TIDMMARS
RNS Number : 9564H
Marston's PLC
21 November 2018
21 November 2018
MARSTON'S PLC
PRELIMINARY RESULTS FOR THE 52 WEEKSED 29 SEPTEMBER 2018
Record revenue and underlying PBT, dividend maintained
-- Record revenue and underlying PBT growth achieved
Underlying Statutory
Revenue GBP1,140.4m + 15% GBP1,141.3m + 13%
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Profit before tax GBP104.0m + 4% GBP54.3m - 46%
------------ ------ ------------ ------
Earnings per share 13.9p - 2% 7.1p - 50%
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- Underlying profit growth in all trading segments
- Statutory profit reflects non-cash impact of estate
revaluation
-- 5(th) consecutive year of like-for-like pub sales growth
- Like-for-like (LFL) sales growth of 0.6%; wet-led pubs
outperformed food-led pubs
- Disciplined approach to operating margins drives profit growth
in all segments
- 14 pub-restaurants and seven lodges opened in the year
- Average profit per pub up 2%; up 55% since 2012
-- Strong growth in Brewing - own and licensed brands exceed 330 million pints
- Total volume +47%, reflecting benefits of CWBB acquisition and
World Cup
- Over 2 million barrels of drinks delivered to one in four of
UK pubs
- On track to deliver at least GBP4 million target synergies
from CWBB acquisition
-- Operating cash flow +1%, leverage reduced
- Leverage before leasing down 0.2x to 4.6x, strong fixed charge
cover of 2.5x
- Additional GBP40 million bank facility to 2023 improving
financial flexibility
-- NAV of GBP1.51 per share supported by estate valuation, pension deficit reduced
- External estate valuation broadly in line with book value of
GBP2.2 billion
- Triennial pension valuation - funding deficit reduced by GBP10
million to GBP40 million
-- Final dividend maintained at 4.8 pence per share covered 1.9x by earnings
-- Clear plans for growth in 2019
- Destination and Premium: 10 new pub-restaurants and bars and
five lodges planned
- Taverns: acquisition of 15 pubs from Aprirose
- Brewing: investment in canning line in Burton and new
distribution centre in Thurrock
-- Focus on cash generation
- Previously announced prudent approach to capital plans for
2019 delivering GBP30 million net capex reduction
- Target GBP20-30 million of additional future cash flow
opportunities identified through reduction in pension
contributions, reduced organic capex and refinancing
opportunities
- Target 1.0x reduction in leverage in 3-5 years
Commenting, Ralph Findlay, CEO said:
"Marston's has performed well in a difficult market. Our
balanced business model has stood us in good stead, delivering
record sales and underlying profits with revenue exceeding GBP1.1
billion for the first time. Our Taverns wet-led community pubs and
market-leading brewing business had an outstanding year, more than
offsetting the effects of weather volatility and the World Cup on
our food-led pubs.
"Macro-economic and political uncertainty is reflected in our
capital plans this year. However, the outlook for good pubs and
brewing remains attractive and Marston's is well placed to leverage
the opportunity this presents with our high quality, well invested
estate, leading brands and great people. We expect to make positive
progress once again in the current financial year."
Forthcoming Events
Please find below the forthcoming reporting dates for the Group,
which are also available on the investor calendar on our website -
www.marstons.co.uk/investors
Q1 Trading update and AGM 23 January 2019
2019 Interim results 15 May 2019
2019 Preliminary Results 27 November 2019
ENQUIRIES:
Marston's Tel: 01902 329516 Instinctif Partners Tel: 020
PLC 7457 2020
Ralph Findlay Chief Executive Officer Justine Warren
Andrew Andrea Chief Financial and Corporate Matthew Smallwood
Development Officer
A live audio webcast of the results presentation will be
available at
http://view-w.tv/795-1295-20604/en at 0815 hours on 21 November
2018
NOTES TO EDITORS
-- Marston's is a leading pub operator and independent brewer.
-- It has an estate of 1,545 pubs situated nationally,
comprising managed, franchised and leased pubs, as well as 1,551
hotel bedrooms across the Group's pub and lodge accommodation
portfolio.
-- It is the UK's leading brewer of premium cask and packaged
ales, which include Marston's Pedigree, Wainwright, and Hobgoblin
in addition to a portfolio of regional, craft and world beers
including Estrella Damm and Warsteiner.
-- Marston's employs around 14,300 people.
-- Leverage is defined as the ratio of net debt before lease financing to underlying EBITDA.
-- The underlying results reflect the performance of the Group
before exceptional and other adjusting items. The Directors
consider that these figures provide a more appropriate indication
of the underlying performance of the Group.
GROUP OVERVIEW
This has been an extraordinary year which has been characterised
by weather extremes, together with one-off events such as the World
Cup. Our balanced business model has stood us in good stead and
smoothed trading to achieve revenue and profit growth in each of
our trading divisions. Our Taverns and Brewing businesses both had
particularly strong performances and clearly benefited from the
warm summer weather and England's extended run in the World
Cup.
Total underlying revenue increased by 14.9% reflecting the
rollover benefits of the acquisition of the Charles Wells Beer
Business ("CWBB") from last year, new distribution contracts in
Brewing, the positive impact of new openings and pub acquisitions,
together with positive like-for-like sales in our pub business.
As anticipated, Group operating margins were 1.6% behind last
year reflecting the dilution impact from the CWBB acquisition which
operates at a lower margin than our existing beer business, the
impact of distribution contracts in Brewing and the anticipated
cost increases in our pub business.
Underlying operating profit was up 4.6% at GBP182.5 million
(2017: GBP174.5 million).
Underlying profit before tax was up 3.9% to GBP104.0 million
(2017: GBP100.1 million), principally reflecting the strong
performance of Brewing and Taverns. Basic underlying earnings per
share for the period of 13.9 pence per share (2017: 14.2 pence per
share) were below last year, reflecting the impact of the equity
issuance in May 2017.
On a statutory basis, revenue was up 13%, profit before tax was
GBP54.3 million (2017: GBP100.3 million) and earnings per share
were 7.1 pence per share (2017: 14.2 pence per share), principally
reflecting the non-cash impact of the estate valuation during the
year.
Operating cash flow of GBP182 million is 1% higher than last
year, after adjusting for the CWBB working capital settlement in
2017. The increase principally reflects the higher EBITDA generated
during the period.
Net debt at the period end was GBP1,386 million, incorporating
the financing of new site expenditure, the acceleration of pub
brand conversions and investment in the new canning line in Burton.
Net debt excluding property leases has reduced by GBP6 million in
the period. A minor delay of some disposal activity in the second
half year has resulted in this now falling into the first half of
2019 and as such we are increasing our disposals guidance for the
current year to GBP45 million. Excluding property leases with
freehold reversion entitlement, the ratio of net debt to underlying
EBITDA was 4.6 times at the period end (2017: 4.8 times) which is
expected to reduce further over time as the business grows and our
long-term debt amortises. In addition, fixed charge cover remains
strong at 2.5 times.
Cash Return on Cash Capital Employed (CROCCE) was 10.3%
reflecting the performance of the Destination and Premium business
as described below. During the year, the external valuation of our
property portfolio was completed confirming a value of GBP2.2
billion, broadly in line with book value. At the period end, net
asset value (NAV) per share was GBP1.51.
The proposed final dividend of 4.8 pence per share provides a
total dividend for the year of 7.5 pence per share. Dividend cover
is 1.9 times and our dividend policy remains to target progressive
increases in the dividend at a cover of around 2 times in the
medium term.
Current trading and outlook
Trading has been solid and in line with our expectations for the
first seven weeks of the current year, with growth in both pub
like-for-like sales and own and licensed beer volumes. As we have
highlighted previously, the first quarter trading is heavily
weighted to December and the Christmas period. However we are
confident our pubs are well prepared to maximise the opportunity
which the Christmas and New Year trading period presents. We expect
to make progress once again in the
current financial year.
Since the year end we have secured the additional GBP40 million
accordion facility that formed part of our bank refinancing in
2017. This increases the overall facility to GBP360 million to 2023
and provides us with additional financing flexibility for the
medium-term.
The political and economic agenda continues to be dominated by
Brexit, contributing to increased uncertainty. However, our
business is almost entirely within the UK and the principal risks
to us relate to continuity of supply in respect of food and drink
from Europe, for which there are alternative sources elsewhere. We
are appropriately vigilant but these risks are manageable.
Challenges in the casual dining and restaurant sector over the
last year or so have been well documented. We continue to see good
opportunities for growth, but given the overall sector background a
degree of caution is appropriate. As previously announced, we have
reduced our openings programme in 2019 to 10 pubs and bars and five
lodges, and together with a corresponding reduction in organic
capex, will cut our capital spend by around GBP30 million this
year.
Group strategy
Our Group Strategy is focused on offering customers a great
experience through both our pubs and beer. There are two key
objectives to achieving our strategy:
-- Operating high-quality pubs and lodges offering great places to eat, drink and stay;
-- Operating a best in class beer business with a wide range of
premium and local brands and great service.
This is described in further detail below.
Operational strategy
1. High-quality pubs and lodges offering great places to drink, eat and stay.
We operate across the breadth of the market, with flexible
operating models targeting the growing UK eating-out and
accommodation markets through new-build and format development.
This helps to ensure we have the right consumer offer and operating
model to maximise sales and profits for each individual pub. Our
key segments are as follows:
Destination and Premium - 406 pubs.
Our Destination pubs offer family dining and great value in a
relaxed pub environment. We aim to retain strong pub values while
reflecting modern tastes and trends in a fast moving and
competitive market.
In 2018 we opened 14 new pub-restaurants and seven lodges
including our flagship 104 bedroom lodge in Ebbsfleet, Kent, and
have opened over 180 pub-restaurants and 21 lodges in the last 10
years. We have a good pipeline of sites for future development.
Our Pitcher & Piano bars, Revere bars (Lost & Found,
Foundry) and country pubs offer premium food and drink in
attractive, often iconic town centre and suburban locations. In
2018 we had openings in Leeds, Bristol (Lost & Found), and
Godstone (Revere Country).
We target a CROCCE of 12-15% on freehold new-build
investment.
Taverns - 1,139 pubs.
Our community pubs are well located 'great locals' with a
traditional pub ambience. We operate under managed, franchised and
leased models offering flexibility for our licensees to run their
pub under a business model that is best suited to their needs to
develop a thriving modern community pub business with growth
potential.
As noted above, since the end of the financial year we have
agreed terms to acquire 15 well- located community pubs with good
potential from Aprirose which are highly complementary to our
flexible business model. We expect to complete and lease fund this
acquisition in the first half of 2019 and will invest approximately
GBP4 million post acquisition with a target EBITDA of around GBP0.5
million in 2019 and at least GBP1 million in 2020.
Increased room investment
We operate over 1,500 rooms across our Destination and Premium
pub estate. Accommodation acts as a complementary income stream,
and the combination of pub-restaurant with rooms or adjacent lodge
is attractive in the context of increasing business and leisure
travel.
Organic room income has been consistently strong with
double-digit sales growth for each of the last four years, with
like-for-like RevPar up 7% in 2018 to GBP41.25.
We target a CROCCE of 12% on freehold lodge investment.
Consumer experience: the right offer underpinned by value,
quality, and service
The wider sector has seen intense competition in recent years,
and oversupply in certain areas. In the last five years, there has
been a net increase of c.4,000 in the number of restaurants across
the UK, mainly in high street locations in towns and cities. In our
view, this has led to extensive discounting which, in a backdrop of
tighter operating margins and increasing costs, is
unsustainable.
To compete and maintain profitability against that backdrop:
- We operate pubs and bars, not just restaurants, and exploit
our brewing heritage, drinks knowledge and experience
- We have largely avoided investing in competitive high street locations
- We have invested in pub ambience, service and technology to
stay out of the price discounting trend seen across much of the
sector. This has been at some detriment to like-for-like sales
growth, but to the benefit of margins and longer-term
sustainability. We have completed major investments in around 50
pubs to date and expect to complete our conversion programme within
the next two years
- In our Premium pubs and bars, a combination of excellent pub
design, innovative drinks offers and a food menu utilising premium
and local produce have contributed to a strong sales
performance
- In Taverns the continuing development of the franchise-style
model, pioneered by Marston's, has further enhanced our ability to
respond quickly to consumer trends. In 2018, the growing appeal of
craft drinks, the World Cup and a hot early summer highlighted the
attractions of great community locals
- We continue to improve our food offers, with our pizza
offering being rolled out extensively across the estate, a greater
choice of healthy options being offered and recently being first to
market with the launch of the vegan Moving Mountains(TM) B12
Burger, with very strong initial sales and feedback. Our vegan menu
was awarded 'best vegan menu' by PETA (People for the Ethical
Treatment of Animals)
The trend in the on-trade for premiumisation continues across
all categories. This plays to Marston's strengths and we are
leveraging the benefits of our market-leading beer portfolio.
We continue to target service improvement with our operational
teams incentivised on both customer satisfaction and EHO standards.
During the year, we have continued to invest in training and
development with 1 in 3 employees receiving formal training, over
70,000 e-learning modules completed and just under 35,000 learning
resources accessed via our Talent Academy online covering a broad
range of areas, from health and safety through to time management
and delivering the 'perfect serve'. Communicating with our teams is
also critical and we have developed new digital platforms and are
in the process of developing further tools to communicate more
effectively. In 2018, we were a regional winner in the National
Apprenticeship Awards.
Technological development in 2018 included the continuing roll
out of a new EPOS system and we are already starting to see
operational benefits from a customer perspective, together with
efficiency improvements in our back-of-house operations. The system
provides improved product and customer information enabling us to
respond to changing trends quickly.
2. Brewing - "best-in-class" beer business offering a wide range
of premium and local brands and great service
Choice, provenance, taste and interest in craft are positive
trends in the on and the off-trade. Innovation and investment in
new brands and products has increased across the sector which has
stimulated further consumer interest.
The off-trade continues to see absolute growth and an increased
share of the drinks market. In beer, the strongest growth is in
premium bottled ale, canned craft beer and the rapid growth
mini-keg which we introduced several years ago. IPAs, including US
craft beers, and more exciting keg beers, have seen increasing
popularity. In both the on and the off-trade, the trends are
towards a consumer preference for premium brands with higher value,
and reduced volume. There is increasing demand for non-alcoholic
drinks; our range includes alcohol-free beers - such as Warsteiner
and Erdinger Alkoholfrei - which saw volume growth of 226% in
2018.
Our strategy has anticipated many of these trends and evolved
rapidly to meet the changing dynamics of the market. Our strategic
development is a consequence of consistent investment in consumer
insight, which has driven the following growth areas.
- Development of market-leading ale portfolio
We have a 14% share of the total ale market, 20% of the premium
ale market in the on-trade, and 27% of the premium botted ale
market. We leverage our knowledge of the beer market to assist our
customers to improve their offers - an example is the On-Trade and
Off-Trade Beer Reports which we produce annually.
Our ale portfolio has been enhanced significantly through
acquisitions. Wainwright, acquired in 2015, was our best selling
cask ale in the summer; in 2017, the acquisition of Bombardier,
Young's and Courage provided distribution opportunities in the
south of England, as has McEwan's in Scotland. Together with our
established range which includes Marston's, Banks's, Jennings,
Wychwood and Ringwood beers, we have an unrivalled range of own ale
brands.
Hobgoblin remains our biggest brand and the "unofficial Beer of
Halloween". Hobgoblin IPA was recently awarded the 'best IPA in the
world' in the World Beer Awards against some of the world's best
known IPAs; a great endorsement of our brewing capability. Other
brands in the portfolio received a total of 19 Gold, Silver or
Bronze medals in 2018.
We have a track record of innovation, including the development
of fastcask(TM) , and the introduction of the mini-cask and
mini-keg.
- Development of a licensed brand portfolio
Marston's has exclusive UK licences for US craft beers including
Shipyard and Founders; world lagers including Estrella Damm,
Warsteiner, and Kirin; and Kingstone Press Cider.
These brands have been an important growth driver. Estrella Damm
is one of the fastest growing premium lagers in the market, up 41%
in 2018; Shipyard - No 2 craft beer in the UK on trade - was up
34%.
- National and local marketing
Our priorities are digital, local and print media. Hobgoblin is
one of most followed ale brands on social media, being awarded the
Digital and Social Media Campaign of the Year at the PRCA Dare
Awards in 2017.
Local marketing includes event sponsorship such as the New
Forest Show, Henley Regatta, and the Keswick Jazz Festival. Our
brewery tours at Wychwood and Ringwood both received tourist awards
this year.
Sports sponsorship includes a five year extension to the beer
supply into Lords Cricket Ground, which will include two Ashes
tours and the completion of the new stand in 2020. This provides us
with an excellent platform to showcase our brands in both London
and on a national basis.
In 2018, we undertook brand relaunches with new imaging for
Bombardier, Directors and McEwan's.
- Export
Following the acquisition of CWBB we acquired an experienced and
established export team. We now export 19 brands into 61 countries,
and export volumes account for 9% of our external ale volume,
almost double the level from recent years.
We are making good progress in growing our six key markets:
Russia, France, Italy, Germany, Canada and the USA. Looking
forward, we believe there are opportunities to expand our export
operations into South America.
- Sector leading service
Our beer business provides brewing, packaging and distribution
services for a wide range of customers, in addition to our own
pubs. In 2018 we entered into new agreements to become the
exclusive distributor to around 1,600 Punch, Hawthorn Leisure and
Brakspear pubs, and we have now secured additional distribution
agreements with New River Retail and Trust Inns. We recently
completed an GBP8 million investment in a new canning line in
Burton which will further improve our canning efficiency and open
up more customer opportunities in addition to bottling; we
currently package c.40% of the UK premium bottled ale market.
Marston's brewery (Burton-upon-Trent), the Eagle brewery
(Bedford) and the Banks's brewery (Wolverhampton) are all British
Retail Consortium "A" rated or above. For the fourth year running
we were awarded The Best Ale Supplier in the Morning Advertiser
Readers' Choice Awards and our customer services team have also
achieved the highest "excellent" rating from the G4S Customer
Services awards.
We distribute directly to around one in four pubs across the UK.
This extensive network is a strategic asset which enables us to
offer distribution at scale for existing and acquired brands.
This strategy has delivered strong financial results. In the
last 10 years turnover has increased fourfold and profits have
doubled, in a beer market which has declined by 13%. We have
increased on-trade market share despite significant new
competition, and we have increased our market share of the premium
off-trade by 50%. In 2018 we sold over one million barrels of own
and licensed brands and around 2.2 million barrels in total to
around a quarter of the 46,000 on-trade outlets in the UK.
Financial strategy
Over the last 10 years we have built over 180 pub-restaurants
and bars, 21 lodges, and have a good pipeline of sites for future
development. We have also made acquisitions consistent with our
stated strategy: the acquisition of Thwaites brewing operations in
2015, CWBB in 2017, a package of seven pubs from Whitbread in 2017
have contributed to growth in each of our operating segments.
We have set clear financial objectives: to target growth,
increase return on capital, and reduce leverage over time. Since
2009, revenue has grown by 77% (CAGR 7%), and underlying profit
before taxation by 48% (CAGR 4%). CROCCE increased from 9.8% to
10.3% on assets of GBP2.2 billion. We have disposed of c.800
(mainly tenanted) pubs, realising GBP517.0 million and resulting in
a go-forward pub estate which is fit for the future. Dividend
payments to shareholders over this time have totalled GBP379.1
million.
Net bank and securitised debt of GBP1,022 million is GBP275
million lower than in April 2009. In addition, we have raised
GBP364 million of long term, secured funding, specific to
individual new-build pubs. This debt has no associated reporting
covenants.
In summary, compared to 2009 in the midst of the financial
crisis, underlying profit before taxation is approximately 50%
higher. We have transformed the quality of the estate with average
profit per pub up 77%. In addition, our pub portfolio is 93%
freehold and suited to long-term, secured debt. The debt structure
has no short-term refinancing requirement and is effectively at
fixed rates of interest.
Allocation of 2019 expansionary capital
We have opened 14 pubs and bars and seven lodges in the current
year and we continue to see good opportunities for further
expansion. Given current sector trends, including high levels of
new openings and investment in the eating-out sector, together with
economic uncertainty, we highlighted earlier in the year that we
would be adopting a more cautious approach to new openings in the
short term. The market is beginning to respond to recent
over-supply and we expect that competition for new sites will
reduce. In the meantime we plan to open 10 pubs and five lodges in
2019.
Other capital investment in 2019 will be around GBP80 million,
including GBP50 million maintenance capital and GBP30 million
growth capital. This, together with the reduction in new-build
expansionary capital described above, represents an overall
reduction in capital expenditure of GBP30 million versus 2018.
Disposal proceeds are expected to be around GBP45 million.
Future cash flow and debt targets
We are also targeting a further GBP20-30 million improvement to
free cash flow as follows:
- Continued improvement in EBITDA.
- Reduction in organic capital expenditure of GBP5-10 million
per annum from 2020 following completion of the rollout of the new
EPOS system and efficiencies in pub maintenance.
- Reduction in pension payments of GBP8 million per annum from
2021 based on eliminating the pension scheme funding deficit in
2021.
- Securitisation financing benefits from refinancing
opportunities. Whilst the outcome of our review of these
opportunities is at an early stage, we expect to report further in
the course of the next financial year.
As a consequence of the actions above, we are targeting a 1x
reduction in leverage within 3-5 years. At the same time, we are
setting clear guidelines in respect of capital structure. In
addition to our ongoing objective to reduce leverage we will also
target a net cash surplus before growth capital (acknowledging
fluctuations in working capital) and acquisitions meeting strict
return on capital criteria, and a commitment to maintaining fixed
charge cover (the ratio of EBITDAR to interest and rent payments)
of at least 2.5 times.
Return on capital targets
As described in the operational strategy above, we target CROCCE
of 12-15% from investment in new pubs and accommodation (freehold
investments) and 20% in organic pub and brewing growth capital.
We will continue to review all of these targets to ensure they
remain appropriate, and to explore further opportunities to improve
cash flow.
PERFORMANCE AND FINANCIAL REVIEW
Underlying Underlying
revenue operating profit Margin
2018 2017 2018 2017 2018 2017
GBPm GBPm GBPm GBPm % %
Destination and Premium 450.7 438.0 89.4 88.9 19.8 20.3
Taverns 312.0 301.3 86.1 84.1 27.6 27.9
Brewing 377.7 252.9 32.0 25.5 8.5 10.1
Group Services - - (25.0) (24.0) (2.2) (2.4)
---------- ---------- ----------- ----------- -------- ----------
Group 1,140.4 992.2 182.5 174.5 16.0 17.6
---------- ---------- ----------- ----------- -------- ----------
Destination and Premium
Total revenue increased by 2.9% to GBP450.7 million reflecting
the performance of our new-build pub-restaurants offset by a
decline in like-for-like sales. Underlying operating profit of
GBP89.4 million was up 0.6%. Profit per pub is 3% down compared to
last year.
Total like-for-like sales were 1.2% below last year, principally
reflecting the adverse impact of the poor winter weather in the
first half year and the World Cup in the second half.
Reported operating margin of 19.8% is slightly below last year,
reflecting previously anticipated cost increases in labour,
business rates and energy costs.
Taverns
Total revenue increased by 3.6% to GBP312.0 million, principally
reflecting like-for-like sales growth in the year in our managed
and franchised pubs. Operating profit was up 2.4% on last year
reflecting growth in the core business offset by disposals. Profit
per pub was up 4% on last year.
In our managed and franchised pubs like-for-like sales were up
3.8%.
Operating margin was 0.3% below last year at 27.6%, reflecting
cost increases and the continued impact of franchise
conversions.
Brewing
Total revenue increased by 49.3% to GBP377.7 million,
principally reflecting the annualised benefit of the acquisition of
CWBB in June 2017 and the benefits of the new distribution
contracts secured in the year. Underlying operating profit
increased by 25.5% to GBP32.0 million.
Operating margin of 8.5% was below last year reflecting the CWBB
business which has historically operated at a lower margin (driven
equally by customer and product mix) and the impact of the
distribution contracts mentioned above.
Group Services
Central costs as a proportion of turnover were 0.2% lower than
2017. Absolute costs increased reflecting inflationary pay
increases, the impact of both the apprenticeship and pub code
levies and higher training and IT costs.
Taxation
The underlying rate of taxation of 15.5% in 2018 (2017: 15.6%)
is below the standard rate of corporation tax due to (i)
significant deferred tax movements in the year at the future
enacted rate of 17%, (ii) a deferred tax benefit created by the
retention of capital allowances on fixtures in property disposals
and (iii) a prior year deferred tax credit arising from rollover
relief claims in respect of capital gains, where the reduction in
tax base cost of property is offset by previously unrecognised
indexation.
Non-underlying items
There is a net non-underlying charge of GBP42.9 million after
tax. Primarily this reflects the external estate valuation
undertaken in the period, which resulted in a GBP39.8 million
charge to the income statement. A net revaluation increase of
GBP8.6 million has also been recognised in the revaluation reserve
in respect of property revaluations undertaken in the period. Other
non-underlying items comprise a charge of GBP0.1 million in respect
of the change in the rate assumptions used in calculating our
onerous lease provisions, reorganisation and integration costs of
GBP7.3 million, principally from the integration of CWBB, a charge
of GBP0.1 million in respect of the net interest on the net defined
benefit pension asset/liability and a GBP0.5 million net loss in
respect of the mark-to-market movement in the fair value of certain
interest rate swaps. The revenue of GBP0.9 million and expenses of
GBP2.8 million in respect of the management of the remaining pubs
from the portfolio disposal in December 2013 have also been
included within non-underlying items. These charges are offset by a
credit of GBP6.8 million relating to the tax on non-underlying
items.
Capital expenditure and disposals
Capital expenditure was GBP162.7 million in the year (2017:
GBP196.3 million), including GBP63 million on new pubs. During the
year, we spent additional capital expenditure on brand conversions
in Destination and invested GBP8 million in the new canning line
described above and additional vehicles for the new distribution
contracts. We expect that capital expenditure will be around GBP130
million in 2019, including around GBP50 million for the
construction of 10 pubs and bars and five lodges.
Cash proceeds of GBP46.9 million have been received from the
sale of pubs and other assets, including GBP32.6 million of leasing
transactions. Disposal proceeds of around GBP45 million are
anticipated in 2019.
Financing
The Group has a GBP320 million bank facility to March 2023, and
since the year end has secured the additional GBP40 million
accordion facility that formed part of our bank refinancing in
2017. This facility, together with the long-term securitisation of
approximately GBP776 million and the lease financing arrangements
described below, provide us with an appropriate level of financing
headroom for the medium term. The Group has sufficient headroom on
both the banking and securitisation covenants and also has
flexibility to transfer pubs between the banking and securitisation
groups.
In recent years, the Group has entered into lease financing
arrangements which have a total value of GBP364 million as at 29
September 2018 (2017: GBP301 million). This financing is a form of
sale and leaseback agreement whereby the freehold reverts to the
Group at the end of the term of the lease 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.
Net debt excluding lease financing of GBP1,022 million at 29
September 2018 is GBP6 million below last year. Operating cash flow
of GBP182 million is GBP1 million ahead of last year after
adjusting for the working capital offset arising from the CWBB
acquisition in 2017.
For the period ended 29 September 2018, the ratio of net debt
before lease financing to underlying EBITDA was 4.6 times (2017:
4.8 times). It remains our intention to reduce this ratio over
time, principally through EBITDA growth generated from our
new-build investment programme.
Pensions
The surplus on our final salary scheme was GBP15.6 million at 29
September 2018 which compares to the GBP5.4 million deficit at last
year end. This movement is principally due to the fall in
liabilities as a consequence of the increase in corporate bond
yields.
Note: CROCCE is calculated as follows:
CROCCE GBPm FY2018
NON-CURRENT
ASSETS: Bal Depn Reval Adj
------- ----- ------- -------
Goodwill 230.3 230.3
------- ----- ------- -------
Other intangible
assets 70.0 6.2 76.2
------- ----- ------- -------
Property, plant
and equipment 2,408.1 187.5 (627.2) 1,968.4
------- ----- ------- -------
Other non-current
assets 9.6 9.6
------- ----- ------- -------
CURRENT ASSETS:
------- ----- ------- -------
Inventories 44.6 44.6
------- ----- ------- -------
Assets held
for sale 2.3 2.3
------- ----- ------- -------
Trade and other
receivables 104.9 104.9
------- ----- ------- -------
LIABILITIES:
------- ----- ------- -------
Creditors (279.0) (279.0)
------- ----- ------- -------
CASH CAPITAL
EMPLOYED 2,590.8 193.7 (627.2) 2,157.3
------- ----- ------- -------
EBITDA 222.6
------- ----- ------- -------
CROCCE 10.3%
------- ----- ------- -------
GROUP INCOME STATEMENT
For the 52 weeks ended 29 September 2018
2018 2017
Non- Non-
Underlying underlying Total Underlying underlying Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ ---- ----------- ------------ ---------- ----------- ------------ --------
Revenue 1,140.4 0.9 1,141.3 992.2 19.1 1,011.3
Operating expenses (957.9) (50.0) (1,007.9) (817.7) (23.2) (840.9)
------------------------------ ----------- ------------ ---------- ----------- ------------ --------
Operating profit 182.5 (49.1) 133.4 174.5 (4.1) 170.4
------------------------------ ----------- ------------ ---------- ----------- ------------ --------
Finance costs (78.9) (0.1) (79.0) (74.8) (2.1) (76.9)
Finance income 0.4 - 0.4 0.4 - 0.4
Movement in fair
value of interest
rate swaps - (0.5) (0.5) - 6.4 6.4
------------------------------ ----------- ------------ ---------- ----------- ------------ --------
Net finance costs (78.5) (0.6) (79.1) (74.4) 4.3 (70.1)
--------
Profit before taxation 104.0 (49.7) 54.3 100.1 0.2 100.3
Taxation (16.1) 6.8 (9.3) (15.6) - (15.6)
------------------------------ ----------- ------------ ---------- ----------- ------------ --------
Profit for the period
attributable to
equity shareholders 87.9 (42.9) 45.0 84.5 0.2 84.7
------------------------------ ----------- ------------ ---------- ----------- ------------ --------
Earnings per share:
Basic earnings per
share 7.1p 14.2p
Basic underlying
earnings per share 13.9p 14.2p
Diluted earnings
per share 7.0p 14.1p
Diluted underlying
earnings per share 13.7p 14.0p
GROUP STATEMENT OF COMPREHENSIVE INCOME
For the 52 weeks ended 29 September 2018
2018 2017
GBPm GBPm
----------------------------------------------------------- -------- ------
Profit for the period 45.0 84.7
------------------------------------------------------------ -------- ------
Items of other comprehensive income that may subsequently
be reclassified to profit or loss
Gains arising on cash flow hedges - 35.7
Transfers to the income statement on cash flow
hedges 10.9 10.7
Tax on items that may subsequently be reclassified
to profit or loss (1.8) (7.9)
------------------------------------------------------------ -------- ------
9.1 38.5
------------------------------------------------------------ -------- ------
Items of other comprehensive income that will not
be reclassified to profit or loss
Remeasurement of retirement benefits 14.0 21.8
Unrealised surplus on revaluation of properties 170.3 2.3
Reversal of past revaluation surplus (161.7) (0.8)
Tax on items that will not be reclassified to profit
or loss (2.3) 0.2
------------------------------------------------------------ -------- ------
20.3 23.5
------------------------------------------------------------ -------- ------
Other comprehensive income for the period 29.4 62.0
------------------------------------------------------------ -------- ------
Total comprehensive income for the period 74.4 146.7
------------------------------------------------------------ -------- ------
GROUP CASH FLOW STATEMENT
For the 52 weeks ended 29 September 2018
2018 2017
GBPm GBPm
---------------------------------------------------------- -------- --------
Operating activities
Underlying operating profit 182.5 174.5
Depreciation and amortisation 40.1 39.2
----------------------------------------------------------- -------- --------
Underlying EBITDA 222.6 213.7
Non-underlying operating items (49.1) (4.1)
----------------------------------------------------------- -------- --------
EBITDA 173.5 209.6
Working capital movement (2.1) 38.8
Non-cash movements 31.8 (7.9)
Decrease in provisions and other non-current liabilities (5.4) (9.1)
Difference between defined benefit pension contributions
paid and amounts charged (8.0) (8.3)
Income tax paid (7.4) (9.5)
----------------------------------------------------------- -------- --------
Net cash inflow from operating activities 182.4 213.6
----------------------------------------------------------- -------- --------
Investing activities
Interest received 0.8 0.3
Sale of property, plant and equipment and assets
held for sale 46.9 61.2
Purchase of property, plant and equipment and
intangible assets (162.7) (196.3)
Acquisition of subsidiary - (90.5)
Movement in other non-current assets 0.7 0.7
Transfer to other cash deposits - (120.0)
Net cash outflow from investing activities (114.3) (344.6)
----------------------------------------------------------- -------- --------
Financing activities
Equity dividends paid (47.5) (44.1)
Interest paid (74.9) (70.2)
Arrangement costs of bank facilities (0.6) (3.3)
Arrangement costs of other lease related borrowings (5.1) (4.6)
Issue of shares - 75.5
Purchase of own shares (1.2) -
Proceeds from sale of own shares - 0.3
Repayment of securitised debt (30.0) (28.4)
Repayment of bank borrowings - (263.0)
Advance of bank borrowings 10.2 280.0
Capital element of finance leases repaid (0.2) (0.1)
Advance of other lease related borrowings 68.0 57.9
Net cash outflow from financing activities (81.3) -
---------------------------------------------------------- -------- --------
Net decrease in cash and cash equivalents (13.2) (131.0)
----------------------------------------------------------- -------- --------
GROUP BALANCE SHEET
As at 29 September 2018
29 September 30 September
2018 2017
GBPm GBPm
---------------------------------------------- -------------- --------------
Non-current assets
Goodwill 230.3 230.3
Other intangible assets 70.0 67.6
Property, plant and equipment 2,408.1 2,360.7
Other non-current assets 9.6 10.3
Deferred tax assets - 0.6
Retirement benefit surplus 15.6 -
2,733.6 2,669.5
---------------------------------------------- -------------- --------------
Current assets
Inventories 44.6 40.2
Trade and other receivables 104.9 108.4
Other cash deposits* 120.0 120.0
Cash and cash equivalents 41.4 54.6
----------------------------------------------- -------------- --------------
310.9 323.2
---------------------------------------------- -------------- --------------
Assets held for sale 2.3 2.7
Current liabilities
Borrowings* (158.4) (148.8)
Derivative financial instruments (28.9) (28.7)
Trade and other payables (252.2) (256.1)
Current tax liabilities (4.0) (3.5)
Provisions for other liabilities and charges (2.8) (3.3)
(446.3) (440.4)
---------------------------------------------- -------------- --------------
Non-current liabilities
Borrowings (1,389.0) (1,354.9)
Derivative financial instruments (148.6) (159.2)
Other non-current liabilities (1.5) (0.6)
Provisions for other liabilities and charges (22.5) (26.9)
Deferred tax liabilities (81.3) (76.6)
Retirement benefit obligations - (5.4)
(1,642.9) (1,623.6)
---------------------------------------------- -------------- --------------
Net assets 957.6 931.4
Shareholders' equity
Equity share capital 48.7 48.7
Share premium account 334.0 334.0
Revaluation reserve 627.2 624.2
Merger reserve 23.7 71.2
Capital redemption reserve 6.8 6.8
Hedging reserve (118.1) (127.2)
Own shares (112.3) (111.3)
Retained earnings 147.6 85.0
----------------------------------------------- -------------- --------------
Total equity 957.6 931.4
----------------------------------------------- -------------- --------------
* Other cash deposits comprises the GBP120.0 million (2017:
GBP120.0 million) drawn down under the liquidity facility and
borrowings includes the corresponding liability.
GROUP STATEMENT OF CHANGES IN EQUITY
For the 52 weeks ended 29 September 2018
Equity Share Capital
share premium Revaluation Merger redemption Hedging Own Retained Total
capital account reserve reserve reserve reserve shares earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
At 1 October
2017 48.7 334.0 624.2 71.2 6.8 (127.2) (111.3) 85.0 931.4
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
Profit for the
period - - - - - - - 45.0 45.0
Remeasurement
of
retirement
benefits - - - - - - - 14.0 14.0
Tax on
remeasurement
of retirement
benefits - - - - - - - (2.4) (2.4)
Transfers to
the
income
statement
on cash flow
hedges - - - - - 10.9 - - 10.9
Tax on hedging
reserve
movements - - - - - (1.8) - - (1.8)
Property
revaluation - - 170.3 - - - - - 170.3
Property
impairment - - (161.7) - - - - - (161.7)
Deferred tax
on
properties - - 0.1 - - - - - 0.1
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
Total
comprehensive
income - - 8.7 - - 9.1 - 56.6 74.4
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
Share-based
payments - - - - - - - 0.5 0.5
Purchase of
own
shares - - - - - - (1.2) - (1.2)
Sale of own
shares - - - - - - 0.2 (0.2) -
Disposal of
properties - - (5.6) - - - - 5.6 -
Tax on
disposal
of properties - - 0.9 - - - - (0.9) -
Transfer to
retained
earnings - - (1.0) - - - - 1.0 -
Dividends paid - - - (47.5) - - - - (47.5)
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
Total
transactions
with owners - - (5.7) (47.5) - - (1.0) 6.0 (48.2)
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
At 29
September
2018 48.7 334.0 627.2 23.7 6.8 (118.1) (112.3) 147.6 957.6
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
Equity Share Capital
share premium Revaluation Merger redemption Hedging Own Retained Total
capital account reserve reserve reserve reserve shares earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
At 2 October
2016 44.4 334.0 623.1 - 6.8 (165.7) (113.7) 23.2 752.1
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
Profit for the
period - - - - - - - 84.7 84.7
Remeasurement
of
retirement
benefits - - - - - - - 21.8 21.8
Tax on
remeasurement
of retirement
benefits - - - - - - - (3.7) (3.7)
Gains on cash
flow
hedges - - - - - 35.7 - - 35.7
Transfers to
the
income
statement
on cash flow
hedges - - - - - 10.7 - - 10.7
Tax on hedging
reserve
movements - - - - - (7.9) - - (7.9)
Property
revaluation - - 2.3 - - - - - 2.3
Property
impairment - - (0.8) - - - - - (0.8)
Deferred tax
on
properties - - 3.9 - - - - - 3.9
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
Total
comprehensive
income - - 5.4 - - 38.5 - 102.8 146.7
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
Share-based
payments - - - - - - - 0.9 0.9
Issue of
shares 4.3 - - 71.2 - - - - 75.5
Sale of own
shares - - - - - - 2.4 (2.1) 0.3
Disposal of
properties - - (4.1) - - - - 4.1 -
Tax on
disposal
of properties - - 0.7 - - - - (0.7) -
Transfer to
retained
earnings - - (0.9) - - - - 0.9 -
Dividends paid - - - - - - - (44.1) (44.1)
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
Total
transactions
with owners 4.3 - (4.3) 71.2 - - 2.4 (41.0) 32.6
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
At 30
September
2017 48.7 334.0 624.2 71.2 6.8 (127.2) (111.3) 85.0 931.4
--------------- --------- --------- ------------ --------- ----------- --------- -------- ---------- --------
NOTES
1 Accounting policies
Basis of preparation
The financial information for the 52 weeks ended 29 September
2018 (2017: 52 weeks ended 30 September 2017) has been extracted
from the audited financial statements, which have been prepared in
accordance with International Financial Reporting Standards (IFRS)
and IFRS Interpretations Committee and Standing Interpretations
Committee interpretations adopted by the European Union and with
those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. The financial statements have been prepared
under the historical cost convention as modified by the revaluation
of certain items, principally land and buildings, derivative
financial instruments, retirement benefits and share-based
payments.
2 Segment reporting
2018 2017
Underlying revenue by segment GBPm GBPm
------------------------------- -------- --------
Destination and Premium 450.7 438.0
Taverns 312.0 301.3
Brewing 377.7 252.9
Group Services - -
Underlying revenue 1,140.4 992.2
Non-underlying items 0.9 19.1
------------------------------- -------- --------
Revenue 1,141.3 1,011.3
------------------------------- -------- --------
2018 2017
Underlying operating profit by segment GBPm GBPm
---------------------------------------- ------- -------
Destination and Premium 89.4 88.9
Taverns 86.1 84.1
Brewing 32.0 25.5
Group Services (25.0) (24.0)
Underlying operating profit 182.5 174.5
Non-underlying operating items (49.1) (4.1)
---------------------------------------- ------- -------
Operating profit 133.4 170.4
Net finance costs (79.1) (70.1)
---------------------------------------- ------- -------
Profit before taxation 54.3 100.3
---------------------------------------- ------- -------
In the prior period the Group had five distinguishable operating
segments being Destination and Premium, Taverns, Leased, Brewing
and Group Services. During the current period the Group merged its
Taverns and Leased operational teams, meaning that it is no longer
possible to separate their performance and profitability. The
results of the merged operations are now presented as one combined
'Taverns' segment in the reporting to the chief operating decision
maker and management decisions are made on a combined basis. The
results for the 52 weeks ended 30 September 2017 have been restated
to reflect the merging of these two segments.
3 NON-Underlying items
2018 2017
GBPm GBPm
------------------------------------------------------- ----- ------
Exceptional operating items
Impact of change in rate assumptions used for onerous
lease provisions 0.1 (1.6)
Reorganisation and integration costs 7.3 5.5
Impairment of freehold and leasehold properties 39.8 -
47.2 3.9
------------------------------------------------------- ----- ------
Other adjusting operating items
Results in respect of the ongoing management of pubs
in the portfolio disposal 1.9 0.2
1.9 0.2
Non-underlying operating items 49.1 4.1
Exceptional non-operating items
Net interest on net defined benefit asset/liability 0.1 0.7
Write-off of unamortised finance costs - 1.4
Movement in fair value of interest rate swaps 0.5 (6.4)
------------------------------------------------------- ----- ------
0.6 (4.3)
------------------------------------------------------- ----- ------
Total non-underlying items 49.7 (0.2)
------------------------------------------------------- ----- ------
Impact of change in rate assumptions used for onerous lease
provisions
The update of the discount rate assumptions used in the
calculation of the Group's onerous property lease provisions
resulted in an increase of GBP0.1 million (2017: decrease of GBP1.6
million) in the total provision.
Reorganisation and integration costs
During the current period the Group incurred reorganisation and
integration costs of GBP7.3 million (2017: GBP5.5 million),
primarily as a result of the acquisition of the beer business of
Charles Wells in the prior period.
Impairment of freehold and leasehold properties
At 28 January 2018 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
recognised in the revaluation reserve or income statement as
appropriate. The amount recognised in the income statement
comprises:
2018
GBPm
-------------------------------------------------------- -------
Impairment of other intangible assets 0.1
Reversal of past impairment of other intangible assets (0.3)
Impairment of property, plant and equipment 70.6
Reversal of past impairment of property, plant and
equipment (31.4)
Impairment of assets held for sale 0.4
Valuation fees 0.4
39.8
-------------------------------------------------------- -------
Portfolio disposal of pubs
During the period ended 4 October 2014 the Group disposed of a
portfolio of 202 pubs and subsequently entered into a four year
lease and five year management agreement in respect thereof. During
the prior period the Group entered into new 15 year leases in
respect of 22 of the properties and these were removed from the
management agreement. All of the other pubs were removed from the
arrangements by the purchaser before the end of the four year lease
term in December 2017. The Group no longer had strategic control of
the pubs whilst they were subject to the management agreement and
they did not form part of its core activities. As such the results
in respect of the ongoing operation and management of these pubs
have been classified as a non-underlying item, comprised as
follows:
2018 2017
GBPm GBPm
-------------------- ------ -------
Revenue 0.9 19.1
Operating expenses (2.8) (19.3)
(1.9) (0.2)
-------------------- ------ -------
Net interest on net defined benefit asset/liability
The net interest on the net defined benefit asset/liability in
respect of the Group's defined benefit pension plan was a charge of
GBP0.1 million (2017: GBP0.7 million).
Movement in fair value of interest rate swaps
The Group's interest rate swaps are revalued to fair value at
each balance sheet date. The movement in fair value of interest
rate swaps which are not designated as part of a hedging
relationship, and the ineffective portion of the movement in fair
value of interest rate swaps which are accounted for as hedging
instruments are both recognised in the income statement. The net
loss of GBP0.5 million (2017: gain of GBP6.4 million) is shown as
an exceptional item.
Impact of taxation
The current tax credit relating to the above non-underlying
items amounts to GBP1.6 million (2017: GBP0.9 million). The
deferred tax credit relating to the above non-underlying items
amounts to GBP5.2 million (2017: charge of GBP0.9 million).
Prior period non-underlying items
During the prior period the Group entered into a new bank
facility. As such the unamortised finance costs relating to the
previous facility were written off.
4 Taxation
2018 2017
Income statement GBPm GBPm
Current tax:
Current period 10.1 10.7
Adjustments in respect of prior periods (0.4) (0.3)
Credit in respect of tax on non-underlying items (1.6) (0.9)
8.1 9.5
----------------------------------------------------- ------ ------
Deferred tax:
Current period 7.6 6.1
Adjustments in respect of prior periods (1.2) (0.9)
(Credit)/charge in respect of tax on non-underlying
items (5.2) 0.9
1.2 6.1
----------------------------------------------------- ------ ------
Taxation charge reported in the income statement 9.3 15.6
----------------------------------------------------- ------ ------
5 Ordinary dividends on equity shares
2018 2017
Paid in the period GBPm GBPm
-------------------------------------------------------- ----- -----
Final dividend for 2017 of 4.8p per share (2016: 4.7p) 30.4 27.0
Interim dividend for 2018 of 2.7p per share (2017:
2.7p) 17.1 17.1
-------------------------------------------------------- ----- -----
47.5 44.1
-------------------------------------------------------- ----- -----
A final dividend for 2018 of 4.8p per share amounting to GBP30.4
million has been proposed for approval at the Annual General
Meeting, but has not been reflected in the financial
statements.
This dividend will be paid on 28 January 2019 to those
shareholders on the register at close of business on 14 December
2018.
6 Earnings per ordinary share
Basic earnings per share are calculated by dividing the profit
attributable to equity shareholders by the weighted average number
of ordinary shares in issue during the period, excluding treasury
shares and those held on trust for employee share schemes.
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. These represent share options
granted to employees where the exercise price is less than the
weighted average market price of the Company's shares during the
period.
Underlying earnings per share figures are presented to exclude
the effect of exceptional and other adjusting items. The Directors
consider that the supplementary figures are a useful indicator of
performance.
2018 2017
Per share Per share
Earnings amount Earnings amount
GBPm p GBPm p
----------------------------- --------- ---------- ----------- ----------
Basic earnings per share 45.0 7.1 84.7 14.2
Diluted earnings per share 45.0 7.0 84.7 14.1
------------------------------- --------- ---------- ----------- ----------
Underlying earnings per
share figures
Basic underlying earnings
per share 87.9 13.9 84.5 14.2
Diluted underlying earnings
per share 87.9 13.7 84.5 14.0
------------------------------- --------- ---------- ----------- ----------
2018 2017
m m
------------------------------------------- ------ ------
Basic weighted average number of shares 633.1 596.9
Dilutive options 6.7 4.8
------------------------------------------- ------ ------
Diluted weighted average number of shares 639.8 601.7
------------------------------------------- ------ ------
7 Net debt
Non-cash
movements
and deferred
issue
2018 Cash flow costs 2017
Analysis of net debt GBPm GBPm GBPm GBPm
--------------------------------- ---------- ------------ -------------- ----------
Cash and cash equivalents
Cash at bank and in hand 41.4 (13.2) - 54.6
41.4 (13.2) - 54.6
-------------------------------- ---------- ------------ -------------- ----------
Financial assets
Other cash deposits 120.0 - - 120.0
120.0 - - 120.0
Debt due within one year
Bank borrowings - - (0.7) 0.7
Securitised debt (31.2) 30.0 (31.7) (29.5)
Finance leases (7.5) 0.2 (7.5) (0.2)
Other lease related borrowings 0.3 - 0.1 0.2
Other borrowings (120.0) - - (120.0)
--------------------------------- ---------- ------------ -------------- ----------
(158.4) 30.2 (39.8) (148.8)
-------------------------------- ---------- ------------ -------------- ----------
Debt due after one year
Bank borrowings (287.3) (10.2) 0.6 (277.7)
Securitised debt (745.1) - 31.2 (776.3)
Finance leases (20.1) - 7.5 (27.6)
Other lease related borrowings (336.4) (68.0) 4.8 (273.2)
Preference shares (0.1) - - (0.1)
--------------------------------- ---------- ------------ -------------- ----------
(1,389.0) (78.2) 44.1 (1,354.9)
Net debt (1,386.0) (61.2) 4.3 (1,329.1)
--------------------------------- ---------- ------------ -------------- ----------
Other borrowings comprises the amount drawn down under the
securitisation's liquidity facility. During the period ended 4
October 2014 the facility's provider, the Royal Bank of Scotland
Group plc, had its short-term credit rating downgraded below the
minimum prescribed in the facility agreement and as such the Group
exercised its entitlement to draw the full amount of the facility
and hold it in a designated bank account. The corresponding balance
of GBP120.0 million (2017: GBP120.0 million) held in the relevant
bank account is included within other cash deposits. The amount
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 this amount is considered to be restricted cash.
Included within cash and cash equivalents is an amount of GBP0.3
million (2017: GBP0.5 million) relating to a letter of credit with
Royal Sun Alliance Insurance, an amount of GBP1.4 million (2017:
GBP1.4 million) relating to a letter of credit with Aviva, and an
amount of GBP6.7 million (2017: GBP7.7 million) relating 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.
2018 2017
Reconciliation of net cash flow to movement in net
debt GBPm GBPm
----------------------------------------------------- ---------- ----------
Decrease in cash and cash equivalents in the period (13.2) (131.0)
Increase in other cash deposits - 120.0
Cash inflow from movement in debt (48.0) (46.4)
----------------------------------------------------- ---------- ----------
Change in debt resulting from cash flows (61.2) (57.4)
Non-cash movements and deferred issue costs 4.3 (2.3)
----------------------------------------------------- ---------- ----------
Movement in net debt in the period (56.9) (59.7)
Net debt at beginning of the period (1,329.1) (1,269.4)
Net debt at end of the period (1,386.0) (1,329.1)
----------------------------------------------------- ---------- ----------
2018 2017
Reconciliation of net debt before lease financing to
net debt GBPm GBPm
------------------------------------------------------ ---------- ----------
Cash and cash equivalents 41.4 54.6
Other cash deposits 120.0 120.0
Bank borrowings (287.3) (277.0)
Securitised debt (776.3) (805.8)
Other borrowings (120.0) (120.0)
Preference shares (0.1) (0.1)
------------------------------------------------------ ---------- ----------
Net debt before lease financing (1,022.3) (1,028.3)
Finance leases (27.6) (27.8)
Other lease related borrowings (336.1) (273.0)
Net debt (1,386.0) (1,329.1)
------------------------------------------------------ ---------- ----------
Notes:
(a) The financial information contained in this preliminary
announcement does not constitute the Group's statutory accounts
within the meaning of Section 434 of the Companies Act 2006. The
financial information has been extracted from the audited statutory
accounts of the Group for the 52 weeks ended 29 September 2018,
which will be filed with the Registrar of Companies in due course.
The independent auditors' report on these accounts is unqualified
and does not contain any statements under section 498 (2) or (3) of
the Companies Act 2006. The statutory accounts for the 52 weeks
ended 30 September 2017 have been delivered to the Registrar of
Companies.
(b) The Annual Report and Accounts for the 52 weeks ended 29
September 2018 will be posted to shareholders on 18 December 2018.
The Annual Report and Accounts can be downloaded from the Marston's
PLC website: www.marstons.co.uk. Alternatively, copies will be
obtainable from Instinctif Partners (020 7457 2020) or from the
Group Secretary, Marston's PLC, Marston's House, Brewery Road,
Wolverhampton, WV1 4JT.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FEWFMSFASEIF
(END) Dow Jones Newswires
November 21, 2018 02:00 ET (07:00 GMT)
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