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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
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Mitchells & Butlers PLC Half Year Results

02/07/2020 7:00am

UK Regulatory (RNS & others)


Mitchells & Butlers (LSE:MAB)
Historical Stock Chart


From Jun 2020 to Aug 2020

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TIDMMAB

RNS Number : 7789R

Mitchells & Butlers PLC

02 July 2020

MITCHELLS & BUTLERS PLC

LEI no: 213800JHYNDNB1NS2W10

2 July 2020

HALF YEAR RESULTS

(For the 28 weeks ended 11 April 2020)

Highlights

 
 -    Strong operational performance demonstrated before lockdown 
  -    Rapid and effective action taken to protect guests and team 
  -    members and to reduce costs 
       New financing arrangements provide security and flexibility 
 -    Experience of German business provides clear path for re-opening 
 -    Well positioned to benefit from recovery on re-opening 
 

Reported results

 
 -    Total revenue of GBP1,039m (HY 2019 GBP1,186m) 
  -    Operating (loss)/profit of GBP(51)m (HY 2019 GBP140m) 
  -    (Loss)/profit before tax of GBP(121)m (HY 2019 GBP75m) 
 -    Basic (loss)/earnings per share of (25.0)p (HY 2019 14.3p) 
 

Trading results

 
 -   First half trading includes nearly four weeks of enforced 
      closure due to Covid-19 
 -   Like-for-like sales(a) growth of 0.9% before closure remained 
      consistently ahead of the market(b) 
 -   Adjusted operating profit(a) GBP108m (HY 2019 GBP151m) 
 -   Adjusted earnings per share(a) 7.2p (HY 2019 16.1p) 
 

Balance sheet and cash flow

 
 -   Unsecured committed financing facilities extended by GBP100m 
      to total GBP250m to 31 December 2021 
 -   Capital investment of GBP82m (HY 2019 GBP90m), including 
      2 new site openings and 166 conversions and remodels (HY 
      2019 208) 
 -   Cash flow of GBP58m (HY 2019 GBP23m) 
 -   Full property valuation and impairment review undertaken 
      resulting in an overall decrease in book value of GBP524m 
 -   Net debt of GBP2.2bn including GBP543m of lease liabilities 
      following adoption of IFRS 16 
 

Phil Urban, Chief Executive, commented:

"The business was performing very well before the enforced closure in response to Covid-19, building on the strengths of our estate of mainly freehold properties, our diversified and well-loved brands and our team's industry leading operational skills. These assets, coupled with our early experience of re-opening in Germany, give us a clear plan for re-opening and ensure that we are well placed to continue to bring people and communities together and to keep Mitchells & Butlers at the forefront of the eating and drinking-out market ."

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. APMs are explained later in this announcement.

b - As measured by the Coffer Peach business tracker.

There will be a conference call held today at 8:30am accessible by phone on 0203 936 2999, access code: 471216, slides will be available on the website at www.mbplc.com . The replay will be available until 16 July 2020 on 0203 936 3001, access code: 174438.

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 - Chief Financial Officer    +44(0)121 498 6552 
 Amy de Marsac - Investor Relations     +44(0) 7712 538660 
 James Murgatroyd (Finsbury)            +44(0)20 7251 3801 
 

Note for editors:

Mitchells & Butlers is a leading operator of managed restaurants and pubs. Its portfolio of brands and formats includes Harvester, Toby Carvery, All Bar One, Miller & Carter, Premium Country Pubs, Sizzling Pubs, Stonehouse, Vintage Inns, Browns, Castle, Nicholson's, O'Neill's and Ember Inns. In addition, it operates Innkeeper's Collection 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 .

CURRENT TRADING AND OUTLOOK

On 12 June we announced that we had extended our unsecured financing facilities by GBP100m to total GBP250m, and that temporary terms have been agreed with bondholders to avoid technical breaches which would have occurred due to forced closure. These arrangements provide stability and flexibility for the group to navigate these uncertain times and provide sufficient liquidity to survive a delay in re-opening beyond our current expectation of early July.

We continue to be focused on emerging from the Covid-19 induced crisis in a position of strength with the intention of continuing to build the business and outperforming the industry.

At this time the business remains closed under government guidance to limit the spread of Covid-19. Uncertainty remains over a number of important variables, including the re-opening profile of our sites, the social distancing measures which will need to be in place and the strength of consumer demand. As such we do not feel it is currently meaningful to give forward guidance.

These financial statements have been prepared under the going concern basis, the specific considerations in reaching this assessment can be found in note 1 to the financial statements.

BUSINESS REVIEW

The first half of the financial year has been dominated by the enforced closure of the estate in response to the Covid-19 outbreak.

On 16 March the government advised the public to not attend busy places, including pubs and restaurants, in order to limit the spread of the virus. This led to a sharp and immediate reduction of like-for-like sales. Then, on 20 March, the government announced a directive to close all pubs and restaurants with immediate effect as measures to slow the spread of the virus increased. The first half therefore includes four weeks of either mandated closure or government guidance not to visit pubs and restaurants.

Before Covid-19 we had enjoyed a strong start to the year. Like-for-like sales (a) growth of 2.6% in the first quarter had been followed by a period of softer sales due to the stormy weather, but we remained c.1% ahead of the market (b) and continued to see the beneficial impact of our Ignite programme of work. Stronger margins, better labour control and tighter cost management had resulted in operating profit growth and we had just started to refresh the range of Ignite initiatives, such that we were confident of a strong finish to the year.

We closed all our businesses immediately on the evening that lockdown was announced to protect our team and our guests. Established communication channels were set in motion to ensure that we could keep the whole team updated during what was a period of confusion and concern for everyone. In keeping with our values, we maintained an honest and open style to all communication and carefully considered our options in the light of the developing situation, including emerging details on government support.

We swiftly set up a closedown team to instigate a structured approach to closing the businesses and to minimise losses. Stock loss was an immediate issue and so as to reduce the impact, perishable items were sold directly from sites or donated through our established relationship with the charity Fareshare. In total we were able to donate 11.5 tonnes of food, equivalent to 27,500 meals, to vulnerable communities which would otherwise have gone to waste. Cash floats, including those in amusement machines were banked, full stock counts were taken, and each business was physically secured for a prolonged period of closure.

The rapid closure presented significant challenges in terms of managing and mitigating the profit and cash flow impact of lost revenue. A number of measures were taken from the outset of the crisis to protect the business including putting over 99% of our employees on furlough with basic pay for all employees including the Board reduced to between 60% to 80% of normal pay, depending on seniority. We quickly reduced operating costs to the minimum required to keep the estate secure, safe and in good condition and maintained strong control of working capital. All discretionary capital expenditure was halted, including our development programme, and all temporary contracts have been cancelled.

Throughout the closure period our central communications team have worked hard to keep team members connected and informed, including the launch of a new support portal which can be accessed from mobile devices, and which includes regularly updated FAQs, our Employee Assistance Programme, wellbeing resources and volunteering opportunities. Social media platforms have also been used to create inclusive groups across all of our team members, from sites and the head office, to share positive and engaging content and ideas. The welfare and mental health of our team has been a primary concern, particularly for those colleagues who have isolated alone, and we have been encouraged in the way the business has pulled together at this difficult time.

We have had a skeleton team working throughout lockdown, including a field-based team that have maintained the businesses, responding to break-ins and emergency call outs. A structured cadence of meetings throughout the week has helped to keep everyone informed, as Covid-19 policy and the industry response has developed. Mitchells & Butlers has played a full role in the UK Hospitality led forums that have helped to devise the Hospitality Sector Protocols Document that the government issued for the sector, and we continue to lobby government directly to ensure that we, and the sector, get the support we need to protect jobs once we re-open and then re-build.

We are working to an early July date for English sites to re-open, with Wales and Scotland following over the next two weeks and have developed a detailed re-opening plan for the business. Each site will have clear directional and spacing signage to explain and help maintain social distancing; sanitising stations; disposable menus; table spacing; capacity management where possible through our online booking engines; a cashless-first approach (and in some businesses cashless-only); and new brand specific Covid-19 safe service cycles such as vegetables being served in Toby Carvery, as opposed to the usual self-serve model. We have also worked hard to ensure that our team can both be and feel safe at work, including new protocols for deliveries, and where appropriate for take-away food collection. Key to these measures is the government guidance on the necessary distance between people, clearly a 1-metre distance will allow for significantly higher capacity and will impact the extent of adaptations to service cycles required.

Our German business, Alex, re-opened through mid to late May, affording us valuable insight into the challenges and opportunities ahead, and we are encouraged that sales levels have grown each week since re-opening. City centre sites have been the slowest to recover, but conversely some suburban businesses have generated days of year on year growth. From the 1st July, VAT on food in Germany will drop from 19% to 7% for a year, and on all other categories, from 19% to 16%, through the rest of the calendar year. We are therefore confident that the business will recover quickly, as the impact of Covid-19 subsides.

OUR STRATEGIC PRIORITIES

The fundamental strengths of our business remain. We have a well-known and diversified brand portfolio, an 83% freehold estate in strong locations, an experienced and proven management team and, going forward, we intend to continue to build on the momentum previously gained. In the short to medium term, our focus will be on successfully re-opening the business in the current challenging environment, ensuring the safety of our team members and guests, and on growing the business back to, and beyond, the levels of trade that we were enjoying before the pandemic.

Our Ignite programme of work remains at the core of our long-term growth plans and we had recently refreshed the initiatives and opportunities available to us. Our immediate focus will be on the successful rebuilding of trade following this period of closure and w e will be prioritising the shorter-term initiatives that have a quick impact on the business, such as sales driving initiatives. We remain confident of our ability to deliver long term and sustained efficiencies and business improvements through the existing Ignite programme and will be working to refine and roll out the new initiatives once the business is trading well again.

Principal risks and uncertainties - Covid-19

We continually monitor and assess the principal risks and uncertainties of the business and operating environment. Given the way in which Covid-19 has rapidly altered the environment in which we trade we note the new risks and uncertainties we now face in addition to the previously identified risks detailed on pages 40 to 44 in our FY 19 Annual Report:

Social distancing measures

Risk: We support the need for social distancing measures to reduce the spread of Covid-19. While social distancing measures are in place the capacity of our businesses will be reduced, impacting the offer to our guests and the financial model of our operations. Given the unknown nature of the virus the duration of distancing measures is uncertain.

Controls / mitigating activity: We will apply a risk assessment to each of our businesses and only re-open those which we believe can operate under the new guidelines. For the pubs and restaurants which we can re-open we will adapt the format and practices of our sites to ensure that the distancing guidelines provided by the government can be adhered to, protecting both team members and guests. We will take measures to protect the financial health of the business whilst operating at reduced capacity and continue to closely manage the cash position of the group. We will continuously review the latest guidelines and continue to adapt our business operations in response in an agile manner.

Consumer behaviour

Risk: As pubs and restaurants re-open, consumers may have a different mindset to eating out, with health and safety at the forefront of priorities. Guests may want greater insight into practices, and food supply chain information to feel confident in their eating our experience. Equally some consumers may not heed the measures put in place to restrict the spread of the virus, potentially putting our team members and other guests at risk.

Controls / mitigating activity: Our priority is to protect our team members and guests, providing an eating out experience which can be enjoyed. We have very strong health and safety practices already in place in our businesses, which we will enhance and evolve to tackle the challenges we now face. We will be transparent with guests as to these measures such that they can trust in us.

FINANCIAL REVIEW

On a statutory basis, loss before tax for the half year was GBP(121)m (HY 2019 profit of GBP75m), on sales of GBP1,039m (HY 2019 GBP1,186m).

The Group Income Statement discloses adjusted profit and earnings per share information that exclude separately disclosed items to allow a better understanding of the trading of the Group. Separately disclosed items are those which are separately identified by virtue of their size or incidence.

 
 
                                  Statutory         Adjusted (a) 
                              HY 2020   HY 2019   HY 2020   HY 2019 
                               GBPm      GBPm      GBPm      GBPm 
 Revenue                       1,039     1,186     1,039     1,186 
 Operating (loss)/profit       (51)       140       108       151 
 (Loss)/profit before 
  tax                          (121)      75        38        86 
 (Loss)/Earnings per share    (25.0)p    14.3p     7.2p      16.1p 
 Operating margin             (4.9)%     11.8%     10.4%     12.7% 
 

At the end of the period, the total estate comprised 1,745 sites in the UK and Germany of which 1,674 are directly managed.

Changes in accounting policies

These are the first set of accounts the Group has published since the adoption of IFRS 16 (Leases). As a result of adopting the m odified retrospective (asset equals liability) method, prior year comparatives have not been restated. A full impairment review of the right-of-use assets has been completed on transition to the new standard with the resulting impairment, net of any reversal of onerous lease provisioning, presented as an adjustment to opening reserves. Further details are included in note 13 to the financial statements.

The main impact of the adoption of this new standard on our financial statements, which should accrue evenly across the year, is as follows. On the balance sheet, recognition of a right of use asset of GBP466m and a lease liability of GBP543m. On the full year income statement; an uplift in EBITDA of c.GBP50m (through lower rental costs) and a reduction in pre-tax profits (after increased depreciation and interest charges) of c.GBP8m, reducing basic earnings per share by 1.5p.

Revenue

Total revenue of GBP1,039m was 12.4% lower than last year due to the government directive to close all sites on 20 March in response to the Covid-19 outbreak.

As at week 24, the last full week of trading before closure to 14 March, like-for-like sales (a) grew by 0.9% with food sales (a) up by 1.3% and drink sales (a) up by 0.3%. The Group had a strong first quarter to week 14, with a particularly strong festive season. The second quarter from weeks 15 to 24 was truncated by enforced closure of all sites on 20 March 2020 and includes the negative impact of the storms and resulting flooding throughout the UK in February followed by a sharp decline in sales due to early restrictions put in place in response to the Covid-19 pandemic.

 
 Like-for-like sales (a)    Weeks 1 -   Weeks 15-24   Weeks 1 - 
  growth:                       14                        24 
                             FY 2020      FY2020       FY 2020 
                           ----------  ------------  ---------- 
 
 Food                         3.0%        (1.3%)        1.3% 
 Drink                        1.8%        (2.1%)        0.3% 
 
 Total                        2.6%        (1.7%)        0.9% 
 

Separately disclosed items

Separately disclosed items are identified due to their nature or materiality to help the reader form a better view of overall and adjusted trading.

A charge of GBP11m was recognised for costs directly associated with the Covid-19 pandemic, which relate primarily to the disposal or donation of short dated food and drink stock items as a result of the government enforced closure of pubs.

A GBP148m charge is recognised relating to valuation and impairment of properties, comprising a GBP130m charge relating to downward valuation movements on freehold and long leasehold sites, a GBP2m impairment charge on short leasehold and unlicensed properties and a GBP16m charge for impairment of right-of-use assets. The majority of these movements are a direct result of Covid-19 and the perceived trading environment present at the reporting date. With all pubs closed at the half year, assumptions reflect the impact of no sales during temporary closure and multiples have also been reduced to reflect uncertainty and an absence of observable comparable transactions at that time.

Operating profit and margins (a)

Adjusted operating profit (a) of GBP108m was 28.5% lower than last year. The period included a little over three weeks of enforced closure of all sites. After the completion of closedown activity, across the estate and central functions, over 99% of the Group's employees were subsequently furloughed under the Coronavirus Job Retention Scheme and all non-essential costs eliminated.

Statutory operating margin of (4.9)% was 16.7ppts lower than last year, materially impacted by the closure period and valuation and impairment reviews. Adjusted operating margin (a) for the half was 2.3ppts lower than last year at 10.4%.

Interest

Net finance costs of GBP68m for the half year were GBP7m higher than last year reflecting an additional GBP10m recognised in respect of interest on lease liabilities due to IFRS16 adoption.

The net pensions finance charge was GBP2m (HY 2019 GBP4m), the charge for the full year is expected to be GBP3m.

Earnings per share

Basic (loss)/earnings per share, after the separately disclosed items described above, were (25.0)p (HY 2019 14.3p). Adjusted earnings per share (a) were 7.2p, 55.3% lower than last year. The weighted average number of shares in the period was 428m and the total number of shares issued at the balance sheet date was 429m.

Cash flow

 
                                                 HY 2020   HY 2019 
                                                  GBPm      GBPm 
 EBITDA before separately disclosed items 
  (a)                                              193       217 
 Non-cash share-based payment and pension 
  costs                                             2         4 
 Operating cash flow before adjusted items, 
  movements in working capital and additional 
  pension contributions                            195       221 
 Working capital movement                         (34)       32 
 Pension deficit contributions                    (25)      (24) 
                                                --------  -------- 
 Cash flow from operations before adjusted 
  items                                            136       229 
 Cash flow from adjusted items                    (11)       (1) 
 Capital expenditure                              (82)      (90) 
 Interest                                         (61)      (55) 
 Tax                                              (16)      (17) 
 Disposal proceeds                                  -         1 
 Other                                             (1)       (1) 
 Principal portion of lease liability             (12)        - 
 Revolving credit facility                         150        - 
 Net cash flow before bond amortisation            103       66 
 Mandatory bond amortisation                      (45)      (43) 
                                                --------  -------- 
 Net cash flow before dividends                    58        23 
 
 
 

The business generated GBP193m of EBITDA before separately disclosed items (a) .

Working capital movement is summarised as; an increase in trade receivables of GBP10m, the majority of which relates to Coronavirus Job Retention Scheme monies due, offset in part by the absence of business rates prepayment, following the announcement of government Covid-19 support for businesses; a decrease in trade and other payables of GBP30m, primarily a reduction in accruals and VAT liability following the loss of sales in the last three weeks of the period and; a decrease in inventories of GBP6m which is the direct result of Covid-19 and the enforced closure of pubs and restaurants.

Capital expenditure of GBP82m relates to investment projects undertaken before the capital programme was suspended in light of the Covid-19 business closure.

Following the adoption of IFRS16, leases are now included in net debt resulting in a corresponding presentational increase in book gearing of approximately 70 bps. Book debt at the half year was GBP2,158m, including lease liabilities of GBP543m.

Capital expenditure

Capital expenditure of GBP82m comprises GBP79m from the purchase of property, plant and equipment and GBP3m in relation to the purchase of intangible assets.

The investment programme was suspended in March as part of the cash management strategy in response to Covid-19, with only essential spend being undertaken after that event.

Given the closure, into the second half of the financial year, we do not believe it will be possible to calculate a current and meaningful return on investment as all sites are impacted by closure. This will be particularly so for those that have not been trading for a full year.

 
                                     HY 2020      HY 2019 
                                    GBPm    #    GBPm    # 
---------------------------------  -----  ----  -----  ---- 
 Maintenance and infrastructure      26           30 
 
 Remodels - refurbishment            41    138    43    182 
 Remodels - expansionary             2      5     4     11 
 Conversions                         10    23     8     13 
 Acquisitions - freehold             2      1     -      - 
 Acquisitions - leasehold            1      1     5      2 
---------------------------------  -----  ----  -----  ---- 
 Total return generating capital 
  expenditure                        56    168    60    208 
 
 Total capital expenditure           82           90 
 

Property

The mandatory closure of pubs and restaurants due to the Covid-19 pandemic is considered to be an indicator of impairment of property, plant and equipment. As a result, a directors' revaluation has been completed of the freehold and long leasehold properties at the half year, although it has not been possible to physically visit sites. In addition, an impairment review has been performed for the short leasehold properties and right-of-use assets. Further details of the assumptions applied are detailed in note 8.

The overall property portfolio valuation has decreased by GBP524m, reflecting a GBP132m separately disclosed net impairment charge in the income statement and a GBP392m net decrease in the revaluation reserve. We believe that this represents a reasonable valuation, based on perceived market conditions at the balance sheet date but note the high degree of uncertainty at that time, shortly following enforced shutdown of all sites in the hospitality sector, coupled with an absence of observed comparable transactions.

Pensions

The Group continues to make pension deficit payments as agreed as part of the triennial pensions valuation with the schemes' Trustee at 31 March 2019, which showed an actuarial deficit of GBP293m. It was agreed that t he deficit would continue to be funded by cash contributions of GBP49m per annum indexed to 2023. However, the Group has agreed with the Trustee that the contributions into the Mitchells & Butlers Pension Plan and the Mitchells & Butlers Executive Pension Plan would be suspended in respect of the monthly contributions in respect of April, May and June 2020 and those contributions have been added onto the end of the agreed recovery plan so that those contributions will be payable in 2023. In 2024 an additional payment of GBP13m will be made into escrow, should such further funding be required at that time.

In light of the Covid-19 outbreak it has been mutually agreed by the Trustee and the Group that the trial of the Trustee's application to court concerning the power to determine the rate of inflation to be applied to pension increases for certain sections of the membership in excess of guaranteed minimum pensions, be adjourned until mid-2021.

Net debt and facilities

Debt within the Group securitisation arrangements is subject to quarterly testing on both a rolling half and full year basis. Following consideration of the impact of the Covid-19 pandemic and the enforced closure of all the Group's businesses from 20 March 2020 it was concluded that, in a highly uncertain environment, the Group was at risk of being in breach of a number of covenants within these debt arrangements through the second half and into next year. As such, alternative and revised arrangements have subsequently been agreed both with the controlling creditor and with trustee of the securitisation and the Group's main unsecured banks. These arrangements, which include extension to the existing term of unsecured facilities, the provision of an additional GBP100m of unsecured liquidity and waivers for anticipated covenant defaults, are summarised in note 15 on post balance sheet events and note 1 on going concern.

Further details can be found at https://www.mbplc.com/infocentre/debtinformation/ .

Going Concern

The outbreak of Covid-19 during the first half of the year casts a high degree of uncertainty as to the future financial performance and cash flows of the group. The implications of this, and particularly the enforced shutdown of all the Group's sites from 20 March 2020, have been considered by the directors in assessing the ability of the Group to continue as a going concern. Further detail is provided in note 1 to the financial statements.

Both before and after the enforced shutdown urgent action was taken to protect access to liquidity, by drawing in full unsecured facilities of GBP150m, and to protect the business through limiting cash outflows, including: cancelling all discretionary capital expenditure, furloughing of over 99% of the workforce, where possible reaching agreement with suppliers and other creditors on extended payment terms, and the elimination of all non-essential operating expenses.

Subsequently agreement was reached with the Group's main creditors on a number of new arrangements which provide a platform of additional liquidity and improved financial flexibility for the Group in order to meet the challenge presented by Covid-19. These included extension of the term of existing unsecured facilities and the raising of an additional GBP100m of unsecured facilities to the same date, to give a total of GBP250m committed unsecured facilities available to the group until 31st December 2021.

In addition, within the securitisation, a number of concessions have been agreed including waiver against default on financial covenant breaches, up to July 2021 for the six month look-back test and to September 2021 for the twelve month look-back test, and the ability to access further liquidity for debt service costs of up to GBP100m through drawing the liquidity facility within the securitisation.

At the date of approval of these interim results the Group has cash on hand of GBP100m and undrawn committed facilities totalling GBP150m. When closed and under full furlough arrangements, the four week EBITDA loss (including rent) totals GBP15m with a cash outflow before debt service costs over the four week period of GBP30m to GBP35m after payment of legacy supplier balances. The two main uncertainties in the year ahead are considered to be the duration of the enforced shutdown and the subsequent strength of recovery as sites re-open. To that end revised financial arrangements, outlined above, have been assessed against a base case, in which the majority of sites re-open in July 2020 (being the current expectation), and a severe but plausible downside case where no sites open before October 2020. In both cases sales are assumed to take nine months to build back up to prior year levels.

After due consideration of these factors the directors believe that they have a reasonable expectation that the Group has sufficient resources to continue in operational existence for the 12 months from the date of approval of these financial statements, and therefore continue to adopt the going concern in their preparation.

Director's 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 1 July 2020 and is signed on its behalf by:

Tim Jones

Chief Financial Officer

1 July 2020

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.

GROUP CONDENSED INCOME STATEMENT

for the 28 weeks ended 11 April 2020

 
                                          2020                      2019                      2019 
                                        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 
                      Notes                GBPm      GBPm         GBPm      GBPm         GBPm            GBPm 
                              -----------------  --------  -----------  --------  -----------      ---------- 
 
 Revenue                3                 1,039     1,039        1,186     1,186        2,237           2,237 
 
 Operating costs 
  before 
  depreciation, 
  amortisation 
  and movements 
  in the valuation 
  of the property 
  portfolio and 
  right-of-use 
  assets                                  (846)     (857)        (969)     (988)      (1,801)         (1,820) 
 Net profit 
  arising on 
  property 
  disposals                                   -         -            -         1            -               1 
 
 EBITDA (b)                                 193       182          217       199          436             418 
 
 Depreciation, 
  amortisation 
  and movements 
  in the valuation 
  of the property 
  portfolio and 
  right-of-use 
  assets                                   (85)     (233)         (66)      (59)        (119)           (121) 
                              -----------------  --------  -----------  --------  -----------      ---------- 
 
 Operating 
  profit/(loss)                             108      (51)          151       140          317             297 
 
 Finance costs          5                  (69)      (69)         (62)      (62)        (114)           (114) 
 
 Finance revenue        5                     1         1            1         1            1               1 
 
 Net pensions 
  finance charge       5,11                 (2)       (2)          (4)       (4)          (7)             (7) 
                              -----------------  --------  -----------  --------  -----------      ---------- 
 
 Profit/(loss) 
  before tax                                 38     (121)           86        75          197             177 
 
 Tax 
  (charge)/credit        6                  (7)        14         (17)      (14)         (38)            (34) 
                              -----------------  --------  -----------  --------  -----------      ---------- 
 
 Profit/(loss) 
  for the period                             31     (107)           69        61          159             143 
                              =================  ========  ===========  ========  ===========      ========== 
 
 Earnings/(loss) 
  per ordinary 
  share :                7 
  Basic                 7.2p            (25.0)p     16.1p        14.3p                  37.2p         33.5p 
  Diluted               7.2p            (24.8)p     16.0p        14.2p                  37.1p         33.3p 
 
 a                   Separately disclosed items are explained and analysed in 
                      note 4. 
 b                   Earnings/(loss) before interest, tax, depreciation, amortisation 
                      and movements in the valuation of the property portfolio 
                      and right-of-use assets. 
 
 

All results relate to continuing operations.

GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME

for the 28 weeks ended 11 April 2020

 
                                                               2020          2019        2019 
                                                           28 weeks      28 weeks    52 weeks 
                                                Notes          GBPm          GBPm        GBPm 
                                                       ------------  ------------  ---------- 
                                                        (Unaudited)   (Unaudited)   (Audited) 
 
 (Loss)/profit for the period                                 (107)            61         143 
 
 Items that will not be reclassified 
  subsequently to profit or loss: 
 
 Unrealised (loss)/gain on revaluation 
  of the property portfolio                       8           (392)             -          84 
 
 Remeasurement of pension liabilities            11               5            17          15 
 
 Tax credit/(charge) relating to items 
  not reclassified                                6              42           (3)        (18) 
                                                       ------------  ------------  ---------- 
 
                                                              (345)            14          81 
 
 Items that may be reclassified subsequently 
  to profit or loss: 
 
 Exchange differences on translation                              -           (1)           - 
  of foreign operations 
 
 Cash flow hedges: 
 - Losses arising during the period                            (13)          (28)        (81) 
 - Reclassification adjustments for 
  items included in profit or loss                               21            18          23 
 
 Tax credit relating to items that 
  may be reclassified                             6               4             2          10 
                                                       ------------  ------------  ---------- 
 
                                                                 12           (9)        (48) 
 
 Other comprehensive (expense)/income 
  after tax                                                   (333)             5          33 
 
 
 Total comprehensive (expense)/income 
  for the period                                              (440)            66         176 
                                                       ============  ============  ========== 
 

GROUP CONDENSED BALANCE SHEET

 
 11 April 2020                                                2020                       2019           2019 
                                                          11 April                   13 April   28 September 
                                 Notes                        GBPm                       GBPm           GBPm 
                                        --------------------------  -------------------------  ------------- 
 ASSETS                                                (Unaudited)                (Unaudited)      (Audited) 
 Goodwill and other intangible 
  assets                             8                    15                               12             14 
 Property, plant and equipment       8                       4,029                      4,448          4,528 
 Lease premiums(a)                                               -                          1              1 
 Right-of-use assets(a)             13                         435                          -              - 
 Interests in associates                                         5                          5              5 
 Lease receivable(a)                                            17                          -              - 
 Deferred tax asset(a)                                          77                         61             66 
 Derivative financial 
  instruments                       12                          50                         41             53 
                                        --------------------------  -------------------------  ------------- 
 
 Total non-current assets                                    4,628                      4,568          4,667 
                                        --------------------------  -------------------------  ------------- 
 
 Inventories                                                    20                         28             26 
 Trade and other 
  receivables(a)                                                63                         56             63 
 Current tax asset                                               4                          -              - 
 Other cash deposits                 9                           -                        120              - 
 Cash and cash equivalents           9                         191                        145            133 
 Derivative financial 
  instruments                       12                           1                          4              3 
 Assets held for sale                                            -                         13              - 
                                        -------------------------- 
 
 Total current assets                                          279                        366            225 
                                        --------------------------  -------------------------  ------------- 
 
 Total assets                                                4,907                      4,934          4,892 
                                        --------------------------  -------------------------  ------------- 
 
 LIABILITIES 
 Pension liabilities                11                        (51)                       (49)           (50) 
 Trade and other payables(a)                                 (293)                      (344)          (327) 
 Current tax liabilities                                         -                        (7)           (12) 
 Borrowings                                                  (251)                      (237)           (95) 
 Lease liabilities(a)               13                        (52)                          -              - 
 Derivative financial 
  instruments                       12                        (37)                       (36)           (36) 
 
 Total current liabilities                                   (684)                      (673)          (520) 
                                        --------------------------  -------------------------  ------------- 
 
 Pension liabilities                11                       (137)                      (183)          (165) 
 Borrowings                                                (1,605)                    (1,699)        (1,657) 
 Lease liabilities(a)               13                       (491)                          -              - 
 Derivative financial 
  instruments                       12                       (257)                      (217)          (266) 
 Deferred tax liabilities                                    (248)                      (283)          (301) 
 Provisions(a)                                                 (3)                       (42)           (36) 
 
 Total non-current liabilities                             (2,741)                    (2,424)        (2,425) 
                                        --------------------------  -------------------------  ------------- 
 
 Total liabilities                                         (3,425)                    (3,097)        (2,945) 
                                        --------------------------  -------------------------  ------------- 
 
 Net assets                                                  1,482                      1,837          1,947 
                                        ==========================  =========================  ============= 
 
 EQUITY 
 Called up share capital                                        37                         37             37 
 Share premium account                                          28                         26             26 
 Capital redemption reserve                                      3                          3              3 
 Revaluation reserve                                           918                      1,197          1,267 
 Own shares held                                               (4)                        (1)            (4) 
 Hedging reserve                                             (238)                      (210)          (250) 
 Translation reserve                                            14                         13             14 
 Retained earnings(a)                                          724                        772            854 
                                        --------------------------  -------------------------  ------------- 
 
 Total equity                                                1,482                      1,837          1,947 
                                        ==========================  =========================  ============= 
 
 a                             During the period, the Group has adopted IFRS 16 which 
                                requires 
                                lease liabilities and corresponding right-of-use assets to 
                                be recognised on the balance sheet. The Group has adopted 
                                IFRS 16 using the modified retrospective approach. As a 
                                result, 
                                prior year comparatives have not been restated. See note 
                                13 for details of transitional impact. 
 
 

GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY

for the 28 weeks ended 11 April 2020

 
                      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 29 September 
 2018 (Audited)           37           26               3            1,197         (1)        (202)               14           695       1,769 
 
Profit for the 
 period                    -            -               -                -           -            -                -            61          61 
Other comprehensive 
 (expense)/income          -            -               -                -           -          (8)              (1)            14           5 
                     -------      -------      ----------      -----------      ------      -------      -----------      --------      ------ 
Total comprehensive 
 (expense)/income          -            -               -                -           -          (8)              (1)            75          66 
Credit in respect 
 of share-based 
 payments                  -            -               -                -           -            -                -             2           2 
 
At 13 April 
 2019 (Unaudited)         37           26               3            1,197         (1)        (210)               13           772       1,837 
 
Profit for the 
 period                    -            -               -                -           -            -                -            82          82 
Other comprehensive 
 income/(expense)          -            -               -               70           -         (40)                1           (3)          28 
                     -------      -------      ----------      -----------      ------      -------      -----------      --------      ------ 
Total comprehensive 
 income/(expense)          -            -               -               70           -         (40)                1            79         110 
Purchase of 
 own shares                -            -               -                -         (3)            -                -             -         (3) 
Credit in respect 
 of share-based 
 payments                  -            -               -                -           -            -                -             1           1 
Tax on share-based 
 payments                  -            -               -                -           -            -                -             2           2 
 
At 28 September 
 2019 (Audited)           37           26               3            1,267         (4)        (250)               14           854       1,947 
 
IFRS 16 
 transition(a)             -            -               -                -           -            -                -          (24)        (24) 
                     -------      -------      ----------      -----------      ------      -------      -----------      --------      ------ 
At 29 September 
 2019                     37           26               3            1,267         (4)        (250)               14           830       1,923 
 
  Loss for the 
  period                   -            -               -                -           -            -                -         (107)       (107) 
Other comprehensive 
 (expense)/income          -            -               -            (349)           -           12                -             4       (333) 
                     -------      -------      ----------      -----------      ------      -------      -----------      --------      ------ 
Total comprehensive 
 (expense)/income          -            -               -            (349)           -           12                -         (103)       (440) 
Share capital 
 issued                    -            2               -                -           -            -                -             -           2 
Purchase of 
 own shares                -            -               -                -         (3)            -                -             -         (3) 
Release of own 
 shares                    -            -               -                -           3            -                -           (3)           - 
Credit in respect 
 of share-based 
 payments                  -            -               -                -           -            -                -             1           1 
Tax on share-based 
 payments                  -            -               -                -           -            -                -           (1)         (1) 
 
 
 
At 11 April 
 2020 
  (Unaudited)             37           28               3              918         (4)        (238)               14           724       1,482 
                     =======      =======      ==========      ===========      ======      =======      ===========      ========      ====== 
 
    a                  During the period, the Group has adopted IFRS 16 which requires 
                       lease liabilities and corresponding right-of-use assets to 
                       be recognised on the balance sheet. The Group has adopted 
                       IFRS 16 using the modified retrospective approach. As a result, 
                       prior year comparatives have not been restated. See note 
                       13 for details of transitional impact. 
 
 

GROUP CONDENSED CASH FLOW STATEMENT

for the 28 weeks ended 11 April 2020

 
                                                              2020          2019        2019 
                                                          28 weeks      28 weeks    52 weeks 
                                               Notes          GBPm          GBPm        GBPm 
                                                      ------------  ------------  ---------- 
                                                       (Unaudited)   (Unaudited)   (Audited) 
 Cash flow from operations 
 Operating (loss)/profit                                      (51)           140         297 
 Add back: adjusted items                        4             159            11          20 
                                                      ------------  ------------  ---------- 
 
 Operating profit before adjusted items                        108           151         317 
 
 Add back: 
 Depreciation of property, plant and 
  equipment                                      8              61            64         116 
 Amortisation of intangibles                                     2             2           3 
 Depreciation of right-of-use assets            13              22             -           - 
 Cost charged in respect of share-based 
  payments                                                       1             2           3 
 Administrative pension costs                   11               1             1           3 
                                                      ------------  ------------  ---------- 
 
 Operating cash flow before adjusted 
  items, movements in working capital 
  and additional pension contributions                         195           220         442 
 
 Decrease/(increase) in inventories                              6           (2)           - 
 Increase in trade and other receivables                      (10)             -         (9) 
 (Decrease)/increase in trade and other 
  payables                                                    (30)            36          25 
 Decrease in provisions                                          -           (1)         (7) 
 Additional pension contributions               11            (25)          (24)        (49) 
                                                      ------------  ------------  ---------- 
 
 Cash flow from operations before adjusted 
  items                                                        136           229         402 
 
 Cash flow from adjusted items                                (11)           (1)           - 
 Interest paid                                                (55)          (57)       (113) 
 Interest received                                               -             1           2 
 Cash payments for the interest portion                        (6)             -           - 
  of lease liabilities 
 Tax paid                                                     (16)          (17)        (25) 
 
 Net cash from operating activities                             48           155         266 
                                                      ------------  ------------  ---------- 
 
 Investing activities 
 Purchases of property, plant and equipment                   (79)          (88)       (147) 
 Purchases of intangible assets                                (3)           (2)         (5) 
 Proceeds from sale of property, plant 
  and equipment                                                  -             1          14 
 Transfers from other cash deposits                              -             -         120 
 
 Net cash used in investing activities                        (82)          (89)        (18) 
                                                      ------------  ------------  ---------- 
 
 Financing activities 
 Issue of ordinary share capital                                 2             -           - 
 Purchase of own shares                                        (3)             -         (3) 
 Repayment of principal in respect 
  of securitised debt                           10            (45)          (43)        (87) 
 Repayment of liquidity facility                                 -             -       (147) 
 Cash payments for the principal portion                      (12)             -           - 
  of lease liabilities 
 Drawdown of unsecured revolving credit 
  facilities                                    10             150             -           - 
 
 Net cash from/(used in) financing 
  activities                                                    92          (43)       (237) 
                                                      ------------  ------------  ---------- 
 
 
 Net increase in cash and cash equivalents       10             58            23          11 
 
 Cash and cash equivalents at the beginning 
  of the period                                                133           122         122 
 
 Cash and cash equivalents at the end 
  of the period                                                191           145         133 
                                                      ============  ============  ========== 
 

Cash and cash equivalents are defined in note 9.

NOTES TO THE INTERIM FINANCIAL INFORMATION

 
 1. GENERAL INFORMATION 
 
 Basis of preparation 
 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 28 September 2019 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 2019. 
 
  It is normal practice for the Company to request its auditor to 
  complete a review of interim financial information. However, as 
  a result of the enforced closure of all pubs and restaurants across 
  England, Scotland and Wales, as announced by the Government on 
  20 March 2020 in response to the Covid-19 pandemic, the interim 
  financial information has not been reviewed by the Company's auditor 
  pursuant to the Auditing Practices Board guidance on review of 
  'Interim Financial Information'. 
 
 Going concern 
      The outbreak of Covid-19 during the first half of the year casts 
       a degree of uncertainty as to the future financial performance 
       and cash flows of the Group. The implications of this, and particularly 
       the enforced shutdown of all of the the Group's sites from 20 
       March 2020, have been considered by the Directors in assessing 
       the ability of the Group to continue as a going concern. 
 
       The Group's primary source of borrowings is through a secured 
       financing structure made up of ten tranches of fully amortising 
       loan notes with a gross debt value of GBP1.6bn. These are secured 
       against the majority of the Group's property and its future income 
       streams. The principal repayment period varies by class of note 
       with maturity dates ranging from 2023 to 2036 but at an aggregate 
       annual debt service cost of cGBP200m. Interest rate and exchange 
       rate fluctuations have largely been fixed with currency and interest 
       rate swaps which qualify for hedge accounting under IFRS 9: Financial 
       Instruments. Within the structure the Group maintains a Liquidity 
       Facility of GBP295m, which is a condition within the securitisation 
       documents. 
 
       At the start of the financial period the Group also had available 
       GBP150m of unsecured revolving credit facilities (GBP50m bilateral 
       facilities from each of Barclays, Santander and HSBC) with a maturity 
       date of 31 December 2020, along with GBP15m of overdraft and uncommitted 
       money market facilities. None of these were drawn at the start 
       of the financial period. 
 
       Following consideration of the impact and uncertainty of the Covid-19 
       pandemic, and particularly the enforced closure of all the Group's 
       sites from 20 March 2020, it was likely that the Group would require 
       waivers for potential breaches of a number of covenants within 
       these debt arrangements and would need access to additional cash 
       liquidity to provide greater resilience given the highly uncertain 
       outlook. 
 
       Alternative and revised arrangements have subsequently been agreed, 
       summarised as follows. 
 
       With the consent of the controlling creditor of the securitisation 
       (Ambac) and the scheme Trustee (HSBC): 
 
        *    a further waiver of, and amendment to, the 30 day 
             suspension of business provision, where the 
             suspension has arisen because of the enforced closure 
             during the Covid-19 pandemic; 
 
 
        *    a waiver of the six month look-back debt service 
             coverage ratio test up until July 2021 and a waiver 
             of the 12 month look-back debt service coverage ratio 
             test up until September 2021; 
 
 
        *    a waiver of the requirement to appoint a financial 
             adviser which would otherwise have arisen for any 
             periods where the debt service coverage ratio falls 
             to below the required level; 
 
 
        *    a reduction in the minimum amount required to be 
             spent on capital maintenance during the remainder of 
             this, and the next, financial years arising from the 
             business having been temporarily suspended; and 
 
 
 
       1. GENERAL INFORMATION (CONTINUED) 
 
        *    a waiver to facilitate drawings of up to GBP100m in 
             total under the Liquidity Facility providing the 
             Group with additional facilities in order to meet 
             payments of principal and interest, provided such 
             drawings are repaid in full at the end of March 2021. 
 
 
       In order to secure such amendments and waivers, the Group gave 
       certain undertakings in relation to its own financing arrangements, 
       namely, to put in place the GBP250m committed unsecured liquidity 
       facilities referred to below, and an undertaking to provide funding 
       into the securitisation of up to GBP100m in line with drawings 
       on the Liquidity Facility. 
       By agreement with the Group's unsecured relationship banks: 
        *    Extension of the term of the GBP150m bilaterals to 31 
             December 2021 
 
 
        *    The provision of an additional GBP100m of liquidity, 
             also to 31 December 2021, backed by the government 
             Coronavirus Large Business Interruption Loan Scheme. 
 
 
 
       Both before and after the enforced shutdown urgent action was 
       taken to both protect access to liquidity, by drawing in full 
       unsecured facilities of GBP150m, and to protect the business through 
       limiting cash outflows, including: cancelling all discretionary 
       capital expenditure, furloughing of over 99% of the workforce, 
       where possible reaching agreement on extended payment terms, and 
       the elimination of all non-essential operating expenses. 
 
       At the date of approval of these interim results the Group has 
       cash on hand of GBP100m and undrawn committed facilities totalling 
       GBP150m. When closed and under full furlough arrangements the 
       four week EBITDA loss (including rent) totals GBP15m with a cash 
       outflow of GBP30m to GBP35m after payment of legacy supplier balances. 
       The two main uncertainties in the year ahead are considered to 
       be the duration of the enforced shutdown and the subsequent strength 
       of recovery of sales as sites re-open. The latter will depend 
       on a number of factors including consumer demand and the detail 
       and evolution of social distancing measures that will then be 
       adopted. To that end revised financial arrangements, outlined 
       above, have been assessed against a base case and a downside case. 
       In the base case scenario the majority of the Group sites re-open 
       for trading in July 2020, as currently expected. Levels of trade 
       are anticipated to rebuild towards reaching the prior year levels 
       by the end of the first half next year. Under this scenario the 
       Directors consider that the Group will continue to operate within 
       its committed facilities, and covenants, with sufficient headroom. 
 
       The Directors have also reviewed a severe but plausible downside 
       scenario which assumes that closure of the full estate continues 
       for over six months, until early October 2020. During this time 
       the Group is assumed to continue benefit from Government assistance 
       principally in the form of relief from business rates for the 
       year to April 2021 (reducing annual costs by cGBP100m) and from 
       access to the Job Retention Scheme (on varying terms as relief 
       is tapered beyond July). On re-opening, trade levels are assumed 
       to build back over a nine month period to reach 90% of prior year 
       trade by the important festive trading season and 100% by July 
       2021. Under this scenario the Group is also able to stay within 
       revised committed facility financial covenants and maintains sufficient 
       liquidity. 
 
       At this time of uncertainty we shall continue to review mitigating 
       activities and the full range of funding options as required, 
       to strengthen liquidity and to maximise the commercial opportunities 
       for the Group. 
       After due consideration of these factors the Directors believe 
       that, having secured the revised financial arrangements outlined 
       above, they have a reasonable expectation that the Group has sufficient 
       resources to continue in operational existence for the 12 months 
       from the date of approval of these condensed financial statements, 
       and therefore continue to adopt the going concern in their preparation. 
 
 Accounting policies 
 The interim financial information has been prepared on a consistent 
  basis using the accounting policies set out in the Annual Report 
  and Accounts 2019, other than the adoption of the new accounting 
  standards set out below. 
 
  New standards and interpretations 
 
  The Group has initially adopted IFRS 16 Leases from 29 September 
  2019. A number of other new standards were effective from 29 September 
  2019, but they do not have a material impact on the Group's accounts.The 
  impact of implementing IFRS 16 is shown in note 13. 
 
 
  1. GENERAL INFORMATION (CONTINUED) 
 
  IFRS 16 Leases 
 
  IFRS 16 introduced a single, on-balance sheet accounting model 
  for lessees and sets out the principles for recognition, measurement, 
  presentation and disclosure of leases. As a result, the Group, 
  as a lessee, has recognised right-of-use assets representing its 
  right to use the underlying assets, and lease liabilities representing 
  its obligation to make lease payments. In contrast to lessee accounting, 
  lessor accounting under IFRS 16 is largely unchanged. 
 
  Given the number of leases and historical data requirements to 
  adopt the full retrospective approach, the Group has applied the 
  modified retrospective approach with assets equal to liabilities, 
  at transition. As a result, there is no requirement to restate 
  prior period information. 
 
  The Group as lessee 
 
  The Group has applied the practical expedient available on transition 
  to IFRS 16, not to reassess whether a contract is or contains 
  a lease. Accordingly, the definition of a lease in accordance 
  with IAS 17 and IFRIC 4 will continue to apply to those leases 
  entered into or modified before 29 September 2019. The Group now 
  assesses whether a contract is or contains a lease based on the 
  new definition of a lease. Under IFRS 16, a contract is, or contains 
  a lease if the contract conveys the right to control the use of 
  an identified asset for a period of time in exchange for consideration. 
 
  The Group has also elected to use the recognition exemptions for 
  lease contracts that, at the commencement date, have a remaining 
  lease term of 12 months or less and do not contain a purchase 
  option, or are lease contracts for which the underlying asset 
  is of low value. 
 
  Where a lease is identified, the Group recognises a right-of-use 
  asset and a corresponding lease liability. 
  The lease liability is measured at the present value of the lease 
  payments, using the lessee's incremental borrowing rate specific 
  to term, country, currency and remaining lease term as the discount 
  rate, if the rate implicit in the lease is not readily determinable. 
  Lease payments include fixed payments, less any lease incentives 
  receivable, and variable lease payments that depend on an index 
  or rate, with these being initially measured using the index or 
  rate at the commencement date. Any variable lease payments that 
  do not depend on an index or rate, are recognised as an expense 
  in the period in which the event or condition that triggers the 
  payment occurs. The lease liability is presented as a separate 
  line in the Consolidated Balance Sheet, split between current 
  and non-current liabilities. 
 
  The lease liability is subsequently measured by increasing the 
  carrying amount to reflect interest on the lease liability (using 
  the effective interest rate method) and by reducing the carrying 
  amount to reflect the lease payments made. The lease liability 
  is re-measured with a corresponding adjustment to the right-of-use 
  asset, when there is a change in future lease payments resulting 
  from a rent review, change in an index or rate, a change in lease 
  term e.g. lease extension, or a change in the Group's assessment 
  of whether it is reasonably certain to exercise or not exercise 
  a break option. 
 
  At the interim date the Group has applied the practical relief 
  available during the Covid-19 pandemic, which provides lessees 
  with relief from applying lease modification accounting to Covid-19 
  related rent concessions. 
 
  The Group recognises right-of-use assets at the commencement date 
  of the lease. Right-of-use assets are measured at cost, less accumulated 
  depreciation and impairment losses and adjusted for any re-measurement 
  of lease liabilities. The cost of right-of-use assets includes 
  the amount of lease liabilities recognised, adjusted for any re-measurement 
  of lease payments made at or before the commencement date, less 
  any lease incentives received. Right-of-use assets are depreciated 
  over the shorter of the asset's useful life or the lease term 
  on a straight-line basis. Right-of-use assets are subject to and 
  reviewed regularly for impairment. This replaces the previous 
  requirement to recognise a provision for onerous lease contracts. 
 
  Under IFRS 16, there is a lease-by-lease transition choice whereby 
  a lessee can take a practical expedient to rely on assessments 
  immediately before the date of initial application of whether 
  leases are onerous under the IAS 37 "Provisions, Contingent Liabilities 
  and Contingent Assets" definition, and to adjust the right-of-use 
  asset by this amount. Alternatively, the new requirements under 
  IFRS 16 can be applied and the right-of-use asset is tested for 
  impairment in accordance with IAS 36 "Impairment of Assets". The 
  Group has considered this on a lease by lease basis with a transitional 
  impairment review taken on a number of leases. 
 
 
  1. GENERAL INFORMATION (CONTINUED) 
 
  The transitional impairment review has resulted in an impairment 
  charge of GBP66m which is presented as an opening reserves adjustment, 
  net of the reversal of onerous lease provisions no longer required 
  (see note 13). This impairment predominantly resulted from the 
  application of different discount rates in line with the applicable 
  accounting standards. The onerous contract provisions previously 
  recognised in accordance with IAS 37 and the IFRS 16 lease liability 
  calculations both use lower discount rates such as a risk-free 
  or incremental borrowing rate. However, on adoption of IFRS 16 
  and recognition of right-of-use assets, these assets are tested 
  for impairment under IAS 36 which uses a market participants rate. 
  The application of these standards and changes in discount rates 
  have caused an impairment on numerous right-of-use lease assets. 
 
  The Group recognises lease payments in relation to short term 
  leases and low value assets as an operating expense on a straight-line 
  basis over the term of the lease. 
 
  At the commencement date of property leases the Group determines 
  the lease term to be the full term of the lease, assuming any 
  option to break or extend the lease is unlikely to be exercised. 
  Leases are regularly reviewed and will be remeasured if it becomes 
  likely that a break clause or option to extend the lease will 
  be exercised. Judgement is also required in respect of property 
  leases where the current lease term has expired but the Group 
  remains in negotiation with the landlord for potential renewal. 
  Where the Group believes renewal to be reasonably certain and 
  the lease is protected by the Landlord Tenant Act, it will be 
  treated as having been renewed at the date of termination of the 
  previous lease term and on the same terms as the previous lease. 
  Where renewal is not considered to be certain the leases are included 
  with a lease term which reflects the anticipated notice period 
  under relevant legislation. The lease will be revalued when it 
  is renewed to take account of the new terms. 
 
  The Group as lessor 
 
  The Group enters into lease agreements as a lessor with respect 
  to some of its properties. 
  Leases for which the Group is a lessor are classified as finance 
  or operating leases. Whenever the terms of the lease transfer 
  substantially all the risks and rewards of ownership to the lessee, 
  the contract is classified as a finance lease. All other leases 
  are classified as operating leases. 
 
  When the Group is an intermediate lessor, it accounts for the 
  head lease and sublease as two separate contracts. The sublease 
  is classified as a finance or operating lease by reference to 
  the right-of-use asset arising from the head lease. As required 
  by IFRS 9, an allowance for expected credit losses will be recognised 
  on the finance lease receivables. The leased asset will be derecognised 
  and finance lease asset receivables recognised. Rental income 
  from operating leases is recognised on a straight-line basis over 
  the term of the relevant lease. 
 

Critical accounting judgements and key sources of estimation uncertainty

The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions in the application of accounting policies that affect reported amounts of assets, liabilities, income and expense.

Estimates and judgements are periodically reviewed and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Details of the Group's critical accounting judgements and estimates are described within the relevant accounting policies set out in the Annual Report and Accounts 2019.

Judgements and estimates for the interim period remain largely unchanged. However, there have been changes to the estimates used in the valuation of property, plant and equipment as described in note 8. Judgement around provisions are also no longer relevant as onerous lease provisioning is no longer a requirement post IFRS 16.

 
 2. SEGMENTAL ANALYSIS 
 
 The Group trades in one business segment (that of operating pubs 
 and restaurants). The Group's brands meet the aggregation criteria 
 set out in paragraph 12 of IFRS 8 Operating Segments and as such 
 the Group reports the business as one reportable segment. 
 
 
 
   3.       REVENUE 
 
 Revenue is analysed as follows:         2020       2019       2019 
                                     28 weeks   28 weeks   52 weeks 
                                         GBPm       GBPm       GBPm 
                                    ---------  ---------  --------- 
 Food                                     535        610      1,137 
 Drink                                    467        537      1,025 
 Services                                  37         39         75 
                                    ---------  ---------  --------- 
 
 Total                                  1,039      1,186      2,237 
                                    =========  =========  ========= 
 

Revenue from services includes rent receivable from unlicensed properties and leased operations of GBP4m (2019 28 weeks GBP5m, 2019 52 weeks GBP10m).

   4.       SEPARATELY DISCLOSED ITEMS 

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 and the impact of any associated tax. Adjusted profitability measures are presented excluding separately disclosed items as we believe this provides both management and investors with useful additional information about the Group's performance and supports a more effective comparison of the Group's trading performance from one period to the next. Adjusted profit and earnings per share information is used by management to monitor business performance against both shorter-term budgets and forecasts but also against the Group's longer-term strategic plans.

Judgement is used to determine those items which should be separately disclosed. This judgement includes assessment of whether an item is of sufficient size or of a nature that is not consistent with normal trading activities.

Separately disclosed items include movements in the valuation of the property portfolio as a result of the revaluation exercise of property, plant and equipment, impairment review of short leasehold and unlicensed properties, impairment review of right-of-use assets, revaluation of assets held for sale, past service cost in relation to the defined benefit pension obligation and costs directly associated with the government enforced closure of pubs as a result of the Covid-19 pandemic.

In addition to those items presented as separately disclosed items in the Annual Report and Accounts 2019, the impairment review of right-of-use assets is classified as separately disclosed due to its potential volatility, which can be partly driven by movements in discount rate. Costs directly associated with the closure of pubs as a result of the Covid-19 virus are considered to be separately disclosed due to their size and one-off nature.

   4.       SEPARATELY DISCLOSED ITEMS (CONTINUED) 
 
                                                     2020             2019       2019 
                                                 28 weeks         28 weeks   52 weeks 
                                        Notes        GBPm             GBPm       GBPm 
                                                ---------  ---------------  --------- 
 Adjusted items 
 Costs directly associated with           a          (11)                -          - 
  the Covid-19 pandemic and enforced 
  closure of pubs 
 Past service cost in relation 
  to the defined benefit pension 
  obligation                              b             -             (19)       (19) 
 Total adjusted items recognised 
  within operating costs                             (11)             (19)       (19) 
 
 Net profit arising on property 
  disposals                               c             -                1          1 
 
 Movement in the valuation of 
  the property portfolio: 
                                                ---------  ---------------  --------- 
 - Impairment arising from the 
  revaluation                             d         (127)                -        (4) 
 - Revaluation of assets held 
  for sale                                e             -                7          7 
 - Impairment of freehold and 
  long leasehold tenant's fixtures 
  and fittings                            f           (3)                -          - 
 - Impairment of short leasehold 
  and unlicensed properties               g           (2)                -        (5) 
 - Impairment of right-of-use 
  assets                                  h          (16)                -          - 
 
 Net movement in the valuation 
  of the property portfolio                         (148)                7        (2) 
 
 Total adjusted items before 
  tax                                               (159)             (11)       (20) 
                                                ---------  ---------------  --------- 
 
 Tax credit relating to the above 
  items                                                31                3          4 
 Tax charge relating to change            i          (10)                -          - 
  in tax rate 
 
 Total adjusted items after tax                     (138)              (8)       (16) 
                                                =========  ===============  ========= 
 
 
 a                                 Costs directly associated with the Covid-19 pandemic primarily 
                                    relate to the disposal of stock items at site and within distribution 
                                    depots that are beyond usable dates as a result of the government 
                                    enforced closure of pubs. These costs are not considered to 
                                    be part of normal trading activity. 
 b                                 On 26 October 2018 the High Court provided a ruling regarding 
                                    guaranteed minimum pensions (GMPs) equalisation. The court 
                                    ruled that pensions provided to members who had contracted-out 
                                    of their scheme must be recalculated to ensure payments reflect 
                                    the equalisation of state pension ages in the 1990s. The ruling 
                                    provided pension trustees with a range of acceptable methods 
                                    for calculating the GMP equalisation. The court also ruled 
                                    that trustees are obliged to make arrears payments to members 
                                    and simple interest on the arrears should be paid at 1% above 
                                    the base rate. The estimated increase in pension liabilities 
                                    required to equalise for GMPs is GBP19m. This was disclosed 
                                    separately in the prior period, as it is not considered part 
                                    of the adjusted trade performance of the Group. 
 c                                 Profit or loss arising on property disposals is disclosed separately 
                                    as it is not considered to be part of adjusted trading performance 
                                    and there is volatility in the size of the profit/(loss) in 
                                    each accounting period. 
 d                                 Impairment arising from the Group's revaluation of its freehold 
                                    and long leasehold pub estate where the carrying values of 
                                    the properties exceed their recoverable amount (see note 8). 
 e                                 A revaluation uplift, which reverses a previous impairment, 
                                    has been recognised on reclassification of property, plant 
  f                                 and equipment to assets held for sale. 
                                    Impairment of freehold and long leasehold tenant's fixtures 
                                    and fittings where their carrying values exceed their recoverable 
                                    amount (see note 8). 
 g                                 The impairment of short leasehold and unlicensed properties 
                                    comprises an impairment charge, where the carrying values of 
                                    the properties exceed their recoverable amount, net of an impairment 
                                    reversal where carrying values have been increased to recoverable 
                                    amounts (see note 8). 
 h                                 Impairment of right-of-use assets where their carrying values 
                                    exceed their recoverable amount (see note 13). 
 i                                 A deferred tax charge of GBP10m has been recognised in the 
                                    current period following the substantive enactment of legislation 
                                    on 17 March 2020 which increased the UK standard rate of corporation 
                                    tax from 17% to 19% from 1 April 2020. 
 
 5. FINANCE COSTS AND FINANCE 
 REVENUE 
                                                       2020                      2019                     2019 
                                                   28 weeks                  28 weeks                 52 weeks 
                                                       GBPm                      GBPm                     GBPm 
                                   ------------------------  ------------------------  ----------------------- 
 Finance costs 
 Interest on securitised debt                          (57)                      (59)                    (109) 
 Interest on other borrowings                           (2)                       (3)                      (4) 
 Interest on lease liabilities                         (10)                         -                        - 
 Unwinding of discount on 
  provisions                                              -                         -                      (1) 
                                   ------------------------  ------------------------  ----------------------- 
 Total finance costs                                   (69)                      (62)                    (114) 
                                   ========================  ========================  ======================= 
 
 Finance revenue 
 Interest receivable                                      1                         1                        1 
 
 Net pensions finance charge 
  (note 
  11)                                                   (2)                       (4)                      (7) 
                                   ========================  ========================  ======================= 
 
 
 
   6.       TAXATION 

The taxation charge for the 28 weeks ended 11 April 2020 has been calculated by applying an estimate of the annual effective tax rate before adjusted items of 19.3% (2019 28 weeks, 19.9%).

 
                                                    2020       2019       2019 
                                                28 weeks   28 weeks   52 weeks 
 Tax credit/(charge) in the income statement        GBPm       GBPm       GBPm 
                                               ---------  ---------  --------- 
 
 Current tax: 
 - UK corporation tax                                  -       (15)       (31) 
 - Amounts over provided in prior periods              -          -          3 
                                               ---------  ---------  --------- 
 
 Total current tax charge                              -       (15)       (28) 
                                               ---------  ---------  --------- 
 
 Deferred tax: 
 - Origination and reversal of temporary 
  differences                                         24          1        (5) 
 - Changes in tax rate                              (10)          -          - 
 - Adjustments in respect of prior periods             -          -        (1) 
 
 Total deferred tax credit/(charge)                   14          1        (6) 
                                               ---------  ---------  --------- 
 
 Total tax credit/(charge) in the income 
  statement                                           14       (14)       (34) 
                                               =========  =========  ========= 
 
 Further analysed as tax relating to: 
 Profit before adjusted items                        (7)       (17)       (38) 
 Adjusted items                                       21          3          4 
                                               ---------  ---------  --------- 
 
                                                      14       (14)       (34) 
                                               =========  =========  ========= 
 
   6.       TAXATION (CONTINUED) 
 
                                                                       2020       2019       2019 
 Tax relating to items recognised in                               28 weeks   28 weeks   52 weeks 
  other comprehensive 
 income                                                                GBPm       GBPm       GBPm 
                                                                  ---------  ---------  --------- 
 
 Deferred tax: 
 Items that will not be reclassified 
  subsequently to profit or loss: 
 
   *    Unrealised losses/(gains) due to revaluations - 
        revaluation reserve                                              43          -       (14) 
 
   *    Unrealised gains due to revaluations - retained 
        earnings                                                        (1)          -        (1) 
 
   *    Rolled over and held over gains - retained earnings             (7)          -          - 
 
   *    Remeasurement of pension liabilities                              7        (3)        (3) 
 
                                                                         42        (3)       (18) 
                                                                  ---------  ---------  --------- 
 Items that may be reclassified subsequently 
  to profit or loss: 
 
   *    Cash flow hedges: 
 
        *    Losses arising during the period                             4          5         14 
 
        *    Reclassification adjustments for items included in 
             profit or loss                                               -        (3)        (4) 
                                                                  ---------  ---------  --------- 
 
                                                                          4          2         10 
                                                                  ---------  ---------  --------- 
 
 Total tax credit/(charge) recognised 
  in other comprehensive income                                          46        (1)        (8) 
                                                                  =========  =========  ========= 
 
 
 
   The tax credit in the interim financial statements is wholly 
   attributable to deferred tax as the full year results are expected 
   to be an overall allowable tax loss and no corporation tax is 
   expected to be payable for the 52 weeks ended 26 September 2020. 
 
   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 balances at 13 April 2019 and 28 
   September 2019. 
 
   On 17 March 2020 a resolution was passed by Parliament under 
   the Provisional Collection of Taxes Act 1968 which substantively 
   enacted a change in the main rate of corporation tax from 1 
   April 2020. The resolution superseded existing legislation and 
   replaced the proposed main rate of corporation tax of 17% with 
   a rate of 19%. The effect of this change has been reflected 
   in the closing deferred tax at 11 April 2020. 
 
 
 7. EARNINGS/(LOSS) PER SHARE 
 
 Basic earnings/(loss) per share (EPS) has been calculated by dividing 
  the (loss)/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 (loss)/earnings per ordinary share amounts are presented 
  before adjusted items (see note 4) in order to allow a better 
  understanding of the adjusted trading performance of the Group. 
 
                                                                    2020       2019               2019 
                                                                28 weeks   28 weeks           52 weeks 
                                                               ---------  ---------      ------------- 
 Basic earnings per share: 
 Total (loss)/profit for the period 
  (GBPm)                                                           (107)         61                143 
 Weighted average number of ordinary 
  shares for the purposes of basic 
  earnings per share (millions)                                      428        428                427 
 
 Basic (loss)/earnings per share 
  (pence)                                                        (25.0)p      14.3p              33.5p 
                                                               ---------  ---------      ------------- 
 
 Total (loss)/profit for the period 
  (GBPm)                                                           (107)         61                143 
 Effect of adjusted items on (loss)/earnings 
  for the period (GBPm)                                              138          8                 16 
 Earnings excluding adjusted items 
  (GBPm)                                                              31         69                159 
 
 Adjusted basic earnings per share 
  (pence)                                                           7.2p      16.1p              37.2p 
                                                               ---------  ---------      ------------- 
 
 
                                                                    2020       2019               2019 
                                                                28 weeks   28 weeks           52 weeks 
 
 Diluted earnings per share: 
 Weighted average ordinary shares 
  for the purposes of basic earnings 
  per share (millions)                                               428        428                427 
 
 Effect of dilutive potential 
  ordinary shares: 
 
   *    Contingently issuable shares (millions)                        1          1                  1 
 
   *    Other share options (millions)                                 2          1                  1 
 Number of shares for the purpose 
  of diluted earnings per share 
  (millions)                                                         431        430                429 
 
 Diluted (loss)/earnings per share 
  (pence)                                                        (24.8)p      14.2p              33.3p 
 Adjusted diluted earnings per 
  share (pence)                                                     7.2p      16.0p              37.1p 
                                                               =========  =========      ============= 
 
 
   8. PROPERTY, PLANT AND EQUIPMENT 
                                                                    2020       2019               2019 
                                                                11 April   13 April       28 September 
                                                                    GBPm       GBPm               GBPm 
                                                               ---------  ---------      ------------- 
 
 At beginning of period                                            4,528      4,426              4,426 
 
 Additions                                                            88         93                151 
 (Decrease)/increase as a result of 
  the revaluation and impairment review                            (524)          7                 82 
 Disposals                                                           (2)        (1)                (2) 
 Depreciation provided during the period                            (61)       (64)              (116) 
 Transfers to assets held for sale                                     -       (13)               (13) 
 
 
 At end of period                                                  4,029      4,448              4,528 
                                                               =========  =========      ============= 
 
 
   8.     PROPERTY, PLANT AND EQUIPMENT (CONTINUED) 
 
 Revaluation and impairment 
  On 20 March 2020, all pubs and restaurants were mandatorily closed 
  under government instruction due to the Covid-19 pandemic. This 
  closure is considered to be a significant indicator of impairment 
  of property, plant and equipment. As a result, a full revaluation 
  exercise has been completed of the freehold and long leasehold 
  licensed properties, along with an impairment review of the related 
  tenant's fixtures and fitings. In addition, an impairment review 
  has been performed for the short leasehold and unlicensed properties. 
 
  Revaluation of freehold and long leasehold properties 
 
  Accounting policy 
  The revaluation utilises valuation multiples, which are determined 
  via third-party inspection of 20% of the sites each year such 
  that all sites are individually valued approximately every five 
  years; estimates of fair maintainable trade (FMT); and estimated 
  resale value of tenant's fixtures and fittings. Properties are 
  valued as fully operational entities, to include fixtures and 
  fittings but excluding stock and personal goodwill. The value 
  of tenant's fixtures and fittings is then removed from this valuation 
  via reference to its associated resale value. Where sites have 
  been impacted by expansionary capital investment in the preceding 
  12 months, FMT is taken as the post investment forecast, as the 
  current year trading performance includes a period of closure. 
 
  Valuation multiples derived via third-party inspections determine 
  brand standard multiples which are then used to value the remainder 
  of the non-inspected estate via an extrapolation exercise, with 
  the output of this exercise reviewed at a high level by the Directors 
  and the third-party valuer. 
 
  Where the value of land and buildings derived purely from a multiple 
  applied to the fair maintainable trade misrepresents the underlying 
  asset value, for example, due to low levels of income or location 
  characteristics, a spot valuation is applied. 
 
  Critical accounting judgements 
  The revaluation methodology is determined using management judgement, 
  with advice from third-party valuers in determining valuation 
  multiples. The application of a valuation multiple to the fair 
  maintainable trade of each site is considered the most appropriate 
  method for the Group to determine the fair value of licensed land 
  and buildings. Where sites have been impacted by expansionary 
  capital investment in the preceding 12 months, management judgement 
  is used to determine the most appropriate souce of FMT which is 
  likely to be a post investment forecast, as the current year trading 
  performance includes a period of closure. 
 
  Key sources of estimation uncertainty 
  The application of the valuation methodology requires two key 
  sources of estimation uncertainty; the estimation of valuation 
  multiples, which are determined via third-party inspections; and 
  an estimate of fair maintainable trade, including reference to 
  historic and future projected income levels. A sensitivity analysis 
  of changes in valuation multiples and FMT, in relation to those 
  properties to which these estimates apply is provided below. The 
  carrying value of properties to which these estimates apply is 
  GBP3,839m. 
 
  Revaluation of freehold and long leasehold properties 
  We have undertaken a Directors' valuation of the freehold and 
  long leasehold properties at fair value as at 11 April 2020, following 
  consultation with CBRE, independent chartered surveyors, with 
  respect of appropriate methodology. The valuation was carried 
  out in accordance with the RICS Valuation - Global Standards 2017, 
  which incorporates the international Valuation Standards and the 
  RICS Valuation - Professional Standards UK January 2015 (revised 
  April 2015) ("the Red Book"), assuming each asset is sold as a 
  fully operational trading entity. The fair value has been determined 
  having regard to factors such as current and future projected 
  income levels, taking account of location, quality of pub restaurant 
  and recent market transactions in the sector. 
 
  At the interim date there have been no site inspections as the 
  third-party valuer CBRE was unable to gain access to properties 
  due to social distancing measures in place as a result of Covid-19. 
  As a result, brand multiples applied at 2019 form the basis for 
  the interim review with a reduction of 1.0x multiple applied to 
  all brands. In addition, the final valuation is reduced by an 
  estimate of the loss of profits resulting from enforced pub closures 
  and 9 months of expected build up in trade post re-opening. 
 
  8. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) 
 
  Sensitivity analysis 
  Changes in either the FMT or the multiple could materially impact 
  the valuation of the freehold and long leasehold properties. The 
  average movement in FMT of revalued properties over the prior 
  three financial years is 1.0%. It is estimated that, given the 
  multiplier effect, a 1.0% change in FMT of the freehold or long 
  leasehold properties would generate an approximate GBP37m movement 
  in their valuation. 
 
  Valuation multiples are determined at an individual brand level. 
  Over the prior three years, the weighted average brand multiple 
  has moved by an average of 0.1. It is estimated that a 0.1 change 
  in the multiple would generate an approximate GBP46m movement 
  in valuation. 
 
  Impairment of freehold and long leasehold tenant's fixtures and 
  fittings 
  The value of tenant's fixtures and fittings are removed from the 
  valuation of freehold and long leasehold properties and are subsequently 
  reviewed for impairment by comparing recoverable amount to their 
  carrying values. Any resulting impairment relates to sites with 
  poor trading performance, where the output of the calculation 
  is insufficient to justify their current net book value. 
 
  Impairment of short leasehold properties 
  Short leasehold and unlicensed properties (comprising land and 
  buildings and fixtures, fittings and equipment) which are not 
  revalued to fair market value, are reviewed for impairment by 
  comparing site recoverable amount to their carrying values. Any 
  resulting impairment relates to sites with poor trading performance, 
  where the output of the calculation is insufficient to justify 
  their current net book value. 
 
  Value in use calculations use forecast trading performance cash 
  flows, which are discounted by applying a pre-tax discount rate 
  of 8.1% (2019 52 weeks 7.7%). At the interim date, the value in 
  use calculations include an estimate of the impact of expected 
  closure period and subsequent build up in trade post re-opening, 
  as a direct result of the Covid-19 pandemic. 
 
  The impact of the revaluation and impairment review is as follows: 
                                                    2020       2019       2019 
                                                28 weeks   28 weeks   52 weeks 
                                                    GBPm       GBPm       GBPm 
                                               ---------  ---------  --------- 
   Group income statement 
   Revaluation deficit charged as an 
    impairment                                     (153)          -       (76) 
   Reversal of past revaluation deficits              26          -         72 
                                               ---------  ---------  --------- 
 
   Total impairment arising from the 
    revaluation                                    (127)          -        (4) 
 
   Impairment of short leasehold and 
    unlicensed properties                            (2)          -        (7) 
   Reversal of past impairments of short 
    leasehold and unlicensed properties                -          -          2 
 
   Total impairment of short leasehold 
    and unlicensed properties                        (2)          -        (5) 
 
   Impairment of freehold and long leasehold         (3)          -          - 
    tenant's fixtures and fittings 
   Reversal of past impairment on transfer 
    to assets held for sale                            -          7          7 
                                               ---------  ---------  --------- 
 
                                                   (132)          7        (2) 
                                               ---------  ---------  --------- 
 
   Revaluation reserve 
   Unrealised revaluation surplus                     29          -        199 
   Reversal of past revaluation surplus            (421)          -      (115) 
                                               ---------  ---------  --------- 
 
                                                   (392)          -         84 
                                               --------- 
 
   Net (decrease)/increase in property, 
    plant and equipment                            (524)          7         82 
                                               =========  =========  ========= 
 
 
 
 
 
  8. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) 
 
  The valuation techniques are consistent with the principles in 
  IFRS 13 and use significantly unobservable inputs such that the 
  fair value measurement of each property within the portfolio has 
  been classified as Level 3 in the fair value hierarchy. 
 
  The number of pubs included in the revaluation and the resulting 
  valuation of these properties is reconciled to the total value 
  of property, plant and equipment below. 
   At 11 April 2020               Number     Land and     Fixtures,        Net book 
                                   of pubs    buildings    fittings         value 
                                                           and equipment 
                                                   GBPm             GBPm       GBPm 
   Freehold properties               1,330        3,142              434      3,576 
   Long leasehold properties            95          226               37        263 
                                 ---------  -----------  ---------------  --------- 
   Total revalued properties         1,425        3,368              471      3,839 
 
    Short leasehold properties                       77               82        159 
   Unlicensed properties                             16                2         18 
   Other non-pub assets                               1                4          5 
   Assets under construction                          4                4          8 
                                            -----------  ---------------  --------- 
   Total property, plant and 
    equipment                                     3,466              563      4,029 
                                            ===========  ===============  ========= 
 
 
   At 28 September 2019           Number     Land and     Fixtures,          Net book 
                                   of pubs    buildings    fittings           value 
                                                           and equipment 
                                                   GBPm           GBPm           GBPm 
   Freehold properties               1,331        3,603            433          4,036 
   Long leasehold properties            96          270             37            307 
                                 ---------  -----------  -------------  ------------- 
   Total revalued properties         1,427        3,873            470          4,343 
 
    Short leasehold properties                       77             80            157 
   Unlicensed properties                             15              2             17 
   Other non-pub assets                               1              3              4 
   Assets under construction                          3              4              7 
                                            -----------  -------------  ------------- 
   Total property, plant and 
    equipment                                     3,969            559          4,528 
                                            ===========  =============  ============= 
 
 
 
  The tables below show, by class of asset, the number of properties 
  that have been valued within each FMT and multiple banding; 
                                          Valuation multiple applied to FMT 
                          ---------------------------------------------------------------- 
   At 11 April 2020             Over       10 to        8 to       6 to      Under   Total 
                            12 times    12 times    10 times    8 times    6 times 
                          ----------  ----------  ----------  ---------  ---------  ------ 
   Number of pubs in 
   each 
   FMT income banding; 
   <GBP200k                       51           8          35        264         21     379 
   GBP200k - GBP360k               2           3          91        333         28     457 
   >GBP360k                        0          33         140        403         13     589 
                          ----------  ----------  ----------  ---------  ---------  ------ 
                                  53          44         266      1,000         62   1,425 
                          ==========  ==========  ==========  =========  =========  ====== 
 
 
                                          Valuation multiple applied to FMT 
                          ---------------------------------------------------------------- 
   At 28 September 2019         Over       10 to        8 to       6 to      Under   Total 
                            12 times    12 times    10 times    8 times    6 times 
                          ----------  ----------  ----------  ---------  ---------  ------ 
   Number of pubs in 
   each 
   FMT income banding; 
   <GBP200k                       56           9         163        158          6     392 
   GBP200k - GBP360k               1          14         302        133         18     468 
   >GBP360k                        1          59         430         61         16     567 
                          ----------  ----------  ----------  ---------  ---------  ------ 
                                  58          82         895        352         40   1,427 
                          ==========  ==========  ==========  =========  =========  ====== 
 
 
  Movements in valuation multiples are the result of changes in 
  property market conditions. The average weighted multiple, inclusive 
  of the impact of closure period is 7.4 (28 September 2019 8.6) 
 
  8. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) 
 
  Goodwill and other intangible assets 
  Goodwill and other intangible assets at 11 April 2020 comprise 
  goodwill of GBP2m (13 April 2019 GBP2m, 28 September 2019 GBP2m) 
  and computer software of GBP13m (13 April 2019 GBP10m, 28 September 
  2019 GBP12m). 
 
 Capital commitments 
  The total amount contracted for but not provided in the financial 
  statements was GBP9m (13 April 2019 GBP22m, 28 September 2019 
  GBP19m). 
 
 
 9. ANALYSIS OF NET DEBT 
                                             2020       2019           2019 
                                         11 April   13 April   28 September 
                                             GBPm       GBPm           GBPm 
                                     ------------  ---------  ------------- 
 
 Cash and bank balances                       191        145            133 
                                     ------------  ---------  ------------- 
 Cash and cash equivalents                    191        145            133 
 
 Other cash deposits                            -        120              - 
 
 Securitised debt                         (1,706)    (1,789)        (1,752) 
 Liquidity facility                             -      (147)              - 
 
 Revolving credit facility                  (150)          -              - 
 
 Derivatives hedging balance sheet 
  debt(a)                                      50         44             55 
 
 Net debt excluding leases                (1,615)    (1,627)        (1,564) 
                                     ------------  ---------  ------------- 
 
 Current lease liabilities                   (52)          -              - 
 Non-current lease liabilities              (491)          -             -- 
                                     ------------  ---------  ------------- 
 
 Total lease liabilities                    (543)          -              - 
                                     ------------  ---------  ------------- 
 
 Net debt including leases                (2,158)    (1,627)        (1,564) 
                                     ============  =========  ============= 
 
 
 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. In the cash flow statement, cash 
  and cash equivalents are shown net of bank overdrafts that are 
  repayable on demand. 
 
 Securitised debt 
 Under a Guarantee Agreement, Ambac Assurance UK Limited, a financial 
  guarantee insurance company, agreed to act as a guarantor of the 
  Companies obligations to repay interest and principal on the loan 
  notes. In the event that the Company is unable to pay such amounts 
  the guarantee is limited to the Class A1N, A3N, A4 and Class AB 
  note holders only. During the period an agreement was reached to 
  remove the guarantee from the Class A2 notes. 
 
  The overall cash interest rate payable on the loan notes is fixed 
  at 6.3% (13 April 2019 6.2%, 28 September 2019 6.2%) 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 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 11 April 
  2020, Mitchells & Butlers Retail Limited had cash and cash equivalents 
  of GBP47m (13 April 2019 GBP69m, 28 September 2019 GBP61m). Of 
  this amount GBP1m (13 April 2019 GBP1m, 28 September 2019 GBP1m), 
  representing disposal proceeds, was held on 
 
  9. ANALYSIS OF NET DEBT (CONTINUED) 
 
  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: 
                                                 2020       2019           2019 
                                             11 April   13 April   28 September 
                                                 GBPm       GBPm           GBPm 
                                            ---------  ---------  ------------- 
 
 Principal outstanding at beginning of 
  period                                        1,753      1,832          1,832 
 Principal repaid during the period              (45)       (43)           (87) 
 Exchange on translation of dollar loan 
  notes                                           (5)        (3)              8 
                                            ---------  ---------  ------------- 
 
 Principal outstanding at end of period         1,703      1,786          1,753 
 
 Deferred issue costs                             (4)        (5)            (4) 
 Accrued interest                                   7          8              3 
                                            ---------  ---------  ------------- 
 
 Carrying value at end of period                1,706      1,789          1,752 
                                            =========  =========  ============= 
 
 

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. During the prior period the Group novated part of the facility to a higher rated counterparty and repaid the amount drawn. The amount drawn at 11 April 2020 is GBPnil (13 April 2019 GBP147m, 28 September 2019 GBPnil).

Unsecured revolving credit facilities

The Group holds three unsecured committed revolving credit facilities of GBP50m each and uncommitted revolving credit facilities of GBP5m, available for general corporate purposes. The amount drawn at 11 April 2020 is GBP150m (13 April 2019 GBPnil, 28 September 2019 GBPnil). All committed facilities expire on 31 December 2020.

 
 10. MOVEMENT IN NET DEBT 
                                                                    2020      2019      2019 
                                                                28 weeks  28 weeks  52 weeks 
                                                                    GBPm      GBPm      GBPm 
                                                                --------  --------  -------- 
 Net increase in cash and cash equivalents                            58        23        11 
 
 Add back cash flows in respect of 
  other components of net debt: 
 
   *    Transfers from other cash deposits                             -         -     (120) 
 
   *    Repayment of principal in respect of securitised debt         45        43        87 
 
   *    Repayment of liquidity facility                                -         -       147 
 
   *    Drawdown of unsecured revolving facilities                 (150)         -         - 
 
 (Increase)/decrease in net debt arising 
  from cash flows                                                   (47)        66       125 
 
 Movement in capitalised debt issue 
  costs net of accrued interest                                      (4)       (5)       (1) 
                                                                --------  --------  -------- 
 
 (Increase)/decrease in net debt excluding 
  leases                                                            (51)        61       124 
 
 
 Opening net debt excluding leases                               (1,564)   (1,688)   (1,688) 
 
 Closing net debt excluding leases                               (1,615)   (1,627)   (1,564) 
                                                                ========  ========  ======== 
 
 
   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 latest full actuarial valuation carried out at 31 March 2019 and updated by the schemes' independent qualified actuaries to 11 April 2020. Scheme assets are stated at market value at 11 April 2020 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.

The principal financial assumptions used at the balance sheet date have been updated to reflect changes in market conditions in the period and are as follows:

 
                                       2020      2019          2019 
                                   11 April  13 April  28 September 
 
 Discount rate                         1.9%      2.6%          1.8% 
 Pensions increases - RPI max 5%       2.6%      3.1%          3.0% 
 Inflation - RPI                       2.6%      3.3%          3.1% 
 
 

The mortality assumptions were reviewed following the 2019 actuarial valuation. A summary of the average life expectancies assumed are as follows:

 
                                          2020          2019            2019 
                                      11 April      13 April    28 September 
 
 Implied life expectancies from 
  age 65: 
      - MABPP male currently 45     22.7 years    23.0 years      22.7 years 
      - MABEPP male currently 45    24.5 years    25.6 years      24.5 years 
      - MABPP female currently 45   25.3 years    25.5 years      25.3 years 
      - MABEPP female currently 45  26.3 years    27.9 years      26.3 years 
                                    ==========    ==========    ============ 
 
 

Minimum funding requirements

The results of the 2019 actuarial valuation showed a funding deficit of GBP293m, using a more prudent basis to discount the scheme liabilities than is required by IAS 19 (revised). As a result of the 2019 actuarial valuation, the Company subsequently agreed recovery plans for both the Executive and Main schemes in order to close the funding deficit in respect of its pension liabilities. The recovery plans show an unchanged level of cash contributions with no extension to the agreed payment term (GBP45m per annum indexed with RPI from 1 April 2016 subject to a minimum increase of 0% and maximum of 5%, until 31 March 2023). However, given the Covid-19 outbreak, the Company has agreed with the Trustee that contributions would be suspended for the months of April, May and June 2020, with these being added onto the end of the agreed recovery plan so that these contributions will be paid in 2023. Under IFRIC 14, an additional liability is recognised, such that the overall pension liabilities at the period end reflect the schedule of contributions in relation to a minimum funding requirement, should this be higher than the actuarial deficit.

   11.     PENSIONS (CONTINUED) 

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                              2020       2019       2019 
                                                 28 weeks   28 weeks   52 weeks 
                                                     GBPm       GBPm       GBPm 
                                                ---------  ---------  --------- 
 Operating profit 
 Employer contributions (defined contribution 
  plans)                                              (6)        (5)       (12) 
 Administrative costs (defined benefit 
  plans)                                              (1)        (1)        (3) 
                                                ---------  ---------  --------- 
 Charge to operating profit before adjusted 
  items                                               (7)        (6)       (15) 
 Past service cost (see note 4)                         -       (19)       (19) 
                                                ---------  ---------  --------- 
 Charge to operating profit                           (7)       (25)       (34) 
 
 Finance costs 
 Net pensions finance income on actuarial 
  surplus                                               3          5         10 
 Additional pensions finance charge due 
  to minimum funding                                  (5)        (9)       (17) 
                                                ---------  ---------  --------- 
 Net pensions finance charge                          (2)        (4)        (7) 
 
 
 Total charge                                         (9)       (29)       (41) 
                                                =========  =========  ========= 
 
 
 Group statement of comprehensive income        2020       2019       2019 
                                            28 weeks   28 weeks   52 weeks 
                                                GBPm       GBPm       GBPm 
                                           ---------  ---------  --------- 
 
 Return on scheme assets and effects of 
  changes in assumptions                          58       (92)       (77) 
 Movement in pension liabilities due to 
  minimum funding                               (53)        109         92 
                                           ---------  ---------  --------- 
 
 Remeasurement of pension liabilities              5         17         15 
                                           =========  =========  ========= 
 
 
 Group balance sheet                       2020      2019          2019 
                                       11 April  13 April  28 September 
                                           GBPm      GBPm          GBPm 
                                       --------  --------  ------------ 
 
 Fair value of scheme assets              2,649     2,477         2,739 
 Present value of scheme liabilities    (2,269)   (2,224)       (2,443) 
                                       --------  --------  ------------ 
 
 Actuarial surplus in the schemes           380       253           296 
 Additional liability recognised due 
  to minimum funding                      (568)     (485)         (511) 
                                       --------  --------  ------------ 
 
 Total pension liabilities(a)             (188)     (232)         (215) 
                                       ========  ========  ============ 
 
 Associated deferred tax asset               36        40            36 
                                       ========  ========  ============ 
 

a. The total pension liabilities of GBP188m (13 April 2019 GBP232m, 28 September 2019 GBP215m) is presented as a GBP51m current liabilities (13 April 2019 GBP49m, 28 September 2019 GBP50m) and a GBP137m non-current liabilities (13 April 2019 GBP183m, 28 September 2019 GBP165m).

   11.   PENSIONS (CONTINUED) 
 
 
   Movements in total pension liabilities are analysed as follows: 
                                                       2020        2019           2019 
                                                   11 April    13 April   28 September 
                                                       GBPm        GBPm           GBPm 
                                                -----------  ----------  ------------- 
 
 At beginning of period                               (215)       (249)          (249) 
 Past service cost                                        -        (19)           (19) 
 Administration costs                                   (1)         (1)            (3) 
 Net pensions finance charge                            (2)         (4)            (7) 
 Employer contributions                                  25          24             49 
 Remeasurement of pension liabilities                     5          17             15 
 
 At end of period                                     (188)       (232)          (215) 
                                                ===========  ==========  ============= 
 
 
 
 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 11 April 2020 
    Financial assets 
    Currency swaps              -     50      -      50 
    Share options               -      -      1       1 
    Financial liabilities 
    Interest rate swaps         -  (294)      -   (294) 
                               --  (244)      1   (243) 
                            =====  =====  =====  ====== 
 
                           Level  Level  Level   Total 
                                1      2      3 
                             GBPm   GBPm   GBPm    GBPm 
                            -----  -----  -----  ------ 
    At 13 April 2019 
    Financial assets 
    Currency swaps              -     45      -      45 
    Financial liabilities 
    Interest rate swaps         -  (253)      -   (253) 
                            -----  -----  -----  ------ 
                               --  (208)      -   (208) 
                            =====  =====  =====  ====== 
 
                            Level  Level  Level   Total 
                                1      2      3 
                             GBPm   GBPm   GBPm    GBPm 
                            -----  -----  -----  ------ 
    At 28 September 2019 
    Financial assets 
    Currency swaps              -     55      -      55 
    Share options               -      -      1       1 
    Financial liabilities 
    Interest rate swaps         -  (302)      -   (302) 
                            -----  -----  -----  ------ 
                                -  (247)      1   (246) 
                            =====  =====  =====  ====== 
 
 
 
 
   12. FINANCIAL INSTRUMENTS (CONTINUED) 
 
   The fair value of interest rate and currency swaps is the estimated 
   amount which the Group could expect to pay or receive on termination 
   of the agreements. These amounts are based on quotations from counterparties 
   which approximate to their fair market value and take into consideration 
   interest and exchange rates prevailing at the balance sheet date. 
   Other financial assets and liabilities are either short-term in 
   nature or their book values approximate to fair values. 
 
 
   13. ADOPTION OF IFRS 16 LEASES 
 
   The Group has initially adopted IFRS 16 Leases from 29 September 
   2019. The impact of the adoption on the opening balance sheet at 
   29 September 2019 is described in note 1 and below. 
 
   Impact of IFRS 16 on the financial statements 
 
   At transition, for leases classified as operating leases under IAS 
   17, lease liabilities were measured in accordance with the policy 
   set out in note 1, using the Group's incremental borrowing rate 
   as at 29 September 2019. Right-of-use assets were measured at an 
   amount equal to the corresponding lease liability, adjusted for 
   any prepaid lease payments, lease incentives, expected dilapidations 
   and lease premiums. 
 
   The following is a reconciliation of total operating lease commitments 
   as at 28 September 2019, to the lease liabilities as at 29 September 
   2019: 
                                                                     GBPm 
    Total operating lease commitments at 28 September 2019            678 
 
    Reconciling items: 
 
           *    Short term leases                                     (1) 
 
           *    Lease commitments for periods post break clauses      120 
 
           *    Assumed lease extensions                                4 
 
    Operating lease liabilities before discounting                    801 
 
    Impact of discounting using incremental borrowing rate          (256) 
 
 
    Total lease liabilities recognised under IFRS 16 at 29 
     September 2019                                                   545 
                                                                   ====== 
 
 
 
   The following is a reconciliation of the opening lease liabilities 
   to the opening right-of-use assets: 
                                                                         GBPm 
    Total lease liabilities recognised under IFRS 16 at 29 
     September 2019                                                       545 
 
    Reconciling items: 
 
           *    Lease premiums                                              1 
 
           *    Lease incentives                                          (9) 
 
           *    Lease prepayments                                          13 
 
           *    Dilapidations costs                                         1 
 
           *    Impairment recognised                                    (66) 
 
           *    Non-current sub-leases derecognised and recognised as 
                finance lease receivables                                (17) 
 
           *    Current sub-leases derecognised and recognised as 
                finance lease receivables                                 (2) 
 
 
    Total right-of-use assets recognised under IFRS 16 at 
     29 September 2019                                                    466 
                                                                        ===== 
 
 
   13. ADOPTION OF IFRS 16 LEASES (CONTINUED) 
 
   Balance sheet 
 
   The impact on the opening balance sheet is summarised below; 
                                  Closing balance          IFRS16    Opening balance 
                                   sheet at 28 September    impact    sheet at 29 September 
                                   2019                               2019 
                                                    GBPm      GBPm                     GBPm 
    Lease Premiums                                     1       (1)                        - 
    Right-of-use assets                                -       466                      466 
    Lease receivable - 
     non-current                                       -        17                       17 
    Deferred tax asset                                66         5                       71 
    Trade and other receivables                       63      (11)                       52 
    Trade and other payables                       (327)        12                    (315) 
    Lease liabilities - current                        -      (29)                     (29) 
    Lease liabilities - 
     non-current                                       -     (516)                    (516) 
    Provisions                                      (36)        33                      (3) 
 
    Retained reserves                                854      (24)                      830 
 
 
    a   Movement in the opening balance of retained earnings represents 
         the impairment review of GBP66m, offset by the reversal of 
         onerous lease provision of GBP33m, rent review accruals no 
         longer required under IFRS 16 of GBP3m, dilapidations on the 
         right-of-use assets already charged through the income statement 
         of GBP1m, and an increase of GBP5m to the deferred tax asset. 
 
 
   Income statement 
 
   The Group has recognised depreciation and interest costs in the 
   income statement, rather than rental charges for those leases that 
   were previously classified as operating leases. During the 28 weeks 
   ended 11 April 2020, the Group recognised GBP22m of depreciation 
   charges and GBP10m of interest costs in respect of these leases. 
   In addition, the Group has recognised an impairment of GBP16m as 
   a separately disclosed item for the 28 weeks ended 11 April 2020. 
 
   Cash flow statement 
 
   Whilst the implementation of IFRS 16 has no impact on cash flow, 
   there is a requirement to present lease payments split between principle 
   and interest as shown in the cash flow statement. 
 
 
   Right-of-use assets 
     The Group leases many assets, including properties and motor 
     vehicles. Details of the movement in the value of right-of-use 
     assets from transition, at 29 September 2019, to 11 April 
     2020 are as follows: 
                                              Properties        Motor             Total 
                                                             vehicles 
                                                    GBPm         GBPm              GBPm 
                                             -----------   ----------   --------------- 
 
    At transition to IFRS 16                         463            3               466 
 
    Additions                                          6            1                 7 
    Depreciation provided during the period         (21)          (1)              (22) 
    Impairment                                      (16)            -    (16) 
 
 
    At 11 April 2020                                 432            3               435 
                                             ===========   ==========   =============== 
 
 
 
 
 
   13. ADOPTION OF IFRS 16 LEASES (CONTINUED) 
 
   Impairment of right-of-use assets 
   Right-of-use assets are reviewed for impairment by comparing site 
   recoverable amounts to their carrying values. Any resulting impairment 
   relates to sites with poor forecast trading performance, where their 
   estimated recoverable amount is insufficient to justify their current 
   net book value. For practical reasons the impairment review of right-of-use 
   assets is performed simultaneously with the impairment review of 
   short leasehold assets classified within property, plant and equipment, 
   as an individual site is a single cash generating unit. 
 
   Recoverable amount is estimated with reference to a value in use 
   calculation which uses forecast trading performance cash flows, 
   discounted by applying a pre-tax discount rate of 8.1%. At the interim 
   date, the value in use calculations include the estimated impact 
   of the expected closure period and subsequent build up in trade 
   post re-opening, as a direct result of the Covid-19 pandemic. 
 
   Critical accounting judgements 
   The impairment review is determined using management judgement of 
   future profitability. Where sites have been impacted by expansionary 
   capital investment in the preceding 12 months, management judgement 
   is used to determine the most appropriate source of post investment 
   profitability which is likely to be based on a post investment forecast, 
   as the current year trading performance includes a period of closure. 
 
   Lease liabilities 
   At 11 April 2020, the lease liabilities recognised are as follows:                                      2020 
                                     11 April 
                                         GBPm 
                                    --------- 
 
    Current lease liabilities            (52) 
    Non-current lease liabilities       (491) 
 
                                        (543) 
                                    ========= 
 
 
   14. RELATED PARTY TRANSACTIONS 
 
 During the period, the Group has held a number of property lease 
  agreements with its associate companies, 3Sixty Restaurants Limited 
  and Fatboy Pub Company Limited. 
 
  Since becoming associates of the Group, the total value of rent 
  charged on these properties in the 28 weeks to 11 April 2020 was 
  GBP375,000 (2019 28 weeks GBP160,000, 2019 52 weeks GBP447,000). 
  In addition, sales of goods and services of GBP343,000 (2019 28 
  weeks GBP342,000, 2019 52 weeks GBP650,000) and loans of GBPnil 
  (2019 28 weeks GBP175,000, 2019 52 weeks GBP175,000) were made to 
  the associates during the 28 weeks to 11 April 2020. The balance 
  due from associates at 11 April 2020 was GBP297,000 (13 April 2019 
  GBP254,000, 28 September 2019 GBP288,000). 
 
  There have been no other related party transactions during the period 
  or the previous period requiring disclosure under IAS 24 Related 
  Party Disclosures. 
 
 

15. POST BALANCE SHEET EVENT

Securitised debt

On 11 June 2020 certain amendments and waivers were agreed with Ambac Assurance UK Ltd (as controlling creditor of the secured financing structure) and HSBC (C.I) Trustee (as Trustee of the secured financing structure), to mitigate against the impacts of the Covid-19 pandemic. Under the terms of the agreement, the financial covenant test in respect of the debt service coverage ratio has been waived until July 2021 (in respect of the six month look-back test) and until September 2021 (in respect of the twelve month look-back test). Further key points are: a) the securitised Liquidity Facility can be used to fund debt service costs in June 2020 and September 2020 (up to a maximum amount of GBP100m), with all amounts having to be repaid by March 2021; b) the requirement to spend a minimum amount of capital maintenance expenditure is waived for periods of closure due to Covid-19. The Group is also committed to provide funding into the securitised financing structure, of up to GBP100m in line with drawings under the securitised Liquidity Facility.

Liquidity facility

On 15 June 2020 the facility was drawn in an amount of GBP47m to fund debt service costs of the securitisation Issuer, in line with the waivers obtained on 11 June 2020.

Securitised funding

On 16 June 2020 the Group subscribed for additional equity in Mitchells & Butlers Retail Limited in the amount of GBP47m, in line with the commitments made on 11 June 2020 to provide additional funding to the securitsation structure.

Unsecured credit facilities

As at 11 April 2020 the Group held three unsecured committed revolving credit facilities of GBP50m each (expiring on 31 December 2020) and unsecured uncommitted revolving credit facilities of GBP5m, available for general corporate purposes. The amount drawn at 11 April 2020 is GBP150m (13 April 2019 GBPnil, 28 September 2019 GBPnil).

On 11 June 2020 the Group entered into the following facilities: a) extension of maturity date under the three existing unsecured committed revolving credit facilities of GBP50m each to 31 December 2021 and; b) two new unsecured committed term loan facilities of GBP50m each with a maturity date of 31 December 2021, structured under the Government backed Coronavirus Large Business Interruption Loan Scheme.

On 17 June 2020 the two term loans were fully drawn for GBP100m, with GBP101m of the existing revolving credit facility drawings being repaid on the same date.

Alternative Performance Measures

The performance of the Group is assessed using a number of Alternative Performance Measures (APMs).

The Group's results are presented both before and after separately disclosed items. Adjusted profitability measures are presented excluding separately disclosed items as we believe this provides both management and investors with useful additional information about the Group's performance and supports a more effective comparison of the Group's trading performance from one period to the next. Adjusted profitability measures are reconciled to unadjusted IFRS results on the face of the income statement with details of separately disclosed items provided in note 4.

The Group's results are also described using other measures that are not defined under IFRS and are therefore considered to be APMs. These APMs are used by management to monitor business performance against both shorter term budgets and forecasts but also against the Group's longer-term strategic plans.

APMs used to explain and monitor Group performance include:

 
 APM                   Definition                                    Source 
--------------------  --------------------------------------------  ------------------ 
 EBITDA                Earnings before interest, tax, depreciation   Group condensed 
                        and amortisation.                             income statement 
--------------------  --------------------------------------------  ------------------ 
 Adjusted EBITDA       Annualised EBITDA on a 52 week basis          Group condensed 
                        before separately disclosed items             income statement 
                        is used to calculate net debt to EBITDA. 
--------------------  --------------------------------------------  ------------------ 
 EBITDA before         EBITDA before separately disclosed            Group condensed 
  adjusted items        items.                                        income statement 
--------------------  --------------------------------------------  ------------------ 
 Operating profit      Earnings before interest and tax.             Group condensed 
                                                                      income statement 
--------------------  --------------------------------------------  ------------------ 
 Adjusted operating    Operating profit before separately            Group condensed 
  profit                disclosed items.                              income statement 
--------------------  --------------------------------------------  ------------------ 
 Like-for-like         Like-for-like sales growth reflects           Group condensed 
  sales growth          the sales performance against the             income statement 
                        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. 
--------------------  --------------------------------------------  ------------------ 
 Adjusted earnings     Earnings per share using profit before        Note 7 
  per share (EPS)       separately disclosed items. 
--------------------  --------------------------------------------  ------------------ 
 Net debt : Adjusted   The multiple of net debt including            Note 9 
  EBITDA                lease liabilities, as per the balance         Group condensed 
                        sheet compared against 52 week EBITDA         income statement 
                        before separately disclosed items 
                        which is a widely used leverage measure 
                        in the industry. 
--------------------  --------------------------------------------  ------------------ 
 Free cash flow        Calculated as net movement in cash            Condensed cash 
                        and cash equivalents before the movement      flow statement 
                        on unsecured revolving credit facilities. 
                        This measure is no longer used as 
                        an APM, see explanation below. 
--------------------  --------------------------------------------  ------------------ 
 Return on capital     Return generating capital includes 
                        investments made in new sites and 
                        investment in existing assets that 
                        materially changes the guest offer. 
                        Return on investment is measured by 
                        incremental site EBITDA following 
                        investment expressed as a percentage 
                        of return generating capital. Return 
                        on investment is measured for four 
                        years following investment. Measurement 
                        commences three periods following 
                        the opening of the site. 
--------------------  --------------------------------------------  ------------------ 
 

A. Like-for-like sales

The sales this year compared to the sales in the previous year of all UK managed sites that were trading in the two periods being compared, expressed as a percentage. This widely used industry measure provides better insight into the trading performance than total revenue which is impacted by acquisitions and disposals. As like-for-like sales can only be measured when sites are trading the measure ceases in week 24 the last full week of trade before the closure of the estate in response to COVID-19.

 
                                                           2020       2019   Year-on 
                                                       24 weeks   24 weeks     -year 
                                 Source                    GBPm       GBPm         % 
                                -------------------   ---------  ---------  -------- 
 
                                 Condensed 
 Reported revenue                 income statement        1,039      1,186   (12.4%) 
 Less non like-for-like 
  sales and income subsequent 
  to closure                                              (114)      (269)   (57.6%) 
                                                      ---------  ---------  -------- 
 Like-for-like sales                                        925        917      0.9% 
 
 

Drink and food sales growth HY 2020

 
                                             2020       2019   Year-on 
                                         24 weeks   24 weeks     -year 
                              Source         GBPm       GBPm         % 
                             --------   ---------  ---------  -------- 
 
 Drink like-for-like sales                  420.3      419.0      0.3% 
 Food like-for-like sales                   481.7      475.4      1.3% 
 Other like-for-like sales                   23.4       22.4 
                                        ---------  ---------  -------- 
 Total like-for-like sales                  925.4      916.8      0.9% 
 
 
 

B. Adjusted Operating Profit

Operating profit before separately disclosed items as set out in the Group Income Statement. Separately disclosed items are those which are separately identified by virtue of their size or incidence (see note 4). Excluding these items allows a better understanding of the trading of the Group.

 
                                                               2020       2019     Year-on 
                                                           28 weeks   28 weeks       -year 
                                     Source                    GBPm       GBPm           % 
                                    -------------------   ---------  ---------  ---------- 
 
                                     Condensed 
 Operating (loss)/profit              income statement         (51)        140      (136%) 
 Separately disclosed items          Note 4                     159         11           - 
 Adjusted operating (loss)/profit                               108        151       (28%) 
                                     Condensed 
 Reported revenue 28 weeks            income statement        1,039      1,186       (12%) 
                                                          ---------  ---------  ---------- 
 Adjusted operating margin                                    10.4%      12.7%   (2.3ppts) 
                                                          =========  =========  ========== 
 

C. Adjusted Earnings per Share

Earnings per share using profit before separately disclosed items. Separately disclosed items are those which are separately identified by virtue of their size or incidence. Excluding these items allows a better understanding of the trading of the Group.

 
                                                            2020       2019   Year-on 
                                                        28 weeks   28 weeks     -year 
                                  Source                    GBPm       GBPm         % 
                                 -------------------   ---------  ---------  -------- 
 
                                  Condensed 
 (Loss)/profit for the period      income statement        (107)         61    (275%) 
 Add back separately disclosed    Condensed 
  items                            income statement          138          8 
 Adjusted (loss)/profit                                       31         69     (55%) 
 Weighted average number 
  of shares                       Note 7                     428        428         - 
 Adjusted earnings per share                                7.2p      16.1p     (55%) 
                                                       =========  =========  ======== 
 

D. Net Debt: Adjusted EBITDA

The multiple of net debt as per the balance sheet compared against 52 week EBITDA before separately disclosed items which is a widely used leverage measure in the industry. From FY 2020 leases are included in net debt following adoption of IFRS16. Adjusted EBITDA is used for this measure to prevent distortions in performance resulting from separately disclosed items.

Due to the closure period we do not have a representative 52 week EBITDA measure to calculate this metric and therefore it has not been used in these financial statements.

E. Free Cash Flow

Free cash flow excludes the cash movement on unsecured revolving credit facilities and was previously presented to allow understanding of the cash movements excluding short term debt. This measure was no longer used in the FY 2019 financial statements, with the reconciliation provided for the prior year purposes only and continues not to be used an alternative performance measure.

F. Return on capital

Return generating capital includes investments made in new sites and investment in existing assets that materially changes the guest offer. Return on investment is measured by incremental site EBITDA following investment expressed as a percentage of return generating capital.

Due to the enforced closure of sites in response to Covid-19 outbreak we are no longer able to accurately measure return on capital as all sites are impacted.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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