REG - Whitbread PLC - Half Year Results <Origin Href="QuoteRef">WTB.L</Origin> - Part 2
29/10/2014 13:31
- Part 2: For the preceding part double click ID:nRSU8199Ua
- - - - 3.2 3.2
At 27 February 2014 149.6 56.2 12.3 3,644.5 (3.1) (2,086.0) 1,773.5 9.5 1,783.0
Interim consolidated balance sheet
(Reviewed) (Reviewed) (Audited)
28 August 2014 29 August 2013 27 February 2014
Notes £m £m £m
ASSETS
Non-current assets
Intangible assets 230.3 217.6 223.0
Property, plant and equipment 3,019.7 2,782.8 2,894.1
Investment in joint ventures 26.2 24.3 24.9
Investment in associate 2.1 2.0 2.0
Trade and other receivables 5.6 5.5 6.0
3,283.9 3,032.2 3,150.0
Current assets
Inventories 34.8 32.0 30.5
Trade and other receivables 130.5 123.8 124.1
Cash and cash equivalents 7 52.7 49.8 41.4
218.0 205.6 196.0
Assets held for sale 1.5 3.9 1.5
Total assets 3,503.4 3,241.7 3,347.5
LIABILITIES
Current liabilities
Financial liabilities 7 0.2 17.3 -
Provisions 12.9 10.3 12.9
Derivative financial instruments 8 4.3 3.5 4.3
Income tax liabilities 42.5 39.2 35.1
Trade and other payables 423.5 374.7 423.0
483.4 445.0 475.3
Non-current liabilities
Financial liabilities 7 519.7 462.6 433.0
Provisions 31.4 30.0 32.7
Derivative financial instruments 8 23.6 16.0 24.7
Deferred income tax liabilities 53.6 99.4 46.8
Pension liability 9 489.2 507.4 534.3
Trade and other payables 19.1 19.1 17.7
1,136.6 1,134.5 1,089.2
Total liabilities 1,620.0 1,579.5 1,564.5
Net assets 1,883.4 1,662.2 1,783.0
Equity
Share capital 149.6 149.1 149.6
Share premium 56.4 54.4 56.2
Capital redemption reserve 12.3 12.3 12.3
Retained earnings 3,738.2 3,524.9 3,644.5
Currency translation reserve (2.8) 0.2 (3.1)
Other reserves (2,078.0) (2,087.9) (2,086.0)
Equity attributable to equity holders of the parent 1,875.7 1,653.0 1,773.5
Non-controlling interest 7.7 9.2 9.5
Total equity 1,883.4 1,662.2 1,783.0
Interim consolidated cash flow statement
(Reviewed) (Reviewed) (Audited)
6 months to28 August 2014 6 months to29 August 2013 Year to 27 February 2014
Notes £m £m £m
Profit for the period 188.6 175.9 323.4
Adjustments for:
Taxation charged on total operations 53.2 24.8 23.6
Net finance cost 4 19.5 22.4 44.5
Total income from joint ventures (1.1) (0.7) (1.6)
Total income from associate (0.6) (0.7) (0.9)
Loss on disposal of property, plant and equipment and property reversions 3 0.8 1.2 11.7
Depreciation and amortisation 80.7 68.7 152.5
Impairment of property, plant and equipment and intangibles 3 - - 20.2
Share-based payments 6.2 5.5 10.6
Other non-cash items 3.9 6.1 7.0
Cash generated from operations before working capital changes 351.2 303.2 591.0
Increase in inventories (4.3) (5.5) (4.2)
Increase in trade and other receivables (12.3) (21.2) (25.5)
Increase in trade and other payables 23.4 34.3 45.1
Payments against provisions (1.7) (3.1) (5.1)
Pension payments 9 (71.2) (61.2) (71.2)
Cash generated from operations 285.1 246.5 530.1
Interest paid (9.8) (9.7) (19.8)
Corporation taxes paid (35.5) (37.6) (81.4)
Net cash flows from operating activities 239.8 199.2 428.9
Cash flows from investing activities
Purchase of property, plant and equipment (216.6) (115.3) (286.3)
Purchase of intangible assets (12.3) (6.4) (19.9)
(Costs)/proceeds from disposal of property, plant and equipment (0.1) (0.5) 1.0
Capital contributions and loans to joint ventures - - (1.6)
Dividends from associate 0.5 0.3 0.7
Interest received 0.2 0.3 0.7
Net cash flows from investing activities (228.3) (121.6) (305.4)
Cash flows from financing activities
Proceeds from issue of share capital 0.2 0.1 2.4
Capital contributions from non-controlling interests - - 4.0
Increase/(decrease) in short-term borrowings 0.2 8.3 (9.0)
Drawings/(repayments) of revolving credit facility 84.9 (37.0) (54.9)
Renegotiation costs of long-term borrowings - - (1.7)
Dividends paid 5 (85.1) (39.5) (62.4)
Net cash flows used in financing activities 0.2 (68.1) (121.6)
Net increase in cash and cash equivalents 11.7 9.5 1.9
Opening cash and cash equivalents 41.4 40.8 40.8
Foreign exchange differences (0.4) (0.5) (1.3)
Closing cash and cash equivalents 7 52.7 49.8 41.4
Notes to the accounts
1. Basis of accounting and preparation
The interim condensed consolidated financial statements were authorised for
issue in accordance with a resolution of the Board of Directors on 20 October
2014.
The interim condensed consolidated financial statements are prepared in
accordance with UK listing rules and with IAS 34 'Interim Financial
Reporting'. The interim financial report does not constitute statutory
accounts within the meaning of section 434 of the Companies Act 2006.
The financial information for the year ended 27 February 2014 is extracted
from the statutory accounts of the Group for that year and does not constitute
statutory accounts as defined in Section 435 of the Companies Act 2006. These
published accounts were prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted for use in the European Union, and
reported on by the auditors without qualification or statement under Sections
498(2) or (3) of the Companies Act 2006 and have been delivered to the
Registrar of Companies.
The interim condensed consolidated financial statements for the six months
ended 28 August 2014 and the comparatives to 29 August 2013 are unaudited but
have been reviewed by the auditor; a copy of their review report is included
at the end of this report.
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. The directors have concluded
therefore that the going concern basis of preparation remains appropriate.
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are consistent with those followed in the
preparation of the Group's annual financial statements for the year ended 27
February 2014 except for the adoption of new Standards and Interpretations
applicable as of 28 February 2014.
The Group has adopted the following standards and interpretations which have
been assessed as having no financial impact or disclosure requirements at the
interim:
· IAS 28 Investments in Associates and Joint Ventures (as revised in
2011);
· IAS 32 Offsetting Financial Assets and Liabilities-Amendments to IAS
32;
· IAS 36 Recoverable Amount Disclosures for Non-Financial
Assets-Amendments to IAS 36;
· IAS 39 Novation of Derivatives and Continuation of Hedge
Accounting-Amendments to IAS 39;
· IFRS 10 Consolidated Financial Statements;
· IFRS 11 Joint Arrangements; and
· IFRS 12 Disclosure of Involvement with Other Entities.
2. Segmental analysis
For management purposes, the Group is organised into two strategic business
units (Hotels & Restaurants and Costa) based upon their different products and
services:
· Hotels & Restaurants provide services in relation to accommodation and
food; and
· Costa generates income from the operation of its branded, owned and
franchised coffee outlets.
The UK and International Hotels & Restaurants segments have been aggregated on
the grounds that the International segment is immaterial.
Management monitors the operating results of its strategic business units
separately for the purpose of making decisions about allocating resources and
assessing performance. Segment performance is measured based on underlying
operating profit. Included within the unallocated and elimination columns in
the tables are the costs of running the public company. The unallocated
assets and liabilities are cash and debt balances (held and controlled by the
central treasury function), taxation, pensions, certain property, plant and
equipment, centrally held provisions and central working capital balances.
Inter-segment revenue is from Costa to the Hotels & Restaurants segment and is
eliminated on consolidation. Transactions were entered into on an arm's
length basis in a manner similar to transactions with third parties.
The following tables present revenue and profit information and certain asset
and liability information regarding business operating segments for the six
months to 28 August 2014 and 29 August 2013 and for the full year ended 27
February 2014.
Unallocated
Hotels & and Total
Restaurants Costa elimination operations
6 months to 28 August 2014 £m £m £m £m
Revenue
Underlying revenue from external customers 851.9 441.3 - 1,293.2
Inter-segment revenue - 1.5 (1.5) -
Total revenue 851.9 442.8 (1.5) 1,293.2
Underlying operating profit before exceptional items 225.0 52.4 (13.8) 263.6
Underlying interest - - (7.6) (7.6)
Underlying profit before tax 225.0 52.4 (21.4) 256.0
Amortisation of acquired intangibles - (1.2) - (1.2)
IAS 19 income statement charge for pension finance cost - - (11.5) (11.5)
Profit before tax and exceptional items 225.0 51.2 (32.9) 243.3
Exceptional items:
Net loss on disposal of property, plant and equipment (0.1) (0.7) - (0.8)
Rebranding costs - (0.3) - (0.3)
Exceptional interest - - (0.4) (0.4)
Profit before tax 224.9 50.2 (33.3) 241.8
Tax expense (53.2)
Profit for the period 188.6
Assets and liabilities
Segment assets 3,041.7 371.8 - 3,413.5
Unallocated assets - - 89.9 89.9
Total assets 3,041.7 371.8 89.9 3,503.4
Segment liabilities (283.1) (89.1) - (372.2)
Unallocated liabilities - - (1,247.8) (1,247.8)
Total liabilities (283.1) (89.1) (1,247.8) (1,620.0)
Net assets 2,758.6 282.7 (1,157.9) 1,883.4
Other segment information
Share of profit from associate 0.6 - - 0.6
Share of profit from joint ventures 1.1 - - 1.1
Total property rent 50.6 49.3 0.1 100.0
Capital expenditure:
Property, plant and equipment - cash basis 180.8 35.7 0.1 216.6
Property, plant and equipment - accruals basis 163.1 36.0 - 199.1
Intangible assets 11.2 1.0 0.1 12.3
Depreciation (49.7) (25.6) - (75.3)
Amortisation (3.2) (1.8) (0.4) (5.4)
(5.4)
Unallocated
Hotels & and Total
Restaurants Costa elimination operations
6 months to 29 August 2013 £m £m £m £m
Revenue
Underlying revenue from external customers 767.3 377.4 - 1,144.7
Inter-segment revenue - 1.4 (1.4) -
Total revenue 767.3 378.8 (1.4) 1,144.7
Underlying operating profit before exceptional items 195.7 43.5 (13.5) 225.7
Underlying interest - - (9.6) (9.6)
Underlying profit before tax 195.7 43.5 (23.1) 216.1
Amortisation of acquired intangibles - (1.4) - (1.4)
IAS 19 income statement charge for pension finance cost - - (12.3) (12.3)
Profit before tax and exceptional items 195.7 42.1 (35.4) 202.4
Exceptional items:
Net loss on disposal of property, plant and equipment (1.0) (0.2) - (1.2)
Exceptional interest - - (0.5) (0.5)
Profit before tax 194.7 41.9 (35.9) 200.7
Tax expense (24.8)
Profit for the period 175.9
Assets and liabilities
Segment assets 2,802.1 351.8 - 3,153.9
Unallocated assets - - 87.8 87.8
Total assets 2,802.1 351.8 87.8 3,241.7
Segment liabilities (236.5) (76.5) - (313.0)
Unallocated liabilities - - (1,266.5) (1,266.5)
Total liabilities (236.5) (76.5) (1,266.5) (1,579.5)
Net assets 2,565.6 275.3 (1,178.7) 1,662.2
1,662.2
Other segment information
Share of profit from associate 0.7 - - 0.7
Share of profit from joint ventures 0.7 - - 0.7
Total property rent 43.3 45.5 0.1 88.9
Capital expenditure:
Property, plant and equipment - cash basis 79.5 35.6 0.2 115.3
Property, plant and equipment - accruals basis 71.6 33.5 - 105.1
Intangible assets 5.8 0.3 0.3 6.4
Depreciation (42.2) (22.3) - (64.5)
Amortisation (2.2) (1.8) (0.2) (4.2)
Unallocated
Hotels & and Total
Restaurants Costa elimination operations
Year to 27 February 2014 £m £m £m £m
Revenue
Underlying revenue from external customers 1,494.0 804.9 - 2,298.9
Inter-segment revenue - 2.8 (2.8) -
Exceptional revenue (4.6) - - (4.6)
Total revenue 1,489.4 807.7 (2.8) 2,294.3
Underlying operating profit before exceptional items 348.1 109.8 (27.2) 430.7
Underlying interest - - (18.9) (18.9)
Underlying profit before tax 348.1 109.8 (46.1) 411.8
Amortisation of acquired intangibles - (2.7) - (2.7)
IAS 19 income statement charge for pension finance cost - - (23.6) (23.6)
Profit before tax and exceptional items 348.1 107.1 (69.7) 385.5
Exceptional items:
VAT on gaming machine income (4.6) - - (4.6)
Net loss on disposal of property, plant and equipment and property reversions (1.2) (3.7) (6.8) (11.7)
Impairment (15.5) (10.6) - (26.1)
Impairment reversal 5.4 0.5 - 5.9
Exceptional interest - - (2.0) (2.0)
Profit before tax 332.2 93.3 (78.5) 347.0
Tax expense (23.6)
Profit for the year 323.4
Assets and liabilities
Segment assets 2,914.5 350.9 - 3,265.4
Unallocated assets - - 82.1 82.1
Total assets 2,914.5 350.9 82.1 3,347.5
Segment liabilities (293.0) (79.5) - (372.5)
Unallocated liabilities - - (1,192.0) (1,192.0)
Total liabilities (293.0) (79.5) (1,192.0) (1,564.5)
Net assets 2,621.5 271.4 (1,109.9) 1,783.0
1,783.0
Other segment information
Share of profit from associate 0.9 - - 0.9
Share of profit/(loss) from joint ventures 2.2 (0.6) - 1.6
Total property rent 89.0 92.5 0.2 181.7
Capital expenditure:
Property, plant and equipment - cash basis 214.2 72.0 0.1 286.3
Property, plant and equipment - accruals basis 245.1 71.6 - 316.7
Intangible assets 16.9 2.2 0.8 19.9
Depreciation (94.8) (48.5) - (143.3)
Amortisation (4.9) (3.8) (0.5) (9.2)
3. Exceptional items and other non GAAP adjustments
6 months to28 August 2014£m 6 months to29 August 2013£m Year to 27 February 2014 £m
Exceptional items before tax and interest:
Revenue
VAT on gaming machine income (a) - - (4.6)
Operating costs
Net loss on disposal of property, plant and equipment and property reversions (0.8) (1.2) (11.7)
Impairment of property, plant and equipment (b) (c) - - (22.4)
Impairment reversal - - 5.9
Impairment of other intangibles (c) - - (3.7)
Rebranding (c) (0.3) - -
(1.1) (1.2) (31.9)
Exceptional items before interest and tax (1.1) (1.2) (36.5)
Exceptional interest:
Interest on exceptional tax (a) - - (1.1)
Unwinding of discount rate on provisions (0.4) (0.5) (0.9)
(0.4) (0.5) (2.0)
Exceptional items before tax (1.5) (1.7) (38.5)
Other non GAAP adjustments made to underlying profit before tax to arrive at reported profit before tax:
Amortisation of acquired intangibles (1.2) (1.4) (2.7)
IAS 19 income statement charge for pension finance cost (11.5) (12.3) (23.6)
(12.7) (13.7) (26.3)
Items included in reported profit before tax, but excluded in arriving at underlying profit before tax (14.2) (15.4) (64.8)
6 months to28 August 2014£m 6 months to29 August 2013£m Year to 27 February 2014 £m
Tax adjustments included in reported profit after tax, but excluded in arriving at underlying profit after tax:
Tax on continuing exceptional items 0.2 0.4 5.6
Exceptional tax items - tax base cost - - 40.2
Deferred tax relating to UK tax rate change - 25.1 18.6
Tax on non GAAP adjustments 2.5 3.1 6.1
2.7 28.6 70.5
(a) In the year ended 3 March 2011, the Group received a refund of VAT charged
on gaming machine income of £4.6m together with some associated interest. HMRC
appealed against the original ruling and the decision was overturned on 30
October 2013. Hence a liability has been booked in 2013/14 for £4.6m of
revenue and £1.1m of associated interest costs.
(b) There were no indicators of impairment in the current period.
(c) The costs incurred this year so far, relate to revenue expenses associated
with the rebranding of Coffeeheaven sites to Costa. The impairment of the
brand intangible and associated fixed assets was incurred in 2013/14 as part
of this rebranding exercise.
4. Finance (costs)/revenue
6 months to28 August 2014£m 6 months to29 August 2013£m Year to 27 February 2014 £m
Finance costs
Bank loans and overdrafts (10.4) (10.5) (20.9)
Other loans - (0.1) (0.4)
Interest capitalised 2.6 1.1 2.6
(7.8) (9.5) (18.7)
Impact of ineffective portion of cash flow and fair value hedges - (0.5) (0.9)
Net pension finance cost (11.5) (12.3) (23.6)
Finance costs before exceptional items (19.3) (22.3) (43.2)
Exceptional finance costs - - (1.1)
Unwinding of discount rate on provisions (note 3) (0.4) (0.5) (0.9)
Total finance costs (19.7) (22.8) (45.2)
Finance revenue
Bank interest receivable 0.1 0.1 0.1
Other interest receivable 0.1 0.3 0.6
Finance revenue before exceptional items 0.2 0.4 0.7
Total finance revenue 0.2 0.4 0.7
5. Dividends paid
6 months to28 August 2014£m 6 months to29 August 2013£m Year to 27 February 2014 £m
Paid in the period:
Equity dividends on ordinary shares:
Final dividend for 2013/14 - 47.00 pence 85.1 - -
Final dividend for 2012/13 - 37.90 pence - 67.7 67.7
Settled via scrip issue - (28.2) (28.2)
Interim dividend for 2013/14 - 21.80 pence - - 39.2
Settled via scrip issue - - (16.3)
85.1 39.5 62.4
Dividends on other shares:
B share dividend - - -
C share dividend - - -
- - -
Total dividends paid 85.1 39.5 62.4
6. Earnings per share
The basic earnings per share figures are calculated by dividing the profit for
the period attributable to parent shareholders, therefore before
non-controlling interests, 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 such options for all disclosed periods was
nil.
The numbers of shares used for the earnings per share calculations are as
follows:
6 months to28 August 2014million 6 months to29 August 2013million Year to 27 February 2014million
Basic weighted average number of ordinary shares 180.6 178.7 179.2
Effect of dilution - share options 1.8 2.0 1.9
Diluted weighted average number of ordinary shares 182.4 180.7 181.1
The profits used for the earnings per share calculations are as follows:
6 months to28 August 2014£m 6 months to29 August 2013£m Year to 27 February 2014£m
Profit for the period attributable to parent shareholders 190.4 177.5 327.9
Exceptional items - gross 1.5 1.7 38.5
Exceptional items - taxation (0.2) (25.5) (64.4)
Exceptional items - non-controlling interest (0.2) - (1.4)
Profit for the period before exceptional items attributable to parent shareholders 191.5 153.7 300.6
Non GAAP adjustments - gross 12.7 13.7 26.3
Non GAAP adjustments - taxation (2.5) (3.1) (6.1)
Underlying profit for the period attributable to parent shareholders 201.7 164.3 320.8
6 months to 28 August 2014 pence 6 months to29 August 2013pence Year to 27 February 2014pence
Basic EPS on profit for the period 105.43 99.33 182.98
Exceptional items - gross 0.83 0.95 21.48
Exceptional items - taxation (0.11) (14.27) (35.94)
Exceptional items - non-controlling interest (0.11) - (0.78)
Basic EPS on profit before exceptional items for the period 106.04 86.01 167.74
Non GAAP adjustments - gross 7.03 7.66 14.68
Non GAAP adjustments - taxation (1.38) (1.73) (3.40)
Basic EPS on underlying profit for the period 111.69 91.94 179.02
Diluted EPS on profit for the period 104.39 98.23 181.06
Diluted EPS on profit before exceptional items for the period 104.99 85.06 165.99
Diluted EPS on underlying profit for the period 110.58 90.92 177.14
7. Movements in cash and net debt
27 February 2014 Cash flow Foreign exchange Fair value adjustments to loan capital Amortisation of premiums and discounts 28 August 2014
£m £m £m £m £m £m
Cash at bank and in hand 41.3 52.7
Short-term deposits 0.1 -
Overdrafts - -
Cash and cash equivalents 41.4 11.7 (0.4) - - 52.7
Short-term bank borrowings - (0.2) - - - (0.2)
Loan capital under one year - -
Loan capital over one year (433.0) (519.7)
Total loan capital (433.0) (84.9) (0.9) (0.2) (0.7) (519.7)
Net debt (391.6) (73.4) (1.3) (0.2) (0.7) (467.2)
8. Financial instruments
IFRS 13 requires that the classification of financial instruments measured at
fair value be determined by reference to the source of inputs used to derive
the fair value. The classification uses the following three-level hierarchy:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets
and liabilities.
Level 2 - Other techniques for which all inputs, which have a significant
effect on the recorded fair value, are observable, either directly or
indirectly.
Level 3 - Techniques which use inputs, which have a significant effect on the
recorded fair value, that are not based on observable market data.
The fair value of derivative instruments disclosed below is calculated by
discounting all future cash flows by the market yield curve at the balance
sheet date using level 2 techniques:
As at 28 August 2014 Level 1£m Level 2£m Level 3£m Total £m
Financial liabilities
Derivative financial instruments - 27.9 - 27.9
As at 29 August 2013 Level 1£m Level 2£m Level 3£m Total £m
Financial liabilities
Derivative financial instruments - 19.5 - 19.5
As at 27 February 2014 Level 1£m Level 2£m Level 3£m Total £m
Financial liabilities
Derivative financial instruments - 29.0 - 29.0
There were no transfers between levels during any period disclosed. There are
no non-recurring fair value measurements.
9. Pension liability
During the six month period to 28 August 2014, the pension liability has
decreased from £534.3m to £489.2m. The main movements in the deficit are as
follows:
£m
Pension liability at 27 February 2014 534.3
Re-measurement due to:
Changes in financial assumptions 119.8
Experience adjustments (6.1)
Return on plan assets greater than discount rate (100.5)
Employer contributions (71.2)
Net interest on pension liability 11.5
Administration costs 1.4
Pension liability at 28 August 2014 489.2
The re-measurement loss due to changes in financial assumptions is primarily
driven by the reduction in the discount factor from 4.30% to 3.85%. This is
offset by the reduction in the Retail Price Index (RPI) inflation assumption
which has reduced from 3.25% to 3.10%.
10. Related party disclosure
In note 31 to the Annual Report and Accounts for the year ended 27 February
2014, the Group identified its key management personnel (including directors),
the Group pension schemes, its joint ventures and its associate as related
parties for the purpose of IAS 24 'Related Party Disclosure'. There have been
no significant changes in those related parties identified at the year end and
there have been no transactions with those related parties during the six
months to 28 August 2014 that have materially effected, or are expected to
materially effect, the financial position or performance of the Group during
this period. Details of the relevant relationships with those related parties
will be disclosed in the Annual Report and Accounts for the year ending 26
February 2015. All transactions with subsidiaries are eliminated on
consolidation.
11. Capital expenditure commitments
Capital expenditure commitments for which no provision has been made are set
out in the table below:
28 August 29 August 27 February
2014 2013 2014
£m £m £m
Property, plant and equipment 80.2 72.8 52.3
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