing a number
of our lower-returning branded restaurants into high returning room
extensions.
Upgraded technology: With
digital channels generating the majority of our revenues, our
technology infrastructure and capability is central to our
long-term success. Having now completed the multi-year upgrade to
our reservation system and technology stack across over 900 hotels
across the UK and Germany, we are continuing to drive further
improvements to our digital networks and systems that will improve
the quality of service to our guests and drive further efficiency
savings.
Lean and agile cost model: As
a vertically integrated operator, we are able to exercise
considerable control over our cost base. This requires a consistent
approach across all areas of our business and our teams are driven
to continue to find new ways of working that can improve our
performance and lower our costs. Whilst there are signs that
inflationary pressures may be easing, they remain above average and
we have therefore launched a new cost efficiency programme to
deliver £150m of cost efficiencies over the next three years, with
£40m - £50m of cost efficiencies expected in FY25. This new
programme will see us extract more savings on a smaller cost base
following the impact of our AGP, and will be delivered throughout
the business, with areas of focus including operations, procurement
and technology.
Operating responsibly and sustainably:
As a major employer in the UK and with a growing
presence in Germany, we recognise our responsibilities in the many
communities where we have a presence and that the way we behave as
a business is increasingly important to many of our stakeholders.
Our sustainability programme, Force for Good, drives our ESG agenda
and sets our stretching targets that are embedded across all areas
of our business, holding us accountable for the changes we are
seeking to make. Our investment in the programme not only ensures
that we are having a positive impact on our communities, it is also
expected to deliver operational efficiencies in the
longer-term.
Current Trading - seven weeks to 18 April
2024
In the UK, as evidenced by the
published market data, whilst midweek demand has been robust, the
phasing of public holidays impacted weekend demand in certain
leisure locations; this meant that total accommodation sales were
1% behind FY24. However, the strength of our brand and commercial
programme meant that we continued to outperform the M&E
market1 with total accommodation sales 1.2pp ahead and a
RevPAR premium of £5.68. We are expecting
a positive step-up in demand across business and leisure over the
next few weeks, supported by our forward booked
revenue position which is ahead of last year. This, together with
our strong commercial programme, means that we remain confident in
continuing to outperform the market.
Food and beverage sales were 2%
behind FY24, with strong performance in our integrated restaurants
offset by softer trading in a number of our branded
restaurants.
In Germany, a number of trade
fairs have helped drive business demand alongside rising leisure
volumes. Total accommodation sales were 21% ahead of the same
period in FY24 and overall RevPAR was €54 (FY23: €51) while, in
aggregate, our cohort of more established hotels2 had
RevPAR of €57 (FY23: €55) which is ahead of the M&E
market3.
1: STR data, standard basis, 1 March 2024 to 18 April 2024,
UK M&E market excludes Premier Inn
2: Premier Inn more established hotels: open and trading
under the Premier Inn brand for 12 consecutive months as at 4 March
2022: 17 hotels
3: STR data, standard basis, 1 March 2024 to 18 April 2024,
Germany M&E market excludes Premier Inn
FY25 Guidance
A summary of our FY25 guidance is
detailed below.
UK
· Sales: every 1% change in like-for-like accommodation sales
versus FY24 has a £16m - £17m impact on profit before tax; and
every 1% change in total F&B1 sales versus FY24 has
a £2.5m impact on profit before tax
· Inflation: year-on-year net inflation is expected to be
between 3 - 4% (no change to our guidance at the time of our Q3
trading update) on our £1.72bn UK cost base, including labour,
F&B and utilities which are now 90% hedged for FY25
· New
rooms: 750 - 1,250 (new rooms: 100% leasehold)
1: F&B sales excluding
sites impacted by the Accelerating Growth Plan for which separate
guidance is provided below
Germany
· Remain on track to break-even on a run-rate basis in calendar
year 2024
· New
rooms: c.400 (new rooms: 100% leasehold)
Central and other costs
· Net
finance income: Expected £20m - £25m reduction versus FY24
reflecting lower cash balances and based on the outlook for Bank of
England rates
Balance sheet
· Gross capex: £550 - £600m, reflecting our plan to optimise
F&B and unlock 3,500 extensions, in addition to our regular
programme of investment
· Proceeds from property transactions: expected to be between
£175m and £225m including sale and
leasebacks and disposals
Financial impact of our Accelerating Growth
Plan
Our AGP, as outlined above, is
expected to result in the following overlay to our normal
guidance:
FY25
· Total F&B sales: £80m - £100m reduction as branded
restaurants are repurposed or sold
· Adjusted PBT: £20m - £25m one-off reduction reflecting the
reduction in revenue and short-term impact of transition
FY26
· Total F&B sales: £100m - £120m further reduction as the
remaining branded restaurants are repurposed or sold
· Adjusted PBT: FY25 one-off impact will be fully recovered as
benefit of removing loss-making branded restaurants offsets any
remaining impact of transition
The plan will require c.£500m of
investment over the next four years which will be funded through
our existing annual capital expenditure
programme. By FY27, as the balance of
those branded restaurants to be sold is completed and the benefit
of new high-returning hotel rooms starts to come through, we expect
the plan to deliver a net incremental adjusted PBT benefit of
between £30m - £40m. As the new extensions mature, we expect
further improvement in subsequent years will deliver an uplift to
adjusted PBT of between £80m - £90m per annum, driving
increased margins and returns.
Medium-term outlook
We remain confident about the
Group's prospects. We are the clear market leader in the UK and
have a number of strategic and commercial initiatives, that will
strengthen our position further. In Germany, we are building a
business of real scale and remain on course to become the number
one hotel brand achieving our long-term
target of 10% - 14% return on capital. Together, with our new efficiency programme, these
initiatives will deliver a step change in our profitability,
margins and returns.
Force for Good
Being a Force for Good is
fundamental to the sustainable and long-term growth of our
business. Our programme comprises three core pillars: opportunity,
responsibility and community, and our stretching targets are
embedded across all areas of our business, ensuring that
responsible business practices are integrated into our
operations.
Opportunity
At Whitbread we give everybody the
opportunity to grow and develop, with no barriers to entry and no
limits to ambition. For us opportunity is anchored to three key
themes within our overall People Plan - diversity and inclusion
('D&I'), wellbeing and training.
We now have 9% ethnic
representation among our leadership and were recognised with
'Investing in Ethnicity: Exemplary Employer status' in February
2024. On gender diversity, whilst we have 39.8% female
representation in our leadership group, this is just slightly below
our 40% target and we are now focused on new targets of 45% female
and 10% ethnic representation by FY26. External recognition for our
D&I efforts continues to demonstrate that we lead the way
across the hospitality sector, including our Top 100 placing in the
Stonewall 2023 Workplace Equality Index and being awarded Level 2
'Employer' status on the Disability Confident scheme.
We take a holistic approach to
employee wellbeing that includes physical, mental and financial
wellbeing. We have continued to invest in both Mental Health First
Aiders and Mental Health Champions during the last twelve months
with 162 people trained across our Operations and Support Centre
teams. In August 2023, we launched a new digital app allowing our
teams greater access to self-care resources to better support their
health and also launched a financial education programme so
everyone who works for us has access to learning resources and
support.
Training and development is
integral to our approach for creating opportunity for our people.
This year we have taken over 500 Hotel Managers and General
Managers through a leadership program and piloted internal
management development programs preparing over 250 people for their
next management role. In addition, over 2,000 people, across a
range of levels, are currently on an apprenticeship programme and
we are delighted to have been rated #1 by the apprentices
themselves in 'Rate My Apprenticeship'. We hope that our Youth
Strategy for Whitbread, that is built around three key pillars:
early careers, fast-track careers and removing barriers to entry,
will enable us to become the employer of choice for young people in
the UK.
Responsibility
Our sustainable sourcing strategy
continues to focus on those commodities that are most material to
our UK business and we made good progress in certifying the
sustainability of more of our supply chain, including palm oil,
cage free eggs and cotton as well as maintaining our sourcing
standards for fish and raw beef. Having completed the biodiversity
mapping of a significant part of our estate, we are developing our
approach to reporting against the Taskforce on Nature-related
Financial Disclosures so that we are in a position to publish a
disclosure within the next 1-2 years. In addition, we have started
preparing for the Corporate Sustainability Reporting Directive
including our double materiality assessment.
We published our transition plan
in 2023 outlining the steps we plan to take in order to meet our
Science Based Target Initiative ('SBTi') validated net zero carbon
goals. The transition away from gas and towards lower emission
power sources is an important part of this plan and our flagship
all-electric hotel in Swindon that opened in October 2023 is set to
become the blueprint for new hotels from 2027 onwards. Having
rolled out a series of water reduction interventions over the past
year, we are progressing as planned towards our target of 20% water
reduction per sleeper by 2030; this also means we need to heat less
water and saves further carbon emissions. As we progress towards
our Scope 3 carbon target, we have now surveyed our supplier base
to help us define our options to reduce emissions in our value
chain.
Our commitment to cut food waste
in half by 2030 continues to be a priority and presents us with an
important carbon reduction as well as a commercial opportunity. We
are also considering how we can improve our waste processes
overall, building on the new workplace recycling legislation in
Wales, to improve segregation across our estate and thus reduce the
impacts of our waste on the environment, and the costs of its
disposal.
Having been the first company
within the hospitality industry to issue a Green Bond, we have now
allocated the full £550m against eligible Green buildings,
renewable energy and sustainable procurement, fulfilling our total
use of proceeds obligations.
Community
Underpinning our commitment to
Great Ormond Street Hospital Children's Charity ('GOSH'), we raised
over £2m in the year, bringing the total amount raised since 2012
to over £24m. Our partnership achieved Highly Commended recognition
at the Corporate Engagement Awards for Most Effective Long-Term
Commitment and won the Best Partnership with a Children's Charity
at the Better Society Awards. In the year, we also raised over £1m
for children.de in Germany.
During the year, our teams pledged
1,000,000 minutes of fundraising activity which contributed to a
record-breaking year of employee fundraising. Our teams raised over
£1m out of our total in the year through a variety of
activities.
For further information on our
Force for Good programme, please see our most recent ESG
Report: https://www.whitbread.co.uk/sustainability/our-strategy-targets/.
Business Review
Premier Inn UK1
|
|
|
£m
|
FY24
|
FY23
|
vs FY23
|
Statutory Revenue
|
2,770
|
2,508
|
10%
|
Other income (excl rental
income)
|
-
|
5
|
(100)%
|
Operating costs before depreciation,
amortisation & rent
|
(1,722)
|
(1,595)
|
(8)%
|
Adjusted EBITDARâ€
|
1,048
|
918
|
14%
|
Net turnover rent and rental
income
|
-
|
1
|
(100)%
|
Depreciation: Right-of-use
asset
|
(144)
|
(134)
|
(8)%
|
Depreciation and amortisation:
Other
|
(183)
|
(169)
|
(8)%
|
Adjusted operating profitâ€
|
722
|
617
|
17%
|
Interest: Lease liability
|
(134)
|
(125)
|
(7)%
|
Adjusted profit before taxâ€
|
588
|
492
|
19%
|
ROCEâ€
|
15.5%
|
12.9%
|
260bps
|
PBT
Marginsâ€
|
21.2%
|
19.6%
|
160bps
|
Premier Inn UK1 key performance
indicators
|
|
|
|
FY24
|
FY23
|
vs FY23
|
Number of hotels
|
853
|
847
|
1%
|
Number of rooms
|
85,443
|
83,576
|
2%
|
Committed pipeline
(rooms)
|
6,795
|
7,425
|
(8)%
|
Occupancy
|
82.2%
|
82.7%
|
(50)bps
|
Average room
rateâ€
|
£79.76
|
£71.84
|
11%
|
Revenue per available
roomâ€
|
£65.56
|
£59.45
|
10%
|
Sales growth2:
|
|
|
|
Accommodation
|
12%
|
|
|
Food & beverage
|
7%
|
|
|
Total
|
10%
|
|
|
Like-for-likeâ€
sales2 growth:
|
|
|
|
Accommodation
|
10%
|
|
|
Food & beverage
|
7%
|
|
|
Total
|
9%
|
|
|
|
|
|
|
|
|
| |
1:
Includes one site in each of: Guernsey and the Isle of Man, two
sites in Jersey and six sites in Ireland
2:
Total and like-for-like versus FY23
Premier Inn UK's total statutory
revenue was 10% ahead of FY23, led by our UK hotels that delivered
another outstanding performance. Total accommodation sales were up
12%; occupancy remained high at 82.2% and ARR increased by 11% to
£79.76, which resulted in RevPAR up 10% to £65.56. This performance
was underpinned by the favourable supply environment in the UK
hotel market and our strong commercial programme.
Premier Inn continued to
outperform the wider M&E market; total accommodation sales grew
3.1pp ahead of the market with a RevPAR premium of £5.95 (FY23:
£4.96), demonstrating the strengths of our scale, brand, direct
distribution, proprietary automated trading engine and vertically
integrated operating model.
UK performance vs M&E market
|
|
|
|
|
|
H1
FY24
|
H2
FY24
|
FY24
|
PI accommodation sales growth
performance (vs FY23)1
|
+2.3pp
|
+3.8pp
|
+3.1pp
|
PI occupancy growth performance
(vs FY23)1
|
(1.0)pp
|
(0.9)pp
|
(0.9)pp
|
PI ARR growth performance (vs
FY23)1
|
1.7pp
|
2.5pp
|
2.1pp
|
PI RevPAR premium
(absolute)1
|
+£6.69
|
+£5.25
|
+£5.95
|
PI market
share2
|
8.8%
|
8.5%
|
8.6%
|
PI market share gains pp (vs
FY23)2
|
0.1pp
|
0.2pp
|
0.1pp
|
|
|
|
|
|
|
| |
1: STR data, standard basis, Premier Inn accommodation
revenue, occupancy, ARR and RevPAR 3 March 2023 to 29 February
2024, M&E market excludes Premier Inn
2: STR data, revenue share of total UK market, 3 March 2023
to 29 February 2024
Total F&B sales were 7% ahead
of FY23 as a result of high levels of hotel occupancy, driving
increased breakfast sales. A number of commercial initiatives
including menu optimisation and promotions helped to support the
performance of some of our branded restaurants that have seen a
reduction in footfall from non-hotel guests over the past few
years.
In line with our previous
guidance, operating costs of £1,722m were up 8% (FY23: £1,595m),
reflecting cost inflation across a number of cost lines and estate
growth, partially offset by savings from our ongoing cost
efficiency programme. Adjusted EBITDAR grew by £130m and was above
£1bn for the first time with margins at 38% (FY23: 37%).
Right-of-use asset depreciation was £144m and lease liability
interest was £134m reflecting the continued growth in our estate.
We opened eleven new hotels during the year, totalling 2,253 rooms
and we also closed 386 rooms; at the end of the year, the total
estate stood at 853 hotels with 85,443 rooms open.
Adjusted profit before tax in the
UK increased by 19% to £588m (FY23: £492m), driven by the strength
of our UK hotel performance and the high operating leverage
inherent within our business model. As a result, UK adjusted
pre-tax profit margins increased to 21.2%, 160bps ahead of
FY23.
Premier Inn Germany
|
|
|
|
|
£m
|
FY24
|
FY23
|
vs FY23
|
|
Statutory revenue
|
190
|
118
|
62%
|
|
Other income (excl. rental
income)
|
3
|
0
|
>1,000%
|
|
Operating costs before depreciation,
amortisation and rent
|
(151)
|
(110)
|
(37)%
|
|
Adjusted EBITDARâ€
|
42
|
7
|
462%
|
|
Depreciation: Right-of-use
asset
|
(39)
|
(32)
|
(22)%
|
|
Depreciation and amortisation:
Other
|
(17)
|
(11)
|
(55)%
|
|
Adjusted operating lossâ€
|
(15)
|
(36)
|
58%
|
|
Interest: Lease liability
|
(21)
|
(14)
|
(51)%
|
|
Adjusted loss before taxâ€
|
(36)
|
(50)
|
28%
|
|
|
|
|
|
|
|
|
Premier Inn Germany1 key performance
indicators
|
|
|
|
|
FY24
|
FY23
|
vs FY23
|
Number of hotels
|
59
|
51
|
16%
|
Number of rooms
|
10,506
|
9,042
|
16%
|
Committed pipeline
(rooms)
|
6,286
|
6,907
|
(9)%
|
Occupancy
|
61.8%
|
59.4%
|
240bps
|
Average room
rateâ€
|
£71.88
|
£62.36
|
15%
|
Revenue per available
roomâ€
|
£44.44
|
£37.04
|
20%
|
Sales growth2:
|
|
|
|
Accommodation
|
63%
|
|
|
Food & beverage
|
58%
|
|
|
Total
|
62%
|
|
|
Like-for-likeâ€
sales2 growth:
|
|
|
|
Accommodation
|
24%
|
|
|
Food & beverage
|
23%
|
|
|
Total
|
24%
|
|
|
|
|
|
|
|
| |
1:
Includes one site in Austria
2:
Total and like-for-like versus FY23
Total statutory revenue in Germany
was 62% ahead of FY23, reflecting the increased size of our estate
and the increasing maturity of our like-for-like hotels. Our cohort
of more established hotels2 delivered a RevPAR of €58
(FY23: €51), while total estate RevPAR increased by 20% to €51
(FY23: €43), driven by further growth in both occupancy and
ARR.
Germany performance vs M&E market
|
|
|
|
|
|
H1
FY24
|
H2
FY24
|
FY24
|
Germany M&E RevPAR
performance1
|
€56
|
€52
|
€54
|
PI more established hotels RevPAR
performance2
|
€60
|
€55
|
€58
|
PI total hotels RevPAR
performance2
|
€53
|
€50
|
€51
|
|
|
|
|
|
|
| |
1:
STR data, standard methodology basis, 3 March 2023 to 29 February
2024, M&E excludes Premier Inn
2: Premier Inn more established hotels: open and trading
under the Premier Inn brand for 12 consecutive months as at 4 March
2022: 17 hotels and Premier Inn total: 59 hotels
Other income includes the release
of a £3m provision relating to a prior year claim for Government
support which has now been finalised (FY23: £nil).
Operating costs in the year
increased by £41m to £151m reflecting the continued growth in our
estate as well as high levels of cost inflation. As we continue to
tailor our proposition and refine our operating model, we remain
focused on delivering a quality guest experience whilst continuing
to look at ways that we can reduce costs.
Right-of-use asset depreciation
costs increased by £7m to £39m as we opened five new leasehold
hotels in the year. Other depreciation and amortisation costs
increased to £17m and lease liability interest costs were £21m,
reflecting the material estate growth over the last
year.
During the year we opened eight
new hotels, taking our open estate to 59 hotels with a total of
10,506 rooms and a further 6,286 rooms in our committed
pipeline.
Adjusted operating losses before
tax reduced to £36m (FY23: loss of £50m), reflecting the expansion
of our estate, an improved trading performance, the progressive
maturity of our existing hotels and a continued focus on cost
efficiency.
Central and other costs
|
|
|
£m
|
FY24
|
FY23
|
vs FY23
|
Operating costs before depreciation,
amortisation and rent
|
(36)
|
(40)
|
8%
|
Share of profit from joint
ventures
|
4
|
2
|
78%
|
Adjusted operating lossâ€
|
(32)
|
(37)
|
13%
|
Net finance income
|
42
|
9
|
386%
|
Adjusted profit / (loss) before
taxâ€
|
10
|
(29)
|
134%
|
|
|
|
|
| |
Central operating costs of £36m
were £4m lower than FY23, primarily driven by foreign exchange
movements and lower consultancy-related costs. Net finance income
was £42m (FY23: £9m) reflecting increased interest receivable on
the Group's cash balances and increased IAS 19 pension finance
income.
Financial review
Financial
highlights
|
|
|
£m
|
FY24
|
FY23
|
vs FY23
|
Statutory revenue
|
2,960
|
2,625
|
13%
|
Other income (excl rental
income)
|
3
|
5
|
(45)%
|
Operating costs before depreciation,
amortisation and rent
|
(1,906)
|
(1,742)
|
(9)%
|
Adjusted EBITDARâ€
|
1,057
|
888
|
19%
|
Net turnover rent and rental
income
|
1
|
1
|
(50)%
|
Depreciation: Right-of-use
asset
|
(183)
|
(166)
|
(11)%
|
Depreciation and amortisation:
Other
|
(200)
|
(180)
|
(11)%
|
Adjusted operating profitâ€
|
674
|
544
|
24%
|
Net finance income / (costs) (excl.
lease liability interest)
|
42
|
9
|
386%
|
Interest: Lease liability
|
(155)
|
(139)
|
(12)%
|
Adjusted profit before taxâ€
|
561
|
413
|
36%
|
Adjusting items
|
(109)
|
(39)
|
(184)%
|
Statutory profit before tax
|
452
|
375
|
21%
|
Tax expense
|
(140)
|
(96)
|
(45)%
|
Statutory profit after tax
|
312
|
279
|
12%
|
|
|
|
|
| |
Statutory
revenue
Statutory revenues were up 13%
versus last year, driven by the combination of a continued strong
demand environment coupled with a reduced level of supply in the UK
hotel market, an improved performance from F&B and continued
growth of our hotel estate in Germany.
Adjusted
EBITDAR
Other income includes a £3m
provision release relating to a prior year claim for Government
support which has now been finalised (FY23: £5m). Operating costs
of £1,906m were 9% higher than FY23, driven by cost inflation and
estate growth in both the UK and Germany, partially offset by
further savings from our cost efficiency programme. This resulted
in a 19% increase in adjusted EBITDAR to £1,057m, demonstrating the
operational leverage of our business model.
Adjusted operating
profit
The leasehold estate in the UK
grew by net eight hotels and by five hotels in Germany with the
result that right-of-use depreciation increased by £17m to £183m.
With the addition of new hotels and our continued programme of
investment, other depreciation and amortisation charges increased
by £20m to £200m. Given the strong growth in adjusted EBITDAR,
adjusted operating profit increased by 24% to £674m (FY23:
£544m).
Net finance
costs
Strong cashflow and sustained high
interest rates resulted in higher interest receivable on the
Group's cash balances of £50m (FY23: £23m). An interest credit from
the pension fund of £16m (FY23: £14m), partially offset by debt
interest of £24m (FY23: £24m), resulted in a net finance credit
(excluding lease liability interest) for the year of £42m (FY23:
£9m credit). Lease liability interest of £155m was £16m higher than
last year, primarily driven by the opening of net eight leasehold
hotels in the UK and five leaseholds in Germany.
Adjusting
items
Total adjusting items before tax
were a charge of £109m for the year compared to a £39m charge in
FY23.
The Group incurred a net
impairment charge of £107m for the year compared to a £33m charge
in FY23. In the UK, gross impairment of £84m (FY23: £nil) has been
recognised in respect of sites impacted by changes to facilitate
our AGP. Included within this amount is £81m where the carrying
value exceeds the expected sale proceeds less costs to sell and a
further impairment of £4m to reflect the impact of the reduced
cashflows as a result of the announcement of the
plan. This was offset by the
reversal of previous impairments relating to these disposal sites
of £7m.
In addition, gross impairment
charges in the UK of £8m (FY23: £54m) have been driven by changes
to forecast cashflows at a small number of sites and an amount of
£10m (FY23: £55m) was recognised as reversals of previous
impairment driven by a strong performance across other sites,
particularly those in London. This amount includes £1m relating to
the Premier Inn hotel remaining following the expected disposal of
the neighbouring branded restaurant. At this time the Group expects
to incur further net impairment charges and write-downs including
accelerated depreciation within adjusting items totalling between
£80m and £100m over the next three financial years.
In Germany, in order to reach
scale at pace and gain access to a number of key markets, we have
invested in freehold and leasehold sites through organic
opportunities as well as by acquisition. Now having a recent period
of trading history, we have updated our cashflow assumptions which
has resulted in an impairment charge of £32m, relating to seven of our German hotels.
The Group has incurred costs
regarding the announced changes to facilitate our AGP in relation
to legal and advisory fees. This plan represents a significant
business change for the Group and is expected to incur costs
over the next few financial years. Cash costs incurred on the plan
and presented within adjusting items in the year were £6m. At this
time the Group expects to incur future cash costs presented within
this adjusting item across the next three financial years totalling
between £20m and £25m.
During the year, the Group
received a settlement of £7m in relation to a legal claim made
against a payment card scheme provider.
The Group also made a profit on
property disposals totalling £18m (FY23: £3m) including a gain of
£9m relating to the sale of a property by one of the Group's joint
venture partners (FY23: £nil). The Group also released net
provisions of £4m (FY23: £0.4m) relating to historic tax matters
and received reimbursements for the costs of remedial works on
cladding material from property developers totalling £2m (FY23:
£nil).
The Group has assessed the
presentation of costs incurred in relation to the current and
future strategic IT programme implementations. The programmes
previously scheduled were the Group's Hotel Management System and
HR & Payroll System, whilst the Group has now also scheduled an
upgrade to its F&B Management System. These represent
significant business change costs for the Group rather than
replacements of IT systems with the System products being Software
as a Service ('SaaS'). The start date of these projects varies and
as such we expect costs to be incurred within this category over
the next few financial years, with their commercial and strategic
benefit seen as lasting multiple years. Cash costs incurred on the
programmes and presented within adjusting items in the period were
£27m, with cumulative cash costs to date being £41m (2023: £14m).
At this time the Group expects to incur future costs presented
within adjusting items across future financial periods as follows:
during the financial year ended 2025 between £20m and £30m and
during the financial year ended 2026 between £5m and
£15m.
Taxation
The tax charge of £160m on the
profit before adjusting items (FY23: £85m) represents an effective
tax rate on the profit before adjusting items of 28.5% (FY23:
20.6%). This is higher than the UK blended corporate tax rate of
24.5%, primarily due to the impact of overseas tax losses for which
no deferred tax has been recognised. A full breakdown is shown in
note 8.
The statutory tax charge for the
period of £140m (FY23: £96m) represents an effective tax rate of
30.9% (FY23: 25.6%). This is higher than the effective tax rate on
the profit before adjusting items of 28.5%, primarily due to impact
of the impairment of Germany property in the year.
Statutory profit after
tax
Statutory profit after tax for the
year was £312m in FY24, compared to a profit of £279m in
FY23.
Earnings per
share
|
|
|
|
|
FY24
|
FY23
|
vs FY23
|
Adjusted basic profit / earnings per
shareâ€
|
206.9p
|
162.9p
|
27%
|
Statutory basic profit / earnings
per share
|
161.0p
|
138.4p
|
16%
|
|
|
|
|
| |
Adjusted basic profit per share of
206.9p and statutory basic profit per share of 161.0p reflect the
adjusted and statutory profits reported in the year and are based
on a weighted average number of shares of 194m (FY23: 202m). The
reduction in the weighted average number of shares reflects shares
purchased and cancelled as part of the Group's previously announced
share buy-back programme.
Dividend
The Board has recommended a 26%
increase in the final dividend of 62.9 pence per share (FY23: 49.8
pence). This reflects the Group's performance over the past year,
its strong balance sheet and confidence in the outlook. If approved
by shareholders at the AGM to be held on 18 June 2024, this would
result in a total dividend payment for the year of 97.0 pence per
share (FY23: 74.2 pence) or £181m (FY23: £119m). The final
dividend, if approved, will be paid on 5 July 2024 to all
shareholders on the register at the close of business on 24 May
2024. Shareholders will be offered the option to participate in a
dividend re-investment plan. The Group's dividend policy is to grow
the dividend broadly in line with earnings across the cycle. Full
details are set out in note 10 to the accompanying financial
statements.
Cashflow
|
£m
|
FY24
|
FY23
|
Adjusted EBITDARâ€
|
1,057
|
888
|
Change in working capital
|
34
|
99
|
Net turnover rent and rental
income
|
1
|
1
|
IFRS 16 interest and principal lease
payments
|
(305)
|
(269)
|
Adjusted operating cashflowâ€
|
787
|
719
|
Interest (excl. IFRS 16)
|
22
|
(9)
|
Corporate taxes
|
(53)
|
(30)
|
Pension
|
(18)
|
(16)
|
Capital expenditure:
non-expansionary
|
(253)
|
(184)
|
Capital expenditure:
expansionary1
|
(256)
|
(362)
|
Disposal Proceeds
|
57
|
60
|
Other
|
0
|
4
|
Cashflow before shareholder returns / receipts and debt
repayments
|
286
|
182
|
Dividend
|
(165)
|
(119)
|
Shares purchased for Employee Share
Ownership Trust ('ESOT')
|
-
|
(32)
|
Share buy-back
|
(591)
|
-
|
Net
cashflow
|
(470)
|
31
|
Opening net
cashâ€
|
171
|
141
|
Closing net (debt) / cashâ€
|
(298)
|
171
|
1: FY24 includes £nil payment of contingent consideration
(FY23: £25m payment of contingent consideration)
The Group's strong trading
performance coupled with a focus on cost efficiencies delivered a
19% increase in adjusted EBITDAR to £1,057m. Lease liability
interest and lease repayments increased by £36m to £305m reflecting
the increased leasehold estate in the UK and Germany. A reduction
in other debtors reflected a number of property transactions and
timing of project spend together with an increase in creditors
resulted in a £34m working capital inflow in the year (FY23: £99m
inflow). This contributed to an adjusted operating cashflow of
£787m, £68m higher than FY23.
The corporation tax net outflow in
the year was £53m which relates mainly to payments on account for
the UK corporation tax liability.
Non-expansionary capital
expenditure was £253m and reflected our accelerated refurbishment
and bed replacement programme as well as our systems replacement
projects. Expansionary capital expenditure was £256m, £106m lower
than last year which included the purchase of freehold properties
in London and Dublin.
Disposal proceeds of £57m (FY23:
£60m) include the disposal of ten properties, including the sale of
an office building that we built as part of a hotel development in
Clerkenwell for £39m, as the Group continues to optimise its estate
when suitable opportunities arise.
The increase in operating cashflow
funded the capital expenditure in the year and therefore resulted
in a cash inflow before shareholder returns of £286m (FY23:
£182m).
Following the strong financial and
operating performance in FY23, the Board recommended a final
dividend of 49.8p per share on 25 April 2023. This resulted in a
payment of £99m which was paid on 7 July 2023. At the interim
results in October 2023, the Board declared an interim dividend of
34.1 pence per share, resulting in a £65m total interim dividend
payment. On 24 April 2023 the Board approved a £300m share buy-back
which was completed on 3 October 2023. At the interim results in
October 2023, the Board approved a further £300m
share buy-back which was completed on 4 March
2024.
Following these payments, net debt
at the end of the year was £298m.
Debt funding facilities & liquidity
|
|
|
|
£m
|
Facility
|
Utilised
|
Maturity
|
Revolving Credit Facility
|
(775)
|
-
|
2028
|
Bond
|
(450)
|
(450)
|
2025
|
Green Bond
|
(300)
|
(300)
|
2027
|
Green Bond
|
(250)
|
(250)
|
2031
|
|
(1,775)
|
(1,000)
|
|
|
|
|
|
Cash and cash equivalents
|
|
697
|
|
Total facilities utilised, net of
cash1
|
|
(303)
|
|
|
|
|
|
Net
debtâ€
|
|
(298)
|
|
Net
debt and lease liabilitiesâ€
|
|
(4,397)
|
|
The Group's objective is to manage
to investment grade metrics and specifically to a
lease-adjusted
net debt : adjusted EBITDAR†ratio of less than 3.5x
over the medium term2. We received confirmation of an
upgrade to our investment grade status on 17 August 2023 from BBB-
to BBB. The Group's lease-adjusted net debt was £3,047m (FY23:
£2,298m) and the lease-adjusted net debt : adjusted EBITDAR ratio
was 2.9x (FY23: 2.6x).
As at 29 February 2024, £35m of
the £775m Revolving Credit Facility is carved-out as an ancillary
guarantee facility for the Group's use in Germany. This facility
replaced an existing credit line previously made available to the
Group outside of the RCF. Guarantees totalling €23m were in issue
at 29 February 2024 (March 2023: €22m).
1: Excludes unamortised fees associated with the debt
instrument
2: This measure has been changed to align to Fitch
methodology on an adjusted EBITDAR basis and as a result has reset
the leverage threshold to 3.5x lease-adjusted net debt : adjusted
EBITDAR (previously 3.7x)
Capital investment
|
|
|
|
£m
|
FY24
|
FY23
|
UK maintenance and product
improvement
|
206
|
182
|
New / extended UK
hotels1
|
165
|
265
|
Germany and Middle
East2
|
138
|
99
|
Total
|
509
|
546
|
|
|
|
| |
1: FY24 includes £nil capital contributions
to joint ventures (FY23: £2m)
2: FY24 includes £nil payment of contingent consideration (FY23:
£25m)
Total capital expenditure in FY24
was £509m, which was £37m lower than the previous year. UK
maintenance and product improvement spend was £206m, £24m higher
than FY23, reflecting our accelerated refurbishment and ongoing bed
replacement programmes and systems-related projects. UK
expansionary expenditure included £165m on developing new sites;
this was £100m lower than in FY23 which included the purchase of
freehold properties in London and Dublin. In Germany, capital spend
was driven by the purchase of freehold properties in Lindau and
Heilbronn, refurbishment of those sites acquired at the end of FY23
and the continued development of our committed pipeline.
Property, plant and equipment of
£4.6bn was higher than FY23 (£4.5bn), with an increase in capital
expenditure partially offset by depreciation and impairment
charges.
Property backed balance sheet
Freehold / leasehold mix
|
|
Open
estate
|
Total
estate1
|
Premier Inn UK
|
|
56%:44%
|
56%:44%
|
Premier Inn Germany
|
|
24%:76%
|
27%:73%
|
Group
|
|
52%:48%
|
52%:48%
|
1: Open plus committed pipeline
The current open UK estate is 56%
freehold and 44% leasehold, a mix that is not expected to change as
the existing committed pipeline is brought onstream. The higher
leasehold mix in our open estate in Germany reflects the greater
proportion of city centre locations.
The new site openings in Germany
and continued expansion in the UK resulted in right-of-use assets
increasing to £3.6bn (FY23: £3.5bn) and lease liabilities
increasing to £4.1bn (FY23: £4.0bn).
Return on Capital1
|
|
|
Returns
|
FY24
|
FY23
|
Group ROCEâ€
|
13.1%
|
10.5%
|
UK ROCEâ€
|
15.5%
|
12.9%
|
|
|
| |
1: Germany ROCE not included as losses were incurred in the
year
The strong revenue and profit
performance meant that Group ROCE increased to 13.1% and UK ROCE
increased to 15.5%. We believe that our vertically integrated
business model means we are particularly well-placed to capitalise
on the significant structural opportunities in both the UK and
Germany. Despite ongoing inflationary pressures, we believe that
this can be mitigated through a combination of: continued estate
growth, our strategic and commercial plans including our AGP and
our new £150m efficiency programme.
Events after the balance sheet date
The Board of Directors approved a
share buy-back on 29 April 2024 for £150m and is in the process of
appointing the relevant brokers to undertake the programme in
accordance with that approval.
The results include the
announcement of our AGP. Details of the plan include the conversion
of 112 branded restaurants into new rooms and disposal of a further
126 branded restaurants over the next 24 months. We have agreed to
sell 21 of these sites for £28m.
Pension
The Group's defined benefit
pension scheme, the Whitbread Group Pension Fund (the 'Pension
Fund'), had an IAS19 Employee Benefits surplus of £165m at the end
of the year (FY23: £325m). The change in surplus was primarily
driven by increases in the Pension Fund's assets being lower than
the discount rate and both inflation experience and membership
experience being less favourable than expected. This was
partially offset by changes to the mortality assumptions and a
decrease in the assumed rates of future inflation, both of which
reduced the value of the pension obligations.
There are currently no deficit
reduction contributions being paid to the Pension Fund, however
annual contributions continue to be paid to the Fund through the
Scottish Partnership arrangements which amount to approximately
£11m. The Trustee holds security over £532m of Whitbread's freehold
property which will remain at this level until no further
obligations are due under the Scottish Partnership arrangements,
which is expected to be in 2025. Following that, the security held
by the Trustee will be the lower of: £500m; and 120% of the buy-out
deficit and will remain in place until there is no longer a buy-out
deficit. The Pension Fund is currently in the process of
conducting the triennial actuarial valuation of the Fund as at 31
March 2023.
Going concern
The directors have concluded that it
is appropriate for the consolidated financial statements to be
prepared on the going concern basis. Full details are set out in
note 2 of the
attached financial statements.
Risks and uncertainties
The directors have reconsidered
the principal risks and uncertainties of the Group, which are
detailed below.
The risk environment continues to
be impacted by global factors that are creating a backdrop of
widening and intensifying geopolitical turmoil; with the highest
ever number of general elections globally across 2024, at the same
time environmental events are occurring more frequently such as
extreme weather, causing floods and fires. Whilst in our key
markets we have seen more positive economic data points than
expected, we recognise that cost-of-living pressures remain and
inflation is still driving significant cost into the
business.
Even following the successful
roll-out of our new reservation system ('Opera'), our strategic
change programme remains substantial and wide-reaching across all
areas of the business as we seek to improve our food and beverage
offering for hotel guests; optimise Opera; and implement a new HR
& Payroll system and other technology initiatives. Each of
these initiatives require careful planning and execution to
minimise disruption, cost and inefficiencies.
We have updated the risk
descriptions to account for the changing nature of the Group's
principal risks and how they might impact our business.
· Uncertain economic outlook - both in the UK and Germany and
the resulting impact on hotel market demand, recognising potential
impact of local political changes and from wider macro-economic
trends, as well as increasing volatility from geopolitical
conflicts.
· Cyber and data security - data breaches or operational
disruption caused by malware such as ransomware, resulting in a
loss of brand trust and regulatory fines.
· Strategic business change and interdependencies - being
unable to successfully deliver major transformational programmes,
including AGP, particularly under time-bound pressures and realise
benefits due to a high volume of change.
· Germany profitable growth - the inability to execute our
strategy in Germany successfully.
· Increased and extended focus on food and beverage
propositions - continued challenges in the branded restaurant
market and the impact this could have on our ability to maintain a
RevPAR premium in our Premier Inn hotels versus the wider M&E
market, by requiring a disproportionate level of focus to satisfy
any investment that may be required in a short
timeframe.
· Extended stagnation of the UK property market - stagnation
continues for longer than expected and impacts our ability to
maintain the UK pipeline, putting pressure on our returns and UK
growth in subsequent years.
· Talent attraction and retention - continued labour market
challenges albeit stable currently, compounded by real
cost-of-living pressures and 'hot spots' covering specific roles.
In addition, uncertainty following planned senior leadership
changes and wider business changes impacting engagement and causing
disruption.
· Third party arrangements - business interruption due to
withdrawal of services for one or more critical suppliers,
provision of services below acceptable standards, or reputational
damage as a result of unethical supplier practices.
· Brand strength and customer demand - impact by sector
specific factors including oversupply of hotel rooms, new budget
competitors and the threat from disruptors, which is heightened by
current consumer price sensitivity due to the cost-of-living
crisis, may challenge our brand strength and market
share.
· Health & safety - adverse publicity and brand damage due
to death or serious injury as a result of company negligence, or a
significant incident resulting from food, in particular the risk
from allergens, as well as fire, terrorism or another safety
failure.
· Environmental, Social and Governance including climate change
risk - uncertainty as to how these collective risks will
materialise. For example, our inability to meet carbon targets,
natural resource scarcity, long-term impact from growing social
trends and volume of regulatory change and compliance
requirements.
We consider a wide range of
emerging risks and their potential impact on our ability to
successfully deliver on our strategic objectives. Due to the time
horizon over which these are assessed, there has been little change
in the past 12 months. Our approach to identifying and managing
emerging risks is embedded into the risk management framework and
integrated through policies and risk control mechanisms.
The detail of our principal risks
can be found in our Annual Report which is available on the Group's
website www.whitbread.co.uk.
American Depositary
Receipts
Whitbread has established a
sponsored Level 1 American Depositary Receipt ('ADR') programme for
which JP Morgan perform the role of depositary bank. The Level 1
ADR programme trades on the U.S. over-the-counter ('OTC') markets
under the symbol WTBDY (it is not listed on a U.S. stock
exchange).
Notes
†The Group uses certain APMs to help evaluate the Group's
financial performance, position and cashflows, and believes that
such measures provide an enhanced understanding of the Group's
results and related trends and allow for comparisons of the
financial performance of the Group's businesses either from one
period to another or with other similar businesses. However, APMs
are not defined by IFRS and therefore may not be directly
comparable with similarly titled measures reported by other
companies. APMs should be considered in addition to, and are not
intended to be a substitute for, or superior to, IFRS measures.
APMs used in this announcement include like-for-like sales, revenue
per available room ('RevPAR'), average room rate ('ARR'), direct
bookings/distribution, adjusted operating profit / (loss), return
on capital employed ('ROCE'), adjusted pre-tax profit
margins, adjusted profit / (loss)
before tax, adjusted basic profit / earnings per share, net cash /
(debt), net cash / (debt) and lease liabilities, lease-adjusted
leverage, adjusted operating cashflow, adjusted EBITDA (pre-IFRS
16) and adjusted EBITDAR. Further information can be
found in the glossary and reconciliation of APMs at the end of this
document.
Consolidated income statement
Year ended 29 February
2024
|
|
52 weeks to 29 February
2024
|
52
weeks to 2 March 2023
|
|
|
Before adjusting
items
|
Adjusting
items
(Note 6)
|
Statutory
|
Before
adjusting items
|
Adjusting items
(Note
6)
|
Statutory
|
|
Notes
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Revenue
|
3
|
2,959.9
|
-
|
2,959.9
|
2,625.2
|
-
|
2,625.2
|
Other income
|
4
|
6.7
|
6.9
|
13.6
|
8.0
|
4.7
|
12.7
|
Operating costs
|
5
|
(2,296.5)
|
(125.2)
|
(2,421.7)
|
(2,090.5)
|
(43.2)
|
(2,133.7)
|
Impairment of loans to joint
ventures
|
|
-
|
-
|
-
|
(1.5)
|
-
|
(1.5)
|
Operating profit before joint ventures
|
|
670.1
|
(118.3)
|
551.8
|
541.2
|
(38.5)
|
502.7
|
|
|
|
|
|
|
|
|
Share of profit from joint
ventures
|
|
4.1
|
8.9
|
13.0
|
2.3
|
-
|
2.3
|
Operating profit
|
3
|
674.2
|
(109.4)
|
564.8
|
543.5
|
(38.5)
|
505.0
|
|
|
|
|
|
|
|
|
Finance costs
|
7
|
(179.3)
|
-
|
(179.3)
|
(166.9)
|
-
|
(166.9)
|
Finance income
|
7
|
66.2
|
-
|
66.2
|
36.8
|
-
|
36.8
|
Profit before tax
|
3
|
561.1
|
(109.4)
|
451.7
|
413.4
|
(38.5)
|
374.9
|
|
|
|
|
|
|
|
|
Tax expense
|
8
|
(159.9)
|
20.3
|
(139.6)
|
(85.2)
|
(10.9)
|
(96.1)
|
Profit for the year
|
|
401.2
|
(89.1)
|
312.1
|
328.2
|
(49.4)
|
278.8
|
|
|
|
|
|
|
|
|
|
|
52 weeks to 29 February
2024
|
52
weeks to 2 March 2023
|
Earnings per share (Note 10)
|
|
pence
|
pence
|
pence
|
pence
|
pence
|
pence
|
Basic
|
|
206.9
|
(45.9)
|
161.0
|
162.9
|
(24.5)
|
138.4
|
Diluted
|
|
205.5
|
(45.6)
|
159.9
|
161.8
|
(24.3)
|
137.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Consolidated statement of comprehensive
income
Year ended 29 February
2024
|
Notes
|
|
52 weeks to 29 February
2024
£m
|
52 weeks
to 2 March 2023
£m
|
|
|
|
|
|
Profit for the year
|
|
|
312.1
|
278.8
|
|
|
|
|
|
Items that will not be reclassified to the income
statement:
|
|
|
|
|
Remeasurement loss on defined
benefit pension scheme
|
25
|
|
(188.2)
|
(223.6)
|
Current tax on defined benefit
pension scheme
|
8
|
|
(10.0)
|
0.7
|
Deferred tax on defined benefit
pension scheme
|
8
|
|
59.5
|
54.7
|
|
|
|
(138.7)
|
(168.2)
|
Items that may be reclassified subsequently to the income
statement:
|
|
|
|
|
Net loss on cash flow
hedges
|
|
|
(14.6)
|
(1.3)
|
Deferred tax on cash flow
hedges
|
8
|
|
4.3
|
-
|
Net gain/(loss) on hedge of a net
investment
|
|
|
10.4
|
(22.2)
|
Current tax on hedge of a net
investment
|
8
|
|
(1.2)
|
-
|
Deferred tax on hedge of a net
investment
|
8
|
|
-
|
2.1
|
Cost of hedging
|
|
|
1.1
|
1.1
|
|
|
|
-
|
(20.3)
|
|
|
|
|
|
Exchange differences on translation
of foreign operations
|
|
|
(21.7)
|
37.3
|
Current tax on exchange differences
on translation of foreign operations
|
8
|
|
2.7
|
-
|
Deferred tax on exchange differences
on translation of foreign operations
|
8
|
|
-
|
(4.0)
|
|
|
|
(19.0)
|
33.3
|
|
|
|
|
|
Other comprehensive loss for the year, net of
tax
|
|
|
(157.7)
|
(155.2)
|
|
|
|
|
|
Total comprehensive income for the year, net of
tax
|
|
|
154.4
|
123.6
|
|
|
|
|
|
Consolidated statement of changes in equity
Year ended 29 February
2024
|
Share
capital
£m
|
Share
premium
£m
|
Capital
redemption
reserve
£m
|
Retained
earnings
£m
|
Currency
translation
reserve
£m
|
Other
reserves
£m
|
Total
£m
|
|
|
|
|
|
|
|
|
At
3 March 2022
|
164.8
|
1,024.7
|
50.2
|
5,225.3
|
24.3
|
(2,370.3)
|
4,119.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
278.8
|
-
|
-
|
278.8
|
|
|
Other comprehensive
(loss)/income
|
-
|
-
|
-
|
(168.2)
|
10.7
|
2.3
|
(155.2)
|
|
|
Total comprehensive income
|
-
|
-
|
-
|
110.6
|
10.7
|
2.3
|
123.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares issued on exercise
of employee share options (Note 23)
|
0.1
|
1.9
|
-
|
-
|
-
|
-
|
2.0
|
|
|
Loss on ESOT shares
issued
|
-
|
-
|
-
|
(4.3)
|
-
|
4.3
|
-
|
|
|
Accrued share-based
payments
|
-
|
-
|
-
|
17.7
|
-
|
-
|
17.7
|
|
|
Tax on share-based
payments
|
-
|
-
|
-
|
(0.1)
|
-
|
-
|
(0.1)
|
|
|
Equity dividends paid
|
-
|
-
|
-
|
(119.1)
|
-
|
-
|
(119.1)
|
|
|
Purchase of ESOT shares
|
-
|
-
|
-
|
-
|
-
|
(31.7)
|
(31.7)
|
|
|
At
2 March 2023
|
164.9
|
1,026.6
|
50.2
|
5,230.1
|
35.0
|
(2,395.4)
|
4,111.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
312.1
|
-
|
-
|
312.1
|
|
|
Other comprehensive loss
|
-
|
-
|
-
|
(138.7)
|
(9.1)
|
(9.9)
|
(157.7)
|
|
|
Total comprehensive income
|
-
|
-
|
-
|
173.4
|
(9.1)
|
(9.9)
|
154.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares issued on exercise
of employee share options (Note 23)
|
0.2
|
5.2
|
-
|
-
|
-
|
-
|
5.4
|
|
|
Loss on ESOT shares
issued
|
-
|
-
|
-
|
(6.4)
|
-
|
6.4
|
-
|
|
|
Accrued share-based
payments
|
-
|
-
|
-
|
15.8
|
-
|
-
|
15.8
|
|
|
Tax on share-based
payments
|
-
|
-
|
-
|
0.5
|
-
|
-
|
0.5
|
|
|
Equity dividends paid (Note
10)
|
-
|
-
|
-
|
(164.7)
|
-
|
-
|
(164.7)
|
|
|
Share buyback, commitment and
cancellation
|
(13.3)
|
-
|
13.3
|
(603.4)
|
-
|
-
|
(603.4)
|
|
|
At
29 February 2024
|
151.8
|
1,031.8
|
63.5
|
4,645.3
|
25.9
|
(2,398.9)
|
3,519.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated balance sheet
At 29 February 2024
|
Notes
|
|
29 February
2024
£m
|
2 March
2023
£m
|
Non-current assets
|
|
|
|
|
Intangible assets
|
11
|
|
185.0
|
179.6
|
Right-of-use assets
|
|
|
3,597.0
|
3,504.6
|
Property, plant and
equipment
|
12
|
|
4,627.9
|
4,554.2
|
Investment in joint
ventures
|
|
|
50.8
|
48.2
|
Derivative financial
instruments
|
|
|
3.8
|
-
|
Defined benefit pension
surplus
|
25
|
|
165.2
|
324.7
|
|
|
|
8,629.7
|
8,611.3
|
Current assets
|
|
|
|
|
Inventories
|
15
|
|
21.2
|
21.7
|
Trade and other
receivables
|
16
|
|
119.3
|
141.8
|
Cash and cash equivalents
|
17
|
|
696.7
|
1,164.8
|
|
|
|
837.2
|
1,328.3
|
Assets classified as held for
sale
|
14
|
|
54.4
|
3.2
|
|
|
|
|
|
Total assets
|
|
|
9,521.3
|
9,942.8
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Lease liabilities
|
|
|
155.6
|
144.1
|
Provisions
|
20
|
|
10.3
|
20.2
|
Derivative financial
instruments
|
21
|
|
11.5
|
-
|
Current tax liabilities
|
|
|
10.2
|
4.6
|
Trade and other payables
|
22
|
|
670.5
|
676.7
|
Other financial
liabilities
|
21
|
|
12.3
|
-
|
|
|
|
870.4
|
845.6
|
Non-current liabilities
|
|
|
|
|
Borrowings
|
18
|
|
994.9
|
993.4
|
Lease liabilities
|
|
|
3,942.8
|
3,814.3
|
Provisions
|
20
|
|
8.3
|
8.3
|
Derivative financial
instruments
|
|
|
4.4
|
7.8
|
Deferred tax liabilities
|
8
|
|
181.1
|
158.2
|
Trade and other payables
|
22
|
|
-
|
3.8
|
|
|
|
5,131.5
|
4,985.8
|
|
|
|
|
|
Total liabilities
|
|
|
6,001.9
|
5,831.4
|
|
|
|
|
|
Net
assets
|
|
|
3,519.4
|
4,111.4
|
|
|
|
|
|
Equity
|
|
|
|
|
Share capital
|
23
|
|
151.8
|
164.9
|
Share premium
|
|
|
1,031.8
|
1,026.6
|
Capital redemption
reserve
|
|
|
63.5
|
50.2
|
Retained earnings
|
|
|
4,645.3
|
5,230.1
|
Currency translation
reserve
|
|
|
25.9
|
35.0
|
Other reserves
|
|
|
(2,398.9)
|
(2,395.4)
|
Total equity
|
|
|
3,519.4
|
4,111.4
|
Consolidated cash flow statement
Year ended 29 February
2024
|
Notes
|
|
52 weeks
to
29 February
2024
£m
|
52 weeks
to
2 March
2023
£m
|
Cash generated from operations
|
24
|
|
1,086.7
|
996.3
|
|
|
|
|
|
Payments against
provisions
|
|
|
(5.0)
|
(2.7)
|
Defined benefit pension scheme
payments
|
25
|
|
(17.5)
|
(15.7)
|
Interest paid - lease
liabilities
|
|
|
(154.9)
|
(138.7)
|
Interest paid - other
|
|
|
(26.3)
|
(32.0)
|
Interest received
|
|
|
48.2
|
22.6
|
Corporation taxes paid
|
|
|
(53.3)
|
(29.9)
|
Net cash flows from operating activities
|
|
|
877.9
|
799.9
|
|
|
|
|
|
Cash flows used in investing activities
|
|
|
|
|
Purchase of property, plant and
equipment
|
3
|
|
(479.9)
|
(482.0)
|
Proceeds from disposal of
property, plant and equipment
|
|
|
56.9
|
59.6
|
Investment in intangible
assets
|
11
|
|
(28.6)
|
(36.8)
|
Payment of deferred and contingent
consideration
|
22
|
|
-
|
(25.3)
|
Loans advanced to joint
ventures
|
|
|
-
|
(1.5)
|
Distributions received from joint
ventures
|
|
|
7.7
|
-
|
Net cash flows used in investing activities
|
|
|
(443.9)
|
(486.0)
|
|
|
|
|
|
Cash flows used in financing activities
|
|
|
|
|
Proceeds from issue of shares on
exercise of employee share options
|
|
|
5.4
|
2.0
|
Payment of facility
fees
|
|
|
(0.8)
|
(4.2)
|
Net lease incentives
(paid)/received
|
|
|
(2.7)
|
3.5
|
Payment of principal of lease
liabilities
|
|
|
(147.1)
|
(133.9)
|
Purchase of own shares for
ESOT
|
|
|
-
|
(31.7)
|
Purchase of own shares, including
transaction costs
|
|
|
(591.1)
|
-
|
Dividends paid
|
|
|
(164.7)
|
(119.1)
|
Net cash flows used in financing activities
|
|
|
(901.0)
|
(283.4)
|
|
|
|
|
|
Net (decrease)/increase cash and cash
equivalents
|
19
|
|
(467.0)
|
30.5
|
Opening cash and cash
equivalents
|
19
|
|
1,164.8
|
1,132.4
|
Foreign exchange
differences
|
19
|
|
(1.1)
|
1.9
|
Closing cash and cash equivalents
|
17
|
|
696.7
|
1,164.8
|
Notes to the consolidated financial
statements
1.
General information
The consolidated financial
statements and preliminary announcement of Whitbread PLC for the
year ended 29 February 2024 were authorised for issue in accordance
with a resolution of the Board of Directors on 29 April
2024.
The financial year represents the
52 weeks to 29 February 2024 (prior financial year: 52 weeks to 2
March 2023).
The financial information included
in this preliminary statement of results does not constitute
statutory accounts within the meaning of Section 435 of the
Companies Act 2006 (the "Act"). The financial information for the
year ended 29 February 2024 has been extracted from the statutory
accounts on which an unqualified audit opinion has been issued.
Statutory accounts for the year ended 29 February 2024 will be
delivered to the Registrar of Companies in advance of the Group's
annual general meeting.
The statutory accounts for the
year ended 2 March 2023, have been delivered to the Registrar of
Companies, and the Auditors of the Group made a report thereon
under Chapter 3 of part 16 of the Act. That report was unqualified
and did not contain a statement under sections 498 (2) or (3) of
the Act.
The consolidated financial
statements of Whitbread PLC and all its subsidiaries have been
prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and
UK-adopted international accounting standards.
2. Accounting policies
The accounting policies adopted in
the preparation of these consolidated financial statements are
consistent with those followed in the preparation of the
consolidated financial statements for the year ended 2 March
2023, except for the adoption of the new
standards and interpretations that are applicable for the year
ended 29 February 2024.
Basis of consolidation
The consolidated financial
statements incorporate the accounts of Whitbread PLC and all its
subsidiaries, together with the Group's share of the net assets and
results of joint ventures incorporated using the equity method of
accounting. These are adjusted, where appropriate, to conform to
Group accounting policies.
A subsidiary is an entity
controlled by the Group. Control is achieved when the
Company:
· has
power over the investee;
· is
exposed, or has rights, to variable returns from its involvement
with the investee; and
· has
the ability to use its power to affect its returns
The Company reassesses whether or
not it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of
control listed above.
Apart from the acquisition of
Whitbread Group PLC by Whitbread PLC in 2000/01, which was
accounted for using merger accounting, acquisitions by the Group
are accounted for under the acquisition method and any goodwill
arising is capitalised as an intangible asset. The results of
subsidiaries acquired or disposed of during the year are included
in the consolidated financial statements from, or up to, the date
that control passes respectively. All intra-Group transactions,
balances, income and expenses are eliminated on consolidation.
Unrealised losses are also eliminated, unless the transaction
provides evidence of an impairment of the asset
transferred.
Going concern
A combination of the strong cash
flows generated by the business, and the significant available
headroom on its credit facilities, support the directors' view that
the Group has sufficient funds available for it to meet its
foreseeable working capital requirements. In reaching this
conclusion, the directors have considered all elements of the
capital allocation framework. The directors have also determined
that, over the period of the going concern assessment, there is not
expected to be a significant impact as a result of climate
change.
The directors have therefore
concluded that the going concern basis of preparation remains
appropriate.
Adjusting items and use of alternative performance
measures
We use a range of measures to
monitor the financial performance of the Group. These measures
include both statutory measures in accordance with IFRS and
alternative performance measures (APMs) which are consistent with
the way the business performance is measured internally by the
Board and Executive Committee. A glossary of APMs and
reconciliations to statutory measures is given at the end of this
report.
The term adjusted profit is not
defined under IFRS and may not be directly comparable with adjusted
profit measures used by other companies. It is not intended to be a
substitute for, or superior to, statutory measures of profit.
Adjusted measures of profitability are non-IFRS because they
exclude amounts that are included in, or include amounts that are
excluded from, the most directly comparable measure calculated and
presented in accordance with IFRS.
The Group makes certain
adjustments to the statutory profit measures in order to derive
many of its APMs. The Group's policy is to exclude items that are
considered to be significant in nature and quantum, not in the
normal course of business or are consistent with items that were
treated as adjusting in prior periods or that span multiple
financial periods. Treatment as an adjusting item provides users of
the accounts with additional useful information to assess the
year-on-year trading performance of the Group.
On this basis, the following are
examples of items that may be classified as adjusting
items:
· net
charges associated with the strategic review of the Group's hotel
and restaurant property estate;
· significant restructuring costs and other associated costs
arising from strategy changes that are not considered by the Group
to be part of the normal operating costs of the
business;
· significant pension charges arising as a result of changes to
UK defined benefit scheme practices;
· net
impairment and related charges for sites which are/were
underperforming that are considered to be significant in nature
and/or value to the trading performance of the business;
· costs in relation to non-trading legacy sites which are
deemed to be significant and not reflective of the Group's ongoing
trading results;
· transformation and change costs associated with the
implementation of the Group's strategic IT programme;
· profit or loss on the sale of a business or investment, and
the associated cost impact on the continuing business from the sale
of the business or investment;
· acquisition costs incurred as part of a business combination
or other strategic asset acquisitions;
· amortisation of intangible assets recognised as part of a
business combination or other transaction outside of the ordinary
course of business; and
· tax
settlements in respect of prior years, including the related
interest and the impact of changes in the statutory tax rate, the
inclusion of which would distort year-on-year comparability, as
well as the tax impact of the adjusting items identified
above.
The Group income statement is
presented in a columnar format to enable users of the accounts to
see the Group's performance before adjusting items, the adjusting
items, and the statutory total on a line-by-line basis. The
directors believe that the adjusted profit and earnings per share
measures provide additional useful information to shareholders on
the performance of the business. These measures are consistent with
how business performance is measured internally by the Board and
Executive Committee.
Changes in accounting policies
The Group has adopted the
following standards and amendments for the first time for the
annual reporting period commencing 3 March 2023:
· IFRS
17 Insurance Contracts and
amendments to IFRS 17 (effective for periods beginning on or after
1 January 2023)
· Amendments to IAS 12 - Deferred Tax Related to Assets and
Liabilities Arising from a Single Transaction (effective for
periods beginning on or after 1 January 2023)
· Amendments to IAS 8 - Definition of Accounting Estimate
(effective for periods beginning on or after 1 January
2023)
· Amendments to IAS 1 - Disclosure of Accounting Policies
(effective for periods beginning on or after 1 January
2023)
· Amendments to IAS 12 - International Tax Reform - Pillar Two
Model Rules (effective immediately)
Standards issued by the IASB not effective for the current
year and not early adopted by the Group
Whilst the following standards and
amendments are relevant to the Group, they have been assessed as
having minimal or no financial impact or additional disclosure
requirements at this time:
· Amendments to IAS 1 - Classification of Liabilities as
Current or Non-Current (effective for periods beginning on or after
1 January 2024)
· Amendments to IAS 1 - Non-current Liabilities with Covenants
(effective for periods beginning on or after 1 January
2024)
· Amendments to IFRS 16 - Lease Liability in a Sale and
Leaseback (effective for periods beginning on or after 1 January
2024)
· Amendments to IAS 7 and IFRS 7 - Supplier Finance
Arrangements (effective for periods beginning on or after 1 January
2024)
The Group does not intend to early
adopt any of these new standards or amendments.
Critical accounting judgements and key sources of estimation
uncertainty
The key judgements and critical
accounting estimates adopted in preparing the financial statements
have been updated to reflect the impact of the Accelerating Growth
Plan on impairment and assets held for sale.
The Group has considered the
impact of climate-related risks on its financial performance and
position, and although the impact represents an uncertainty, it is
not considered to be material.
Critical accounting
judgements
The following are the critical
accounting judgements, apart from those involving estimations
(dealt with separately below) that management has made in the
process of applying the Group's accounting policies and which have
the most significant effect on the amounts recognised in the
financial statements.
Adjusting items
During the year certain items are
identified and separately disclosed as adjusting items. Judgement
is applied as to whether the item meets the necessary criteria as
per the accounting policy disclosed earlier in this note. This
assessment covers the nature of the item, cause of occurrence and
the scale of impact of that item on reported performance. Reversals
of previous adjusting items are assessed based on the same
criteria. Note 6 provides information on all of the items disclosed
as adjusting in the current year and comparative financial
statements.
Assets held for sale
As per the accounting policy above
assets are classified as held for sale only if the asset
is available for immediate sale in their present condition and
a sale is highly probable and expected to be completed within
one year from the date of classification.
As a result of the Group's
Accelerating Growth Plan ('AGP') the Group is actively marketing a
significant number of sites. Judgement exists on a site-by-site
basis as to whether the sale will complete within one year. In
exercising its judgement management has taken
into consideration all available information including
external market expert advice.
Key sources of estimation
uncertainty
The following are the key areas of
estimation uncertainty that may have a significant risk of causing
a material adjustment to the carrying amounts of assets and
liabilities within the next financial year.
Defined benefit pension
Defined benefit pension plans are
accounted for in accordance with actuarial advice using the
projected unit credit method. The Group makes significant estimates
in relation to the discount rates, mortality rates and inflation
rates used to calculate the present value of the defined benefit
obligation. Note 25 describes the assumptions used together with an
analysis of the sensitivity to changes in key
assumptions.
Impairment testing - Property,
plant and equipment and right-of-use assets
The performance of the Group's
impairment review requires management to make a number of
judgements and estimates which are presented together below for
ease of understanding but identified separately:
Estimates within impairment testing:
Inputs used to estimate value in use
The estimate of value in use is
most sensitive to the following inputs:
Forecast period cashflows - the
initial five-year period's cashflows are drawn from
the five-year business plan.
Discount rate - judgement is
required in estimating the weighted average cost of capital (WACC)
of a typical market participant and in assessing the specific
country and currency risks associated with the Group. The rate used
is adjusted for the Group's gearing, including equity, borrowings
and lease liabilities.
Maturity profile of individual
sites - judgement is required to estimate the time taken
for sites to reach maturity and the sites' trading level once
they are mature.
Methodology used to estimate fair value
Fair value is determined using a
range of methods, including present value techniques using
assumptions consistent with the value in use calculations and
market multiple techniques using externally available data. For the
purpose of assessing fair value for sites the Group has sought
expert valuations based on insight into local market specific
factors.
Judgements within impairment testing:
Strategic impact on composition of CGUs
The Group has judged that where
there is a commitment and expectation that part of a trading site's
value will be realised through sale an impairment review should be
completed on the trading site as separate CGUs. This is due to the
change in how the Group now expects to receive cashflows from the
trading site's assets which are largely independent.
Identification of indicators of impairment and
reversal
The Group assesses each of its
CGUs for indicators of impairment or reversal at the end of each
reporting period and, where there are indicators of impairment or
reversal, management performs an impairment assessment.
Key estimates and sensitivities
for impairment of assets are disclosed in Note 13.
3. Segment information
The Group provides services
in relation to accommodation, food and beverage both in the UK
and internationally. Management monitors the operating results of
its operating segments separately for the purpose of making
decisions about allocating resources and assessing performance.
Segment performance is measured based on adjusted operating profit
before joint ventures. Included within central and other in the
following tables are the costs of running the public company, other
central overhead costs and share of profit from joint
ventures.
The following tables present
revenue and profit information regarding business operating
segments for the years ended 29 February 2024 and 2 March
2023.
|
52 Weeks to 29 February
2024
|
52
Weeks to 2 March 2023
|
Revenue
|
UK &
Ireland
£m
|
Germany1
£m
|
Central and
other
£m
|
Total
£m
|
UK &
Ireland
£m
|
Germany
£m
|
Central
and other
£m
|
Total
£m
|
Accommodation
|
2,007.7
|
162.7
|
-
|
2,170.4
|
1,795.0
|
100.1
|
-
|
1,895.1
|
Food, beverage and other
items
|
762.0
|
27.5
|
-
|
789.5
|
712.7
|
17.4
|
-
|
730.1
|
Revenue
|
2,769.7
|
190.2
|
-
|
2,959.9
|
2,507.7
|
117.5
|
-
|
2,625.2
|
|
52 Weeks to 29 February
2024
|
52
Weeks to 2 March 2023
|
Profit/(loss)
|
UK &
Ireland
£m
|
Germany1
£m
|
Central and
other
£m
|
Total
£m
|
UK &
Ireland
£m
|
Germany
£m
|
Central
and other
£m
|
Total
£m
|
Adjusted operating profit/(loss) before joint
ventures1
|
721.5
|
(15.1)
|
(36.3)
|
670.1
|
616.6
|
(35.9)
|
(39.5)
|
541.2
|
Share of profit/(loss) from joint
ventures
|
-
|
-
|
4.1
|
4.1
|
-
|
-
|
2.3
|
2.3
|
Adjusted operating profit/(loss)
|
721.5
|
(15.1)
|
(32.2)
|
674.2
|
616.6
|
(35.9)
|
(37.2)
|
543.5
|
Net finance costs
|
(134.0)
|
(20.9)
|
41.8
|
(113.1)
|
(124.9)
|
(13.8)
|
8.6
|
(130.1)
|
Adjusted profit/(loss) before
tax
|
587.5
|
(36.0)
|
9.6
|
561.1
|
491.7
|
(49.7)
|
(28.6)
|
413.4
|
Adjusting items before tax (Note
6)
|
|
|
|
(109.4)
|
|
|
|
(38.5)
|
Profit/(loss) before tax
|
|
|
|
451.7
|
|
|
|
374.9
|
1 The Germany segment includes operations of the Group within
Austria.
|
52 Weeks to 29 February
2024
|
52
Weeks to 2 March 2023
|
Other segment information
|
UK and
Ireland
£m
|
Germany
£m
|
Central and
other
£m
|
Total
£m
|
UK and
Ireland
£m
|
Germany
£m
|
Central
and other
£m
|
Total
£m
|
Capital expenditure:
|
|
|
|
|
|
|
|
|
Property, plant and equipment-
cash basis
|
391.8
|
88.1
|
-
|
479.9
|
405.9
|
76.1
|
-
|
482.0
|
Property, plant and equipment -
accruals basis
|
373.5
|
92.5
|
-
|
466.0
|
430.4
|
73.7
|
-
|
504.1
|
Intangible assets
|
28.5
|
0.1
|
-
|
28.6
|
36.7
|
0.1
|
-
|
36.8
|
Cash outflows from lease interest
and payment of principal of lease liabilities
|
247.7
|
54.3
|
-
|
302.0
|
234.0
|
38.6
|
-
|
272.6
|
Depreciation - property, plant and
equipment and investment property
|
159.6
|
17.3
|
-
|
176.9
|
152.2
|
11.0
|
-
|
163.2
|
Depreciation - right-of-use
assets
|
143.9
|
39.4
|
-
|
183.3
|
133.6
|
32.2
|
-
|
165.8
|
Amortisation
|
23.1
|
0.1
|
-
|
23.2
|
16.3
|
0.2
|
-
|
16.5
|
Segment assets and liabilities are
not disclosed because they are not reported to, or reviewed by, the
Chief Operating Decision Maker.
The Group's revenue, split by
country in which the legal entity resides, is as
follows:
|
2023/24
£m
|
2022/23
£m
|
United Kingdom
|
2,740.8
|
2,487.7
|
Germany
|
185.9
|
117.5
|
Ireland
|
16.0
|
10.3
|
Other
|
17.2
|
9.7
|
|
2,959.9
|
2,625.2
|
The Group's non-current
assets2, split by country in which the legal entity
resides, are as follows:
|
2024
£m
|
2023
£m
|
United Kingdom
|
6,946.3
|
6,869.2
|
Germany
|
1,227.3
|
1,216.2
|
Ireland
|
182.4
|
93.3
|
Other
|
104.7
|
107.9
|
|
8,460.7
|
8,286.6
|
1 The Germany segment
includes operations of the Group within Austria.
2 Non-current assets exclude
derivative financial instruments and the surplus on the Group's
defined benefit pension scheme.
4.
Other income
An analysis of the Group's other
income is as follows:
|
|
|
2023/24
£m
|
2022/23
£m
|
Rental income
|
|
|
4.0
|
3.1
|
Government
payments1
|
|
|
2.5
|
4.7
|
Other
|
|
|
0.2
|
0.2
|
Other income before adjusting items
|
|
|
6.7
|
8.0
|
Legal claim settlement (Note
6)
|
|
|
6.9
|
4.7
|
Other income
|
|
|
13.6
|
12.7
|
1 £2.5m has been released as
other income from a previously held provision relating to
Government payments (2022/23: £4.7m).
5.
Operating costs
|
|
|
2023/24
£m
|
2022/23
£m
|
Cost of inventories recognised as
an expense1
|
|
|
255.1
|
229.0
|
Employee benefits
expense2
|
|
|
837.8
|
784.3
|
Amortisation of intangible assets
(Note 11)
|
|
|
23.2
|
16.5
|
Depreciation - property, plant and
equipment and investment property (Note 12)
|
|
|
176.9
|
163.2
|
Depreciation -
right-of-use-assets
|
|
|
183.3
|
165.8
|
Utilities
|
|
|
143.8
|
117.2
|
Rates
|
|
|
100.1
|
125.0
|
Other site property
costs
|
|
|
455.2
|
384.3
|
Variable lease payment
expense
|
|
|
3.5
|
2.1
|
Net foreign exchange
differences
|
|
|
0.4
|
(2.1)
|
Other operating
charges2
|
|
|
117.2
|
105.2
|
Adjusting operating
costs2 (Note 6)
|
|
|
125.2
|
43.2
|
|
|
|
2,421.7
|
2,133.7
|
1 Cost of inventories
recognised as an expense includes £6.5m (2022/23: £6.7m) of
inventory write downs recorded during the year.
2 Adjusting operating costs
includes a charge for net impairments of £107.5m (2022/23: £33.4m),
a charge of £13.0m (2022/23: £9.8m) relating to other operating
charges and a charge of £4.7m (2022/23: £0.5m) relating to employee
benefit expenses.
Employee costs are split between
hourly paid and salaried employees as below:
|
|
|
2023/24
£m
|
2022/23
£m
|
Employee costs - hourly
paid
|
|
|
549.7
|
520.1
|
Employee costs -
salaried
|
|
|
288.1
|
264.2
|
|
|
|
837.8
|
784.3
|
6.
Adjusting items
As set out in the policy in Note
2, we use a range of measures to monitor the financial performance
of the Group. These measures include both statutory measures in
accordance with IFRS and APMs which are consistent with the way
that the business performance is measured internally. We report
adjusted measures because we believe they provide both management
and investors with useful additional information about the
financial performance of the Group's businesses. Adjusted measures
of profitability represent the equivalent IFRS measures adjusted
for specific items that we consider hinder the comparison of the
financial performance of the Group's businesses either from one
period to another or with other similar businesses.
|
|
2023/24
£m
|
2022/23
£m
|
Adjusting items were as follows:
|
|
|
|
|
|
|
|
Other income:
|
|
|
|
Legal claim
settlements1
|
|
6.9
|
4.7
|
Adjusting other income
|
|
6.9
|
4.7
|
|
|
|
|
Operating costs:
|
|
|
|
Net impairment charges - property,
plant and equipment, right-of-use assets and assets held for
sale2
|
|
(30.5)
|
(33.4)
|
Strategic F&B net impairment
charges and write-offs3
|
|
(77.0)
|
-
|
Gains on disposals, property and
other provisions4
|
|
15.3
|
4.0
|
Strategic IT programme
costs5
|
|
(27.1)
|
(13.8)
|
Strategic F&B programme
costs6
|
|
(5.9)
|
-
|
Adjusting operating costs before joint
ventures
|
|
(125.2)
|
(43.2)
|
|
|
|
|
Share of profit from joint
ventures:
|
|
|
|
Gains on disposals,
property and other provisions7
|
|
8.9
|
-
|
Adjusting items before tax
|
|
(109.4)
|
(38.5)
|
|
|
|
|
Tax on adjusting
items
|
|
19.8
|
(1.1)
|
Impact of change in
tax rates
|
|
0.5
|
(9.8)
|
Adjusting tax credit/(expense)
|
|
20.3
|
(10.9)
|
1 During the year, the Group received settlements of £6.9m
(2022/23: £4.7m) in relation to legal claims made against a payment
card scheme provider, lease agreement dispute and other legal
matters.
2 The Group identified impairment indicators and indicators of
impairment reversals relating to assets held by the Group at the
year-end date. An impairment review of those assets was undertaken,
resulting in adjusting net impairment charges of £107.3m. Amounts
have been reported separately in the table above where they relate
to the Group's UK F&B strategy (Accelerating Growth
Plan).
Impairments arising outside of
this strategic programme are comprised of impairment charges on
sites of £40.6m (£30.8m relating to property, plant and equipment
and £9.8m relating to right-of-use assets) offset by impairment
reversals of £10.3m (£7.2m relating to property, plant and
equipment and £3.1m relating to right-of-use assets), netting to an
impairment charge of £30.3m. In addition, impairment charges of
£0.2m have been recorded in relation to assets held for sale during
the year. This brings the total adjusting net impairment charges
outside of the Group's UK F&B strategy to £30.5m within
operating costs. Further information including a country split is
provided in Note 13.
During the comparative year, an
impairment review of those assets was undertaken, resulting in
adjusting net impairment charges of £30.1m. This was made up of an
impairment loss on sites of £85.0m (£76.1m relating to property,
plant and equipment and £8.9m relating to right-of-use assets)
offset by impairment reversals of £54.9m (£35.5m relating to
property, plant and equipment and £19.4m relating to right-of-use
assets). In addition, impairment charges of £3.3m had been recorded
in relation to assets held for sale. That brought the total
adjusting net impairment charges for 2022/23 to £33.4m within
operating costs.
3 Included in the amounts recorded for impairment this year are
impairments driven by the impact of the project to optimise the
Group's UK F&B strategy (Accelerating Growth Plan). These
impairments are made up of impairment charges on sites of £84.3m
(£83.7m relating to property, plant and equipment and £0.6m
relating to right-of-use assets) offset by impairment reversals of
£7.3m (£7.3m relating to property, plant and equipment).
At this time the Group expects to
incur further net impairment charges and write downs or accelerated
deprecation within adjusting items totalling between £80.0m and
£100.0m in relation to the Accelerating Growth Plan to transform
and exit a number of the Group's branded restaurants.
4During the year, the Group made gains on other property
disposals of £8.7m (2022/23: gain of £3.0m) and released net
provisions of £4.2m (2022/23: net charge of £0.4m) relating to
historic indirect tax matters.
The Group established a
property-related provision for the performance of remedial works at
a small number of sites. During the year, the Group has received
reimbursements of costs of remedial works on cladding material from
property developers totalling £2.4m (2022/23: £nil).
During the comparative period, the
Group entered into a sale and lease transaction of land and a hotel
currently under construction. As a result of this transaction, the
Group received proceeds of £46.4m and recognised a net gain of
£1.4m, the completed hotel and land are now leased back following
practical completion.
5 The Group has assessed the presentation of costs incurred in
relation to the current and future strategic IT programme
implementations. The programmes previously scheduled were the
Group's Hotel Management System and HR & Payroll System, whilst
the Group has now also scheduled an upgrade to its F&B
Management System. These represent significant business change
costs for the Group rather than replacements of IT systems with the
System products being Software as a Service (SaaS). The start date
of these projects varies and as such we expect costs to be incurred
within this category over the next few financial years, with their
commercial and strategic benefit seen as lasting multiple years.
Cash costs incurred on the programmes and presented within
adjusting items in the period were £27.1m, with cumulative cash
costs to date being £40.9m (2023: £13.8m). At this time the Group
expects to incur future costs presented within adjusting items
across future financial periods as follows: during the financial
year ended 2025 between £20.0m and £30.0m and during the financial
year ended 2026 between £5.0m and £15.0m.
6 The Group has incurred legal and advisory costs regarding the
announced changes to facilitate the Accelerating Growth Plan
('AGP'). This programme represents a significant business change
for the Group's strategic focus. The programme is expected to incur
costs over the next few financial years. Cash costs incurred on the
programmes and presented within adjusting items in the period were
£5.9m. At this time the Group expects to incur future cash costs
presented within this adjusting item across the next three
financial years totalling between £20.0m and £25.0m.
7During the year, one of the Group's joint ventures made a
gain on a property sale with the Group's share being £8.9m
(2022/23: £nil).
7.
Finance (costs)/income
|
|
2023/24
£m
|
2022/23
£m
|
Finance costs
|
|
|
|
Interest on bank loans and
overdrafts
|
|
(4.6)
|
(5.1)
|
Interest on other loans
|
|
(24.2)
|
(24.3)
|
Interest on lease
liabilities
|
|
(154.9)
|
(138.7)
|
Interest capitalised
|
|
5.5
|
2.5
|
Unwinding of discount on contingent
consideration (Note 22)
|
|
-
|
(0.2)
|
Cost of hedging
|
|
(1.1)
|
(1.1)
|
|
|
(179.3)
|
(166.9)
|
Finance income
|
|
|
|
Bank interest receivable
|
|
50.0
|
23.2
|
IAS 19 pension net finance income
(Note 25)
|
|
16.2
|
13.6
|
|
|
66.2
|
36.8
|
|
|
|
|
Total net finance costs
|
|
(113.1)
|
(130.1)
|
|
|
|
|
8.
Taxation
Consolidated income statement
|
2023/24
£m
|
2022/23
£m
|
Current tax:
|
|
|
Current tax expense
|
59.3
|
35.3
|
Adjustments in respect of previous
periods
|
(6.7)
|
0.7
|
|
52.6
|
36.0
|
Deferred tax:
|
|
|
Origination and reversal of
temporary differences
|
76.8
|
51.5
|
Effect of in-year rate
differential/change in tax rates
|
(0.5)
|
9.8
|
Adjustments in respect of previous
periods
|
10.7
|
(1.2)
|
|
87.0
|
60.1
|
Tax reported in the
consolidated income statement
|
139.6
|
96.1
|
Adjustments to current and
deferred tax expenses in respect of previous years include
adjustments relating to the reassessment of tax on the asset-backed
pension scheme (Pension Funding Partnership) which has been agreed
with HMRC during the financial year.
Consolidated statement of other comprehensive
income
|
2023/24
£m
|
2022/23
£m
|
Current tax:
|
|
|
Defined benefit pension
scheme
|
10.0
|
(0.7)
|
Tax on net (loss)/gain on hedge of
a net investment
|
1.2
|
-
|
Tax on exchange differences on
translation of foreign operations
|
(2.7)
|
-
|
|
8.5
|
(0.7)
|
Deferred tax:
|
|
|
Cash flow hedges
|
(4.3)
|
-
|
Tax on net (loss)/gain on hedge of
a net investment
|
-
|
(2.1)
|
Tax on exchange differences on
translation of foreign operations
|
-
|
4.0
|
Defined benefit pension
scheme
|
(59.5)
|
(54.7)
|
|
(63.8)
|
(52.8)
|
Tax reported in other comprehensive income
|
(55.3)
|
(53.5)
|
A reconciliation of the tax
expense applicable to adjusted profit before tax and profit before
tax at the statutory tax rate, to the actual tax expense at the
Group's effective tax rate, for the years ended 29 February 2024
and 2 March 2023 respectively is set out below. All items have been
tax effected at the UK statutory rate of 24.5% (2022/23: 19%), with
the exception of the effect of unrecognised losses in overseas
companies, which has been tax effected at the statutory rate in the
relevant jurisdictions with an adjustment to account for the
differential tax rates included in the effect of different tax
rates.
|
2023/24
|
2023/24
|
2022/23
|
2022/23
|
Tax on
adjusted
profit
£m
|
Tax on
profit
£m
|
Tax
on
adjusted
profit
£m
|
Tax
on
profit
£m
|
Profit before tax as reported in the consolidated income
statement
|
561.1
|
451.7
|
413.4
|
374.9
|
|
|
|
|
|
Tax at current UK tax rate of 24.5%
(2022/23: 19%)
|
137.5
|
110.7
|
78.5
|
71.2
|
Effect of different tax
rates
|
(5.9)
|
(8.3)
|
(7.5)
|
(11.5)
|
Unrecognised losses in overseas
companies
|
15.5
|
25.8
|
19.5
|
29.4
|
Effect of super deduction in respect
of tax relief for fixed assets
|
(0.5)
|
(0.5)
|
(4.5)
|
(4.5)
|
Expenditure not allowable
|
6.5
|
5.7
|
2.4
|
1.4
|
Adjustments to current tax expense
in respect of previous years
|
(6.7)
|
(6.7)
|
0.7
|
0.7
|
Adjustments to deferred tax expense
in respect of previous years
|
10.7
|
10.7
|
(1.2)
|
(1.2)
|
Impact of deferred tax in respect of
sale and lease transaction (Note 6)
|
-
|
-
|
-
|
3.4
|
Impact of deferred tax being at a
different rate from current tax rate
|
-
|
(0.5)
|
-
|
9.8
|
Impact of deferred tax related to
indexation allowance
|
4.4
|
4.4
|
-
|
-
|
Other movements
|
(1.6)
|
(1.7)
|
(2.7)
|
(2.6)
|
Tax
expense reported in the consolidated income
statement
|
159.9
|
139.6
|
85.2
|
96.1
|
|
|
|
|
|
Deferred tax
The major deferred tax
(liabilities)/assets recognised by the Group and movement during
the current and prior financial years are as follows:
|
Accelerated capital
allowances
£m
|
Rolled over gains and
property revaluations
£m
|
Pensions
£m
|
Leases
£m
|
Losses
£m
|
Other3
£m
|
Total
£m
|
At
3 March 2022
|
(72.5)
|
(92.5)
|
(165.9)
|
48.7
|
139.3
|
(7.7)
|
(150.6)
|
(Expense)/credit to consolidated
income statement1
|
(14.7)
|
(2.1)
|
(5.2)
|
(3.3)
|
(39.9)
|
5.1
|
(60.1)
|
Credit/(expense) to statement of
comprehensive income2
|
-
|
-
|
54.7
|
-
|
(1.9)
|
-
|
52.8
|
Expense to statement of changes in
equity
|
-
|
-
|
-
|
-
|
-
|
0.1
|
0.1
|
Foreign exchange and other
movements
|
-
|
0.8
|
-
|
(1.1)
|
-
|
(0.1)
|
(0.4)
|
At
2 March 2023
|
(87.2)
|
(93.8)
|
(116.4)
|
44.3
|
97.5
|
(2.6)
|
(158.2)
|
(Expense)/credit to consolidated
income statement1
|
(22.5)
|
7.7
|
(5.3)
|
(0.4)
|
(62.7)
|
(3.8)
|
(87.0)
|
Credit to statement of comprehensive
income2
|
-
|
-
|
59.5
|
-
|
-
|
4.3
|
63.8
|
Credit/(expense) to statement of
changes in equity
|
-
|
-
|
-
|
0.4
|
(0.1)
|
0.2
|
0.5
|
Foreign exchange and other
movements
|
-
|
-
|
-
|
(0.5)
|
0.5
|
(0.2)
|
(0.2)
|
At
29 February 2024
|
(109.7)
|
(86.1)
|
(62.2)
|
43.8
|
35.2
|
(2.1)
|
(181.1)
|
1The total charge to the
consolidated income statement of £87.0m (2023: £60.1m) relates
largely to the utilisation of tax losses carried forward in the
period of £57.2m and accelerated capital allowances arising from
super deduction relief of £25.3m (2023: utilisation of tax losses
carried forward of £33.0m super deduction relief of £15.0m), these
being the largest components of the net charge.
2The total credit to other
comprehensive income of £63.8m (2023: credit of £52.8m) relates
predominantly to a net deferred tax credit on defined benefit
pension scheme movements through other comprehensive income of
£59.5m (2023: credit of £54.7m).
3The Other category includes
a deferred tax liability of £13.6m (2023: £12.5m) in respect of
capitalised interest and a deferred tax asset of £7.3m (2023:
£7.1m) in respect of share-based payments.
The Group recognises UK deferred
tax assets to the extent that taxable profits will be available to
utilise deductible temporary differences or unused tax losses. At
29 February 2024, no UK deferred asset is unrecognised (2023:
£nil).
The Group has unrecognised German
tax losses of £226.6m (2023: £199.9m) which can be carried forward
indefinitely and offset against future taxable profits in the same
tax group. The Group carries out an assessment of the
recoverability of these losses for each reporting period and, to
the extent that they exceed deferred tax liabilities within the
same tax group, does not think it is appropriate at this stage to
recognise any deferred tax asset. Recognition of these assets in
their entirety would result in an increase in the reported deferred
tax asset of £72.4m (2023: £63.8m). The
impact on the effective tax rate from the non-recognition of these
assets in the current year is 1.9% (2023: 6.1%).
At 29 February 2024, no deferred
asset is recognised (2023: £nil) on gross temporary differences of
£2.4m (2023: £11.1m) relating to the accumulated losses of other
international subsidiaries as the Group is able to control the
timings of the reversal of these temporary differences and it is
probable that they will not reverse in the foreseeable
future.
Tax relief on total interest
capitalised amounts to £1.2m (2022/23: £0.5m).
Factors affecting the tax charge for future
years
The UK Budget 2021 announcement on
3 March 2021 included an increase to the UK's main corporation tax
rate to 25%, effective from 1 April 2023, as a result of this all
UK deferred tax balances are recognised at the rate of
25%.
Pillar Two Legislation
In December 2021, the OECD
released model rules for a new global minimum corporate tax
framework applicable to multinational enterprise groups with global
revenues of over €750m ('Pillar Two'). The BEPS Pillar Two Minimum
Tax legislation was substantively enacted in June 2023 in the UK
and will be effective for the Group's financial year beginning 1
March 2024. The Group has applied the mandatory temporary exception
under IAS 12 in relation to the accounting for deferred taxes
arising from the implementation of the Pillar Two rules. The Group
has performed an assessment of its potential exposure to Pillar Two
income taxes and the new rules are not expected to have a material
impact on the tax charge for the Group.
9. Earnings per share
The basic earnings per share (EPS)
figures are calculated by dividing the net profit/(loss) for the
period attributable to ordinary shareholders of the parent by the
weighted average number of ordinary shares in issue during the
period after deducting treasury shares and shares held by an
independently managed employee share ownership trust
(ESOT).
The diluted earnings per share
figures allow for the dilutive effect of the conversion into
ordinary shares of the weighted average number of options
outstanding during the period. Where the average share price for
the period is lower than the option price, the options become
anti-dilutive and are excluded from the calculation.
The number of shares used for the
earnings per share calculations are as follows:
|
|
2023/24
million
|
2022/23
million
|
Basic weighted average number of
ordinary shares
|
|
193.9
|
201.5
|
Effect of dilution - share
options
|
|
1.3
|
1.3
|
Diluted weighted average number of
ordinary shares
|
|
195.2
|
202.8
|
|
|
|
|
The total number of shares in
issue at the year-end, as used in the calculation of the basic
weighted average number of ordinary shares, was 197.4m, less 12.5m
treasury shares held by Whitbread PLC and 0.9m held by the ESOT
(2023: 214.6m, less 12.5m treasury shares held by Whitbread PLC and
1.2m held by the ESOT).
The profits used for the earnings
per share calculations are as follows:
|
|
|
|
|
|
2023/24
£m
|
2022/23
£m
|
Profit for the year attributable to parent
shareholders
|
|
312.1
|
278.8
|
Adjusting items before tax (Note
6)
|
|
109.4
|
38.5
|
Adjusting tax (credit)/expense (Note
6)
|
|
(20.3)
|
10.9
|
Adjusted profit for the year attributable to parent
shareholders
|
|
401.2
|
328.2
|
|
|
2023/24
pence
|
2022/23 pence
|
Basic EPS on profit for the year
|
|
161.0
|
138.4
|
Adjusting items before
tax
|
|
56.4
|
19.1
|
Adjusting tax
(credit)/expense
|
|
(10.5)
|
5.4
|
Basic EPS on adjusted profit for the year
|
|
206.9
|
162.9
|
|
|
|
|
Diluted EPS on profit for the year
|
|
159.9
|
137.5
|
Diluted EPS on adjusted profit for the year
|
|
205.5
|
161.8
|
10.
Dividends paid and proposed
|
2023/24
|
2022/23
|
|
pence per
share
|
£m
|
pence
per
share
|
£m
|
Final dividend, proposed and paid,
relating to the prior year
|
49.80
|
99.2
|
34.70
|
70.1
|
Interim dividend, proposed and paid,
for the current year
|
34.10
|
65.3
|
24.40
|
49.0
|
Total equity dividends paid in the
year
|
|
164.5
|
|
119.1
|
|
|
|
|
|
Dividends on other
shares:
|
|
|
|
|
B share dividend
|
2.60
|
0.1
|
-
|
-
|
C share dividend
|
5.50
|
0.1
|
1.00
|
-
|
|
|
|
|
|
Total dividends paid
|
|
164.7
|
|
119.1
|
|
|
|
|
|
Proposed for approval at annual
general meeting:
|
|
|
|
|
Final equity dividend for the
current year
|
62.90
|
115.0
|
49.80
|
100.0
|
A final dividend of 62.90p per
share amounting to a dividend of £115.0m was recommended by the
directors at their meeting on 29 April 2024. A dividend
reinvestment plan (DRIP) alternative will be offered. The proposed
final dividend is subject to approval by shareholders at the Annual
General Meeting and has not been included as a liability in these
consolidated financial statements.
11.
Intangible assets
|
Goodwill
£m
|
IT software and
technology
£m
|
Total
£m
|
Cost
|
|
|
|
At 3 March 2022
|
350.1
|
120.2
|
470.3
|
Additions
|
-
|
36.8
|
36.8
|
Assets written off
|
-
|
(10.5)
|
(10.5)
|
Foreign currency
translation
|
-
|
0.2
|
0.2
|
At 2 March 2023
|
350.1
|
146.7
|
496.8
|
Additions
|
-
|
28.6
|
28.6
|
Assets written off
|
-
|
(15.2)
|
(15.2)
|
Foreign currency
translation
|
-
|
(0.1)
|
(0.1)
|
At
29 February 2024
|
350.1
|
160.0
|
510.1
|
|
|
|
|
Amortisation and impairment
|
|
|
|
At 3 March 2022
|
(239.6)
|
(71.4)
|
(311.0)
|
Amortisation during the
year
|
-
|
(16.5)
|
(16.5)
|
Amortisation on assets written
off
|
-
|
10.5
|
10.5
|
Foreign currency
translation
|
-
|
(0.2)
|
(0.2)
|
At 2 March 2023
|
(239.6)
|
(77.6)
|
(317.2)
|
Amortisation during the
year
|
-
|
(23.2)
|
(23.2)
|
Amortisation on assets written
off
|
-
|
15.2
|
15.2
|
Foreign currency
translation
|
-
|
0.1
|
0.1
|
At
29 February 2024
|
(239.6)
|
(85.5)
|
(325.1)
|
|
|
|
|
Net
book value at 29 February 2024
|
110.5
|
74.5
|
185.0
|
Net book value at 2 March
2023
|
110.5
|
69.1
|
179.6
|
Other than goodwill, there are no
intangible assets with indefinite lives. IT software and technology
assets, which are made up entirely of internally generated assets,
have been assessed as having finite lives and are amortised under
the straight-line method over periods ranging from three to ten
years from the date the asset became fully operational.
Note 13 contains details of the
impairment review conducted on goodwill as at the year-end
date.
Capital expenditure commitments
Capital expenditure commitments in
relation to intangible assets at the year-end amounted to £6.5m
(2023: £7.7m).
12.
Property, plant and equipment
|
|
Land and
buildings
£m
|
Plant and
equipment
£m
|
Total
£m
|
Cost
|
|
|
|
|
At
3 March 2022
|
|
3,662.0
|
1,580.7
|
5,242.7
|
Additions
|
|
295.7
|
208.4
|
504.1
|
Interest capitalised
|
|
2.5
|
-
|
2.5
|
Net movements from/to held for sale
in the year
|
|
6.1
|
3.8
|
9.9
|
Disposals
|
|
(7.0)
|
(2.0)
|
(9.0)
|
Assets written off
|
|
(3.9)
|
(73.7)
|
(77.6)
|
Asset reclassified from right-of-use
asset
|
|
(3.3)
|
-
|
(3.3)
|
Foreign currency
translation
|
|
30.4
|
4.5
|
34.9
|
At
2 March 2023
|
|
3,982.5
|
1,721.7
|
5,704.2
|
|
|
|
|
|
Additions
|
|
242.3
|
223.7
|
466.0
|
Interest capitalised
|
|
5.5
|
-
|
5.5
|
Net movements from/to held for sale
in the year
|
|
(58.2)
|
(53.8)
|
(112.0)
|
Disposals
|
|
(39.8)
|
(9.7)
|
(49.5)
|
Assets written off
|
|
(2.8)
|
(91.7)
|
(94.5)
|
Foreign currency
translation
|
|
(18.7)
|
(2.8)
|
(21.5)
|
At
29 February 2024
|
|
4,110.8
|
1,787.4
|
5,898.2
|
|
|
|
|
|
Depreciation and impairment
|
|
|
|
|
At
3 March 2022
|
|
(281.4)
|
(734.2)
|
(1,015.6)
|
Depreciation charge for the
year
|
|
(23.5)
|
(139.7)
|
(163.2)
|
Net impairment charge (Note
13)
|
|
(26.4)
|
(15.5)
|
(41.9)
|
Net movements from/to held for sale
in the year
|
|
(6.1)
|
(1.8)
|
(7.9)
|
Disposals
|
|
2.2
|
2.0
|
4.2
|
Depreciation on assets written
off
|
|
3.9
|
72.1
|
76.0
|
Foreign currency
translation
|
|
(0.4)
|
(1.2)
|
(1.6)
|
At
2 March 2023
|
|
(331.7)
|
(818.3)
|
(1,150.0)
|
Depreciation charge for the
year
|
|
(23.8)
|
(153.1)
|
(176.9)
|
Net impairment charge/(reversal)
(Note 13)
|
|
(111.2)
|
11.2
|
(100.0)
|
Net movements from/to held for sale
in the year
|
|
16.5
|
33.1
|
49.6
|
Disposals
|
|
4.7
|
5.9
|
10.6
|
Depreciation on assets written
off
|
|
2.8
|
91.7
|
94.5
|
Foreign currency
translation
|
|
0.8
|
1.1
|
1.9
|
At
29 February 2024
|
|
(441.9)
|
(828.4)
|
(1,270.3)
|
|
|
|
|
|
Net
book value at 29 February 2024
|
|
3,668.9
|
959.0
|
4,627.9
|
Net book value at 2 March
2023
|
|
3,650.8
|
903.4
|
4,554.2
|
Included above are assets under
construction of £492.7m (2023: £426.9m).
There is a charge in favour of the
pension scheme over properties with a market value of £531.5m
(2023: £531.5m). See Note 25 for further information.
Capital expenditure commitments
|
|
2024
|
2023
|
|
|
£m
|
£m
|
Capital expenditure commitments for
property, plant and equipment for which no provision has been
made
|
|
56.5
|
125.4
|
Capitalised interest
Interest capitalised during the
year amounted to £5.5m, using an average rate of 2.4% (2022/23:
£2.5m, using an average rate of 2.5%).
13. Impairment
During the year, net impairment
charges of £107.5m (2022/23: net impairment charges of £33.4m) were
recognised within operating costs.
Accelerating Growth Plan
Impairment of £84.3m (2022/23:
nil) has been recognised in respect of sites impacted by the
announced changes to facilitate the Accelerating Growth Plan (see
section below). Included within this amount is £80.6m where the
carrying value exceeds the expected sale proceeds less costs to
sell. In addition, a further impairment of £3.7m has been recorded,
to reflect the impact of the reduced cashflows as a result of the
announcement of the Extensions programme. This was offset by the
reversal of previous impairments relating to disposal sites of
£7.3m.
UK:
Gross impairment charges in the UK
of £8.4m (2022/23: £54.2m) have been driven by changes to forecast
cashflows at a small number of sites and an amount of £10.3m
(2022/23: £54.9m) was recognised as reversals of previous
impairment driven by a strong performance across other sites,
particularly those in London. This amount includes £0.9m relating
to the Premier Inn hotel remaining following the expected disposal
of the neighbouring branded restaurant.
Germany:
In order to reach scale at pace
and gain access to a number of key markets, the Group has invested
in freehold and leasehold sites through organic opportunities as
well as utilising acquisitions. Now having a recent history of
trading, the Group has updated the relevant cash flow assumptions
which has resulted in an impairment charge of £32.2m (2022/23:
impairment charge of £30.8m), relating to seven of our hotels. The
impairment charge is included within adjusting items.
Assets held for sale:
In addition, impairment charges of
£0.2m (2022/23: £3.3m) have been recorded in relation to other
assets held for sale during the year.
The charges/(reversals) were
recognised on the following classes of assets:
|
|
2023/24
£m
|
2022/23
£m
|
Impairment charges/(reversals) included in operating
costs
|
|
|
|
Property, plant and equipment -
impairment charges
|
|
30.8
|
76.1
|
Property, plant and equipment -
impairment reversals
|
|
(7.2)
|
(35.5)
|
Property, plant and equipment -
impact of accelerating growth programme
|
|
76.4
|
-
|
Property, plant and equipment -
transfer to assets held for sale
|
|
-
|
1.3
|
Right-of-use assets - impairment
charges
|
|
9.8
|
8.9
|
Right-of-use assets - impairment
reversals
|
|
(3.1)
|
(19.4)
|
Right-of-use assets - impact of
accelerating growth programme
|
|
0.6
|
-
|
Assets held for sale
|
|
0.2
|
2.0
|
Total charges for impairment included in operating
costs
|
|
107.5
|
33.4
|
Property, plant and equipment and right-of-use assets -
impairment review
The carrying value of property,
plant and equipment and right-of-use assets are reviewed for
impairment whenever events or changes in circumstances indicate
that their carrying values may not be recoverable.
The majority of the Group's
trading sites offer a combination of accommodation and food and
beverage services, either through a hotel and branded restaurant at
the same location or a hotel which offers food and beverage. Due to
the high dependency of cashflows across accommodation and food and
beverage services at these locations, the Group considers each such
trading site to be a separate Cash Generating Unit ('CGU').
Exceptions to this exist in the form of a small number of trading
sites that provide food and beverage only, or sites where a third
party provides food and beverage services. In addition, in
circumstances where the Group is committed to disposal of a
proportion of a site, the related proportion is not included in the
trading CGU as the economic benefits are expected to be received
principally through sale.
In assessing whether an asset has
been impaired, the carrying amount of the CGU is compared to its
recoverable amount. The recoverable amount is the higher of its
value in use and its fair value less costs of disposal.
Valuation methodology:
The Group calculates a value in
use (VIU) for each CGU. The key assumptions used in calculating VIU
are set out below.
Where the VIU is lower than the
carrying value of the CGU, the Group additionally estimates a fair
value less costs of disposal (FVLCD) for each site:
For leasehold sites, FVLCD is
estimated based on present value techniques using a discounted cash
flow method.
For freehold sites, FVLCD is
estimated based on applying a market multiple to the CGU's EBITDAR.
Where the Group deem it appropriate for the purpose of assessing
fair value for sites the Group has sought expert valuations based
on insight into local market specific factors.
The assumptions applied in
estimating fair value for each of the above are set out below. Both
estimates of FVLCD rely on inputs not normally observable by market
participants and are therefore level 3 measurements in the fair
value hierarchy.
All of the impairment assessments
take account of expected market conditions which include future
risks including climate change and related legislation.
Key assumptions:
VIU for freehold and
leasehold sites:
The key assumptions used by
management in estimating VIU were:
Discount
rates
The discount rate is based on the
Weighted Average Cost of Capital (WACC) of a typical market
participant, taking into account specific country and currency
risks associated with the Group. The UK discount rate has increased
reflecting market volatility in the spot risk-free rate and gearing
ratios used in the WACC calculation, while the German discount rate
has remained consistent year-on-year due to offsetting
movements.
|
|
2023/24
|
2022/23
|
|
|
UK
|
Germany
|
UK
|
Germany
|
Pre-tax discount rate
|
|
11.6%
|
9.9%
|
11.1%
|
9.9%
|
Post tax discount rate
|
|
9.3%
|
7.5%
|
8.9%
|
7.5%
|
Approved budget
period
Forecast cashflow for the initial
five-year period are based on actual cash flows and considered
after applying management's assumptions of the performance of the
Group over the next five years.
The key assumptions used by
management in setting the board approved financial budgets for the
initial five-year period were as follows:
· Forecast period cashflows: The initial five-year period's
cashflows are drawn from the 5-year business plan.
· Forecast growth rates: Forecast growth rates are based on the
Group business plan, which includes assumptions around the UK and
German economies over the next five years.
· Operating profits are forecast based on historical experience
of operating margins, adjusted for the impact of inflation and cost
saving initiatives.
· Local factors impacting the site in the current year or
expected to impact the site in future years. Key assumptions
include the maturity profile of individual sites, the future
potential of immature sites and the impact of increasing or
reducing market supply in the local area.
Long-term growth
rates
A long-term growth rate of 2.0%
(2023: 2.0%) was used for cash flows subsequent to the five-year
approved budget/plan period. This long-term growth rate is a
conservative rate and is considered to be lower than the long-term
historical growth rates of the underlying territories in which the
CGUs operate and the long-term growth rate prospects of the sectors
in which the CGUs operate.
FVLCD for leasehold sites:
The key assumptions used by
management in estimating the FVLCD on a discounted cashflow method
were similar to those used in the VIU assessment, modified to
reflect estimated cost of disposal and lease payments.
Discount
rates
The inclusion of lease payments is
reflected in the discount rate applied to FVLCD for leaseholds,
increasing WACC for the specific asset class versus that in the VIU
assessment as below:
|
|
2023/24
|
2022/23
|
|
|
UK
|
Germany
|
UK
|
Germany
|
Pre-tax discount rate for FVLCD
for leaseholds
|
|
12.4%
|
10.7%
|
12.3%
|
11.0%
|
FVLCD for freehold sites:
The key assumption used by
management in estimating the FVLCD for freehold sites is an EBITDAR
multiple.
EBITDAR
multiple
An EBITDAR multiple is estimated
based on a normalised trading basis and market data obtained from
external sources. This resulted in a multiple in the range of 7 to
11 times.
Announced changes in relation to Group's Accelerating Growth
Plan (AGP)
As set out in detail on page 8 in
the Business Strategy section, the Group has announced changes to
facilitate its optimisation of UK F&B through the AGP. This has
had the following impact on the Group's impairment
review:
Extensions
programme:
As part of the Group's Extensions
programme, some of the Group's branded restaurants will be
repurposed with smaller space devoted to providing integrated
F&B services and remaining space being converted to additional
hotel rooms. The composition of the CGU remains unchanged, however
the forecast cashflows have been updated to include the committed
elements of this plan.
The useful economic life of
relevant buildings and FF&E will be reassessed as more
certainty is obtained over site-level plans.
Disposal
sites:
The Group has a committed plan to
dispose of a further group of sites to third parties.
At the year end, sites that are
being actively marketed with a valid expectation that they will be
disposed of within 12 months from the balance sheet date have been
moved to Assets Held for Sale (AHFS). As the economic benefit of
these sites is expected to be recovered through sale rather than by
continuing to trade, these sites have been measured at the lower of
cost and expected proceeds less costs of disposal resulting in an
impairment of £44.2m. The remaining NBV of £46.2m relating to these
sites has been moved to assets held for sale.
Those sites that do not meet the
criteria as AHFS have been measured at the lower of cost and their
net realisable value (NRV). NRV in these instances is represented
by their FVLCD which is higher than their VIU. An impairment charge
of £29.1m has been recognised for these sites resulting in a
remaining NBV of
£10.0m.
Sensitivity to changes in assumptions
The level of impairment is
predominantly dependent upon estimates used in arriving at future
growth rates and the discount rates applied to cash flow
projections. The incremental impact on the net impairment charge of
applying a reasonably possible change in assumptions to the growth
rates used in the five-year business plans, long-term growth rates,
pre-tax discount rates, EBITDAR multiple and FV of disposal is as
follows:
|
|
|
Total
£m
|
Increase to net impairment charge
if year one's cashflows reduced by 10%
|
|
|
2.9
|
Decrease to net impairment charge
if year one's cashflows increased by 10%
|
|
|
(1.2)
|
Increase to net impairment charge
if discount rates increased by 2%
|
|
|
20.5
|
Decrease to net impairment charge
if discount rates reduced by 2%
|
|
|
(23.2)
|
Increase to net impairment charge
if the fair value of disposal sites reduced by 20%
|
|
|
9.8
|
Decrease to net impairment charge
if the fair value of disposal sites increased by 20%
|
|
|
(10.3)
|
Increase to net impairment charge
if long-term growth rates reduced by 1%
|
|
|
10.1
|
Increase to net impairment charge
if EBITDAR multiple reduced by 10%
|
|
|
12.8
|
The above sensitivity analyses are
based on a change in an assumption whilst holding all other
assumptions constant. In practice, this is unlikely to occur and
changes in some of the assumptions may be correlated.
Goodwill
Following the impairment
assessment over property, plant and equipment and right-of-use
assets, the Group completed an impairment review of goodwill.
Goodwill acquired through business combinations is allocated to
groups of CGUs at an operating segment level, being the level at
which management monitors goodwill. As a result of the German
goodwill being impaired in previous years, all of the Group's
goodwill is allocated to the UK and Ireland segment.
The recoverable amount is the
higher of fair value less costs of disposal and value in use using
the same assumptions as those used in the site level impairment
reviews. The recoverable amount has been determined from value in
use calculations. The future cash flows are based on assumptions
from the approved budget and cover a five-year period. These
forecasts include management's most recent view of medium-term
trading prospects. Cash flows beyond this period are extrapolated
using a 2.0% (2023: 2.0%) growth rate. The pre-tax discount rate
applied to cash flow projections is 11.6% for the UK (2023:
11.1%).
Given the level of headroom within
the UK segment, there is no reasonably possible change that could
result in a further material impairment of goodwill.
Investments in joint ventures
During the period, the Group's
interest in Healthy Retail Limited was sold.
Assets held for sale
In addition to impairments on
assets transferred to held for sale in the year, an impairment
charge of £0.2m (2022/23: £2.0m) was recorded in relation to assets
which had previously been classified as held for sale as a result
of a reduction in expected sales proceeds.
14. Assets classified as held
for sale
The following table present the
major classes of assets and liabilities classified as held for
sale:
|
|
2023/24
£m
|
2022/23
£m
|
Property, plant and
equipment
|
|
56.0
|
3.2
|
Right-of-use assets
|
|
5.2
|
-
|
Lease liabilities
|
|
(6.8)
|
-
|
Assets classified as held for sale
|
|
54.4
|
3.2
|
At the year end, there were 73
sites with a combined net book value of £54.4m (2023: five at
£3.2m) classified as assets held for sale (AHFS). There are no
gains or losses recognised in other comprehensive income with
respect to these assets.
As described in Note 13, sites
have been transferred to assets held for sale during the period
following the Group's commitment to the Accelerating Growth Plan.
As a result, £46.2m relating to 65 sites has been transferred to
assets held for sale. Further sites will be added as they meet the
AHFS criteria outlined below.
As with previous years, the Group
disposes of sites as part of its programme to optimise its property
estate. During the year, as part of this plan, ten property assets
with a combined net book value of £14.6m (2022/23: eight at £5.2m)
were transferred to assets held for sale. No properties were
transferred back to property, plant and equipment (2022/23: seven
at £7.9m). Seven property assets were sold during the year having a
net book value of £9.4m (2022/23: seven at £57.5m). An impairment
loss of £0.2m (2022/23: £1.4m) was recognised relating to
assets classified as held for sale.
Sites are classified as held for
sale only if they are available for immediate sale in their present
condition and a sale is highly probable and expected to be
completed within one year from the date of classification. If a
site no longer meets this criteria at future reporting dates it is
transferred back to property, plant and equipment.
Included within assets held for
sale are assets which were written down to fair value less costs to
sell of £34.4m (2023: £1.5m). The fair value of property assets was
determined based on current prices in an active market for similar
properties. Where such information is not available management
consider information from a variety of sources including current
prices for properties of a different nature or recent prices of
similar properties, adjusted to reflect those differences. This is
a level 3 measurement, the key inputs under this approach are the
property size and location.
15.
Inventories
|
|
2024
£m
|
2023
£m
|
Finished goods held for
resale
|
|
17.4
|
15.5
|
Consumables
|
|
3.8
|
6.2
|
|
|
21.2
|
21.7
|
The carrying value of inventories is
stated net of a provision of £1.5m (2023: £3.2m).
16.
Trade and other receivables
|
|
2024
£m
|
2023
£m
|
Trade receivables
|
|
54.4
|
46.0
|
Prepayments and accrued
income
|
|
34.4
|
49.8
|
Other receivables
|
|
30.5
|
46.0
|
|
|
119.3
|
141.8
|
Analysed as:
|
|
|
|
Current
|
|
119.3
|
141.8
|
Non-current
|
|
-
|
-
|
|
|
119.3
|
141.8
|
Trade and other receivables are
non-interest bearing and are generally on 30-day terms. Trade
receivables includes £52.0m (2023: £45.1m) relating to contracts
with customers.
The allowance for expected credit
loss relating to trade and other receivables at 29 February 2024
was £0.9m (2023: £1.7m). During the year, credit losses of £0.8m
(2022/23: £1.2m) were recognised within operating costs in the
consolidated income statement.
17.
Cash and cash equivalents
|
|
2024
£m
|
2023
£m
|
Cash at bank and in hand
|
|
97.8
|
60.2
|
Money market funds
|
|
193.9
|
769.6
|
Short term deposits
|
|
405.0
|
335.0
|
|
|
696.7
|
1,164.8
|
Short-term deposits are made for
varying periods of between one day and three months depending on
the immediate cash requirements of the Group. They earn interest at
the respective short-term deposit rates.
The Group does not have material
cash balances which are subject to contractual or regulatory
restrictions.
For the purposes of the
consolidated cash flow statement, cash and cash equivalents
comprise the amounts as disclosed above.
18. Borrowings
Amounts drawn down on the Group's
borrowing facilities are as follows:
|
Current
|
Non-current
|
|
2024
£m
|
2023
£m
|
2024
£m
|
2023
£m
|
Revolving credit facility
|
-
|
-
|
-
|
-
|
Senior unsecured bonds
|
-
|
-
|
994.9
|
993.4
|
|
-
|
-
|
994.9
|
993.4
|
Revolving credit facility
and covenant
In May 2023 the Group signed an
extension to the existing five-year £775.0m multicurrency Revolving
Credit Facility Agreement, extending the final maturity date by one
year to now expire on 25 May 2028. The facility's other terms
remain consistent, being a Multicurrency Revolving Facility
Agreement and having variable interest rates with GBP being linked
to SONIA and EUR being linked to EURIBOR. The revolving credit
facility agreement contains one financial covenant ratio,
being:
Net Debt/Adjusted EBITDA
<3.5x.
As at 29 February 2024, £35.0m of
the £775.0m Revolving Credit Facility is carved-out as an ancillary
guarantee facility for the Group's use in Germany. Guarantees
totalling €22.8m were in issue at 29 February 2024 (March 2023:
€21.6m).
Senior unsecured bonds
The Group has issued senior
unsecured bonds with coupons and maturities as shown in the
following table:
Title
|
Year
issued
|
Principal value
|
Maturity
|
Coupon
|
2025 senior unsecured
bonds
|
2015
|
£450.0m
|
16
October 2025
|
3.375%
|
2027 senior unsecured green use of
proceeds bond
|
2021
|
£300.0m
|
31 May
2027
|
2.375%
|
2031 senior unsecured green use of
proceeds bond
|
2021
|
£250.0m
|
31 May
2031
|
3.000%
|
Amortised arrangement fees of
£2.1m (2023: £2.6m) directly incurred in relation to the bonds are
included in the carrying value and are being amortised over the
term of the bonds. The bonds contain an early prepayment option
which meets the definition of an embedded derivative.
19.
Movements in cash and net debt
|
2 March
2023
|
Share buyback commitments
including transaction costs
|
Cash flow
|
Net new lease
liabilities
|
Foreign
exchange
|
|
Transfers to Assets held for
sale
|
Amortisation of
premiums and discounts
|
29 February
2024
|
Year ended 29 February 2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
1,164.8
|
-
|
(467.0)
|
-
|
(1.1)
|
|
-
|
-
|
696.7
|
|
|
|
|
|
|
|
|
|
|
Liabilities from financing activities:
|
|
|
|
|
|
|
|
|
|
Borrowings
|
(993.4)
|
-
|
-
|
-
|
-
|
|
-
|
(1.5)
|
(994.9)
|
Lease liabilities
|
(3,958.4)
|
-
|
147.1
|
(322.9)
|
29.0
|
|
6.8
|
-
|
(4,098.4)
|
Committed share buyback
|
-
|
603.4
|
(591.1)
|
-
|
-
|
|
-
|
-
|
12.3
|
Total liabilities from financing activities
|
(4,951.8)
|
603.4
|
(444.0)
|
(322.9)
|
29.0
|
|
6.8
|
(1.5)
|
(5,081.0)
|
Less: lease liabilities
|
3,958.4
|
-
|
(147.1)
|
322.9
|
(29.0)
|
|
(6.8)
|
-
|
4,098.4
|
Less: committed share
buyback
|
-
|
(603.4)
|
591.1
|
-
|
-
|
|
-
|
-
|
(12.3)
|
Net
cash/(debt)
|
171.4
|
-
|
(467.0)
|
-
|
(1.1)
|
|
-
|
(1.5)
|
(298.2)
|
|
3 March
2022
|
Share buyback commitments
including transaction costs
£m
|
Cash flow
|
Net new lease
liabilities
|
Foreign
exchange
|
Transfers to Assets held for
sale
|
Amortisation of
premiums and discounts
|
2 March
2023
|
Year ended 3 March
2023
|
£m
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
1,132.4
|
-
|
30.5
|
-
|
1.9
|
-
|
-
|
1,164.8
|
|
|
|
|
|
|
|
|
|
Liabilities from financing activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
(991.9)
|
-
|
-
|
-
|
-
|
-
|
(1.5)
|
(993.4)
|
Lease liabilities
|
(3,701.8)
|
-
|
133.9
|
(346.1)
|
(44.4)
|
-
|
-
|
(3,958.4)
|
Total liabilities from financing activities
|
(4,693.7)
|
-
|
133.9
|
(346.1)
|
(44.4)
|
-
|
(1.5)
|
(4,951.8)
|
Less: Lease liabilities
|
3,701.8
|
-
|
(133.9)
|
346.1
|
44.4
|
-
|
-
|
3,958.4
|
|
|
|
|
|
|
|
|
|
Net
cash/(debt)
|
140.5
|
-
|
30.5
|
-
|
1.9
|
-
|
(1.5)
|
171.4
|
|
|
|
|
|
|
|
|
|
20.
Provisions
|
|
|
Restructuring
|
Onerous
contracts
|
Property
costs
|
Insurance
claims
|
Government
payments
|
Other
|
Total
|
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 3 March 2022
|
|
|
0.4
|
5.0
|
6.6
|
8.2
|
9.3
|
1.8
|
31.3
|
Created
|
|
|
-
|
2.0
|
-
|
2.8
|
-
|
0.8
|
5.6
|
Transferred
|
|
|
-
|
-
|
-
|
-
|
2.3
|
-
|
2.3
|
Utilised
|
|
|
-
|
(1.4)
|
(1.0)
|
(2.3)
|
(0.1)
|
(0.1)
|
(4.9)
|
Released
|
|
|
(0.4)
|
(0.9)
|
-
|
-
|
(4.7)
|
-
|
(6.0)
|
Foreign exchange
|
|
|
-
|
-
|
-
|
-
|
0.2
|
-
|
0.2
|
At 2 March 2023
|
|
|
-
|
4.7
|
5.6
|
8.7
|
7.0
|
2.5
|
28.5
|
Created
|
|
|
-
|
0.4
|
4.0
|
2.0
|
-
|
0.4
|
6.8
|
Utilised
|
|
|
-
|
(0.9)
|
(4.0)
|
(1.0)
|
-
|
(0.3)
|
(6.2)
|
Released
|
|
|
-
|
(1.3)
|
-
|
(1.4)
|
(6.9)
|
(0.8)
|
(10.4)
|
Foreign exchange
|
|
|
-
|
-
|
-
|
-
|
(0.1)
|
-
|
(0.1)
|
At 29 February 2024
|
|
|
-
|
2.9
|
5.6
|
8.3
|
-
|
1.8
|
18.6
|
|
|
|
|
|
|
|
|
|
|
Analysed as:
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
-
|
2.9
|
5.6
|
-
|
-
|
1.8
|
10.3
|
Non-current
|
|
|
-
|
-
|
-
|
8.3
|
-
|
-
|
8.3
|
At 29 February 2024
|
|
|
-
|
2.9
|
5.6
|
8.3
|
-
|
-
|
18.6
|
|
|
|
|
|
|
|
|
|
|
Onerous contracts
Onerous contract provisions relate
primarily to property, software licences and supplier contracts
where the contracts have become onerous. Provision is made for
property-related costs for the period that a sublet or assignment
of the lease is not possible.
Onerous contract provisions are
discounted using a discount rate of 2.0% (2023: 2.0%) based on an
approximation for the time value of money.
Property-related
The amount and timing of the cash
outflows are subject to variation. The Group utilises the skills
and expertise of both internal and external property experts to
determine the provision held. Provisions are expected to be
utilised over a period of up to ten years. During the year, the
Group created £0.5m, utilised £0.5m and released £1.3m of
property‑related
onerous provisions.
Software
Certain software licence
agreements were deemed to be onerous when following the disposal of
Costa and as a result of the cancellation of a contract relating to
the supply of IT equipment, it was no longer beneficial to the
Group to use certain software or IT equipment. A provision of £0.5m
was brought forward in relation to these contracts. During the
year, the Group utilised £0.3m of this provision, with the
provision carried forward to be utilised over the next
year.
Supplier contracts
Certain supplier contract
arrangements are deemed to be onerous where minimum order
commitments are not expected to be met. A provision of £0.4m was
brought forward in relation to these contracts. During the year,
the Group utilised £0.1m of the provision.
Property costs
The Group has established a
property-related provision for the performance of remedial works at
a small number of the Group's sites. A provision of £5.6m is
brought forward in relation to these costs. During the year £4.0m
of the provision has been utilised and £4.0m was created. The
provision is expected to be utilised over the next three
years.
Insurance
A provision of £8.7m was brought
forward in relation to the estimate of the cost of future claims
against the Group from employees and the public. The claims covered
typically relate to accidents and injuries sustained within
Whitbread's trading sites. During the year, £1.0m of the provision
was utilised, £1.4m was released, and £2.0m was created.
Government payments
The Group had made various claims
for government support in previous years which were subject to
review by relevant agencies. During the year a provision being held
in relation to Whitbread's claims within Germany was released as
management is satisfied that no repayments are required following
final submission. Also during the year a provision being held in
relation to Whitbread's claims in respect of historical indirect
tax payments was released as the claim was paid out and settled,
not requiring utilisation of this provision.
Other
The Group has previously announced
its intention to exit hotel operations in South East Asia. This
resulted in the recognition of a provision of £3.7m for risks
arising from tax affairs and indemnity agreements. During the year,
£0.3m of the provision had been utilised in the year, with £1.3m of
the provision carried forward for risks arising from indemnity
agreements. The remaining costs are expected to be utilised within
one year.
The Group operates leases where it
neither anticipates nor intends exiting a lease, therefore the
Group has determined that the circumstances in which these leases
would end mean that an outflow of resources is not considered
probable and therefore it does not hold a material dilapidations
provision.
21. Financial risk management and
objectives
The Group's principal financial
instruments, other than derivatives, comprise bank loans, senior
unsecured bonds, cash, short-term deposits, trade receivables and
trade payables. The Board agrees policies for managing the
financial risks summarised below:
Interest rate risk
The Group's exposure to market
risk for changes in interest rates relates primarily to the Group's
long-term debt obligations. Interest rate swaps are used where
necessary to maintain a mix of fixed and floating rate borrowings
to manage this risk, in line with the Group treasury policy. At the
year-end, (100%) of Group debt was fixed for an average of 3.5
years at an average interest rate of 3.0% (2023: 100% for 4.5 years
at 3.0%). The interest rate swaps for sterling expired in February
2022.
In accordance with IFRS 7
Financial Instruments: Disclosures, the Group has undertaken
sensitivity analysis on its financial instruments which are
affected by changes in interest rates. This analysis has been
prepared on the basis of a constant amount of net debt, a constant
ratio of fixed to floating interest rates, and on the basis of the
hedging instruments in place at 29 February 2024 and 2 March 2023
respectively. Consequently, the analysis relates to the
situation at those dates and is not representative of the years
then ended. The following assumptions were made:
· balance sheet sensitivity to interest rates applies only to
derivative financial instruments, as the carrying value of debt and
deposits does not change as interest rates move; and
· gains or losses are recognised in equity or the consolidated
income statement in line with the Groups accounting policies set
out in Note 2.
Based on the Group's net debt/cash
position at the year-end, a 1% pt increase in interest rates would
increase the Group's profit before tax by £7.0m (2023:
£11.6m).
Liquidity risk
In its funding strategy, the
Group's objective is to maintain a balance between the continuity
of funding and flexibility through the use of overdrafts and bank
loans. This strategy includes monitoring the maturity of financial
liabilities to avoid the risk of a shortage of funds.
Excess cash used in managing
liquidity is placed on interest-bearing deposit where maturity is
fixed at no more than three months. Short-term flexibility is
achieved through the use of short-term borrowing on the money
markets.
The Group has re-presented the
time bands to better reflect the maturity profile that it monitors
in its liquidity management activities and has amended the
comparative total lease liability amount.
The tables below summarise the
Group's financial liabilities at 29 February 2024 and 2 March 2023
based on contractual undiscounted payments, including
interest:
|
|
Less than 12
months
|
Between 1 and 3
years
|
Between 3 and 10
years
|
Between 10 and 20
years
|
More than 20
years
|
Total
|
Carrying
value
|
29 February
2024
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Non-derivative financial
assets/liabilities:
|
|
|
|
|
|
|
|
|
Interest-bearing loans and borrowings
|
|
29.8
|
494.4
|
594.6
|
-
|
-
|
1,118.8
|
994.9
|
Lease
liabilities
|
|
318.7
|
640.2
|
2,172.0
|
2,277.3
|
1,551.9
|
6,960.1
|
4,098.4
|
Other
financial liabilities
|
|
12.3
|
-
|
-
|
-
|
-
|
12.3
|
12.3
|
Trade
and other payables
|
|
181.3
|
-
|
-
|
-
|
-
|
181.3
|
181.3
|
|
|
542.1
|
1,134.6
|
2,766.6
|
2,277.3
|
1,551.9
|
8,272.5
|
5,286.9
|
Derivative financial
assets/liabilities:
|
|
|
|
|
|
|
|
|
Cross-currency
swaps
|
|
|
|
|
|
|
|
|
Derivative contracts - receipts
|
|
(15.2)
|
(465.2)
|
-
|
-
|
-
|
(480.4)
|
|
Derivative contracts - payments
|
|
9.4
|
455.6
|
-
|
-
|
-
|
465.0
|
|
|
|
(5.8)
|
(9.6)
|
-
|
-
|
-
|
(15.4)
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
536.3
|
1,125.0
|
2,766.6
|
2,277.3
|
1,551.9
|
8,257.1
|
|
|
|
Less than 12
months
|
Between 1 and 3
years
|
Between 3 and 10
years
|
Between 10 and 20
years
|
More than 20
years
|
Total
|
Carrying
value
|
2 March
2023
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Non-derivative financial
assets/liabilities:
|
|
|
|
|
|
|
|
|
Interest-bearing loans and borrowings
|
|
29.8
|
509.6
|
609.3
|
-
|
-
|
1,148.7
|
993.4
|
Lease
liabilities
|
|
301.6
|
604.6
|
2,044.0
|
2,232.3
|
1,578.0
|
6,760.5
|
3,958.4
|
Trade
and other payables
|
|
198.9
|
3.8
|
-
|
-
|
-
|
202.7
|
202.7
|
|
|
530.3
|
1,118.0
|
2,653.3
|
2,232.3
|
1,578.0
|
8,111.9
|
5,154.5
|
Derivative financial
assets/liabilities:
|
|
|
|
|
|
|
|
|
Cross-currency
swaps
|
|
|
|
|
|
|
|
|
Derivative contracts - receipts
|
|
(15.2)
|
(480.4)
|
-
|
-
|
-
|
(495.6)
|
|
Derivative contracts - payments
|
|
9.8
|
481.7
|
-
|
-
|
-
|
491.5
|
|
|
|
(5.4)
|
1.3
|
-
|
-
|
-
|
(4.1)
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
524.9
|
1,119.3
|
2,653.3
|
2,232.3
|
1,578.0
|
8,107.8
|
|
Credit risk
Due to the high level of cash held
at the year-end, the most significant credit risk faced by the
Group is that arising on cash and cash equivalents. The Group's
exposure arises from default of the counterparty, with a maximum
exposure equal to the carrying value of these instruments. The
Group seeks to minimise the risk of default in relation to cash and
cash equivalents by spreading investments across a number of
counterparties and dealing in accordance with Group Treasury Policy
which specifies acceptable credit ratings and maximum investments
for any counterparty.
In the event that any of the
Group's banks get into financial difficulty, the Group is exposed
to the risk of withdrawal of currently undrawn committed
facilities. This risk is mitigated by the Group having a range of
counterparties to its facilities.
The Group is exposed to a small
amount of credit risk attributable to its trade and other
receivables. This is minimised by dealing with counterparties
with good credit ratings. The amounts included in the balance
sheet are net of expected credit losses, which have been estimated
by management based on prior experience and any known factors at
the balance sheet date.
The Group's maximum exposure to
credit risk arising from trade and other receivables, loans to
joint ventures, derivatives and cash and cash equivalents is
£785.4m (2023: £1,256.7m).
Foreign currency risk
The Group monitors the growth and
risks associated with its overseas operations and will undertake
hedging activities as and when they are required. In October 2019,
the Group entered into a net investment hedge to manage the impact
of movements in the GBP:EUR exchange rate on the value of the
Group's investment in its business in Germany.
Capital management
The Group's primary objective in
regard to capital management is to ensure that it continues to
operate as a going concern and has sufficient funds at its disposal
to grow the business for the benefit of shareholders. The Group
seeks to maintain a ratio of debt to equity that balances risks and
returns and also complies with the Group's net debt to EBITDA
covenant. See the Financial review within the preliminary results
announcement for the policies and objectives of the Board regarding
capital management, analysis of the Group's credit facilities and
financing plans for the coming years.
The Group aims to maintain
sufficient funds for working capital and future investment in order
to meet growth targets. The management of equity through share
buybacks and new issues is considered as part of the overall
leverage framework balanced against the funding requirements of
future growth. In addition, the Group may carry out a number of
sale and leaseback transactions to provide further funding for
growth.
The Group has access to a £775.0m
multicurrency revolving credit facility with a final maturity date
on 25 May 2028. There is one financial covenant ratio, being: Net
Debt/Adjusted EBITDA <3.5x.
The above matters are considered
at regular intervals and form part of the business planning and
budgeting processes. In addition, the Board regularly reviews
the Group's dividend policy and funding strategy.
22.
Trade and other payables
|
|
|
|
|
|
Represented1
|
|
|
|
|
|
2024
|
2023
|
|
|
|
|
|
£m
|
£m
|
Trade payables
|
|
|
|
|
91.9
|
95.2
|
Other taxes and social
security
|
|
|
|
|
61.9
|
70.7
|
Contract liabilities
|
|
|
|
|
177.1
|
167.3
|
Accruals
|
|
|
|
|
250.2
|
239.8
|
Other payables
|
|
|
|
|
86.2
|
103.7
|
Deferred and contingent
consideration
|
|
|
|
|
3.2
|
3.8
|
|
|
|
|
|
670.5
|
680.5
|
|
|
|
|
|
|
|
Analysed as:
|
|
|
|
|
|
|
Current
|
|
|
|
|
670.5
|
676.7
|
Non-current
|
|
|
|
|
-
|
3.8
|
|
|
|
|
|
670.5
|
680.5
|
1 Following a change in the hotel management
system, the analysis of trade and other payables as at 2 March
2023 has been re-presented to reclassify VAT of £30.5m from
contract liabilities to other taxes and social security to achieve
consistent year-on-year presentation of contract liabilities, net
of VAT.
Included with contract liabilities
is £171.9m (2023: £165.3m re-presented) relating to payments
received for accommodation where the stay will take place after the
year-end and £5.2m (2023: £4.0m) revenue deferred relating to the
Group's customer loyalty programmes. During the year, £167.3m
presented as a contract liability in 2023 has been recognised in
revenue (2023: £146.2m).
Trade payables typically have
maturities up to 60 days depending on the nature of the purchase
transaction and the agreed terms.
|
|
|
|
|
2024
|
2023
|
|
|
|
|
|
£m
|
£m
|
Opening deferred and contingent
consideration
|
|
|
|
|
3.8
|
25.1
|
Recognised on acquisition of assets
(Note 27)
|
|
|
|
|
-
|
2.5
|
Amounts released during the
period
|
|
|
|
|
(0.5)
|
-
|
Unwinding of discount rate (Note
7)
|
|
|
|
|
-
|
0.2
|
Paid during the period
|
|
|
|
|
-
|
(25.3)
|
Foreign exchange
movements
|
|
|
|
|
(0.1)
|
1.3
|
Closing deferred and contingent
consideration
|
|
|
|
|
3.2
|
3.8
|
The Group has contingent
consideration in relation to nine sites from acquisitions in the
current and previous years which is held at fair value. Amounts
payable relate to various acquisitions and as a result payment
terms vary, with the last payment due within one year. The fair
value is calculated by discounting the future payments from their
expected handover date using a risk adjusted discount rate. A 1%
decrease/increase in the discount rate would increase/decrease the
value of contingent consideration by £0.1m.
Foreign exchange movements on
contingent consideration are recognised within exchange differences
on translation of foreign operations in the consolidated statement
of comprehensive income.
23.
Share capital
Ordinary share capital
Allotted, called up and fully paid ordinary shares of 76.80p
each (2023: 76.80p each)
|
million
|
£m
|
At
2 March 2023
|
214.6
|
164.9
|
Issued on exercise of employee share
options
|
0.2
|
0.1
|
Cancellations following share
buyback
|
(17.3)
|
(13.3)
|
At
29 February 2024
|
197.5
|
151.7
|
Share buyback, commitment and cancellation
The Company purchased and
cancelled 17.3m shares with a nominal value of £13.3m under the
share buyback programmes running through the financial year.
Consideration of £591.1m, including associated fees and stamp duty
of £3.4m, was paid during the period. The buyback represents an
irrevocable commitment and therefore the liability to purchase the
remaining shares of £12.3m is recorded as a liability on the
consolidated balance sheet. The final payment to shareholders under
the October 2023 announced share buyback programme was made on 4
March 2024.
24.
Analysis of cash flows given in the cash flow
statement
|
|
|
|
|
|
|
2023/24
|
2022/23
|
|
|
|
|
|
|
|
£m
|
£m
|
Profit for the year
|
|
|
|
|
312.1
|
278.8
|
Adjustments for:
|
|
|
|
|
|
|
|
|
Tax expense
|
|
|
|
|
139.6
|
96.1
|
|
Net finance costs
|
|
|
|
113.1
|
130.1
|
|
Share of profit from joint
ventures
|
|
|
|
(13.0)
|
(2.3)
|
|
Depreciation and
amortisation
|
|
|
|
383.4
|
345.5
|
|
Share-based payments
|
|
|
|
|
15.8
|
17.7
|
|
Net impairment reversal/(charge)
(Note 13)
|
|
|
107.5
|
34.9
|
|
Gains on disposals, property, and
other provisions
|
|
|
(15.3)
|
(4.0)
|
|
Other non-cash items
|
|
|
|
|
9.2
|
0.6
|
Cash generated from operations before working capital
changes
|
|
1,052.4
|
897.4
|
Decrease/(increase) in
inventories
|
|
|
|
0.4
|
(2.3)
|
Decrease/(increase) in trade and
other receivables
|
|
|
26.1
|
(10.9)
|
Increase in trade and other
payables
|
|
|
7.8
|
112.1
|
Cash generated from operations
|
|
|
1,086.7
|
996.3
|
Other non-cash items include an
outflow of £0.6m representing bad debt charges (2022/23: £0.3m
outflow), an inflow of £3.2m (2022/23: £0.7m outflow) as a result
of net provision movements, an inflow of £5.0m (2022/23: £3.6m
inflow) representing non-cash pension scheme administration costs
and an inflow of £1.6m (2022/23: £2.1m outflow) from foreign
exchange gains.
25. Retirement benefits
Defined benefit scheme
During the year to 29 February
2024, the defined benefit pension scheme has moved from a surplus
of £324.7m to a surplus of £165.2m. The main movements in the
surplus are as follows:
|
|
|
£m
|
Pension surplus at 3 March 2023
|
|
|
324.7
|
Administrative expenses
|
|
|
(5.0)
|
Net interest on pension liability
and assets (Note 7)
|
|
|
16.2
|
Losses recognised in other
comprehensive income
|
|
|
(188.2)
|
Contributions from
employer
|
|
|
17.3
|
Benefits paid directly by the
Company in relation to an unfunded pension scheme
|
|
|
0.2
|
Pension surplus at 29 February 2024
|
|
|
165.2
|
The surplus has been recognised as
the Group has an unconditional right to receive a refund, assuming
the gradual settlement of the scheme liabilities over time until
all members and their dependants have either died or left the
scheme, in accordance with the provisions of IFRIC14.
With the pensioner buy-in policy
purchased in June 2022, the defined benefit scheme has now insured
around 50% of pensioners, under which the benefits payable to
defined benefit members covered under the policy became fully
insured, thus reducing the Group's exposure to changes in
longevity, interest rates inflation and other relevant
factors.
The principal assumptions used by
the independent qualified actuaries in updating the most recent
valuation carried out as at 31 March 2020 of the UK scheme to 29
February 2024 for IAS 19 Employee benefits purposes
were:
|
|
|
|
|
|
At 29 February
2024
|
At 2
March 2023
|
|
|
|
|
|
|
%
|
%
|
Pre-April 2006 rate of increase in
pensions in payment
|
|
|
|
3.10
|
3.20
|
Post-April 2006 rate of increase in
pensions in payment
|
|
|
|
2.10
|
2.20
|
Pension increases in
deferment
|
|
|
|
3.10
|
3.20
|
Discount rate
|
|
|
|
5.00
|
5.00
|
Inflation assumption
|
|
|
|
3.20
|
3.30
|
The mortality assumptions are
based on standard mortality tables which allow for future mortality
improvements. The mortality improvements assumption has been
updated to use the CMI 2022 model (2023: CMI 2021). The CMI 2022
model parameters include some weighting for 2022 mortality
experience. The assumptions are that a member currently aged 65
will live on average for a further 19.5 years (2023: 19.7 years) if
they are male and
for a further 22.1 years (2023:
22.4 years) if they are female. For a member who retires in 2043 at
age 65, the assumptions are that they will live on average for a
further 20.4 years (2023: 20.7 years) after retirement if they are
male and for a further 23.3 years (2023: 23.6 years) after
retirement if they are female.
The Group's methodology for
determining the discount rate is set based on single-AA rated
corporate bonds.
The assumptions in relation to
discount rate, mortality and inflation have a significant effect on
the measurement of scheme liabilities. The following table shows
the sensitivity of the valuation to changes in these
assumptions:
|
|
|
|
|
|
Decrease/(increase) in gross
defined benefit liability
|
|
|
|
|
|
|
2024
|
2023
|
|
|
|
|
|
|
£m
|
£m
|
Discount rate
|
|
|
|
|
|
|
|
2.00% increase to discount
rate
|
|
|
|
|
|
344.0
|
357.0
|
2.00% decrease to discount
rate
|
|
|
|
|
(518.0)
|
(548.0)
|
Inflation
|
|
|
|
|
|
|
|
0.25% increase to inflation
rate
|
|
|
|
|
|
(38.0)
|
(39.0)
|
0.25% decrease to inflation
rate
|
|
|
|
|
|
37.0
|
38.0
|
Life expectancy
|
|
|
|
|
|
|
|
Additional one-year increase to life
expectancy
|
|
|
|
|
(64.4)
|
(71.3)
|
The above sensitivity analyses are
based on a change in an assumption whilst holding all other
assumptions constant. In practice, this is unlikely to occur and
changes in some of the assumptions may be correlated. Where the
discount rate is changed this will have an impact on the valuation
of scheme assets in the opposing direction. The above sensitivities
table shows only the expected changes to the gross defined benefit
obligation ('liability').
When calculating the sensitivity
of the defined benefit obligation to significant actuarial
assumptions, the same method ('projected unit credit method') has
been applied as when calculating the pension surplus recognised
within the consolidated balance sheet. The methods and types of
assumptions did not change.
26. Events after the Balance Sheet Date
Share buy-back
The Board of Directors approved a
share buy-back on 30 April 2024 for £150.0m and is in the process
of appointing the relevant brokers to undertake the programme in
accordance with that approval.
Accelerating Growth Plan
The results include the
announcement of the Accelerating Growth Plan ('AGP') to optimise UK
F&B. Details of the plan include the conversion of 112 branded
restaurants into new rooms and disposal of a further 126 branded
restaurants over the next 24 months. We have agreed to sell 21 of
these sites for £28m.
27. Asset Acquisitions
During this and the previous year,
the Group have purchased a number of properties, the legal form of
the transactions varies between acquisition of the property or
acquisition of the company holding title of the property, as well
as noting that a number of properties are purchased in a state that
means they do not meet the definition of a business on acquisition.
For the remaining properties which do meet the definition of being
a business on acquisition, these transactions have been accounted
for as asset acquisitions under IFRS 3 Business
Combinations as the fair value of
the assets is concentrated in a single group of similar assets in
each deal analysed. The transactions form part of the Group's
strategic priorities over both international growth and continued
UK market share gains.
Glossary
Adjusted property rent
Property rent less a proportion of
contingent rent. Property rent is defined as IFRS 16 property lease
interest and depreciation plus variable lease payments, adjusted
for deferred rental amounts. This is used as a proxy for rent
expense as recorded under IAS 17.
Basic earnings per share (Basic EPS)
Profit attributable to the parent
shareholders divided by the weighted average number of ordinary
shares in issue during the year after deducting treasury shares and
shares held by an independently managed share ownership trust
('ESOT').
Committed pipeline
Sites where the Group has a legal
interest in a property (that may be subject to planning/other
conditions) with the intention of opening a hotel in the
future.
Direct bookings / distribution
Based on stayed bookings in the
financial year made direct to the Premier Inn website, Premier Inn
app, Premier Inn customer contact centre or hotel front
desks.
Food and beverage (F&B) sales
Food and beverage revenue from all
Whitbread owned restaurants and integrated hotel
restaurants.
GOSH charity
Great Ormond Street Hospital
Children's Charity.
IFRS
International Financial Reporting
Standards.
Lease debt
Eight times adjusted property
rent.
Occupancy
Number of hotel bedrooms occupied
by guests expressed as a percentage of the number of bedrooms
available in the period.
Operating profit
Profit before net finance costs
and tax.
OTAS
Online travel agents.
Rent expense
Rental costs recognised in the
income statement prior to the adoption of IFRS 16.
Team retention
The number of permanent new
starters that we retain for the first 90 days/three
months.
Trading site
A joint hotel and restaurant or a
standalone hotel or restaurant.
WINcard
Whitbread In Numbers - balanced
scorecard to measure progress against key performance
targets.
YourSay
Whitbread's annual employee
opinion survey to provide insight into the views of
employees.
†Alternative Performance Measures
We use a range of measures to
monitor the financial performance of the Group. These measures
include both statutory measures in accordance with IFRS and
alternative performance measures (APMs) which are consistent with
the way that the business performance is measured
internally.
APMs are not defined by IFRS and
therefore may not be directly comparable with similarly titled
measures reported by other companies. APMs should be considered in
addition to, and are not intended to be a substitute for, or
superior to, IFRS measures.
The APM titled cohort of
established German hotels adjusted profit before tax is no longer
reported as the Group does not see this as a useful APM going
forwards. The nature of a maturity profile is such that the cohorts
will evolve over time in comparison to the fixed nature of an APM
meaning that there is not a consistent basis on which to report.
The APM titled funds from operations is no longer reported as the
Group's credit rating agency no longer utilises this measure in
calculating leverage. The APM titled three-year UK like-for-like
revenue growth is no longer reported as the Group's comparative
period no longer contains the impact of the COVID-19
pandemic.
APM
|
Closest equivalent IFRS measure
|
Adjustments to reconcile to IFRS measure
|
Definition and purpose
|
REVENUE MEASURES
|
|
|
|
Accommodation sales
|
Revenue
|
Exclude non-room revenue such as
food and beverage
|
Premier Inn accommodation revenue
excluding non-room income such as
food and beverage. The growth in
accommodation sales on a year-on-year basis is a good indicator of
the performance of the business.
Reconciliation: Note 3
|
Average room rate (ARR)
|
No direct equivalent
|
Refer to definition
|
Accommodation sales divided by the
number of rooms occupied by guests. The directors consider this to
be a useful measure as this is a commonly used industry metric
which facilitates comparison between companies.
|
|
|
|
Reconciliation
|
2023/24
|
2022/23
|
|
|
|
UK Accommodation sales
(£m)
|
2,007.7
|
1,795.0
|
|
|
|
Number of rooms occupied by guests
('000)
|
25,173
|
24,984
|
|
|
|
UK
average room rate (£)
|
79.76
|
71.84
|
|
|
|
|
|
|
|
|
|
Germany Accommodation sales
(£m)
|
162.7
|
100.1
|
|
|
|
Number of rooms occupied by guests
('000)
|
2,263
|
1,606
|
|
|
|
Germany average room rate (£)
|
71.88
|
62.36
|
UK like-for-like revenue
growth
|
Movement in accommodation sales per
the segment information (Note 3)
|
Accommodation sales from non
like-for-like
|
Year over year change in revenue for
outlets open for at least one year. The directors consider this to
be a useful measure as it is a commonly used performance metric and
provides an indication of underlying revenue trends.
|
|
|
|
Reconciliation
|
2023/24
|
2022/23
|
|
|
|
UK like-for-like revenue
growth
|
10.0%
|
50.0%
|
|
|
|
Contribution from net new
hotels
|
1.9%
|
5.0%
|
|
|
|
UK
Accommodation sales growth
|
11.9%
|
55.0%
|
Revenue per available room
(RevPAR)
|
No direct equivalent
|
Refer to definition
|
Revenue per available room is also
known as 'yield'. This hotel measure is achieved by dividing
accommodation sales by the number of rooms
available. The directors consider
this to be a useful measure as it is a commonly used performance
measure in the hotel industry.
|
|
|
|
Reconciliation
|
2023/24
|
2022/23
|
|
|
|
UK Accommodation sales
(£m)
|
2,007.7
|
1,795.0
|
|
|
|
Available rooms ('000)
|
30,624
|
30,193
|
|
|
|
UK
REVPAR (£)
|
65.56
|
59.45
|
|
|
|
|
|
|
|
|
|
Germany Accommodation sales
(£m)
|
162.7
|
100.1
|
|
|
|
Available rooms ('000)
|
3,660
|
2,703
|
|
|
|
Germany REVPAR (£)
|
44.44
|
37.04
|
INCOME STATEMENT MEASURES
|
|
|
Adjusted1 operating
profit/loss
|
Profit/loss before tax
|
Adjusting items
(Note 6), finance
income/costs (Note 7)
|
Profit/loss before tax, finance
costs/income and adjusting items
Reconciliation: Consolidated income
statement
|
|
|
| |
Adjusted1 tax
|
Tax expense/credit
|
Adjusting items
(Note 6)
|
Tax expense/credit before adjusting
items.
Reconciliation: Consolidated income
statement
|
Adjusted1 profit/loss
before tax
|
Profit/loss before tax
|
Adjusting items
(Note 6)
|
Profit/loss before tax and adjusting
items.
Reconciliation: Consolidated income
statement
|
Adjusted1 basic
EPS
|
Basic EPS
|
Adjusting items
(Note 6)
|
Adjusted profit attributable to the
parent shareholders divided by the basic weighted average number of
ordinary shares in issue during the year after deducting treasury
shares and shares held by an independently managed share ownership
trust (ESOT).
Reconciliation: Note 10
|
Profit/PBT margin
|
No direct equivalent
|
Refer to definition
|
Segmental adjusted profit before tax
divided by segmental adjusted revenue, to demonstrate profitability
margins of the segmental operations.
Reconciliation: Business
review
|
BALANCE SHEET MEASURES
|
|
|
Net cash/debt
|
Total liabilities from financing
activities
|
Exclude lease liabilities and
derivatives held to hedge financing activities
|
Cash and cash equivalents after
deducting total borrowings. The directors consider this to be a
useful measure of the financing position of the Group.
Reconciliation: Note 21
|
|
|
| |
Adjusted net cash/debt
|
Total liabilities from financing
activities
|
Exclude lease liabilities and
derivatives held to hedge financing activities. Includes an
adjustment for cash assumed by ratings agencies to not be
readily available
|
Net cash/debt adjusted for cash,
assumed by ratings agencies to not be readily available, and
excluding unamortised debt related fees. The measure has been
amended in the year to exclude unamortised debt related fees. The
directors consider this to be a useful measure as it is aligned
with the method used by ratings agencies to assess the financing
position of the Group.
|
|
|
|
Reconciliation
|
2023/24
£m
|
2022/23
£m
|
|
|
|
Net debt/(cash)
|
298.2
|
(171.4)
|
|
|
|
Less: unamortised debt
costs
|
5.1
|
6.6
|
|
|
|
Restricted cash
adjustment
|
10.0
|
10.0
|
|
|
|
Adjusted net det/(cash)
|
313.3
|
(154.8)
|
Lease-adjusted net
debt/cash
|
Total liabilities from financing
activities
|
Exclude lease liabilities and
derivatives held to hedge financing activities. Includes an
adjustment for cash assumed by rating agencies to not be readily
available
|
This measure has been changed to
align to Fitch methodology post IFRS16. Adjusted net debt plus
lease debt. The directors consider this to be
a useful measure as it forms the
basis of the Group's leverage targets.
|
|
|
|
Reconciliation
|
2023/24
£m
|
2022/23
£m
|
|
|
|
Adjusted net debt/(cash)
|
313.3
|
(154.8)
|
|
|
|
Lease debt
|
2,733.6
|
2,452.8
|
|
|
|
Lease-adjusted net debt
|
3,046.9
|
2,298.0
|
Net debt/cash and lease
liabilities
|
Cash and cash equivalents less total
liabilities from financing activities
|
Refer to definition
|
Net debt/cash plus lease
liabilities. The directors consider this to be a
useful measure of the financing
position of the Group.
|
|
|
|
Reconciliation
|
2023/24
£m
|
2022/23
£m
|
|
|
|
Net debt/(cash)
|
298.2
|
(171.4)
|
|
|
|
Lease liabilities
|
4,098.4
|
3,958.4
|
|
|
|
Net
debt/(cash) and lease liabilities
|
4,396.6
|
3,787.0
|
CASH FLOW MEASURES
|
|
|
Lease-adjusted net debt to EBITDAR
for leverage
|
No direct equivalent
|
Refer to definition
|
This measure is a ratio of
lease-adjusted net debt compared against the Group's adjusted
EBITDAR. The directors use this to monitor the leverage position of
the Group. This measure may not be directly comparable with
similarly titled measures utilised by credit rating agencies,
however on a normalised basis these measures would be expected to
move proportionally in the same direction.
|
|
|
| |
|
|
|
Reconciliation
|
2023/24
£m
|
2022/23
£m
|
|
|
|
Lease-adjusted net debt
|
3,046.9
|
2,298.0
|
|
|
|
Adjusted EBITDAR
|
1,057.1
|
888.0
|
|
|
|
Lease-adjusted net debt to adjusted EBITDAR for
leverage
|
2.9x
|
2.6x
|
Adjusted1 operating cash
flow
|
Cash generated from
operations
|
Refer to definition
|
Adjusted operating profit/loss
adding back depreciation and amortisation and after IFRS 16
interest and lease repayments and working capital movement. The
directors consider this a useful measure as it is a good indicator
of the cash generated which is used to fund future growth,
shareholder returns, tax, pension and interest payments.
|
|
|
|
Reconciliation
|
2023/24
£m
|
2022/23
£m
|
|
|
|
Adjusted operating profit
|
674.2
|
543.5
|
|
|
|
Depreciation - right-of-use
assets
|
183.3
|
165.8
|
|
|
|
Depreciation - property, plant
and
equipment
|
176.9
|
163.2
|
|
|
|
Amortisation
|
23.2
|
16.5
|
|
|
|
Adjusted EBITDA (post-IFRS 16)
|
1,057.6
|
889.0
|
|
|
|
Interest paid - lease
liabilities
|
(154.9)
|
(138.7)
|
|
|
|
Payment of principal of lease
liabilities
|
(147.1)
|
(133.9)
|
|
|
|
Net lease incentives
received
|
(2.7)
|
3.5
|
|
|
|
Movement in working
capital
|
34.3
|
98.9
|
|
|
|
Adjusted operating cash flow
|
787.2
|
718.8
|
Cash capital expenditure
(cash capex)
|
No direct equivalent
|
Refer to definition
|
Cash flows on property, plant and
equipment and investment property and investment in intangible
assets, payments of deferred and contingent consideration, and
capital contributions or loans to joint ventures.
|
Adjusted1
EBITDA
(post-IFRS 16),
Adjusted1
EBITDA
(pre-IFRS 16)
and Adjusted1
EBITDAR
|
Operating profit
|
Refer to definition
|
Adjusted EBITDA (post-IFRS 16) is
profit before tax, adjusting items, interest, depreciation and
amortisation. Adjusted EBITDA (pre-IFRS 16) is further adjusted to
remove rent expense. Adjusted EBITDAR is profit before tax,
adjusting items, interest, depreciation, amortisation, variable
lease payments and rental income. The directors consider these
measures to be useful as they are commonly used industry metrics
which facilitate comparison between companies on a before and after
IFRS 16 basis.
|
|
|
|
Reconciliation
|
2023/24
£m
|
2022/23
£m
|
|
|
|
Adjusted operating profit
|
674.2
|
543.5
|
|
|
|
Depreciation - right-of-use
assets
|
183.3
|
165.8
|
|
|
|
Depreciation - property, plant and
equipment
|
176.9
|
163.2
|
|
|
|
Amortisation
|
23.2
|
16.5
|
|
|
|
Adjusted EBITDA (post-IFRS 16)
|
1,057.6
|
889.0
|
|
|
|
Variable lease payments
|
3.5
|
2.1
|
|
|
|
Rental income
|
(4.0)
|
(3.1)
|
|
|
|
Adjusted EBITDAR
|
1,057.1
|
888.0
|
|
|
|
Rent expense, variable lease
payments and rental income
|
(293.6)
|
(269.9)
|
|
|
|
Adjusted EBITDA (pre-IFRS 16)
|
763.5
|
618.1
|
Return on Capital Employed
(ROCE)
|
No direct equivalent
|
Refer to definition
|
Adjusted operating profit/loss
(pre-IFRS 16) for the year divided by net assets at the balance
sheet date, adding back net debt/cash, right-of-use assets, lease
liabilities, taxation assets/liabilities, the pension
surplus/deficit and derivative financial assets/liabilities, other
financial liabilities and IFRS 16 working capital adjustments. The
directors consider this to be a useful measure as it expresses the
underlying operating efficiency of the Group and is used as the
basis for remuneration targets.
|
|
|
|
Reconciliation
|
2023/24
Total
£m
|
2023/24
UK &
Ireland
£m
|
|
|
|
Adjusted operating profit
|
674.2
|
|
|
|
|
Depreciation - right-of-use
assets
|
183.3
|
|
|
|
|
Rent expense
|
(294.1)
|
|
|
|
|
Adjusted operating profit (pre-IFRS 16)
|
563.4
|
583.8
|
|
|
|
Net assets
|
3,519.4
|
|
|
|
|
Net debt
|
298.2
|
|
|
|
|
Current tax liabilities
|
10.2
|
|
|
|
|
Deferred tax liabilities
|
181.1
|
|
|
|
|
Pension surplus
|
(165.2)
|
|
|
|
|
Derivative financial
assets
|
(3.8)
|
|
|
|
|
Derivative financial
liabilities
|
15.9
|
|
|
|
|
Lease liabilities
|
4,098.4
|
|
|
|
|
Right-of-use assets
|
(3,597.0)
|
|
|
|
|
Other financial
liabilities
|
12.3
|
|
|
|
|
IAS 17 rent adjustments
|
(65.0)
|
|
|
|
|
Adjusted net assets
|
4,304.5
|
3,755.9
|
|
|
|
Return on capital employed
|
13.1%
|
15.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
|
2022/23
Total
£m
|
2022/23
UK &
Ireland
£m
|
|
|
|
Adjusted operating profit
|
543.5
|
|
|
|
|
Depreciation - right-of-use
assets
|
165.8
|
|
|
|
|
Rent expense
|
(270.9)
|
|
|
|
|
Adjusted operating profit (pre-IFRS 16)
|
438.4
|
477.6
|
|
|
|
Net assets
|
4,111.4
|
|
|
|
|
Net debt
|
(171.4)
|
|
|
|
|
Current tax liabilities
|
4.6
|
|
|
|
|
Deferred tax liabilities
|
158.2
|
|
|
|
|
Pension surplus
|
(324.7)
|
|
|
|
|
Derivative financial
liabilities
|
7.8
|
|
|
|
|
Lease liabilities
|
3,958.4
|
|
|
|
|
Right-of-use assets
|
(3,504.6)
|
|
|
|
|
IAS 17 rent adjustments
|
(65.0)
|
|
|
|
|
Adjusted net assets
|
4,174.7
|
3,694.8
|
|
|
|
Return on capital employed
|
10.5%
|
12.9%
|
1 Adjusted measures of profitability represent the equivalent
IFRS measures adjusted for specific items that we consider relevant
for comparison of the Group's business either from one period to
another or with similar businesses. We report adjusted measures
because we believe they provide both management and investors with
useful additional information about the financial performance of
the Group's businesses.