REG - Whitbread PLC - Whitbread Interim Results <Origin Href="QuoteRef">WTB.L</Origin> - Part 3
25/10/2016 07:05
- Part 3: For the preceding part double click ID:nRSY3371Nb
1.0 0.7 (1.5)
Tax on non underlying adjustments 1.1 2.2 4.3
Exceptional tax items - tax base cost - - (0.1)
Deferred tax relating to UK tax rate change - - 13.0
2.1 2.9 15.7
(a) During the period, the Group made a net gain on asset disposals of £4.5m.
The balance relates to changes in onerous contract provisions.
(b) On 13 July 2016, the Group announced its intention to exit hotel
operations in South East Asia. This has resulted in the recognition of
impairment losses on assets of £12.3m, investment in joint ventures of £0.4m
and goodwill of £3.0m as well as the recognition of a restructuring provision
of £19.3m for costs of exiting management agreements and closure of regional
offices.
(c) During the period, the business undertook significant operational
restructuring, incurring costs of £7.8m, including staff redundancy and
consultation costs, and a £2.9m asset impairment.
(d) During the period, the Group received a refund on settlement of a historic
VAT claim.
(e) The interest arising from the unwinding of the discount rate within
provisions is included in exceptional interest, reflecting the exceptional
nature of the provisions created.
4. Finance (costs) / revenue
6 months to1 September 2016£m 6 months to27 August 2015£m Year to 3 March 2016£m
Finance costs
Bank loans and overdrafts (2.8) (2.9) (5.3)
Other loans (15.5) (11.8) (28.0)
Interest capitalised 5.5 4.0 10.0
Impact of ineffective portion of cash flow and fair value hedges (0.1) - -
(12.9) (10.7) (23.3)
Finance revenue
Bank interest receivable 0.1 0.3 0.4
Other interest receivable 0.1 0.1 0.2
Impact of ineffective portion of cash flow and fair value hedges - - 0.2
0.2 0.4 0.8
Underlying net finance costs (12.7) (10.3) (22.5)
Exceptional and non underlying finance costs
IAS 19 income statement charge for pension finance cost (5.0) (9.1) (17.2)
Unwinding of discount on provisions (Note 3) (0.4) (0.3) (0.7)
(5.4) (9.4) (17.9)
Total net finance costs (18.1) (19.7) (40.4)
Total finance costs (18.3) (20.1) (41.2)
Total finance revenue 0.2 0.4 0.8
Total net finance costs (18.1) (19.7) (40.4)
5. Dividends paid
6 months to1 September 2016£m 6 months to27 August 2015£m Year to 3 March 2016£m
Paid in the period:
Equity dividends on ordinary shares:
Final dividend for 2015/16 - 61.85 pence 112.6 - -
Final dividend for 2014/15 - 56.95 pence - 103.4 103.4
Interim dividend for 2015/16 - 28.50 pence - - 51.7
112.6 103.4 155.1
Dividends on other shares:
B share dividend - - -
C share dividend - - -
- - -
Total dividends paid 112.6 103.4 155.1
6. Earnings per share
The basic earnings per share (EPS) figures are calculated by dividing the net
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 to1 September 2016million 6 months to27 August 2015million Year to 3 March 2016million
Basic weighted average number of ordinary shares 182.1 181.3 181.4
Effect of dilution - share options 0.6 1.7 1.4
Diluted weighted average number of ordinary shares 182.7 183.0 182.8
The profits used for the earnings per share calculations are as follows:
6 months to1 September 2016£m 6 months to27 August 2015£m Year to 3 March 2016£m
Profit for the period attributable to parent shareholders 202.9 197.6 391.2
Exceptional items and non underlying adjustments - gross 43.4 36.4 58.6
Exceptional items and non underlying adjustments - taxation (2.1) (2.9) (15.7)
Exceptional items and non underlying adjustments - non-controlling interest (0.4) (0.3) (1.2)
Underlying profit for the period attributable to parent shareholders 243.8 230.8 432.9
6 months to 1 September 2016 6 months to 27 August 2015 pence Year to 3 March 2016pence
pence
Basic EPS on profit for the period 111.42 108.99 215.66
Exceptional items and non underlying adjustments - gross 23.83 20.08 32.30
Exceptional items and non underlying adjustments - taxation (1.15) (1.60) (8.65)
Exceptional items and non underlying adjustments - non-controlling interest (0.22) (0.17) (0.66)
Basic EPS on underlying profit for the period 133.88 127.30 238.65
Diluted EPS on profit for the period 111.06 107.98 214.00
Diluted EPS on underlying profit for the period 133.44 126.12 236.82
7. Movements in cash and net debt
3 March 2016 Cost of borrowings Cash flow Foreign exchange Fair value adjustments to loan capital Amortisation of premiums and discounts 1 September 2016
£m £m £m £m £m £m £m
Cash at bank and in hand 57.0 72.7
Short-term deposits 0.1 0.5
Overdrafts - -
Cash and cash equivalents 57.1 - 14.5 1.6 - - 73.2
Short-term bank borrowings (92.0) - (4.5) - - - (96.5)
Loan capital under one year (2.0) (36.2)
Loan capital over one year (872.9) (928.7)
Total loan capital (874.9) 0.6 (73.9) (12.3) (3.5) (0.9) (964.9)
Net debt (909.8) 0.6 (63.9) (10.7) (3.5) (0.9) (988.2)
Net debt includes US$ denominated loan notes of US$325.0m (March 2016:
US$325.0m) retranslated at period end to £249.4m (March 2016: £233.8m). These
notes have been hedged using cross-currency swaps. At maturity, £208.3m (March
2016: £208.3m) will be repaid taking into account the cross-currency swaps. If
the impact of these hedges is taken into account, reported net debt would be
£947.1m (March 2016: £884.3m).
8. Financial instruments
The Group entered into a number of cross-currency swap agreements in relation
to the US$ denominated loan notes to eliminate any foreign currency exchange
risk on interests or on the repayment of principle borrowed. There are also
£50.0m of swaps (March 2016: £50.0m) with maturity beyond the life of the
revolving credit facility (2021), which are in place to hedge against the core
level of debt the Group will hold.
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 or
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; and
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:
1 September 27 August 3 March
2016 2015 2016
£m £m £m
Financial assets
Derivative financial instruments - level 2 38.4 5.0 24.8
Financial liabilities
Derivative financial instruments - level 2 13.6 14.7 14.0
There were no transfers between levels during any period disclosed.
9. Pension liability
During the six month period to 1 September 2016, the pension liability has
increased from £288.1m to £403.5m. The main movements in the deficit are as
follows:
£m
Pension liability at 3 March 2016 288.1
Re-measurement due to:
Changes in financial assumptions 636.1
Experience adjustments 1.4
Return on plan assets greater than discount rate (485.0)
152.5
Contributions from employer (43.7)
Net interest on pension liability 5.0
Administrative expenses 1.6
Pension liability at 1 September 2016 403.5
The deficit has increased by £115.4m from 3 March 2016 driven by a reduction
in the discount rate from 3.70% to 2.20% and a reduction in the Retail Price
Index (RPI) inflation assumption from 2.90% to 2.80%, offset by a contribution
of £43.7m.
10. Related party disclosure
In note 32 to the Annual Report and Accounts for the year ended 3 March 2016,
the Group identified its related parties as its key management personnel
(including directors), the Group pension schemes, its joint ventures and its
associate 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 1 September 2016 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 2 March 2017. 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:
1 September 27 August 3 March
2016 2015 2016
£m £m £m
Property, plant and equipment 191.2 141.5 142.4
Intangible assets 12.5 4.6 10.9
12. Events after the balance sheet date
An interim dividend of 29.90p per share (2015: 28.50p) amounting to a dividend
of £54.5m (2015: £51.7m) was declared by the directors. A dividend
reinvestment plan (DRIP) alternative will be offered. These consolidated
financial statements do not reflect this dividend payable.
Independent review report to Whitbread PLC
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 1
September 2016 which comprise the interim consolidated income statement, the
interim consolidated statement of comprehensive income, the interim
consolidated statement of changes in equity, the interim consolidated balance
sheet, the interim consolidated cash flow statement and the related notes 1 to
12. We have read the other information contained in the half-yearly financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity"
issued by the Auditing Practices Board. Our work has been undertaken so that
we might state to the Company those matters we are required to state to it in
an independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our review work, for this report, or for the conclusions
we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in the accounting policies, the annual financial statements of
the Group are prepared in accordance with IFRSs as adopted by the European
Union. The condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International Accounting
Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 1 September 2016 is not prepared, in
all material respects, in accordance with International Accounting Standard 34
as adopted by the European Union and the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, UK
24 October 2016
This information is provided by RNS
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