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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Mitchells & Butlers Plc | LSE:MAB | London | Ordinary Share | GB00B1FP6H53 | ORD 8 13/24P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.50 | 0.21% | 236.50 | 237.00 | 238.00 | 239.50 | 235.50 | 235.50 | 126,414 | 16:35:08 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Drinking Places (alcoholic) | 2.5B | -4M | -0.0067 | -355.22 | 1.41B |
From Apr 2019 to Apr 2024
TIDMMAB
RNS Number : 3488F
Mitchells & Butlers PLC
17 May 2017
MITCHELLS & BUTLERS PLC
17 May 2017
HALF YEAR RESULTS
(For the 28 weeks ended 8 April 2017)
Hot Features
Premium
- Continued like-for-like sales
momentum
- Ongoing focus on mitigating inflationary
cost headwinds
- Strong progress on all three strategic
priorities
Financial performance
- Like-for-like sales (a) up 1.6% at the half
year and up 1.9%(a) in first 33 weeks of year
- Results impacted by movement of Easter into
second half
- Adjusted operating profit of GBP149m(b) (H1
2016 GBP156m)
- Adjusted earnings per share of 15.2p(b) (H1
2016 15.7p)
- Interim dividend of 2.5p (H1 2016 2.5p)
Strategic progress
- Completed 178 return generating capital projects
with focus on premiumisation of the estate
- Improved interaction with social media; guest
satisfaction score up 2.4%
Reported results
- Total revenue of GBP1,123m (H1 2016 GBP1,096m)
- Operating profit of GBP145m (H1 2016 GBP157m)
- Profit before tax of GBP75m (H1 2016 GBP83m)
- Basic earnings per share of 13.7p (H1 2016
18.4p)
Balance sheet and cash flow
- Capital expenditure of GBP93m (H1 2016 GBP88m),
including 6 new site openings and 172 conversions
and remodels
- Free cash flow of GBP24m(c) (H1 2016: GBP34m)
- Net debt of GBP1.83bn (H1 2016 GBP1.86bn) representing
4.3 times adjusted EBITDA(d) (H1 2016 4.2 times)
Phil Urban, Chief Executive, commented:
"During the half year we have generated sustained sales growth, whilst consistently out-performing the market. This comes from the good progress we have made in our three priority areas: building a more balanced business; instilling a more commercial culture; and driving an innovation agenda.
As previously announced, margins have been adversely impacted by increased costs, most notably from wage inflation, property costs and exchange rate movements. In order to partially mitigate these costs we have been working hard to encourage our guests to trade up and increase spend per head for a more premium experience whilst challenging our General Managers to run their businesses as cost effectively as possible.
Overall, we are pleased with the turnaround in our sales trajectory and relative performance against the market. In a challenging cost and consumer environment we will continue to focus on our three priority areas."
Definitions
a - Like-for-like sales growth reflects the sales performance against the comparable period in the prior year of UK managed pubs, bars and restaurants that were trading in the two periods being compared, unless marketed for disposal. Like-for-like sales are measured against relevant accounting weeks in the prior year.
b - Adjusted earnings are quoted before separately disclosed items as set out in the Group Income Statement and detailed in note 3 of the accounts.
c - Free cash flow excludes GBP4m dividend payment (HY 2016 GBP21m); GBP38m mandatory bond amortisation (H1 2016 GBP32m) and net GBP6m drawn from unsecured revolving facilities (H1 2016 GBP8m).
d - Annualised EBITDA before separately disclosed items is used to calculate debt service coverage ratio.
There will be a presentation today for analysts and investors at 8.45am 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 conference will also be accessible by phone: 020 3059 8125 and quote "Mitchells & Butlers". The replay will be available until 24 May 2017 on 0121 260 4861 replay access pin 6014173#.
All disclosed documents relating to these results are available on the Group's website at www.mbplc.com
For further information, please contact:
+44(0)121 498
Tim Jones - Finance Director 6112
Amy De Marsac - Investor Relations +44(0) 7712 538660
+44(0)20 7251
James Murgatroyd (Finsbury) 3801
Notes to editors:
- Mitchells & Butlers is a leading operator
of managed restaurants and pubs. Its strong
portfolio of brands and formats includes Harvester,
Toby Carvery, All Bar One, Miller & Carter,
Premium Country Pubs, Sizzling Pubs, Crown
Carveries, Stonehouse, Vintage Inns, Browns,
Castle, Nicholson's, O'Neill's and Ember Inns.
In addition, it operates Innkeeper's Lodge
hotels in the UK and Alex restaurants and
bars in Germany. Further details are available
at www.mbplc.com and supporting photography
can be downloaded at www.mbplc.com/imagelibrary
.
BUSINESS REVIEW
In the first six months of this year we have made further progress against our three strategic priorities:
- To build a more balanced business - To instil a more commercial culture - To drive an innovation agenda
Over the last year, we have seen a steady improvement in our rate of like-for-like sales performance, both compared to where we were and relative to the wider market. Our like-for-like sales in the year-to-date, including Easter, have now increased by 1.9%.
We have increased the level of capital investment in the estate, reducing the remodel life cycle closer to an average of 6 to 7 years. This is clearly helping our sales growth. However, we have also seen a marked improvement in the trajectory of the uninvested business over this time, suggesting the many other initiatives we have been working on are also now starting to benefit the business. We believe that by working hard to make a large number of marginal improvements across all areas of the business, we will continue to improve our performance.
We will continue to work on multiple fronts to maintain the good progress that we have achieved over the last twelve months.
THE EXTERNAL ENVIRONMENT
We operate in a challenging and uncertain environment, both in the economy as a whole and in our sector specifically. Consumer confidence has remained fragile throughout 2016 and 2017, whilst spending remains in growth, albeit at a slowing rate. There is clearly therefore some caution over future demand. However, this backdrop is not new and, encouragingly, we have still continued to improve our sales performance.
In the UK we have seen headline inflation figures start to rise recently and, more specifically, wholesale food inflation has increased in recent months, up to 6.0% in March 2017. Overall however, our cost outlook for the year is unchanged from that set out in our full-year results last November and continues to present a challenge which we must mitigate. This inflationary environment clearly impacts on our own, and our competitors', decisions on pricing. We have stated previously that we would expect some price to be taken in the sector, and we have seen recent indications of this. Nevertheless, there has also been evidence of aggressive discounting during quieter trading periods. We continue to monitor our own prices carefully, and have carried out some price adjustments, including both price increases and price reductions in local markets. We will continue to enable and encourage guests to premiumise and increase the level of spend per head through enhanced products and menus, although some movement on like-for-like prices is also likely to be necessary.
The level of supply in our market has also changed significantly in recent years. We have commented previously on the high number of new casual dining restaurants opening, particularly up until the middle of 2015. Since then we have seen restaurant supply growth slow considerably, reducing to a small decline in the last four quarters, although clearly within the net position there are examples of segments and operators that are continuing to roll out. While we are not now seeing the same level of new openings as two years ago, our marketplace remains highly competitive.
OUR PRIORITIES
Building a more balanced business
Our priority continues to be to reach the optimal balance of brands and formats across our high-quality estate, of around 1,800 largely freehold sites. Last year we carried out a full review to identify the ideal brand for each site, and since then we have been working towards achieving this profile, aiming to premiumise where possible to take advantage of higher growth and more resilient markets, alongside improving the general level of amenity and shortening the cycle within which all of our sites are invested.
We have made good progress against this plan. Our main growth focus has been Miller & Carter, our specialist steak format which continues to be a great success both for new openings and conversions of existing sites. We now have 67 Miller & Carter sites open and are on track to reach around 100 sites by the end of 2017. These investments perform very well for us, and offer possible growth opportunities even beyond the 100-site target. We have also continued our conversion of sites into the Stonehouse Pizza & Carvery format, now in 72 sites, and extended the Harvester Feel Good Dining concept, now in 55 sites.
In all, we completed 172 remodels and conversions (H1 2016: 164) in the first half of the year, keeping us on track to achieve our aim of a 6 to 7 year cycle of reinvesting in each of our sites. We have opened 6 new sites, and expect to complete around 15 new openings in the full year, mostly in All Bar One, Alex and Miller & Carter.
We also identified a number of sites for disposal last year. This followed several years of limited disposals, and was an output of the estate review outlined above. We are currently in negotiations to sell 78 sites which we would expect to complete before the end of the year. The annualised EBITDA of these disposals is around GBP5m.
Instilling a more commercial culture
Instilling a more commercial culture is about the way in which the organisation operates and strives for profitable sales growth. We are pleased with the progress in this area. The four divisional structure is now embedded and working well. This year we will update our labour rostering system, which will enable us to operate Time & Attendance across the business, as well as giving our managers and team the ability to access the system from their own devices.
Our use of social media is becoming increasingly important as a tool to interact with our guests, such that we are now generating more than 40,000 pieces of customer feedback every month. This provides a rich source of data as well as the opportunity for our managers to engage directly with our guests. We have installed a social media consolidation tool across all our brands, which enables our managers to see and respond to feedback from multiple social media channels. Data suggests a clear link between 'scores' achieved on social media and performance measures, including like-for-like sales, complaints per meal sold and net promoter score.
Our commercial culture also extends to discipline around managing our cost base, as we strive to mitigate the substantial cost pressures that we, and the industry, face. Our scale clearly helps us in this regard. Our procurement teams have worked across our supplier base to, where possible, substitute or consolidate products and suppliers while maintaining the quality of product offered to guests. We have also been focusing on costs at an operational level and, whilst we feel that the organisation is already lean in the way it operates, we have given each of our sites a daily challenge to work towards in terms of cost savings - through challenging productivity, energy usage, and food and drink waste to name a few. This gives us a clear goal to work towards and engages the teams, whilst taking care not to take actions which will impact upon the guest experience. We are pleased with the progress we have made, both centrally and at an operational level, and expect to be able to mitigate an element of the full-year cost headwinds.
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.
Innovation and technology are critical areas for us as a business, in terms of efficiency, attracting and interacting with guests and remaining competitive in our markets. We aim to use our technology to improve all aspects of the customer journey, which sometimes means making seemingly small adjustments to make a significant difference. Examples of our progress in this area include:
- Continuing to increase the level of online
bookings, such that now around 90,000 bookings
are made a week through our own websites and
third-party partners;
- A new site-level website template which is
being rolled out, now live across 170 sites,
and provides us with a platform to easily
and quickly replicate new websites for site
or brand concepts as well as improving the
online guest experience;
- Improvements to guest Wi-Fi, both through
increasing the network speed and separating
the back office usage; and
- Trialling of alternative payment devices,
which we expect to build on with a trial for
guests to order at tables later this year.
We have continued to extend our use of delivery, which is now live across more than 50 sites and in three of our existing brands, plus our two new concepts Chicken Society and Son of Steak. We are convinced that this is an area of the market which is here to stay, and the demand appears strong across towns and cities nationwide. On average we are still seeing delivery sales of around GBP300 per site per week, showing the strength of the offer as we continue to roll out. Certain individual sites trade well in excess of this amount, with the two new concepts being particularly strong on delivery sales. We currently partner with one provider, but are close to extending the offer into other regions through alternative suppliers and believe that a delivery offer may ultimately be applicable for up to a quarter of the estate.
As well as using technology to enhance the guest experience, we are also using technology to improve the way we work. These improvements may appear small, but can make a significant difference to our teams. Based on feedback, we have issued all of our house managers with laptops to facilitate more flexible working on site. We have also introduced enhancements to our telephone system to allow bookings to be routed through a centrally operated telephone line, rather than the team having to manage phones directly at sites during peak trading periods.
We have done much to improve our digital marketing in the last 18 months, by consolidating all of our customer information into one database, trialling flexible offers through email and other channels, and by developing apps for a number of our brands. We now have six brand apps (Harvester, Toby Carvery, All Bar One, Nicholson's, Ember Inns and Browns), with an aggregate of 825k downloads so far. We have begun testing a loyalty function within some of these apps, and in the months ahead will develop this further to tailor rewards to guests based on their individual usage. This enables us to understand our guests' preferences more clearly and therefore to have much more personalised interaction with them.
Our work on innovation also extends to the ongoing development of new products and concepts. Existing brands are continuously looking to evolve their offers, with examples ranging from the introduction of a low calorie prosecco in a quarter of the estate and the development of vegan dishes, to exploring popup and partnership opportunities to expand the reach of our brands. As mentioned above we also opened two new concepts this financial year: Chicken Society and Son of Steak. Both are based on a simple but high-quality offer, with a focused concept aimed at millennials, who are arguably underrepresented as a customer base across our existing portfolio of brands. Chicken Society opened in Finchley in December, and Son of Steak in Nottingham in March. We are encouraged by the early trading in both and whilst we expect to open more sites in the months ahead, we will take time to assess the performance and the business model of each before deciding whether a scale rollout is appropriate. We have always been very clear that, whilst the concepts may end up being a future conversion opportunity for the estate, it is more important that they help us develop our own culture of testing and learning, and being able to innovate at pace - benefiting both future new trials and innovation within our existing brands.
OUTLOOK
Since the half-year, trading has benefited from Easter falling later this year. In the year-to-date (as at 13(th) May) our like-for-like sales have now increased by 1.9%. This builds on the momentum we have seen in the last twelve months, as a result of the various activities we have been undertaking and despite the challenging market backdrop.
We have made good progress against our three priorities, but must continue to work at pace and on multiple fronts in order to maintain our market outperformance and offset the increasing cost pressures facing our sector, such that we maximise long term shareholder value.
FINANCIAL REVIEW
On a statutory basis, profit before tax for the period was GBP75m (H1 2016 GBP83m), on sales of GBP1,123m (H1 2016 GBP1,096m).
The Group Income Statement discloses adjusted profit and earnings per share information that excludes separately disclosed items to allow a better understanding of the underlying trading of the Group.
At the end of the period, the total estate comprised 1,770 managed businesses and 56 franchised businesses, in the UK and Germany.
This year will be a 53 week accounting year to maintain alignment of accounting and calendar dates, ending on 30 September 2017.
Changes in accounting policies
There have been no changes in accounting policies in the period.
Revenue
The Group's total revenues of GBP1,123m were 2.5% higher than the first half last year, with growth in like-for-like sales supported by new site openings.
Total like-for-like sales(a) grew by 1.6% in the first half with food sales up by 0.8% and drink sales by 2.3%. Volumes of both food and drink fell 4.8% and 1.8% respectively with average spend per item on food up 5.9%, and average drink spend up 4.2% both reflecting the impact of the increasing premiumisation of the estate. However, this excludes the impact of Easter, which fell in the first half of last year. Like-for-like sales for the 33 weeks to 13(th) May, including Easter, grew by 1.9% continuing an improvement in sales performance across the estate in both invested and uninvested sites.
Like-for-like sales Week 1 Week 1 Week
growth: - 15 - 28 1 - 33
FY 2017 FY 2017 FY 2017
-------- -------- --------
Food 1.6% 0.8% 1.4%
Drink 1.7% 2.3% 2.4%
Total 1.7% 1.6% 1.9%
Separately disclosed items
Separately disclosed items comprise a GBP4m impairment charge in relation to assets held for sale and a GBP2m capital gains tax adjustment in respect of the prior year.
Operating margins
Whilst we have marginally increased gross margins, inflationary cost pressures have, as anticipated, driven a year-on-year operating margin reduction with increased labour, utilities, property costs, duty and food and drink costs all impacting the first half. Adjusted operating margins(b) were 0.9ppts lower than last year at 13.3%.
Inflationary cost pressures are anticipated to continue through the second half of the year and into next year at a similar level.
Adjusted operating profit(b) for the first half was GBP149m, 4.5% lower than the same period last year as a result of the inflationary costs pressures above and the delay of Easter outweighing the improvement we have made in both the invested and uninvested estates performance in the period.
Interest
Net finance costs of GBP70m were GBP4m lower than in the first half last year, reflecting a lower net pensions finance charge of GBP4m (H1 2016 GBP6m), and a reduction in Group securitised borrowings.
For the current financial year we expect the full year pensions finance charge to be around GBP7m (FY 2016 GBP12m).
Earnings per share
Basic earnings per share, after the separately disclosed items described above, were 13.7p (H1 2016 18.4p). Adjusted earnings per share(b) were 15.2p, 3.2% lower than last year. The weighted average number of shares in the period of 415m has increased due to the issue of shares as scrip dividends. The total number of shares issued at the date of announcement is 421m.
Cash flow and net debt
The cash flow statement below excludes GBP38m of mandatory bond amortisation (H1 2016 GBP32m) and a net GBP6m drawn from unsecured revolving facilities (H1 2016 GBP8m).
H1 2017 H1 2016
GBPm GBPm
EBITDA before adjusted items(b) 210 217
Working capital movement / - -
non-cash items
Pension deficit contributions (23) (26)
-------- --------
Cash flow from operations 187 191
Capital expenditure (93) (88)
Interest (60) (62)
Tax (11) (8)
Disposals and other 1 1
-------- --------
Free Cash Flow 24 34
Dividend (4) (21)
Net cash flow 20 13
The business generated GBP210m of EBITDA before adjusted items the first half. Capital expenditure of GBP93m is higher than last year due to the accelerated capital programme. After capital expenditure, interest and tax, GBP24m of free cash flow was generated by the business. The cash dividend payment is lower than last year due to the scrip dividend issue.
Net debt of GBP1,825m at the half year end (H1 2016 GBP1,862m), represented 4.3 times adjusted EBITDA(c) (H1 2016 4.2 times).
Capital expenditure
Total maintenance and infrastructure capex of GBP24m was GBP10m lower than last year, following review and improvement of the delivery of maintenance work and due to the increase in remodel and conversion activity over the past year.
During the period we have increased return generating capital expenditure through remodelling or converting 172 sites (H1 2016: 164 sites) and opening 6 new sites (H1 2016: 4 sites), at an additional investment spend of GBP15m. Conversions were primarily focused on premiumisation to Miller & Carter and Stonehouse and, acquisitions on growth of All Bar One (4 sites) and Miller & Carter (2 sites).
The EBITDA return on all conversion and acquisition capital invested since FY 2014 is 18%, with projects since the start of 2016 returning in excess of 20%. Recent remodel performance has been encouraging, delivering sales uplifts in excess of 10%.
H1 2017 H1 2016
GBPm # GBPm #
-------------------------------- ----- ---- ----- ----
Maintenance and infrastructure 24 34
Remodels - refurb 24 101 38 125
Remodels - expansionary 9 22 3 6
Conversions 24 49 9 33
Acquisitions - freehold - - 1 2
Acquisitions - leasehold 12 6 3 2
-------------------------------- ----- ---- ----- ----
Total return generating
capital expenditure 69 178 54 168
Total capital expenditure 93 88
Pensions
The Company continues to make pensions deficit payments based on a ten year schedule of contributions agreed as part of the triennial valuations at 31 March 2013, which showed an assessed funding shortfall at that time of GBP572m. The discounted value of the minimum funding requirement agreed as part of the schedule of contributions is recognised in the balance sheet at GBP316m (H1 2016 GBP340m) before tax.
The Company is in negotiations with the Trustees of the pension schemes regarding the latest triennial valuation, as at 31 March 2016.
Dividends
The Board has approved an interim dividend of 2.5 pence per share which will be paid on 3 July 2017 to shareholders on the register at the close of business on 26 May 2017. The Board intends to make a scrip dividend alternative available to shareholders.
Shareholders who hold share certificate(s) will need to complete a Scrip Dividend Mandate Form, which can be found on our website www.mbplc.com or by contacting Equiniti on 0371 384 2065. The completed Scrip Dividend Mandate form should be returned to the registrars no later than 5pm on 12 June 2017.
Shareholders who hold their shares in CREST and who wish to elect for the Scrip Dividend should complete an election through CREST no later than 5pm on 12 June 2017. Please refer to the elections process document available at www.shareview.co.uk/info/reinvest
Shareholders who do not hold their shares in CREST and who have already submitted a Scrip Dividend Mandate form in respect of the final dividend for the 2016 financial year do not need to submit a new mandate form. The existing Mandate form will continue in force for those shareholders who do not hold shares in CREST unless and until notice of cancellation is received by the Company's registrars not less than 15 working days before the date on which the dividend is to be paid.
Risk factors and uncertainties
The risks and uncertainties that affect the company remain unchanged and are set out on pages 20 - 24 of the 2016 Annual report and accounts which is available on the Mitchells & Butlers website at www.mbplc.com.
Definitions
a - Like-for-like sales growth reflects the sales performance against the comparable period in the prior year of UK managed pubs, bars and restaurants that were trading in the two periods being compared, unless marketed for disposal. Like-for-like sales are measured against relevant accounting weeks in the prior year.
b - Adjusted measures are quoted before separately disclosed items as set out in the Group Income Statement and detailed in note 3 of the accounts.
c - Annualised EBITDA before separately disclosed items is used to calculate debt service coverage ratio.
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 25 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 16 May 2017 and is signed on its behalf by Tim Jones, Finance Director.
GROUP CONDENSED INCOME STATEMENT
for the 28 weeks ended 8 April 2017
2017 2016 2016
28 weeks 28 weeks 52 weeks
(Unaudited) (Unaudited) (Audited)
------------- ------------- -----------
Before Before Before
separately separately separately
disclosed disclosed disclosed
items(a) Total items(a) Total items(a) Total
GBPm GBPm GBPm GBPm GBPm GBPm
---------- ----- ----------- ----- ----------- -----
Revenue (note
2) 1,123 1,123 1,096 1,096 2,086 2,086
Operating costs
before depreciation,
amortisation
and movements
in the valuation
of the property
portfolio (913) (913) (879) (879) (1,655) (1,655)
Net profit
arising on
property disposals - - - 1 - 1
EBITDA(b) 210 210 217 218 431 432
Depreciation,
amortisation
and movements
in the valuation
of the property
portfolio (61) (65) (61) (61) (113) (201)
------ ------ ------ ------ -------- --------
Operating profit 149 145 156 157 318 231
Finance costs
(note 4) (66) (66) (69) (69) (126) (126)
Finance revenue
(note 4) - - 1 1 1 1
Net pensions
finance charge
(note 4) (4) (4) (6) (6) (12) (12)
------ ------ ------ ------ -------- --------
Profit before
tax 79 75 82 83 181 94
Tax expense
(note 5) (16) (18) (17) (7) (37) (5)
------ ------ ------ ------ -------- --------
Profit for
the period 63 57 65 76 144 89
====== ====== ====== ====== ======== ========
Earnings per
ordinary share
(note 6):
Basic 15.2p 13.7p 15.7p 18.4p 34.9p 21.6p
Diluted 15.2p 13.7p 15.7p 18.4p 34.9p 21.6p
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 8 April 2017
2017 2016 2016
28 weeks 28 weeks 52 weeks
GBPm GBPm GBPm
------------ ------------ ----------
(Unaudited) (Unaudited) (Audited)
Profit for the period 57 76 89
Items that will not be reclassified
subsequently to profit or
loss:
Unrealised gain on revaluation
of the property portfolio - - 216
Remeasurement of pension liability
(note 11) 3 (9) (22)
Tax relating to items not
reclassified (note 5) 4 7 (21)
------------ ------------ ----------
7 (2) 173
Items that may be reclassified
subsequently to profit or
loss:
Exchange differences on translation
of foreign operations - 2 3
Cash flow hedges:
- Gains/(Losses) arising during
the period 55 (54) (116)
- Reclassification adjustments
for items included in profit
or loss 12 6 8
Tax relating to items that
may be reclassified (note
5) (11) 3 10
------------ ------------ ----------
56 (43) (95)
Other comprehensive income/(expense)
after tax 63 (45) 78
Total comprehensive income
for the period 120 31 167
============ ============ ==========
GROUP CONDENSED BALANCE SHEET
8 April 2017
2017 2016 2016
8 April 9 April 24 September
ASSETS GBPm GBPm GBPm
--------------- --------------- -------------
(Unaudited) (Unaudited) (Audited)
Goodwill and other intangible
assets (note 8) 8 9 9
Property, plant and equipment
(note 8) 4,407 4,271 4,423
Lease premiums 2 3 2
Deferred tax asset 125 143 143
Derivative financial instruments
(note 12) 61 34 52
--------------- --------------- -------------
Total non-current assets 4,603 4,460 4,629
--------------- --------------- -------------
Inventories 26 25 25
Trade and other receivables 41 39 32
Other cash deposits (note
9) 120 120 120
Cash and cash equivalents
(note 9) 146 152 158
Derivative financial instruments
(note 12) 3 - 1
Assets held for sale (note 43
8) - -
Total current assets 379 336 336
--------------- --------------- -------------
Total assets 4,982 4,796 4,965
--------------- --------------- -------------
LIABILITIES
Pension liabilities (note
11) (46) (46) (46)
Trade and other payables (302) (309) (293)
Current tax liabilities (14) (17) (12)
Borrowings (note 9) (261) (228) (253)
Derivative financial instruments
(note 12) (44) (43) (44)
Total current liabilities (667) (643) (648)
--------------- --------------- -------------
Pension liabilities (note
11) (270) (294) (291)
Borrowings (note 9) (1,894) (1,942) (1,920)
Derivative financial instruments
(note 12) (295) (302) (360)
Deferred tax liabilities (322) (323) (329)
Provisions (9) (10) (9)
Total non-current liabilities (2,790) (2,871) (2,909)
--------------- --------------- -------------
Total liabilities (3,457) (3,514) (3,557)
--------------- --------------- -------------
Net assets 1,525 1,282 1,408
=============== =============== =============
EQUITY
Called up share capital 36 35 35
Share premium account 26 27 27
Capital redemption reserve 3 3 3
Revaluation reserve 1,142 953 1,142
Own shares held (1) (1) (1)
Hedging reserve (282) (285) (338)
Translation reserve 13 12 13
Retained earnings 588 538 527
--------------- --------------- -------------
Total equity 1,525 1,282 1,408
=============== =============== =============
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
for the 28 weeks ended 8 April 2017
Called Share Capital Own
up premium redemption Revaluation shares Hedging Translation Retained Total
share
capital account reserve reserve held reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------- ------- ---------- ----------- ------ ------- ----------- -------- ------
At 26 September
2015 (Audited) 35 26 3 938 (1) (240) 10 500 1,271
Profit for
the period - - - - - - - 76 76
Other
comprehensive
income/(expense) - - - 15 - (45) 2 (17) (45)
------- ------- ---------- ----------- ------ ------- ----------- -------- ------
Total
comprehensive
income/(expense) - - - 15 - (45) 2 59 31
Share capital
issued - 1 - - - - - - 1
Purchase
of own shares - - - - (1) - - - (1)
Release
of own shares - - - - 1 - - (1) -
Credit in
respect
of share-based
payments - - - - - - - 1 1
Dividends
paid - - - - - - - (21) (21)
At 9 April
2016 (Unaudited) 35 27 3 953 (1) (285) 12 538 1,282
Profit for
the period - - - - - - - 13 13
Other
comprehensive
income/(expense) - - - 189 - (53) 1 (14) 123
------- ------- ---------- ----------- ------ ------- ----------- -------- ------
Total
comprehensive
income/(expense) - - - 189 - (53) 1 (1) 136
Credit in
respect
of share-based
payments - - - - - - - 1 1
Dividends
paid - - - - - - - (10) (10)
Tax on
share-based
payments - - - - - - - (1) (1)
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 - - - - - - - (21) (21)
Scrip dividend
related
share issue
(note 7) 1 (1) - - - - - 17 17
At 8 April
2017
(Unaudited) 36 26 3 1,142 (1) (282) 13 588 1,525
======= ======= ========== =========== ====== ======= =========== ======== ======
GROUP CONDENSED CASH FLOW STATEMENT
for the 28 weeks ended 8 April 2017
2017 2016 2016
28 weeks 28 weeks 52 weeks
GBPm GBPm GBPm
------------ ------------ ----------
(Unaudited) (Unaudited) (Audited)
Cash flow from operations
Operating profit 145 157 231
Add back: adjusted items 4 (1) 87
------------ ------------ ----------
Operating profit before adjusted
items 149 156 318
Add back:
Depreciation of property, plant
and equipment 60 60 111
Amortisation of intangibles 1 1 2
Cost charged in respect of
share based payments 1 1 2
Administrative pension costs
(note 11) 1 1 2
------------ ------------ ----------
Operating cash flow before
adjusted items, movements in
working capital and additional
pension contributions 212 219 435
Increase in inventories (1) (1) (1)
Increase in trade and other
receivables (9) (12) (4)
Increase/(decrease) in trade
and other payables 8 11 (5)
Decrease in provisions - - (1)
Additional pension contributions
(note 11) (23) (26) (49)
------------ ------------ ----------
Cash flow from operations before
adjusted items 187 191 375
Interest paid (60) (63) (126)
Interest received - 1 1
Tax paid (11) (8) (28)
Net cash from operating activities 116 121 222
------------ ------------ ----------
Investing activities
Purchases of property, plant
and equipment (93) (88) (166)
Purchases of intangible assets - - (1)
Proceeds from sale of property,
plant and equipment 1 1 5
Net cash used in investing
activities (92) (87) (162)
------------ ------------ ----------
Financing activities
Dividends paid (4) (21) (31)
Issue of ordinary share capital - 1 1
Purchase of own shares - (1) ( (1)
Repayment of principal in respect
of securitised debt (38) (32) (67)
Net movement on unsecured revolving
credit facilities 6 8 31
Net cash used in financing
activities (36) (45) (67)
------------ ------------ ----------
Net decrease in cash and cash
equivalents (note 10) (12) (11) (7)
Cash and cash equivalents at
the beginning of the period 158 163 163
Foreign exchange movements
on cash - - 2
Cash and cash equivalents at
the end of the financial period 146 152 158
============ ============ ==========
Cash and cash equivalents are defined in note 9.
There was an issue of 7 million shares during the year as a scrip dividend which is a non-cash transaction. Refer to note 7 for further details.
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 52 weeks ended 24 September
2016 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
2016.
The interim financial information has been prepared
on a consistent basis using the accounting policies
set out in the Annual Report and Accounts 2016.
Adjusted profit
In addition to presenting information on an IFRS
basis, the Group also presents adjusted profit
and earnings per share information that excludes
separately disclosed items, including the impact
of related tax. This adjusted information is disclosed
to allow a better understanding of the underlying
trading performance of the Group and is consistent
with the Group's internal management reporting.
Separately disclosed items are those which are
separately identifiable by virtue of their size
or incidence and include movements in the valuation
of the property portfolio as a result of the annual
revaluation exercise, impairment review of short
leasehold and unlicensed properties, restructuring
costs and corporation tax rate change. Further
information is available in the Annual Report
and Accounts 2016 and in note 3.
Going Concern
The Group's available secured debt and unsecured
bank facilities, combined with the strong cash
flows generated by the business, support the Directors'
view that the Group has sufficient facilities
available to it to meet its foreseeable working
capital requirements. The Directors have concluded
therefore that the going concern basis remains
appropriate.
2. SEGMENTAL ANALYSIS
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
measure 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 Property business Total
business
---------------- ----------------- -----
2017 2016 2016 2017 2016 2016 2017 2016 2016
28 28 wks 52 28 28 52 28 28 52 wks
wks wks wks wks wks wks wks
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------- -------- -------- ------ ------ ------ -------- ----- ------
Revenue 1,123(a) 1,096(a) 2,086(a) - - - 1,123(a) 1,096 2,086
EBITDA pre-
adjustments 95 102 218 115(b) 115(b) 214(b) 210 217 431
Operating
profit
pre-adjustments 41 48 117 108 108 201 149 156 318
-------- -------- -------- ------ ------ ------
Separately disclosed
items(c) (4) 1 (87)
-------- ----- ------
Operating
profit 145 157 231
Net finance
costs (70) (74) (137)
-------- ----- ------
Profit before
tax 75 83 94
Tax expense (18) (7) (5)
-------- ----- ------
Profit for
the period 57 76 89
======== ===== ======
a Revenue includes other income of GBP3m (9
April 2016 GBP3m; 24 September 2016 GBP6m)
in respect of leased operations and other
income of GBP4m (9 April 2016 GBP4m; 24 September
2016 GBP7m) in respect of leased rental income.
b The EBITDA pre-adjustments of the property
business relates entirely to rental income
received from the retail operating business.
c Refer to note 3.
3. SEPARATELY DISCLOSED ITEMS
2017 2016 2016
28 weeks 28 weeks 52 weeks
Notes GBPm GBPm GBPm
---------------- --------- ---------
Adjusted items
Net profit arising on property
disposals - 1 1
Movement in the valuation
of the property portfolio:
---------------- --------- ---------
- Impairment arising from
the revaluation a - - (80)
- Impairment of assets
held for sale b (4) - -
- Other impairment c - - (8)
---------------- --------- ---------
Net movement in the valuation
of the property portfolio (4) - (88)
Total adjusted items before
tax (4) 1 (87)
---------------- --------- ---------
Tax (charge)/credit relating
to the above items - - 18
Tax adjustments in respect
of prior periods (2) 2 -
Tax credit in respect of
change in tax legislation d - 8 14
Total adjusted items after
tax (6) 11 (55)
================ ========= =========
a Impairment arising from the Group's revaluation
of its pub estate where their carrying values
exceed their recoverable amount.
b Impairment recognised on reclassification of
property, plant and equipment to assets held
for sale.
c Impairment of short leasehold and unlicensed
properties.
d A deferred tax credit has been recognised in
the prior period following the enactment of
legislation on 18 November 2015 which lowered
the UK standard rate of corporation tax from
20% to 19% from 1 April 2017. The Finance Act
2016 was substantively enacted on 15 September
2016 which reduced the main rate of corporation
tax to 17% from 1 April 2020.
All separately disclosed items relate to continuing
operations.
4. FINANCE COSTS AND FINANCE
REVENUE
2017 2016 2016
28 weeks 28 weeks 52 weeks
GBPm GBPm GBPm
----------------- ---------------- ----------------
Finance costs
Interest on securitised and
other debt (66) (69) (126)
================= ================ ================
Finance revenue
Interest receivable - cash - 1 1
Net pensions finance charge
(note 11) (4) (6) (12)
================= ================ ================
5. TAXATION
The taxation charge for the 28 weeks ended 8 April 2017 has been calculated by applying an estimate of the annual effective tax rate before adjusted items of 19.9% (2016 28 weeks, 20.5%).
2017 2016 2016
28 weeks 28 weeks 52 weeks
Tax charged in the income statement GBPm GBPm GBPm
--------- --------- ---------
Current tax
- UK corporation tax (14) (14) (28)
- Amounts over provided in
prior periods - 3 3
--------- --------- ---------
Total current tax charge (14) (11) (25)
--------- --------- ---------
Deferred tax
- Origination and reversal
of temporary differences (2) (3) 9
- Adjustments in respect of
prior periods (2) (1) (3)
- Change in tax rate - 8 14
--------- --------- ---------
Total deferred tax (charge)/credit (4) 4 20
--------- --------- ---------
Total tax charged in the income
statement (18) (7) (5)
========= ========= =========
Further analysed as tax relating
to:
Profit before adjusted items (16) (17) (37)
Adjusted items (2) 10 32
--------- --------- ---------
(18) (7) (5)
========= ========= =========
2017 2016 2016
Tax relating to items recognised 28 weeks 28 weeks 52 weeks
in other comprehensive
income GBPm GBPm GBPm
--------- --------- ---------
Deferred tax:
Items that will not be reclassified
subsequently to profit or
loss:
* Unrealised gains due to revaluations - revaluation
reserve - 15 (12)
* Unrealised gains due to revaluations - retained
earnings 5 (1) (11)
* Rolled over and held over gains - retained earnings - - 11
* Remeasurement of pension liability (1) (7) (9)
4 7 (21)
--------- --------- ---------
Items that may be reclassified
subsequently to profit or
loss:
* Cash flow hedges:
* Losses arising during the period (9) 3 11
* Reclassification adjustments for items included in
profit or loss (2) - (1)
--------- --------- ---------
(11) 3 10
--------- --------- ---------
Total tax (charge)/credit
recognised in other comprehensive
income (7) 10 (11)
========= ========= =========
The Finance (No.2) Act 2015 was enacted on 18
November 2015 and reduced the main rate of corporation
tax from 20% to 19% from 1 April 2017. The Finance
Act 2016 was substantively enacted on 15 September
2016 and reduced the main rate of corporation
tax to 17% from 1 April 2020. The effect of these
changes has been reflected in the closing deferred
tax balance at 8 April 2017.
6. EARNINGS PER ORDINARY SHARE
Basic earnings per share (EPS) has been calculated
by dividing the profit for the financial period
by the weighted average number of ordinary shares
in issue during the period, excluding own shares
held by employee share trusts.
For diluted earnings per share, the weighted average
number of ordinary shares is adjusted to assume
conversion of all potentially dilutive ordinary
shares.
Adjusted earnings per ordinary share amounts are
presented before adjusted items (see note 3) in
order to allow a better understanding of the underlying
trading performance of the Group.
Basic Diluted
EPS EPS
pence pence
per per
Profit ordinary ordinary
GBPm share share
------- --------- ---------
28 weeks ended 8 April 2017
Profit/EPS 57 13.7 13.7
p p
Adjusted items, net of tax 1.5 1.5
6 p p
Adjusted profit/EPS 63 15.2 15.2
p p
======= ========= =========
28 weeks ended 9 April 2016
Profit/EPS 76 18.4 18.4
p p
Adjusted items, net of tax (11) (2.7)p (2.7)p
Adjusted profit/EPS 65 15.7 15.7
p p
======= ========= =========
52 weeks ended 24 September
2016
Profit/EPS 89 21.6 21.6
p p
Adjusted items, net of tax 55 13.3 13.3
p p
Adjusted profit/EPS 144 34.9 34.9
p p
======= ========= =========
The weighted average number of ordinary shares
used in the calculations above are as follows:
2017 2016 2016
28 weeks 28 weeks 52 weeks
millions millions millions
--------- --------- ---------
For basic EPS calculations 415 413 413
Effect of dilutive potential
ordinary shares:
- 1 -
* Contingently issuable shares
For diluted EPS calculations 415 414 413
========= ========= =========
7. DIVIDS
2017 2016 2016
28 weeks 28 weeks 52 weeks
GBPm GBPm GBPm
--------- --------- ---------
Declared and paid in the period
Final dividend for 52 weeks
ended 24 September 2016 of
5.0p per share (9 April 2016
5.0p, 24 September 2016 5.0p) 4 21 31
========= ========= =========
An interim dividend of 2.5p per share, amounting to GBP10m, has been approved by the Directors and will be paid on 3 July 2017 to those shareholders on the register at the close of business on 26 May 2017. This interim financial information does not reflect this dividend payable.
A scrip dividend alternative was offered to shareholders for the 2016 final dividend. Of the GBP21m final dividend, GBP17m was in the form of ordinary shares to shareholders opting in to the scrip alternative. The market value per share at the date of payment was 227.3 pence per share, resulting in the issue of 7 million new shares, fully paid up from the share premium account. The nominal value of shares issued is GBP1m.
8. PROPERTY, PLANT AND EQUIPMENT
2017 2016 2016
8 April 9 April 24 September
GBPm GBPm GBPm
-------- -------- -------------
At beginning of period 4,423 4,242 4,242
Additions 93 88 167
(Impairment)/revaluation (4) - 128
Disposals (2) - (5)
Depreciation provided during
the period (60) (60) (111)
Exchange differences - 1 2
Transfers to assets held for (43) - -
sale
At end of period 4,407 4,271 4,423
======== ======== =============
The freehold and long leasehold licensed properties
were valued at market value as at 24 September
2016 by CBRE, independent Chartered Surveyors.
Short leasehold properties, unlicensed properties
and fixtures, fittings and equipment are held
at cost less depreciation and impairment provisions.
During the current period, the estate has been
reviewed for impairment and material changes in
value.
Goodwill and other intangible assets at 8 April
2017 comprises goodwill of GBP2m (9 April 2016
GBP2m, 24 September 2016 GBP2m) and computer software
of GBP6m (9 April 2016 GBP7m, 24 September 2016
GBP7m).
During the period, a group of properties have
been classified as held for sale. At 8 April 2017
the net book value of these properties was GBP43m.
An impairment of GBP4m has been recognised in
the period to reduce the carrying value of these
assets to the fair value less costs to sell, where
this is lower.
Capital commitments
The total amount contracted for but not provided
in the financial statements was GBP23m.
9. ANALYSIS OF NET DEBT
2017 2016 2016
8 April 9 April 24 September
GBPm GBPm GBPm
-------- -------- -------------
Cash and cash equivalents 146 152 158
Other cash deposits 120 120 120
Securitised debt (1,971) (2,015) (1,995)
Liquidity facility (147) (147) (147)
Revolving credit facilities (37) (8) (31)
Derivatives hedging balance
sheet debt(a) 64 36 55
(1,825) (1,862) (1,840)
======== ======== =============
a Represents the proportion of the fair value of
the currency swap that is hedging the balance
sheet value of the Group's US dollar denominated
A3N loan notes. This amount is disclosed separately
to remove the impact of exchange rate movements
which are included in the securitised debt amount.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank
and in hand and other short-term highly liquid
deposits with an original maturity at acquisition
of three months or less. Cash held on deposit
with an original maturity at acquisition of more
than three months is disclosed as other cash deposits.
Securitised debt
The overall cash interest rate payable on the
loan notes is fixed at 6.1% (9 April 2016 6.1%,
24 September 2016 6.1%) after taking account of
interest rate hedging and the cost of the provision
of a financial guarantee provided by Ambac in
respect of the Class A and AB notes. The notes
are secured on the majority of the Group's property
and future income streams.
The securitisation is governed by various covenants,
warranties and events of default, many of which
apply to Mitchells & Butlers Retail Limited, the
Group's main operating subsidiary. These include
covenants regarding the maintenance and disposal
of securitised properties and restrictions on
its ability to move cash, by way of dividends
for example, to other Group companies. At 8 April
2017, Mitchells & Butlers Retail Limited had cash
and cash equivalents of GBP101m (9 April 2016
GBP91m, 24 September 2016 GBP103m). Of this amount
GBP1m (9 April 2016 GBP39m, 24 September 2016
GBP36m), representing disposal proceeds, was held
on deposit in an account over which there are
a number of restrictions. The use of this cash
requires the approval of the securitisation trustee
and may only be used for certain specified purposes
such as capital enhancement expenditure and business
acquisitions.
The carrying value of the securitised debt in
the Group balance sheet is analysed as follows:
2017 2016 2016
8 April 9 April 24 September
GBPm GBPm GBPm
-------- -------- -------------
Principal outstanding at beginning
of period 1,998 2,031 2,031
Principal repaid during the
period (38) (32) (67)
Exchange on translation of
dollar loan notes 9 15 34
-------- -------- -------------
Principal outstanding at end
of period 1,969 2,014 1,998
Deferred issue costs (6) (7) (7)
Accrued interest 8 8 4
-------- -------- -------------
Carrying value at end of period 1,971 2,015 1,995
======== ======== =============
9. ANALYSIS OF NET DEBT (CONTINUED)
Liquidity facility
Under the terms of the securitisation, the Group holds a liquidity facility of GBP295m provided by two counterparties. As a result of the decrease in credit rating of one of the counterparties, the Group was obliged to draw that counterparty's portion of the facility during the 52 weeks ended 27 September 2014. The amount drawn at 8 April 2017 is GBP147m (9 April 2016 GBP147m, 24 September 2016 GBP147m). These funds are charged under the terms of the securitisation and are not available for use in the wider Group.
Unsecured revolving credit facilities
The Group holds two unsecured committed revolving credit facilities of GBP75m each and uncommitted revolving credit facilities of GBP15m, available for general corporate purposes. The amount drawn at 8 April 2017 is GBP37m (9 April 2016 GBP8m, 24 September 2016 GBP31m). Both committed facilities expire on 31 December 2017.
10. MOVEMENT IN NET DEBT
2017 2016 2016
28 weeks 28 weeks 52 weeks
GBPm GBPm GBPm
-------- -------- --------
Net decrease in cash and
cash equivalents (12) (11) (7)
Add back cash flows in respect
of other components of net
debt:
* Repayment of principal in respect of securitised debt 38 32 67
* Net movement on unsecured revolving facilities (6) (8) (31)
Decrease in net debt arising
from cash flows 20 13 29
Movement in capitalised debt
issue costs net of accrued
interest (5) (5) (1)
-------- -------- --------
Decrease in net debt 15 8 28
Opening net debt (1,840) (1,870) (1,870)
Foreign exchange movements
on cash - - 2
-------- -------- --------
Closing net debt (1,825) (1,862) (1,840)
======== ======== ========
11. PENSIONS
Retirement and death benefits are provided for eligible employees in the United Kingdom, principally by the Mitchells & Butlers Pension Plan (MABPP) and the Mitchells & Butlers Executive Pension Plan (MABEPP). These plans are funded, HMRC approved, occupational pension schemes with defined contribution and defined benefit sections. The defined benefit section of the plans is now closed to future service accrual.
In addition, Mitchells & Butlers plc also provides a workplace pension plan in line with the Workplace Pensions Reform Regulations. This automatically enrols all eligible workers into a Qualifying Workplace Pension Plan.
Measurement of scheme assets and liabilities
Actuarial valuation
The actuarial valuations used for IAS 19 (revised) purposes are based on the results of the actuarial valuation carried out at 31 March 2013 and updated by the schemes' independent qualified actuaries to 8 April 2017. Scheme assets are stated at market value at 8 April 2017 and the liabilities of the schemes have been assessed as at the same date using the projected unit method. IAS 19 (revised) requires that the scheme liabilities are discounted using market yields at the end of the period on high quality corporate bonds.
11. PENSIONS (CONTINUED)
The principal financial and mortality assumptions used at the balance sheet date have been updated to reflect changes in market conditions in the period.
2017 2016 2016
8 April 9 April 24 September
Discount Rate 2.5% 3.3% 2.2%
Inflation (RPI) 3.3% 2.9% 3.0%
Implied life expectancies
from age 65:
- MABPP male currently 24.3 years 24.3 24.3 years
45 years
- MABEPP male currently 27.6 years 27.6 27.6 years
45 years
========== ======= ============
Minimum funding requirements
The results of the 2013 funding valuation showed a funding deficit of GBP572m, using a more prudent basis to discount the scheme liabilities than is required by IAS 19 (revised) and on 21 May 2014 the Company formally agreed a 10 year recovery plan with the Trustees to close the funding deficit in respect of its pension liabilities. The Group made contributions of GBP45m per annum for the three years commencing 1 April 2013. From 1 April 2016 contributions have increased by the rate of RPI (subject to a minimum increase of 0% and a maximum increase of 5%) and will continue to do so for the following seven years, subject to review following completion of the 2016 actuarial valuation. As part of the recovery plan, the Group also made a further payment of GBP40m in September 2015 on terms agreed with the Trustees. Under IFRIC 14, an additional liability is recognised, such that the overall pension liability at the period end reflects the schedule of contributions in relation to a minimum funding requirement, should this be higher than the actuarial deficit.
Amounts recognised in respect of pension schemes
The following amounts relating to the Group's defined benefit and defined contribution arrangements have been recognised in the Group income statement and Group statement of comprehensive income:
Group income statement 2017 2016 2016
28 weeks 28 weeks 52 weeks
GBPm GBPm GBPm
--------- --------- ---------
Operating profit
Employer contributions (defined
contribution plans) (3) (4) (7)
Administrative costs (defined
benefit plans) (1) (1) (2)
--------- --------- ---------
Charge to operating profit (4) (5) (9)
Finance costs
Net pensions finance charge
on actuarial deficit (2) (2) (3)
Additional pensions finance
charge due to minimum funding (2) (4) (9)
--------- --------- ---------
Net pensions finance charge (4) (6) (12)
Total charge (8) (11) (21)
========= ========= =========
Group statement of comprehensive 2017 2016 2016
income
28 weeks 28 weeks 52 weeks
GBPm GBPm GBPm
--------- --------- ---------
Return on scheme assets and
effects of changes in assumptions 134 30 (148)
Movement in pension liability
due to minimum funding (131) (39) 126
--------- --------- ---------
Remeasurement of pension liability (3) (9) (22)
========= ========= =========
11. PENSIONS (CONTINUED)
Group balance sheet 2017 2016 2016
8 April 9 April 24 September
GBPm GBPm GBPm
------- ------- ------------
Fair value of scheme assets 2,444 2,079 2,381
Present value of scheme liabilities (2,496) (2,128) (2,587)
------- ------- ------------
Actuarial deficit in the schemes (52) (49) (206)
Additional liability recognised
due to minimum funding (264) (291) (131)
------- ------- ------------
Total pension liability (316) (340) (337)
======= ======= ============
Associated deferred tax asset 54 61 57
======= ======= ============
Movements in the total pension liability are
analysed as follows:
2017 2016 2016
28 weeks 28 weeks 52 weeks
GBPm GBPm GBPm
--------- --------- ---------
At beginning of period (337) (350) (350)
Administration costs (1) (1) (2)
Net pensions finance charge (4) (6) (12)
Employer contributions 23 26 49
Remeasurement of pension liability 3 (9) (22)
At end of period (316) (340) (337)
========= ========= =========
12. FINANCIAL INSTRUMENTS
The fair value of the Group's derivative financial
instruments is calculated by discounting the expected
future cash flows of each instrument at an appropriate
discount rate to a 'mark to market' position and
then adjusting this to reflect any non-performance
risk associated with the counterparties to the
instrument.
IFRS 13 Financial Instruments requires the Group's
derivative financial instruments to be disclosed
at fair value and categorised in three levels according
to the inputs used in the calculation of their
fair value:
* Level 1 instruments use quoted prices as the input to
fair value calculations;
* Level 2 instruments use inputs, other than quoted
prices, that are observable either directly or
indirectly;
* Level 3 instruments use inputs that are unobservable.
The table below sets out the valuation basis of
financial instruments held at fair value by the
Group:
Level Level Level Total
1 2 3
GBPm GBPm GBPm GBPm
----- ----- ----- ------
At 8 April 2017
Financial assets
Currency swaps - 64 - 64
Financial liabilities
Interest rate swaps - (339) - (339)
-- (275) - (275)
===== ===== ===== ======
12. FINANCIAL INSTRUMENTS (CONTINUED)
Level Level Level Total
1 2 3
GBPm GBPm GBPm GBPm
----- ----- ----- ------
At 9 April 2016
Financial assets
Currency swaps - 34 - 34
Financial liabilities
Interest rate swaps - (345) - (345)
----- ----- ----- ------
-- (311) - (311)
===== ===== ===== ======
Level Level Level Total
1 2 3
GBPm GBPm GBPm GBPm
----- ----- ----- ------
At 24 September 2016
Financial assets
Currency swaps - 53 - 53
Financial liabilities
Interest rate swaps - (404) - (404)
----- ----- ----- ------
- (351) - (351)
===== ===== ===== ======
13. RELATED PARTY TRANSACTIONS
There have been no related party transactions during
the period or the previous period requiring disclosure
under IAS 24 Related Party Disclosures.
INDEPENDENT REVIEW REPORT TO MITCHELLS & BUTLERS
PLC
We have been engaged by the Company to review
the condensed set of financial information in
the half-yearly financial report for the 28 week
period ended 8 April 2017 which comprises the
Group condensed income statement, the Group condensed
statement of comprehensive income, the Group
condensed balance sheet, the Group condensed
statement of changes in equity, the Group condensed
cash flow statement and related notes 1 to 13.
We have read the other information contained
in the half-yearly financial report and considered
whether it contains any apparent misstatements
or material inconsistencies with the information
in the condensed set of financial statements.
This report is made solely to the Company in
accordance with International Standard on Review
Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by
the Auditing Practices Board. Our work has been
undertaken so that we might state to the Company
those matters we are required to state to it
in an independent review report and for no other
purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to
anyone other than the Company, for our review
work, for this report, or for the conclusions
we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility
of, and has been approved by, the Directors.
The Directors are responsible for preparing the
half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial
statements of the Group are prepared in accordance
with IFRSs as adopted by the European Union.
The condensed set of financial statements included
in this half-yearly financial report has been
prepared in accordance with International Accounting
Standard 34, "Interim Financial Reporting," as
adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company
a conclusion on the condensed set of financial
statements in the half-yearly financial report
based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland)
2410 "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity"
issued by the Auditing Practices Board for use
in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily
of persons responsible for financial and accounting
matters, and applying analytical and other review
procedures. A review is substantially less in
scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland)
and consequently does not enable us to obtain
assurance that we would become aware of all significant
matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our
attention that causes us to believe that the
condensed set of financial statements in the
half-yearly financial report for the 28 weeks
ended 8 April 2017 is not prepared, in all material
respects, in accordance with International Accounting
Standard 34 as adopted by the European Union
and the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, UK
16 May 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BRGDUCXBBGRL
(END) Dow Jones Newswires
May 17, 2017 02:00 ET (06:00 GMT)
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