TIDMWTB
RNS Number : 6185O
Whitbread PLC
18 May 2018
Whitbread PLC
Annual Report and Annual General Meeting
18 May 2018
The Company announces that copies of its 2017/18 Annual Report
and Accounts, Notice of Annual General Meeting and Form of Proxy,
together with letters from the Chairman relating to such documents,
have been submitted to the UK Listing Authority National Storage
Mechanism and will shortly be available for inspection at
www.morningstar.co.uk/uk/nsm.
These documents can also be downloaded from the Company's
website at www.whitbread.co.uk.
The Company's Annual General Meeting will be held at Church
House Conference Centre, Dean's Yard, Westminster, London SW1P 3NZ
on Wednesday 27 June 2018 at 2.00 pm.
In accordance with the requirements of Rule 6.3.5 of the
Disclosure Rules and Transparency Guidance of the UK Financial
Conduct Authority, the Appendix to this announcement contains a
description of the principal risks and uncertainties affecting the
Group, a related party disclosure and a responsibility statement,
each reproduced in unedited full text from the 2017/18 Annual
Report and Accounts.
The Company's Preliminary Results for the financial year to 1
March 2018 were announced on 25 April 2018.
Enquiries:
Laura Taylor, Assistant Company Secretary
Tel: 01582 889363
APPIX
1. Principal risks and uncertainties
Understanding and responding to risks in our operations means we
can make informed decisions that enhance our capacity to build
value.
Risk management
Risk arises from the operations of, and strategic decisions
taken by, every business. It is not something that can be avoided
but should be actively managed and harnessed in pursuit of business
objectives.
The Board has ultimate responsibility for risk management
throughout the Group and determines the nature and extent of the
risks Whitbread is willing to take to achieve its objectives to
determine its risk appetite. Risk is managed proactively by the
Executive Committee. Certain responsibilities, such as overseeing
the systems of risk management and internal control, have been
delegated by the Board to the Audit Committee, which completes an
annual review of the effectiveness of these processes.
Both the Premier Inn and Costa businesses complete an annual
review of the risks to the achievement of their strategic goals,
whilst also taking into account the key operational risks, which
are updated regularly. A top-down risk assessment is also completed
to capture the Board's views on the principal risks facing
Whitbread and its risk appetite for each. Actions required to
manage these risks are monitored and reviewed on a regular basis.
The principal risks identified, together with a summary of key
mitigations, can be found on pages 54 and 55.
Viability statement
The Corporate Governance Code requires that the directors have
considered the viability of the Group over an appropriate period of
time selected by them, in this case a three-year period. In making
this assessment, the directors took into account the current
financial and operational positions of the Group and the potential
impact of the risks and uncertainties as outlined on pages 54 and
55.
The business planning process reviewed by the Board, as part of
the annual strategic planning process, is over a five-year
timeline, with the Board acknowledging that there is significantly
more certainty over the first three years of the plan in light of
fluctuations in the global economy, the entry of new competitors
and customer preferences. Therefore the directors have determined a
three-year period is an appropriate period over which to provide
its viability statement. In making the viability statement, the
Board carried out a robust assessment of the principal risks and
uncertainties facing the Group, which could impact the business
model, future performance, solvency and liquidity, including the
proposed demerger of Costa which is expect to complete within the
viability assessment period. Scenario modelling and sensitivity
analysis was applied to forecasted cash flows, including a downturn
in like for like growth rates as well as the potential impacts
should the principal risks, outlined on pages 54 to 55 actually
occur. Consideration was given to the availability and likely
effectiveness of mitigating actions that could be taken to avoid or
reduce the impact or occurrence of the identified risk.
In particular, it should be noted that the Group is currently
spending a substantial part of its cash from operations on
discretionary growth capital (c.30% on average) which allows the
Group considerable flexibility to manage cash flows and would
provide significant mitigation if required.
Based upon this assessment, the directors confirm that they have
reasonable expectation that the Group will be able to continue in
operation and to meet its liabilities as they fall due over the
three-year assessment period.
Risks Key mitigations
======================================== =================================================
Cyber and data security We have a series of IT security controls
Cyber and data security remains in place, including up-to-date antivirus
a key risk as it could reduce software across the estate, network/system
the effectiveness of our systems monitoring and regular penetration testing
or result in a loss of data. to identify vulnerabilities. A continuous
This in turn could result in security improvement programme is in place
loss of income and/or reputational improving security and data controls.
damage. Specifically, during the year we have
enhanced network security and we are in
the process of implementing a framework
of industry-recognised security standards.
---------------------------------------- -------------------------------------------------
Innovation and brand strength To ensure we maintain and improve the
A long-term decline in the customer strength of our brands, we continually
perception of our brands would complete market research and monitor opinion
impact our ability to grow and with focus groups and net guest scores
achieve appropriate levels of to ensure we maintain the right levels
return. of investment and innovation in our customer
offerings. We monitor the rate and level
of investment in the refurbishment of
our Premier Inn hotels and Costa stores
along with our net promoter scores.
---------------------------------------- -------------------------------------------------
Change We embarked on an extensive programme
Our ability to execute the significant of change to replace our legacy finance,
volume of change, including the POS, CRM and HR systems, whilst also delivering
proposed demerger of Costa. an ongoing efficiency programme and upgrading
our digital capability and customer propositions
enabling Whitbread to deliver its growth
plans over the coming years. To help ensure
the successful delivery of these change
projects, including the proposed demerger
of Costa we have significantly enhanced
our internal project delivery expertise
and capability and put in place a robust
assurance management framework coupled
with regular reporting to the Executive
Committee.
---------------------------------------- -------------------------------------------------
Economic Climate There is a rigorous business planning
Uncertain/volatile political process in place which considers many
and economic climate results scenarios with appropriate responses.
in a decline in GDP, consumer We also have strong site selection teams
and business spending, a fall with well-established processes in place
in RevPAR and inflation pressure based on market and economic fundamentals,
impacting growth plans. both at a macro and micro level. These
are supported by sensitivity analysis
and a robust investment appraisal process
to help deliver good levels of return
and we are making good progress with our
efficiency programme that aims to deliver
GBP250 million of savings over five years.
---------------------------------------- -------------------------------------------------
Retention and wage inflation The success of our businesses would not
Failure to maintain staff engagement be possible without the passion and commitment
and retention in a tightening of our teams. Team engagement is fundamental.
labour market. We monitor this closely through our annual
engagement survey Your Say, the results
of which are reviewed by the Executive
Committee and the Board, with trends analysed
and appropriate actions reviewed and agreed.
We are also upgrading our HR systems to
provide greater insight. Team retention
is a key component of our WINcard and
Annual Incentive Scheme.
---------------------------------------- -------------------------------------------------
Pandemic/terrorism The safety and security of our customers,
The risk of a pandemic or terrorism employees and suppliers is of utmost importance.
on the safety and security of Failure to prevent or respond to a major
our customers or staff and the safety or security incident could adversely
consequent impact on trading. impact our operations and financial performance.
We invest in site level training to help
identify hostile reconnaissance activities
and to ensure we have an appropriate response
should such events take place. The executive
team also hold regular crisis management
exercises to ensure we are prepared for
such events.
---------------------------------------- -------------------------------------------------
Food safety and hygiene The health and wellbeing of our customers
The preparation or storage of is fundamental to our business. We have
food and/or supply chain failure stringent food safety and sourcing policies
results in food poisoning and with traceability and testing requirements
reputational damage. in place in respect of meat and other
products. Independent food safety audits
are also completed regularly at our hotels,
restaurants and coffee shops and the results
are closely monitored. We also invest
considerable resources in employee training
in the storage, handling and preparation
of food.
---------------------------------------- -------------------------------------------------
Health and safety The safety of our guests and employees
Health and safety risk, death is of paramount importance. NSF, an independent
or serious injury as a result company, carries out health and safety
of company negligence. audits on every site and we have a programme
of fire safety training for our employees.
In addition, C.S. Todd & Associates Ltd,
independent fire safety consultants, have
been working with us on the fire safety
of our hotels. Health and safety is a
measure on the WINcard and acts as a hurdle
for incentive payments. Regular health
and safety updates are provided to the
Executive Committee and the Board.
---------------------------------------- -------------------------------------------------
Third party arrangements Whitbread has several key supplier relationships
Business interruption as a result that help ensure the efficient delivery
of the withdrawal of services/provision of our multi-site and support centre operations.
of services below acceptable The failure or withdrawal of services
standards/support or reputational from one or more of these suppliers may
damage as result of unethical result in some business interruption.
supplier practices. To safeguard against this, we continually
review our suppliers and business continuity
arrangements. We expect our suppliers'
practices to be in line with our values
and standards. Suppliers are thoroughly
vetted before we enter into any arrangements
to ensure they are reputable and then
monitored though our supplier management
arrangements.
---------------------------------------- -------------------------------------------------
2. Related Party Disclosure
The Group consists of a parent company, Whitbread PLC,
incorporated in the UK and a number of subsidiaries and joint
ventures and held directly and indirectly by Whitbread PLC, which
operate and are incorporated around the world. Note 10 to the
Company's separate financial statements lists details of the
interests in subsidiaries and related undertakings.
The Group holds 6% as a general partnership interest in Moorgate
Scottish Limited Partnership (SLP) with Whitbread Pension Trustees
holding the balance as a limited partner. Moorgate SLP holds a
67.8% investment in a further partnership, Farringdon Scottish
Partnership (SP), which was established by the Group to hold
property assets. The remaining 32.2% interest in Farringdon SP is
owned by the Group. The partnerships were set up in 2009/10 as part
of a transaction with Whitbread Pension Trustees and the Group
retains control over both partnerships and, as such, they are fully
consolidated in these consolidated financial statements. Further
details can be found in Note 29.
Shares in Whitbread Group PLC are held directly by Whitbread
PLC. Shares in the other subsidiaries are held directly and
indirectly by Whitbread Group PLC.
Related party transactions 2017/18 2016/17
Joint ventures Joint Ventures
GBPm GBPm
------------------------------------------ ---------------- ----------------
Sales to a related party 5.1 5.2
------------------------------------------ ---------------- ----------------
Amounts owed by related party 1.9 1.7
------------------------------------------ ---------------- ----------------
Amounts owed to related party - -
------------------------------------------ ---------------- ----------------
Compensation of key management personnel
(including directors):
------------------------------------------ ---------------- ----------------
2017/18 2016/17
GBPm GBPm
------------------------------------------ ---------------- ----------------
Short-term employee benefits 7.3 6.4
------------------------------------------ ---------------- ----------------
Post employment benefits - -
------------------------------------------ ---------------- ----------------
Share-based payments 0.6 4.0
------------------------------------------ ---------------- ----------------
7.9 10.4
------------------------------------------ ---------------- ----------------
Joint ventures
For details of the Group's investments in joint ventures see
Note 15.
Terms and conditions of transactions with related parties
Sales to, and purchases from, related parties are made at normal
market prices. Outstanding balances at year-end are unsecured and
settlement occurs in cash. There have been no guarantees provided,
or received, for any related party receivables. No provision for
doubtful debts relating to amounts owed by related parties has been
made (2016: GBPnil). An assessment is undertaken, each financial
year, through examining the financial position of the related
parties and the market in which the related parties operate.
Transactions with other related parties
Details of transactions with directors are detailed in the
remuneration report on pages 72 to 87.
3. Directors' responsibility statement
The directors are responsible for preparing the Annual Report
and Accounts in accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law, the directors
are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union (EU) and Article 4 of the IAS
Regulation and have elected to prepare the parent company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting standards and
applicable law), including FRS 101 Reduced Disclosure Framework.
Under company law the directors must not approve the accounts
unless they are satisfied that they give a true and fair view of
the state of affairs of the Company and of the profit or loss of
the Group for that period.
In preparing the parent company financial statements, the
directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable UK accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
In preparing the Group financial statements, International
Accounting Standard 1 requires that directors:
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRS are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and performance;
and
-- make an assessment of the Group's ability to continue as a going concern.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose, with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with the
relevant reporting framework, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company and the undertakings included in the consolidation taken as
a whole;
-- the strategic report includes a fair review of the
development and performance of the business and the position of the
Company and the undertakings included in the consolidation as a
whole, together with a description of the principal risks and
uncertainties that they face; and
-- the Annual Report and Accounts, taken as a whole, are fair,
balanced and understandable and provide the information necessary
for shareholders to assess the Company's position and performance,
business model and strategy.
This responsibility statement was approved by the Board of
Directors on 24 April 2018 and is signed on its behalf by:
Alison Brittain Nicholas Cadbury
Chief Executive Group Finance Director
This information is provided by RNS
The company news service from the London Stock Exchange
END
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