REG - Marston's Plc - Interim Results <Origin Href="QuoteRef">MARS.L</Origin> - Part 2
18/05/2017 07:06
- Part 2: For the preceding part double click ID:nRSR4790Fa
Tax on disposal of properties - - 0.6 - - - (0.6) -
Transfer to retained earnings - - (0.5) - - - 0.5 -
Dividends paid - - - - - - (27.0) (27.0)
Total transactions with owners - - (2.8) - - 0.5 (24.4) (26.7)
At 1 April 2017 44.4 334.0 622.7 6.8 (140.1) (113.2) 38.5 793.1
for the 26 weeks ended 2 April 2016
Equity share capital Share premium account Revaluation reserve Capital redemption reserve Hedging reserve Own shares Retained earnings Total equity
£m £m £m £m £m £m £m £m
At 4 October 2015 44.4 334.0 616.0 6.8 (128.1) (118.7) 28.5 782.9
Profit for the period - - - - - - 23.9 23.9
Remeasurement of retirement benefits - - - - - - (20.9) (20.9)
Tax on remeasurement of retirement benefits - - - - - - 4.0 4.0
Losses on cash flow hedges - - - - (22.3) - - (22.3)
Transfers to the income statement on cash flow hedges - - - - 5.8 - - 5.8
Tax on hedging reserve movements - - - - (0.2) - - (0.2)
Property revaluation - - 1.3 - - - - 1.3
Deferred tax on properties - - 10.9 - - - - 10.9
Total comprehensive income/(expense) - - 12.2 - (16.7) - 7.0 2.5
Share-based payments - - - - - - 0.2 0.2
Sale of own shares - - - - - 2.5 (2.3) 0.2
Disposal of properties - - (1.3) - - - 1.3 -
Tax on disposal of properties - - 0.4 - - - (0.4) -
Transfer to retained earnings - - (0.5) - - - 0.5 -
Dividends paid - - - - - - (25.9) (25.9)
Total transactions with owners - - (1.4) - - 2.5 (26.6) (25.5)
At 2 April 2016 44.4 334.0 626.8 6.8 (144.8) (116.2) 8.9 759.9
NOTES
1 BASIS OF PREPARATION OF INTERIM FINANCIAL INFORMATION
This interim financial information has been prepared in accordance with IAS 34
'Interim Financial Reporting' as adopted by the European Union. The same
accounting policies, presentation and methods of computation are followed in
the interim financial information as applied in the Group's audited financial
statements for the 52 weeks ended 1 October 2016, with the exception of new
standards and interpretations that were only applicable from the beginning of
the current financial year, and a revised presentation of provisions for other
liabilities and charges and the net interest on the net defined benefit
asset/liability.
The audited financial statements for the 52 weeks ended 1 October 2016 contain
details of the new standards and interpretations now applicable to the Group.
The adoption of these standards and interpretations has had no impact on the
interim financial information.
In the prior period provisions for other liabilities and charges were
originally presented wholly within non-current liabilities in the balance
sheet. Amounts due within one year have now been represented within current
liabilities to better reflect the timing of the amounts falling due and to be
consistent with the current period presentation.
In the prior period the net interest on the net defined benefit
asset/liability was presented within underlying items. This has now been
represented within non-underlying items to better reflect the nature of this
item and to be consistent with the current period presentation.
The deferred tax balances as at 2 April 2016 that were originally presented on
a gross basis in the balance sheet have been represented on a net basis to
better reflect the offsetting requirements of IAS 12 'Income Taxes' and to be
consistent with the current period presentation and that in the financial
statements for the 52 weeks ended 1 October 2016.
The financial information for the 52 weeks ended 1 October 2016 is extracted
from the audited accounts for that period, which have been delivered to the
Registrar of Companies. The Auditors' report was unqualified and did not
contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The interim financial information does not constitute statutory accounts
within the meaning of section 434 of the Companies Act 2006. The interim
financial information for the 26 weeks ended 1 April 2017 and the comparatives
to 2 April 2016 are unaudited, but have been reviewed by the Auditors.
The Group does not consider that any standards or interpretations issued by
the International Accounting Standards Board, but not yet applicable, will
have a significant impact on the financial statements for the 52 weeks ending
30 September 2017.
The Directors are satisfied that the Group has sufficient resources to
continue in operation for the foreseeable future, a period of not less than 12
months from the date of this report. Accordingly, they continue to adopt the
going concern basis in preparing this interim financial information.
2 SEGMENT REPORTING
1 April 2017 2 April 2016
Underlying revenue by segment £m £m
Destination and Premium 202.6 193.9
Taverns 118.0 115.9
Leased 25.8 26.3
Brewing 94.4 92.6
Group Services - -
Underlying revenue 440.8 428.7
Non-underlying items 10.7 15.6
Revenue 451.5 444.3
1 April 2017 2 April 2016
Underlying operating profit by segment £m £m
Destination and Premium 34.6 33.5
Taverns 24.1 24.3
Leased 13.9 13.9
Brewing 10.4 10.0
Group Services (12.0) (11.2)
Underlying operating profit 71.0 70.5
Non-underlying operating items 0.7 (3.3)
Operating profit 71.7 67.2
Net finance costs (35.0) (44.4)
Profit before taxation 36.7 22.8
Underlying operating profit is a key measure of profitability used by the
chief operating decision maker.
During the current period the Group changed the structure of its internal
organisation in a manner that caused the composition of its operating segments
to change. The results for the 26 weeks ended 2 April 2016 have been restated
to reflect these changes.
3 NON-underlying items
In order to illustrate the underlying trading performance of the Group,
presentation has been made of performance measures excluding those items which
it is considered would distort the comparability of the Group's results.
These non-underlying items comprise exceptional items and other adjusting
items.
Exceptional items are defined as those items that, by virtue of their nature,
size or expected frequency, warrant separate additional disclosure in the
financial statements in order to fully understand the underlying performance
of the Group. As management of the freehold and leasehold property estate is
an essential and significant area of the business, the threshold for
classification of property related items as exceptional is higher than other
items.
Other adjusting items comprise the revenue and expenses in respect of the
ongoing management of the remainder of the portfolio of pubs disposed of in
the period ended 4 October 2014. The pubs subject to the management agreement
no longer form part of the Group's core activities and the Group does not have
the ability to make strategic decisions in respect of them. As such it is
considered appropriate to exclude the results of these pubs from the Group's
underlying results.
1 April 2017 2 April 2016
£m £m
Exceptional operating items
Impact of change in rate assumptions used for onerous lease provisions (0.9) 1.2
Non-core estate disposal and reorganisation costs - 0.7
Relocation, reorganisation and integration costs - 0.9
Tax advisory fees - 0.5
(0.9) 3.3
Other adjusting operating items
Results in respect of the ongoing management of pubs in the portfolio disposal 0.2 -
0.2 -
Non-underlying operating items (0.7) 3.3
Exceptional non-operating items
Net interest on net defined benefit asset/liability 0.3 (0.3)
Write-off of unamortised finance costs 1.4 -
Movement in fair value of interest rate swaps (4.0) 7.0
(2.3) 6.7
Total non-underlying items (3.0) 10.0
Impact of change in rate assumptions used for onerous lease provisions
The update of the discount rate assumptions used in the calculation of the
Group's onerous property lease provisions at the current period end resulted
in a decrease of £0.9 million (2016: increase of £1.2 million) in the total
provision.
Portfolio disposal of pubs
During the period ended 4 October 2014 the Group disposed of a portfolio of
202 pubs and subsequently entered into a four year lease and five year
management agreement in respect thereof. A number of the pubs have since been
removed from the leasing and management arrangements by the purchaser. During
the current period the Group has also entered into new 15 year leases in
respect of 22 of the properties. These properties have also been removed from
the management agreement. The Group no longer has strategic control of the
pubs still subject to the management agreement and they do not form part of
its core activities. As such the results in respect of the ongoing operation
and management of these pubs have been classified as a non-underlying item,
comprised as follows:
1 April 2017 2 April 2016
£m £m
Revenue 10.7 15.6
Operating expenses (10.9) (15.6)
(0.2) -
Net interest on net defined benefit asset/liability
The net interest on the net defined benefit asset/liability in respect of the
Group's defined benefit pension plan was a charge of £0.3 million (2016:
credit of £0.3 million).
Write-off of unamortised finance costs
During the current period the Group entered into a new bank facility. As such
the unamortised finance costs relating to the previous facility have been
written off.
Movement in fair value of interest rate swaps
The Group's interest rate swaps are revalued to fair value at each balance
sheet date. The movement in fair value of interest rate swaps which are not
designated as part of a hedging relationship, and the ineffective portion of
the movement in fair value of interest rate swaps which are accounted for as
hedging instruments, are both recognised in the income statement. The net
gain of £4.0 million (2016: loss of £7.0 million) is shown as an exceptional
item. In addition to this, a gain of £30.9 million (2016: loss of £16.5
million) has been recognised in the hedging reserve, in relation to the
effective portion of the movement in fair value of interest rate swaps which
are accounted for as hedging instruments.
Impact of taxation
The current tax credit relating to the above non-underlying items amounts to
£0.1 million (2016: £0.5 million). The deferred tax charge relating to the
above non-underlying items amounts to £0.6 million (2016: credit of £1.6
million). In addition, there is a non-underlying deferred tax credit of £nil
(2016: £1.1 million) in relation to the change in corporation tax rate (note
5).
During the prior period the Group agreed the tax treatment of certain items
with HM Revenue & Customs. The tax credit of £4.1 million in respect of the
additional tax relief claimed for previous periods was classified as a
non-underlying item along with the associated advisory fees of £0.5 million.
Prior period non-underlying items
During the period ended 5 October 2013 the Group commenced a restructuring of
its pub estate and its operating segments. Costs in respect of this
restructuring were incurred in the prior period.
During the prior period the redevelopment of the Group's head office building
in Wolverhampton was completed along with a reorganisation of certain head
office functions. Costs of £0.4 million were incurred in respect of
temporarily relocating to alternative premises nearby during the period of
redevelopment and in undertaking the reorganisation.
The Group also incurred reorganisation and integration costs of £0.5 million
in the prior period as a result of the acquisition of the trading operations
of Daniel Thwaites PLC's beer division in the period ended 3 October 2015.
4 FINANCE COSTS AND INCOME
1 April 2017 2 April 2016
£m £m
Finance costs
Unsecured bank borrowings 5.9 6.1
Securitised debt 23.3 24.1
Finance leases 0.5 0.5
Other lease related borrowings 7.1 6.0
Other interest payable and similar charges 0.8 1.2
37.6 37.9
Exceptional finance costs
Net interest on net defined benefit asset/liability 0.3 -
Write-off of unamortised finance costs 1.4 -
1.7 -
Total finance costs 39.3 37.9
Finance income
Deposit and other interest receivable (0.3) (0.2)
(0.3) (0.2)
Exceptional finance income
Net interest on net defined benefit asset/liability - (0.3)
- (0.3)
Total finance income (0.3) (0.5)
Movement in fair value of interest rate swaps
Gain on movement in fair value of interest rate swaps (5.7) -
Loss on movement in fair value of interest rate swaps 1.7 7.0
(4.0) 7.0
Net finance costs 35.0 44.4
5 TAXATION
The underlying taxation charge for the 26 weeks ended 1 April 2017 has been
calculated by applying an estimate of the underlying effective tax rate for
the 52 weeks ending 30 September 2017 of approximately 18.1% (26 weeks ended 2
April 2016: approximately 18.9%).
1 April 2017 2 April 2016
£m £m
Current tax 4.4 0.6
Deferred tax 2.2 (1.7)
6.6 (1.1)
The taxation charge/(credit) includes a current tax credit of £0.1 million
(2016: £0.5 million) and a deferred tax charge of £0.6 million (2016: credit
of £1.6 million) relating to the tax on non-underlying items. In addition,
there is a non-underlying deferred tax credit of £nil (2016: £1.1 million) in
relation to the change in corporation tax rate. There is also a
non-underlying current tax credit of £nil (2016: £3.7 million) and a
non-underlying deferred tax credit of £nil (2016: £0.4 million) in relation to
the additional tax relief claimed by the Group for previous periods following
the agreement of the tax treatment of certain items with HM Revenue & Customs
(note 3).
6 EARNINGS PER ORDINARY SHARE
Basic earnings per share are calculated by dividing the profit attributable to
equity shareholders by the weighted average number of ordinary shares in issue
during the period, excluding treasury shares and those held on trust for
employee share schemes.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. These represent share options granted to employees where the exercise
price is less than the weighted average market price of the Company's shares
during the period.
Underlying earnings per share figures are presented to exclude the effect of
exceptional and other adjusting items. The Directors consider that the
supplementary figures are a useful indicator of performance.
1 April 2017 2 April 2016
Earnings Per share amount Earnings Per share amount
£m p £m p
Basic earnings per share 30.1 5.2 23.9 4.2
Diluted earnings per share 30.1 5.2 23.9 4.1
Underlying earnings per share figures
Basic underlying earnings per share 27.6 4.8 26.6 4.6
Diluted underlying earnings per share 27.6 4.7 26.6 4.6
1 April 2017 2 April 2016
m m
Basic weighted average number of shares 575.4 574.4
Dilutive options 5.8 5.7
Diluted weighted average number of shares 581.2 580.1
7 PROPERTY, PLANT AND EQUIPMENT
£m
Net book amount at 2 October 2016 2,199.4
Additions 86.7
Net transfers to assets held for sale and disposals (24.5)
Depreciation, revaluation and other movements (21.5)
Net book amount at 1 April 2017 2,240.1
£m
Net book amount at 4 October 2015 2,122.6
Additions 71.9
Net transfers to assets held for sale and disposals (22.4)
Depreciation, revaluation and other movements (17.9)
Net book amount at 2 April 2016 2,154.2
The net profit on disposal of property, plant and equipment, intangible assets
and assets held for sale was £7.8 million (2016: £4.2 million). A profit on
disposal of £7.8 million (2016: £4.4 million) is included within the Group's
underlying results.
Revaluation/impairment
During the current and prior period various properties were reviewed for
impairment and/or material changes in value.
The impact of the revaluations/impairments described above is as follows:
1 April 2017 2 April 2016
£m £m
Income statement:
Revaluation loss charged as an impairment (4.0) -
(4.0) -
Revaluation reserve:
Unrealised revaluation surplus 2.3 1.3
Reversal of past revaluation surplus (0.8) -
1.5 1.3
Net (decrease)/increase in shareholders' equity/property, plant and equipment (2.5) 1.3
8 NET DEBT
1 April 2017 Cash flow Non-cash movements and deferred issue costs 1 October 2016
Analysis of net debt £m £m £m £m
Cash and cash equivalents
Cash at bank and in hand 165.8 (19.8) - 185.6
165.8 (19.8) - 185.6
Debt due within one year
Unsecured bank borrowings 0.7 30.0 (0.1) (29.2)
Securitised debt (28.7) 13.8 (14.7) (27.8)
Finance leases (0.1) 0.1 (0.1) (0.1)
Other lease related borrowings 0.1 (0.1) - 0.2
Other borrowings (120.0) - - (120.0)
(148.0) 43.8 (14.9) (176.9)
Debt due after one year
Unsecured bank borrowings (287.4) (57.0) 1.6 (232.0)
Securitised debt (791.4) - 14.4 (805.8)
Finance leases (20.4) - 0.1 (20.5)
Other lease related borrowings (240.6) (22.5) 1.6 (219.7)
Preference shares (0.1) - - (0.1)
(1,339.9) (79.5) 17.7 (1,278.1)
Net debt (1,322.1) (55.5) 2.8 (1,269.4)
Other borrowings represent amounts drawn down under the securitisation's
liquidity facility. During the period ended 4 October 2014 the facility's
provider, the Royal Bank of Scotland Group plc, had its short-term credit
rating downgraded below the minimum prescribed in the facility agreement and
as such the Group exercised its entitlement to draw the full amount of the
facility and hold it in a designated bank account. The corresponding balance
of £120.0 million (at 1 October 2016: £120.0 million) held in this bank
account is included within cash and cash equivalents. The amounts drawn down
can only be used for the purpose of meeting the securitisation's debt service
obligations should there ever be insufficient funds available from operations
to meet such payments. As such these amounts are considered to be restricted
cash.
Included within cash and cash equivalents is an amount of £0.6 million (at 1
October 2016: £0.6 million), which relates to a letter of credit with Royal
Sun Alliance Insurance, an amount of £1.5 million (at 1 October 2016: £1.5
million), which relates to a letter of credit with Aviva, and an amount of
£7.7 million (at 1 October 2016: £7.8 million), which relates to collateral
held in the form of cash deposits. These amounts are also considered to be
restricted cash.
In addition, any other cash held in connection with the securitised business
is governed by certain restrictions under the covenants associated with the
securitisation.
1 April 2017 2 April 2016
Reconciliation of net cash flow to movement in net debt £m £m
(Decrease)/increase in cash and cash equivalents in the period (19.8) 41.1
Cash inflow from movement in debt (35.7) (69.0)
Change in debt resulting from cash flows (55.5) (27.9)
Non-cash movements and deferred issue costs 2.8 0.4
Movement in net debt in the period (52.7) (27.5)
Net debt at beginning of the period (1,269.4) (1,245.0)
Net debt at end of the period (1,322.1) (1,272.5)
1 April 2017 2 April 2016
Reconciliation of net debt before lease financing to net debt £m £m
Cash and cash equivalents 165.8 231.9
Unsecured bank borrowings (including bank overdrafts) (286.7) (314.2)
Securitised debt (820.1) (847.0)
Other borrowings (120.0) (120.0)
Preference shares (0.1) (0.1)
Net debt before lease financing (1,061.1) (1,049.4)
Finance leases (20.5) (20.7)
Other lease related borrowings (240.5) (202.4)
Net debt (1,322.1) (1,272.5)
9 FINANCIAL INSTRUMENTS
The only financial instruments which the Group holds at fair value are
derivative financial instruments, which are classified as at fair value
through profit or loss or derivatives used for hedging.
Fair value hierarchy
IFRS 13 'Fair Value Measurement' requires fair value measurements to be
recognised using a fair value hierarchy that reflects the significance of the
inputs used in the measurements, according to the following levels:
Level 1 - unadjusted quoted prices in active markets for identical assets or
liabilities.
Level 2 - inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
Level 3 - inputs for the asset or liability that are not based on observable
market data.
The table below shows the level in the fair value hierarchy within which fair
value measurements have been categorised:
1 April 2017 1 October 2016
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Liabilities as per the balance sheet £m £m £m £m £m £m £m £m
Derivative financial instruments - 205.8 - 205.8 - 240.7 - 240.7
There were no transfers between Levels 1, 2 and 3 fair value measurements
during the current or prior period.
The Level 2 fair values of derivative financial instruments have been obtained
using a market approach and reflect the estimated amount the Group would
expect to pay on termination of the instruments. The Group utilises
valuations from counterparties who use a variety of assumptions based on
market conditions existing at each balance sheet date.
The fair values of all non-derivative financial instruments are equal to their
book values, with the exception of borrowings. The carrying amount less
impairment provision of trade receivables, other receivables and trade loans,
and the carrying amount of trade payables and other payables, are assumed to
approximate their fair values. The carrying amount (excluding unamortised
issue costs) and the fair value of the Group's borrowings are as follows:
Carrying amount Fair value
1 April 2017 1 October 2016 1 April 2017 1 October 2016
£m £m £m £m
Unsecured bank borrowings 290.0 263.0 290.0 263.0
Securitised debt 825.7 839.5 820.3 845.9
Finance leases 20.5 20.6 20.5 20.6
Other lease related borrowings 258.4 235.8 258.4 235.8
Other borrowings 120.0 120.0 120.0 120.0
Preference shares 0.1 0.1 0.1 0.1
1,514.7 1,479.0 1,509.3 1,485.4
10 SIGNIFICANT EVENTS AND TRANSACTIONS
Additional contributions of £3.9 million (26 weeks ended 2 April 2016: £4.5
million) were made in the period to the Marston's PLC Pension and Life
Assurance Scheme.
There were no significant related party transactions during the period (26
weeks ended 2 April 2016: none).
Further detail regarding significant events and transactions that have taken
place since 1 October 2016 is provided outside of the interim financial
statements in the Group Overview and the Performance and Financial Review.
11 CAPITAL COMMITMENTS
Capital expenditure authorised and committed at the period end but not
provided for in this interim financial information was £23.4 million
(at 1 October 2016: £6.5 million).
12 CONTINGENT LIABILITIES
There have been no material changes to contingent liabilities since 1 October
2016.
13 SEASONALITY OF INTERIM OPERATIONS
The Group's financial results and cash flows have, historically, been subject
to seasonal trends between the first and second half of the financial year.
Traditionally, the second half of the financial year sees higher revenue and
profitability, as a result of better weather conditions.
There is no assurance that this trend will continue in the future.
14 EVENTS AFTER THE BALANCE SHEET DATE
An interim dividend of £15.5 million, being 2.7p (2016: 2.6p) per ordinary
share, has been proposed and will be paid on 4 July 2017 to those shareholders
on the register at the close of business on 26 May 2017. This interim
financial information does not reflect this dividend payable.
On 17 May 2017 the Group exchanged contracts to acquire the beer and brewing
business of Charles Wells for cash consideration of £55.0 million plus working
capital adjustments. The acquisition is expected to complete in June 2017 and
will be financed from the proceeds of an equity placing.
15 PRINCIPAL RISKS AND UNCERTAINTIES
The Group set out on pages 22 and 23 of its 2016 Annual Report and Accounts
the principal risks and uncertainties that could impact its performance.
These remain unchanged since the Annual Report and Accounts was published and
are expected to remain unchanged for the second half of the financial year.
These risks and uncertainties are summarised as follows:
§ Disruption to key suppliers (logistics, food, drink) or shortage of
essential commodities
§ Changes in regulation impacting upon the cost of business or obstructing
growth
§ Breaches of health and safety or food hygiene regulations
§ Network outage or denial of service
§ Loss, theft or corruption of data
§ Failure to attract or retain the best people
§ Breach of financial covenants with lenders
§ Inadequate funding of the pension scheme
§ Incorrect reporting of financial results
§ Unauthorised transactions
16 INTERIM RESULTS
The interim results were approved by the Board on 18 May 2017.
17 COPIES
Copies of these results are available on the Marston's PLC website
(www.marstons.co.uk) and on request from the Group Secretary, Marston's PLC,
Marston's House, Brewery Road, Wolverhampton, WV1 4JT.
This information is provided by RNS
The company news service from the London Stock ExchangeRecent news on Marston's
See all newsREG - Marston's Plc - Trading Update for the 41 weeks to 12 July 2025
AnnouncementREG - Marston's Plc - Block listing Interim Review
AnnouncementREG - Marston's Plc - Total Voting Rights
AnnouncementREG - Marston's Plc - Appointment of Chief Financial Officer
AnnouncementREG - Marston's Plc - RESULTS FOR THE 26 WEEKS ENDED 29 MARCH 2025
Announcement