REG - Whitbread PLC - Whitbread Preliminary Results <Origin Href="QuoteRef">WTB.L</Origin> - Part 3
25/04/2017 07:06
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covering staff redundancy and consultation costs.
(e) During the year, the Group received a refund on settlement of a historic
VAT claim.
(f) During the year the Group disposed of its investment in Morrison Street
Hotel Limited resulting in a net gain of £11.8m.
(g) Following a review of IT software and technology assets during the prior
year, additional amortisation of £10.1m was recognised in the income statement
in respect of systems for which there was no future economic benefit.
(h) Net impairment losses arising on sites which are to be closed or
underperforming.
(i) The finance cost arising from the unwinding of the discount rate within
provisions is included in non-underlying finance costs, reflecting the
non-underlying nature of the provisions created.
(j) Impact of the reduction in the main rate of UK corporation tax to 19% from
1 April 2017 and to 17% from 1 April 2020.
6. Taxation
Consolidated income statement 2016/17£m 2015/16£m
Current tax:
Current tax expense 111.6 116.1
Adjustments in respect of previous periods (1.7) (8.0)
109.9 108.1
Deferred tax:
Origination and reversal of temporary differences (6.0) (2.9)
Adjustments in respect of previous periods 0.8 8.2
Change in UK tax rate to 17% (2015/16: 18%) (5.2) (13.0)
(10.4) (7.7)
Taxreported in the consolidated income statement 99.5 100.4
Consolidated statement of comprehensive income 2016/17£m 2015/16£m
Current tax:
Cash flow hedges (0.5) 0.9
Pensions (15.6) (14.7)
Deferred tax:
Cash flow hedges 0.6 0.4
Pensions (26.7) 55.4
Change in UK tax rate to 17% (2015/16: 18%) - pensions 3.1 0.7
Change in UK tax rate to 17% (2015/16: 18%) - cash flow hedges 0.1 0.1
Tax reported in other comprehensive income (39.0) 42.8
42.8
A reconciliation of the tax charge applicable to underlying profit before tax
and profit before tax at the statutory tax rate, to the actual tax charge at
the Group's effective tax rate, for the years ended 2 March 2017 and 3 March
2016 respectively is as follows:
2016/17 2015/16
Tax on underlying profit£m Tax on profit £m Tax on underlying profit £m Tax on profit £m
Profit before tax as reported in the consolidated income statement 565.2 515.4 546.3 487.7
Tax at current UK tax rate of 20.00% (2015/16: 20.08%) 113.0 103.1 109.7 98.0
Effect of different tax rates and unrecognised losses in overseas companies 4.3 8.3 3.5 5.1
Effect of joint ventures and associate (0.5) (0.5) (0.9) (0.9)
Expenditure not allowable 3.1 (4.9) 4.0 11.0
Adjustments to current tax expense in respect of previous years (2.1) (1.6) (8.0) (8.0)
Adjustments to deferred tax expense in respect of previous years 1.8 0.8 7.8 8.2
Impact of deferred tax being at a different rate from current tax rate (0.5) (0.5) - -
Impact of change of tax rate on deferred tax balance - (5.2) - (13.0)
Tax expense reported in the consolidated income statement 119.1 99.5 116.1 100.4
Current tax liability
The corporation tax balance is a liability of £45.9m (2016: liability of
£41.2m).
Deferred tax
Deferred tax relates to the following:
Consolidatedbalance sheet Consolidated income statement
2017£m 2016£m 2016/17£m 2015/16£m
Deferred tax liabilities
Accelerated capital allowances 44.0 48.7 (4.7) (3.3)
Rolled over gains and property revaluations 68.1 73.3 (4.5) (8.0)
Gross deferred tax liabilities 112.1 122.0
Deferred tax assets
Pensions (53.1) (28.7) (0.7) (2.2)
Other 3.0 1.4 (0.5) 5.8
Gross deferred tax assets (50.1) (27.3)
Deferred tax expense (10.4) (7.7)
Net deferred tax liability 62.0 94.7
Total deferred tax liabilities relating to disposals during the year were £nil
(2016: £nil).
The Group has incurred overseas tax losses which, subject to any local
restrictions, can be carried forward and offset against future taxable profits
in the companies in which they arose. The Group carries out an annual
assessment of the recoverability of these losses and does not think it
appropriate at this stage to recognise any deferred tax asset. If the Group
were to recognise these deferred tax assets in their entirety, profits would
increase by £16.5m (2016: £10.7m), of which, the share attributable to the
parent shareholders is £13.9m (2016: £8.9m).
At 2 March 2017, there was no recognised deferred tax liability (2016: £nil)
for taxes that would be payable on any unremitted earnings, as all such
amounts are permanently reinvested or, where they are not, there are no
corporation tax consequences of such companies paying dividends to parent
companies.
Tax relief on total interest capitalised amounts to £1.8m (2016: £2.0m).
Factors affecting the tax charge for future years
The Finance (No 2) Act 2015 reduced the main rate of UK corporation tax to 19%
from 1 April 2017 and to 18% from 1 April 2020. The effect of these rates was
included in the financial statements in 2015/16. The Finance Act 2016 further
reduced the main rate of UK corporation tax to 17% with effect from 1 April
2020. The effect of the new rate is a reduction of the deferred tax liability
by a net of £2.7m comprising a credit of £5.2m to the income statement, a
charge of £3.2m to the statement of consolidated income, and a reserves
movement of £0.7m. The rate changes will also impact the amount of the future
cash tax payments to be made by the Group.
7. Earnings per share
The basic earnings per share figures (EPS) are calculated by dividing the net
profit for the year attributable to ordinary shareholders, therefore before
non-controlling interests, by the weighted average number of ordinary shares
in issue during the year 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 year. Where the average share price for the year is
lower than the option price the options become anti-dilutive and are excluded
from the calculation. The number of such options was nil (2016: nil).
The numbers of shares used for the earnings per share calculations are as
follows:
2016/17million 2015/16million
Basic weighted average number of ordinary shares 182.2 181.4
Effect of dilution - share options 0.4 1.4
Diluted weighted average number of ordinary shares 182.6 182.8
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
195.4m, less 12.1m treasury shares held by Whitbread PLC and 1.0m held by the
ESOT (2016: 195.2m, less 12.6m treasury shares held by Whitbread PLC and 0.9m
held by the ESOT).
The profits used for the earnings per share calculations are as follows:
2016/17£m 2015/16£m
Profit for the year attributable to parent shareholders 421.6 391.2
Non-underlying items - gross 49.8 58.6
Non-underlying items - taxation (19.6) (15.7)
Non-underlying items - non-controlling interest (2.7) (1.2)
Underlying profit for the year attributable to parent shareholders 449.1 432.9
2016/17pence 2015/16pence
Basic on profit for the year 231.39 215.66
Non-underlying items - gross 27.33 32.30
Non-underlying items - taxation (10.76) (8.65)
Non-underlying items - non-controlling interest (1.48) (0.66)
Basic on underlying profit for the year 246.48 238.65
Diluted on profit for the year 230.89 214.00
Diluted on underlying profit for the year 245.95 236.82
8. Dividends paid and proposed
2016/17 2015/16
pence per share £m pence per share £m
Final dividend, proposed and paid, relating to the prior year 61.85 112.6 56.95 103.4
Interim dividend, proposed and paid, for the current year 29.90 54.5 28.50 51.7
Total equity dividends paid in the year 167.1 155.1
Dividends on other shares:
B share dividend 0.80 - 0.80 -
C share dividend 0.80 - 0.80 -
- -
Total dividends paid 167.1 155.1
Proposed for approval at Annual General Meeting:
Final equity dividend for the current year 65.90 120.1 61.85 112.4
A final dividend of 65.90p per share (2016: 61.85p) amounting to a dividend of
£120.1m (2016: £112.4m) was recommended by the directors at their meeting on
24 April 2017. A dividend reinvestment plan (DRIP) alternative will be
offered. These financial statements do not reflect this dividend payable.
9. Movements in cash and net debt
Year ended 2 March 2017 3 March 2016 Cost of borrowings Cash flow Foreign exchange Fair value adjustments to loans Amortisation of premiums and discounts 2 March 2017
£m £m £m £m £m £m £m
Cash at bank and in hand 57.0 62.9
Short-term deposits 0.1 0.1
Overdrafts - -
Cash and cash equivalents 57.1 - 4.1 1.8 - - 63.0
Short-term bank borrowings (92.0) - (17.6) - - - (109.6)
Loan capital under one year (2.0) (47.8)
Loan capital over one year (872.9) (795.6)
Total loan capital (874.9) 0.6 67.4 (28.1) (6.5) (1.9) (843.4)
Net debt (909.8) 0.6 53.9 (26.3) (6.5) (1.9) (890.0)
Year ended 3 March 2016 26 February 2015 Cost of borrowings Cash flow Foreign exchange Fair value adjustments to loans Amortisation of premiums and discounts 3 March 2016
£m £m £m £m £m £m £m
Cash at bank and in hand 1.9 57.0
Short-term deposits 0.2 0.1
Overdrafts - -
Cash and cash equivalents 2.1 - 54.4 0.6 - - 57.1
Short-term bank borrowings (71.2) - (20.8) - - - (92.0)
Loan capital under one year (1.9) (2.0)
Loan capital over one year (512.2) (872.9)
Total loan capital (514.1) 3.6 (343.3) (14.1) (5.1) (1.9) (874.9)
Net debt (583.2) 3.6 (309.7) (13.5) (5.1) (1.9) (909.8)
Net debt includes US$ denominated loan notes of US$325.0m (2016: US$325.0m)
retranslated to £267.8m (2016: £233.8m). These notes have been hedged using
cross-currency swaps. At maturity, £208.3m (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 £830.5m (2016: £884.3m).
This information is provided by RNS
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