TIDMMAB
RNS Number : 6404Z
Mitchells & Butlers PLC
17 May 2023
MITCHELLS & BUTLERS PLC
LEI no: 213800JHYNDNB1NS2W10
17 May 2023
HALF YEAR RESULTS
(For the 28 weeks ended 8 April 2023)
Highlights
Strong like-for-like sales (a) growth of 8.5% versus HY 2022,
- built on volume growth in both food and drink
Costs remain a challenge but medium-term cost outlook is now
- improving
Capital investment and Ignite programme continue to drive
- sales growth and cost efficiencies
Reported results
Total revenue of GBP1,282m (HY 2022 GBP1,159m)
- Operating profit of GBP99m (HY 2022 GBP121m)
Profit before tax of GBP40m (HY 2022 GBP57m)
-
-
Basic earnings per share of 5.4p (HY 2022 7.7p)
-
Trading results
Adjusted operating profit(a) GBP100m (HY 2022 GBP120m)
-
Adjusted earnings per share(a) 5.5p (HY 2022 7.6p)
-
Balance sheet and cash flow
Cash inflow before bond amortisation of GBP10m (HY 2022 inflow
- GBP22m)
Cash balances on hand of GBP142m at half year end (HY 2022
- GBP194m) with undrawn unsecured committed financing facilities
of GBP150m to February 2024
Net debt(a) reduced to GBP1,193m (HY 2022 GBP1,253m), excluding
- GBP467m of IFRS 16 lease liabilities (HY 2022 GBP483m)
Phil Urban, Chief Executive, commented:
"We are pleased to report a strong first half performance
delivering continued like-for-like sales (a) growth and
outperformance (b) against the market.
The trading environment for the hospitality sector remains
challenging with inflationary costs putting pressure both on the
industry's margins and disposable income of our guests. However, we
are encouraged by the resilience of trade to date, including the
most recent six weeks at 8.9% like-for-like sales (a) growth, and
also by early signs of the medium-term cost outlook improving.
We remain focused on our Ignite programme of initiatives and our
successful capital investment programme, driving cost efficiencies
and increased sales. Combined with our diverse portfolio of
established brands, value proposition, enviable estate locations
and talented people, we believe we are well positioned to continue
to outperform the sector (b) .
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 presentation held today at 9:00am accessible by
phone on 020 3936 2999, access code: 388030 and at
https://www.netroadshow.com/events/login?show=b62bae44&confId=50883
The slides will also be available on the website at www.mbplc.com
The replay will then be available at
http://www.mbplc.com/hy2023/analystspresentation
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 6112
George Kitchen - Investor Relations +44 (0)121 498 6514
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
We have been encouraged by the strength of trading throughout
the first half of the year with the return to office working
continuing, city centres becoming stronger, tourist numbers
recovering and guests across the country continuing to enjoy the
hospitality sector. This has continued since the period end with
trading over the past six weeks, including the benefit of the
Easter weekend in both years and all at full rates of VAT,
delivering like-for-like sales (a) growth of 8.9%. This gives us
optimism for the future, although we continue to remain mindful of
the cost-of-living challenge facing our guests.
There are indications that cost inflation headwinds across the
supply chain are starting to abate, although they continue to
present a challenge in the near-term. Energy prices have fallen
back materially from earlier market highs and early evidence
suggests that cost increases in other areas, notably food, will
soon start to slow. Our cost guidance for the current year remains
in line with that previously announced as we anticipate an
inflationary cost headwind across our c.GBP1.8 billion cost base at
the lower end of the 10-12% range before mitigation. We continue to
work hard to mitigate as many of these pressures as we can through
both driving sales growth and identifying and implementing cost
efficiencies. This should allow margins to start to rebuild towards
pre-covid levels.
Therefore, whilst the environment remains challenging, we are
pleased with the momentum the business carries into the second half
of the year. This provides confidence that we are tracking ahead of
management's previous expectations in both the short and the medium
term.
BUSINESS REVIEW
Total sales across the period were GBP1,282m reflecting 10.6%
growth on HY 2022, supported by increases in both volume and spend
per head. Like-for-like sales(a) increased by 8.5%. Operating
profit of GBP99m (HY 2022 GBP121m) was generated, with adjusted
operating profit (a) of GBP100m. Prior year figures include GBP53m
of government support initiatives, including GBP43m benefit from
the temporary reduction in the rate of VAT on food and
non-alcoholic drink sales.
We made a strong start to the year with like-for-like sales (a)
growth of 6.5% over the first ten weeks, primarily driven by drink
sales growth. As expected, growth significantly increased in the
final five weeks of the first quarter due principally to last year
being impacted by the emergence of the Omicron variant which
resulted in a downturn in activity across much of the festive
season. Like-for-like sales (a) for the quarter were up 10.4%
against FY 2022.
Sales remained resilient through the second quarter with strong
performances on key trading dates and from our drink-led, city
centre pubs, especially in London, that are benefitting from a
further return of office working and tourists visiting. Across the
quarter, we recorded like-for-like sales (a) growth of 6.4%,
comprising drink sales growth of 9.9% and food sales growth of
5.2%.
Against FY 2019, like-for-sales(a) grew 9.7% over the first
half, with growth driven by spend-per-head as volumes remain below
pre-Covid levels.
Comparing our sales performance versus the wider market, we are
currently outperforming the Coffer Peach tracker by between 2-3% on
like-for-like sales(a) each month.
The uncertainty and cost challenges the industry has faced has
had an unavoidable impact on market supply with a 4.3% net decline
in pubs and restaurants in the year to March 2023 and a 12.0% net
decline since the start of the Covid-19 pandemic in March 2020 (CGA
Outlet Index April 2023). Independent and tenanted businesses have
made up the substantial majority of the net closures. Given our
strong estate and portfolio of brands, we believe that we are well
placed to continue to benefit from these changes in the competitive
landscape.
OUR STRATEGIC PRIORITIES
The fundamental strengths of our business provide a strong
platform for the future. We have an 83% freehold and long leasehold
estate, with recognised and diversified brands across a broad range
of consumer occasions, demographics and locations, and an
experienced and proven management team. We remain focused on the
strategic pillars which formed the foundations of our strong
performance both before and after the pandemic, and which are
equally relevant to the current trading environment. Our priority
is to grow the business back to, and beyond, the levels of profit
that we were achieving before Covid-19 and the war in Ukraine.
We provide value for money to our guests, working hard to
protect entry level items where we can and introducing more premium
trade-up options. We regularly assess prices across the market and
respond accordingly. The benefit of our size and scale, our ability
to continue to invest in our capital programme and the mitigation
generated through Ignite allow us to use pricing tactically and to
remain competitive. This, combined with market-beating guest net
sentiment scores, leaves us well-positioned for further market
share gains.
Our Ignite programme of work remains at the core of our
long-term value creation plans and we are working on a large number
of fresh initiatives, alongside those already implemented in the
business. We continue to focus particularly on margin additive
initiatives which improve efficiency and productivity, such as
through better labour scheduling, cost-mitigating procurement
strategies and energy consumption reduction.
Following successful trials, the auto-scheduling project has now
been fully rolled out across the estate. This assists our site
managers by producing automatically generated team member rosters
to help ensure we have the right people on shift at the right time,
to drive sales at peak times and reduce costs at quieter times.
Based on encouraging early results, we believe there is significant
further opportunity over the second half and into FY 2024.
We have now completed the installation of voltage optimisers
into the majority of the estate and we have achieved c.6%
electricity consumption reductions as a result. Our trained energy
ambassadors have completed another round of energy audits and
further trials of internet-connected control devices to lower
electricity and gas consumption have begun.
Alongside efficiency improvements, we have a number of projects
focused on sales growth and one of the most exciting new Ignite
workstreams launched in the first half is focusing on further
driving a 'sales and volume culture' across the organisation,
including each site, district and brand targeting select products
each quarter, to maximise incremental sales. We remain confident in
our ability to deliver long-term sustained business improvements
and efficiencies through the Ignite programme.
Success in hospitality is inextricably linked to customer
satisfaction, with the correlation between superior guest review
scores and stronger like-for-like sales irrefutable. Strengthening
these scores remains a key focus throughout the organisation, from
frontline team members through to the Board. Scores over recent
months have been encouraging, especially in the context of the cost
pressures our guests are facing which means, more than ever, every
guest experience has to delight. We have risen to that challenge,
renewing our guest focus with Ignite projects such as Guest
Obsessed, where functional experts support our frontline teams with
targeted training. We have brands now regularly scoring 4.5 or
above out of 5.0 and, as a collective, we are outperforming our
defined market on guest satisfaction.
We are continuing to invest in our digital strategy which
focuses on building organisational capabilities to allow for quick
activation of new digital services as consumer behaviours change,
allowing us to be at or near the forefront of advances in the
sector. In recent months we have completed the deployment of
automated stock replenishment across our businesses, whilst
launching a prep-and-par system which supports team members in
identifying what food to prepare each day based on site specific
trading patterns. Within the e-commerce arena, a variety of
enhancements have been made to enrich our online booking and
ordering services, for example a new Innkeepers Collection booking
website, the acceptance of new payment methods on our
order-at-table platform and a streamlined app registration
experience within Browns. We remain committed to progressing
projects that strengthen data-driven decision-making across the
organisation.
Our capital programme is building and delivering significant
value by improving the competitive position of our pubs and
restaurants within their local markets. Over the first half, we
have completed 90 investment projects comprising 81 remodels, 3
conversions and 6 acquisitions. We are continuing to see strong
performances from our investment projects. The conversion programme
includes the trial of Browns in suburbia, stretching the brand
beyond its usual high street location. The first trial site opened
in August 2022 and the second opened in December 2022, with both
sites performing strongly. We are also keen to take advantage of
new opportunities as they arise including opening a new Browns
restaurant within a Marriott hotel in Cardiff in February 2023 and
a new Innkeepers Collection lodge and Miller & Carter in
Sheffield in April 2023. Arrowsmiths, our new competitive
socialising darts concept, is now established within two O'Neill's
sites, Solihull and Watford, and providing a strong return from
secondary space.
In August 2018, we acquired an initial 40% stake in 3Sixty
Restaurants Limited, owners of Ego Restaurants, and we will acquire
the remaining 60% in June 2023. Ego is a collection of
Mediterranean inspired pubs and restaurants where guests can enjoy
freshly cooked food, cocktails, cask ales and wine from across the
continent. We have built a good rapport with the Ego team, grown
our understanding of their business and witnessed their impressive
trading record. Ego currently has 26 sites, including 16 that are
leased from Mitchells & Butlers, and c.1,000 employees. We
currently foresee scope for c.20-30 conversions using the Ego
format over the next three to five years.
PEOPLE
Our people are fundamental to the delivery of great experiences
for our guests. The recruitment challenges facing many industries
are well-documented and the hospitality industry as a whole has
been disproportionally impacted by labour shortages in recent
years. Our overall employee numbers recovered to pre-pandemic
levels towards the end of FY 2022 and have stabilised through the
first half of the current year. Whilst the recruitment landscape
remains challenging, in particular for kitchen teams, the market is
returning to a more normal pattern with greater numbers of vacancy
applications being received. Team turnover has now started to trend
downwards and, whilst still well above pre-pandemic levels, this is
encouraging as stable teams are crucial to the delivery of high
quality guest experiences. It is also very encouraging to see that
employee engagement scores remain at very high levels. Growing and
developing our own talent internally has never been more important
and we have had over 2,500 apprenticeship starts over the last 12
months. We are delighted that our apprentice programmes were
recognised at the 2023 learning excellence awards winning the
retail, hospitality, sports and leisure category.
SUSTAINABILITY
We are committed to reducing the environmental impact of our
business and the Board has challenging targets to drive continued
momentum in this area. We have committed to:
- Net Zero emissions by 2040, including scope 1, 2 and 3
emissions; we submitted our roadmap to net zero for Science Based
Target Initiative approval in March 2023. We are founding members
of the Zero Carbon Forum and are committed to playing our part in
decarbonising the hospitality industry as a whole.
- Zero operational waste to landfill by 2030; we have made
strong progress in this area in recent years and currently divert
97% of operational waste away from landfill. We have underpinned
this ambition with a recycling rate target of 80% over the same
period.
- 50% reduction in food waste by 2030; aligned with the UN
Sustainable Development Goals we will halve food waste in our
supply chain and in sites by 2030.
We have a number of initiatives underway to support these
ambitions. Food emissions are the largest contributor to our carbon
footprint and we are collaborating with suppliers to reduce product
specific emissions and formulate menus with lower-emission dishes,
as seen in All Bar One and Harvester. We are developing a
transition plan to remove gas from our businesses through the
electrification of our kitchens, continue to examine alternative
heating solutions such as ground source heat pumps and trials of
onsite renewable energy generation using solar panels begin in the
second half of this year. We have reduced electricity consumption
through the installation of voltage optimisers across the majority
of the estate in the first half of this year, and we also have an
established kitchen refurbishment programme which has saved over
1,400 pieces of kitchen equipment from going to landfill since its
inception.
Our sustainability strategy also has a strong focus on the
positive impact we have on people and communities. We are committed
to enhancing the wellbeing of our own people, and we have an
established nutritional strategy aiming to provide balanced choices
and information to guests. We work with Fareshare and Too Good To
Go, through whom we have now saved over one million meals from
going to waste, and we also have charitable partnerships with
Shelter and Social Bite through which we are helping to tackle the
issue of homelessness in the UK.
Mitchells and Butlers was delighted to be voted 'Best
Sustainable Pub Company' at the 2023 Publican Awards, endorsing the
good progress we have made in this area.
FINANCIAL REVIEW
On a statutory basis, profit before tax for the half year was
GBP40m (HY 2022 GBP57m), on sales of GBP1,282m (HY 2022
GBP1,159m).
The Group Income Statement discloses adjusted profit and
earnings per share information that excludes separately disclosed
items to allow a more effective comparison of the Group's trading
performance from one period to the next. Separately disclosed items
are those which are separately identified by virtue of their size
or nature.
Statutory Adjusted (a)
HY 2023 HY 2022 HY 2023 HY 2022
GBPm GBPm GBPm GBPm
Revenue 1,282 1,159 1,282 1,159
Operating profit 99 121 100 120
Profit before tax 40 57 41 56
Earnings per share 5.4p 7.7p 5.5p 7.6p
Operating margin 7.7% 10.4% 7.8% 10.4%
At the end of the period, the total estate comprised 1,717 sites
in the UK and Germany of which 1,645 are directly managed.
Revenue
Total revenue of GBP1,282m (HY 2022 GBP1,159m) reflects a strong
period of trading, albeit somewhat disrupted by industrial action
on national transport systems. As expected, the first half was
boosted by the comparative period l ast year being adversely
impacted by the emergence of the Omicron variant which resulted in
a downturn in activity across much of the festive season. However,
prior year figures also include government support, as detailed
later in this statement.
Sales comparisons unless otherwise stated are to the same period
in FY 2022.
Like-for-like sales (a) in the first half increased by 8.5%,
comprising an increase in like-for-like food sales (a) of 5.8% and
of like-for-like drink sales (a) of 12.8%, with both food and drink
volumes in growth.
Like-for-like sales (a) :
Wks 1-15 Wks 16-28 Wks 1-28
Q1 Q2 H1
Food 6.4% 5.2% 5.8%
Drink 15.5% 9.9% 12.8%
Total 10.4% 6.4% 8.5%
Total excl. 15.1% 10.3% 12.8%
FY 2022 VAT
benefit
Against FY 2019, like-for-like sales(a) growth across the first
half was 9.7%.
The strength of recent trading is best represented across the
six weeks from 2 April, including the Easter weekend in both years
and all with full rates of VAT in force, during which like-for-like
sales grew by 8.9%. For purely the five weeks since the period end,
like-for-like sales(a) were lower at 6.9%, reflecting the mismatch
of Easter between the two years.
Separately disclosed items
Separately disclosed items are identified due to their size or
nature to help the reader form a view of overall and adjusted
trading.
There was a GBP1m separately disclosed item in the period.
GBP19m has now been received from HMRC relating to VAT on gaming
machine income for the period 2005 to 2012. An estimate of GBP20m
for the amount receivable was previously recognised in the 52 weeks
ended 25 September 2021.
Operating profit and margins (a)
Adjusted operating profit (a) for the first half was GBP100m (HY
2022 GBP120m), a decrease of 16.7% on HY 2022.
Statutory operating margin of 7.7% was 2.7ppts lower than last
year.
Despite a strong sales performance, operating profit and margin
were lower overall than HY 2022 due primarily to government support
in the prior year and high cost inflation across the supply chain,
particularly in the areas of energy, wages and food costs.
We now anticipate an aggregate cost headwind for this year to be
at the lower end of the 10-12% range previously quoted on our cost
base of c.GBP1.8 billion. We are working very hard to mitigate as
much of the impact of these cost increases as we can, both through
driving sales growth and through identifying and implementing
further cost efficiencies, all executed under our Ignite programme
of work.
Government Support
Following the outbreak of the Covid-19 global pandemic in early
2020 and the subsequent enforced closure of the business, we
received a number of different areas of support from both local and
central Government in the UK and in Germany. Over the comparative
period in HY 2022, Government support of GBP53m was received.
Principally, the Group benefitted from a reduction in the rate of
VAT from 20% to 5% on non-alcoholic sales which was introduced by
the UK Government on 15 July 2020 and continued until 30 September
2021. Following this a rate of 12.5% applied for the subsequent six
months until 31 March 2022. The estimated impact of this on food
and drink revenue in the comparative period in HY 2022 is GBP43m.
Other support comprised Local Authority Grants GBP3m, business
rates relief GBP5m, grants for loss of profits in Germany GBP1m and
apprenticeship incentives GBP1m.
Interest
Net finance costs of GBP58m (HY 2022 GBP63m) for the half year
were GBP5m lower than the same period last year, with annual
amortisation reducing the value of securitised debt.
The net pensions finance charge was GBP1m (HY 2022 GBP1m). The
charge for the full year is expected to be GBP3m.
Earnings per share
Basic earnings per share, after the separately disclosed items
described above, were 5.4p (HY 2022 7.7p), adjusted earnings per
share (a) were 5.5p (HY 2022 7.6p).
The basic weighted average number of shares in the period was
595m and the total number of shares issued at the balance sheet
date was 597m.
Cash flow
HY 2023 HY 2022
GBPm GBPm
EBITDA before movements in the valuation
of the property portfolio 168 191
Non-cash share-based payment and pension
costs and other 4 2
Operating cash flow before movements
in working capital and additional pension
contributions 172 193
Working capital movement 27 2
Pension deficit contributions (7) (23)
-------- --------
Cash flow from operations 192 172
Capital expenditure (98) (58)
Net finance lease principal payments (26) (33)
Interest on lease liabilities (11) (11)
Net interest paid (46) (50)
Other (1) 2
Net cash flow before bond amortisation 10 22
Mandatory bond amortisation (57) (54)
-------- --------
Net cash flow (47) (32)
The business generated GBP168m of EBITDA before movements in the
valuation of the property portfolio.
The working capital movement of GBP27m in the first half was
driven primarily by the following. Firstly, there was a GBP20m
reduction in receivables due to the receipt of cash in relation to
an historic gaming machine VAT claim with HMRC. This was partially
offset by GBP13m of main plan pension payments now paid into
blocked escrow accounts and recognised within other receivables.
Secondly, there was a GBP15m increase in the year-on-year VAT
liability as a result of the reduced rate of VAT of 12.5% on
non-alcoholic sales in the prior year, which returned to 20% in
April 2022.
Capital expenditure was GBP40m higher than prior year (HY 2022
GBP58m). Supply issues in terms of material procurement, contractor
availability and the timing on granting of planning consent have
eased somewhat although they remain a limiting factor.
Before mandatory bond amortisation, cash inflow was GBP10m (HY
2022 inflow GBP22m). After mandatory bond amortisation of GBP57m
(including net impact of currency swaps), cash outflow was GBP47m
(HY 2022 outflow GBP32m).
Capital expenditure
Capital expenditure of GBP98m (HY 2022 GBP58m, including GBP2m
intangible assets) comprises GBP95m from the purchase of property,
plant and equipment and GBP3m in relation to the purchase of
intangible assets. Of the GBP95m spend, GBP58m relates to the
completion of acquisitions, conversions and remodels with the
balance being essential maintenance and infrastructure.
HY 2023 HY 2022
GBPm # GBPm #
--------------------------------- ----- --- ----- ---
Maintenance and infrastructure 40 19
Remodels - refurbishment 45 81 24 57
Conversions 4 3 2 3
Acquisitions - freehold 8 4 13 3
Acquisitions - leasehold 1 2 - -
Total return generating capital
expenditure 58 90 39 63
Total capital expenditure 98 58
The four freehold acquisitions comprise the purchase of two
sites previously held as leasehold and two new sites.
As a result of supply chain issues noted above, we anticipate
capital expenditure for the current year to be slightly lower than
previously guided, at c.GBP175m.
Pensions
As previously announced, the latest triennial valuation of the
pension schemes, as at 31 March 2022, was completed earlier in the
year with an improvement in the combined actuarial funding position
to a marginal surplus (FY 2019: GBP293m combined deficit). All
future contributions to be made by the company under the agreed
recovery plan to September 2023 are now being paid into blocked
escrow accounts.
Net debt and facilities
Following the adoption of IFRS 16 in FY 2020, leases are now
included in net debt(a) . Net debt(a) at the period end was
GBP1,660m, comprised of GBP1,193m non-lease liabilities and lease
liabilities of GBP467m (HY 2022 GBP1,736m comprised of GBP1,253m
non-lease liabilities and lease liabilities of GBP483m).
In addition to the securitisation, the Group has a GBP150
million unsecured facility expiring in February 2024. Further
details of existing debt arrangements and an analysis of net
debt(a) can be found in Note 10 to the financial statements and at
https://www.mbplc.com/infocentre/debtinformation/ .
Going Concern
After considering forecasts, sensitivities and mitigating
actions available to management and having regard to risks and
uncertainties, the Directors have a reasonable expectation that the
Group has adequate resources to continue to operate within its
borrowing facilities and covenants for a period of at least 12
months from the date of signing the financial statements. However,
particularly given the requirement to refinance existing unsecured
facilities which expire in February 2024, but also due to the
prevailing uncertainty concerning sales and cost inflation, the
Directors have concluded that a material uncertainty exists which
may cast significant doubt over the Group's ability to trade as a
going concern, in which case it may be unable to realise its assets
and discharge its liabilities in the normal course of business.
Accordingly, the financial statements continue to be prepared on
the going concern basis but with material uncertainty on the
Group's compliance with financial covenants and its liquidity. Full
details are included in Note 1.
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 25 weeks of the
year); and
- The interim management report includes a fair review of
the information required by DTR 4.2.8R (disclosure of related
parties' transactions and changes therein).
This responsibility statement was approved by the Board of
Directors on 16 May 2023 and is signed on its behalf by:
Tim Jones
Chief Financial Officer
16 May 2023
Definitions
a - The Directors use a number of alternative performance
measures (APMs) that are considered critical to aid the
understanding of the Group's performance. Key measures are
explained later in this announcement.
b - As measured by the Coffer Peach Business Tracker.
GROUP CONDENSED INCOME STATEMENT
for the 28 weeks ended 8 April 2023
2023 2022 2022
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 1,282 1,282 1,159 1,159 2,208 2,208
Operating costs
before
depreciation,
amortisation
and movements
in the valuation
of the property
portfolio (1,114) (1,115) (970) (970) (1,836) (1,836)
Share in
associates
results 1 1 1 1 1 1
Net profit
arising on
property
disposals - - - 1 - 1
EBITDA (b)
before movements
in the valuation
of the property
portfolio 169 168 190 191 373 374
Depreciation,
amortisation
and movements
in the valuation
of the property
portfolio (69) (69) (70) (70) (133) (250)
----------- -------- ----------- ---------- ----------- ----------
Operating
profit 100 99 120 121 240 124
Finance costs 5 (60) (60) (63) (63) (115) (115)
Finance income 5 2 2 - - 1 1
Net pensions
finance charge 5,11 (1) (1) (1) (1) (2) (2)
----------- -------- ----------- ---------- ----------- ----------
Profit before
tax 41 40 56 57 124 8
Tax
(charge)/credit 6 (8) (8) (11) (11) (17) 5
----------- -------- ----------- ---------- ----------- ----------
Profit for
the period 33 32 45 46 107 13
=========== ======== =========== ========== =========== ==========
Earnings per
ordinary share
: 7
Basic 5.5p 5.4p 7.6p 7.7p 18.0p 2.2p
Diluted 5.5p 5.4p 7.6p 7.7p 18.0p 2.2p
a Separately disclosed items are explained and analysed in note
4.
b Earnings before interest, tax, depreciation, amortisation and
movements in the valuation of the property portfolio.
All results relate to continuing operations.
GROUP CONDENSED STATEMENT OF COMPREHENSIVE INCOME
for the 28 weeks ended 8 April 2023
2023 2022 2022
28 weeks 28 weeks 52 weeks
Notes GBPm GBPm GBPm
------------ ------------ ----------
(Unaudited) (Unaudited) (Audited)
Profit for the period 32 46 13
Items that will not be reclassified
subsequently to profit or loss:
Unrealised loss on revaluation of
the property portfolio - - (187)
Remeasurement of pension liabilities 11 36 29 41
Tax relating to items not reclassified 6 (9) (7) 32
------------ ------------ ----------
27 22 (114)
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation
of foreign operations - - 2
Cash flow hedges:
- (Losses)/gains arising during the
period (46) 61 180
- Reclassification adjustments for
items included in profit or loss 29 13 1
Tax relating to items that may be
reclassified 6 4 (19) (45)
------------ ------------ ----------
(13) 55 138
Other comprehensive income after
tax 14 77 24
Total comprehensive income for the
period 46 123 37
============ ============ ==========
GROUP CONDENSED BALANCE SHEET
8 April 2023 2023 2022 2022
8 April 9 April 24 September
Notes GBPm GBPm GBPm
--------------- --------------- ------------------
ASSETS (Unaudited) (Unaudited) (Audited)
Goodwill and other intangible
assets 8 15 13 14
Property, plant and equipment 8 4,235 4,450 4,194
Right-of-use assets 9 338 368 339
Interests in associates 7 6 6
Finance lease receivables 12 13 12
Other receivables 11 25 - -
Deferred tax asset 4 3 4
Derivative financial instruments 12 32 35 56
--------------- --------------- ------------------
Total non-current assets 4,668 4,888 4,625
--------------- --------------- ------------------
Inventories 27 23 23
Trade and other receivables 88 58 90
Current tax assets - 1 1
Finance lease receivables 1 1 1
Derivative financial instruments 12 4 - 4
Cash and cash equivalents 10 180 223 207
Total current assets 300 306 326
--------------- --------------- ------------------
Total assets 4,968 5,194 4,951
--------------- --------------- ------------------
LIABILITIES
Pension liabilities 11 (1) (41) (42)
Trade and other payables (457) (352) (408)
Current tax liabilities (1) - -
Borrowings 10 (156) (141) (130)
Lease liabilities 9 (44) (46) (53)
Derivative financial instruments 12 (8) (36) -
Total current liabilities (667) (616) (633)
--------------- --------------- ------------------
Pension liabilities 11 (23) (53) (22)
Borrowings 10 (1,252) (1,368) (1,334)
Lease liabilities 9 (423) (437) (428)
Derivative financial instruments 12 (36) (99) (28)
Deferred tax liabilities (365) (383) (354)
Provisions (10) (10) (9)
Total non-current liabilities (2,109) (2,350) (2,175)
--------------- --------------- ------------------
Total liabilities (2,776) (2,966) (2,808)
--------------- --------------- ------------------
Net assets 2,192 2,228 2,143
=============== =============== ==================
EQUITY
Called up share capital 51 51 51
Share premium account 357 357 357
Capital redemption reserve 3 3 3
Revaluation reserve 1,009 1,150 1,009
Own shares held (5) (4) (5)
Hedging reserve (33) (101) (20)
Translation reserve 15 13 15
Retained earnings 795 759 733
--------------- --------------- ------------------
Total equity 2,192 2,228 2,143
=============== =============== ==================
GROUP CONDENSED STATEMENT OF CHANGES IN EQUITY
for the 28 weeks ended 8 April 2023
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 25 September
2021 (Audited) 51 356 3 1,150 (3) (156) 13 690 2,104
Profit for
the period - - - - - - - 46 46
Other
comprehensive
income - - - - - 55 - 22 77
------- ------- ------------------ ----------------- ------ ------- ----------- -------- ------
Total
comprehensive
income - - - - - 55 - 68 123
Share capital
issued - 1 - - - - - - 1
Purchase of
own shares - - - - (1) - - - (1)
Credit in
respect of
share-based
payments - - - - - - - 2 2
Tax charge
on share-based
payments - - - - - - - (1) (1)
At 9 April
2022
(Unaudited) 51 357 3 1,150 (4) (101) 13 759 2,228
Loss for the
period - - - - - - - (33) (33)
Other
comprehensive
(expense)/income - - - (141) - 81 2 5 (53)
------- ------- ------------------ ----------------- ------ ------- ----------- -------- ------
Total
comprehensive
(expense)/income - - - (141) - 81 2 (28) (86)
Purchase of
own shares - - - - (1) - - - (1)
Credit in
respect of
share-based
payments - - - - - - - 2 2
At 24 September
2022 (Audited) 51 357 3 1,009 (5) (20) 15 733 2,143
Profit for
the period - - - - - - - 32 32
Other
comprehensive
(expense)/income - - - - - (13) - 27 14
------- ------- ------------------ ----------------- ------ ------- ----------- -------- ------
Total
comprehensive
(expense)/income - - - - - (13) - 59 46
Credit in
respect of
share-based
payments - - - - - - - 3 3
At 8 April
2023 51 357 3 1,009 (5) (33) 15 795 2,192
(Unaudited)
======= ======= ================== ================= ====== ======= =========== ======== ======
GROUP CONDENSED CASH FLOW STATEMENT
for the 28 weeks ended 8 April 2023
2023 2022 2022
28 weeks 28 weeks 52 weeks
Notes GBPm GBPm GBPm
---------------------- ------------------- ----------
Cash flow from operations (Unaudited) (Unaudited) (Audited)
Operating profit 99 121 124
Add back/(deduct):
Movement in the valuation of the property
portfolio - - 117
Net profit arising on property disposals - (1) (1)
Depreciation of property, plant and
equipment 8 49 49 93
Amortisation of intangibles 2 2 4
Depreciation of right-of-use assets 9 18 19 36
Cost charged in respect of share-based
payments 3 2 4
Administrative pension costs 11 2 2 4
Share of assoicates results (1) (1) (1)
Operating cash flow before movements
in working capital and additional
pension contributions 172 193 380
Increase in inventories (4) (3) (3)
Decrease/(increase) in trade and other
receivables 1 (10) (19)
Increase in trade and other payables 30 15 42
Decrease in provisions - - (1)
Additional pension contributions 11 (7) (23) (44)
Cash flow from operations 192 172 355
Interest payments (44) (31) (67)
Interest payments on interest rate
swap (6) (19) (33)
Interest receipts on cross currency
swap 3 - 1
Interest payments on cross currency
swap (2) - (1)
Other interest paid - lease liabilities (11) (11) (16)
Interest received 3 - 1
Tax paid - - (2)
---------------------- ------------------- ----------
Net cash from operating activities 135 111 238
---------------------- ------------------- ----------
Investing activities
Purchases of property, plant and equipment (95) (56) (117)
Purchases of intangible assets (3) (2) (5)
Net proceeds from sale of property,
plant and equipment (1) 2 1
Finance lease principal repayments
received 1 1 3
---------------------- ------------------- ----------
Net cash used in investing activities (98) (55) (118)
---------------------- ------------------- ----------
Financing activities
Issue of ordinary share capital - 1 1
Purchase of own shares - (1) (2)
Repayment of principal in respect
of securitised debt 10 (60) (56) (115)
Principal receipts on currency swap 10 11 9 20
Principal payments on currency swap 10 (8) (7) (15)
Cash payments for the principal portion
of lease liabilities (27) (34) (48)
---------------------- ------------------- ----------
Net cash used in financing activities (84) (88) (159)
---------------------- ------------------- ----------
Net decrease in cash and cash equivalents 10 (47) (32) (39)
Cash and cash equivalents at the beginning
of the period 10 190 227 227
Foreign exchange movements on cash (1) (1) 2
Cash and cash equivalents at the
end of the period 10 142 194 190
====================== =================== ==========
Cash and cash equivalents are defined in note 10.
NOTES TO THE INTERIM FINANCIAL INFORMATION
1. GENERAL INFORMATION
Basis of preparation
Mitchells & Butlers Plc (the Company) is a company domiciled in
the UK. These condensed consolidated interim financial statements
(interim financial statements) as at and for the 28 weeks ended
8 April 2023 comprise the Company and its subsidiaries (together
referred to as the Group). The Group is primarily involved in
the hospitality industry providing guests with memorable occasions
serving food and drink across a range of restaurants, pubs and
bars.
This interim financial information has been prepared in accordance
with International Accounting Standard (IAS) 34 Interim Financial
Reporting as adopted within the United Kingdom and should be read
in conjunction with the Group's last annual consolidated financial
statements as at 24 September 2022. They do not include all of
the information required for a complete set of financial statements
prepared in accordance with International Financial Reporting
Standards (IFRS). However, selected explanatory notes are included
to explain events and transactions that are significant to an
understanding of the changes in the Group's financial position
and performance since the last annual financial statements.
These interim financial statements were authorised for issue by
the Company's board of Directors on 16 May 2023.
The information for the 52 weeks ended 24 September 2022 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 IFRS as adopted within the United
Kingdom. The auditor's report on those accounts was not qualified
and did not contain statements under section 498(2) or (3) of
the Companies Act 2006, but did include a section highlighting
a material uncertainty that may cast significant doubt on the
Group and Company's ability to continue as a going concern.
This interim financial information has not been audited or reviewed
by the auditor under the International Standard on Review Engagements
(UK) 2410.
Going concern
Despite some resilience in recent consumer spending, high and
persistent cost inflation, initially in energy, wages and food
costs, but now evident throughout most of the Group's cost base,
has resulted in profits and operating cash flow which are yet
to recover to pre-Covid levels. This casts a degree of uncertainty
as to the future financial performance and cash flows of the Group
and has been considered by the Directors in assessing the ability
of the Group to continue as a going concern.
The Group has two main sources of funding, namely, a secured debt
financing structure and a GBP150m unsecured revolving credit facility
due to expire in February 2024.
Within the secured debt financing structure there are two main
covenants, being the level of net assets and FCF to DSCR. As at
8th April 2023 there was substantial headroom on the net worth
covenant. FCF to DSCR represents the multiple of cash generated
by sites within the structure to the cost of debt service. This
is tested quarterly on both a trailing two quarter and a four
quarter basis. These tests are now being measured at their full
level of a minimum of 1.1 times following expiry of the agreed
waivers and amendments in January 2023.
The unsecured facilities include financial covenants relating
to the ratio of EBITDAR to rent plus interest (at a minimum of
1.5 times) and Net debt to EBITDA (to be no more than 3.0 times)
based on the performance of the unsecured estate, tested at each
Half Year and Full Year date. Unsecured facilities expire in February
2024, within the going concern assessment period, and whilst the
Directors have confidence that it will be possible to renew or
extend the terms of these facilities, that is not directly within
their control.
Full details on debt arrangements, which were agreed in support
of the equity raise in March 2021, can be found in the prospectus
issued with the Open Offer which is available on the Group's website.
In the year ahead the main uncertaint ies are considered to be
the maintenance of growth in sales in the face of pressure on
consumer spending power in an environment of falling real wages,
and the future outlook for cost inflation across the whole of
the cost base. The outlook for these is highly uncertain and will
depend on a number of factors including consumer confidence, global
political developments and supply chain disruptions and government
policy.
1. GENERAL INFORMATION (CONTINUED)
Going concern (continued)
The Directors have reviewed the financing arrangements against a
forward trading forecast in which they have considered the Group's
current financial position. This forecast assumes further growth in
sales. Whilst inflation remains an issue, the increase in costs is
assumed to show some easing over the next year. Under this scenario
the Group is able to stay within all committed facility financial
covenants, with increasing headroom over time, and maintains
sufficient liquidity throughout based on an assumption of
successful refinancing of existing facilities.
The Directors have also considered a severe but plausible
downside scenario covering adverse movements against the base
forward forecast in both sales and cost inflation in which some,
but limited, mitigation activity is taken. In this downside
scenario the Group also retains sufficient liquidity throughout the
period, again based on an assumption of successful refinancing of
existing facilities, and no covenants are breached although there
is no headroom at the fourth quarter test in the current year.
As a result 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 condensed financial statements, and therefore continue to
adopt the going concern assumption in their preparation. However,
given both the prevailing high level of uncertainty concerning both
sales and cost inflation, and the requirement to refinance existing
unsecured facilities within the going concern period, a material
uncertainty exists in particular with respect to the ability to
achieve covenant waivers or amendments, should these be required,
and maintain sufficient liquidity which may cast doubt over the
Group's ability to trade as a going concern. In this case it may be
unable to realise its assets and discharge its liabilities in the
normal course of business.
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 2022.
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 2022. Judgements and estimates for
the interim period remain unchanged.
2. SEGMENTAL ANALYSIS
The Group trades in one business segment (that of operating pubs,
bars 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: 2023 2022 2022
28 weeks 28 weeks 52 weeks
GBPm GBPm GBPm
--------- --------- ---------
Food 681 627 1,166
Drink 557 484 957
Services 43 43 80
Other - Local Authority grants
(UK and Germany) - 4 3
Other - German government grants
for loss of profits - 1 1
Other - Apprenticeship incentives 1 - 1
Total 1,282 1,159 2,208
========= ========= =========
Revenue from services includes rent receivable from unlicensed
properties and leased operations of GBP5m (2022 28 weeks GBP5m,
2022 52 weeks GBP9m).
VAT
In the prior period, the Group benefitted from a reduction in
the rate of VAT from 20% to 12.5% applied for the six month period
from 1 October 2021 until 31 March 2022. The estimated impact of
this on food and drink revenue in the current period is GBPnil
(2022 28 weeks GBP43m, 2022 52 weeks GBP43m).
Government grants
Local Authority grants
During the prior period, following the EU Court ruling on State
Aid aggregation, the Group recognised an additional GBP2m of
Covid-19 support, subject to the individual caps applicable in both
the UK and Germany. In addition, following the outbreak of the
Omicron variant of Covid-19 in the UK in November 2021, the
Government introduced some further grants to help support
businesses in the leisure and hospitality sectors. As a result, a
further GBP1m of grants were recognised.
German Government grants
In the prior period, following the impact of the Omicron
variant, grant claims were made for costs incurred during periods
of significantly lower sales under an extension of the Bridging Aid
scheme.
Apprenticeship incentives
The Group is entitled to claim GBP1,000 for each apprentice
employed, where they are aged 16 to 18, or under 25 and meet
certain other criteria. In prior periods, as part of its response
to the Covid-19 pandemic, the UK Government introduced a scheme to
enable an employer to receive up to an additional GBP3,000 per
apprentice, where the apprentice commenced employment between 1
August 2020 and 31 January 2022. The payment is phased with amounts
due in equal instalments at 90 days and 365 days after employment
commenced and is recognised on receipt of cash.
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
and VAT refund in relation to gaming duty.
4. SEPARATELY DISCLOSED ITEMS (CONTINUED)
2023 2022 2022
28 weeks 28 weeks 52 weeks
Notes GBPm GBPm GBPm
--------- --------- ---------
Gaming machine settlement a (1) - -
Total separately disclosed items recognised (1) -
within operating costs -
Net profit arising on property disposals - 1 1
Movement in the valuation of the property
portfolio:
--------- --------- ---------
- Impairment charge arising from the
revaluation of freehold and long leasehold
properties b - - (86)
- Impairment of short leasehold and unlicensed
properties c - - (9)
- Impairment of right-of-use assets d - - (22)
Net movement in the valuation of the
property portfolio - - (117)
Total separately disclosed items before
tax (1) 1 (116)
--------- --------- ---------
Tax relating to the above items - - 22
Total separately disclosed items after
tax (1) 1 (94)
========= ========= =========
Separately disclosed items are as follows.
a During the period GBP19m has been received from HMRC, relating
to VAT on gaming machine income for the period 2005 to 2012,
including interest. An estimate of GBP20m for the amount receivable
was recognised in the 52 weeks ended 25 September 2021. As
a result, the excess of GBP1m has been recognised.
b Impairment arising from the Group's revaluation of its freehold
and long leasehold pub estate where the carrying amount of
the properties exceeds their recoverable amount.
c The impairment of short leasehold and unlicensed properties
where the carrying values of the properties exceeded their
recoverable amount.
d The impairment of right-of-use assets where their carrying
values exceeded their recoverable amount.
5. FINANCE COSTS AND INCOME
2023 2022 2022
28 weeks 28 weeks 52 weeks
GBPm GBPm GBPm
--------- --------- ---------
Finance costs
Interest on securitised debt (48) (52) (94)
Interest on other borrowings (3) (2) (5)
Interest on lease liabilities (9) (9) (16)
Total finance costs (60) (63) (115)
========= ========= =========
Finance income
Interest receivable on cash balances 2 - 1
Net pensions finance charge (note 11) (1) (1) (2)
========= ========= =========
6. TAXATION
The taxation charge for the 28 weeks ended 8 April 2023 has been
calculated by applying an estimate of the annual effective tax rate
before separately disclosed items of 18.4% (2022 28 weeks, 20.5%).
The annual effective tax rate for the current period is lower than
the statutory rate of 22.0% due to the benefit of enhanced capital
allowance claims.
2023 2022 2022
28 weeks 28 weeks 52 weeks
Tax (charge)/credit in the income statement GBPm GBPm GBPm
--------- --------- ---------
Current tax:
- Corporation tax (2) - (3)
- Amounts over provided in prior periods - - 1
--------- --------- ---------
Total current tax charge (2) - (2)
--------- --------- ---------
Deferred tax:
- Origination and reversal of temporary differences (8) (10) 3
- Effect of changes in UK tax rate 2 - 4
- Adjustments in respect of prior periods - (1) -
Total deferred tax (charge)/credit (6) (11) 7
--------- --------- ---------
Total tax (charge)/credit in the income statement (8) (11) 5
========= ========= =========
Further analysed as tax relating to:
Profit before separately disclosed items (8) (11) (17)
Separately disclosed items - - 22
--------- --------- ---------
(8) (11) 5
========= ========= =========
2023 2022 2022
Tax relating to items recognised in other 28 weeks 28 weeks 52 weeks
comprehensive
income/(expense) GBPm GBPm GBPm
--------- --------- ---------
Deferred tax:
Items that will not be reclassified subsequently
to profit or loss:
* Unrealised losses due to revaluations - revaluation
reserve - - 46
* Unrealised losses due to revaluations - retained
earnings - - (5)
* Remeasurement of pension liabilities (9) (7) (9)
(9) (7) 32
--------- --------- ---------
Items that may be reclassified subsequently
to profit or loss:
* Cash flow hedges 4 (19) (45)
Total tax charge recognised in other comprehensive
income (5) (26) (13)
========= ========= =========
The Finance Act 2021 increased the main rate of corporation tax
from 19% to 25% from 1 April 2023. The effect of this change has
been reflected in the closing deferred tax balances at 8 April
2023, 24 September 2022 and 9 April 2022.
7. EARNINGS PER SHARE
Basic earnings per share (EPS) has been calculated by dividing
the profit for the financial period by the weighted average number
of ordinary shares in issue during the period, excluding own shares
held by employee share trusts.
For diluted earnings per share, the weighted average number of
ordinary shares is adjusted to assume conversion of all dilutive
potential ordinary shares.
Adjusted earnings per ordinary share amounts are presented
before separately disclosed items (see note 4) in order to allow a
better understanding of the adjusted trading performance of the
Group.
The profit used for the earnings per share calculations is as
follows:
2023 2022 2022
28 weeks 28 weeks 52 weeks
GBPm GBPm GBPm
--------- --------- ---------
Profit for the period 32 46 13
Separately disclosed items net of
tax 1 (1) 94
--------- --------- ---------
Adjusted profit for the period 33 45 107
========= ========= =========
The number of shares used for the earnings per share
calculations are as follows:
2023 2022 2022
28 weeks 28 weeks 52 weeks
million million million
Basic weighted average number of
ordinary shares 595 596 595
Effect of dilutive potential ordinary
shares:
* Contingently issuable shares 1 1 1
Diluted weighted average number
of shares 596 597 596
--------- --------- ---------
At 8 April 2023, 4,868,022 (2022 28 weeks 2,991,909, 2022 52
weeks 4,839,607) share options were outstanding that could
potentially dilute basic EPS in the future but were not included in
the calculation of diluted EPS as they are anti-dilutive for the
periods presented.
2023 2022 2022
28 weeks 28 weeks 52 weeks
pence pence Pence
--------- --------- ---------
Basic earnings per share
Basic earnings per share 5.4 7.7 2.2
Separately disclosed items net of
tax per share 0.1 (0.1) 15.8
--------- --------- ---------
Adjusted basic earnings per share 5.5 7.6 18.0
========= ========= =========
Diluted earnings per share
Diluted earnings per share 5.4 7.7 2.2
Adjusted diluted earnings per share 5.5 7.6 18.0
========= ========= =========
8. PROPERTY, PLANT AND EQUIPMENT
2023 2022 2022
8 April 9 April 24 September
Net book value GBPm GBPm GBPm
-------- -------- -------------------------
At beginning of period 4,194 4,442 4,442
Additions 90 60 130
Disposals - (3) (4)
Net decrease from property revaluation - - (273)
Impairment of short leasehold
properties - - (9)
Depreciation provided during the
period (49) (49) (93)
Exchange differences - - 1
At end of period 4,235 4,450 4,194
======== ======== =========================
Revaluation and impairment
The freehold and long leasehold licensed properties were valued
at market value as at 24 September 2022, using information provided
by CBRE, independent Chartered Surveyors. This valuation was based
on an assessment of individual asset fair maintainable operating
profit (FMOP) and property multiples. The Group has performed an
assessment for material changes that would impact the value of its
freehold and long leasehold properties at the interim date. The
Group's profit performance is in line with forecast supporting the
fair maintainable operating profit (FMOP) assessed at 24 September
2022 and the property multiples adopted at 24 September 2022 are
supported by the current property market. As such there is no
requirement to perform a revaluation at the interim date.
Short leasehold properties, unlicensed properties and fixtures,
fittings and equipment are held at cost less depreciation and
impairment provisions. During the current period, in accordance
with IAS 36, the Group has performed an assessment for indicators
of impairment of these categories of property, plant and equipment,
together with right-of-use assets (note 9). This review included an
assessment of current year performance which is in line with the
overall Group forecast used in the impairment review at 24
September 2022, and long term growth rates and capital maintenance
assumptions both of which are unchanged from the year end. In
addition, our sensitivity analysis at FY22 year end showed that the
impairment charge was relatively insensitive to likely movements in
the WACC of 9.65%. As such, there are not considered to be any
indicators of impairment that would require the Group to perform a
further review of impairment.
As a result of the above review, no revaluation or impairment
has been recognised in the period (2022 28 weeks GBPnil, 2022 52
weeks revaluation decrease of GBP273m and short leasehold
properties impairment of GBP9m).
Goodwill and other intangible assets
Goodwill and other intangible assets at 8 April 2023 of GBP15m
(9 April 2022 GBP13m, 24 September 2022 GBP14m) comprise goodwill
of GBP2m (9 April 2022 GBP2m, 24 September 2022 GBP2m) and computer
software of GBP13m (9 April 2022 GBP11m, 24 September 2022
GBP12m).
Capital commitments
The total amount contracted for but not provided in the
financial statements was GBP14m (9 April 2022 GBP15m, 24 September
2022 GBP28m).
9. LEASES
Right-of-use assets
2023 2022 2022
8 April 9 April 24 September
Net book value GBPm GBPm GBPm
-------- -------- -------------
At start of period 339 379 379
Additions 20 17 26
Impairment - - (22)
Disposals(a) (2) (8) (9)
Depreciation provided during
the period (18) (19) (36)
Foreign currency movements (1) (1) 1
At end of period 338 368 339
======== ======== =============
a. Disposals mainly relate to leasehold properties where the
freehold has been purchased, and therefore, the right-of-use assets
and corresponding lease liabilities (see note 10) have been
disposed. The freehold purchases are reflected in property, plant
and equipment additions (see note 8).
Impairment review of right-of-use assets
As described in note 8, the Group has reviewed its short
leasehold properties and right-of-use assets for indicators of
impairment at the interim date, and determined that there are no
indicators that lead the Group to conclude that a further review of
impairment is required.
Lease liabilities
An analysis of lease liabilities recognised are as follows:
8 April 9 April 24 September
2023 2022 2022
GBPm GBPm GBPm
-------- -------- -------------
Current liabilities 44 46 53
Non current liabilities 423 437 428
-------- -------- -------------
Total lease liabilities 467 483 481
======== ======== =============
10. BORROWINGS AND NET DEBT
Borrowings
8 April 9 April 24 September
2023 2022 2022
GBPm GBPm GBPm
-------- -------- -------------
Current
Securitised debt 118 113 113
Unsecured revolving credit facilities - (1) -
Overdraft 38 29 17
-------- -------- -------------
Total current 156 141 130
Non-current
Securitised debt 1,252 1,368 1,334
Total borrowings 1,408 1,509 1,464
======== ======== =============
10. BORROWINGS AND NET DEBT (CONTINUED)
Net debt
8 April 9 April 24 September
2023 2022 2022
GBPm GBPm GBPm
-------- ------------------- -------------
Cash and cash equivalents 180 223 207
Overdraft (38) (29) (17)
-------- ------------------- -------------
Cash and cash equivalents as presented
in the cashflow statement(a) 142 194 190
Securitised debt (1,370) (1,481) (1,447)
Unsecured revolving credit facility - 1 -
Derivatives hedging balance sheet
debt(b) 35 33 59
Net debt excluding leases (1,193) (1,253) (1,198)
Lease liabilities (467) (483) (481)
-------- ------------------- -------------
Net debt including leases (1,660) (1,736) (1,679)
======== =================== =============
a Cash and cash equivalents in the cash flow statement are presented
net of an overdraft within a cash pooling arrangement, to which
the Group has a legal right of offset.
b 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 and form an integral part of the Group's cash
management.
Net debt
Net debt comprises cash and cash equivalents, cash deposits net
of borrowings and discounted lease liabilities. Net debt is
presented on a constant currency basis, due to the inclusion of the
fixed exchange rate component of the cross currency swap. Cash
flows on the interest rate and cross currency swaps are shown
within interest paid in the Group cash flow statement.
Securitised debt
On 13 November 2003, the Group refinanced its debt by raising
GBP1,900m through a securitisation of the majority of its UK pubs
and restaurants owned by Mitchells & Butlers Retail Limited. On
15 September 2006 the Group completed a further debt ('tap') issue
to borrow an additional GBP655m and refinance GBP450m of existing
debt at lower cost. The notes are secured on the majority of the
Group's property and future income streams therefrom. All of the
floating rate notes are hedged using interest rate swaps which fix
the interest rate payable.
The overall cash interest rate payable on the loan notes is 6.3%
(9 April 2022 6.3%, 24 September 2022 6.3%) after taking account of
interest rate hedging and the cost of the financial guarantee
provided by Ambac Assurance UK Limited (Ambac). Ambac acts as a
guarantor of the Group's obligations to repay interest and
principal on the loan notes. In the event that the Group is unable
to pay such amounts the guarantee is limited to the Class A1N, A3N,
A4 and Class AB note holders only.
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.
There are two main financial covenants, being the level of net
assets and free cash flow (FCF) to debt service. FCF to debt
service represents the multiple of cash generated by sites within
the structure to the cost of debt service. This is tested quarterly
on both a trailing two quarter and a four quarter basis. There are
additional 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.
10. BORROWINGS AND NET DEBT (CONTINUED)
At 8 April 2023, Mitchells & Butlers Retail Limited had cash
and cash equivalents of GBP81m (9 April 2022 GBP87m, 24 September
2022 GBP61m). Of this amount GBP1m (9 April 2022 GBP1m, 24
September 2022 GBP1m), representing disposal proceeds, was held on
deposit in an account over which there are a number of
restrictions. The use of this cash requires the approval of the
securitisation trustee and may only be used for certain specified
purposes such as capital enhancement expenditure and business
acquisitions.
The carrying value of the securitised debt in the Group balance
sheet is analysed as follows:
8 April 9 April 24 September
2023 2022 2022
GBPm GBPm GBPm
-------- -------- -------------
Principal outstanding at beginning of
period 1,448 1,527 1,527
Principal repaid during the period (60) (56) (115)
Net principal receipts on cross currency
swap 3 2 5
Exchange on translation of dollar loan
notes (24) 5 31
-------- -------- -------------
Principal outstanding at end of period 1,367 1,478 1,448
Deferred issue costs (2) (3) (3)
Accrued interest 5 6 2
-------- -------- -------------
Carrying value at end of period 1,370 1,481 1,447
======== ======== =============
Liquidity facility
Under the terms of the securitisation, the Group holds a
liquidity facility of GBP295m provided by two counterparties. The
amount drawn at 8 April 2023 is GBPnil (9 April 2022 GBPnil, 24
September 2022 GBPnil).
Unsecured revolving credit facilities
The Group holds an unsecured committed revolving credit facility
of GBP150m, which expires on 14 February 2024. The amount drawn at
8 April 2023 is GBPnil, (9 April 2022 is GBPnil, 24 September 2022
GBPnil).
Movement in net debt excluding leases
2023 2022 2022
28 weeks 28 weeks 52 weeks
GBPm GBPm GBPm
-------- -------- --------
Net decrease in cash and cash equivalents (47) (32) (39)
Add back cash flows in respect of other
components of net debt:
* Repayment of principal in respect of securitised debt 60 56 115
* Principal receipts on cross currency swap (11) (9) (20)
* Principal payments on cross currency swap 8 7 15
Decrease in net debt arising from
cash flows 10 22 71
Movement in capitalised debt issue
costs net of accrued interest (4) (4) (1)
-------- -------- --------
Decrease in net debt excluding leases 6 18 70
Opening net debt excluding leases (1,198) (1,270) (1,270)
Foreign exchange movements on cash (1) (1) 2
Closing net debt excluding leases (1,193) (1,253) (1,198)
======== ======== ========
10. BORROWINGS AND NET DEBT (CONTINUED)
Movement in lease liabilities
2022 2022
2023 28 weeks 52 weeks
28 weeks GBPm GBPm
GBPm
----------- ---------- ----------
Opening lease liabilities (481) (513) (513)
Additions(a) (19) (15) (25)
Interest charged during the period (9) (9) (16)
Repayment of principal 27 34 48
Payment of interest 11 11 16
Disposals(b) 3 8 11
Foreign currency movements 1 1 (2)
----------- ---------- ----------
Closing lease liabilities (467) (483) (481)
=========== ========== ==========
a Additions to lease liabilities include new leases and lease
extensions or rent reviews relating to existing leases.
b Disposals mainly relate to leasehold properties where the freehold
has been purchased, and therefore, the right-of-use assets
(see note 9) and corresponding lease liabilities have been
disposed.
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. The defined benefit
liabilities relate to these funded plans, together with an unfunded
unapproved pension arrangement (the Executive Top-Up Scheme, or
MABETUS) in respect of certain MABEPP members. The assets of the
plans are held in self-administered trust funds separate from the
Company's assets.
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
MABEPP - buy-in policy transaction
During the prior period, the Trustees of the MABEPP entered a
Bulk Purchase Agreement (BPA) with Legal and General Assurance
Society Limited. The resulting policy is set up to provide the plan
with sufficient funding to cover all known member benefits of the
scheme.
The difference between the buy-in purchase price and the defined
benefit obligation covered by the policy was accounted for in other
comprehensive income in the prior period. The accounting treatment
was based on the following considerations made by the Company:
-- the employer is not relieved of primary responsibility for
the obligation. The policy simply covers the benefit payments that
continue to be payable by the scheme;
-- the contract is effectively an investment of the scheme; and
-- the contract provides the option to convert the annuity into
individual policies, which would transfer the obligation to the
insurer (known as a "buy-out"). Whilst this course of action may be
considered in future, this is not a requirement and a separate
decision will be required before any buy-out proceeds.
Following on from the transaction, the remaining scheduled
contribution payments for the MABEPP have been
paid into a "Blocked Account" from which the funds may be used
by the Trustee or may be returned
to the Company. As a result the payments are no longer
recognised as a minimum funding requirement
and any balance in the Blocked Account is recognised within
non-current other receivables. The amount recognised as at 8 April
2023 is GBP12m (9 April 2022 GBP3m, 24 September 2022 is
GBP9m).
11. PENSIONS (CONTINUED)
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 2022 and updated by the schemes' independent
qualified actuaries to 8 April 2023. Schemes' assets are stated at
market value at 8 April 2023 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 schemes' 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:
2023 2022 2022
8 April 9 April 24 September
Discount rate 4.8% 2.9% 5.3%
Pensions increases - RPI max 5% 2.9% 3.4% 3.2%
Inflation - RPI 3.2% 3.7% 3.5%
The mortality assumptions were reviewed following the 2022
actuarial valuation. A summary of the average life expectancies
assumed are as follows:
2023 2022 2022
8 April 9 April 24 September
Implied life expectancies from
age 65:
- MABPP male currently 45 22.5 years 22.7 years 22.7 years
- MABEPP male currently 45 24.3 years 24.5 years 24.5 years
- MABPP female currently 45 25.4 years 25.3 years 25.3 years
- MABEPP female currently 45 26.1 years 26.3 years 26.3 years
========== ========== ============
Minimum funding requirements
The results of the 2022 actuarial valuation, which was completed
in December 2022, show a marginal surplus. As a result of the 2022
actuarial valuation, the Company subsequently agreed a revised
schedule of contributions for both the MABPP and MABEPP
schemes.
For the MABEPP, the agreement confirms that from December 2022,
payments into the "Blocked Account" that was set up as part of the
buy-in transaction have been suspended.
For the MABPP, there has been no change to the remaining
contributions due, which are due to end in September 2023 .
However, all contributions since December 2022 have been made into
a new blocked bank account. As the scheme is in surplus, these
payments are no longer considered a minimum funding requirement and
therefore are not recognised as plan assets. As a result, the
blocked bank account has been recognised within non-current other
receivables as recovery of these amounts is expected. The amount
recognised as at 8 April 2023 is GBP13m (9 April 2022 GBPnil, 24
September 2022 is GBPnil). In addition, under IFRIC 14, an
additional liability is recognised to offset the actuarial surplus
as the Company does not have an unconditional right to a refund of
the surplus.
As a result of the above changes, the resulting net pension
liability as at 8 April 2023 of GBP24m relates soley to the MABETUS
plan, with a total of GBP25m in escrow accounts across the MABPP
and MABEPP schemes, recognised in non-current other
receivables.
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 2023 2022 2022
28 weeks 28 weeks 52 weeks
GBPm GBPm GBPm
--------- --------- ---------
Operating profit
Employer contributions (defined contribution
plans) (9) (8) (16)
Administrative costs (defined benefit
plans) (2) (2) (4)
--------- --------- ---------
Charge to operating profit (11) (10) (20)
Finance costs
Net pensions finance income on actuarial
surplus 8 4 8
Additional pensions finance charge due
to minimum funding (9) (5) (10)
--------- --------- ---------
Net pensions finance charge (1) (1) (2)
Total charge (12) (11) (22)
========= ========= =========
Group statement of comprehensive income 2023 2022 2022
28 weeks 28 weeks 52 weeks
GBPm GBPm GBPm
--------- --------- ---------
Gain/(loss) on scheme assets and effects
of changes in assumptions 53 (58) (161)
Movement in pension liabilities due to
minimum funding (17) 87 202
--------- --------- ---------
Remeasurement of pension liabilities 36 29 41
========= ========= =========
Group balance sheet 2023 2022 2022
8 April 9 April 24 September
GBPm GBPm GBPm
------- ------- ------------
Fair value of scheme assets 1,787 2,395 1,699
Present value of scheme liabilities (1,464) (2,058) (1,442)
------- ------- ------------
Actuarial surplus in the schemes 323 337 257
Additional liability (IFRIC 14) (347) (431) (321)
------- ------- ------------
Total pension liabilities(a) (24) (94) (64)
======= ======= ============
Associated deferred tax asset 6 20 14
======= ======= ============
a. The total pension liabilities of GBP24m (9 April 2022 GBP94m,
24 September 2022 GBP64m) is presented as GBP1m current liabilities
(9 April 2022 GBP41m, 24 September 2022 GBP42m) and GBP23m
non-current liabilities (9 April 2022 GBP53m, 24 September 2022
GBP22m).
11. PENSIONS (CONTINUED)
Movements in total pension liabilities are analysed as follows:
2023 2022 2022
8 April 9 April 24 September
GBPm GBPm GBPm
-------- -------- -------------
At beginning of period (64) (143) (143)
Administration costs (2) (2) (4)
Net pensions finance charge (1) (1) (2)
Employer contributions 7 23 44
Remeasurement of pension liabilities 36 29 41
At end of period (24) (94) (64)
======== ======== =============
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.
The Group's derivative financial instruments are 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
At 8 April 2023 GBPm GBPm GBPm GBPm
------ ----- ----- ------
Financial assets
Currency swaps - 35 - 35
Share options - - 1 1
Financial liabilities
Interest rate swaps - (44) - (44)
- (9) 1 (8)
======= ===== ===== ======
Level Level Level Total
1 2 3
At 9 April 2022 GBPm GBPm GBPm GBPm
----- ----- ----- ------
Financial assets:
Currency swaps - 34 - 34
Share options - - 1 1
Financial liabilities:
Interest rate swaps - (135) - (135)
----- ----- ----- ------
-- (101) 1 (100)
===== ===== ===== ======
Level Level Level Total
1 2 3
At 24 September 2022 GBPm GBPm GBPm GBPm
----- ----- ----- ------
Financial assets:
Currency swaps - 59 - 59
Share options - - 1 1
Financial liabilities:
Interest rate swaps - (28) - (28)
----- ----- ----- ------
-- 31 1 32
===== ===== ===== ======
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.
Borrowings are valued as a level 1 financial instrument. The
securitised debt has been valued using period end quoted offer
prices for each tranche. The securitised debt is traded on an
active market, so the market value represents the fair value of
this debt. The current value of the overdraft represents its fair
value. The carrying value and fair value of borrowings is as
follows:
8 April 9 April 24 September
2023 2022 2022
---------------------- ---------------------- -------------------
Carrying Carrying Carrying Fair
value Fair value value Fair value value value
GBPm GBPm GBPm GBPm GBPm GBPm
----------- -----------
Borrowings (note
10) (1,408) (1,194) (1,509) (1,422) (1,464) (1,180)
========= =========== ========= =========== ========= ========
All other financial assets and liabilities are either short-term
in nature or their book values approximate to fair values.
13. 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.
The Group has entered into the following transactions with the
associates:
3Sixty Restaurants Limited Fatboy Pub Company Limited
2023 2022 2022 2023 2022 2022
28 weeks 28 weeks 52 weeks 28 weeks 28 weeks 52 weeks
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------- ---------- ---------- ---------- ---------- ----------
Rent charged 640 478 1,180 50 50 60
Sales of goods and
services 400 448 782 2 (41) 4
1,040 926 1,962 52 9 64
========== ========== ========== ========== ========== ==========
The balance due from 3Sixty Restaurants Limited at 8 April 2023
was GBP48,000 (9 April 2022 GBP284,000, 24 September 2022
GBP351,600). The balance due from Fatboy Pub Company at 8 April
2023 was GBP1,000 (9 April 2022 GBP44,000, 24 September 2022
GBPnil), net of a provision of GBP179,000 (9 April 2022 GBP179,000,
24 September 2022 GBP179,000).
There have been no other related party transactions during the
period or the previous period requiring disclosure under IAS 24
Related Party Disclosures.
14. POST BALANCE SHEET EVENTS
Share option exercise
The Group owns 40% of the share capital of 3Sixty Restaurants
Limited, which is recognised as an associate. On 18 April 2023, the
Group has exercised the call option to acquire the remaining 60% of
the share capital. This exercise notice is irrevocable and
completion will take place on 18 June 2023.
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 profit 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 an effective comparison
of the Group's trading performance from one period to the next.
Adjusted profit measures are reconciled to unadjusted IFRS results
on the face of the condensed 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.
-------------------- ---------------------------------------------- ------------------
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.
-------------------- ---------------------------------------------- ------------------
Like-for-like Like-for-like sales excluding VAT Group condensed
sales excluding benefit reflects like-for-like sales income statement
VAT benefit growth excluding the benefit of the
temporary reduction in the rate of
VAT on food and non-alcoholic drink
sales to 12.5% in the first half of
FY 2022.
-------------------- ---------------------------------------------- ------------------
Adjusted earnings Earnings per share using profit before Note 7
per share (EPS) separately disclosed items.
-------------------- ---------------------------------------------- ------------------
Net debt Net debt comprises cash and cash equivalents, Note 10
cash deposits net of borrowings and
discounted lease liabilities. Presented
on a constant currency basis due to
the inclusion of the fixed exchange
rate component of the cross-currency
swap.
-------------------- ---------------------------------------------- ------------------
Net debt : Adjusted The multiple of net debt including Note 10
EBITDA lease liabilities, as per the balance
sheet compared against 52-week EBITDA Group condensed
before separately disclosed items, income statement
which is a widely used leverage measure
in the industry.
-------------------- ---------------------------------------------- ------------------
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.
2023 2022 Year-on-year
28 weeks 28 weeks
Source GBPm GBPm %
------------------ ----------- ---------------
Condensed
Reported revenue income statement 1,281.9 1,159.5 10.6%
Less non like-for-like
sales and income (182.7) (146.3) 24.9%
------------------ -----------
Like-for-like sales 1,099.2 1,013.2 8.5%
------------------ -----------
Less like-for-like sales - (38.8) -
VAT benefit
Like-for-like sales excl. 1,099.2 974.4 12.8%
VAT benefit
Drink sales
Year-on-year
2023 2022
------------------ -----------
28 weeks 28 weeks
Source GBPm GBPm %
------------------ ----------- ---------------
Reported drink revenue Note 3 556.5 483.9 15.0%
Less non like-for-like
drink sales (69.1) (51.9) 33.1%
------------------ -----------
Drink like-for-like sales 487.4 432.0 12.8%
------------------ -----------
Food sales 2023 2022
28 weeks 28 weeks Year-on-year
Source GBPm GBPm %
------------------ ----------- ---------------
Reported food revenue Note 3 681.1 627.3 8.6%
Less non like-for-like
food sales (101.6) (79.7) 27.5%
------------------ -----------
Food like-for-like sales 579.5 547.6 5.8%
------------------ -----------
Other sales 2023 2022
28 weeks 28 weeks Year-on-year
Source GBPm GBPm %
------------------ ----------- ---------------
Reported other revenue Note 3 44.3 48.3 (8.3)%
Less non like-for-like
other sales (12.0) (14.7) (18.4)%
------------------ -----------
Other like-for-like sales 32.3 33.6 (3.9)%
------------------ -----------
FY 2022 is the primary comparator for like-for-like sales.
However, we have chosen to additionally disclose vs. FY 2019
performance, with FY 2019 being the last full year pre Covid-19. A
comparison to FY 2019 was the approach taken at FY 2021 and FY
2022.
2023 2019 2023
vs. 2019
28 weeks 28 weeks
Source GBPm GBPm %
--------- --------- ----------
Reported revenue 1,281.9 1,185.5 8.1%
Less non like-for-like
sales and income (186.8) (187.2) (0.2)%
--------- ---------
Like-for-like sales 1,095.1 998.3 9.7%
--------- ---------
B. Adjusted operating profit
Operating profit before separately disclosed items as set out in
the Group Condensed Income Statement. Separately disclosed items
are those which are separately identified by virtue of their size
or nature. Excluding these items allows a more effective comparison
of the Group's trading performance from one period to the next.
2023 2022 Year-on
28 weeks 28 weeks -year
Source GBPm GBPm %
--------- --------- ----------
Condensed
Operating profit income statement 99 121 (18.2)%
Separately disclosed items Note 4 1 (1) 200.0%
Adjusted operating profit 100 120 (16.7)%
Condensed
Reported revenue income statement 1,282 1,159 10.6%
--------- ---------
Adjusted operating margin 7.8% 10.4% (2.6)ppts
========= =========
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 nature. Excluding these items
allows a more effective comparison of the Group's trading
performance from one period to the next.
2023 2022 Year-on
28 weeks 28 weeks -year
Source GBPm GBPm %
--------- --------- --------
Condensed
Profit for the period income statement 32 46 (30.4)%
Add back separately disclosed
items Note 4 1 (1) 200.0%
Adjusted profit 33 45 (26.7)%
Basic weighted average
number of shares Note 7 595 596 (0.2)%
Adjusted earnings per
share 5.5p 7.6p (27.6)%
========= =========
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.
2023 2022
28 weeks 28 weeks
Source GBPm GBPm
--------- ---------
Net debt Note 10 1,660 1,736
--------- ---------
Group condensed
Adjusted EBITDA H1 income statement 169 190
Adjusted EBITDA prior year H2* 183 217
Adjusted 52-week EBITDA 352 407
Net debt : Adjusted EBITDA 4.7 4.3
========= =========
*H2 measures are calculated from the income statement as the
measure for the 52 weeks ended 24 September 2022 less the measure
for the 28 weeks ended 9 April 2022
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IR BRGDUUSBDGXL
(END) Dow Jones Newswires
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