TIDMMARS
RNS Number : 1139N
Marston's PLC
14 May 2015
14(th) May 2015
MARSTON'S PLC
INTERIM RESULTS FOR THE 26 WEEKS ENDED 4 APRIL 2015
REVENUE AND EARNINGS GROWTH SUPPORT INCREASE IN DIVIDEND
FINANCIAL HIGHLIGHTS
-- Underlying Group revenue up 3% to GBP384.5 million
-- Underlying profit before tax up 2% to GBP29.6 million,
despite disposals and anticipated pension costs
-- Underlying earnings per share up 2% to 4.2 pence per share
-- Interim dividend up 4% to 2.5 pence per share
-- Estate valuation reveals GBP54 million increase - 40% increase on build cost for new-builds
OPERATING HIGHLIGHTS
-- Destination and Premium: Like-for-like (lfl) sales up 1.5%,
underlying operating profit up 10%, operating margin up 0.5%
-- Taverns managed and franchised: Lfl sales up 1.4%, profit per pub up 19%
-- Leased: Profit per pub up 4%
-- Brewing: Underlying revenue up 9%, ale volume up 4%,
underlying operating profit up 10%, operating margin up 0.1%
STRATEGY HIGHLIGHTS
-- New-build development: Completed 8 new-builds in the half year
-- Franchise expansion:37 pubs converted to franchise; now 520 pubs
-- Disposal of smaller wet-led pubs: Disposal proceeds of GBP26
million, including sale of 65 pubs, improving average estate
quality and returns
-- Brewing: Acquisition of Thwaites' brewing operations completed in April 2015
CURRENT TRADING - 5 WEEKS TO 9 MAY
-- Managed lfl sales up 2.0% including lfl food sales up 1.8% and lfl wet sales up 1.7%
-- Taverns lfl sales up 2.8%
-- Leased profits and own-brewed volumes in line with expectations
Commenting, Ralph Findlay, Chief Executive, said:
"Two years ago, we set out our plan to reposition our pub
estate, focusing on high-quality pubs with opportunity for further
growth. As we approach the end of the transition period, these
results demonstrate our plan is working.
Profits have increased in each of our trading segments,
excluding the impact of disposals, and we remain on track to
complete 25 new-builds this year with excellent visibility on our
site pipeline in 2015 and 2016. We are also seeing good
opportunities to expand our premium estate, Pitcher & Piano and
Revere, and invest further in pubs with accommodation.
We expect to complete the majority of our disposals programme
this year and our momentum gives us confidence of achieving further
progress in the future."
ENQUIRIES:
Marston's PLC Tel: 01902 Instinctif Tel: 020 7457
329516 Partners 2020
Ralph Findlay, Chief Executive Justine Warren
Officer
Andrew Andrea, Chief Financial Matthew Smallwood
Officer
An audio webcast of the results presentation will be available
at
http://webcast.instinctif.tv/p/886-1178-15750 on Thursday, 14th
May.
NOTES TO EDITORS
-- Marston's is a leading pub operator and independent
brewer.
-- It has an estate of around 1,630 pubs situated nationally,
comprising managed, franchised and leased pubs.
-- It is the UK's leading brewer of premium cask and
bottled ales, including Marston's Pedigree and Hobgoblin.
The beer portfolio also includes Banks's, Jennings,
Wychwood, Ringwood, Brakspear and Mansfield beers.
-- Marston's employs around 13,000 people.
o The underlying results reflect the performance of
the Group before exceptional and other adjusting
items.
The Directors consider that these figures provide
a useful indication of the underlying performance
of the Group.
o The statutory loss for the period after taxation
was GBP23.8 million. This reflects non-underlying
items of
GBP47.6 million, the majority of which are non-cash
and relate to the external estate valuation and
the impact
of changing discount rates used for valuing swaps
and the onerous lease provision.
GROUP OVERVIEW
We are pleased to report interim results which are in line with
our expectations and demonstrate encouraging progress in
implementing our strategy. Each of our trading segments achieved
underlying revenue and profit growth excluding the impact of
disposals.
Total underlying revenue of GBP384.5 million increased by 2.7%
(2014: GBP374.3 million) reflecting the contribution from new
pub-restaurants, solid like-for-like sales growth, and growth in
Brewing, over and above the impact of disposals.
Underlying operating profit increased by 1% to GBP66.5 million
(2014: GBP65.7 million) despite a disposal impact of around GBP3
million and a GBP2 million accounting increase in pension costs.
Underlying profit per pub improved in all of our pub segments and
we achieved profit growth of 10.3% in Brewing. Underlying operating
margin reduced slightly to 17.3% (2014: 17.6%).
Underlying profit before tax increased by 2% to GBP29.6 million
(2014: GBP29.0 million). Basic underlying earnings per share
increased by 2% to 4.2 pence per share (2014: 4.1 pence per
share).
During the period we disposed of 65 pubs and other assets
generating proceeds of GBP26 million. Net debt increased by GBP47
million reflecting our seasonal earnings profile, the payment of
the 2014 final dividend (GBP25 million), and capital investment of
GBP71 million. Net debt at the period end comprised GBP1,043
million of predominantly long-term secured debt and GBP202 million
relating to lease financing which retains the benefit of freehold
ownership.
These results also reflect the adoption of a full external
valuation of our property estate at GBP2 billion. The overall
effect is a net increase in property values of GBP54 million.
Properties valued in the previous 2012 valuation were valued 2%
higher in 2015 than in 2012. Additionally, our previously unvalued
new-build pub-restaurants increased in value by GBP69 million - a
40% increase relative to build cost - demonstrating the significant
shareholder value generated from our capital investment. The
valuation of smaller, wet-led pubs contributed to a non-cash
accounting charge to the income statement, described below within
'non-underlying items'.
Since the period end we have completed the acquisition of the
trading operations of Thwaites' beer division, including the
Lancaster Bomber and Wainwright brands, for a total cash
consideration of GBP25.1 million before working capital. The
acquisition is consistent with our strategy to focus on popular
premium ale brands and provides further opportunities for growth in
the developing free trade market.
Strategy
Ours is a strategy for growth. We aim to achieve growth in pubs
through investment in attractive new-build pubs, and in our core
estate through our managers, franchisees and lessees offering
memorable service to customers. In Brewing, our focus is on local
and premium draught and bottled beers in a market where there is
increasing demand.
Investment in new-builds for growth and quality; disposals
increase profit per pub.
In 2015 we expect to open around 25 family-friendly
pub-restaurants, including three lodges, representing the
continuing development of our Destination and Premium estate which
has benefited from the opening of over 100 such pubs in the last
four years. These are large, high-turnover managed pubs generating
high returns through a focus on family dining, reflected in a food
sales mix of over 50%.
From 2016, around five lodge developments per year are
anticipated. These represent an expansion of around 135 rooms per
year to our existing total of 600 rooms in 34 Destination pubs.
Additionally, we will continue to develop accommodation within our
Revere estate which has around 130 rooms in 10 pubs.
Our investment in new-build pubs has contributed to the
development of a high-quality, national pub estate and
transformational growth in food sales to over 30 million meals each
year. Over the last four years we have also sold 600 smaller pubs
which offered limited opportunity for growth or development; we
expect to realise around GBP60 million from the disposal of smaller
wet-led pubs in the current financial year, mainly from the Taverns
estate. In the future, disposals will be fewer as we reach our
target estate configuration.
In subsequent years we expect a similar overall rate of growth,
but with a broader allocation of investment, including two Revere
or Pitcher & Piano openings each year dependent on site
availability. In 2015 we expect two conversions to Revere from our
existing estate. Our ability to invest and develop a range of
operating formats and brands including family-friendly,
value-for-money dining and more premium pubs and bars provides us
with greater flexibility and opportunity when selecting new
sites.
Property development is a vital component of our development
plans. We have a good pipeline of sites which gives us confidence
in achieving our future openings target, and we have been able to
use our property expertise to acquire sites at attractive prices
and maximise value from our existing predominantly freehold
estate.
Innovation and management of quality, standards and service
drive like-for-like growth.
Our plans for growth in our existing pub estate recognise that
the wider eating-out and drinking-out markets are evolving,
dynamic, competitive, and subject to regulatory influences. We have
responded to consumer demands through innovative menu and service
developments including Pizza Kitchens, Garden Grills, and ice-cream
parlours, and through the introduction of new technologies to
provide entertainment and better service to our customers.
We have led the market in new-build pub development in recent
years, and we were also the first major pub operator to spot the
need for new, more flexible business models in the community pub
market in our Taverns estate. We pioneered franchise-style
agreements in 2009 as a new model designed to improve customer
experiences through investment, improved standards and offering
outstanding value, and we now have around 520 franchised pubs in
our Taverns business. These pubs operate very differently to
traditional tenancies - specifically, they do not include either
rent or a traditional beer tie - and allow our franchisees to
continue to play vital roles at the heart of communities while
benefiting from support similar to that provided in our managed
pubs. We expect that such agreements will become the default
operating model for most community pubs in future.
The increasingly competitive and fast-moving market will require
us to continue to be innovative and responsive. We have set a
target for 85% of our pub profits to be generated by agreements
where we are in direct control of the retail offer - managed and
franchised pubs - by 2016. We are currently at 76%.
We remain supportive of the leased model in high-quality
distinctive pubs which benefit from entrepreneurial management and
which are let to independent operators under long-term leases.
Approximately 15% of our pub profits are generated by pubs under
this model, generating average profits per pub of GBP70,000 and
average rents per pub of GBP40,000.
We will continue to invest selectively where appropriate, and
this year we expect to invest around GBP2 million in leased
pubs.
A differentiated beer strategy delivering market
outperformance.
In Brewing, our strategy is to focus on local, premium draught
and bottled beers. Increasing consumer demand for choice,
provenance and beers of taste has made us 'Number 1' in key
markets: our market share in premium cask ale is 17%, and in
bottled ale is 21%. We are uniquely positioned to benefit from
these trends and we have achieved significant increases in market
share of premium cask ale in the on-trade and bottled ale in the
off-trade in recent years. We also target growth in the export
market and through our innovative fastcask(R) technology.
Long-term debt financing of freehold assets.
Our securitisation structure covers 61% of our pub profits at a
range of maturities to 2035, at fixed rates of interest. We have
also put in place GBP202 million of low-cost, 35-40 year property
leases with no covenant reporting requirement and options to retain
freehold ownership representing a 'sector first'. This is an
effective way to help finance our investment in new-build
pub-restaurants. The GBP47 million of property leases completed in
2015 have an initial yield of 4.15%, demonstrating the attraction
of our pub development programme to lenders. Our use of short-term
bank facilities is relatively small, minimising near-term
refinancing requirements. The majority of our debt is long-term,
secured and fixed-rate with a stable debt service profile.
BUSINESS REVIEW
Destination and Premium - 380 pubs
Our 345 Destination pubs have a high food sales mix of 58%
(2014: 57%) reflecting our continued focus on informal, family pub
dining. Our 35 Premium pubs and bars include the branded Pitcher
& Piano chain, and up-market pubs which have an independent
feel focused on food, drink and accommodation ('Revere').
Total underlying revenue increased by 7.6% to GBP187.2 million
including the contribution from 27 new pub-restaurants opened in
2014 and 8 in 2015.
Like-for-like sales were 1.5% ahead of last year including
like-for-like food sales up by 1.4% and like-for-like wet sales
growth of 1.4%. These rates of growth were ahead of the market
outside London (as indicated by the Peach Tracker).
Average spend per head increased 5% to around GBP6.90 driven by
increased sales of starters, desserts and coffee.
Premium pubs and bars continued to perform well. Pitcher &
Piano benefited from recent refurbishments in four bars, and we
opened two major Revere conversions (Newbury and Derby) in the
period.
The continuing and increasing popularity of pub and lodge
accommodation contributed to like-for-like room sales growth of
4.3%. In the first half year, we opened new lodges in Dunbar and in
Balloch, Loch Lomond, and expect to open in Whitby in the second
half year.
Overall, Destination and Premium underlying operating profit of
GBP31.6 million was up 10.5% (2014: GBP28.6 million), with average
profit per pub up 3%. Underlying operating margin increased by 0.5%
reflecting sales growth and good cost management. We expect cost
inflation to be relatively low for the remainder of 2015, with most
significant costs managed using fixed price contracts.
Taverns - 909 pubs
Our Taverns pubs are high-quality community pubs operated
through managed, franchised and tenanted business models. They
focus on recruiting and retaining great licensees, with offers,
entertainment and amenities tailored for local customers. They have
a relatively high wet sales mix (77%), although the importance of
food sales is increasing.
Currently, the Taverns estate comprises 113 community managed
pubs, 520 franchised pubs, and 276 tenanted pubs. In the first half
year we sold 65 pubs from the Taverns estate, and expect around 200
disposals for the full year. By the end of 2016 we expect to have
converted the majority of our remaining tenanted pubs to the
franchise model, resulting in a core portfolio of 800 high-quality
community pubs operating principally under the franchise model.
Underlying revenue of GBP104.4 million (2014: GBP113.2 million)
and underlying operating profit of GBP24.1 million (2014: GBP25.1
million) reflect the impact of disposals. Underlying revenue
excluding disposals was up 3% reflecting like-for-like sales growth
of 1.4% in our managed and franchised pubs, and the contribution of
pubs converted to franchise-style agreements over the previous 18
months. Operating margin was 0.9% higher due to tighter cost
control and the positive impact of disposing of low margin
units.
The continued extension of franchise-style agreements and
disposals have significantly improved the quality of the Taverns
estate, with average profit per pub up 19% in the period.
Leased - 343 pubs
Our Leased estate includes high-quality distinctive pubs which
benefit from a higher degree of independence and committed
licensees. The leased model, with longer-term assignable
agreements, attracts skilled entrepreneurs who build value through
developing their own businesses in pubs which are increasingly
targeting the pub-dining market.
Total underlying revenue of GBP25.1 million and underlying
operating profit of GBP12.4 million were broadly in line with last
year despite the impact of disposals. Average profit per pub
increased by 4%.
In our Leased estate our primary objective is to help our
business partners improve their offers to customers. We offer all
lessees access to Marston's buying power and provide them with
retail insight gained from our experiences in operating a national
estate of managed and franchised pubs. We have a good pipeline of
applicants to become partners with Marston's, and licensee
stability remains high at over 90%. We offer a range of lease
agreements, including free-of-tie options.
Brewing
Total underlying revenue increased by 9.4% to GBP67.8 million;
underlying operating margin was 0.1% ahead of last year, and
underlying operating profit increased 10.3% to GBP8.6 million.
Ale volumes were 4% ahead of last year, including growth of 9%
in premium ale volumes. Hobgoblin, our largest brand, achieved
sales growth of 11% in the period.
We maintained our market leading position in premium cask ale
with a market share of 17%, and maintained our share of the bottled
ale market at 21% through continued growth in the off-trade.
Our focus on premium, regional and high quality beers supported
by great service underpins our brewing strategy: premium ale now
accounts for 73% of our own-brewed volume. At the same time, we
have innovated and introduced new beers - recent examples include
the launch of Hobgoblin Gold, Marston's Pedigree New World Pale
Ale, and a collaboration beer with Tesco and Help for Heroes to
raise funds for the charity with each pint or bottle sold.
Our marketing campaigns for Marston's Pedigree and Hobgoblin
were winners at the recent Beer Marketing Awards.
Current trading
The second half year has started well, with like-for-like sales
growth in Destination and Premium pubs up 2.0% for the 5 weeks to 9
May and 1.6% for the year to date; in Taverns of 2.8% and 1.7% for
the same periods respectively; and Leased profits in line with
expectations. In Brewing, trading is in line with expectations,
with Group ale volumes up 4% for the year to date.
Outlook and dividend
After an encouraging first half year, we expect to make further
progress for the remainder of the year. Given underlying growth
trends and our confidence for the year as a whole, we are pleased
to declare an interim dividend of 2.5 pence per share representing
a 4.2% increase on last year.
FINANCIAL REVIEW
Results for the 26 weeks to 4 April 2015
Underlying Underlying
revenue operating Margin
profit
(see note
2)
2015 2014 2015 2014 2015 2014
GBPm GBPm GBPm GBPm % %
Destination and
Premium 187.2 173.9 31.6 28.6 16.9 16.4
Taverns 104.4 113.2 24.1 25.1 23.1 22.2
Leased 25.1 25.2 12.4 12.5 49.4 49.6
Brewing 67.8 62.0 8.6 7.8 12.7 12.6
Group Services - - (10.2) (8.3) (2.7) (2.2)
-------- ------- -------- ---------- --------- ---------
Group 384.5 374.3 66.5 65.7 17.3 17.6
-------- ------- -------- ---------- --------- ---------
Underlying Group revenue was 2.7% up on last year, with
improving trends in Destination and Premium pubs and Brewing.
Underlying Group operating margin was 0.3% below last year due to
the increased mix of profits from our franchised business only
being partially offset by the higher margins in Destination and
Premium pubs. Central costs were impacted by a previously
anticipated GBP2 million increase in pension costs in the first
half.
Underlying operating profit was GBP66.5 million and underlying
earnings per share were 4.2 pence per share (2014: 4.1 pence per
share).
The operating profit after non-underlying items was GBP18.0
million (2014: GBP9.9 million) and the basic loss per share after
non-underlying items was 4.2 pence per share (2014: 8.3 pence per
share).
Capital expenditure
Capital expenditure for the first half year was GBP70.9 million
(2014: GBP72.2 million), reflecting continued investment in the
new-build pub development programme and in the Franchised estate.
We expect capital expenditure to be around GBP145 million for the
year as a whole (2014: GBP142.6 million).
Disposals
Proceeds of GBP26.4 million have been received from the disposal
of 65 pubs and other assets.
Financing
The Group has a long-term securitisation of approximately GBP0.9
billion and a GBP257.5 million bank facility to November 2018, the
drawn position of which at 4 April 2015 was GBP235 million.
In 2015 the Group has entered into 40-year lease-financing
arrangements of GBP47 million, bringing the total arrangements
under this form of financing to GBP202.2 million as at 4 April
2015. This financing is a form of sale and leaseback agreement
whereby the freehold reverts to the Group at the end of the term at
nil cost, consistent with our preference for predominantly freehold
asset tenure. The agreements range from 35 to 40 years and provide
the Group with an extended debt maturity profile at attractive
rates of interest. Unlike a traditional sale and leaseback, the
associated liability is recognised as debt on the balance sheet due
to the reversion of the freehold.
These facilities provide us with an appropriate level of
financing headroom for the short and medium term, and with a
structure that continues to provide operational flexibility. The
Group has sufficient headroom on both the banking and
securitisation covenants and has flexibility to transfer pubs
between the two debt structures.
Net debt at 4 April 2015 was GBP1,245 million and excluding the
lease financing described above was GBP1,043 million. The level of
net debt tends to be higher at the half year reflecting the
seasonal earnings profile of the business and the proportionately
higher dividend.
Underlying interest charges of GBP36.9 million were broadly in
line with last year.
Pensions
The deficit on our final salary pension scheme was GBP7.3
million which compares to the GBP7.8 million surplus at the year
end. This is principally due to the movement in bond yields during
the period.
Taxation
The underlying rate of taxation was 19.6% in 2015 compared to
20.0% in 2014. This is below the standard rate of corporation tax
primarily due to credits in respect of deferred tax on
property.
Non-underlying items
There is a net non-underlying charge of GBP47.6 million after
tax. This primarily reflects the external estate valuation
undertaken in the period, which resulted in a GBP39.0 million
charge to the income statement and a net increase in the
revaluation reserve of GBP92.4 million. In addition there is a
charge of GBP1.6 million relating to non-core estate disposal and
reorganisation costs, a GBP1.1 million loss in respect of the
ongoing management of the pubs from the prior year portfolio
disposal, a charge of GBP5.9 million in respect of the change in
the inflation and discount rate assumptions used in calculating our
onerous lease provisions, a charge of GBP0.9 million in respect of
head office relocation and reorganisation costs and a loss of
GBP8.6 million in respect of the mark-to-market movement in the
fair value of certain interest rate swaps. These charges are offset
by a credit of GBP9.5 million relating to the tax on non-underlying
items.
Independent review report to Marston's PLC
Report on the interim financial information
Our conclusion
We have reviewed the interim financial information, defined
below, in the Interim Report of Marston's PLC for the 26 weeks
ended 4 April 2015. Based on our review, nothing has come to our
attention that causes us to believe that the interim financial
information 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.
This conclusion is to be read in the context of what we say in
the remainder of this report.
What we have reviewed
The interim financial information, which is prepared by
Marston's PLC, comprises:
-- the Group balance sheet as at 4 April 2015;
-- the Group income statement and Group statement of
comprehensive income for the period then ended;
-- the Group cash flow statement for the period then ended;
-- the Group statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial information.
As disclosed in note 1, the financial reporting framework that
has been applied in the preparation of the full annual financial
statements of the Group is applicable law and International
Financial Reporting Standards (IFRS) as adopted by the European
Union.
The interim financial information included in the Interim Report
has been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
What a review of interim financial information involves
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.
We have read the other information contained in the Interim
Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial information.
Responsibilities for the interim financial information and the
review
Our responsibilities and those of the Directors
The Interim Report, including the interim financial information,
is the responsibility of, and has been approved by, the Directors.
The Directors are responsible for preparing the Interim Report in
accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express to the Company a conclusion on
the interim financial information in the Interim Report based on
our review. This report, including the conclusion, has been
prepared for and only for the Company for the purpose of complying
with the Disclosure and Transparency Rules of the Financial Conduct
Authority and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
14 May 2015
Birmingham
Notes:
a) The maintenance and integrity of the Marston's PLC website is
the responsibility of the Directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Responsibility Statement of the Directors in respect of the
Interim Report
The Directors confirm that these condensed consolidated interim
financial statements have been prepared in accordance with IAS 34
as adopted by the European Union and that the interim management
report includes a fair review of the information required by DTR
4.2.7R and DTR 4.2.8R, namely:
-- an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
-- material related party transactions in the first six months
of the financial year and any material changes in the related party
transactions described in the last Annual Report and Accounts.
The Directors of Marston's PLC are listed in the Marston's PLC
Annual Report and Accounts for 4 October 2014 with the exception of
the following changes in the period: Catherine Glickman was
appointed to the Board on 1 December 2014 and Rosalind Cuschieri
retired from the Board on 27 January 2015. A list of current
Directors is maintained on the Marston's PLC website:
www.marstons.co.uk.
By order of the Board:
Ralph Findlay Andrew Andrea
Chief Executive Chief Financial Officer
Officer
14 May 2015 14 May 2015
GROUP INCOME STATEMENT (UNAUDITED)
for the 26 weeks ended 4 April 2015
52 weeks
to
26 weeks to 4 April 26 weeks to 5 April 4 October
2015 2014 2014
Non- Non-
Underlying underlying Underlying underlying
items items Total items items Total Total
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- ----- ------------- ------------ -------- ------------- ------------ -------- -----------
2,
Revenue 3 384.5 16.0 400.5 374.3 10.2 384.5 815.3
Operating expenses* (318.0) (64.5) (382.5) (308.6) (66.0) (374.6) (766.2)
-------------------- ----- ------------- ------------ -------- ------------- ------------ -------- -----------
2,
Operating profit 3 66.5 (48.5) 18.0 65.7 (55.8) 9.9 49.1
-------------------- ----- ------------- ------------ -------- ------------- ------------ -------- -----------
Finance costs 4 (37.1) .- (37.1) (36.8) (27.0) (63.8) (100.4)
Finance income 4 0.2 .- 0.2 0.1 .- 0.1 0.3
Movement in
fair value
of interest
rate swaps 4 .- (8.6) (8.6) .- (1.0) (1.0) (8.2)
-------------------- ----- ------------- ------------ -------- ------------- ------------ -------- -----------
Net finance 3,
costs 4 (36.9) (8.6) (45.5) (36.7) (28.0) (64.7) (108.3)
Profit/(loss)
before taxation 29.6 (57.1) (27.5) 29.0 (83.8) (54.8) (59.2)
3,
Taxation 5 (5.8) 9.5 3.7 (5.8) 13.1 7.3 8.5
-------------------- ----- ------------- ------------ -------- ------------- ------------ -------- -----------
Profit/(loss)
for the period
attributable
to equity
shareholders 23.8 (47.6) (23.8) 23.2 (70.7) (47.5) (50.7)
-------------------- ----- ------------- ------------ -------- ------------- ------------ -------- -----------
(Loss)/earnings
per share:
Basic loss
per share 6 (4.2)p (8.3)p (8.9)p
Basic underlying
earnings per
share 6 4.2p 4.1p 11.7p
Diluted loss
per share 6 (4.2)p (8.3)p (8.9)p
Diluted underlying
earnings per
share 6 4.1p 4.0p 11.6p
GROUP STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
for the 26 weeks ended 4 April 2015
26 weeks 26 weeks 52 weeks
to to to
4 April 5 April 4 October
2015 2014 2014
GBPm GBPm GBPm
-------------------------------------------- --------- --------- -----------
Loss for the period (23.8) (47.5) (50.7)
--------------------------------------------- --------- --------- -----------
Items of other comprehensive income
that may subsequently be reclassified
to profit or loss
Losses arising on cash flow hedges (56.4) (7.7) (36.4)
Transfers to the income statement on
cash flow hedges 6.0 33.5 39.0
Tax on items that may subsequently
be reclassified to profit or loss 10.1 (5.2) (0.5)
--------------------------------------------- --------- --------- -----------
(40.3) 20.6 2.1
--------------------------------------------- --------- --------- -----------
Items of other comprehensive income
that will not be reclassified to profit
or loss
Remeasurement of retirement benefits (22.2) (3.1) (12.5)
Unrealised surplus on revaluation of
properties* 213.0 .- 16.4
Reversal of past revaluation surplus* (120.6) (2.9) (3.4)
Tax on items that will not be reclassified
to profit or loss (13.3) 1.8 0.8
--------------------------------------------- --------- --------- -----------
56.9 (4.2) 1.3
--------------------------------------------- --------- --------- -----------
Other comprehensive income for the
period 16.6 16.4 3.4
--------------------------------------------- --------- --------- -----------
Total comprehensive expense for the
period (7.2) (31.1) (47.3)
--------------------------------------------- --------- --------- -----------
* During the current period a revaluation of the Group's
freehold and leasehold properties was undertaken, resulting in a
net increase in property values of GBP53.8 million. An unrealised
surplus on revaluation of GBP213.0 million and a reversal of past
revaluation surplus of GBP120.6 million have been recognised in the
revaluation reserve, and a net charge of GBP38.6 million has been
recognised in the income statement. Further detail is provided in
notes 3 and 7 to the interim financial information.
GROUP CASH FLOW STATEMENT (UNAUDITED)
for the 26 weeks ended 4 April 2015
26 weeks 26 weeks 52 weeks
to to to
4 April 5 April 4 October
2015 2014 2014
Note GBPm GBPm GBPm
-------------------------------------------- ----- --------- --------- -----------
Operating activities
Underlying operating profit 66.5 65.7 156.1
Depreciation and amortisation 18.4 18.3 36.3
-------------------------------------------- ----- --------- --------- -----------
Underlying EBITDA 84.9 84.0 192.4
Non-underlying operating items 3 (48.5) (55.8) (107.0)
-------------------------------------------- ----- --------- --------- -----------
EBITDA 36.4 28.2 85.4
Working capital movement (1.3) (17.1) (23.7)
Non-cash movements 36.7 48.7 78.1
Increase/(decrease) in provisions
and other non-current liabilities 0.1 (2.3) 22.8
Difference between defined benefit
pension contributions paid and amounts
charged/credited (7.1) (8.2) (26.0)
Income tax paid (6.6) (3.4) (8.8)
-------------------------------------------- ----- --------- --------- -----------
Net cash inflow from operating activities 58.2 45.9 127.8
-------------------------------------------- ----- --------- --------- -----------
Investing activities
Interest received 0.3 0.2 0.5
Sale of property, plant and equipment
and assets held for sale 26.4 115.7 143.6
Purchase of property, plant and equipment
and intangible assets (70.9) (72.2) (142.6)
Movement in other non-current assets 0.5 0.3 1.3
Net cash (outflow)/inflow from investing
activities (43.7) 44.0 2.8
-------------------------------------------- ----- --------- --------- -----------
Financing activities
Equity dividends paid (24.6) (23.4) (37.1)
Interest paid (36.0) (39.4) (74.6)
Arrangement costs of bank facilities .- (1.5) (1.9)
Arrangement costs of other lease
related borrowings (2.9) (3.6) (3.9)
Swap termination costs .- (25.0) (25.0)
Proceeds of ordinary share capital
issued .- 0.1 0.2
Proceeds from sale of own shares 0.1 .- 0.5
Repayment of securitised debt (12.4) (91.7) (104.0)
Advance of bank loans 23.0 14.0 21.0
Capital element of finance leases
repaid .- .- (0.1)
Advance of other lease related borrowings 47.0 49.9 53.5
Advance of other borrowings .- 120.0 120.0
Net cash outflow from financing activities (5.8) (0.6) (51.4)
-------------------------------------------- ----- --------- --------- -----------
Net increase in cash and cash equivalents 8 8.7 89.3 79.2
-------------------------------------------- ----- --------- --------- -----------
GROUP BALANCE SHEET (UNAUDITED)
as at 4 April 2015
4 April 5 April 4 October
2015 2014 2014
Note GBPm GBPm GBPm
---------------------------------- ----- ---------- ---------- ----------
ASSETS
Non-current assets
Goodwill 224.2 224.2 224.2
Other intangible assets 24.7 24.4 25.1
Property, plant and equipment 7 2,083.5 1,938.5 1,990.0
Deferred tax assets 61.1 41.3 49.1
Retirement benefit surplus .- .- 7.8
Other non-current assets 11.0 12.5 11.5
2,404.5 2,240.9 2,307.7
---------------------------------- ----- ---------- ---------- ----------
Current assets
Inventories 23.7 22.8 23.0
Trade and other receivables 72.6 71.6 72.9
Derivative financial instruments .- 3.4 .-
Cash and cash equivalents* 8 189.1 215.4 180.9
---------------------------------- ----- ---------- ---------- ----------
285.4 313.2 276.8
---------------------------------- ----- ---------- ---------- ----------
Assets held for sale 27.1 77.2 38.3
---------------------------------- ----- ---------- ---------- ----------
LIABILITIES
Current liabilities
Borrowings* 8 (151.8) (175.3) (151.6)
Derivative financial instruments (26.5) (20.2) (19.5)
Trade and other payables (155.7) (160.7) (157.0)
Current tax liabilities (10.1) (19.7) (14.2)
(344.1) (375.9) (342.3)
---------------------------------- ----- ---------- ---------- ----------
Non-current liabilities
Borrowings 8 (1,282.2) (1,229.6) (1,227.5)
Derivative financial instruments (172.7) (93.0) (120.7)
Retirement benefit obligations (7.3) (0.2) .-
Deferred tax liabilities (140.2) (128.4) (131.3)
Other non-current liabilities (2.4) (3.5) (2.9)
Provisions for other liabilities
and charges (40.5) (13.0) (39.1)
---------------------------------- ----- ---------- ---------- ----------
(1,645.3) (1,467.7) (1,521.5)
---------------------------------- ----- ---------- ---------- ----------
Net assets 727.6 787.7 759.0
Shareholders' equity
Equity share capital 44.4 44.4 44.4
Share premium account 334.0 333.9 334.0
Revaluation reserve 616.9 536.4 545.9
Capital redemption reserve 6.8 6.8 6.8
Hedging reserve (133.2) (74.4) (92.9)
Own shares (126.3) (130.9) (126.8)
Retained earnings (15.0) 71.5 47.6
---------------------------------- ----- ---------- ---------- ----------
Total equity 727.6 787.7 759.0
---------------------------------- ----- ---------- ---------- ----------
* During the prior period the provider of the securitisation's
liquidity facility, 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 amount drawn down of GBP120.0
million (at 4 October 2014: GBP120.0 million) is included within
cash and cash equivalents and the corresponding liability is
included within borrowings.
GROUP STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
for the 26 weeks ended 4 April 2015
Equity Share Capital
share premium Revaluation redemption Hedging Own Retained Total
capital account reserve reserve reserve shares earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
At 5 October
2014 44.4 334.0 545.9 6.8 (92.9) (126.8) 47.6 759.0
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Loss for the
period .- .- .- .- .- - (23.8) (23.8)
Remeasurement
of retirement
benefits .- .- .- .- .- - (22.2) (22.2)
Tax on remeasurement
of retirement
benefits .- .- .- .- .- - 4.4 4.4
Losses on cash
flow hedges .- .- .- .- (56.4) - .- (56.4)
Transfers to
the income statement
on cash flow
hedges .- .- .- .- 6.0 - .- 6.0
Tax on hedging
reserve movements .- .- .- .- 10.1 - .- 10.1
Property revaluation .- .- 213.0 .- .- - .- 213.0
Property impairment .- .- (120.6) .- .- - .- (120.6)
Deferred tax
on properties .- .- (17.7) .- .- - .- (17.7)
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Total comprehensive
income/(expense) .- .- 74.7 .- (40.3) - (41.6) (7.2)
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Share-based
payments .- .- .- .- .- - 0.2 0.2
Tax on share-based
payments .- .- .- .- .- - 0.1 0.1
Sale of own
shares .- .- .- .- .- 0.5 (0.4) 0.1
Disposal of
properties .- .- (4.0) .- .- - 4.0 .-
Tax on disposal
of properties .- .- 0.6 .- .- - (0.6) .-
Transfer to
retained earnings .- .- (0.3) .- .- - 0.3 .-
Dividends paid .- .- .- .- .- - (24.6) (24.6)
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Total transactions
with owners .- .- (3.7) .- .- 0.5 (21.0) (24.2)
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
At 4 April 2015 44.4 334.0 616.9 6.8 (133.2) (126.3) (15.0) 727.6
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
for the 26 weeks ended 5 April 2014
Equity Share Capital
share premium Revaluation redemption Hedging Own Retained Total
capital account reserve reserve reserve shares earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
At 6 October
2013 44.4 333.8 575.3 6.8 (95.0) (130.9) 107.5 841.9
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Loss for the
period .- .- .- .- .- - (47.5) (47.5)
Remeasurement
of retirement
benefits .- .- .- .- .- - (3.1) (3.1)
Tax on remeasurement
of retirement
benefits .- .- .- .- .- - 0.7 0.7
Losses on cash
flow hedges .- .- .- .- (7.7) - .- (7.7)
Transfers to
the income statement
on cash flow
hedges .- .- .- .- 33.5 - .- 33.5
Tax on hedging
reserve movements .- .- .- .- (5.2) - .- (5.2)
Property impairment .- .- (2.9) .- .- - .- (2.9)
Deferred tax
on properties .- .- 1.1 .- .- - .- 1.1
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Total comprehensive
(expense)/income .- .- (1.8) .- 20.6 - (49.9) (31.1)
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Share-based
payments .- .- .- .- .- - 0.1 0.1
Tax on share-based
payments .- .- .- .- .- - 0.1 0.1
Issue of shares .- 0.1 .- .- .- - .- 0.1
Disposal of
properties .- .- (41.1) .- .- - 41.1 .-
Tax on disposal
of properties .- .- 4.0 .- .- - (4.0) .-
Dividends paid .- .- .- .- .- - (23.4) (23.4)
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
Total transactions
with owners .- 0.1 (37.1) .- .- - 13.9 (23.1)
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
At 5 April 2014 44.4 333.9 536.4 6.8 (74.4) (130.9) 71.5 787.7
---------------------- --------- --------- ------------ ------------ ---------- --------- ---------- ---------
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 4 October 2014, 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 items within cash and cash equivalents.
The audited financial statements for the 52 weeks ended 4
October 2014 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.
Some of the prior period balances within cash and cash
equivalents that were originally presented on a net basis in the
balance sheet and the relevant notes have been represented on a
gross basis to more accurately reflect the underlying transactions
and to be consistent with the current period presentation.
The financial information for the 52 weeks ended 4 October 2014
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 4
April 2015 and the comparatives to 5 April 2014 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 3 October
2015.
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
4 April 5 April
2015 2014
Underlying revenue by segment GBPm GBPm
------------------------------- -------- --------
Destination and Premium 187.2 173.9
Taverns 104.4 113.2
Leased 25.1 25.2
Brewing 67.8 62.0
Group Services .- .-
------------------------------- -------- --------
Underlying revenue 384.5 374.3
Non-underlying items 16.0 10.2
------------------------------- -------- --------
Revenue 400.5 384.5
------------------------------- -------- --------
4 April 5 April
2015 2014
Underlying operating profit by segment GBPm GBPm
---------------------------------------- -------- --------
Destination and Premium 31.6 28.6
Taverns 24.1 25.1
Leased 12.4 12.5
Brewing 8.6 7.8
Group Services (10.2) (8.3)
---------------------------------------- -------- --------
Underlying operating profit 66.5 65.7
Non-underlying operating items (48.5) (55.8)
---------------------------------------- -------- --------
Operating profit 18.0 9.9
Net finance costs (45.5) (64.7)
---------------------------------------- -------- --------
Loss before taxation (27.5) (54.8)
---------------------------------------- -------- --------
Underlying operating profit is a key measure of profitability
used by the chief operating decision maker.
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 portfolio of 202 pubs
disposed of in the prior period. Following their disposal these
pubs 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.
4 April 5 April
2015 2014
GBPm GBPm
------------------------------------------------- -------- --------
Exceptional operating items
Non-core estate disposal and reorganisation
costs 1.6 18.8
Loss on portfolio disposal of pubs .- 35.8
Impairment of freehold and leasehold properties 39.0 .-
Impact of change in rate assumptions used
for onerous lease provisions 5.9 .-
Head office relocation and reorganisation
costs 0.9 .-
47.4 54.6
------------------------------------------------- -------- --------
Other adjusting operating items
Results in respect of the ongoing management
of pubs in the portfolio disposal 1.1 1.2
------------------------------------------------- -------- --------
1.1 1.2
------------------------------------------------- -------- --------
Non-underlying operating items 48.5 55.8
------------------------------------------------- -------- --------
Exceptional non-operating items
Interest on Rank refunds .- (0.2)
Buyback of securitised debt and associated
costs .- 27.2
Movement in fair value of interest rate swaps 8.6 1.0
------------------------------------------------- -------- --------
8.6 28.0
------------------------------------------------- -------- --------
Total non-underlying items 57.1 83.8
------------------------------------------------- -------- --------
Non-core estate disposal and reorganisation costs
During the period ended 5 October 2013 the Group restructured
both its pub estate and its operating segments. Costs in respect of
this restructuring were incurred in both the current and prior
period. The prior period exceptional charge of GBP18.8 million
included an amount of GBP8.8 million in respect of the impairment
of non-core properties.
Portfolio disposal of pubs
During the prior period 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. The loss on disposal was
GBP35.8 million and revaluation surpluses of GBP37.5 million were
transferred from the revaluation reserve to retained earnings upon
disposal, giving a net impact of GBP1.7 million.
The Group no longer has strategic control of these pubs 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 post
disposal have been shown as a non-underlying item, which is
comprised as follows:
4 April 5 April
2015 2014
GBPm GBPm
-------------------- -------- --------
Revenue 16.0 10.2
Operating expenses (17.1) (11.4)
-------------------- -------- --------
(1.1) (1.2)
-------------------- -------- --------
Impairment of freehold and leasehold properties
At 1 February 2015 the Group's freehold and leasehold properties
were revalued by independent chartered surveyors on an open market
value basis. The resulting revaluation adjustments have been taken
to the revaluation reserve or income statement as appropriate. The
amount recognised in the income statement comprises:
4 April
2015
GBPm
--------------------------------------------- --------
Impairment of other intangible assets 0.1
Reversal of impairment of other intangible
assets (0.2)
Impairment of property, plant and equipment 60.1
Reversal of impairment of property, plant
and equipment (26.3)
Impairment of assets held for sale 5.0
Reversal of impairment of assets held
for sale (0.1)
Valuation fees 0.4
39.0
--------------------------------------------- --------
Impact of change in rate assumptions used for onerous lease
provisions
Due to significant movements in gilt yields and inflation rates
in the current period, the update of the discount and inflation
rate assumptions used in the calculation of the Group's onerous
property lease provisions at the current period end resulted in an
increase of GBP5.9 million in the total provision.
Head office relocation and reorganisation costs
During the current period redevelopment of the Group's head
office building in Wolverhampton commenced along with a
reorganisation of certain head office functions. Costs of GBP0.9
million were incurred in respect of temporarily relocating to
alternative premises nearby during the period of redevelopment and
in undertaking the reorganisation.
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 hedge
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
loss of GBP8.6 million (2014: GBP1.0 million) is shown as an
exceptional item. In addition to this, a loss of GBP50.4 million
(2014: gain of GBP1.1 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 GBP1.5 million (2014: GBP6.3 million). The
deferred tax credit relating to the above non-underlying items
amounts to GBP8.0 million (2014: GBP6.8 million).
Prior period non-underlying items
In previous periods the Group received refunds totalling GBP5.9
million from HM Revenue & Customs (HMRC). This followed
Tribunal/Court of Appeal hearings involving The Rank Group Plc
('Rank'), which concluded that there had been a breach of fiscal
neutrality in the treatment of gaming machine income as liable to
UK VAT. HMRC issued protective assessments to recover the
repayments pending the result of further Court hearings. On 30
October 2013 the Court of Appeal found in favour of HMRC and the
Group subsequently repaid the refunds of GBP5.9 million plus
interest of GBP0.3 million thereon. In the period ended 5 October
2013 the Group had recognised a provision for the GBP5.9 million
repayment and interest of GBP0.5 million. As such there was a
reduction in the interest accrual of GBP0.2 million in the prior
period.
During the prior period the Group repurchased all of its
securitised AB1 notes at par. The notes, with a nominal value of
GBP80.0 million, were immediately cancelled and the associated
floating-to-fixed interest rate swap held in respect of this
tranche of securitised debt was terminated. This swap had been
designated as a cash flow hedge of the forecast floating rate
interest payments arising in respect of the AB1 notes. As these
forecast transactions were no longer expected to occur the
cumulative hedging loss of GBP24.7 million was recognised in the
income statement.
4 FINANCE COSTS AND INCOME
4 April 5 April
2015 2014
GBPm GBPm
----------------------------------------------- -------- --------
Finance costs
Unsecured bank borrowings 5.7 6.0
Securitised debt 24.7 25.9
Finance leases 0.5 0.6
Other lease related borrowings 5.1 3.5
Net finance cost in respect of retirement
benefits .- 0.2
Other interest payable 1.1 0.6
37.1 36.8
----------------------------------------------- -------- --------
Exceptional finance costs
Interest on Rank refunds .- (0.2)
Buyback of securitised debt and associated
costs .- 27.2
.- 27.0
----------------------------------------------- -------- --------
Total finance costs 37.1 63.8
----------------------------------------------- -------- --------
Finance income
Deposit and other interest receivable (0.2) (0.1)
Total finance income (0.2) (0.1)
----------------------------------------------- -------- --------
Movement in fair value of interest rate swaps
Gain on movement in fair value of interest
rate swaps .- (3.4)
Loss on movement in fair value of interest
rate swaps 8.6 4.4
----------------------------------------------- -------- --------
8.6 1.0
----------------------------------------------- -------- --------
Net finance costs 45.5 64.7
----------------------------------------------- -------- --------
5 TAXATION
The underlying taxation charge for the 26 weeks ended 4 April
2015 has been calculated by applying an estimate of the underlying
effective tax rate for the 52 weeks ending 3 October 2015 of
approximately 19.6% (26 weeks ended 5 April 2014: approximately
20.0%).
4 April 5 April
2015 2014
GBPm GBPm
-------------- -------- --------
Current tax 3.9 (2.1)
Deferred tax (7.6) (5.2)
-------------- -------- --------
(3.7) (7.3)
-------------- -------- --------
The taxation credit includes a current tax credit of GBP1.5
million (2014: GBP6.3 million) and a deferred tax credit of GBP8.0
million (2014: GBP6.8 million) relating to the tax on
non-underlying items (note 3).
6 EARNINGS PER ORDINARY SHARE
Basic earnings per share are calculated by dividing the
profit/(loss) 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.
4 April 2015 5 April 2014
Per Per
share share
Earnings amount Earnings amount
GBPm p GBPm p
--------------------------------- --------- -------- --------- --------
Basic loss per share (23.8) (4.2) (47.5) (8.3)
Diluted loss per share* (23.8) (4.2) (47.5) (8.3)
--------------------------------- --------- -------- --------- --------
Underlying earnings per share
figures
Basic underlying earnings per
share 23.8 4.2 23.2 4.1
Diluted underlying earnings per
share 23.8 4.1 23.2 4.0
--------------------------------- --------- -------- --------- --------
* The diluted loss per share is the same as the basic loss per
share as the inclusion of the dilutive potential ordinary shares
would reduce the loss per share and as such is not dilutive in
accordance with IAS 33 'Earnings per Share'.
4 April 5 April
2015 2014
m m
------------------------------------------- -------- --------
Basic weighted average number of shares 572.0 570.7
Dilutive options 6.4 6.1
------------------------------------------- -------- --------
Diluted weighted average number of shares 578.4 576.8
------------------------------------------- -------- --------
7 PROPERTY, PLANT AND EQUIPMENT
GBPm
----------------------------------------------------- --------
Net book amount at 5 October 2014 1,990.0
Additions 71.4
Net transfers to assets held for sale and disposals (18.9)
Depreciation, revaluation and other movements 41.0
----------------------------------------------------- --------
Net book amount at 4 April 2015 2,083.5
----------------------------------------------------- --------
GBPm
----------------------------------------------------- --------
Net book amount at 6 October 2013 2,063.6
Additions 72.9
Net transfers to assets held for sale and disposals (174.5)
Depreciation, revaluation and other movements (23.5)
----------------------------------------------------- --------
Net book amount at 5 April 2014 1,938.5
----------------------------------------------------- --------
Revaluation/impairment
At 1 February 2015 independent chartered surveyors revalued the
Group's freehold and leasehold properties on an open market value
basis. These valuations have been incorporated into the financial
statements and the resulting revaluation adjustments have been
taken to the revaluation reserve or income statement as
appropriate.
During the 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:
4 April 5 April
2015 2014
GBPm GBPm
------------------------------------------- -------- --------
Income statement:
Revaluation loss charged as an impairment (60.1) (2.9)
Reversal of past impairments 26.3 .-
------------------------------------------- -------- --------
(33.8) (2.9)
Revaluation reserve:
Unrealised revaluation surplus 213.0 .-
Reversal of past revaluation surplus (120.6) (2.9)
------------------------------------------- -------- --------
92.4 (2.9)
------------------------------------------- -------- --------
Net increase/(decrease) in shareholders'
equity/property, plant and equipment 58.6 (5.8)
------------------------------------------- -------- --------
8 NET DEBT
Non-cash
movements
and
deferred
4 April Cash issue 4 October
2015 flow costs 2014
Analysis of net debt GBPm GBPm GBPm GBPm
-------------------------------- ---------- ------- ----------- ------------
Cash and cash equivalents
Cash at bank and in hand 189.1 8.2 .- 180.9
Bank overdrafts (7.1) 0.5 .- (7.6)
182.0 8.7 .- 173.3
-------------------------------- ---------- ------- ----------- ------------
Debt due within one year
Unsecured bank borrowings 0.8 .- .- 0.8
Securitised debt (25.5) 12.4 (13.1) (24.8)
Finance leases (0.1) .- .- (0.1)
Other lease related borrowings 0.1 .- .- 0.1
Other borrowings (120.0) .- .- (120.0)
(144.7) 12.4 (13.1) (144.0)
-------------------------------- ---------- ------- ----------- ------------
Debt due after one year
Unsecured bank borrowings (232.9) (23.0) (0.4) (209.5)
Securitised debt (847.0) .- 12.8 (859.8)
Finance leases (20.7) .- .- (20.7)
Other lease related borrowings (181.5) (47.0) 2.9 (137.4)
Preference shares (0.1) .- .- (0.1)
(1,282.2) (70.0) 15.3 (1,227.5)
-------------------------------- ---------- ------- ----------- ------------
Net debt (1,244.9) (48.9) 2.2 (1,198.2)
--------------------------------- ---------- ------- ----------- ------------
Unsecured bank borrowings due within one year represent
unamortised issue costs expected to be charged to the income
statement within 12 months of the balance sheet date. Unsecured
bank borrowings due after one year represent amounts drawn down
under the Group's revolving credit facility, net of unamortised
issue costs expected to be charged to the income statement after 12
months from the balance sheet date.
Other lease related borrowings represent amounts due under sale
and leaseback arrangements that do not fall within the scope of IAS
17 'Leases'.
Other borrowings represent amounts drawn down under the
securitisation's liquidity facility. During the prior period 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 GBP120.0
million (at 4 October 2014: GBP120.0 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 at bank and in hand is an amount of GBP1.4
million (at 4 October 2014: GBP1.4 million), which relates to a
letter of credit with Royal Sun Alliance Insurance, an amount of
GBP1.0 million (at 4 October 2014: GBP1.0 million), which relates
to a letter of credit with Aviva, and an amount of GBP8.1 million
(at 4 October 2014: GBP8.2 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.
4 April 5 April
2015 2014
Reconciliation of net cash flow to movement
in net debt GBPm GBPm
---------------------------------------------- ---------- ----------
Increase in cash and cash equivalents in the
period 8.7 89.3
Cash inflow from movement in debt (57.6) (92.2)
---------------------------------------------- ---------- ----------
Change in debt resulting from cash flows (48.9) (2.9)
Non-cash movements and deferred issue costs 2.2 4.4
---------------------------------------------- ---------- ----------
Movement in net debt in the period (46.7) 1.5
Net debt at beginning of the period (1,198.2) (1,191.0)
---------------------------------------------- ---------- ----------
Net debt at end of the period (1,244.9) (1,189.5)
---------------------------------------------- ---------- ----------
4 April 5 April
2015 2014
Reconciliation of net debt before lease financing
to net debt GBPm GBPm
--------------------------------------------------- ---------- ----------
Cash and cash equivalents 189.1 215.4
Unsecured bank borrowings (239.2) (233.3)
Securitised debt (872.5) (896.6)
Other borrowings (120.0) (120.0)
Preference shares (0.1) (0.1)
--------------------------------------------------- ---------- ----------
Net debt before lease financing (1,042.7) (1,034.6)
Finance leases (20.8) (20.9)
Other lease related borrowings (181.4) (134.0)
--------------------------------------------------- ---------- ----------
Net debt (1,244.9) (1,189.5)
--------------------------------------------------- ---------- ----------
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:
4 April 2015 4 October 2014
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
Liabilities as per
the balance sheet GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- ------- ------ ------ ------ ------ ------ ------ ------
Derivative financial
instruments - 199.2 - 199.2 - 140.2 - 140.2
---------------------- ------- ------ ------ ------ ------ ------ ------ ------
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 obtains such 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
4 April 4 October 4 April 4 October
2015 2014 2015 2014
GBPm GBPm GBPm GBPm
-------------------------------- -------- ---------- -------- ----------
Unsecured bank borrowings 242.1 219.6 242.1 219.6
Securitised debt 879.2 891.6 922.0 923.7
Finance leases 20.8 20.8 20.8 20.8
Other lease related borrowings 195.1 148.1 195.1 148.1
Other borrowings 120.0 120.0 120.0 120.0
Preference shares 0.1 0.1 0.1 0.1
1,457.3 1,400.2 1,500.1 1,432.3
-------------------------------- -------- ---------- -------- ----------
10 MATERIAL TRANSACTIONS
Additional contributions of GBP6.6 million (26 weeks ended 5
April 2014: GBP6.3 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 5 April 2014: none).
11 CAPITAL COMMITMENTS
Capital expenditure authorised and committed at the period end
but not provided for in this interim financial information was
GBP10.4 million
(at 4 October 2014: GBP9.0 million).
12 CONTINGENT LIABILITIES
There have been no material changes to contingent liabilities
since 4 October 2014.
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 GBP14.3 million, being 2.5p (2014: 2.4p)
per ordinary share, has been proposed and will be paid on 7 July
2015 to those shareholders on the register at the close of business
on 29 May 2015. This interim financial information does not reflect
this dividend payable.
On 17 April 2015, the Group acquired the trading operations of
Daniel Thwaites PLC's beer division, including the two leading beer
brands Wainwright and Lancaster Bomber. The initial cash
consideration paid (excluding working capital) was GBP25.1 million.
Due to the proximity of this acquisition to the date the interim
results were authorised for issue the initial accounting has not
yet been completed. Full disclosures in respect of this acquisition
will be provided in the financial statements for the 52 weeks
ending 3 October 2015.
15 PRINCIPAL RISKS AND UNCERTAINTIES
The Group set out on pages 14 and 15 of its 2014 Annual Report
and Accounts the principal risks and uncertainties that could
impact its performance. These remain unchanged since the Annual
Report and Accounts were published and are expected to remain
unchanged for the second half of the financial year. These risks
and uncertainties are summarised as follows:
-- Economic uncertainty
-- Changes in regulation impacting on the cost of business or obstructing growth
-- Investment plans not meeting expectations
-- Network outage or denial of service
-- Loss, theft or corruption of data
-- Failure to attract or retain the best people
-- Incorrect reporting of financial results
-- Unauthorised transactions
-- Breach of financial covenants with lenders
16 INTERIM RESULTS
The interim results were approved by the Board on 14 May
2015.
17 COPIES
Copies of these results are available on the Marston's PLC
website (www.marstons.co.uk) and on request from The Company
Secretary, Marston's PLC, Coniston House, Chapel Ash,
Wolverhampton, WV3 0BF.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGUBUAUPAGQW
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