MITCHELLS & BUTLERS PLC
LEI no: 213800JHYNDNB1NS2W10
16 May 2018
HALF YEAR RESULTS
(For the 28 weeks ended 14 April 2018)
- | Sustained like-for-like sales outperformance |
- | Fresh wave of initiatives to further transform the business |
Financial performance
- | Like-for-like salesa growth of 1.6%; growth adjusted for impact of snow of 2.5% |
- | Like-for-like salesa growth of 5.8% over Easter weekend which moves into the first half |
- | Adjusted operating profita of £141m (H1 2017 £149m) |
- | Adjusted earnings per sharea of 13.9p (H1 2017 15.2p) |
Strategic progress
- | Completed 224 capital projects as part of 6-7 year cycle; 100th Miller and Carter opened |
- | Improved customer satisfaction; net promoter score up 5 points |
- | Digital penetration increased; 120k online bookings per week (H1 2017 80k) |
Reported results
- | Basic earnings per share of 13.0p (H1 2017 13.7p) |
Balance sheet and cash flow
- | Capital expenditure of £104m (H1 2017 £93m), including 4 new site openings and 220 conversions and remodels (H1 2017 172) |
- | Adjusted free cash flow of £(3)ma (H1 2017 £(18)m) |
- | Net debt of £1.72bn (H1 2017 £1.83bn) representing 4.1 times adjusted EBITDAa (H1 2017 4.3 times) |
Phil Urban, Chief Executive, commented:
"During the first half we continued to deliver like-for-like sales growth against a period of growth last year. This strong performance comes from the progress we continue to make in our three priority areas: building a more balanced business; instilling a more commercial culture; and driving an innovation agenda.
Success in this highly competitive market is dependent on a continuous stream of improvements, and that is what we are focused on delivering. We have therefore embarked upon a new wave of initiatives which are in their early stages of development, and we believe have the potential to further transform the business.
As previously announced, margins are being adversely impacted by increased costs, most notably from wage inflation, property costs, energy and food and drink costs. In light of this, our operational teams have performed well to deliver flat underlying profitabilityb in the period."
Definitions
a - The Directors use a number of alternative performance measures (APMs) that are considered critical to aid the understanding of the Group's performance. Key measures are explained later in this announcement.
b - The period was impacted by one off adjusted operating profit items which are explained in the operating margin section of the Financial Review.
There will be a presentation today for analysts and investors at 9.30am at the London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS. A live webcast of the presentation will be available at www.mbplc.com. The presentation will also be accessible by phone: 020 3059 5868 and quote "Mitchells & Butlers". The replay will be available until 23 May 2018 on 0121 260 4862 replay access pin 386401#.
All disclosed documents relating to these results are available on the Group's website at www.mbplc.com
For further information, please contact:
Tim Jones - Finance Director | +44(0)121 498 6112 |
Amy De Marsac - Investor Relations | +44(0) 7712 538660 |
James Murgatroyd (Finsbury) | +44(0)20 7251 3801 |
Notes to editors:
- |
BUSINESS REVIEW
We remain focused on our three strategic priorities; to build a more balanced business, to instil a more commercial culture and to drive an innovation agenda. We are pleased with further progress against actions implemented in the previous financial year which is translating into a sustained improvement in sales performance. We have also embarked upon a new wave of initiatives covering sales and service, labour, stock, external spend, menus and pricing, return on investment, digital marketing and stock and cash leakage which are in their early stages of development, and we believe have the potential to further transform the business. We believe that success in our market is dependent on a continuous stream of improvements, and that is what we are focused on delivering.
The benefits of actions taken are evident in our sales performance, with like-for-like salesa growth in the first half of 1.6%. Like-for-like sales are now growing on prior year growth and remain consistently ahead of the wider market, as measured by the Peach tracker. The long Easter weekend in particular was encouraging, with like for like salesa growth of 5.8%. However, the first half was also punctuated by periods of exceptionally bad weather, including widespread snow, which we estimate has cost c.£12m in lost sales and impacted the half year growth by 0.9ppts. In the first 32 weeks of the year like-for-like salesa have grown by 1.4%.
Whilst cost pressures continue to impact the industry we believe the progress made across the business both in streamlining operations and the consistent improvement in like-for-like salesa growth positions the Company to be able to build on the momentum gained and to return to profitable growth in the mid-term.
THE EXTERNAL ENVIRONMENT
The macro environment we operate in remains challenging. Consumer confidence has remained low and this, compounded by inflation growing at a higher rate than wages, has resulted in a reduction in consumers' disposable income. In our market, despite these challenges, demand has been relatively resilient for now. Turnover in the eating out market grew by 1.7% in the last calendar year with the frequency with which people eat out remaining flat.
However, increased supply over recent years has created a highly competitive environment, particularly in the food led sector. Although net supply has slowed in the past year the overall result of increased new entrants is that c.4,000 more restaurants were open at the end of 2017 than in 2013. The rate of growth in supply has been higher than growth in demand, making the acquisition of market share vital to growth. Due to the heightened competition for consumer occasions we have seen an increased level and depth of discounting in the market, putting further pressure on margins.
Quality of experience is ever more important in this competitive environment, with good quality food and drink no longer being enough to meet consumers' expectations. This sets the context for our ongoing brand development which aims to keep our brands front of mind for guests. We continue to monitor our prices carefully and challenge our thinking in this area through innovative workstreams. Where appropriate we are focused on enabling guests to premiumise their experience through enhanced product options and menus, thus growing the total spend on a given occasion. In addition, we are placing further emphasis on the overall guest experience which will encourage our customers to keep coming back to our brands, supported by investment in staff training which underpins the complete experience.
Cost inflation continues to impact the sector, hence the importance of maintaining our focus on efficiency and driving profitable sales growth. We believe that success requires trustworthy brands offering high quality experiences at the right price to generate sufficient sales growth to mitigate cost headwinds and grow profitability.
OUR PRIORITIES
Building a more balanced business
Our priority continues to be to maximise value creation from our estate of around 1,700 largely freehold sites. Value is unlocked by ensuring optimal brand fit to the local market in each site with improved amenity standards and we are continuing with the execution of our estate plan to achieve this goal.
Good progress has been made in the first half in this area. We accelerated the capital programme, completing 220 conversion, remodel and growth projects, versus 172 in the first half last year. The aim of completing projects earlier is to capture more of the post investment benefit in year, however it does result in a greater number of closure weeks in the first half of the year. To minimise the impact we have been working hard to reduce closure time required for investment through operational efficiency and by working closely with suppliers to streamline work. We continue to focus on the upgrade of amenities across the estate through our remodel programme and are generating returns of over 20% on projects completed this year.
The quantity of projects completed means that we are now within our targeted 6-7 year investment cycle, and we are reaching the tipping point in terms of reducing the proportion of the estate which has not been invested in for 7 years or more.
We also opened our 100th Miller & Carter, a brand which continues to perform very well in a variety of geographies and site types, and whose expansion we plan to continue.
Instilling a more commercial culture
In the current environment a relentless focus on commerciality is essential. We have made good headway in instilling a more commercial culture across the organisation over the past two years and further progress is still being made.
The upgraded labour system rolled out last financial year is delivering benefits. The new system enables managers to plan their labour more effectively according to the trading pattern of their individual business, and to review scheduled and actual labour deployment accuracy versus the system's ideal standard. The result has been improved efficiency, with more team members working when we need them and fewer in quieter times.
Last financial year we also began the upgrade of our stock management system, the implementation and roll out of which has continued into the current financial year. The new system will help managers to reduce waste, dramatically reduce the time taken to complete stock takes, whilst benefitting guests through reduced instances of stock unavailability. This introduces a change in the way we manage stock and we anticipate significant cost savings once the system is fully embedded.
Appropriate pricing is critical to success in a competitive environment. We review pricing in the context of the local market in which our businesses operate and work hard to ensure that we are competitively priced in all of our sites. The flexibility for guests to premiumise their experience through enhanced products and menus is a key part of our strategy. We have been making further progress in this area through brand offer development, ensuring an appropriate stretch in the range of items within all of our brands as well as exploring and developing the way in which the offer is presented to guests though menu layout.
In the face of the tough inflationary cost environment we continue to leverage our scale through central procurement and fine tune processes to ensure that maximum efficiency can be achieved. By working closely with our suppliers we are able to find new ways to leverage our scale and increase efficiency resulting in both cost savings and improved processes for our managers.
Drive an innovation agenda
We continue to drive our innovation agenda by working to improve our technological and digital capability, and developing new products and concepts to benefit from changing consumer behaviour which presents an opportunity to develop and enhance the way we communicate with guests.
Our digital interaction with guests ranges from online bookings and take-away orders to feedback both through a number of third party social channels and our brand apps. The data captured from the digital interaction enables us to be more targeted in our communication and to tailor our message to suit individual guest behaviour and preferences.
The demand for food delivery in the industry has remained in growth, with delivery aggregators taking increasing market share. Although delivery remains a relatively small part of what we do, we are working with Deliveroo and JustEat to expand our presence within this growing market with 109 sites now live. Recent trials with JustEat have also enabled us to explore the potential of click and collect, presenting an opportunity to participate directly in this market through take-away.
Guests increasingly expect to use technology as part of their experience in site. To facilitate this we have rolled out an online payment option across all of our brands, which allows guests to view and pay their bill from their mobile device with the option to split the cost amongst a group. We will also be trialling wireless charging across a selection of our All Bar One locations, with the facility being made available to guests who have downloaded the brand app. In addition, we have been trialling our mobile order facility in three sites in O'Neill's, which allows guests to both order and pay for food and drinks from their mobile device within site, without approaching the bar. Early evidence suggests that guests appreciate the ease with which orders can be placed with this facility allowing us to be more efficient during busy times.
We continue to focus on responding quickly and personally to guest feedback through online channels and are seeing the benefit of this work through our NPS score which has increased to 61, up 5 points from this time last year. We now respond to 90% of all social media comments which we believe is driving the benefit in our reputation with guests.
Last financial year we launched two new concepts, Chicken Society and Son of Steak, both of which are generating very positive customer feedback. These concepts remain in incubation whilst we refine the offers and we are pleased with the progress being made. The creation of new offers was important to breed an innovation ethos across the business and is something which has translated to existing brands in terms of offer development. For example, All Bar One has recently released a new menu including a larger range of healthy dishes, including vegan options, using the expertise of our company nutritionist. This sort of brand development is ongoing across the business to help keep brands relevant to their consumer groups.
OUR PEOPLE
People are at the heart of our business and we rely on our team members to deliver the experiences which make our guests want to return to our brands. As such we have been working hard in a number of areas and are pleased that engagement scores continued to strengthen across all cohorts.
We have developed and launched an online portal called MABLE which employs the principles of gamification to evolve the way in which we provide training and development to staff members. The portal includes training materials which staff can access at a time and place to suit them, allows us to communicate individually with all staff members and also includes a social element. The platform attracted the Learning & Performance Institute gold award for digital transformation.
Due to the impact that Brexit is likely to have on the free movement of people into the UK we have a need to ensure that we can access alternative talent pools. Whilst the proportion of our people who are non-British EU is relatively low at 13%, some brands and geographies would be more impacted than others and it is important that we address the issue. We have been investing in our apprenticeship programme which we believe will play an important part in developing the talent we need to drive our business forward in the future. We have a total of 1,600 apprentices in active learning, providing access to career paths across all sectors of the business. We were delighted to be awarded the Best Early in Careers Programme at the National HR Distinction Event in February this year as well as collecting the award for the Overall Best Place to Work award
OUTLOOK
Since the half-year trading has been strong, aided by good weather, and like-for-like salesa in the 32 weeks to 12 May have grown by 1.4%.
We have made good progress against our three priorities so far this year and will be refining and embedding our next wave of initiatives during the second half. In this uncertain environment and in the face of unrelenting cost headwinds our focus remains on delivering our strategy with the aim of returning the company to profitable growth and maximising long-term shareholder value.
FINANCIAL REVIEW
On a statutory basis, profit before tax for the period was £69m (H1 2017 £75m), on sales of £1,130m (H1 2017 £1,123m).
The Group Income Statement discloses adjusted profita and earnings per sharea information that excludes separately disclosed items to allow a better understanding of the adjusted trading of the Group.
At the end of the period, the total estate comprised 1,691 managed businesses and 59 franchised businesses, in the UK and Germany.
Changes in accounting policies
There have been no changes in accounting policies in the period.
Revenue
The Group's total revenues of £1,130m were 0.6% higher than the first half last year, with growth in like-for-like sales partially offset by the impact of disposals made in the previous financial year.
Total like-for-like salesa grew by 1.6% in the first half with food sales up by 1.8% and drink sales by 1.4%. Growth was positively impacted by the timing of Easter which fell in the second half of last year. However, trade was negatively impacted by adverse weather which impacted sales growth by an estimated £12m in the period as a whole. Adjusting for this impact, like-for-like sales would have increased by 2.5%. Volumes of food and drink fell 3.6% and 2.3% respectively with average spend per item on food up 5.7%, and average drink spend up 3.8% both reflecting the impact of the increasing premiumisation of the estate.
Like-for-like salesa for the 32 weeks to 12 May, which are not impacted by the timing of Easter, were up by 1.4%.
Like-for-like salesa growth: | Week 1 - 14 | Week 1 - 28 | Week 1 - 32 |
FY 2018 | FY 2018 | FY 2018 | |
Food | 1.4% | 1.8% | 1.0% |
Drink | 1.0% | 1.4% | 1.9% |
Total | 1.1% | 1.6% | 1.4% |
Separately disclosed items
Separately disclosed items comprise £1m net profit arising on disposal of property and a £5m charge for impairment of a small number of short leasehold properties.
Operating profit and margins
Adjusted operating profita for the first half was £141m, 5.4% lower than the same period last year. The period was adversely impacted by an estimated £8m due to weather in addition to disposals made last year (£2m) and closure cost from acceleration of our capital programme (£2m). These are partly mitigated by the movement of Easter into the first half, with an estimated timing benefit of £4m. Adjusting for these items illustrates underlying profits were broadly flat in the first half.
Inflationary cost pressures remain, particularly on labour, utilities, property costs, energy, food and drink costs. These are anticipated to remain at similar levels through the second half and into next year.
Adjusted operating margin of 12.5% was 0.8ppts lower than last year.
Interest
Net finance costs of £68m were £2m lower than in the first half last year, reflecting the continued reduction in Group securitised borrowings.
For the current financial year we expect the full year pensions finance charge to be around £7m (FY 2017 £7m).
Earnings per share
Basic earnings per share, after the separately disclosed items described above, were 13.0p (H1 2017 13.7p). Adjusted earnings per sharea were 13.9p, 8.6% lower than last year. The weighted average number of shares in the period of 424m has increased due to the issue of shares as scrip dividends. The total number of shares issued at the date of announcement is 428m.
Cash flow and net debt
The cash flow statement below excludes a net £6m outflow on unsecured revolving facilities (H1 2017 inflow of £6m).
H1 2018 | H1 2017 | |
£m | £m | |
208 | 212 | |
Working capital movement and other | 32 | (2) |
Pension deficit contributions | (23) | (23) |
Cash flow from operations before adjusted items | 217 | 187 |
Capital expenditure | (104) | (93) |
Interest | (60) | (60) |
Tax | (13) | (11) |
Disposals | 4 | 1 |
Cash flow before adjusted items | 44 | 24 |
Mandatory bond amortisation | (40) | (38) |
Net cash flow before dividends | 4 | (14) |
Dividend | (7) | (4) |
(3) | (18) |
The business generated £208m of operating cash flow from before adjusted items, movements in working capital and addition pension contributions from trading in the first half.
The cash inflow from working capital movement is due largely to the unwinding of the 53rd week trading in the previous year impacting the timing of scheduled payments within the first half. Capital expenditure of £104m is higher than last year due to the accelerated capital programme.
The cash dividend payment is higher than last year due to lower uptake of the scrip dividend issue and after bond amortisation there was a net free cash outflow of £3m.
Net debt of £1,718m at the half year end (H1 2017 £1,825m), represented 4.1 times adjusted EBITDAa (H1 2017 4.3 times).
Capital expenditure
Total maintenance and infrastructure capex of £29m was £5m higher than last year, with £3m of the additional spend in relation to investment in technology and systems.
During the period we have continued to increase return generating capital expenditure through remodelling or converting 220 sites (H1 2017: 172 sites) and opening 4 new sites (H1 2017: 6 sites). Conversions and acquisitions were primarily focused on premiumisation, with conversions to Miller & Carter and Stonehouse and acquisitions of All Bar One (2) and Miller & Carter (2) sites.
The EBITDA return on all freehold and leasehold conversion and acquisition capital invested since the start of the previous financial year is in excess of 19% and returns on remodel projects are over 20%.
H1 2018 | H1 2017 | |||
£m | # | £m | # | |
29 | 24 | |||
Remodels - refurb | 51 | 181 | 24 | 101 |
Remodels - expansionary | 5 | 13 | 9 | 22 |
Conversions | 16 | 26 | 24 | 49 |
Acquisitions - freehold | - | - | - | - |
Acquisitions - leasehold | 3 | 4 | 12 | 6 |
Total return generating capital expenditure | 75 | 224 | 69 | 178 |
Total capital expenditure | 104 | 93 |
Pensions
The Company continues to make pensions deficit payments as agreed as part of the triennial pensions valuation with the scheme trustees at 31 March 2016, which showed an asset funding shortfall at that time of £451m. The deficit will be funded by cash contributions of £46m per annum indexed to 2023, as per the agreement reached in 2013.
In 2024 an additional payment of £13m will be made into escrow, should such further funding be required at that time.
Dividends
As previously advised the Board is not declaring an interim dividend but will make an assessment of pay-out at the end of the year based on a full year of trading and development of the sector outlook. As previously set out, in making this assessment the Board considers investment to maintain the condition and competitiveness of the existing estate to be of primary importance for the long-term health of the business and would not expect to see a structural, or permanent, increase in the use of short term facilities.
Risk factors and uncertainties
The risks and uncertainties that affect the company remain unchanged and are set out on pages 36 - 40 of the 2017 Annual report and accounts which is available on the Mitchells & Butlers website at www.mbplc.com.
Definitions
a -. The Directors use a number of alternative performance measures (APMs) that are considered critical to aid the understanding of the Group's performance. Key measures are explained later in this announcement.
Responsibility statement
We confirm that to the best of our knowledge:
- | The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as required by DTR 4.2.4R and to the best of their knowledge gives a true and fair view of the information required by DTR 4.2.4R; |
- | The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first 28 weeks and description of principal risks and uncertainties for the remaining 24 weeks of the year); and |
- | The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein). |
This responsibility statement was approved by the Board of Directors on 15 May 2018 and is signed on its behalf by Tim Jones, Finance Director.
GROUP CONDENSED INCOME STATEMENT
for the 28 weeks ended 14 April 2018
2018 | 2017 | 2017 | ||||||||||
Notes | £m | £m | £m | £m | £m | £m | ||||||
Revenue | 2 | 1,130 | 1,130 | 1,123 | 1,123 | 2,180 | 2,180 | |||||
Operating costs before depreciation, amortisation and movements in the valuation of the property portfolio | (924) | (924) | (913) | (913) | (1,751) | (1,786) | ||||||
Net profit arising on property disposals | - | 1 | - | - | - | 1 | ||||||
2 | 206 | 207 | 210 | 210 | 429 | 395 | ||||||
Depreciation, amortisation and movements in the valuation of the property portfolio | (65) | (70) | (61) | (65) | (115) | (187) | ||||||
Operating profit | 2 | 141 | 137 | 149 | 145 | 314 | 208 | |||||
Finance costs | 4 | (65) | (65) | (66) | (66) | (125) | (125) | |||||
Finance revenue | 4 | 1 | 1 | - | - | 1 | 1 | |||||
Net pensions finance charge | (4) | (4) | (4) | (4) | (7) | (7) | ||||||
Profit before tax | 73 | 69 | 79 | 75 | 183 | 77 | ||||||
Tax expense | 5 | (14) | (14) | (16) | (18) | (37) | (14) | |||||
Profit for the period | 59 | 55 | 63 | 57 | 146 | 63 | ||||||
Earnings per ordinary share: |
Basic | 13.9p | 13.0p | 15.2p | 13.7p | 34.9p | 15.1p | ||||||
Diluted | 13.8p | 12.9p | 15.2p | 13.7p | 34.8p | 15.0p | ||||||
a | Separately disclosed items are explained in note 1 and analysed in note 3. |
b | Earnings before interest, tax, depreciation, amortisation and movements in the valuation of the property portfolio. |
All results relate to continuing operations.
GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME
for the 28 weeks ended 14 April 2018
2018 | 2017 | 2017 | ||||
28 weeks | 28 weeks | 53 weeks | ||||
Notes | £m | £m | £m | |||
(Unaudited) | (Unaudited) | (Audited) | ||||
Profit for the period | 55 | 57 | 63 | |||
Items that will not be reclassified subsequently to profit or loss: | ||||||
Unrealised gain on revaluation of the property portfolio | - | - | 74 | |||
Remeasurement of pension liability | 11 | 3 | 3 | 8 | ||
Tax relating to items not reclassified | 5 | 4 | 4 | (13) | ||
7 | 7 | 69 | ||||
Items that may be reclassified subsequently to profit or loss: | ||||||
Exchange differences on translation of foreign operations | - | - | 1 | |||
Cash flow hedges: | ||||||
- (Losses)/Gains arising during the period | (5) | 55 | 60 | |||
- Reclassification adjustments for items included in profit or loss | 33 | 12 | 53 | |||
Tax relating to items that may be reclassified | 5 | (5) | (11) | (19) | ||
23 | 56 | 95 | ||||
Other comprehensive income after tax | 30 | 63 | 164 | |||
Total comprehensive income for the period | 85 | 120 | 227 |
GROUP CONDENSED BALANCE SHEET
14 April 2018
2018 | 2017 | 2017 | |||||
14 April | 8 April | 30 September | |||||
ASSETS | Notes | £m | £m | £m | |||
(Unaudited) | (Unaudited) | (Audited) | |||||
Goodwill and other intangible assets | 8 | 10 | 8 | 10 | |||
Property, plant and equipment | 8 | 4,464 | 4,407 | 4,429 | |||
Lease premiums | 1 | 2 | 1 | ||||
Deferred tax asset | 100 | 125 | 110 | ||||
Derivative financial instruments | 12 | 26 | 61 | 41 | |||
Total non-current assets | 4,601 | 4,603 | 4,591 | ||||
Inventories | 27 | 26 | 24 | ||||
Trade and other receivables | 44 | 41 | 53 | ||||
Other cash deposits | 9 | 120 | 120 | 120 | |||
Cash and cash equivalents | 9 | 138 | 146 | 147 | |||
Derivative financial instruments | 12 | 3 | 3 | 2 | |||
Assets held for sale | - | 43 | 1 | ||||
Total current assets | 332 | 379 | 347 | ||||
Total assets | 4,933 | 4,982 | 4,938 | ||||
LIABILITIES | |||||||
Pension liabilities | 11 | (48) | (46) | (47) | |||
Trade and other payables | (324) | (302) | (297) | ||||
Current tax liabilities | (3) | (14) | (3) | ||||
Borrowings | 9 | (231) | (261) | (235) | |||
Derivative financial instruments | 12 | (40) | (44) | (43) | |||
Total current liabilities | (646) | (667) | (625) | ||||
Pension liabilities | 11 | (223) | (270) | (245) | |||
Borrowings | 9 | (1,775) | (1,894) | (1,827) | |||
Derivative financial instruments | 12 | (225) | (295) | (249) | |||
Deferred tax liabilities | (316) | (322) | (324) | ||||
Provisions | (43) | (9) | (42) | ||||
Total non-current liabilities | (2,582) | (2,790) | (2,687) | ||||
Total liabilities | (3,228) | (3,457) | (3,312) | ||||
Net assets | 1,705 | 1,525 | 1,626 | ||||
EQUITY | |||||||
Called up share capital | 37 | 36 | 36 | ||||
Share premium account | 25 | 26 | 26 | ||||
Capital redemption reserve | 3 | 3 | 3 | ||||
Revaluation reserve | 1,201 | 1,142 | 1,202 | ||||
Own shares held | (1) | (1) | (1) | ||||
Hedging reserve | (221) | (282) | (244) | ||||
Translation reserve | 14 | 13 | 14 | ||||
Retained earnings | 647 | 588 | 590 | ||||
Total equity | 1,705 | 1,525 | 1,626 | ||||
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
for the 28 weeks ended 14 April 2018
Called | Share | Capital | Own | |||||||||||||||
up share | premium | redemption | Revaluation | shares | Hedging | Translation | Retained | Total | ||||||||||
capital | account | reserve | reserve | held | reserve | reserve | earnings | equity | ||||||||||
£m | £m | £m | £m | £m | £m | £m | £m | £m | ||||||||||
At 24 September 2016 (Audited) | 35 | 27 | 3 | 1,142 | (1) | (338) | 13 | 527 | 1,408 | |||||||||
Profit for the period | - | - | - | - | - | - | - | 57 | 57 | |||||||||
Other comprehensive income | - | - | - | - | - | 56 | - | 7 | 63 | |||||||||
Total comprehensive income | - | - | - | - | - | 56 | - | 64 | 120 | |||||||||
Credit in respect of share-based payments | - | - | - | - | - | - | - | 1 | 1 | |||||||||
Dividends paid (note 7) | - | - | - | - | - | - | - | (4) | (4) | |||||||||
Scrip dividend related share issue (note 7) | 1 | (1) | - | - | - | - | - | - | - | |||||||||
At 8 April 2017 (Unaudited) | 36 | 26 | 3 | 1,142 | (1) | (282) | 13 | 588 | 1,525 | |||||||||
Profit for the period | - | - | - | - | - | - | - | 6 | 6 | |||||||||
Other comprehensive income | - | - | - | 61 | - | 38 | 1 | 1 | 101 | |||||||||
Total comprehensive income | - | - | - | 61 | - | 38 | 1 | 7 | 107 | |||||||||
Credit in respect of share-based payments | - | - | - | - | - | - | - | 1 | 1 | |||||||||
Dividends paid (note 7) | - | - | - | - | - | - | - | (8) | (8) | |||||||||
Revaluation reserve realised on disposal of properties | - | - | - | (1) | - | - | - | 1 | - | |||||||||
Tax on share-based payments taken directly to equity | - | - | - | - | - | - | - | 1 | 1 | |||||||||
At 30 September 2017 (Audited) | 36 | 26 | 3 | 1,202 | (1) | (244) | 14 | 590 | 1,626 | |||||||||
Profit for the period | - | - | - | - | - | - | - | 55 | 55 | |||||||||
Other comprehensive income | - | - | - | - | - | 23 | - | 7 | 30 | |||||||||
Total comprehensive income | - | - | - | - | - | 23 | - | 62 | 85 | |||||||||
Credit in respect of share-based payments | - | - | - | - | - | - | - | 1 | 1 | |||||||||
Dividends paid (note 7) | - | - | - | - | - | - | - | (7) | (7) | |||||||||
Revaluation reserve realised on disposal of properties | - | - | - | (1) | - | - | - | 1 | - | |||||||||
Scrip dividend related share issue (note 7) | 1 | (1) | - | - | - | - | - | - | - | |||||||||
37 | 25 | 3 | 1,201 | (1) | (221) | 14 | 647 | 1,705 | ||||||||||
GROUP CONDENSED CASH FLOW STATEMENT
for the 28 weeks ended 14 April 2018
2018 | 2017 | 2017 | ||||
28 weeks | 28 weeks | 53 weeks | ||||
Notes | £m | £m | £m | |||
(Unaudited) | (Unaudited) | (Audited) | ||||
Cash flow from operations | ||||||
Operating profit | 137 | 145 | 208 | |||
Add back: adjusted items | 4 | 4 | 106 | |||
Operating profit before adjusted items | 141 | 149 | 314 | |||
Add back: | ||||||
Depreciation of property, plant and equipment | 64 | 60 | 113 | |||
Amortisation of intangibles | 1 | 1 | 2 | |||
Cost charged in respect of share-based payments | 1 | 1 | 2 | |||
Administrative pension costs | 11 | 1 | 1 | 2 | ||
Operating cash flow before adjusted items, movements in working capital and additional pension contributions | 208 | 212 | 433 | |||
(Increase)/decrease in inventories | (3) | (1) | 1 | |||
Decrease/(increase) in trade and other receivables | 9 | (9) | (20) | |||
Increase in trade and other payables | 25 | 8 | 7 | |||
Increase/(decrease) in provisions | 1 | - | (2) | |||
Additional pension contributions | 11 | (23) | (23) | (46) | ||
Cash flow from operations before adjusted items | 217 | 187 | 373 | |||
Interest paid | (61) | (60) | (122) | |||
Interest received | 1 | - | 1 | |||
Tax paid | (13) | (11) | (26) | |||
Net cash from operating activities | 144 | 116 | 226 | |||
Investing activities | ||||||
Purchases of property, plant and equipment | (103) | (93) | (166) | |||
Purchases of intangible assets | (1) | - | (3) | |||
Proceeds from sale of property, plant and equipment | 4 | 1 | 46 | |||
Net cash used in investing activities | (100) | (92) | (123) | |||
Financing activities | ||||||
Dividends paid (net of scrip dividend) | 7 | (7) | (4) | (12) | ||
Repayment of principal in respect of securitised debt | 10 | (40) | (38) | (77) | ||
Net movement on unsecured revolving credit facilities | 10 | (6) | 6 | (25) | ||
Net cash used in financing activities | (53) | (36) | (114) | |||
Net decrease in cash and cash equivalents | 10 | (9) | (12) | (11) | ||
Cash and cash equivalents at the beginning of the period | 147 | 158 | 158 | |||
Cash and cash equivalents at the end of the financial period | 138 | 146 | 147 |
Cash and cash equivalents are defined in note 9.
NOTES TO THE INTERIM FINANCIAL INFORMATION
1. GENERAL INFORMATION |
Basis of preparation and accounting policies |
This interim financial information has been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting as adopted by the European Union. |
The information for the 53 weeks ended 30 September 2017 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that period has been delivered to the Registrar of Companies and has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The auditor's report on those accounts was not qualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under section 498(2) or (3) of the Companies Act 2006. This interim financial information should be read in conjunction with the Annual Report and Accounts 2017. |
The interim financial information has been prepared on a consistent basis using the accounting policies set out in the Annual Report and Accounts 2017. |
IFRS 8 Operating Segments requires operating segments to be based on the Group's internal reporting to its Chief Operating Decision Maker ("CODM"). The CODM is regarded as the Chief Executive together with other Board members. The CODM uses EBITDA and profit before interest and adjusted items (operating profit pre-adjustments) as the key measures of the segment results. Group assets are reviewed as part of this process but are not presented on a segment basis. |
The retail operating business operates all of the Group's retail operating units and generates all of its external revenue. The property business holds the Group's freehold and long leasehold property portfolio and derives all of its income from the internal rent levied against the Group's retail operating units. The internal rent charge is eliminated at the total Group level. |
Retail operating business | Property business | Total |
2018 | 2017 | 2017 | 2018 | 2017 | 2017 | 2018 | 2017 | 2017 | |||||||||
28 wks | 28 wks | 53 wks | 28 wks | 28 wks | 53 wks | 28 wks | 28 wks | 53 wks | |||||||||
£m | £m | £m | £m | £m | £m | £m | £m | £m | |||||||||
Revenue | 1,130 | 1,123 | 2,180 | - | - | - | 1,123 | 2,180 | |||||||||
EBITDA pre- adjustments | 95 | 95 | 213 |